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(37 4If7' Minutes of actions taken by the Board of Governors of the Pecie,„, lieserve System on Monday, June 2, 1952. The Board met in "ecutlye session in the Board Room at 10:00 a.m. PREEEWr: Mr. Mr. Mr. Mr. Mr. Martin, Chairman Szymczak Evans Powell Mills P°110wing the executive session, Mr. Carpenter, Secretary, Mr. Vest, Gene al C°1111-sel, and Mr. F'olomon, Assistant General Counsel, were called t'/1-e meeting. In accordance with the understanding at the meeting on May 29, the. la Presented a revised draft of letter to the Presidents of all ci 1,, eeral Reserve Banks reading as follows: Gov "In itE letter of February 26, 19)2, the Board of theern°rs stated that it hoped a procedure for approving oollisalaries of officers of the Federal Reserve Banks 101.14 be worked out which would discharge the responsiat t;,Y Placed upon the Board of Governors by Congress and ras.3t4'le same time would permit the boards of directors a ' 11111M amount of latitude. this "In order to facilitate approval of official salaries be.sedYear maximums for various official categories were set, Of uPon the salaries paid during recent years. Severa 139nks have indicated that such maximums have caused 11). ies in individual cases which should be corrected as it s40-1-°11 as feasible. It appeared undesirable to take eaci:I request individually to the Salary Board, but since or 0°14 Possible to present them simultaneously, the Board yoll.rovsernors is prepared to consider such adjustments as Thosegirectors feel are necessary to correct inequitlecbe 13,, adjustments approved by the Board of Governors will bko;:eented to salary stabilization officials with the -tndation that they authorize the increases propold. or est he Board still intends to consider the feasibili y ablishing a salary plan for officers. The formulation 6/2/52 -2-- of such a plan will undoubtedly require considerable time, and, accordingly, it appears desirable to attempt to adjust Promptly any internal salary relationships that are out of line 0 . "Please advise us if you have any cases which in the el)11-°n of your directors require immediate action and in aca case which you submit, please state specifically why an inequity exists." Approved unanimously. Mr. Sherman, Assistant Secretary, joined the meeting at this P°int, • 14r. Vest stated that a memorandum had been rt,ceived from the 13resident dated May 23) 1952, regarding S. J. Res. 122, "to impose limdta115 14ith regard to executive agreements", and S. J. Res. 130, proposin e°/isti tutional amendment "relative to the making of treaties and executive aareements." A memorandum from Mr. rolomon dated may 28, 1952 and c°13Y Or the Proposed resolutions as well as a copy of the memorandum from the l'resicient had been sent to each member of the Board before this meet- Following a discussion, a letter to the President was approved unanimously in the following form: -nas refers to your memorandum of May 23, 1.92, reregard J16 S. J. Res. 122 't() impose limitations with : to proposing a ' ) 130 :ecutive agreenents' and S. J. Res. aZtitutional amendment 'relative to the making of treaties e ecutive agreements.' the 'In view of the nature of the functions performed by lard of Governors and the Federal Reserve Banks, the 6/2/52 -3- does not feel that it would be in a position to offer statement s or comments of sufficient relevancy to warrant 1334k1ng to testify on the joint resolutions. However, the will watch closely developments in this matter so al.dit hat can be prepared to act promptly if the proposed ! eeolutions should be expanded so as to affect Federal Aeeerve operations." J Chairman Martin then referred to a memorandum addressed to him by kr, ve et dated May 29, 1952 transmitting a routine request, dated May 23, l'15nIthe Chairman of the House Committee on Interstate and Foreign Commerce askinry for a report on H. R. 7955, 8 bill to amend the Securities Exchange Act Of 1934 80 as to extend authority for setting margin requirements on certto '`.1111/11isted securities. Mr. Vest stated that two years ago the Board ROB a 13Prolial to a proposal which would extend margin requirements to unlisted securities, that the present proposal was similar in nature to the N ear lier approved by the Board but that it would be more comprehensive itIce r ewer exemptions from the requirement would be permitted by the bill. kt.'ye Et Vent on to say that Mr. Cherry, Legislative Counsel, had been in- members of the Committee's staff that the proposed legislation was -NY to be considered at this session of Congress, and that under the °1relltIletna n e ---e he would recommend that no report be submitted unless a rllrthsr l'equest were received. It was agreed unanimously that the memorandum from Mr. Vest, dated May 29, 1952 would be circulated for the information of the members of the Board, that at least for the time being 6/2/52 no report would be made on the bill, but that should another request be received it would be brought to the attention of the Board promptly. Mr. Thurston, Assistant to the Board, and Mr. Noyes, Director