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; Minutes of actions taken by the Board of Governors of the Federal Reserve System on 'Wednesday, March 26, 1952. The Board met ill the Board Room at 10:05 a.m. PRESENT: Mr. Martin, Chairman Mr. Szymczak Mr. Evans Mr. Vardaman Mr. Powell Mr. Mills Mr. Robertson Mr. Sherman, Assistant Secretary Mr. Murff, Assistant Secretary Mr. Leonard, Director, Division of Bank Operations Mr. Vest, General Counsel Mr. Sloan, Director, Division of Examinations Chairman Martin stated that yesterday afternoon he and Mr. !eat a ttended a meeting of the Patman Subcommittee in executive session, Itt which time he delivered to Chairman Patman a letter dated March 25, 952 trInsillitting, for examination by the several members of the Subcomttees certain communications from the Federal Open Market Committee 444 the Board of Governors to the President and to the Secretary of the itle4t8/117 with respect to questions of credit policy and Treasury financing t lie Period July 1950-February 1951. The material thus transmitted was thit o trtIthlioh the Subcommittee requested that he (Chairman Martin) submit : 141 1 examination when he appeared before it March 11, 1952. Chairman 48aid that the letter of transmittal was read by the members of the V26/52 -2- mmittee (all but Congressman Wolcott were present) and that they looked over the documents attached to the extent they desired. He also 414 that in the course of discussion, Senator Douglas stated that the letter of February 7, 1951 addressed by the Chairman of the Federal Open 4e1icet Committee to the President was the one he was "fishing for" and that he thought it would be desirable to put it in the record. Chairman liartin said that after some discussion, which was on a very cordial and t11114144 basis, he and Mr. Vest withdrew from the room in which the Subecktittee was meeting and that they were called back in 20 or 30 minutes It/11114h time Chairman Patman returned the documents listed in the transal letter, stating that he would keep only the transmittal letter and tilt the Subcommittee would consider further whether the other material 11°111ci be made a part of the public record. Chairman Martin went on to all that he was disposed to think the Subcommittee might decide not to ttleitide the letters in the public record. During the foregoing report, Messrs. Thurston, Assistant to the tokrA and Riefler, Assistant to the Chairman, joined the meeting. Chairman Martin stated that during the meeting with the Subcomkittee 44hq was asked certain questions concerning the savings bond program 144 that 1, ' 41 responded that it would be difficult for him to comment on thitt le 13r°Vaz since it was not within the jurisdiction of the Federal Rel't158Ystem but was in the province of the Treasury. • T 3/26/52 • _3_ Chairman Patman also brought up the matter of examinations and • "te of the Board and of the Federal Reserve Banks and requested that he (Chairman Martin) attend another executive session at ten o'clock on Illeaday morning, April 1, 1952, bringing with him copies of the audit IleP°Ite covering the Board and the Federal Reserve Banks as made by the " 8 le examination staff and the Reserve Bank auditors. Chairman Martin 841dthat he would plan to attend the executive session of the Subcom14ittee next Tuesday accompanied by Mr. Leonard, Mr. Sloan, and perhaps 414 Lang, Chief Federal Reserve Examiner, with a view to presenting any illtormation which the Subcommittee wished regarding the examination and 411dit Procedures followed. There followed a discussion of the material that might 1;os called t}1 attention of the Subcommittee and of the general procedure to be Naoly ed in submitting the reports and information requested, and it was 114ciel8t00d that a more detailed agenda of material to be presented would be PliePared by the staff in consultation with Mr. Robertson between now '4( th I ° date of the executive session. In this connection, it was underNod that material to be prepared would cover not only the audit and ttaltai tiation procedures but also the budget procedures observed by the Qood and the Federal Reserve Banks. It Was also understood that Mr. 11/441w ..., c44-141 accompany the Chairman at the executive session of the Subttee next Tuesday. I 11 3/26/52 —4At this point the members of the staff listed