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425
Minutes of actions taken by the Board of Governors of the
Federal Reserve System on Thursday, March 20, 1947.
The Board met
In the Board Room at 2:45 p.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Eccles, Chairman
Draper
Evans
Vardaman
Clayton
Mr. Carpenter, Secretary
Chairman Eccles presented a memorandum reading as follows,
and stated that, in view of the desirability of a closer scrutiny
of the
expenses of the Board, he would recommend that the changes
procedure proposed in the memorandum be adopted by the Board:
"The President of the United States has recluested
that departments and agencies of the Government scrutinize their expenditures with the utmost care, and the
Congress has instructed the Comptroller General to make
investijtions and reports on the economy and efficiency
With which public funds are administered and expended.
While we do not use appropriated moneys, we must recognize the fact that our expenditures affect the residual
interest of the Government in the surplus earnings of
the Federal Reserve Banks. It is obvious therefor
that we have a public trust which we must guard and protect, and that our affairs should be conducted on the
rost economical basis reasonably consistent with our
responsibilities. For this purpose the following
amendments to existing procedures are proposed.
'
1.
Amendments of Board's travel regulations
Add a new paragraph as follows:
8. Whenever any travel at the Board's expense is contemplated by any member of the Board
or of the Board's staff, a memorandum in a form
provided by the Board for the purpose shall be
submitted in advance of the trip to the Board's
Personnel Committee, setting forth the proposed
3/20/47
-2"date or dates of absence on such travel, the
itinerary to be followed, the purpose, and why
it is deemed necessary in the conduct of the
official business of the Board. When it is
expected that more then one will visit any
place at approximately the same time, the attention of the Personnel Committee should be
directed to that fact and the Committee shall
inquire into the necessity therefor. No
voucher for travel expenses to which this paragraph applies shall be paid by the Division
of Administrative Services unless the Division
shell have been furnished with advice of approval by the Personnel Committee of such
travel. This para,raph does not apply to the
regular travel of the Board's examiners engaged in the examination of Federal Reserve
Banks pursuant to the annual order of the
Board or to the travel of the employees en,aged in the reviews of functional expenses
and personnel classification plans conducted
by the Divisions of Bank Operations end Personnel Pdministration, respectively.
"Amend paragraph 1 90 as to reduce per diem in lieu
of subsistence to 1'10 from ft2.50; and substitute for
the words 'expense voucher' at the end of the third sentence the following: 'travel voucher which shall be supported by satisfactory receipts as required by the standardized Government travel rezula4 ions as amended.'
"Amend paragraph 2 so as to reduce per diem in lieu
of subsistence to t8.00 from t10.00.
"Amend paragraph 3 so as to reduce per diem in lieu
of subsistence to $7.00 from $7.50.
"Amend paragraphs 2 and 5 by substituting the 1 Boerdls
personnel committee' for the 'Chairman, the Vice Chairman
or Chairman pro tern' in the places where they are mentioned.
(Note: When travel of a member of the personnel committee
is involved, the Chairman, the Vice Chairman, or the Chairman pro tern will substitute for such member on the personnel
committee.)
"Amend the portion of the first sentence of paragraph 4
which begins with the words 'except that' by striking out
all the language after the word 'accommodations' and changing
the existing language to read as follows:
427
3/20/47
-3-
"'except that persons referred to in paragraphs
1 and 2 above may be allowed any Pullmen eccommodations obtainable in connection with a single
fare, and that, when a single bedroom is not
available, eny member of the Board may be allowed
the extra railroad fare necessary to enable him
to obtain Pullman accommodations, the cost of
which does not exceed the cost of a compartment,
as well as the extra cost of such accommodations.'
"Amend paragraph 4 so as to substitute the rate of 5
cents per mile for the rate now specified of 6-1/4 cents
per mile allowable for the use of the traveler's own automobile in official travel, and to provide that such
allowance shall be subject to the approval of the Personnel Committee.
"Amend paragraph 7 by striking out the words 'other
than members of the Board.'
