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4 On A meeting of the Board of Governors of the Federal Reserve SYstera was held in Washington on Friday, June 8, 1945, at 10:30 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak McKee Draper Evans Mr. Mr. Mr. Mr. Mr. Mr. Morrill, Secretary Carpenter, Assistant Secretary Hammond, Assistant Secretary Thurston, Assistant to the Chairman Vest, General Attorney Wyatt, General Counsel Telegrams to Mr. Flanders, President of the Federal Reserve of Boston, Messrs. Treiberand McCreedy, Secretaries of the Fed- Reserve Banks of New York and Philadelphia, respectively, Messrs. 14 /1 arid McLarin, Presidents of the Federal Reserve Banks of Richmond 44c1 Atlanta, respectively, Mr. Dillard, Vice President of the Federal ileaerve tank of Chicago, Mr. Stewart, Secretary of the Federal Reserve Of St, Louis, Mr. Powell, First Vice President of the Federal Reeerve of Minneapolis, Mr. Caldwell, Chairman of the Federal Re- t44 k eeN. of Kansas City, Mr. Gilbert, President of the Federal Re- Of Dallas, and Mr. Earhart, Vice President of the Federal 'Jar* of San Francisco, stating that the Board approves the esWithout change by the Federal Reserve Banks of St. Louis Sati 1.14e 6 ) '44.nelsco on June 5, by the Federal Reserve Bank of Atlanta on the Federal Reserve Banks of New York, Philadelphia, Richmond, J1. ."Lin neapolis, Kansas City, Dallas, and San Francisco on June 7, 1 916 and , °Y the Federal Reserve Bank of Boston today of the rates of 921. 6A/45 —2— cli8e°1-int and purchase in their existing schedules. Approved unanimously. Mr. Evans referred to the Board's letter of February 11, 1944, t 14, Black, Governor of the Farm Credit Administration, in which the Position was taken that the Board would have no objection to legisla— tiOt L. WILI-Ch would fix the maximum amount of a farm loan by a Federal Land IQ_ on first mortgage security at 65% of its normal agricultural 1jj ') with the understanding that in the new legislation the authority t(31` the ---41-Lag of second mortgage loans by the Land Bank Commissioner %lad ID e terminated. Mr. Evans said that at the time the Board's letter wa 8 tkre aub Or seat the officials of the Farm Credit Administration were in agreement with the position set forth therein but that because eequent increases in the prices of farm lands it was felt that, if the arm Credit Administration was to be able to do its share e ra 'a financin , it mould be necessary to retain for a furtherofg. tem— Do til011 : 471-0d the authority of the Land Bank Commissioner to make °rtgage loans. This matter, he said, was discussed informally th A ere of the Board and the representatives of the Farm Credit 8tl ' ation were informed that the Board did not care to change its vItio rl on the matter but would not express an opinion with respect to it t"that1111lees such an opinion were asked. Mr. Evans vent on to say sletion as passed by Congress renewed the authority of the 14k1 cltazIk Commissioner for one year and it was made clear by the 922 6/8/45 —3— agricultural leaders in Congress during the debates on the legisla— t44Uat it was their desire to eliminate the authority for second 431 ' tgage loans as soon as possible and that the renewal for one year we's 14erelY for the purpose of tiding over the existing situation. It l'fae • 'Irans' opinion that the Board should not change the position set "" ln its letter of February 11, 1944, and that the authority Of the L 44d Bank Commissioner to make second mortgage loans should be el. 4-3-tainated from the law as promptly as possible. Mr. Evans' state— kerlt -8 made merely for the information of the members of the Board 44 rio action with respect to the matter was called for at this time. Mr. McKee reported that he, Mr. Morrill, and Mr. Pollard, As • 4stant . Dlrector of the Division of Examinations, went to Memphis, tulesse e) on Tuesday, June 5, to attend a meeting of representatives atke In most of the cities where the absorption of exchange charges hae„ eeented a problem in view of the provision of section 19 of the recier., b `4.4. 