above withdrew rret the meeting and W. Allen, Director of the Division of Personnel Adtirlistration, entered the room. The Secretary was subsequently informed that following a discussion of officers' salaries at the Federal Reserve Banks, Mr. Allen withdrew from the meeting, and that during the executive session that ensued the Board approved a memorandum from Mr. Young, Director of the Division of Research and Statistics, dated March 19, 1952 recommending that Miss Susan S. Burr, Assistant Director, Division of Research and Statistics, be authorized to accept an invitation to participate in the Economic Education Workshops sponsored by the Texas Economic Education Council and that she also be authorized the necessary official leave and traveling expenses to Texas for that purpose, with the understanding that a travel authorization request would be submitted as soon as a definite itinerary was arranged. The following additional actions were taken by the Board: Minutes of actions taken by the Board of Governors of the ?otter 41 Reserve System on March 25, 1952, were approved unanimously. Letter to Mr. Stevens, Federal Reserve Agent, Federal Reserve fulk of New York, reading as follows: fr "In accordance with the telephone request of March 24 Mr. Harris, the Board of Governors approves the pay"tent of salary to Mr. R. E. Hunke at the rate of $6,550 per !,411 ,11171, effective January 24, 1952, which is the effective of his appointment as Alternate Assistant Federal , 411E1 , 4eserve Agent." Approved unanimously. Letter to Mr. Lunding, Federal Reserve Agent, Federal Reserve 1441k of wkicago, reading as follows: re, 3/26/52 -5- "In accordance with the request contained in Mr. Meyer'sletter of March 21, 1952, the Board of Governors approves the payment of salary to Mr. Charles J. Scanlon, Alternate Assistant Federal Reserve Agent, at the rate of $81800.00 per annum, effective January 141 1952." Approved unanimously. Letter to Mr. Koppang, First Vice President, Federal Reserve 8,4k of Kansas City, reading as follows: "In view of the circumstances described in your letter of March 201 1952, the Board of Governors approves the payment of salaries to the following employees at rates below their respective grade minimums for a further period until April 1, 1952: Department Name Head Office Accounting George E. Moran Check Collection Schofield Magdalen Dining Pat Guadagnoli File Marilyn Childs Agency Fiscal Lorene Free Agency Fiscal Mary Pomie Denver Branch Check Collection Margaret Stieb Branch Oklahoma City Administrative Oren Powell Building Thomas Norman Omaha Branch Check Collection Lois Mandolfo Check Collection Debris Shafer "The Board of Governors also approves the payment of s• .i.es to Messrs. Brenton Leavitt and Elmer Screechfield, c ar E4al amlnation Department, at rates below their respective grade minimums for a further period ending July 1, 1952. "The Board of Governors also approves for a further Pieriod ending March 31, 1952, the payment of salaries to 13c3an Stastny and Lavonne Martin, employees at the Omaha ' ranch, at rates that are below their respective grade minimums." Approved unanimously. 31X/52 -6Letter to Mr. Smyth, Vice President, Federal Reserve Bank of 13141ae s reading as follows: "In view of the circumstances described in your letter of March 20, 1952, the Board of Governors apProves the continuation of the payment of salary to Mr. Ralph H. Rogers while occupying the position of Supervisor of Return Items - Remittances and Country Checks, Transit Department, San Antonio Branch, at the rate of $3,900 per annum which exceeds the maximum established for the grade in which his position is classified." Approved unanimously. Letter to Mr. Latham, Vice President, Federal Reserve Bank °I' katon, reading as follows: "In accordance with the request contained in your , letter of March 20, 1952, the Board approves the desig!,!ation of the following as special assistant examiners Or the Federal Reserve Bank of Bostnn: Roger C. Meuse Foster K. Cummings John 0. Barrows Harold J. Kennedy William E. Studley Kenneth Holland John F. McTeague Donald A. Pelletier Harry H. Norris Thomas F. Hunt George E. Mulvey George McLeed Joseph B. McBride George H. Harris John H. Bragg Phillip A. Burbine William G. Kendricken" Charles L. Buchanan Approved unanimously. Letter to Mr. Stetzelberger, Vice