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925 A meeting of the Board of Governors of the Federal Reserve 8Ystem was held in Washington on Thursday, June 24, 1943, at 10:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Ransom, Vice Chairman McKee Draper Evans Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman Mr. Thurston, Special Assistant to the Chairman Mr. Smead, Chief of the Division of Bank Operations Mr. Dreibelbis, General Attorney Mr. Vest, Assistant General Attorney Mr. Thomas, Assistant Director of the Division of Research and Statistics Yr. Wyatt, General Counsel There was a further discussion of matters which might come up tOr Itli scussior. with the Presidents of the Federal Reserve Banks while they are in Washington next week. Chairman Eccles joined the meeting at 12:45 p.m., and at 1:15 the meeting recessed and reconvened at 3:30 p.m. with the same atterdan__ ';e as at the close of the morning session except that Messrs. Nrila 8 and Wyatt were not present. At the conclusion of the discussion of matters to be considered th the Presidents, it was understood that a memorandum of the informal cotlel 11810ns reached would be prepared for the use of the members of the during the meeting with the Presidents. In connection with the consideration of the extension of the exg self-insurance agreement of the Federal Reserve Banks, it was 926 6/24/43 -2Ilildtersto-d that Mr. Smead would make available to the Presidents' Confere nee Committee on Insurance at its meeting in Chicago this week a e()r)f of Mr. Dreibelbist memorandum of June 16, 1943, relating to the alith°l'itY of the Federal Reserve Banks to extend the existing agreekent. At this point Messrs. McKee and Smead left the meeting to catch 4 trAi, -"' for Chicago. Mr. Draper called attention to bill H.R. 3022 which was intro- chIceA . in the House of Representatives on June 22, 1943, by Representa' tive MaY and referred to the Connittee on Military Affairs, and which I'laS . 'eSigned to authorize the Secretary of War to use funds made avail- able to the Tar Department in connection with the termination of War ment contracts under such regulations as the Secretary might preaelu e and 1Nithout regard to any provision of law relating to the making Perfol, ""anoe, amendment, or modification of contracts, for advance or P41.4.1 payments to contractors with the War Department, or to subcontractors or suppliers directly or indirectly under such War Department or for loans or guaranties of loans to such contractors, Ilbeontractors, or suppliers, or for the purchase of the rights of such )ttractors, subcontractors, or suppliers to such amounts certified by tit4n1 tc) be due in connection with any such termination and upon such rIzle as the Secretary might permit by such regulations. Mr. Draper 14ecl for discussion the question whether any action was called for by the tn in connection with the bill, and there was agreement on the °I* the members present that inasmuch as the Board had not been 92'7 6/24/43 _3- 4sked for a report on the bill no action was called for at this time. Draper felt that if the Board were called upon to express an opinloll it might take the position that it would have no objection to the el:Lting of the authority provided it was made clear that it was to the settlement of war contracts and not for the purpose of profunds for conversion of production facilities from war- to Peacet e oPeration. At this point Messrs. Thurston, Dreibelbis, and Vest withdrew t1:1°Z the Meeting, and the action stated with respect to each of the 141;ters hereinafter referred to was then taken by the Board: The minutes of the meeting of the Board of Governors of the Red- R "erve System held on June 23, 1943, were approved unanimously. Memorandum dated June 19, 1943, from Mr. Uorrill, reading as t011ows: "The tax withholding under the Current Tax Payment Act 7 t 1943 becomes effective July 1, 1943, and the Board, as an 1111310Yer, is required to withhold a certain proportion of the helaries of its employees and to pay once a month such withti° ,1(iinge to an authorized depositary and financial agent of 'le United States Treasury. 'Minder the provisions of the Act the employer is given the option, in lieu of making an exact computation, of makdeductions in accordance with Wage Bracket Withholding ' h ules. The Act also provides that the employee must fur;r1171 the employer with a Withholding Exemption Certificate illving his marital and dependency status, and, upon a change a such status, the employee must furnish the employer within asPecified period a new certificate. The Act gives the emcTer the option of selecting (with certain limits) the wage veYzent With respect to which the new certificate shall take "rect. "It is recommended that the Board adopt the optional Wa.c. 40 Bracket Withholding according to the applicable table ,. 