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572 A meeting of the Board of Governors of the Federal Reserve smera was held in Washington on Friday, March 27, 1942, at 11:30 PRESENT: Mr. Mr. Mr. Mr. Eccles, Chairman Ransom, Vice Chairman Szymczak Draper Mr. Mr. Mr. Mr. Morrill, Secretary Bethea, Assistant Secretary Carpenter, Assistant Secretary Clayton, Assistant to the Chairman The action stated with respect to each of the matters hereinatte referred to was taken by the Board: The minutes of the meeting of the Board of Governors of the 4...a.1 Reserve System held on March 26, 1942, were approved unani- 1110usly. Telegrams to Mr. Sanford, Secretary of the Federal Reserve 134k 0f u New York, Mr. Malden, First Vice President of the Federal Reaerve Bank of Richmond, Messrs. Dillard and Stewart, Secretaries of thepe deral Reserve Banks of Chicago and St. Louis, respectively, and 141'' C Chairman of the Federal Reserve Bank of Kansas City, statin g that the Board approves the establishment without change by the Fed eral Reserve Banks of New York, Richmond, Chicago, St. Louis, a.rid risas City on March 26, 1942, of the rates of discount and purehaee . 111 their existing schedules. Approved unanimously. llemorandum dated March 26, 1942, from Mr. Nelson, Assistant Se Qrete. recommending that Albert J. Sadler be appointed as a guard 573 3/27/42 —2— in the S ecretary's Office on a temporary basis for an indefinite period, with sa1ary at the rate of 41,380 per annum, effective as of the date uP°1"thich he enters upon the performance of his duties after having Passed satisfactorily the usual physical examination, with the under81:a ding that if his work is satisfactory during the first six months Of his a ppointment a further recommendation will be submitted asking that his salary be increased to ft,500 per annum. Approved unanimously. Memorandum dated March 26, 1942, from Mr. Nelson, Assistant SecretarY, recannending that Mrs. Loretta D. Beale be appointed as a illnior • flle clerk in the Secretary's Office on a temporary basis for a Peri°d of not to exceed six months, with salary at the rate of Ta,260 Per effective as of the date upon which she enters upon the per— formance of her duties after having passed satisfactorily the usual NlYsical examination, with the understanding that if her work is satis— rual\ctc) during the six months' period a further recommendation will be -"4111tteci asking that her appointment be made permanent and her salary increased to -1,440 per annum. Approved unanimously. Memorandum dated March 21, 1942, from Mr. Goldenweiser, Di— of the Division of Research and Statistics, submitting the resig— Of oeeome Edward Boorstein as a junior economist in that Division, to effective as of the close of business on March 20, 1942, and 574 3127/42 —3— ree°11111erlding that the resignation be accepted as of that date. The resignation was accepted. Letter to Mr. Creighton, Chairman of the Board of the Federal Reserve Bank of Boston, reading as follows: to your letter of February 26, 1942, the Board"Referring of Governors approves the appointment of Mr. William as First Vice President of the Federal Reserve ,ank of Boston for the unexpired portion of the five—year Lem ending February 28, 1946. "In accordance with the request contained in your letter of March 18, 1942, the Board of Governors also ap— 3vss the payment of salaries to Mr. William W. Paddock President, and to Mr. William Willett as First Vice Pr esidente, at the rates of $25,000 and $16,000 per annum, sPectively, as fixed by your Board of Directors, for "s period April 1, 1949, to April 30, 1943, inclusive." r J Approved unanimously. Letter to Mr. Clark, Vice President of the Federal Reserve Bank q Atlanta, reading as follows: March 18, 1942, re "Reference is made to your letter of ,questing that the Board approve the reappointment of R. se Wilson as an assistant examiner for the Federal Re— avrve Bank of Atlanta. It is understood that you wish to 1,ail Yourselves of Mr. Wilson's services on a more or 88 temporary basis until you can find someone with good rsasibilities for development to replace him, at which r ison will be returned to another department of e Mr. 