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553 A meeting of the Board of Governors of the Federal Reserve 8Ystena Was held in Washington on Thursday, March 26, 1942, at 3:00 PRESENT: Mr. Mr. Mr. Mr. Mr. Tccles, Chairman Ransom, Vice Chairman Szymczak McKee Draper Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Chairman Eccles stated that today the President signed the EIltive Order which was discussed at the meeting on March 20, 1942, 81-R1141i-eh would authorize the Federal Reserve Banks to act as fiscal 4gents of the United States in connection with loans guaranteed or made the War and Navy Departments and the Maritime Commission to finance Contracts to facilitate the prosecution of the war, and that consideraOfl should be given to the kind of organization to be established by the Board in order to carry out its responsibility for supervising the %vities of the System as contemplated by the Order. grGra In this connection, Mr. Draper stated that the following telehad already been sent to the Federal Reserve Banks: "The President has today signed an Executive Order author ing Federal Reserve Banks, under supervision and th':utation of the Board of Governors, to act as agents for si' War Department, Navy Department, and Maritime Commisto°11 to guarantee loans made by financial institutions procontractors, subcontractors and others engaged in war co duction or as such agents to make loans, advances or mNliments to such persons engaged in war production. 'The Executive Order will be implemented by directives , goa„" 037- the three arms, in the preparation of which the expects to have the opportunity to participate. 554 3/26/42 "It is considered urgent that a conference be held Washington at the earliest practicable date to outline Title organization and procedure for handling this new unction. It is requested that you send to this conference the officer whom you expect to designate to have immediate supervision over this work at your Bank. 3,. "Conference has been set for 9 A.M., Monday, March Please wire who will attend. of the Executive Order and press release will immediately." copy foil: Chairman Eccles suggested that when the conference with the representat' lves of the Federal Reserve Banks is held a draft of a regulation a.nd the i• nstructions to be given by the Board to the Federal Reserve Banks sh°111c1 be ready for discussion and that a definite procedure to be fol1°Iled bY the System should be determined upon as soon as possible, with the standing, of course, that it would be subject to change on the be.sis °f experience. It was stated that a draft of regulation and in- strItctions were being prepared and would be ready for the conference on atiell 30, Chairman Eccles then presented a memorandum which he stated 0 e t4ined the joint recommendation of Mr. Draper and himself Ath reto the organization to be set up in the Board's offices as being ' 17, at least in the beginning, to insure the proper functioning neee888 the -Ystem under the program agreed upon. The memorandum was in the t°11°11ing form: supervise the activities of the Federal Reserve SYet"T° partr as fiscal agent for the l';ar Department, Navy Dello, nent, and Maritime Commission under Executive Order it is proposed that there be a committee of 555 3iV42 —3— "he Board of Governors to be designated the V,ar Loans Com! r Ittee. The committee shall consist of the Chairman of the Board as ex officio Chairman; Governor Draper, Vice Chairman of the committee; Governor McKee as the third member. "In order that the Board members on the committee can -Limit their functions to those of a supervisory and policymaking nature, the committee shall appoint an Executive Officer, who will devote his full time to the matters under the Jurisdiction of the committee. The committee shall i'lsc) have a Secretary, Mr. Bethea; a Technical Adviser, mead; and Counsel, Mr. Vest. The Executive Officer Will he appointed from outside the Board's organization, ' eferably a man with experience in loans to industry. He ah have one or more assistants, including a liaison assistant between the Banks and the armed services, Mr. Boothe. B "The committee, under the general direction of the 2ard of Governors, will meet whenever necessary to receive reports from the Executive Officer or other members of its Staff and shall recommend to the Board such actions as are eessary to be taken by the Board to implement the Execudin Order above referred to. This will include, among other allul?s, the preparation and submission of a regulation, the 213°111tment of necessary personnel in Lashington, and the of the field organization at the Federal Reserve B8 In view of the other duties of the members of the COalmittee as members of the Board of Governors, a smoothing and energetic staff is necessary so as to reduce the er of meetings of the committee and relieve the members of " detail. V j WAR LOANS COMLITTEE Eccles, Chrmn.Ex.Off.; Draper, Vice Chrmn; McKee Alternate: Clayton) ITech.Advr.: Smeadl Counsel: Vest Executive