14/aits, Reserve Act prohibiting the payment of interest on demand de— tal at the meeting was a very satisfactory one, and that shortly be .4°re th e end of the meeting, Sterling B. Cramer, First Vice Pres— red °f the Fifth—Third Union Trust Company, Cincinnati, Ohio, ofInOt: Ion which, after being seconded by Ralph C. Gifford, 4441 te ' 11 First National Bank, Louisville, Kentucky, and after amend— "41eh were accepted by them, was put by the chair to a voice 92:1 V8/45 —4— tote and was adopted without a dissenting vote. It was made clear 41 the discussion, Mr- McKee said, that the motion was regarded as 84 inforraal 'Ilithout expression of the prevailing sentiment of those present, binding effect on anyone, and that it was understood that the final d ecision would be made by the Board of Governors after being a4vised as to the views expressed at this meeting. The motion, as 841erided, was to the following effect: rl "It is the sense of this meeting that the Board of `4dovernors of the Federal Reserve System should make a a finite : regulation, prescribing t21 or such other amount ens:it:he Board of Governors may decide upon, for any one '°mer in any month as the limit for trivial items, Ilith be ,.„August 1, 1945 as the uniform deadline for all memde : uanks, and that the Board of Governors should eny_-vor to obtain the cooperation of the Federal Deposit :4_11eurance Corporation along the same lines as to all non4enlber banks." the information of the members of the Board, Messrs. McKee rrill reviewed in Some detail the high lights of the meeting and randula with respect to the meeting and a list of the names of th 4e who u -:ere in attendance have been placed in the Board's files. 11041,(1 8 tha te 14% Morri11 stated that, while the motion suggests that the 4111d make a "definite regulation", it was clearly understood ILe f '`c)rm in which the Board's action was to be taken was for deatioxi the ellr 1.-5r It. He also said that Mr. Robertson, Deputy Comptroller tivo otti rencY, who had attended the meeting as the representative of e had asked for an opportunity to go over any statement or 924 6/8/45 -5tilling proposed to be issued by the Board. At the conclusion of the discussion, upon motion by Mr. Ransom, Mr. McKee was requested, with the assistance of Messrs. Morrill and Vest, to prepare the necessary documents to carry out the action con— templated by the motion adopted at the Memphis meeting, it being understood that Mr. Robertson of the Comptroller's Office would be given an opportunity to make sug— gestions with respect to the documents, and that, before final action was taken by the Board, Mr. McKee would discuss the matter with the Chairman of the Federal Deposit Insurance Corporation as contem— plated by the motion. For the information of the members of the Board, Chairman Ecele itade substantially the following statement with respect to the Present status of the proposed executive order relating to real etate r1c3rtgage credit: otL The National Housing Agency and possibly some of the orrr Government agencies which might be affected by the atirer Would like to get certain exceptions written into inyegulations that might be issued under the order and norni;hat connection have been talking to Mr. Salant, Eco' - e Adviser in the Office of Economic Stabilization. I illerstood that Mr. Salant was working on a memorandum at n Would express these views and would be, in effect, Wo .ei14 t a tentative understanding of what it was expected jezil :be provided in the regulations that the Board might ' In that situation, and inasmuch as Mr. Davis, Di— reciof Economic Stabilization, was out of the city, I par.eu with Mr. Salant and learned that what he was pre— as not a memorandum of the kind referred to but be used by Mr. Davis in presenting the matter to President of the United States so that he would be NiCesident Mr informed as to just what was contemplated. I told t04 ; -a-lant that I did not want the situation with respect ()ssible exemptions from the regulations to become i 925 6/8/45 -6?rYstalized, that I would object very strenuously to hayany exceptions written into the executive order, and that, if the Board of Governors is to be responsible for adchanistering the order, it would not want any prior uner tandings as to what the regulations were to contain, eis at was expected that the regulations would be prepared n°31, -,1--owing consultations with interested agencies, both ' 'i.1.1 -ac and private and the Board would not want its hands led in advance. The order is still in Mr. Davis' office and has not yet been presented to the President. j I talked to Mr. Vinson, Director of Mobilization lalid Reconversion, yesterday about the matter and repeated uhe suggestion previously made that he, Mr. Davis, and I 8' °111d get together and agree upon the statement that flould be made to the President, in which it could be ide perfectly clear that the executive order is a part 0 a larger program which, in addition to ltations rarl a real estate mortgage credit, contemplated increased