'a the Reserve Bank. be "In the circumstances, it is not felt that it would as aPPropriate to approve the appointment of Mr. Mason However, the Board will /Iota Fegular assistant examiner. ject to his assignment to the Bank Examination De— 'i;'t'tment for the time being under the authorization con— in the Board's letter of March 3, 1942, approving the : al designation of MT. Wilson as a special assistant ex— t-i;fer even though his service may be more regular than ordinarily contemplated in designating persons as 4 4 575 3/27/42 -4- "special ' assistant examiners in order that their services may be available to assist your regular examining staff When necessary." Approved unanimously. Letter to Mr. Woolley, Vice President of the Federal Reserve of Kansas City, reading as follows: let"In accordance with the request contained in your t-er of March 17, 1942, the Board approves the appointof Everett D. Land as an examiner for the Federal 'eserve Bank of Kansas City. Please advise us of the efleetive date." Approved unanimously. Letter to Mr. Gilbert, President of the Federal Reserve Bank Of Dail as, reading as follows: n Boa- Referring to your letter of March 21, 1942, the 1-cl of Governors approves the reappointment of Mr. Char] . R. Moore, and the appointment of Messrs. E. P. H;:lac'ns, Lawrence S. Pollock, Ira T. Moore, and Jake L. as members of the Industrial Advisory Committee ,u or the Eleventh Federal Reserve District, each to serve the term which will expire February 28, 1943. Your miTTents regarding changes in the personnel of the Come have been noted." Approved unanimously. ot Letter to Mr. Gilbert, President of the Federal Reserve Bank -0, reading as follows: to "Referring to your letter of March 21, 1942, the .1 c1 of Governors approves payment of salaries to the fo , 31'1-owing officers for the period March 19, 1942 to May th' 0 1942/ inclusive, at the rates indicated, which are se fixed by your Board of Directors: Annual salary Title ti, 11-44a Lee cook Assistant Cashier, 3,600 Houston Branch 576 3/27/42 -5-"Name H. K. Davis Title Assistant Cashier, San Antonio Branch Annual salary .(n,300" Approved unanimously. Letter to "The First National Bank of El Campo", El Campo, Texas, l'ILding as follows: "The Board of Governors of the Federal Reserve Systern has reconsidered your application for certain fiduciary Powers, and grants you authority to act, when not in contravention of State or local law, as co-trustee under the t a-st agreement dated August 1, 1941, executed by Guy F. ell-1 Edith Stovall, under which you are now acting, the exercise of such right to be subject to the provisions of Federal Reserve Act and the regulations of the Board or Governors of the Federal Reserve System. fid "This letter will be your authority to exercise the r,uciarY power granted by the Board pending the preparation of a formal certificate covering such authorization, w ".1-ch will be forwarded to you in due course. , "In granting the above authorization, it is desired t a4emphasize the importance, where a corporate fiduciary the as.a co-trustee, of its participating actively in administration of the account, and of maintaining adete records of its actions in order that evidence may it available at all times that it has properly discharged s responsibilities toward the trust." r Approved unanimously. Tel-egram to the Presidents of all Federal Reserve Banks, reading ae follows: copies Of "On March 11 Board forwarded to Reserve Banks 1 eports of informal committees on enforcement and Better B ,: 081ness Bureaus. Board would appreciate having in writing tr or before April 1 your comments and suggestions on these tg reports. Board will welcome your frank criticism of Plans outlined in the reports and your suggestions of ill7rnative methods. In order to avoid a System conference s'shington on account of the critical hotel conditions 577 3/27/42 -6- "here and increasing pressure of work in the Reserve Banks, Board and its staff on receipt of your comments and suggestions will work out an enforcement plan to be submitted to the Reserve Banks at a later date." Approved unanimously. Letter to the Presidents of all Federal Reserve Banks, reading a8 fOliOWS: ,, "Questions have been received regarding instalment ' ° Ligations created before the effective date of AmendMerit No. 3 to Regulation VI and the extent to which a creditor may revise the terms of such an obligation, extending its maturity, without requiring a Statement 4ece58ity. The applicable rule in such cases depends whether the obligation was or was not subject to the egulation when it was created. "In the case of a revision of an obligation that was to the regulation before March 23, 1942, t,he the zilective effective date of Amendment No. 3, the rule is stated I tu section 8(a), that is, the revision may not change the f?rms to any which would not have been 'permitted in the +1rst instance for the credit. For example, if an au2Mobile was sold with a 12 months' maturity in December when 18 months was permissible, it could be revised even s. after March 23, 1942 to increase the maturity by raonths, since this would still result in a maturity on 18 months as permitted