."2. Board automobiles shall not be used for travel
between home and office or for any other non-official
Purpose at any time. Board automobiles shall not be
used outside the working hours during which Board chauffeurs are regularly on duty, without written approval,
on a form provided for the purpose, by the Board member
whose assignments include the supervision of the operation of the Board's building, or by his alternate when
hir use of a Board automobile is involved or when he is
ebsent. The record of trips made by official cars which
the chauffeurs are required to keep under the Board's
existing rules shall be reviewed from time to time by
such Board member or his alternate.
"3. Distribution shell not be made for any member
of the Board or of its staff of speeches, articles or
other documents through the use of the franking privilege or otherwise at the expense of the Board without
written approval, on a form provided for the purpose,
by the Board member whose assignments include Board
Publications, or by his alternate when such distribution on his part is involved or when he is absent.
"4. The Board shall not carry on the pay roll of,
or charge to the budget of, one office or division the
sElary of an employee who performs service in another
office or division, except when such service is only
for brief periods of an intermittent character. Any
transfer necessitated by this regulation shall be
subject to approval in advance by the Board.
428
3/20/47
-4-
"5. The services of messen,ers and other employees, whether assigned to members of the Board or
otherwise, shall not be used at the Board's expense
at any time for private purposes except that, when
no overtime pay is caused, Board members' messengers
may be used for running personal errands for Board
members or for driving their cars.
"6. In order to remove any basis for misunderstanding as to the relation of the Board or any of
its members to any special gatherings or luncheons,
dinners or other occasions which may create expense
for any Federal Reserve Bank or its Branch that
would not be incurred otherwise, no such arrangements shall be requested or suggested by any member
of the Board or of its staff, except with the approval of the Board which will be communicated to
such Federal Reserve Bank by the Board's Secretary
or Assistant Secretary. No arrangements at the
expense of the Board for such purposes shall be
made without the approval of the Board which will
be communicated to the Division of Administrative
Services by the Board's Secretary or Assistant
Secretary.
"7. If any question as to the propriety of
any expenditure to be charged to the Board should
arise, it shall be the responsibility of the
Division of Administrative Services to refer the
matter to the Personnel Committee.
After a brief discussion, upon
motion by Mr. Vardaman, the changes
in existing procedures as set forth
in the memarrndum referred to above
were approved unanimously, effective
March 21, 1947, with the understanding (1) that copies of the revised
travel regulations and of the statements contained in the memorandum
with respect to the other matters
referred to would be sent to the
members of the Board and to the
members of the senior staff, )11(1
-.
(2) that the letter to the Presidents of the Federal Reserve Banks
advising of the action of the Board
with respect to special gatherings,
429
3/20/47
-5luncheons, dinners, etc., (a) would
make it clear that the Board's action
did not imply that the officers or
directors of a Federal Reserve Bank
were not at liberty on their own
initiative, whenever in their judgment it would be in the interest of
the System, to arrange functions of
this kind when a member or members
of the Board or its staff were
visiting in the District, and (b)
would request that advice of the
Board's action be brought to the
attention of the officers of the
Federal Reserve Banks and branches,
if any.
The official travel regulations
of the Board, as amended in accordance with the above action, were as
follows:
"BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
TRAVEL REGULATIONS ADOPTED DECEMBER 15, 1937
As Amended Effective March 21, 1947
"Reimbursement for expenses of persons traveling
on official business of the Board shall be as hereinafter set forth.
1. Members of the Board shall be allowed either
(a) actual necessary transportation expenses and a
Per diem in lieu of subsistence not to exceed 4t10 or
(b) their actual necessary travel expenses. The terms
underscored are defined below. When actual necessary
travel expenses are claimed, the items of expense a
shall be set forth in detail in the travel voucher
which shall be supported by satisfactory receipts as
required by the standardized Government travel regulations as amended. Such expenses shall not be allowed
when claimed in a lump sum. Members of the Board
shall also be allowed reasonable expenses for telephone,
telegraph, cable and radio service, and for miscellaneous
expenses, including stenographic and other clerical
service, when such expenditures are necessary for the
transaction of official business while in a travel
status.