44tRined in the Act, and that any new Withholding Exemption tificate relating to a change in marital or dependency ej 't1-1s of an employee be made effective with respect to wages 928 6/24/43 -4- "Paid for the first pay roll period comencing after the receipt of the new certificate. "It is also recommended that the Board approve the attaeheci memorandum to employees respecting the tax withholding." Approved unanimously. The memorandum to the employees was in the following form: "Beginning with the pay roll period July 1 to 15, 1943, Pursuant to the provisions of the new 'Pay-As-You-Got income teX law, the Board is required to withhold a certain propor,orl of each employee's salary to be turned over to the United , t States Treasury. The withholding is not a new tax but is to be applied to the payment of your regular Federal Income and Victory tax. "Under the Act the employer is given the option, in lieu of making an exact computation, of making deductions in accordance with Wage Bracket nthholding Tables as set forth in the Act. The Board will, therefore, withhold the tax in accordance with the attached table. "The law requires each employee to furnish his or her employer a signed Withholding Exemption Certificate relating 60 the employee's marital and dependency status for the purP?" of determining the amount of tax to be withheld. You Znould, therefore, complete the attached WithholdingExemptio A nCertificate--Form W-4, and return it promptly to the ccounting Section of the Secretary's Office, Room 1021. "Particular attention is called to the part of the instructions accompanying the Employee's Withholding Exemption Certificate relating to a change in marital or dependency Status. within 10 days following such change in status a n i,e ,w certificate should be completed and sent to the AccountSection. The new certificate will take effect beginning Z;I-th the first pay roll period commencing after the receipt teereof. A coey of the form may be obtained upon request to he Accounting Section. "For your information, there is reproduced on the reverse side of the table referred to above a 'Notice to Emfrom the Commissioner of Internal Revenue." Nev Letter to Mr. Gidney, Vice President of the Federal Reserve Bank IY°rk, reading as follows: "In accordance with the request contained in your letter of JUn' 171 1943, the Board approves the appointments of 929 6/24/43 -5"Arthur W. Mitchell William H. Spangler as examiners for the Federal Reserve Bank of New York, the aPPointments of Roland 0. Binet Rudolph A. Huebner William E. Shackleton as assistant examiners, and the desination of Merrill R. Tarnstrom as a special assistant examiner. Please advise us of the dates upon which the appointments of the examiners and as— sistant examiners become effective. "With reference to the indebtedness of Mr. Spangler to two nonmember hanks in Pennsylvania, it is assumed that !,hese obligations will be placed on a regular reduction basis, lf such is not already the case." Approved unanimously. Telegrar:. to Mr. Gilbert, President of the Federal Reserve Bank or Da lLte, reading as follows: "Board approves payment of compensation and expenses to James C. Dolley, as Economic Adviser of the Federal Re— serve Bank of Dallas in accordance with the arrangement outlined in your telegram June 21." Approved unanimously. Letter prepared for the signature of Chairman Eccles to Honorp 1e aul V. McNutt, Chairman of the War Manpower Commission, reading t°11.0, "Upon my return to Washington, I find your lettcr of Jun e 18 advising us that the War Manpower Commission has gnated the operations of the Federal Reserve Banks and uranches an essential activity. "This will be of great help to the Federal Reserve 8ank,3 in the discharge of their responsibilities and I can 4 a ,sure you that the action of your Commission is appreci— ved bY the Federal Reserve Bans as well as by the Board 1 Governors." Approved unanimously. 930 6/4/43 —6— Letter to Mr. Paddock, President of the Federal Reserve Bank or B°aton, reading as follows: "Reference is made to your letter of June 7, 1943, submitting the request of the Norfolk County Trust Company, , I rookline, Massachusetts, for permission to establish two °ranches in Walpole, Massachusetts, in connection with the Purchase of assets and assumption of deposit liabilities of the Walpole Trust Company. "In view of your recommendation and the information furnished, the Board approves the establishment and operation two branches in Walpole, Massachusetts, by the Norfolk uounty Trust Company, Brookline, Massachusetts, provided the Plan for the purchase of assets and ta..14.tion of deposit iiities of the Walpole Trust Comany is consumnedsubanlally as prouosed, the prior approval of the appropriate 163tate authorities is obtained and couns.:1 for the Reserve ank is to be satisfied as to the legal aspects involved." Approved unanimously. Letter to "The First National Bank of Marietta", Marietta, reading as follows: "The Board