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484 A meeting of the Board of Governors of the Federal Reserve SYstem was held in Washington on Thursday, March 12, 1942, at 2:00 P.m. PRESENT: Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman McKee Draper Mr. Mr. Mr. Mr. Morrill, Secretary Bethea, Assistant Secretary Carpenter, Assistant Secretary Clayton, Assistant to the Chairman The action stated with respect to each of the matters hereinafter referred to was taken by the Board: The minutes of the meeting of the Board of Governors of the Federal Reserve System held on March 11, 1942, were approved unaniinotisly Letter to Mr. Fletcher, Vice President of the Federal Reserve Balt* of Cleveland, reading as follows: "In accordance with the request contained in your letter of March 9, 1942, the Board approves the designation of Chalmer L. Davies as a special assistant examiner, with the understanding, of course, that he All not be transferred permanently to examination work without the Board?s approval." Approved unanimously. Memorandum dated March 10, 1942, from Mr. 'Wilkes, Federal Reserve, r-xaminer in the Division of Examinations, stating that, since it sppea_ red from the information furnished by the French American Banking Cc)I'Portlon, New York, New York, that the Corporation was complying ' With the spirit and purpose of the Board's letter of April 9, 1940, 485 3/12/42 requiring the Corporation to maintain a condition of liquidity con80Ilant with the nature of its liabilities, it was felt that there was n° reason at this time for the Board to change the position expressed in the letter referred to. The members of the Board concurred in the opinion expressed in the memorandum. Letter to Mr. Norman Asher, Chicago, Illinois, reading as follows: "Your letter of February 17, 1942 addressed to the Securities and Exchange Commission with regard to Regulation T has been referred to this Board, which prescribes the regulatio n. 'You refer to certain transactions by one of your Clients in 1936 and 1937 involving unissued securities. For Your information in this connection there are enclosed 2opies of (1) the Securities Exchange Act of 1934, (2) ' Iegulation T as it became effective October 1, 1934, (3) all the amendments to the regulation before its general revision of January 1, 1938, and (4) Ruling No. 47 which relates to unissued securities. "You will note that throughout 1936 and 1937 section 3(f)(4) of the regulation referred to 'the amount of any Targin customarily required by the creditor on every fu-Lure commitmen t in unissued securities ...'. "The application of the regulation to a particular ?ase would, of course, depend upon all the relevant facts involved, and in the circumstances the Board naturally could not attempt to express any opinion as to the rights between private litigants. "The administration of Regulation T has been decentralized through the Federal Reserve Banks, and if T I should have any further questions regarding the regation you may find it convenient to communicate with 4, '"e Federal Reserve Bank of Chicago." Approved unanimously. 486 3/12/42 -3Letter to Mr. Neely, Chairman of the Federal Reserve Bank of Atlazita, reading as follows: "At the completion of the examination of the Federal Reserve Bank of Atlanta made as of January 5, 1942, DY the Board's examiners, a copy of the report of examin?.tion was left for your information and that of the directors. A copy was also furnished President McLarin. "It is understood that in his conversation with YOU Mr. Millard, the Examiner in charge, discussed several matters affecting the operations of the auditing department, among which were: 1. The desirability of establishing in the minds of the executive officers the independence of the position of the General Auditor, who is primarily the representative of the board of directors. 2. The unfavorable features of the practice of lending audit clerks to operating departments. 3. The numerical adequacy of the auditing staff to cope with the rapidly increasing volume of operations without sacrificintr the thoroughness of the audit work. You will recall that the question of adequacy of the auditing staff was also raised following the previous examination. "It is understood, also, that at the time of the fnext audit of the Jacksonville Branch the auditing departTent will make an investigation of the disproportionate cost of the operations of the cafeteria which led to its alscontinuance. e ."The Board will appreciate advice that the report of 2'am-1-nation has been considered by the board of directors c?cl as to the matters referred to in this letter. Any Other comments you may care to offer regarding the discusOn with respect to the examination or action taken or ' 1° be taken as a result of the examination will also be aPPreciated." Approved unanimously. 487 3/12/42 -4Mr. Ransom recommended that the Board authorize an arrange- nient with the shorthand reporting firm of Hart & Dice for a stenograPhic report of the meeting to be held tomorrow with representatives of the trade for the purpose of discussing amendments to Regulation with respect to loans for purposes other than the purchase of art • icles listed in the regulation. Approved unanimously. Thereupon the meeting adjourned. Secretary. UI Chairman.
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