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Minutes of actions taken by the Board of Governors of the Federal Reserve System on Tuesday, June 3, 1952. The Board met in executive session in the Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Martin, Chairman Evans Powell Mills Robertson At the conclusion of the executive session the following members or the staff were called into the meeting: Mr. Mr. Mr. Mr. Mr. Carpenter, Secretary Sherman, Assistant Secretary Thurston, Assistant to the Board Vest, General Counsel Young, Director, Division of Research and Statistics Mr. Noyes, Director, Division of Selective Credit Regulation Mr. Benner, Assistant Director, Division of Selective Credit Regulation Governor Evans stated that Mr. Noyes had talked further with the oftice (If Mr. Foley, Housing and Home Finance Administrator, since the tIleetin g Yesterday concerning possible changes in the terms of Regulation X3 Re al Estate Credit, and that as a result of the various discussions that h ad been had to date he (Governor Evans) would be inclined to recomr4s4d that the Board amend the regulation so as to (a) relax the terms on holls es valued at more than $12,000 along lines previously discussed to 151'°Iride for a maximum loan value of 66-2/3 per cent on houses selling for °1411' 422,500. (b) smooth the schedule for credit permitted on houses valued 6/3/52 -2between certain $7,000 and $12,000, which would result in minor relaxation at points in this price range; (c) make no change in the schedule aPPlicable to houses valued at less than $7,000; and (d) increase the loan value on commercial construction to 66-2/3 per cent. Governor Evans dded that except for the third suggestion, Mr. Foley had indicated he was agreeable to all parts of this proposal but that in the case of houses vellied at less than $7,000 Mr. Foley felt some relaxation would be desirables As a result, Governor Evans said, while he would prefer that there be no r elaxation in houses valued at less than $7,0001 if Mr. Foley strongly Prete rred either suspension or relaxation in that price range he (Governor Ellane.\ "would suggest that the regulation be suspended entirely for such }bus 8 on the grounds that it would be better not to cover them at all than it WOUld to indicate down-payments as low as 7 per cent, as suggested bykr * Foley last week. Chairman Martin stated that he did not feel it desirable to take axy "ion at this meeting since he would like to have Mr. Foley meet with tile 8 oard and express his reasons why the changes he recommended should be raacie in the real estate credit regulations. Chairman Martin also noted that r, 'crvernor Szymczak would be able to attend meetings of the Board later this week, and said that he felt it desirable to have as many of the Board enlbfar 8 present as possible when action was taken. 6/3/52 -3There followed a general discussion of the basis for action to rela-x or suspend the regulation, during which views were expressed that while the economic situation might not call for relaxation of the regulati°n at this time neither did it call for retention of terms which were as restrictive as those imposed in October 1950 for houses selling in the IIPPer Price brackets, or in February 1951 for commercial building. It Wa8 also stated that the materials supply situation had changed consider- 134 over the past several months and, whereas a year ago there were shorta4 88 of certain materials, surpluses of virtually all building materials ' 4" existed or were in prospect with the possible exception of copper and aluminum. It was also stated that as a matter of equity within the regulatio 4 some relaxation for houses selling in upper price brackets would A„ 60 be called for and such action should not be deferred. Mr. Thurston emphasized the need for reaching a decision and g an appropriate announcement promptly, preferably this week, as to "hethe, - or not the regulation was to be changed, pointing out that the trap ression had been created both by Chairman Martin's testimony on the Deter,. -'4(1 Production Act extension and by statements of Mr. Foley that ative consideration was being given to a modification of the regulation. that At the conclusion of the discussion, Chairman Martin suggested no action be taken toward changing the regulation at this meeting 6/3/52 with the understanding that he would try to arrange for Mr. Foley to meet lith the Board for a discussion of the matter tomorrow. This suggestion was approved unanimously. There Was presented a letter to Mr. Leedy, President of the Federal Reserve Bank of Kansas City, reading as follows: "The Board of Governors approves the payment of salaries to the following officers of the Federal Reserve Bank of Kansas City and its Branches for the period June 1, 1952, through MaY b 31, 1953 1 at the rates indicated, which are the rates fixed 1 the Board of Directors as reported in your letter of May 221 Annual Title 2,00o H. G. Leedy President Henry 0. Koppang First Vice President 18,000 16,200 D. W. Woolley Vice President 12,000 G. A. Gregory Vice President 11,000 M. W. E. Park Vice President 13,000 Clarence W. Tow Vice President 8,000 P. A. DebusCashier E. U. Sherman Assistant Vice President 8 9: ( E. D. Vanderhoof Assistant Vice President 0 ) J.T. Boysen President Vice Assistant Assistt an Cashier Cravens 7,000 