in the first instance. ar, "To determine the applicable rule for the revision ouZer March 23, 1942 of an instalment obligation growing he the article added to the list bysale before that date of an coe must be read in 8(a) the amendment, section sennection with the last part of the paragraph added to 9(d) by the amendment. When read together these steti°n te that in such a case the obligation may not be reto terms which, when reckoned from the date of the exe. : 1) would not be permitted under the amendment. For tIlriV'e, suppose a watch was sold with a 12 months' ma%113;k7 in December 1941 when the transaction was not aftJect to the regulation. If the obligation is revised ti March 23, 1942 when watches have become listed are-4es, the maturity may be increased by only three months i 578 3/27/42 -7- 7since this would result in a total maturity of 15 months, the longest permitted under the amendment for such credit." Approved unanimously. Letter to the Presidents of all Federal Reserve Banks, reading as follows: received regarding the effect Of "Questions have been Amendment No. 3 to Regulation k, effective March 23, 1942, on a bona fide commitment made before that date to Make a sale or loan after that date on terms that were Permitted at the time of the commitment but are not permitted under the terms of the amendment. "This may be illustrated by a bona fide commitment made before March 23 to install a particular furnace on !,-5% down payment. After that date the requirement is 2o 23') but if there is a valid contract, made before March tr) to grant the credit on a 15% down payment, this con4 ,.act may be carried out. The same principle applies the commitment relates to an article added to the 1St by the amendment. "However, as indicated in W-12 which discussed corn1 made before September 1, 1941, in any such case must ere the actually be a valid contract and not merely form or appearance of a contract. The principles stated in , hat interpretation should be consulted in this connecti' wo°n. If the requirements stated in 1-12 are met, it not alter the case that the commitment is accom, ,"led by a form of 'lay-away' or partial prepayment Lan.11 Approved unanimously. Letter to Mr. Turman, Counsel of the Federal Reserve Bank of 414Ita ) reading as follows: to "Reference is made to your letter of March 3, 1942, of Solomon regarding the effect of section 8(a)(2) =ti .on Wupon an instalment sale of a repossessed alit "The Board has had occasion to consider this quest.Ion • lh other connections and has expressed the view 579 3/27/42 -8- "that, in the usual case where a Registrant repossesses an automobile and offers it for sale, section 8(a)(2) would not authorize the sale to be made on any terms Other than the standard requirements of the regulation. "The Board has also considered two related but somewhat unusual cases. In the first of these the finance company repossessed the automobile, but before it was 8°-14 at public auction the customer advised the finance e°mPany that he could pay the remaining balance if the IYments were reduced. The Board expressed the view that section 8(a)(2) would permit the Registrant to reVise the contract by reducing the payments if the Regis',cant deemed such action necessary for his own protection. "In the second case the car was repossessed and at public auction, the finance company being the lipurohaser. Thereafter the customer made a similar statement and the finance company wished to reinstate the deal 'fld let him have the car without a one-third down paytrn • The Board expressed the opinion that the Regis1, ant might also reinstate the contract in this case if e c.leemed it necessary for his own protection, since the egistrant would not be making a new sale to a third party out would still, in effect, be dealing with the defaulted obligation. sold "You will note, however, that both these cases turned original obligor and obligation were, effect, still involved, and that neither of these cases :-Lters the general principle that section 8(a)(2) does not Ilthorize a repossessed automobile to be sold on any terms other than the standard requirements of the regulation." PPon the fact that the Approved unanimously. Letter tark of to Mr. Woolley, Vice President of the Federal Reserve ICansas city, reading as follows: s is in reply to your letter of March 2 with furth let,er reference to the questions submitted in your /4of February 18 regarding the effect of Regulation Upon the sale of a repossessed automobile. 