q the 7, '"Nision of Selective Credit Regulation, joined the meeting at this 13011.4. Chairman Martin stated that he felt it would be desirable to itytte 141'. Foley, Housing and Home Finance Administrator, to meet with thez_ ve:rdbefore reaching a decision on what, if any, action of a relaxllEttur -e would be taken in connection with Regulation X, Real Estate Governor Evans stated that Mr. Foley had indicated that he felt 8°11e l'elazation would be appropriate which would not result in much increase ta the volume of housing credit. Governor Evans felt that the 44rcl should reach a decision as to whether it desired to relax the N4lation, adding that in his opinion the down payment requirements for hollaes valued ta excess of $12,000 should be modified so as to reduce the 14'411414 to 33l/3 1 per cent, and per cent compared with the present )0 1) 't term' -4 on houses valued from $7,000 to $12,000 should be smoothed so 61°3 elimitate the "step" arrangement now in effect, the latter action : -4411titg in only minor relaxation. Governor Evans went on to say that 144141% Foley felt it would be desirable to do both of these things, : .41114Q Bugeested relaxation for houses valued at less than $7,000, whereas 4 VT7 6/2/52 -5he ( G°Irernor Evans) would prefer that there be no relaxation in that Price bracket inasmuch as the present down payment requirements were 84a level which, at the recent hearing on the Defense Production Act, Solte Zenibers of the House Banking and Currency Committee considered to bereas onable. Mr. hard. Would 144telnen+ -" 43 Thurston stated the impression had been created that the modify the terms of Regulation X, that Mr. Foley had made which had also been interpreted as indicating relaxation e inTenA. (3r arl041_ this 4 and that he felt it necessary to reach a decision one and make an announcement, preferably before the end of *. Benner, Assistant Director of the Division of Selective M1 4tRegUlation, joined the meeting at this point. There was a general discussion of the existing terms of Regulation Y and of the possible desirability of changes in the regulation or of its suspension, at the conclusion of which it was agreed that the matter would be considered again at a meeting tomorrow. Messrs. Thurston, Vest, Noyes, Solomon, and Benner withdrew at Pc)itt and mi.. elate I'M the Young, Director of the Division of Research and Statistics, room. Before this meeting there had been circulated among the members of 41.11' a memorandum from Mx. Young dated April 28, 1952 relating to • 6/2152 t-411` 7. -6- Ilviai°11 of the Board's index of industrial production, authorized by the Board on March 3/ 1950' In response to Chairman Martin's request, Mr. Young made a state11th respect to the progress of the work in which he said that it vas hoped V45z. that the revision could be completed before the end of this Young went on to say that apart from the need for periodic reviei ° of the index, it had long been recognized that it would be &eeir 1, Ilule to expand its coverage to include, in addition to manufacturm. 1.-attg, activity in the construction, transportation, and possibly the 844”11ce industries. He also said that the usefulness of the data on 1)r°411(rtin --t could be greatly increased by developing new combinations of °IAPtit tvo kor indexes in terms of types of products. Mr. Young felt that these Ilee of development offered an opportunity to make production data "erta at a small cost, that the work should be made a part of the Niaar /1°rk of the Division of Research and Statistics, and that it VotALlb turn to e highly desirable for members of the present staff to these ilr(Mleihs as soon as revision of the industrial production index Vtie c°111Pleted. To this end, he recommended authorization be given to: (1) (2) Continue the work on the revision of the index of industrial production through remainder of 19)2; Undertake, as soon as the revision is completed, the new lines of work outlined above; and 6/2/52 -7(3) Change the appointments of the three employees engaged In the revision work from a temporary definite basis to a temporary indefinite basis. There followed a general discussion of the construction of the Board I 8 irlde industrial production index, the sources of data used in the the Professional and clerical personnel working on the index, ella the annual cost of maintenance of the index. The discussion also t°11chea uPon the use of the industrial production index to the Board, t° 0ther Governmental agencies, and to private industry, as well as 4°11 the- relationship of an index of the physical volume of industrial 1)'°dItetton to the series on gross national product prepared by the bp, -utett of Commerce. e Mr. Young stated during the discussion that .r°Sal to place on a temporary indefinite basis the three workers (14) Mrs. Black, and Mrs. Townsend) who had been employed on reV 4_ °In of the index would involve an annual expenditure of around $8,000 ) atd that it would be of assistance in planning work during the e —43.