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1522 A meeting of the Board of Governors of the Federal Reserve 87etem was held in rashington on Friday, July 31, 1942, at 11:15 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Draper Evans Mr. Morrill, Secretary Mr. Bethea, Assistant Secretary Mr. Carpenter, Assistant Secretary There were presented telegrams to Messrs. Treiber and McCreedy, ' '- - uaries of the Federal Reserve Banks of New York and Philadelphia, respe . etivelY, Mr. Wagner, Vice President of the Federal Reserve Bank of 01 Messrs. Dillard and Stewart, Secretaries of the Federal --ve Banks of Chicago and St. Louis, respectively, and Mr. Caldwell, -"'en of the Federal Reserve Bank of Kansas City, stating that the toa, *"4 approves the establishment without change by the Federal Reserve ' ktik or St. Louis on July 28, by the Federal Reserve Bank of Kansas °11 ly 29, and by the Federal Reserve Banks of New York, Phila- 411, Cleveland, Chicago, and Kansas City on July 30, 1942, of the N;sa of discount and purchase in their existing schedules. Approved unanimously. ,The action stated with respect to each of the matters herein4tte) , re.p ' erred to was taken by the Board: 1523 7/31/42 The minutes of the meeting of the Board of Governors of the Nieral Reserve System held on Tilly 30, 1942, were approved unanimously. Memorandum dated Tuly 28, 1942, from Mr. Goldenweiser, Dire etor of the Division of Research and Statistics, recommend- that Robert Triffin be appointed as an associate economist in that Dilrision, with salary at the rate of $4,600 per annum, effective as of the date upon which he enters upon the performance of 418 duties after having passed satisfactorily the usual physical eltratation. Approved unanimously. Memorandum dated July 30, 1942, from Mr. Goldenweiser, tll'ecto of -r the Division of Research and Statistics, recommending that 44118* Margaret Richards Pabst be appointed as a junior econoIll" it that Division, with salary at the rate of 0,600 per annum, "recti---Te as of the date upon which she enters upon the performance he duties after having passed satisfactorily the usual physical Approved unanimously. Memorandum dated July 24, 1942, from Mr. Morrill, recomttlecilile that the following increases in salaries of employees in those elsetarSos Office be approved, effective as of August 1, 1942: 1.524 7/31/42 -3- Name Building Operation & maintenance Section Charles R. Nichols Thomas Cook J. Woodley Boothe E. M. Dial Clifford B. Myers Morris Mayhew Donal Phillips Stan1 FEL;707 -R eginald C. Power Nelson Dyson Robert H. Jones Designation Salary Increase From To Guard Guard Guard Guard Guard Gardener Elevator Operator $1,380 1,380 1,380 1,380 1,380 1,560 1,200 $1,500 1,500 1,500 1,500 1,500 1,620 1,320 2,200 2,300 1,560 1,680 1,620 1,380 1,680 1,500 Foreman Operator (Duplicating Devices) Junior Operator (Duplicating Devices) Junior Operator (Duplicating Devices) Junior Mail Clerk Approved unanimously. Letter to Mr. Mercer, Vice President of the Federal Reserve of Richmond, reading as follows: "Reference is made to the report of examination of Berwind Bank', Berwind, West Virginia, made as of i June 3, 1942, on pages T-1 and T-3 of which information given in regard to a corporate trusteeship accepted L'Y the bank since the previous examination. "The bank was admitted to membership in the Federal Res erve System in 1920, subject to a condition of memberiP to the effect that except with the approval of the °ard there shall be no change in the general character °f its assets or broadening in the functions exercised it at the time of its admission. The Board has hereore taken the position that the exercise of trust Powers bY a State member bank constitutes a broadening its functions within the meaning of this condition, pod since the bank apparently was not exercising trust sh !T at the time of its admission to membership, it as'ud have obtained permission of the Board prior to suming any fiduciary activities. It does not appear from the information available that the bank contemplates transacting a general trust the 1.525 7/31/42 -4- "business, and the Board will raise no objection to its continuing to handle the one corporate trusteeship now held by it, but if the bank should desire to exercise trust powers in other instances it should first obtain the permission of the Board. Please advise the bank acc ordingly." Approved unanimously. Letter to Mr. Trimble, Assistant General Counsel of the Federal Reserve Bank of New York, reading as follows: "This is to acknowledge receipt of your letter of July 27, 1942 enclosing six copies of a new form of loan agreement prepared by you for use in connection with loans guaranteed under Executive Order No. 9112. "It is noted that a sentence has been added at the erid of paragraph 5 of the form of loan agreement regarding the protection afforded the borrower by a guarantee agree! nt and Providing that the borrower shall give notice to '"e Financing Institution of the cancellPtion of any war contract of the borrower. In accordance with your request, we have informally consulted the War Department as to the Propriety of this sentence and have been advised that the 42.r Department will have no objection to its inclusion in Lqie form of loan agreement." T Approved unanimously. Telegram to Mr. Woolley, Vice President of the Federal Reserve 8 ank of Kansas City, reading as follows: , "Re telegram of July 27 on railroad watches. Amendment (to Regulation 14) dependent upon War Production Board 1T?r which is expected shortly. Practice you describe rat "td not be permissible. Pending amendment suggest explowitrn of possibility that the loaner watch might be rented °Ilt lay-away plan on new watch." Approved unanimously. erire Tel -egram to Mr. Woolley, Vice President of the Federal ReBatik of Kansas City, reading as follows: 1526 7/31/42 -5- "Re telegram July 23 concerning Amendment No. 6 (to Regulation W), credit for so-called insulating materials used on exterior of building is not exempt. Claim of fuel saving was considered when amendment was under study but factual information on the subject always welcome." Approved unanimously. Letter to Mr. Baker, Manager of the Consumer Credit DepartFederal Reserve Bank of Minneapolis, reading as follows: "In your letter of July 17, 1942 to Dr. Parry, you Presented certain questions relating to the 'defense housing' exemption in section 8(e) of Regulation W. You indicate that these questions, together with our answers, might be useful as criteria in judging inquiries in this connection which have become numerous since the change in the designation procedure by Order No. 8 of the Administrator of the National Housing Agency. Your quesions are quoted below, followed in each instance by the board's response thereto. 