'Pon in vit:The Board's letter of March 3 discussed two cases Which a dealer, after repossessing an automobile, 580 3/27/42 —9— "reinstates the contract with the original purchaser, With modified terms, and said that in the cases described ,1,11 letter no down payment was required because the Registrant was 'not making a new sale to a third party still in effect dealing with the defaulted obli"However, your letter of March 2 presents a case Where there is a sale to a purchaser other than the °r1gInal obligor, and although there may be unusual sit.1a,_tl°ns, it would seem that the question is answered by '"e Board's wire of November 15, 1941 to Mr. Phillips Stating that in the usual case where a Registrant repos...;”es an automobile and offers it for sale, section ' /14 a) would not authorize the resale to be made on terms not complying with the Regulation." Approved unanimously. LOS An Letter to Mr. R. Leslie Kelley, Editor of the Kelley Blue BoOk, 6eles, California, reading as follows: "This is in reply to your letter of March 23 addressed to the attention of Mr. Dembitz. The following Imbered paragraphs are in reply to the questions of the same numbers in your letter: "1. Zith respect to the possible designation of 4fi e Kelley Blue Book for Purposes of Regulation IV in IT, states of Montana, New Mexico, Texas, Oklahoma, of arisas, and Louisiana, it has been the understanding the Board that the market for used automobiles in thosema states has been sufficiently different from the tket in California that a compilation of the estimar cal?d average retail values of used cars reflecting the ma lf°rnia market would not be representative of the arkets in such other places. The Board would be very toad to give consideration to any data that you may wish submit that may indicate the facts to be otherwise. 'The Official Guide' published by Pacific Auto Inc., Los Angeles, has been designated for the ut, es of Arizona, California, Idaho, Nevada, Oregon, Q413"and 1,ashington. Nort3- 'Northwest Used Car Values', published by the hwest Publishing Company, Seattle, has been designated r 581 3127/42 -10- "for the states of Idaho, Oregon, and Vashington. "6 The Board's designation of the 'Kelley Blue Book I was intended to apply to the March-April issue during the month of April and to the May-June issue during the months of May and June. The question whether the aY-June edition should also be included among the publications designated for purposes of Regulation V. for 8°111e Period prior to May 1 has not yet been given consideration by the Board; in case the Board should decide to 2hange this designation so that it will apply to the 'jaydune edition during some part of the month of April, you ! I'll be notified. Your conunent with respect to the increase reflected in the March 25 issue of the District L Edition 10! the N.A.D..A. 'Official Used Car Guide' has been noted the Board's staff but they have not yet had an oppor01,InitY to make any detailed comparison between this issue -L the N.A.D.A. guide and the March-April issue of the K elley Blue Book. eh "10. It is our impression that you contemplate the name of your publication to 'Kelley Official Blue naltl? Book'. The Board will have no objection to desigti lng a publication of that name in lieu of its designaif°n of the 'Kelley Blue Book', please notify the Board you decide to make this change. The Board has not yet given detailed consideration tO th 5, 7 e various questions raised in paragraphs numbered 4, n '8 and 9 of your letter, -which will be answered as as possible." Approved unanimously, together with a letter to Mr. M. E. Peters, President and Editor of The Offigi.!_ea Guide, Los Angeles, California, in the following form: lat. "This will acknowledge your letter of March 24 ren,,lng to the inclusion of The Official Guide among the es designated for purposes of Regulation Y. in seven uern states. The Board appreciates very much your exess c)n of cooperation in this matter. cm 'It is noted that in your opinion the selling prices ap ted in the March-April issue of The Official Guide are tejoXimately 10 per cent under today's market values and '13 in accordance with the Board's request of March 21 ZV 582 3/27/42 -11"that we be notified in advance of any substantial change the basis of your quoted retail prices, you inquire as to the Board's attitude on the possible issuance of a statement by you to your subscribers to the effect that !:Jle prices in your Guide may be raised 10 per cent. The Board's designation of your Official Guide, however, was intended to apply during the month of April to the Irch-April issue, and the Board is not prepared at this Llme to extend the designation to a supplementary statement.which would in effect replace this issue by an issue clu°ting retail prices 10 per cent higher. You also inquire as to the Board's attitude with resPect