-Qls to know whether the Board was sympathetic to carrying on Kier, work in perfecting its index of industrial production. During thts discUssion it also was suggested that it would be desirable to h4le th e structure of the Board's industrial production index explained 1 414 ru 14 by members of the Division of Research and Statistics at a ter illeeting of the Board. Following the discussion, unanimous approval was given to Mr. Young's recommendations as set forth qbove. 6/2/52 -8Chairman Martin referred to questions raised by Mr. Young in a Illek°1111141-12n dated April 28, 1952, with respect to a proposed Eighth Annual Burve , J of Consumer Finances to be undertaken in 1953 and to an interim 8111nrey Proposed to be undertaken next month as a means of checking upon the 3:esillts indicated by the Seventh Annual Survey of Consumer Finances cow_ '14cted early this year. The Chairman stated that he felt it would be 484 1, ' e le to defer a decision on this matter until Governor Vardaman e°111c1 b6 Present unless there were pressing reasons for taking action be. tuba that time. Mr• Young stated that his memorandum covered two points, namely, the 611"th Annual Survey to be undertaken next year and the question whether 841 illterim survey should be undertaken this sunnier for the purpose of verif Yine the results of the 1952 survey or checking to see whether ccnNler 8 hacl changed their views in recent months. Mr. Young went on to ay 'hat ir the interim survey were to be undertaken in July, a decision should be reeichecl 48 quickly as possible inasmuch as planning and organization of tba lro .4°111c1 require decisions both at the Board and at the University of 141chige.11 *which would require some little time. or Mr. Young also said that it 1Neted that if the interim survey were made it could be paid for out authorized for the Seventh Annual Survey which totaled $160,000 '°O Under contract plus $10,000 contingency funds). Ett 113r 0 There followed a discussion of the use made by the Board as well there of the surveys of consumer finances conducted in recent 6/2/52 -9143.1134uring which it was agreed that the matter would be taken up at a 3"tngnext week. Mr. Young then referred to a proposed series of data relating to real. estate credit discussed at the meeting of the Board on January 2, 1951. Mr. Young stated that preliminary work relating to the technique Of deli el°Ping better statistical information on real estate credit had Progre ssed sufficiently to discuss the matter at a President's Conference Vith • view to ascertaining their views concerning the desirability of collect series. The Presidents felt it would be desirable to such ri glares on a sampling basis and that the proposal would not be so 144.4fl These c)Ille on reporting agencies as to present much of a problem. vieve haa been expressed several months ago, Mr. Young said, but he recently hed been 4 elven to understand by President Erickson of the Boston Bank that 4 he el f—t it still would be desirable to collect figures of real estate • activity in inadequate, view of the fact that existing data were ' 4 81° uecomjiig available, and of somewhat doubtful reliability. Mr. 16114 IftAt on to say that several additional months of planning work would the quesbe Ileecied if the series were undertaken and that he was raising tit:14 Vhether the or whether, Board felt any further work should be done abandon the pro1414E*elistille circumstances, it would be preferable to "et. Governor Powell stated that he felt it would be desirable to WO_ 6/2/52 -10- 1)r°eeed with the work looking toward collection of better data on real eStEi.te credit activity. stlgee During a general discussion, Chairman Martin that Governor Powell and Governor Mills be appointed to look Irto question and submit a recommendation to the Board. This suggestion was approved unanimously. At this point all of the members of the staff uith the exception u me 861's, Carpenter and Sherman withdrew, and the action stated with reeDec t to each of the matters hereinafter referred to was taken by the liC)arta. Minutes of actions taken by the Board of Governors of the Federal Reserve System on May 29, 1952, were approved unanimously. Letter to Mr. Neely, Federal Reserve Agent, Federal Reserve Bank or Atiatt a) reading as follows: "In accordance with the request contained in your tel th'earam of May 28, 1952, the Board of Governors approves e aPpointment of 0. E. Davis, Jr., as Federal Reserve ril/t18 Representative at the Nashville Branch, effective to e 1, 1952, with salary at the rate of $51 000 per annum, 811Feeed Mr. Stuart H. Magee. mz. T1.1is approval is given with the understanding that pa,avlS will be placed upon the Federal Reserve Agent's va4 roll and will be solely responsible to him or, during a ,a,,ealleY in the office of the Federal Reserve Agent, to the *Zistant Federal Reserve Agent, and to the Board of Gayerfor the proper performance of his duties. When not tierged in the performance of his duties as Federal Reserve ?4-1ti e Representative he may, with the approval of the eral Reserve Agent or, in his absence, of the Assistant r 1_0(12 72/52 -11- "Ftederal Reserve Agent, and the Vice President in charge of he Nashville Branch, perform