of Governors of the Federal Reserve System • given consideration to your application for permission exercise additional fiduciary powers, and grants you au°ritY to act, when not in contravention of State or local t , 17) as trustee and registrar of stocks and bonds in connec8c1°n rith the Water Revenue Anticipation Certificates - Mayor Council nnd Board of Lights & Water Works, City of Marietta, vrrtlia, the exercise of such rights to be subject to the prosi°ns of the Federal Reserve Act and the regulations of the °ard of Governors of the Federal Reserve System. "This letter will be your authority to exercise the ad,.'10nal fiduciary powers granted by the Board pending the t-eParation of a formal certificate covering such authorizalOns which will be forwarded to you in due course." has t Approved unanimously. In accordance with the action taken at the meeting of the Board on June 17, 1943, and the Procedure suggested in the Board's letter of June 19, 1943, to Mr. Carstarphen, General Counsel of the Federal Reserve Bank of St. Louis, the issuance of the following order was approved by unanimous vote: 931 6/24/43 -7"THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM TASHINGTON, DISTRICT OF COLUMBIA Regulation W - In Relation to Missouri St. Louis Mitchell Clothing Company East St. Louis Illinois Mitchell Clothing Company Illinois Granite City Mitchell Clothing Company Missouri Mayer's Clothing Company St. Louis East St. Louis Illinois Mayer's Clothing Company ORDER SUSPENDING LICENSE "Louis H. Mitchell, having apeared in connection with alleged violations of Regulation W of the Board of Governors of Federal Reserve System (hereinafter called the 'Board'), and 'laving waived notice and opportunity for hearing before the Board ;e-Ild consented to the issuance of this Order for the suspension of 'as license, and having agreed that: 1. He was at all times mentioned herein and now is engaged in the business of making instalment sales and char:e sales of listed arbicles through stores Which he owns and operates under the following trade names in the folloring places: !itchell Clothing ,,ComPany Missouri 615 North Seventh Street St. Louis L utchell Clothing Company 115 Collinsville Avenue East St. Louis Illinois Mitchell Clothing ,Company Granite City Illinois 1316 Nineteenth Street maYer l s Clothing St. Louis m Company Missouri 622 Delmar Boulevard aYert s Clothing C°mPany 111 Collinsville Avenue East St. Louis Illinois 2. He duly filed the Registration Statement required by the Board's Regulation W and was at all times mentioned herein and nov is subject to such 1*-gulation. 3. Before and after October 6, 1942, and continuing through May 17, 1943, he pursued a course of dealing in contravention of Regulation W and negligently failed to comply 1,1ith same. Such negligent violations include (a) using charge accounts as a means of circumventing the down payment requirements of the Regulation, (b) improper and inadequate preparation and delivery of Statements of Transaction, (c) accenting insufficient down payment on instalment sales, (d) granting longer terms than permissible on instalment sales, (e) selling listed articles in defaulted charge accounts, and (f) selling listed articles in accounts which furported to be charge accounts but l'ere in fact instalment accounts; and 932 6/24/43 "The said Louis H. Mitchell having further agreed that llring the period of suspension of his license under this er he will close all of the aforesaid stores and disconnue all sales including those for cash; that upon resu:-.p1.10n of business following the termination of this suspension period, he will conform his business to the re,-mirer:lents of the Rerrulation; and that he will not in any manner ?.n his future solicitations or advertiserlents for business fldicate or imply that he will grant terms which would be ln contravention of the Regulation: "Accordingly, the Board having considered the consent, l'sPresentations, and agr-r-fients of the party named, and uncaler authority of section 5(b) of the Act of October 6, 1917, amended, and the Executive Order of the President No. 8843, hereby orers: 1. That the license of said Louis H. Mitchell, issued pursuant to the Board's Regulation V be and the same is hereby suspended for the :eriod commencinq at 12:01 a.m. on July 4, 1943, and ending at 12:01 a.m. July 12, 1943, unless said period is sooner terminated by the Board: Provided, that this Order, during the suspension period, shall not prohibit (a) the carrying on of regular office and accounting work, (b) the receipt of any payments through the mails or through the normal and usual collection facilities which have heretofore been maintained off the orewises of said stores, and (c) the making of payments of any obligations, including obligations to employees for salaries or Wages. 