430
3/20/47
-6-
"2. Heads or assistant heads of divisions of the
Board's Washington staff (who shall include Assistants
to the Chairman or the Board), the Federal Reserve Bank
auditors who audit the accounts of the Board, and any
other persons traveling on official business of the
Board upon specific authorization of the Board's Personnel Committee shall be allowed either (a) actual necessary transportation expenses and a per diem in lieu of
subsistence not to exceed $8.00 or (b) upon specific
authorization of the Board's Personnel Committee their
actual necessary travel expenses when the travel voucher
is supported by satisfactory receipts as required by the
standardized Government travel regulations as amended.
3. All other persons traveling on official business of the Board pursuant to proper authorizations shall
be allowed actual necessary transportation expanses and a
Per diem in lieu of subsistence not to exceed r7.00.
4. For the purposes of paragraphs 1, 2 and 3 above,
the term actual necessary transportation expenses includes
the cost of all necessary official travel by railroad,
airline, steamboat, bus, streetcar, taxicab, automobile
and other means of conveyance, together with minimum
priced single first-class accommodations in staterooms
on vessels or one standard lower berth or single seat
in a sleeping or chair car, except that persons referred
to in paragraphs 1 and 2 above may be allowed any Pullman accommodations obtainable in connection with a single
fare, and that, when a single bedroom is not available,
any member of the Board may be allowed the extr-, railroad
fare necessary to enable him to obtain Pullman accommodations, the cost of which does not exceed the cost of a
compartment, as well -s the extra cost of such accommodations. If accommodations are shared by the traveler, the
fact should be stated in his expense voucher and he may
claim only his proportionate share of the costs. This
item also include-, reasonable expenditures for the ordinary incidentals to transportation which are not covered by the definition of per diem in lieu of subsistence,
such as cost of baggage transfer; official telegraph,
telephone, radio and cable messages relating to transportation; steamer chairs and steamer rugs; fees or tips
to baggagemen, to hotel, station, sleeping or chair car,
and cabin porters, or cabin boys, for service rendered
in connection with sleeping or Pullman accommodations
en route or with baggage, and to room and library stewards
431
3/20/47
-7-
"on vessels; and the usual taxicab, streetcar or bus
fares from station or wharf or other terminal to piece
of abode or place of business and from place of abode
or place of business to station or 1.-harf or other terminal, while in a travel status. 17hen using his own
automobile in officiel travel with the approval of the
Board's Personnel Committee, the traveler may be allayed
mileage at a rate not to exceed 50 per mile in lieu of
actual operating expenses, except that persons referred
to in paragraph 3 above may be allowed reimbursement on
such basis only to the extent that such allowance does
not exceed the cost of transportation by common carrier
over the shortest usually traveled route between the
points of travel.
When savings can be effected by the purchase of
round trip or special rate tickets, they shall be obtained.
aetre expense incurred by persons referred to in
Paragraphs 2 and 3 above by reason of travel on airlines,
extra fare trains, or unusual means of cenveyence, will
be allowed only when the travel voucher is accompanied
by a satisfactory shoving of the necessity therefor, or
that the cost thereof, less the amount of subsistence
allowance saved by more expeditious travel and. the
amount of salary of the traveler for the time thus
saved) does not exceed the cost of rail or steamer
transportation and Pullman or stateroom fare between
the points of travel.
5. For the purposes of paragraphs 1, 2 and 3
above, the term per diem in lieu of subsistence includes
all meals; lodgings; personal use of room -luring daytime;
baths, fees or tips to waiters, bellboys, -.nd other
hotel servants, end dining room stewards and others on
vessels, in connection with subsistence; telegrams -nd
telephone calls reserving hotel accommodations; laundry
End valet servic-; ,nd transportation between places of
lodging or whele meals are taken and places of duty.
When meals are included in the cost of passage
ticl-et on vessels, per diem in lieu of subsistence will
not be allowed while traveler is on shipboard, but for
such period he will he reimbursed on the basis of actual
necessary travel expenses.
