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Minutes of actions taken by the Board of Governors of the
Federal Reserve System on Monday, June
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
4, 1951.
Martin, Chairman
Szymczak
Vardaman
Norton
Powell
Mr. Carpenter, Secretary
Mr. Sherman, Assistant Secretary
Mr. Kenyon, Assistant Secretary
Minutes of actions taken by the Board of Governors of the Federal
-"e System on June 1, 1951, were approved unanimously.
Memorandum dated May 23, 1951, from Mr. Sloan, Director of the
-Lon of Examinations, recommending the appointment of Miss Zoe
G atsj
as as a
Stenographer in that Division, on a temporary basis for
Period of
three months, with basic salary at the rate of $2,610 per
aNa
ffective as of the date upon which she enters upon the pertormanc
e of her duties after having passed the usual physical examinaalld subject to the completion of a satisfactory employment
&Ilvestigatione
Approved unanimously.
Memoranda from Mr. Bethea„ Director of the Division of Administie
SerVi„S 3 recommending increases in the basic annual salaries
he
t°11"ing employees in that Division, effective June 10, 1951:
Nte of
Memorandum
Salary Increase
Title
5/241.1d
From
1
To
/26./51.°
%4311,11 8
MYerS
\1114 . Hopkins
. Becker
Operating Engineer
Painter
Guard
$31225
3,325
3,525
3,625
2,690
2,610
6/4/51
-2--
Date of
Memorandum
and Name
Edward L. Hampton
Alfred. W. Minutolo
Dorothy Reamey
Title
Tabulation Planner
Operator (Tabulation
Equipment)
Operator (Key Punch)
Salary Increase
To
From
$3,950
3,350
,01,075
3,575
2,850.
2,970
Approved unanimously.
Memorandum dated May 29, 1951, from Mr. Vest, General Counsel,
recommending the
appointment of Miss Diane K. Vigeant as a Stenographer
in the
Legal Division, on a temporary basis for a period of three
mcnVils, with basic
salary at the rate of $2,610 per annum, effective
as of
the date upon which she enters upon the performance of her
dikes after
having passed the usual physical examination, and subject
t0 the completion of a satisfactory employment investigation.
Approved unanimously.
M
emorandum dated May 312 1951,of
from Mr. Marget, Director
the Di . .
71810n of International Finance, reading as follows:
a e,"The Bank of Greece has asked our help in finding
them petent person to go to Greece for a year and instruct
it on the principles and procedures of bank examination.
wij
eems desirable for the Federal Reserve System to comply
m " this request since it was one of the recommendations
be
arl'e bY Delos C. Johns on his mission to Greece and also
ma?ause it would directly assist in the restoration and
ctilti
r;
tenarloe of financial stability in Greece. It would be
ped -Loult at the present time to find a person within the
:
ab 41 Reserve System to send on this mission, but we have
G'eal en with Mr. W. H. Dillistin who recently retired as
anderal Auditor of the Federal Reserve Bank of New York
is regarded as an outstanding person in this field.
wija.14.41istin indicates that he may be interested and he is
more g to come to aashington to discuss the subject in
detail.
6/4/51
-3-
"Under these circumstances it seems very desirable
that we bring Mr. Dillistin to Washington, preferably
before June 6 in order that he may talk to Sir Theodore
Gregory, the British member of the Greek Currency Commission who is temporarily here. It is recommended,
therefore, that the Board approve the payment of Mr.
Dillistints necessary travel expenses for coming from
his home in Patterson, New Jersey to Washington and
return, along with a subsistence allowance of $12 per diem."
Approved unanimously.
Memorandum dated May 28, 1951, from the Divisions of Adminisve
Services and Personnel Administration, recommending that the
13c)ard give its approval to withholding from pay roll monthly dues for
hos
,
Pitalizatien and surgical services offered through Group Hospitali4:q°114 Inc.) with the understanding that withholding will be made upon
'uPrlate written authorization from the employee, that such monthly
cillesbe .
Withheld the first pay day in the month, and that distribution
c)deecriptive literature, application forms, etc., relative to the
/108pi
-`'alization and surgical service plans and the advising of employees
COneer
4Ing these matters be placed in the Division of Personnel Administrati
c)n. The memorandum also transmitted a draft of memorandum to be
tribt
to present employees and to persons hereafter employed ing them of
the procedure.