2. Any terms used in this Order that are defined in Regulation VT shall have the meaning therefl them. 8 84. _ mBYorder of the Board of Governors of the Federal Reserve (sE e) this 24th day of June, 1943. (Signed) Chester Morrill Secretary "I, the do hereby confirm undersigned, Mitchell, Louis H. the or;agreements and representations set out in the aforesaid ' er, and consent to its issuance. (Signed) Louis H. Mitchell" In connection with the above action, unanimous ap_)roval was also given to the following statement, with the understanding that it would be handed to the press tomorrow morning for immediate release and that it would be wired to the Presidents of all the Federal Reserve B-J1ks, 933 6/24/43 -9except St. Louis, and to the Managing Directors of all Branches with the statement that they were at liberty to give the release such local publicity as appeared to be desirable: "The Board of Governors of the Federal Reserve System as suspended, for one week fro-rt July 4 to July 11, both dates flelusivel the license under the Board's Regulation TV, of lOuls H. Mitchell, who operates the Mitchell Clothing Co,,pany, .46 North Seventh Stret, St. Louis, Ifissouri, Mitchell ClothCompany, 115 Collinsville Avenue, 7rst St. Louis, Illinois, lw..9-t?hell Clothing Company, 1316 Nineteenth Street, Granite City, .-11 -nois, Mayer's Clothing Corapany, 622 Delmar Boulevard, St. Lruls, Missouri, and Mayer's Clothing Company, 111 Collinsville 'venue, East St. Louis, Illinois. .„ "The Board, acting under authority of section 5(b) of Act of October 6, 1917, and the President's Executive nder No. 8843, ordered the suspension of the license because lure to comply with the :,rovisions of Regulation VJ with a:_sPect to credit sales. All of the terms of the Order were ! il r d to by the Registrant, who has given his assurance that will u" hereafter comply with all the provisions of the Recula"The violations included two, of a general nature: y (1) The use of charge accounts as a means of circumenting the down payment requirements of the Regulation and (2) Incomjet, -ness of the Statement of Transaction. ,Specif c" violations included: Insufficient down payment on instalwent contracts. t4) The granting of longer terms than permissible on ris+ ualment obligations. (5) Sale of listed articles into defaulted charge ace°14 , Its, and Sale of listed articles in accounts which purrted to be charge accounts but were in fact instalment a ee(3unts. Close::Under the Order, the doors of the several stores will be bIlt u. for business during the period of suspension of the license, owe,the terms of the Order do not prevent payment of obligations wa4:bY the Mitchell Clothing Company, including salaries and to ey,ployees, -nd normal accounting o;- erations and collec,u Letter to Mr. Attebery, Vice President of the Federal Reserve St. Louis) reading as follows: 934 6/24/43 -10"Reference is made to your letter of June 17 in which 7.°11 say that you have oermitted a re)resentative of the Department of Justice to examine a card file which you have 2 1 1 Your Bank containing information taken from Registration dtatements filed under Regulation in other Federal Reserve BanIcs. t . "In view of the fact that this card file does not conaln any information which the Department of Justice representative could not have obtained from Registration Stateents on file in other Reserve Bnii-s, there is no objection o Per-itting him to examine the card file." Approved unanimously. Letter to Mr. W. C. Nesbitt, President of American Auto Appraisal, etrXt 3 Michigan, reading as follows: "Reference is made to the Board's letter to you dated December 2, 1942, continuing the designation for the year 1943 of the American Auto Appraisal for use, in the territory 8Pec1fied in the Board's letter of March 21, 1942, for pur" P es of the Board's Regulation has been noted that the latest issue of your aide , 0/flitted quotations for many 1935 model cars. -Che effect this change will be to rlike your guide unavailable for se Under Regulation V7 in connection with credit sales of 35 model cars, and Registrants subscribing to your publicaet°fl will need to have access to.some other guide when they 'end credit for 1935 model cars. cal, In view of this situation, We may wish to ask you to n atteiltion to the status of the 1935 model cars in that of your guide that refers to Regulation W, but before ing so 1:e. would like to have your reaction to such a suggestion. . "Incidentally, it should be mentioned that the elimlnt ch io, - ol the 1935 model prices is one of the kinds of a44 : 8nge3 that the Board would like to have brought to its • ention in advance." hes ”Tt i J grt Approved unanimously, together with a Similar letter to Mr. T. R. Leonard of the Northwest Publishing Co., seattle, v -9hington, referring to the designation for the Year 1943 of Northwest Used Car Values for purposes of the Board's ReP-ulation W. 6/24/43 Thereupon the meeting adjourned.
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