President, Federal Reserve allic of Cleveland, reading as follows: request contained in your lett "In accordance with the 112,4 er of March 24, 1952, the Board approves the desig--"14n of the following as special assistant examiners 3/26/52 "for the Federal Reserve Bank of Trimbur, Hilda Haflinger, Constance R. Petrovic, Stephanie (Mrs.) Zgonik, Elsie B. Zielaskiewicz, Clara (Mrs.) Bergold, Molly (Mrs.) Covert, Violet (Mrs.) Davis, Helen C. DiBlasi, Frances F. Fennell, LaVerne M. (Mrs.) Hawkins, Bernice Stroh, Coletta M. Blue, Bernice L. (Mrs.) Campbell, Helen E. Eberhart, Edwin A. Kamerer, Gordon R. Cam, Charles H. Clay, W. Rogers, Jr. Coby, Arthur B. Janicki„ Joseph W. Martin, Albert G. Peoples, Edgar R. Poelking, John A. Stemmles Charles E. Pollock, Robert H. Cleveland: Edwards, ArthurE. Todhunter, Paul E. Spies, Olive M. Bones, Gladys A. (Mrs.) Fajfar, Dolores F. Sievertson, Gertrude (Mrs.) Kantor, Marguerite (Mrs.) Zinger, Leona I. (Mrs.) Winslow, Frances (Mrs.) Kaczorek„ Alice J. (Mrs.) Amos, Helen E. LaBoda, Mary C. (Mrs.) Berish, Eleanore L. Scott, Helen H. EMrhein, Marie Lewis, Stella I. Hoelke, Clara E. Erste, Anne J. Whither, Virginia L. (Mrs.) Dickman, Mildred L. (Mrs.) Nichols, Catherine Smith, Betty Jane Struble, Janet M. Wasco, Helen Grover, Rosemarie Easton, Claire. P." Approved unanimously. Letter to Mr. Armistead, Vice President, Federal Reserve 84* of Richmond, reading as follows: le„ "In accordance with the request contained in your naner of March 21, 19520 the Board approves the desig4ion of the following as special assistant examiners the Federal Reserve Bank of Richmond: Benjamin F. Harrington, Jr. John H. Mosner, Jr. 01. 4 "Appropriate notations have been made in our records he names to be deleted from the list of special 3/26/52 _8_ "assistant examiners." Approved unanimously. Letter to Mr. Vergari, Counsel, Federal Reserve Bank of PhiladelPhia, reading as follows: , "Receipt is acknowledged of your letter of March 21, 52, and enclosures relating to apparent violations of e "egulation W by Kaplan Furniture Company, Scranton, PennsYlvania. This material was forwarded in accordance with Paragraph 7 of the Board's letter of January 18, 1952, W-179. "In view of the fact that the latest examination spewed only three willful violations, consisting of late 4°: .1111 Payments, your suggestion as to the handling of 'us matter appears to be entirely in order." Approved unanimously. Letter to Mr. Lloyd W. Foutz, Executive Director, Oil Heat 48°ciation of Metropolitan Philadelphia, 5035 Sansom Street, Philacleiphia) Pennsylvania, reading as follows: p "This refers to your letter of March 21, 1952 reif,d_ing the application of Regulation W to the so-called e„ 7 . 1er Plant of financing consumer purchases of heating -1"1-Pnlent. re ."The Board's action in eliminating the down payment c rement for Group D items, including residential heatt4ye orpment, should afford at least a partial solution Problem. Requirements governing maturity and the 1102d11ling of instalment payments remain unchanged, "ever. all "In the Board's opinion, it would be inadvisable to in °W the schedule of instalment payments to be adjusted rei , ccordance with the seasonal use of a product. Such lei ' could not be equitably granted to any single item 3/26/52 -9- "alone and its general application would substantially weaken the effectiveness of the Regulation." Approved unanimously. Letter to the Presidents of all Federal Reserve Banks, reading as follows: "In connection with Amendment No. 7 to Regulation W, you may find it helpful to have some additional background concerning the Board's decision to eliminate the down payment requirement in connection with credit extensions for Group D articles, residential repairs, alterations, or improvements. At the time this provision was first included in the Regulation in September 1950, there as general recognition of the great difficulty of obtaining anything like complete observance of such a reTlirement when applied to all home improvement credits -as' distinguished from Federal Housing Administration requirements that there be a down payment only if the Credit grantor wished Federal Housing Administration Insurance). In adopting this down payment provision, therefore, the Board was aware that it might not prove to be either sufficiently equitable or effective as a