Officer: to be selected) Asst.: Boothe Asst.: to be selected It 556 3/26/42 -4In the ensuing discussion, Mr. Ransom suggested that if the eXeClitiVe officer contemplated in the memorandum were employed his Should be Administrator instead of Executive Officer. Messrs. Eccles and Draper concurred in this suggestion. Mr. McKee stated that the System had no responsibility under the r— '4-ecutive Order until requested by the War or Navy Department or the maritime Commission to act as agent, and he questioned whether the Board should undertake to set up an organization until it was deterrnined what procedure the services would desire to follow. Mr. Eccles e8.1d that it was clear from the discussions which had been had with represent ti a -yes of the services that, because of the close contact of the Federal R. -eserve Banks with commercial banks throughout the country and their standing in their respective communities, the services were anxi°11s to have the Federal Reserve Banks act as agents in guaranteeing 'which it was expected would be made largely by the commercial be that an organization somewhat along the lines suggested would necessarY to keep in touch with the situation and see that the Federal Re serve Banks were meeting their responsibilities effectively, and the.t in -- view of the understanding had with the representatives of the servic_ es) the Board should not wait for further advice but should state tO the representatives that the organization proposed in the memorandum w e being Set w4e1-1 the up in the Board's offices to supervise the activities representatives had indicated they desired the System to 557 3/26/42 —5— There was also a discussion of the question whether the work of the System under the Order should be supervised by the committee of three suggested in the memorandum or whether it should be placed in the hands of a single member of the Board. At the conclusion of the discussion, Mr. Szymczak moved that the organization as outlined in the memorandum presented by Chairman Eccles, with the change suggested by Mr. Ransom, be created and that Messrs. Eccles and Draper be requested to submit a recommendation to the Board with respect to the person to be employed as the administrator for the Board. Mr. Szymczak's motion was put by the chair and carried, Mr. McKee voting "no" for the reason that he felt the work could be handled more effectively under the direction of a single member of the Board. Mr, Szymczak stated that under date of February 26, 1942, Mr. Y()14.1g, Pres ident of the Federal Reserve Bank of Chicago, transmitted a list or salaries fixed by the directors for the officers of the Bank for the year beginning April 1, 1942, that he had gone over the list l'erY carefully with Mr. Young and Mr. Lewis, Chairman of the Bank, when they Were in Washington recently, and that for reasons which he disclIssed briefly it was his recommendation that the Board act on the in- 4'eases proposed for certain officers as follows: Present Salary A. 1.4,500 13,000 13,000 10,500 8,000 Proposed Increase 500 2,000 1,000 1,500 2,000 Increase Recommended by Mr. Szymczak 1,000 750 1,000 558 3/26/42 krav (Contld.) C. J. Netterstrom A. L. ason Neil B. W. R. DiDawes ercks 11. ' 71 Cameron Present Salary 1,', 9,500 8,500 8,000 , 8000 3,500 Proposed ,Increase Increase Recommended by Mr. Szymczak 500 500 500 500 300 300 In a discussion of the proposed salary changes, the suggestion was made that in view of the satisfactory services being performed 13Y 141*. Mulroney it might be well to advise the directors of the Bank that later in the year the Board would be willing to give consideration t° all increase in his salary to be effective after he had been with the Bank a year. (/f the Board. This suggestion was agreed to by all of the members Thereupon, upon motion by Mr. Szymczak, the following letter to Mr. Young, President of the Federal Reserve Bank of Chicago, was approved unanimously: )30 :Referring to your letter of February 26, 1942, the 10-,l'u of Governors approves payment of salaries to the folma , 11,C officers of the Bank for the period April 1, 1942, to 31, 1943, inclusive, as fixed by your Board of Directors rs, at the rates indicated: Annual Salary Title C. S. Young ,1',30,000 President H. P. 25,000 First Vice President C. B. Preso Dunn n Vice President and 14,000 General Counsel W. . Dachman Assistant Vice Presi9,500 dent A. Hopkins 6,500 Cashier Assistant ark 6,750 ,ra A- Lies Assistant Cashier nn. A. 6,800 Assistant Cashier Lindsten 559 3/26/42 -7Annual SalLzz Title (Cont'd.) meyer $ 7,000 Assistant Cashier F. L. 7,500 Assistant Cashier Purrington J. G. Roberts 7,250 Assistant Cashier Carl M. Saltnes8,000 Assistant Cashier uohn J. Endres 7,000 Auditor Paul C. Hodge 5,600 Assistant Counsel Branch Detroit H. J. Chalfont 10,000 Managing Director 11. L. Diehl 6,000 Cashier .4- J. Illiegand 4,200 t Assistant Cashier W. T. 3,800 Cameron Assistant Cashier R. W. 3,920 Bloomfield Assistant Cashier For the reasons stated orally by Governor Szymczak