J. T. lhite Assistant Cashier 7,500 J. S. Handford Cashier Assistant C. L. Bollinger 8,900 Auditor 9,000 L. F. Mills Chief Examiner Denver Branch 8,800 F. H. Larson Cashier 7,800 H. L. Stempel Assistant Cashier 7,800 Hubert G. Duck Assistant Cashier Oklahoma City Branch R. L.13,800 Vice President Mathes F. W. 8,800 Cashier Alexander 7,800 F. R. Fritz Assistant Cashier Fred C. Schmocker Assistant Cashier 7,700 7 ,8..91= C. A. 6/3/52 — — Annual Salary Title Branch Omaha $ 15,000 L. H. Earhart Vice President J. K. Friedebach Cashier 8,800 U. S. Berry 7,900 Cashier Assistant 7,700 William P. Doran Assistant Cashier "As indicated in the schedule attached to your letter, the Board of Governors has previously approved the payment of salaries to Vice Presidents John Phillips, Jr. and G. H. Pipkin, at the rates of $11,000 and $13,000 per annum, respectively, for the Period ending June 30 1952." "Name Approved unanimously. There was also presented a letter to Mr. Gilbert, President of the Federal Reserve Bank of Dallas, reading as follows: "Reference is made to your letter of May 261 1952, requesting the Board's approval of the payment of salaries to the officers of the Federal Reserve Bank of Dallas for the year beginning June 1, 1952. "The Board of Governors approves the payment of salaries to YOU, as President of the Federal Reserve Bank of Dallas, and to i r. W. D. Gentry, as First Vice President, for the period June 1, 952, through May 31, 191j, at the rates of $25,000 and $18,000 ' Per annum, respectively, if fixed by the Board of Directors at such rates. . "The Board of Governors also approves the payment of sala_f,2:es to the following officers for the period June 1, 1952, 'Fough May 31, 1953, at the rates indicated, which are the rates fixed by the Board of Directors as indicated in your letter. Annual Salar7 LIAMe Title ,i---R. $ 15,000 n B. Coleman Vice President 14,000 Vice President E. B. Austin 14,000 Vice President 1;',. G. Pondrom 14000 , H. Irons President Vice 11,500 Mac C. Smyth Vice President 10,600 J. L. Cook Vice Pres. & Cashier Morgan & President Vice Asst. an H. Rice 10,200 Secretary of the Board W10 6/3/52 -6- Annual Salary Title $ 6,900 Assistant Cashier 8,300 Assistant Cashier 8,000 Assistant Cashier 8,000 Assistant Cashier 7,500 Assistant Cashier 6,000 Assistant Counsel 81400 Chief Examiner Houston Branch 11,500 W. H. Holloway Vice Pres. in Charge 7,800 H. K. Davis Cashier 6,900 B. J. Troy Assistant Cashier San Antonio Branch 11,500 W. E. Eagle Vice Pres. in Charge 7,200 A. E. Mundt Cashier 6,600 F. C. Magee Assistant Cashier Branch El Paso 9,600 C. M. Rowland Vice Pres. in Charge 6,900 A. E. Russell Cashier 6,300 Assistant Cashier T. C. Arnold "As indicated in your letter, the Board of Governors has Previously approved the payment of salaries to Mr. G. R. Murff„ as General Auditor, and to Mr. Harry A. Shuford, as Vice Presiotent and General Counsel, at the rates of $131000 and $121000 Per annum, respectively, for the period ending May 31, 1953." "Name Howard Carrithers W. D. Waller T. W. Plant H. W. Kaman E. H. Berg George F. Rudy N. B. Harwell Approved unanimously. At the meeting on May 22, 1952, consideration was given to a ciralt of letter which it was proposed would be signed jointly by the Chaira tan of the Board, the Chairman of the Federal Deposit Insurance . eorrt r ration, the Comptroller of the Currency, the President of the Nati. n,„ "Association of Supervisors of State Banks, and the President of the AMer. -lean Bankers Association and sent to the chief executive officer or e effort to stimulate ach bank in the United States as a part of the 1011 6/3/52 -7- interest in the Treasury's savings bond program. Following that discus.on, the draft of letter was referred to Mr. Thurston for revision along lines suggested by Governor Powell. Before this meeting a revised draft had been circulated to the nianthers of the Board, with the understanding that if the Board approved the draft) it would be discussed by the Treasury Department with the Federal Deposit Insurance Corporation and the Comptroller of the Currency. G°Irern°r Powell stated that he would recommend that the Board indicate to the Treasury Department that it approved the letter in the following N7D11: 'Your business, and ours, is to face financial problems squarely and solve them realistically. This has led to a ,4Y-ae-you-go and save as-much-as-you-can policy during the ) ! rfense emergency. This policy has paid dividends --more than 15 months of relatively stable prices in the face of rising defense expenditures. "As essential spending for our defense continues to rise, 1;?intaining a pay-as-you-go program becomes increasingly difficult. We must therefore continue to encourage the upward trend in savings. This is the people's solution to the roblem of inflation. 4.1_ "United States Savings Bonds play an important part in 'us public's savings program. Savings Bonds can be sold and le being sold. Bankers have played an indispendable role in ls great thrift program. More than 57 billion dollars are ?w 1 outstanding,--substantially more than at the end of 1945. About 2 million more payroll savers were signed up in 1951 by concerted efforts in business and industry. Sales of small denomination E bonds were up almost 25 per cent in the first months of 1952. "In order to show needed improvement in sales of the arger denominations, we solicit the same effective support tf C)1 6/3/52 -8"by bankers to inform their customers as to the features of the improved Savings Bonds Series E0 H, J, and K. The public should be informed that these series now carry iiiProved investment yields which make them more attractive to larger as well as smaller denomination buyers. 