credit restraint measure to warrant its indefinite retention in Regulation W. In an effort to make the requireIr,leht administratively feasible, the Board provided that the Payment must be obtained before beginning work, but the Defense Production Act amendments of 1951 forbade the requirement of a down payment before completion of the w°rk, and amendment of the regulation to carry out this , 1, 3r°vision virtually destroyed any chance of successfully g"forcing the requirement. WM__ zosperience brought out in practice the problems that had been anticipated in connection with the down !Plient requirement in the home improvement field and nowed that the cost and effort throughout the System 01. attempting to administer and enforce the provision utweighed , Weighed any possible restrictive effect on instalment or expansion. Furthermore, in the case of violations, J/26/S2 -10-- "it was either impossible to obtain the necessary evidence to support a referral to the Department of Justice, or the time and effort needed to secure such information were disproportionate to the significance of such violations. It was these considerations, and not the desire to stimulate the extension of home repair and modernization credit, that led the Board to conclude that the proshould be eliminated. "The matter also was discussed with the Federal Housing Administration to ascertain whether that agency would seriously object to such action. This discussion brought out the fact that Federal Housing Administration not only had no objection but that it was also prepared to eliminate the down payment requirement with respect to home improvement loans insured under Title I of the Federal Housing Act. "The Board will not refer any more cases covering violations of the down payment provision of Group D articles to the Department of Justice, even though the violations occurred prior to the effective date of Amendment No, 7. It will not be necessary, therefore, to submit to the Board additional reports of violations of this provision, in accordance with our letter of January 18, 1952, S-14301 j-179." Approved unanimously. Order for proceedings pursuant to section 8(b) of Regulation C(Insumer Credit, prepared in accordance with action taken at the etijig on March 18, 1952, in the matter of Video Meter, Inc., 108 11:44 Street, San Francisco, California, a registrant under Regulation WI reading as follows: "UNITED STATES OF AMERICA At aBEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM e, meeting of the Board of Governors of the Federal Reserve °Ystem held at its offices in the City of Washington, D. C., on the 26th dm_of March, A. Do, 1952, 3/26/52 "In the Matter of Video Meter, Inc.) a California Corporation, 108 Ninth Street, San Francisco California. -11-- ORDER FOR PROCEEDINGS PURSUANT TO SECTION 8(b) OF REGULATION W, CONSUMER CREDIT. The Federal Reserve Bank of San Francisco has advised the Board of Governors of the Federal Reserve System that Video Meter, Inc., a California Corporation, hereinafter called the registrant, has filed a registration statement with that Bank 1?ursuant to Section 2(b) of Regulation 4, Consumer Credit, i ssued by the Board of Governors pursuant to Section 601 of the liefense Production Act of 1950, as amended; and that Bank has l'ransmitted information to the Board of Governors which tends to Show that since September 18, 1950, the effective date of Regu-ILIationVi and contrary to the provisions thereof, the registrant as leased, and made instalment sales of, television receiving sets listed in that Regulation in violation of the terms thereof. II The information reported to the Board of Governors, as !et forth in Section I hereof tends, if true, to show that the fegistrant, in instalment sales of listed articles since Septem'er 18) 1950, has violated Regulation A: a. By not obtaining the down payment required by Section 3(a); b. By not obtaining the down payment at or before the time of delivery of listed articles, as required by Section 3(c); C. By delivering listed articles in anticipation of instalment sales without obtaining at or before the time of such delivery, a deposit equal to the down payment that would be required on such an instalment sale, as required by Section 6(f); d. By inflating the cash price of listed articles sold, thereby evading or circumventing the down payment