to u and Chairman Lewis, the Board is not willing to approve alaries for the following officers at the rates fixed by , your Board of Directors, but approves payment of salaries to s;Lera. for the period April 1, 1942, to March 31, 1943, inclulve, at the rates indicated, if fixed by your Directors at sI rates. In considering the salary fixed by your directors for bers Mr. Mulroney the Board had in mind that he has then in the employ of the Bank for only seven months. While Board did not feel that it should approve an increase or 4, r him at this time because of his short period of service, ;te, has requested that you be advised that, if later in the a 4r Your directors still feel that an adjustment in his salifY 8 1 justified, the Board will be willing to consider an rease to become effective on or after September 1, 1942: Annual Name Salarz Title J. H. !'1.4,500 Vice President A. J. Dillard 13,000 Vice President A. T. Mulroney Sihler 11,250 Vice President A. M. Black 9,000 Cashier °. J. PresVice Assistant Netterstrom 9,500 ident A. L. Olson Assistant Vice Pres8,500 ident Neil B. Dawes Assistant Vice Pres8,000 ident W. R. Diercks Assistant Vice President and Chief 8,000" Examiner RAMP.: L. G. r 560 3 'V42 -8Mr. McKee suggested that a memorandum be prepared showing the effect of contained eral the amendment to section 14(b) of the Federal Reserve Act, in the Second L'ar Powers Act, on the authority of the Fed— Open Market Committee to direct the Federal Reserve Banks to Purchase Govermnent securities. Chairmen Eccles suggested that copies sent by the Secretary to all the Presidents. were agreed to unanimously. be These suggestions Mr. McKee also raised for discussion the question whether, in \II"' Of the Executive Order authorizing the 'tar and Navy Departments and the Maritime Commission to guarantee loans made by Federal Reserve 13841k8 under the section 13b of the Federal Reserve Act, the Board should re— Secretary of the Treasury to amend the regulation issued by 4441111der that section of the law. It was understood that the Legal . Division would be requested to prepare and submit to the Board for considera— tion a draft of letter to the Secretary of the Treasury along the lines suggested during informal discussions before this meeting. Inasmuch as the Executive Order above referred to directs the Secretary of the Treasury to designate the Federal Reserve Banks to act as fiscal agents for the United States, the staff was requested to keep in touch with the Treasury for the purpose of having these designations made as promptly as possible. Of Mr. Morrfll stated that a telegram had been received under date tar ch 19, 1942, from Mr. Test, Vice President of the Federal Reserve 561 3/26/42 -9- 1131k Or San Francisco, stating that the Bank had established a rate 1'1 per cent on rediscounts and advances under sections 13 and 13a Of the Federal Reserve Act, except the last paragraph of section 13, 411d had e stablished without change the other rates of discount and pur-, Chase in the Bank's existing schedule. Mr. Morrill said that if the ell"ge in rate were approved by the Board the following rates, among Others, would be in effect at the Bank: On a dvances secured by direct obligations of the United States: 1 Per cent on 15-day advances to member banks, 1-1/2 per cent on 16- to 90-day advances to member banks, n_ 1-1/2 per cent on advances to nonmember banks. ' I 90-day rediscounts and advances secured by eligible Paper, 1 per cent. Ittorrill made the further statement that on March 24, 1942, a secOnd telegram was received from Mr. Hale, Vice President of the Bank, stati— "g that on that date the Bank had established without change the achechae of rates of discount and purchase established at the meeting Of the di rectors on March 19 and reported to the Board on that date but Ilhich had not vet received Board approval. Do! a In the ensuing discussion, it was pointed out that the rates proby the Bank raised the questions (1) whether the Bank should have lower rate for member banks on 15-day advances secured by Government qq-igations than on 90-day advances similarly secured, (2) whether the lik.should have a lower rate on rediscounts and advances secured by eligible paper than on 16- to 90-day advances secured by Government 562 3/26/42 -10- obligations, and (3) whether the Bank should be permitted to depart tran the policy announced on September 1, 1939, of permitting nonmember banks to borrow at the same rates as member banks on advances secured bY direct obligations of the United States. At the conclusion of the discussion, Mr. Morrill was requested to call Mr. Hale on the telephone and discuss the proposed rates with him in the light of the questions above referred to, with the thought that the matter might be given further consideration at the next meeting of the board of directors of the Bank. There was then presented a telegram just received from Mr. ?Owen. First Vice President of the Federal 118, r4te Reserve Bank of Minneapo- stating that the executive