eaTn requirements and a strengthening of the tax on th''Z'al gains. This statement should also make it clear that, little can be done in the credit field alone, that ti ere Probably will be strong protest against the execu' nov te order by lending institutions, that the order should ou be put into effect until after the President had disbessed the matter with Congressional leaders, and that, de llse of the fact that it was not believed that a great : al - would be accomplished by regulating credit extensions be'ne, the Board was not seeking the authority that would nted by the proposed order, but that, if it were theg, the' 4-1a111 of the responsible officials of Government that to cOrder should be issued, the Board would do its best arrY out its provisions. r also re 1.01et : ,;, sst with Mr. Vinson the question whether of the executive order at this time might clltb ei_bad timing in the light of the contemplated large Illeht-,e, s of war production with their resulting unemploy%Id ch is bound to have a dampening effect on private inrlatl i lg, on activity in the securities' market, and the Illark °flarY pressure on the farm and urban real estate it Inasmuch as the executive order is late anyway, lori,,gut be better to let the matter stand for a few weeks rl to determine more definitely whether there Is any ecessity for its issuance. rearl 926 6/8/45 -7At this point Messrs. Vest and Wyatt withdrew from the meetg) and the action stated with respect to each of the matters herein- referred to was then taken by the Board: The minutes of the meeting of the Board of Governors of the Neraa Reserve System held on June 7, 1945, were approved unanimously. Memorandum dated June 6, 1945, from Mr. Thomas, Director of the Ivlsion of Research and Statistics, recommending that the followin g creases in basic annual salaries of employees in that Division be approved, effective at the beginning of the pay roll period followby the Board: ligMe , i Title Lte, Marr Nitner ?1,,, an,_ , N,":,?-40Lri Kathryn Stevens Loretta -As) Aiice L. Clerk Clerk Clerk Secretary Salary Increase From To $1,920 1,860 1,680 1,920 $2,100 2,000 1,800 2,100 Approved unanimously, effective June 16, 1945. Iletnorandum dated Je June 4, 1945, from Mr. Bethea, Director of the tivisi On of Administrative Services, recommending that the fol- -4€ cre ases in E1104 be basic annual salaries of employees in that Divi- aPProved, effective June 16, 1945: h 4"41`t IN. young 41411 tic)4- 1, 1413- Title GLindarnood lotfelty, Jr. Mechanical Superintendent Operating Engineer Operating Engineer Approved unanimously. Salary Increase To From $3,200 $3,400 2,700 2,600 2,800 2,700 927 6/8/45 Telegram to Mr. Davis, President of the Federal Reserve Bank q St, • L°u1s, reading as follows: "Reference membership application of Switz City Bank, 2witz City, Indiana. Advice receive today from Federal d Posit Insurance Corporation that conditions set forth In its letter of May 3, 1945, a copy of which accompanied letter of May 4 relating to the application, have bee heen complied with. Accordingly, arrangements may now ksT.Imade for completion of the bank's admission to memberullo In the System." Approved unanimously. Letter to Mr. A. G. Hauck, Manager, A. G. Hauck Company, Cinc1411tati n1,4 '-“4-43, reading as follows: 1011,"This is with reference to your letter of June 1, fiL3 3 relative to Amendment No. 16 to Regulation W, efive June 11, 1945, which eliminated a provision which Previously exempted loans secured by first liens on -'Proved real estate duly recorde d. te,„ "The purpose of this amendment was to simplify the of the regulation as it applies to home repairs and "re'vements so that some work would not be subject to riliiiere terms while other work of the same kind was pertted to be treated very liberally. In our opinion the will have no important effect upon the total amount notef:edit that can be obtained for this purpose and will be "amPer the distribution of all the materials that will thoel'ailable. In your own business of roofing and siding gil,ce customers who could not for one reason or another 18-4-ifY under the first lien exemption can now be given nicT: ths instead of the former limit of twelve months. Illat,'Furthermore, we believe you will find that the elimi.114 °11 of the first lien exemption will not affect financc‘,"e much as it now appears to you. We suggest that you 17-14Les the matter with the financi al institution with tilti,Y°u arrange your financing. Also, you or that instiof tl,11 illaY wish to communicate with the Cincinnati Branch s4WIT Federal Reserve Bank of Cleveland which has respon : --4Y for administration of Regulation W in your district." hnt Approved unanimously. 