requirements of the Regulation contrary to the provisions of Section 6(h); e. By extending credit for financing the purchase of listed articles knowing that there was other credit extended in connection with the purchase of .4 1 3/26/52 -12- "the listed articles, thereby bring the total amount of credit extended in connection with such purchases beyond the amount of instalment credit permitted by the Regulation, contrary to the provisions of Section 6(1); allowing discounts to be used as part or all By f. of the down payments on listed articles contrary to the provisions of Section 8(j)(7); g. By filing to keep, maintain, and preserve records of such instalment sales as were made by it as is required by Section 8(a); One or more of the violations alleged in paragraphs a to g, inclusive, hereinabove set out, occurred in connection with one or more of the leases and/or sales of listed articles by the registrant to the following persons or customers: Jane Alexander James Morgan M. Konchalski Gladys B. C. Bergman Lee Edwards Eura Stanley A. Bergman Richard Carroll 'one Cain Allen Gravier W. E. Hall Robert L. Bebout Harold Williams Lester D. Smithers Mr. C. Raquizs Chew Teya C. J. Laws Ann P. Kennedy Schuchart Loretta M. Saunders Percy T. Webb George E. Turner Horace O. Weaver Leroy Jacobson Silvio G. Santori Frank Bell Barbara Conover W. C. Larson Lucille Brown Chas. Mitrea Warren Scott Ginna Ryan Azzie Lee Thomas Daryl Dillon Mrs. Hazel Elmore Mrs. P. Hilsen E. F. Spencer Max C. Singleton C. Dimmitt David Perez Mack Pittman Lucille L. Bronson FrankW. Clark, Jr. Lee Baca Donald Chapin Sam Ono Mrs. James O'Connor Robert Lee Nicholson Mrs, Ivy Chargois John Wood Ozzie Lewis John W. Little Mrs. Robert L. Martin Frank J. Scardino Norman Babkirk 3/26/52 "Harold R. Follett Thelma Patricks Robert E. Sutherland Herbert M. Johnson Charles Hoffman E. Norris 1816 Pacific St. Oxford Hall Colonial Hall Terrace Guest House Phi Delta Theta Joe Caboara Harold Square Deetz Residence Club Roosevelt Hotel Club Casino 5044 Club I. F. O. No. 1 Office Launderette L & M Cafe Delux Guest House Barrington Hall Astoria Guest House Angelos Prank C. Weaver The Buchanan Fourty-One Club Gilroy Club Stewart Hotel Berkeley Motel Zeta Psi -13Rogers S. Cannel Marie Bell George Pavis William Guyman Atelena V. Uribe Swanson Guest House Frank Cascino Curleyts Restaurant Dolphine Room Rainbow Club Zenieth Cafe White Guest House Wilson Guest House Santa Maria Club Rockwood Inn Parkview Inn North Gables Marogos Club Joaquin Guest Haase The Henry Clay Hawley House El Rancho Annex El Rancho San Pablo Motel Chateau de Longpre Casa Verda Broderick Manor 1035 Haight Street House of Baker The California Hotel Crane Hotel III The Board deems it necessary and appropriate that proceer14..., --ulgs be instituted to determine: a. Whether the statements set forth in Sections I and II hereof, are true; b. Whether it is necessary or appropriate in the public interest to suspend the license of the registrant pursuant to Section 8(b) of Regulation W. 3/26/52 IV "IT IS HEREBY ORDERED that a hearing for the purpose Of taking evidence on the questions set forth in Section III hereof be held before the Board or before a trial examiner designated by the Board at a time and place to be fixed by the Board. (signed) Merritt Sherman, (SEAL) Assistant Secretary." Approved unanimously. Letter to Mr. Olson, Vice President, Federal Reserve Bank of Chic ego, reading as follows: "Reference is made to your letter of March 18, 1952, with attachment, regarding the applicability of Regulation X to the construction of a parsonage 'that will be connected to and attached to' the present Church of the Redeemer building in Racine, Wisconsin. The Board is of the same opinion as the Chicago Bank in that the erection of this parsonage should be considered new residential construction and that conventional credit advanced for its permanent financing is subject to Regulation X. This residence would be analogous to a row :Iollse or semidetached house which is joined to a struc! ware other than a residence. "In regard to the status of structures ancillary tO churches, hospitals, and schools, no action has been taken on this matter since the time of our past discussions on the question." Approved unanimously. Assista Secre ry.
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