?Then
member of the Board's staff finds it necessary to take leave of absence on account of illness while
in a travel s'atue, he may be allowed (with the approval
432
3/20/47
"of the Board's Persoanel Cormittee In the case of a head
of e division, and with the approval of the head of the
division in the case of other employes of the Board) per
diem in lieu of subsi-tenc during such absence, for
period not to exceed on. week and, in the event the illness
extends beyond one week, he may be allowed per diem in lieu
of subsistence for such additional period as may be fixed
by the Board.
6. 'or the purposes of paragraphs I and 2 above, the
ter. -ctuel necessary travel expenses includes all actual
necessary expenditures covered by the defiseLtions of (F)
actual necessary transportation expenses such (b) per diem
in lieu of subsistence. Then hotel or other eccoe-o;odetIons
are shared by the traveler, the fact should be staled in
his expense voucher and he may claim only his proportionate
share of the costs.
7. Except to the extent specifically allowed otherwise by this regulation, the provisions of the standardized
Government travel regulations as amended shall, continue to
apply to all persons traveling on official business of the
Board.
3. Whenever any travel at the Board's expense is
contempleted by any member of the Board or of the Board's
staff, a memorandum in P form provided by the Board for
the purpose shell he submitted in advance of the trip to
the Board's Personnel Committee,* setting forth the proposed date or dates of absence on such travel, the itinerary to be followed, the purpose, and why it is deemed
necessary in the conduct of the official business of the
Board. Vhen it is expected that more than one will visit
any place at approximately the same time, the attention
of the Personnel Committee* should be directed to that
fact and the Committee* shall inquire into the necessity
therefor. No voucher for travel expenses to which this
Paragraph applies shall be paid by the Division of IdministratLve Services unless the Division shell have been
furnished with advice of approval by the Personnel Committee* of such travel. This paragraph does not apply
to the regular travel of the Board's exemlmers engaged
in the examination of Federal Reserve P-n':E1 pursuant to
the annual order of the Board or to the travel of the
employees engaged in the reviews of 'unctionel expenses
and personnel classification plans conducted by the
Divisions of Bank Operations and Personnel Administration, respectively.
433
3/20/47
"(*Note: Vhen travl of s member of the P7xsonnel Com—
mittee is involved, the Chairman, Vice Chairman, or
Chairman pro tern will substitute for such mcn1:er on the
Personnel Cormittee.)"
Chairmen Fccles then stated thrt, in connection with the
alopointment of nr. Clayton as a member of the Board, consideration
had been „iven to changes in the assignments of subject, for initial
considera'ion by the individual members -nd the P.
',-;1 ComTittee
,rsonn,
fld that he would recommend that as,
,ignment-> be made as
"Chairman Eccles
"1. Economic and monetary policy matters (open
- -serve r'eqvire—
marl:et operations, discount rates, 1
ment9, interest rates, Government finance, interna—
tional monetary questions).
2. Policies involved in the initiation and
adoption o' legislation and executive or'ers affecting
the System.
3. Public relations of Board of Governors.
(Chairman Eccles is chairman of the Open Market
Committee and of its executive committee. He is also
by statute a member of the National Advisory Council
on International Monetary and Financial Problems and
n member of the Advisory Board to the xport—Import
Bank.)
"Vice Chairman Ransom
the Vice Chairman is charged with the
"1.
responsibility of acting as Chairman in the absence of
the latter, he shares with the Chairman the considera—
tion of matters specifically assigned to the letter,
in such manner as they ray decide from time to time.
2. Reports on legislation and other legislative
matters not handled by the Chairmen.
3. Regulation of consumer credit. (Alternate,
4/••. Evans)
434
3/20/46
-10-
"Yr. Szymczek
"Pending return to duty of Mr. Ransom,
Mr. Szymczak will assume his duties as Acting
Vice Chairman, except as to item 3 in Mr.
Ransom's assignments.