to your making a similar 10 per cent increase in May-June issue when it is published. The Board has :(1).yet given detailed consideration to the matter of a 1j.j-leY with respect to this and similar inquiries, which be answered as soon as possible." Letter to the Jacobs Wind Electric Company, Inc., Minneapolis, kinales °ta, reading as follows: Hm . s isb with reference to your letter of March 21, , concerning the application of the Board's Regulation t0 2 Credit sales of bind electric plants. You suggest that enat such credit sales should not be included within the c°13e of the regulation. The attention of the Board has been called to this 17duct on several occasions and careful consideration been given to the question of its treatment under the u gulation. in "One of the principal objectives of the regulation indeurtailing credit is to reduce the opportunity and of ucement for civilians to make unnecessary purchases 10 goods of the class to which these electric plants be-. dong. The requirement of an 18-month maturity with no Payment seems to the Board very liberal in contrast do1,11 the requirement for similar goods of 33-1/3 per cent th n.?' and 15 months maturity. It was in recognition of meelr relation to farm activities and residential improvemollt that such plants were not included in the list under evere requirements. The Board knows that you will appreciate the necessit Y for balancing the war needs for materials against 9 583 3/27/42 -12- • civiIlan requirements. The Board's decision in this 111,?,tter has been made with the full realization that there Iy1.1l . be individual cases of inconvenience and delay, but lt ls believed that the serious problems of today can Only be met by measures of this kind." o Approved unanimously. Letter to Senator Robert F. Wagner, Chairman of the Senate ecmmitt -ee on Banking and Currency, reading as follows: "This is in reply to your letter of December 27, requesting an opinionas to the merits of the S. 2146, 2147, and 2148 which would amend the Home R 14ome Ovmers' Loan Act of 1933, Title IV of the National , °11eing Act, and the Federal Home Loan Bank Act. The believes that the enactment of these bills would not be desirable in the public interest. 74hen your Committee was giving consideration to theb Con„all S.4095 during the third session of the 76th you requested the views of the Board as to the iT"--Ls of that bill. In response to this request, the Roard filed a report, and Messrs. Marriner Eccles and onald Ransom testified at hearings on the bill, in opP°sition to its enactment. For the ready reference of Ur Committee, a copy of the adverse report which the oard filed on S. 4095 is enclosed herewith. 8. , "In general, the Board objected to the enactment of 4095 because as stated in its report, such enactment wolad re=present a material departure from the original ide a behind their (building and loan associations and fnlar institutions) creation and would so enlarge the of their permissible operations and the sources from sioln WhiCh they could attract funds that it may be con, clered as having the effect of establishing a separate a , ti.;' complete banking system'. It was further pointed out saa 'as between Home Loan Bank members and savings banks, civInEs departments of commercial banks and other financ_al institutions, the bill would strengthen and increase a;:mpetitive advantages of the Home Loan Bank group which e not enjoyed by the others'. Although the provisions 1941,4 V 584 3/27/42 -13- "of s - 4095 which would have extended certain tax exemption ate chartered associations and would have reduced tile premium rate on Federal Savings and Loan insurance are ntot contained in the bills S. 2146, 2147, and 2148, still, _he Principal provisions of these three bills in other respects are substantially the same as those contained in the bill S. 4095. "Therefore, the Board feels that these bills are sub,ect to the same fundamental objection which it offered 0 the enactment of S. 4095 and should not be enacted." Approved unanimously. Telegram to the Presidents of all Federal Reserve Banks, reading as follows: "Due to delay at War Department in setting up their °rganization to handle new war production credit procedure, Conference scheduled for Monday is postponed until Tuesday ecIrledy Will wire definitely before Saturday noon. lease advise your wishes regarding hotel reservations." Approved unanimously. Telegram to the Presidents of all Federal Reserve Banks, readIlg as follows: 'Meeting which was called for Monday will be held on We dnesday at nine a.m." Approved unanimously. Thereupon the meeting adjourned. Chairman.
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