Approved unanimously.
Lett. to Mr. L. A. Jennings, Deputy. Comptroller of the Currency,
tn
g °-, D. C., reading as follows:
6/4/51
-4-
"This refers to your letter of April 30 regarding
the addition of the following memorandum item to Schedule
A of the national bank call report form:
Item 13, MEMORANDUM: Total amount of loans or portions
thereof which are fully guaranteed or insured
by the United States Government or its agencies plus the amount, of FHA Title I loans
fully covered by insurance reserves.
"Promptly upon receipt of your letter and after discussions with Mr. Cramer, Chief of the Division of Research
and Statistics of the Federal Deposit Insurance Corporation,
we began informal negotiations with the National Association
of Supervisors of State Banks to clear the new item with the
, ssociation before adding it to the form of State member
ork call report. Confirming the telephonic advice already
-1-yen you, we were unable to obtain clearance in time to
clude the item in the forms to be used at the mid-year call0
ever, we shall continue our negotiations with the Assotion, and we hope that at its fall meeting consideration
1-L1 be given to its inclusion in the end-of-year report form."
rr
Approved unanimously.
Letter to Senator Richard B. Russell, United States Senate,
71asilington, D. C.,
reading as follows:
win, "This refers to your letter of May 18, 1951, with
1,', Lch You enclosed a letter from Mr. H. W. Robinson, Vice
and General Manager of Harry Sommers, Inc.,
Atlanta,
-anta, Georgia. The letter pertains to Regulation W
ti-a cerning consumer credit, particularly with respect to
ti- effects of the present credit terms of the regulam-°n on instalment sales of automobiles to persons of
oderate income.
feel certain you will agree that it is diffia ,,to consider Regulation W and its intended purposes
)
1 4 t' from other monetary and fiscal measures all of
leh are
directed at reducing heavy inflationary presU.
caleis* The regulation, of course, is designed specifito dampen demand for consumer credit because of
the
eavY
:
impact of an expansion in credit throughout
the
110
e2 Y during a period such as the present when
the:
pre,:n'ire price structure is subject to severe upward
'
- 11-res because of increases in the money supply. It
I
("),(›),".#
,4
.
40,11
-5aas these pressures that caused the Board to adopt
the terms which are presently incorporated
in the
Regulation.
"While it is frequently stated that the present
fifteen months maximum maturity provision of the regulation makes it impossible Cor the man of moderate income to purchase an automobile, analysis of the
facts
does not support such a contention. As former Chairman
"AcCabe pointed out in his statement of December 8, 1950,
before the Joint Committee on Defense Production, the
-,ruth is that Regulation 6 has helped rather than
penal3Ted the person of moderate or low
income. It helps him
ere he is most in need of help -- in
his pocketbook.
O
'
are, new or used, are available at various prices to
meet the budgets of
practically all workers who want or
•leed cars and
these cars cost less than they mould have
in the absence of Regulation W.
"Although the Board recognizes that there has been
a general softening in the markets for consumer durable
g°°ds following the heavy buying wave of last December
eon January, in the light of general economic and credit
ditios, it believes that instalment credit should be
•
t.r°nglY curbed at this time in the interest of the nalanai defense
program.
glt, "Mr. Robinson's letter is returned herewith as reand,
we appreciate your interest in referring it
for
th
consideration
since we are always glad to have
the
°ehefit of the views of the trade in our continuing
• IldY of the effects of the regulation."
Approved unanimously.
Letter to the Honorable Kenneth McKellar, United States Senate,
W ,
4sillneton, D. co,
reading as follows:
tO:
0 This refers to your letter of May 15, 1951, addressed
Mr ,r1rman Martin, with which you enclosed a letter from
41.4'
l4°111 M. Holt of Harley-Holt Company, Nashville, Tennessee.
atin
.
10,t13 letter relates to Regulation g, concerning conorscredit, particularly with respect to the effects of the
all(C
f ui terrils on the instalment sales of household appliances
remo"e-Levision sets. It is suggested in the letter that the
raeii:ation be changed so as to permit 10 per cent down payor nothing down, on such articles.