"1. Institutions engaged in internatfonal and foreign
banking subject to sections 25 and 25A of the Federal Reserve Act; foreign branches of domestic banks.
2. Relations of Reserve Banks with foreign banks,
bankers, and governments; staff missions of Reserve Banks
and Board to foreign countries. (Alternate, Mr. Evens)
3. Relations with holding company and other affiliates; examinations of affiliates; issuance and revocatLon
of voting permits of holding company effilietes.
4. Federal Reserve Retirement System. (Mr. Szymczak
is one of the Trustees of the Retirement System, elected
by the Board as its representative.)
"Mr. Draper
(Alternate, Mr. Evans)
"1. Discounts and advances of Reserve Banks; purchases by Reserve Banks of securities and bills other than
through System open market account; questions of eligibility
of paper for discount or as security for advances.
2. Extension and maintenance of credit by brokers,
dealers, banks and others for purchasing or carrying securities.
3. Lending activities of Government agencies (other
than those in the agricultural field).
4. Federal Reserve activities relating to war loans
undier Executive Order 9112, the Contract Settlement Act of
1'74, and loans under Section 13b of the Federal Reserve
5. Building operation and maintenance.
"Mr. Evans
(Alternate, Mr. Draper, except as to last item listed below)
"1. fgriculturel conditi-ns, including prices, production, exports and imports; and relations concerning these
subjects with Department of Agriculture, Farm Credit Aeministretion and other a encies; len-iin; activities of Government
agencies in the abricultural field.
2. Publications of the Federal Feserve System; cell
reports of condition nnd other periodical re;orts of member
banks.
435
3/20/47
-11-
"3. Coordination and development of relations of
Federal Reserve Banks with member banks, nonmember banks,
banking essociations, educational institutions, 7nd the
general public.
4. Voluntary pay roll deduction plans for Government bonds.
5. Research programs of Federal Reserve Ranks and
Board of Governors. (Alternate, Mr. Szymczak)
"Mr. Vardaman
and reimbursement
Reserve
Services
of
"1.
Bank 1-ladets,
Reserve
including
expenditures,
therefor;
Reports;
Expense
Functional
and
Plan
Salary Cleseification
chargelosses,
reserves
for
Reserve
Bens;
examinations of
off and dividends; Reserve Bank stock.
2. Establishment, regulation end discontinuance of
branches and a_encies o Reserve Banks; determination of
district and branch territorial limits.
3. Cle-r-nce and collection systems; currency matters; interdistrict settlement 'unds.
4. Outside business and other relations or directors,
officers and employees of Reserve Prnl:st; removal of directors,
officers and employees of Reserve Brinks.
5. Those aspects of questions arising in the administration of the Board's affairs which are of special concern
to veterans. (Men n question arises which involves a. veteran problem Mr. Vardemnn will be consulted or wIll consult
with the member of the Board whose assignments include the
other aspects of the question.)
"Mr. Clayton
"1. Admissions to, conditions of, and termination of
- owers for member banks.
membership of State banks; trust c
of State member banks,
examination
and
2. Supervision
adjustment of
consolidations,
mergers,
br-nches,
domestic
yeyment
reserves,
or
required
maintenance
structure,
capital
of interest on deposits, or member banks; r-lntions rearding these matters with Federal Deposit Insurance Cprporetien,
Reconstruction Finance Corporation, and Comptroller of the
Currency.
3. Loans and investments of member banks, including
acceptances; relations regerding these matters with Comptroller of the Currency, Securities and Fxchenge Commission,
and other Government e_:encies.
436
3/20/47
"4. Interlocking relations of directorF) officers
-nd eeeployeas of raerb -r banks servir, oth:r brnke and
security deelers; loans to executive officers of menber
brelf-o; removel of (7irectore) officers and employees of
reember banks; r'ispo - ition of criminal charges.
"Per:cnrel Co pnittPe
"1. Ap)ointmcnts of Class 'C' ''irectore of Reerve
&n17;' enr' the director- of branches who are appointed by
the Board,
2. Desi nel,ions of Chairmen and Federal Pe --,rve
f„ent: and appointments of Deputy Ch=irmen of Federal
Reserve Banks.