928 6/8/45 —9— Memorandum dated June 6, 1945, from Mr. Smead, Director of the D4 . -Lvlsion of Bank Operations, reading as follows: "Beginning in 1936, with Board approval, the Ameri— can Bankers Association has been sending members of their staff each year to the Board's offices to copy our recapit— ulation sheets (sample attached) showing annual earnings ,!statistics of State member banks, by size of bank and by States. The same arrangements were made with the offices 1 ()11 the Comptroller of the Currency and the Federal Deposit Corporation. The resulting ratios computed from unese these data have been published in pamphlet form by the j B alc Management Commission of the ABA (1943 pamphlet at— ached) under the title, 'Earnings and Expenses of all .-LS.faITE14a1 Banks in 2:11 This Luis year, presumably to eliminate the transporta— ti ,°a involved and to save manpower, Mr. Melvin C. Miller, 'i'leacretary, and Mr. J. O. Brott, Assistant General Counsel, tj! proposed in telephone conversations with this office ik3_°Prow these sheets and photostat them. V:e understand e.;',L the offices of the Comptroller and the FDIC are agree— , , °-1 1 -..e to this proposal if similar arrangements are made at va-1-1 three offices. jzaw. "In the case of State member banks, there are approx— c„'elY 300 forms containing the desired data. In most these forms represent totals, in thousands of dol— p,f8, of three or more State member banks in the size —our, .)1.11 forms do not indicate the names of the indi01--)8L'al banks included in the totals. The ABA has always mel7ved the restriction stated in the original arrange— of not publishing figures for any size group contain— 3 than three banks. In the circumstances, there seems to be no objection to if tring these forms to the ABA to be photostated and, e Board approves, we shall make the necessary arrange— I Approved unanimously. Letter to the Secretary of State reading as follows: HI_ to be " our letter of May 25 on the subject of the trip made by three Federal Reserve representatives to 6 / 8/45 —10— °Eur°Pe, Russia was included among the countries that we ehed to have visited if possible. Subsequently we were Informed that the inclusion of Russia would have to be 8Peoifically approved on the basis of a statement to be e,bled to MOSCOW as to the particular purposes of the 71eit. The following is offered for that purpose: The State Bank of the USSR is a correspondent of the Federal Reserve Bank of New York and maintains balances with it. The Federal Reserve Bank, which, under statutory uth orization, maintains such accounts with numerous cen41 banks, finds from experience that their operation lacilitated by consultation in person with its corresP°11dents so that a closer understanding can be developed .0 j1 both sides as to the conditions affecting the transac„Ic)ne between them. It is for this purpose that we are '174 a rranging for visits to be made during the next few , eeks to other central banks of Europe by Dr. E. A. L'41denweiser, Economic Adviser to the Board of Governors id the Federal Reserve System, Mr. L. W. Knoke, Vice Presote t of the Federal Reserve Bank of New York in charge a,S Foreign Department, and Mr. Walter H. Rozell, an bllstant to Mr. Knoke. We believe it would be helpful o h to ourselves and to the Russian authorities if Dr. tio-Ldenweiser, Mr. Knoke, and Mr. Rozell might also visit 0t8:°w for interviews with the officers of the State Bank ec Lhe USSR and with other state officials concerned with ura cT°Irtio and monetary relations between Russia and the vlaj ' ,ed States; and we hope that the Russian authorities gree that the interviews will be of mutual advantage. t, shall be obliged if the Department of State will lltate the proposed visit of our representatives to sla; and we sha3] be glad to furnish such additional 4"rmation as may be desired." J e C Approved unanimously. lieraorandum dated June 75 1945, from Mr. Nelson, Assistant ) 14 e'Qtor of the Division of Administrative Services, submitting a tiel 'ill the araount of $68.85 covering expenses incurred by Glenn d114141, a Federal Reserve Examiner in the Division of Examinations trl q00 -.11hection with his trip to the Phil • . ippines pursuant to the Board's 930 6/8/45 —U— of April 5, 19452 and recommending that payment of the Ir°11eher be approved. Approved unanimously. Thereupon the meeting adjourned. Chairman.
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