I
6/4/51
-6-
"Although the Board recognizes that there has been
a general softening in the markets for consumer durable
goods following the heavy buying wave of last December
and January, in the light of general economic and credit
conditions, it believes that instalment credit should be
strongly curbed in the interests of the national defense
program.
nith respect to Ir. Holt's comment concerning the
newspaper advertisement in which a competitor offers to
sell a refrigerator at less than the actual cost of the
article, Regulation W does not prohibit such sales. Such
efferings are occasionally to be expected, of course, where
there is free competition and a seller decides to use price
aPPeal to stimulate sales of merchandise he wishes to move.
ir• Holt's letter is returned herewith as requested,
and -Ne appreciate your interest in referring it to us for
censideration since we are always glad to have the benefit
°f the views of the trade.
trae received an identical letter from Mr. Holt through
Re
Presentative Sutton's office to which we replied in subst
antially this same way."
Approved unanimously, with
the understanding that similar
letters would be sent in response
to other inquiries where appropriate.
Letter to Mr. Olson, Vice President of the Federal Reserve Bank
tlChica
go, reading as follows:
cp., "This refers to your letter of May 1$1 1951, cont-rning the application of section 6(f) of Regulation X
the veterans' loan program of the State of Wisconsin.
vet "The intent of section 6(f) is to permit eligible
co,
efans being aided by State programs to finance new
mi:t:Z6ruction on terms as liberal as those currently perAct ed under Title HE of the Servicemen's Readjustment
°f 1944.
pro "It is our understanding that under the Wisconsin
$35gram a veteran may get a second mortgage loan up to
a h °. In the example which you cite, the purchase of
Repn having a 'value' of $10,000, we believe that a
as7;86rant properly can make a first mortgage loan for
lloh as $5,200, making the total credit extended V3,700,
6M1
n or
the same as the maximum that is permitted under a
VA guarantee in a similar transaction0
it is our opinion that conventional credit
may be extended in amounts which make up the difference
between maximum loan value and 33500, it should not also
be substituted for the difference between WOO and any
amount which the state will lend short of $3500. In the
example given, if Wisconsin lends a particular borrower
2nlY $3000, the conventional credit may still be only
5200, not $5700. This is based on the position which we
have taken in the past to the effect that preferred terms
are available not to veterans Der se, but to veterans who
finance with a VA guarantee. We have stated, therefore,
that iC a veteran cannot obtain the maximum loan amount
permissible with VA guarantee, he may not, under Regula—
tion X, borrow the remainder from any source. Since the
v3500 loan in the instance mentioned is, in a sense, a
substitute
for the VA guarantee, it seems reasonable to
apply the same rule.
"Similarly, since the exemption in section 6(f) is
applicable only to State programs which are essentially
Parable in purpose or effect to the Federal program,
paragraph of this let—
hi
t Principle stated in the third
Would not apply if the State program provided for
uni-Y nominal or relatively small loans to be made, insured,
or guarante
ed.
H
ValueConcerning the use of a Certificate of Reasonable
as the basis for 'value', it is our opinion that this
:Id be permitted. The valuation base, for this purpose,
uj
.,1?e considered as a part of the !terms of the credit'
4"narti the meaning of section 6(f).
fac, 'Inasmuch as we may not be aware of all the necessary
ha,us about the Wisconsin program, we should appreciate
v-trig Your reaction to our position on this matter."
r:
Approved unanimously.
Letter
a4111-ngtoril
to Mr. Frederick J. Lawton, Director, Bureau of the Budget,
C.)
reading as follows:
"This refers to Bureau of the Budget Bulletin No.
51 I,
dated May 29, 1951, to the Heads of Executive
naP
t.
lartnients and Establishments, relating to the desig-°11 of agencies as 'Departments' pursuant to the
,
6/4/51
—8—
"Renegotiation Act of 1951.
"The Board of Governors of the Federal Reserve
System does not have any activity having a direct and
Immediate connection with the national defense Arhich
has resulted, or is likely to result, in the awarding
of contracts. Accordingly, it is recommended that the
Board of Governors of the Federal Reserve System should
not be designated by the President,for inclusion under
the Renegotiation Act."
Approved unanimously.
Memorandum dated June
4, 1951, from
Mr. Carpenter, Secretary
Of the
Board, regarding general protective measures to be followed in
thep
ederal Reserve Building in the event of an air raid warning.
Approved unanimously, with
the understanding that a copy of
the memorandum would be sent to
each employee of the Board.
/
Secre
ry.
@FedFRASER