committee of the Bank today fixed a of 1 Per cent on advances to, and rediscounts for, member banks 1111d" secti°n8 13 and 13a of the Federal Reserve Act and advances to 11°11111ember banks under the last paragraph of section 13, subject to apProve. " of the Board of Governors. The new rates were approved unanimously, effective March 28, 1942, and, on the assumption that such action was also taken, the establishment by the Bank without change of the other rates of discount and purchase in its existing schedule was approved by unanimous vote. The action stated with respect to each of the matters herein- 4tter to was then taken by the Board: The tera.1 the meeting of the Board of Governors of the Res::uts System held on March 24, 1942, were approved unani- 563 3/26/42 -11Memorandum dated March 24, 1942, from Mr. Goldenweiser, Director Of the Division of Research and Statistics, recommending that s Me. 17 Elizabeth Forsling with be appointed as a clerk in that Division, - at salary the rate of i1,440 per annum, effective as of the date Upon "Each she enters upon the performance of her duties after having Passed sat isfactorily the usual physical examination. Approved unanimously. the Letter dated March 25, 1942, to Mr. Rice, Vice President of p ederal Reserve Bank of Ney., York, reading as follows: t , "The Board of Governors approves the changes in "e personnel classification plan of your Bank as requested in your letter of March 11, 1942." Approved unanimously. Letter dated March 25, 1942, to Mr. Young, President of the Pecler al Reserve Bank of Chicago, reading as follows: vi . "Referring to your letter of March 19, 1942, adbe ! l ng of the resignation of Mr. R. R. Monroe as a mem,: of the Industrial Advisory Committee and the appointi;nt of mr. Edward M. Kerwin, Vice President of E. J. Beach and Sons, Chicago, Illinois, as his successor, the a84rd of Governors approves the appointment of Mr. Kerwin 8_ a member of the Industrial Advisory Committee for the irrenth Federal Reserve District to serve for the remain28, portion of Mr. Monroe's term which expires February 1943." Approved unanimously. Letter to Mr. Fleming, President of the Federal Reserve Bank of ele Ireland 3 reading as follows: :In passing upon applications for membership the toard gives consideration to the financial history of 564 3/26/42 -12"the bank and the character of its management. It appears that the management of The Lorain County Savings & Trust ,Companyfl Elyria, Ohio, under the domination of its presi'tent, has been regarded by all supervisory authorities as uns atisfactory and that at least some of the directors recognize that the management needs strengthening. 4.. "The Board, therefore, in accordance with the sugges,'10n discussed with Mr. Fletcher, with which suggestion he reports the Admission Committee of your bank agrees, nas deferred action upon the application until the manageIlt has been satisfactorily strengthened. It is believed hat such measures should include the appointment of a _ew Chief executive officer who shall succeed to the au°r1tY now exercised by the president." IT Approved unanimously. Letter to Mr. Gidney, Vice President of the Federal Reserve Bank Ilew York, reading as follows: March 18, 1942, wsUb :Reference is made to your letter of matting the request of The Westfield Trust Company, ,:strield, New Jersey, for approval of the establishment " 0" a branch in Garwood, New Jersey, in the quarters now ocrcuPied by, and in connection with the proposed purchase Th assets The First and assumption of the deposit liabilities of, National Bank of Garwood. ."In view of your recommendation and the information 10M1tted, the Board approves the establishment and operaT °n of a branch at Garwood, New Jersey, by The Westfield t11,I, st Company, provided the purchase of assets and assumpGa-n of deposit liabilities of The First National Bank of ' ; ,/1°°d is carried out substantially as outlined in the tr Feder company's letter of March 9, 1942, counsel for the ie legalal Reserve Bank of New York is satisfied as to the aspects of the proposed absorption and the establishstl "of the branch, and formal approval of the appropriate ate authorities is obtained." Z1 Approved unanimously. Te legram to the Presidents of all Federal Reserve Banks, reading -L-Lows: , H_ D con, "'g- tf.