'We endorse the Treasury's new Savings Bonds Program and we urge every banker to enlist personally in an intensified effort to promote the sale of these new and improved bonds.11 Approved unanimously. At this point all of the members of the staff with the exception "Ifessrs. Carpenter and Sherman withdrew, and the action stated with l'esPect to each of the matters hereinafter referred to was taken by the 80arci: Minutes of actions taken by the Board of Governors of the Pecier al Reserve System on June 2, 1952, were approved unanimously. Memorandum dated May 23, 1952, from Mr. Young, Director, 1)1114 4-011 of Research and Statistics, recommending that the resignation ' ot N ancY A• 'Nam, Clerk-Typist in that Division, be accepted to be "etive in accordance with her request at the close of business 13, 1952. Approved unanimously. Letter to Mr. Neely, Federal Reserve Agent, Federal Reserve or Atlanta, reading as follows: "In accordance with the request contained in your letter of May 261 1952, the Board of Governors approves 6/3/52 -9"the payment of salary to Genevieve M. Barnett, Alternate Assistant Federal Reserve Agent, at the rate of $5,100 per annum, effective June 1, 1952." Approved unanimously. Letter to Mr. Diercks, Vice President, Federal Reserve Bank of Chicago, reading as follows: "Reference is made to your letter of May 261 1.952, !nelosing a certified copy of a resolution adopted by the :!eard of Directors of the Chesterton State Bank, Chesterton, -Ladianal signifying its intention to withdraw from memberin the Federal Reserve System and requesting waiver of theSiX monthst notice of such withdrawal. It is understood _hat the bank has applied to the Federal Deposit Insurance ''orporation for continuance of insurance of its deposits. w "In view of your recommendation, the Board of Governors t allies the requirement of six months' lotice of withdrawal. 'ccordingly, upon surrender of the Federal Reserve Bank stock issued to the Chesterton State Bank, Chesterton, Indiana, you are authorized to cancel such stock and make appropriate re;,d thereon. Under the provisions of the Boardte letter of 4.!bruary 19, 1937 (F.R.L.S. #35)8) the bank may accomplish termination of its membership at any time within four Tnths of the date of this letter. If a longer period is quired the bank should request an extension of time. Please ' vise when cancellation is effected and refund is made. The certificate of membership issued to the bank should be obtained, if possible and forwarded to the Board. The State bank • wit,,lng authorities should be advised of the bank's proposed tnt from membership and the date such withdrawal becomes efr:r O h"It is noted that the bank is withdrawing because it does ave the minimum capital stock required by Federal Statute r the establishment of an out-of-town branch." fo_ Approved unanimously. Letter to the Honorable Raymond M. Foley, Administrator, Housing ark!, Ro_ I4E1 Finance Agency, Washington, D. C., reading as follows: 6/3/52 -10- "This refers to your letter of May 20, 1952, and your suPplemental letter of May 28, 1952, concerning your intention to grant to builders in the States of North Dakota, South Dakota, Minnesota, Iowa, Nebraska, and Missouri exceptions from residential credit restrictions with respect to financing the construction of 300 programed dwelling units in the areas above-mentioned for the replacement of houses destroyed or damaged by recent floods. We understand the President, under authority of Public Law 875 (approved September 30, 1950)3 has determined that the disaster is of such severity and magnitude as to warrant assistance by the Federal Government. "You will recall that the Board on April 24, 1952 wrote *. Fitzpatrick, Acting Administrator, Housing and Home rinance Agency, concurring in a proposal to construct 150 Programed dwelling units in the State of Arkansas for the Placement of homes destroyed or damaged by a tornado. In -Lhat letter the Board referred to its interpretation dated 1_11gust 1, 1951 of section 5(e) of Regulation X to the effect Lhat the applicability of the exemption extends to tenants as 7-1 as owners, and later, in a telegram to one of the Federal 4.?3erve Banks on August 6, 1951, the Board stated that the exemp0/1 also extends to a person building a structure for lease to " a tenant who will use the structure to replace a structure destroyed by casualty. "In the circumstances described in your letter the Board . re cognizes the same need and desirability of some relief from eal estate credit restrictions as it did in the case of the Arkaneas tornado. Accordingly, the Board concurs in your proi°sed action provided appropriate safeguards are adopted to P n3ure that the 300 dwelling units to be constructed by private , uuilders will be sold or rented to persons who formerly occupied, , tenants or owners, homes which were destroyed or substantially 'amaged by the floods." Approved unanimously.
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