3. t.pprvale of appointments of officers and employees of the Reserve Banks requiring action by the
Board. 'Then an appointment is in the examination or
research dep-rtment of n Reserve Bank, it is understood
that the reconrendrtLon to the Board will 1- e made in
collaboration with Mr. Clayton or Mr. Evans) respectively.
4. Reserve Bank salaries other than those covered
by the salary classification plan; executive development
plan.
5. Questions relating to election and qualifications of Class A and Ca= P directore of Reserve
including elasF:irication of member bens for such elections.
6. Board's budgets and expenditures. fluestions
arising as to the propriety of expense items incurred by
mrr',ers of the Board and its s'eeff.
7.- Approval of authorizations for official travel.
"Co-iniL tee Meelbersiii -,7,
"Executive Co:7.mit,tee of the
Federal Open Mar':ot Coe=ittee
(Until February 29,
Mr. 7ccles
Chairman:
Vice Chairman: Mr. Sproul
Mr. Draper
Mr. Vardanin
Davis
41ternatee
For Board mem.ber:.;
1. Mr. Szymczak
2. Mr. Clayton
3. Mr. Evans
Note: Upon Mr. Rensaei's
return he will serve as
first alternate in the
absence of Mr. Eccles and
as third alternate in the
absence of Messrs. Szymczak
and Clayton.
Tor Presidentes
Cidney
Mr. Peyton
437
"Committee Memberships - Continued
"Personnel Committee
(Until February 29, 1948)
Mr. Evans
Mr. Clayton"
•
Upon notion by Mr. Evans, the
assignments as recommended by Chalrman
Eccles were approved unanimously, it
being understood that no general alternates for Messrs. Szymczak, Vardaman,
and Clayton would be designated until
after Mr. Szymczak's return to 7ashington toward the end of April.
There followed an informal c7iscuss!,on of the conduct of,
and statements by, members of the Board when visiting in the various
'ederal Reserve Districts and at the Federal Reserve Pans. It was
the unanimous opinion of the members present that, if any member of
the DoF,rd Had any opinions, or objections to Board polioie:: or actions,
he should feel free to express himslf and argue as fully and as
orously for his position with the individual members and at the
ill'
?etings of the Board as he might wish; that, in fact, if he held
views which were not in harmony with actions or policies of the
Board, he w-s under oblig-It'_on to express such views at meetings
°f the Poard; but that he shov1 4 not express himself on the outside
°r while visiting the Federal Reserve B-rl:s with respect to such
Policies -nd actions in such a manner as would in,9ic- te that there
cleavage among the members of the Do-rd or in such
P
way as
to undermine the position of the Board or any member thereof.
438
3/20/47
-14Reference wes made to the vacancy in the Class C 'irector-
Ship
at the Federal Reserve Bank of Richmond and to the suggestion
that had been made that an appointment be tendered to Mr. Edward
R. Stettiniuq, Jr., as a Class C directorfor the unexpired portion
of the term enain,; December 31, 19L9.
,^edestion irns raised whether,
in cpproechint, Mr. Stettiniu3, it should he indicated that the Board
had in mind designating him as Chairman and Federal reserve Agent
and in that connection it was pointed out that the term or Yr. W7sor
(A0 is now serving as Chairman and Federal Reserve Agent) as a
Class
C director would not expire until December 31, 1948.
It was agreed unenimously (1) that
steps should be taken to ascertain if
Mr. Stettinius wou1.3 accept appointment
PS Class C director if tendered by the
Board, and (2) that there would be no
objection to indicating' to him that the
Bo- rd had in mind his designation as
Chairman and Federal Reserve Agent following the termination of Mr. 7ysor's
present term as Class C director on
December 31, 1948.
The action stated with respect to each of the matters here-
inafter set forth was taken by the Board:
The minutes of actions taken by the Board of Governors of
the Federal Reserve System on March 19, 1947, were approved unanimously.