--130. The Board has received several inquiries ILLng the application of interpretation W-51 to the 565 3/26/42 -13- "rat* m, lng of coal stokers for purposes of Regulation W. '"e questions relate to the method of determining which stokers are included in the list of articles the credit Sales of which are subject to the regulation. "Interpretation 17-51 states that the classification .household furnaces and heating units for furnaces (includ-ing oil burners, gas conversion burners, and stokers)' includes heat generating sources such as furnaces and boilers, an4 appurtenances which form a part of such sources, inlvidually or collectively installed, when such sources or a PPurtenances are designed for actual net output of 24o,&30 B.t.u, per hour or less. "How shall Registrants determine whether a particular model e of coal stoker falls within the class described? The question to be answered is what the particular model Li-taigaaq to do, that is, what heating requirements the enufacturer considers will be met by the model. The Registrant, therefore, must depend upon the rating made by the facturer rather than upon his own calculation of the net B.t.u. output based upon individual installations. "In the past, coal stokers have been rated by the ' '.,14.11ufacturers on the basis of the coal delivery rate, and "" appears that a stoker rated as capable of delivering 45 vTlinds of for installations Where the coal per hour was recommended slightly less maximum net output required was than 2 40,000 B.t.u. per hour and where average conditions ;t1sted. It should be noted that the maximum net output a gure is a standard representing the heating capacity of bes .Ystera of which the stoker is designed to be a part, it thlrlg assumed that the heating requirements are average, equigment appropriate, and the coal of average heating m:fle• Once the rating is determined for a particular cà 'el under average conditions, that rating is used in all ti8eS for classifying the model for purposes of the regulawhr, and it does not matter that the conditions under a given stoker is to be installed differ materially from the averages. vol„"A special question relates to changes in models inbe 'LlIg an increase in the coal delivery rate. A case has st2 brought to the attention of the Board in which a tl,''er formerly rated as a 30-pound stoker was altered by eL2e addition of an attachment which brought the theoretical a1 delivery rate up to 50 pounds per hour. Such a change d _uld not conclusively change the status of the stoker unthe regulation. The pound delivery rate has no f 4 566 3/26/42 -14- "significance in itself. It has been used, in the past, a..s indicative of the heating capacity of the stoker, but lt cannot be so used unless the features of the stoker Other than the coal delivery rate are appropriate to a stoker which is actually to be used at the given rate. "The problem, therefore, is whether, after a change of the kind described, it can be maintained in good faith the stoker is designed for a heating load of more than uhan.2 40,000 B.t.u. net output per hour under the average Fonditions mentioned above. In this connection it would lia:ve to be determined whether or not the other features of the converted stoker were such as to make it suitable ja!id economic for the heavier heating requirements. Also, 1;here would be a question as to the ability of the converted stoker over its normal life actually to deliver Coal at the rate required of a 50-pound stoker. These are_ matters to be established by heating engineers, and .11) to the present time the Board has been willing to rely Upon the judgment of the manufacturer in rating his products Provided this judgment is exercised in good faith." Approved unanimously. Letter to Mr. Phelan, Assistant Vice President of the Federal Re- eve 8a nk of New York, reading as follows: 1, "Reference is made to your letter of February 24, 4tt23 regarding the questions presented by The Associaae°n of Life Insurance Presidents, New York, New York, re to Whether life insurance companies are required to tigister under section 3(a) of Regulation W. These quesbe?ns are discussed below, and a copy of this letter is forwarded as an 'S' letter to all Federal Reserve s in ,"' a order that they may be in a position to make r°Priate replies to any inquiries on the subject from insurance companies in various parts of the country. Hi is Po icy Loans. - Life insurance companies frez lY make so-called 'policy loans' in the amount of ti , or less on life insurance policies issued by them. understood that the provisions of the policies re;;11̀LJ-1 , the companies to make these loans, and to make them the sole security of the policy. It is perhaps arguable Whether the policyholder undertakes to repay the loan at 567 3/26/42 -15"all, but it is understood that he clearly does not undertake to repay the loan in instalments. On the basis of this understanding, it is the view of the Board that thek _ mailnpg of such 'policy loans' does not cause an insurance any Corn to be 'engaged in the business' described in section 3(aNj and hence does not require the company to register. "2. Instalment Loans. - A great many of the loans made 1, stalmey life insurance companies are repayable on an innt basis. An insurance company which regularly 1 .;alcss or accepts applications for, instalment loans of 1-'500 or less (or instalment loans secured by recently purchased listed articles as specified in section 2(e)(2)) : .1 s engaged in the business of making extensions of instalment loan credit and is required to register pursuant to sectionN .)