such work for the Branch as not be inconsistent with his duties as Federal Reserve iiEent's Representative. Davis should execute the usual oath of office which should be forwarded to the Board." Approved unanimously. Letter to Triast Nir. Myron B. Griswold, Assistant Treasurer, The Few York °P1P8nY, 100 Broadway, New York, New York, reading as follows: "This will acknowledge your letter of May 21, 1952, stating n that on March 15, 1922, your bank applied for ',1eraission to accept drafts for the purpose of furnishing ' :0-ilar exchange but that you are unable to find any specific FePlY to such letter, although you have been advised by the e,deral Reserve Bank of New York that your institution appears 0, list of hanks which have such power. You have requested nfirmation that your bank has been granted permission to iaccept drafts or bills of exchange for the purpose of creatrig dollar exchange. "According to the Board's records, in a letter dated March 15, 1922, Mr. Frederick W. Walz, Treasurer of your stated that the Federal Reserve Bank of New York had le\rised that it was without record of your having received e nlission to accept drafts and bills of exchange up to 100 rels cent of your capital and surplus. Although the letter bitilested authority for permission to accept drafts or ' 11.14 s of exchange up to 100 per cent of capital and surplus, Bo also for the purpose of furnish-lag dollar exchange, the ofTl's letter of March 22, 1922, in reply indicated approval per cent of 'he application for permission to accept up to 100 ti Your Paid-in capital and surplus, pursuant tc the recommenda14 of the Federal Reserve Bank of New York through which the er dated March 15, 1922, was transmitted. It is assumed : f3t' further authority was not considered necessary in order ;Your bank to accept drafts or bills of exchange for the 1)11 beel)°8e of creating dollar exchange as this authority had 11 granted on February 8, 1921. "In a letter dated February 9, 1921, Mr. W. W. Hcxton, eeret por ary of the Federal Reserve Board, had advised Mr. Hurry Nei,,Th, Treasurer, The New York Trust Company, 26 Broad Street, ."31°4 City, as follows: 1 6/2/52 -12'Referring to your letter of February 7, 1921, the Federal Reserve Board, at its meeting on February 81 1921, approved the application of The New York Trust CoraDany, New York City, for permission to accept drafts, to run not longer than ninety days, drawn upon it by banks or bankers in the following countries: Nicaragua British Guiana Argentina Panama Bolivia Peru Brazil .F an Salvador French Guiana Rico Porto Chile Uruguay Domingo Santo Costa Rica anezuela Trinidad Guatemala Colombia Cuba Dutch Guiana Ecuador Honduras Paraguay British Honduras apthe approved 'At the same time the Board also Plication of The New York Trust Company, New York City, for permission to accept drafts, to run not longer than ninety days, drawn upon it by banks or bankers located in Australia, New Zealand and other Australasian dependencies, for the purpose of creating dollar exchange. 'The Board, of course, reserves its right to modify Or, on ninety days' notice, to revoke its approval, either as to any particular member bank or as to any country.' e rr date of February 10, 1921, Mr. Forsyth acknowledgcd re'Ll3t. of the letter. th ,."According to the records of the Board, the foregoing aualjjization is still in effect. Accordingly, your bank is f Ilorized to accept drafts or bills of exchange for the purpose Of urnishing dollar exchange as required by the usages of trade thai4: /3uch countries, dependencies, or insular possessions of the el.2; 1 6red States as may have been designated by the Board of Govthe°re, subject to the provisions of the Federal Reserve Act and , Regulation C issued pursuant thereto. 13?ara'r the :Enclosed is a list of the countries with respect to which the toard of Governors has found that the usages of trade require furnishing of dollar exchange." Approved unanimously, with a copy- to Mr. Wiltse, Vice President, Federal Reserve Bank or New York. re,3, Iviemorandum dated May 281 1.92, from Mr. Chase, Assistant Eolicitor, trle is follows: V2/52 -13- "The Federal Reserve Bank of an Francisco wrote the on April 9, 1951 stating that information already °bteined indicated that four automobile dealers and two inance companies in and around San Francisco were working esther to evade Regulation W and to conceal the evasions. Reserve Bank asked for orders for investigation so that 1141 information could be developed. tio, The investigation centered around Public Loan Corporaand one automobile dealer, and these cases were referred . .▪to the Department of justice. It was not found to be necessary Pursue the other cases, and nothing further has been done recomTaended that twIllthrespect to them. Accordingly, it is Board's files with respect tc them be closed. They are: '• reside Finance Company, MCCamey and Guy Motor Sales, George Plichcih, doing business as Reliable Used Car Co., and C. Lisle, doing business as Lisle Motor Co., San Francisco, B0Et f Approved unanimously.
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