Memorandum dated March 17, 1947, from Mr. Leonard, Director
Of the Division of Examinations, recommending that, effective as of
439
3/20/47
-15-
the date upon which he eaters upon the performance of his
uties,
V. Fisler be appointed for a perior' of one yerr as an
.g'eder-1 T'eeerve 7xeminer, with basic salary at the rate of
-097.20 per -nnue, -nd with official headquarters at 7.rners City,
Missouri.
By uneninou - vote, Mr. James V.
risler was eppointe:7 for a period of
one ye',12 as an ex-miner to exeeeine
ede--1 Reserve Banks, mealber banks
of the Federal Reserve Systee-, and
corporations operating under the provisions of sections 25 and 25(o) of
the Feder-1 Reserve l'ct, for all purposes of the Federal Reserve "ct and
of all other acts of Congress perteinin, to examinations mac'e by, for, or
under the ('Irectl.on or the Board of
Governors of the Federal Reserve. System, and was dest,nEted as an Assistant Federal Reserve 7xcrielner, with
official headquarters at Kansas City,
74issoaril and with be-sic salary at
the rate of '=.3):397.20 per annum, all
effective as of the drte upon which
he enters upon the perfonience of
his duties.
Letter to Mr. Wiltse, Vice President of the Federal Reserve
Dank
of New York, reading as follows:
"Reference is made to your letter of Merch 6, 194",
ubmitting the request of The Northern New York Trust
Company, Watertown, New York, for perziesion to establish
branch in Adams, New York, in connection with the proposed merger with the Citizens and Farmers Trust Co,:p-ny,
'dams, New York.
"In view of your recommend- tion, the Board of Governors approves the establishment and operation of e
branch in Pdams,. New York, by The Northern New York Trust
440
3/20/47
-16-
"Company, Vafertown, New York, provided the merc;er is
effected substantiElly as proposed and the prior -pproval of the appropriate State authorities is obtained,
,
5-.nd with the understanding that Counsel for the Peserve
Bank is to review and satisfy himself as to the legality
of all steps taken to effect the 7er,,er and
the branch.
"It is noted that this is the third absorption and
establishment of P branch to be effected by the epplicant
Within F ye-r inroiv.thg the disbursement of the capital
funds of the bank absorbed and without a corresponding
there-se in its own c-pitel 'unds. The Po -d does not
approve of a policy of expansion on - basis involving
ectuel reduction of invested c-pit-1 end requests that
You advise the applicant and its Holding Company Pffiliete, the Marine Midland Corporation, that this factor
must be satisfactorily resolved in connection with consideration of any further applict:_ons of this cher- cto-."
Ppproved unanimously.
Letter to Honorable J. Hardin Peterson, United States House
of Representatives, reading as follows:
"This is in reply to your letter of March 3, 1947,
- skin,: about the present status of Regulation V.
"You are correct in your understanding ',het the
reguletion has recently been modified. Effective December 1, 1946, ite scope was narrowed and some chren_es in
terms were made. It is now applicable only to instalment
credit; all maturities may be as lon_, as 15 months; and
down payments are one-third except that furniture and
floor coverings recuire only one-fifth do-n.
"In view of continued inflationary pressures of
which there has been strong evidence in recent wgelcs,
the Board is of the opinion that further relaxation
woul-1 be ine2fropriete at present.
"The whole rluestion of the regul-tion of consumer
credit probably will be brought before Congress at this
session end the important euestion of just how far deficit financing on the part of individuals ea-1 families
'affects the up-End-down of the business cycla will, 7re
are confident, receire careful consideration. Consumer
credit within the next few ycere will be such F sizable
441
3/20/47
"percenta Le of the total credit in use in our country
that the effect) upon employmant and the national income,
of overspending of future income cannot be ignored. The
noE.rd has made r careful study of consumer credit and is
of the opinion that continuance of some regulation uould
contribute to economic stability.
"We appreciate having had this opportunity to comment on the questions which have been raised by your
correspondents."
Approved un&niLiously.
@FedFRASER