(a). On the other hand, if a company does not 1.45e, or hold itself out as being prepared to receive aplileations for, any such instalment loans, it would not 2 e to register unless there were some other facts that Lu'ought it under the requirement. "It is understood that there are also some insurance companies that do not clearly fall within either of the IdircriPtions in the preceding paragraph. They do not reg„arlY make, and do not hold themselves out as being presecuredt receive applications for, any instalment loans by recently purchased listed articles or any inst 21ment loans of :1 1,500 or less, but they nevertheless 7,ti e one or two such loans in isolated instances on in'-vequent occasions. co "In general, and in the absence of other facts, a mal!PanY would not be 'engaged in the business' unless it 0 , l'es such loans with at least some degree of repetition holds itself out as being prepared to receive applicati41°ns for such loans. For example, the inquiry states aliZt one such insurance company which does not hold itself loa as prepared to receive any applications for any such ns has less in the past made two instalment loans of $1,500 or 20 years. Assuming that these two loans were cornPar e as isolated instances, they would not cause the comsection in described t ° be 3( / Nr 'engaged in the business' 3(a), The question whether a particular company is 'en' of ed in the business' by virtue of having made certain fa !uch loans must, of course, depend upon all the relevant c'e of the individual case. f 568 3/26/42 -16- "3. Advances f r Taxes a der I s ra ce • e I s 11-944Aatjama, - Frequently a provision of a first mortgage authorizes the holder of the mortgage to pay taxes 8 .,:rid insurance premiums on the property when the mortgagor pay them, and provides further that the amount payments shall be a first lien on the premises ?r?..d become a part of the sum secured by the mortgage. Life insurance companies from time to time make payments Pursuant to such provisions. The fact that such advances are exempted as a part of the first mortgage under seeon 6(a) and V1-128 would not prevent them from requiring B e company to register. However, it is the view of the ,°ard that the payment of taxes and insurance premiums n these circumstances does not cause an insurance company o be 'engaged in the business' described in section 3(a) fen though such supplemental advances are repayable in J-nstalments and are in the amount of P1,500 or less. "11- E.Atiallv Repaid Loans. - An instalment loan is made in good faith in excess of c.''1,500, and is not set.secured by a recently purchased listed article as dethrlbed in section 2(e)(2), does not become subject to i,e regulation when the outstanding amount of the loan 171 reduced to $1,500 or less. Hence, the fact that an : u urance company has on its books many such loans which ha : e originally made in amounts exceeding '1,500 but which s in v e been Paid down to 11500 or less does not cause the in urance company to be 'engaged in the business' described section 3(a) .11 _Lon:: t 1 Approved unanimously, with the understanding that copies of the letter would be sent to the Presidents of all Federal Reserve Banks except New York. Letter Of the to Mr. Baker, Manager of the Instalment Credit Department p ederal Reserve Bank of Minneapolis, reading as follows: MarchTis will acknowledge receipt of your letter of chan,, 9, 1942, making a suggestion as to a possible ln the Statement of Borrower used under RegulaThe Board is glad to have this suggestion and to be taken into account when it becomes necessary l Tse the statement. ' • You also ask about the addition of the new listed lterns O n the back of the statement. This was covered in 569 3/26/42 —17-"the Board's wire to all the Federal Reserve Banks on 11i?aich 19. The Board would be very glad to have informa— tion on the extent to which Registrants are adding the items to the list. "As to your question concerning the printing of supplies of the form, the Board does not have in mind l: a11 Immediate revision of the form. The letter of Feb— illarY 23, asking for suggestions, was based on the idea that they should be collected now so they would be avail— Tae for whatever revision might be determined upon in e future. However, as you are aware, some ratherex— a"lve changes are being considered in the regulation if they materialize, it seems likely that the State— ;ent of Borrower would have to be changed considerably. ' l this reason, limited printing seems desirable. The Board, of course, would not wish Registrants to imply from rY statement you might make on printing that a change in the form had been determined upon or was imminent." r Approved unanimously. Letter to the Presidents of all Federal Reserve Banks, reading 8 follows. th "A11 twelve Federal Reserve Banks have indicated 1_!lr approval of the proposal, contained in the Board's 1_7Lter of January 23, to discontinue the reporting of nk debits on a weekly basis and to substitute monthly gbePe°rts for the present weekly ones. It has therefore „-11 decided to adopt the proposal, and the following an— Z1ncement to that effect will