1. May (the exemption in section 8(e)) * * * be used in cases where credit is extended on furnaces or other "listed articles", other than articles listed in Group C of the Regulation?' "Section 8(e) exempts extensions of credit to acquire furnaces or other listed articles, including materials and "vices covered in Group C of section 13(a), if such articles are used in the remodeling or rehabilitation of a structure covered in that section. '2. Must (the 8(e) exemption) * * * be in connection with war workers' accommodations, or may it apply to any project which is located in a defense housing critical area?' "The exemption of section 8(e) covers not only projeet's • living accommodations suitable for , Involving additional 4, ihar workers, but also projects essential to the con1Znued habitation of any structure located in a Defense tolTing Critical Area and meeting certain conditions as c0_,t0cation in relation to war activities, if the other "Qitions essential to the application of the exemption "ist '3. If (such exemption) * * * applies to , iirnaces, would it cover a case where a stoker ls sold to replace one beyond repair?' 527 W31/42 -6- "It would not appear that this type of repair would coae within the provisions of Order No. 8 relating to additional housing accommodations. Moreover, you will note that a project which is exempt because essential to continued habitation covers repair or restoration of living accommodations, without change of design, which if not made would require the occupant to move to other living accommodations. The replacement of a stoker would seem to meet these requirements only very rarely, if at all, since the heating system could be hand-fired. '4. Would (such exemption) * * * cover a situation where a party wishes to replace a workable gas furnace with a coal furnace, or where there is a conversion of a gas furnace into a coal furnace?' question should be answered in the negative, since "This • it does not appear that either the replacement or .7?nversi0n is essential to continued habitation or other-ese involved in a project entitled to exemption. Conrsion of existing heating equipment is, of course, now Pr°vided for by Amendment No. 6 to Regulation Vt., but such 0 , endment is not applicable to the replacement of one type ' furnace with another." 7 Approved unanimously. Letter to the Federal Reserve Bank of Minneapolis, reading as follows: "There is respectfully referred to you for reply the attached letter from Mr. Carl Collins, Belfield, North Dakota. Nr. Collins requests a copy of Regulation W and inf °rmation on its application to charge accounts. He pee ti°ces a letter which he received from a creditor, ermann's of Belfield, North Dakota. "The letter from Determann's to Mr. Collins seems Us to be a particularly objectionable specimen of a letter stating that the Federal Reserve Board Ifmenljs that the customer pay up or make other arrangeext,,8 to the satisfaction of the creditor. This is an Pal :41e example of the kind of case discussed in Mr. varld s telegram of July 20 to Mr. Swanson and, while to A°ue suggestions regarding a possible System program ' eel adequately with this evil are under consideration, 1528 7/31/42 -7- “it is hoped that you will be able to proceed at once to correct Mr. Determann's understanding of the regulation. "Mr. Collins has not been advised of the reference Of his letter to you.” Approved unanimously. Letter to Mr. Hale, Vice President of the Federal Reserve Bank Of San Francisco, reading as follows: "Thank you for your letter of July 15 enclosing a c°PY of a letter received from Silvers of Oakland, California, and an advertisement of promotion items by Harold A.' Co., New York City. "As pointed out in the final paragraph of our letter °f JulY 23, written in reply to your letter of June 25 about a case involving the sale of ten pairs of curtains at the same time, the determination of the answers to questions of this kind depends to a great extent upon the nature of the articles and the methods employed in selling them. We have noted that the advertisement that You sent us says in part: 'The Federal Reserve Board states, you may sell a group of promotions, each selling for less than $6.00 at NO MONEY DOWN and only $1.25 PER 1QEK for the entire gross sum. That means, if 3.rou featured FIVE PROMOTIONS IN ONE AD, each item ls ONLY 25 A WEEK.' :lid, since the offering and sale of several items togeth7!'.on this basis may in some cases cause the items to con:tritute a single group within the meaning of section 12(1) of Regulation WI we have called this item to the attention he Federal Reserve Bank of New York in whose district the cate ncipal office of the advertiser appears to be lo- Approved unanimously. Bank Letter to Mr. Hale, Vice President of the Federal Reserve Of San Francisco, reading as follows: "This is in reply to your letter of July 23 regardg eases in which the Board's present Form F.R. 565, St atement of Necessity to Prevent Undue Hardship, does 1529 7/31/42 -8- "not appear entirely appropriate because of the inclusion Of the word 'instalment' in the form. "It is noted that you have informed an inquirer that Pending revision of Form F.R. 565 by the Board it will be permissible to delete the word 'instalment' from the face Of the form whenever the form is used in connection with the refinancing of a charge account or a single payment loan, and the Board agrees with your position in this matter. "It is expected that the revision of Form F.R. 565 will be taken UD in due course. In this connection, the suggestions contained in your letter of July 23 will be noted, and any further suggestions that you may care to make on this subject will also be welcome. The matter of revising Form F.R. 565 does not seem urgent however, in view of the relatively minor changes by which Registrants can adapt the present form, and some delay may give us the benefit of some experience by Registrants in the use of these forms in connection with charge accounts or single payment loans." Approved unanimously. Thereupon the meeting adjourned. tftgAu--AApproved: Chairman. #.40,JIT Secretary.
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