View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

370

Minutes of actions taken by the Board of Governors of the
Pecieral Reserve System on Tuesday, March 16, 1948.
PRESENT:

Mr.
Mr.
Mr.
Mr.

Szymczak, Chairman pro tem.
Draper
Evans
Clayton
Mr.
Mr.
Mr.
Mr.

Carpenter, Secretary
Sherman, Assistant Secretary
Morrill, Special Adviser
Thurston, Assistant to the Board

Minutes of actions taken by the Board of Governors of the
Pea,„
ral Reserve System on March 15, 1948, were approved unanimously.
'
Memorandum dated March 12, 1948, from Mt. Thomas, Director
or the Division of Research and Statistics, recommending the appointMent °f Miss Mary Madeline Ryan as a clerk in that Division, on a
te1111)°I.arY indefinite basis, with basic salary at the rate of $2,168.28
Der

el11111111, effective as of the date upon which she enters upon the

ilic)rhlance of her duties after having passed the usual physical ex4111a9.-tion.
Miss Rya

The memorandum also stated that it was contemplated that
would become a member of the Federal Reserve retirement

sYqe-ni.
Approved unanimously.
Telegram to Mr. Woolley, Vice President of the Federal ReBank of Kansas City, reading as follows:
"Reurlet March 10, 1948. Board approves appointof F. Lee Major, Jr., as assistant examiner for
?ederal Reserve Bank of Kansas City. Please advise
effective date and salary rate."




Approved unanimously.

371

-2Letter to Mr. Wiltse, Vice President of the Federal Reserve

Bank Of
New York, reading as follows:
"Reference is made to your letter of March 11,
1948, submitting the application of the State Bank
of Albany, Albany, New York, for approval of the establishment of a branch in Watervliet, New York, and
the approval of an additionAl investment of approximately $106,500 in bank premises, both of these actions being in connection with the proposed absorption
Of The National Bank of Watervliet.
"The Board of Governors concurs in your opinion
that the proposed absorption will not result in a
change in the character of the assets of the State
Bank of Albany or in the scope of the corporate powers
exercised by it within the meaning of condition of membership numbered 1 to which it is subject.
"In view of your recommendation, the Board approves
the establishment and operation of a branch in Watervliet,
New York, by the State Bank of Albany, Albany, New York,
Provided the absorption of The National Bank of Watervliet, Watervliet, New York, is effected substantially
in accordance with the proposed plan as submitted and
Provided the prior approval of the appropriate State
aUthorities is obtained, and with the understanding
that Counsel for the Reserve Bank will review and satisfy himself as to the legality of all steps taken to
effect the absorption and establish the branch.
"The Board also approves the additional investment
.cr/,t approximately $106,500 in bank premises by the State
13ank of Albany."
Approved unanimously.
Letter to Mr. Harry W. Besse, President, Boston Stock Exchange,
te.te Street, Boston, Massachusetts, reading as follows:
. "This will acknowledge your letter of March 4, 1948,
°ich states the opinion of the Board of Governors of the
ston Stock Exchange to the effect that the margin re,t,Illirements of Regulation T should be substantially re'lleed because of their 'detrimental influence on the

r




372

3/16/48

-3-

securities markets and financing through equity capital

• •.
"As you suggest, there are many factors which contribute to the state of the market, at any given time,
for equity securities. At a time like the present, however, when the total money supply of the country has been
SO greatly expanded as to be altogether redundant, it
would seem most unlikely that a shortage of money or credit is a factor of much importance in restraining equity
financing. In further support of this view it should be
noted that in the spring of 1946, when margin requirezents were 100 per cent, the stock market was at a considerably higher level, more active, and more receptive
to new issues, than it is at present when margin requirements are 75 per cent in general and 50 per cent for purchases under subscription rights.
"At the present time, the freedom of the securities
Zarkets from excessive credit inflation is a gratifying
element of strength in a general economic situation that
is threatened by serious inflation dangers. The use of
More credit in the securities markets would not lead to
increased production under present conditions -- when
key materials such as steel are in short supply and the
labor force is practically fully-employed. What it would
(10/ in the Board's opinion, would be to add to the already
excessive supply of money which is being used to bid for
scarce materials and labor, making a bad situation worse.
"When the standard margin requirements were reduced
tO their present level, the Chairman of the Board in a
statement to the press indicated that further changes
would depend on the course of economic events. That
is one way of saying that the crucial considerations,
as we have Illustrated above, may at times relate to
matters mainly outside the stock market itself."
Approved unanimously.
Letter to Mr. Merriam B. Barthold, Secretary, Philadelphia
k Exchange, Philadelphia 2, Pennsylvania, reading as follows:
"This refers to your letter of February 27, 1948,
to Mr. Bonnar Brown, regarding your accumulating file
reports of margin requirements which have been met
uY liquidation.




373

3/16/48

-4-

"For our purposes, it will not be necessary for
You to keep these reports on file for more than a
two-year period."
Approved Timanimously.
Letter to Mr. J. Nap Covey, Vice President, Polk County Bank,
ar) Missouri, reading as follows:
13
"
"This refers to your letter of February 25, 1948,
stating that your St. Louis business has been solicited
by some banks who, among other things, have offered to
Ship currency and coin with postage and express charges
Prepaid.
"While we are aware that there are some banks that
zake shipments of currency to their correspondent banks
and absorb the shipping charges, the Board has not issued any ruling as to whether this practice is affected
by the provision of law forbidding the payment of interest on demand deposits. It is the Board's policy
in general not to attempt to pass upon questions as to
What constitutes a payment of interest except upon a
consideration of all the facts and circumstances of the
Particular case as developed in the course of examination
Of the iwink involved, and the Board has not taken any action respecting any member bank on the ground that the
Practice which you describe constitutes a payment of interest.
"If you should have any further inquiry regarding
this or any similar matter it is suggested that you get
in touch with the Federal Reserve Bank of St. Louis which
vill be glad to be of any service."
Approved unpnimously

41)proved.:




Secretary.