be inserted in the next eklY debits statement released by the Board: Beginning with the month of May, only monthly bank debits figures will be collected by the Board; weekly bank debits statements will be discontinued after issuance of the statement covering the week ending May 6. The monthly figures, which are available from the beginning of 1919, are more significant than the weekly figures for most purposes, .nce they smooth out wide weekly variations. Some of the Reserve Banks suggested, in response to he Board's letter of January 23, a number of centers V 570 3/26/42 -18"for addition to the list of reporting centers in their resPective districts when the shift to a monthly basis is made. These and other suggestions were reviewed and compared with the results of an independent study made at the Board's offices. Account was taken of the population and ald recent growth of the centers considered for addition, .amount of bank deposits, the location of the centers In relation to those now reporting, and the relative adeguacY with which present reporting centers represent the PaoPulation, deposits, and economic activity of the 8tates and di stricts in which they are located. It has been decided that under present circumstances would not be desirable to add very many centers to the , lst of those now reporting, but an average of four centers .1-,Tr istrict have been selected for addition, provided dhat this can be done with the full cooperation of the ?anks located in such centers. Accordingly, you will be Informed in a separate letter which of the new centers 1,3,0posed and approved for addition are located in your '-t'strict, and it is suggested that you invite the banks in er tisle e centers to report debits monthly, beginning with May, appear directly or through the local clearing house, as rs most appropriate and convenient to you. No special is °rt need be made to obtain the figures, however, if there = i s. stance on the part of the banks to submitting thear "On the basis of reports prepared by the Reserve Banks, c' e" flas been found that in the case of about 20 reporting centers the banks that now report hold less than 90 per t;ilt of the deposits of all commercial banks in the respeca's-ye centers. It seems desirable, incident to the shift to errIal°11thlY basis, that an effort be made to improve the coy.ge Cases where it is incomplete if this can be done 3;0 4* out inconvenience. It is suggested, therefore, that 21 endeavor to obtain reports beginning with May from the ,ore important nonreporting banks located in reporting el, !rs. In the case of very small banks, of course, inth; ' s °11 or exclusion is not a matter of importance, but 1e , is no objection to inviting all nonreporting banks in ;, centers that are included, either directly or through the the V-earing house, to report regularly. Please advise are 'uoard which, if any, additional banks in your district covered by the first monthly reports. "The proposed form of monthly report has been changed htly from the draft attached to the Board's letter 571 3/26/42 -19- :of January 23 and a copy of the revised draft is enclosed. ihe form will be printed, and it is expected that an initial supply will be sent to you in about two weeks. Arrangements for the shift to monthly reporting may then be made with the reporting agencies and banks and a supply of tie form distributed to them. However, explicit instruc2.-ons should be given that the period to be covered by the larst report on the new form is the entire calendar month or May, and that weekly reports should continue to be submitted through the week ending May 6. If any banks indicate an unwillingness to report their end-of-month deposits, you TaY inform them that their debits reports will continue to ;? acceptable and that the reporting of deposits is not oblgatory, It is not contemplated that any extensive changes fl the agencies used in collecting the debits reports will a e made, but in cases where the present reporting procedure unsatisfactory or you have reason to believe at a change „a6 would result in improvement there is no objec'Lola to your seeking to bring about such change. in :When you have obtained the individual reports coverg all debits-reporting banks in your district and inspected them for possible errors and inconsistencies, please 1Tepare for transmission to the Board a transcript showing 'a-41! month's debits and deposits for each individual bank, stiIlct each reporting center. If practicable, these data e mailed to the Board's Division of Bank Operations 1- tulle to reach lashington by the eighth of the month foloring that to which the figures apply (air mail should, 0_ course, be used where necessary). After the first two 114three months, if experience indicates that the individ4.7bank figures are not particularly useful, you will be 2Q-fied to send to the Board merely the totals for each 'reporting center." l Approved unanimously. Thereupon the meeting adjourned. ___6Raaa, 413Proyea__,///' LI) Secr Lary.
@FedFRASER