Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, March 28, 1952, Volume 39, Part 1

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11r41.1

Minutes of actions taken by the Board of Governors of the
Federal Reserve System on Friday, MarCh 28, 1952.
FIESLET:

Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

Martin, Chairman
7,3,Tmczak
Evans
Vardaman
Powell
Mills
Robertson
Mr. Car enter, recret' ry
5sistant,ecretary
Mr. Sherman,
lit Lecretary
AssIst,
Mr. Kenyon,

Governors of the
Minutes of actions taken by the 3u_Ird of
l'ederal Reserve System on March 27, 192,

InCre

approved unanimously.

of New York, Cleveland,
Telegrams to the Federal Reserve Banks
Einneapolis„ Kansas City,
nd, Atlanta, Chicago, Ft. Louis,
Board approves the establiship.a.11aF,, and Lan Francisco stating that the
r4ent without change by the Federal Reserve Bank of St. LMals on March 24,
Francisco on March 25, and by the
-e Iederal Reserve Bank of Lan
Richmond, Atlanta, Chicago,
ederal Reserve Banks of New York, CleveDuld,
27, 1952, of the rates of
/414neapoli8, Kansas City, and Dallas on Larch

'448count and purchase in their exh,tinG schedules.
Approved unanimously.
from hr. Williams, Assistant
Memorandum dated February 26, 1952,
Statistics, recommending that the
actor, Division -of Research and
following employees in that
.vorary indefinite appointments of the
effective immediately, with
1-sion be eytended on a permanent basis,




3/2e/52

-2-

no change in their present basic anmal salcArics:
Title

Name
Joan N. Yamamoto
Marian E. Fadeley
Marjorie C. Cars
._5.runa L. 1,atts

Clcr
Cler
Draftsdli

-pproved unanimously.
VJ1-(111., aea
Eemorandum dated March 17, 1055, frolA iTr.
Illending an increase in the basic salary- of Fletcher E. Brovh, 1-CC21(n"?'er
111 the Board Meml,ers' Offices, from 5,07C to

3,l5O per annum, e,— ectTA -c

March 30, 1952.
Approved unanimouslj.
annual salaries
Memoranda recommending increases in the 1-asic
of the following employees, in the amounts indicated, effective March
3o, 1952:
Salary Increase
From
Vtle
To
bate of Memorandum
Name and
the Board
of
secretary
the
Memorandum from
3/17/52

Marjorie Eaton,
Secretary to Mc. Sherman

y3,785

$3,910

General Counse?
Memorandum from Mr. Vest,
3/17/52

Lucy I. McCulloch,
Secretary to Mr. Vest

1+,955

Director,
Memorandum from Mr. Younc,
Statistics
and
Research
Division of

3/24/52




Charles E. Fox, Jr.,
Economist

5,185

3/28/>2
Date of Irlemorandum
c. )2

-3Name and Title
Howard G. smith,
Economist
'Olnofred Raez,
Clerk
Monica F. Jones,
Clerk
Vera F.
Clerk-Typist

Salary Increase
From
To

ti:4,330

)5
.44,14,

3,78>

3,910

3;535

3,660

3,190

3,27G

Memorandum from Mr. harget, Director,
Division of International Finance
3/26/52

Dorothy V. Uright,
Clerk

3,575

Memoranda from Mr. Sloan, Director,
Division of Examinations

3/19/52

3/2 b2.

M. V. McNamara,
Assistant Federal Reserve
Examiner
3,795
E. K. O'Malley,
Assistant Federal Reserve
Examiner
3,795
Carl A. Emith,
Assistant Federal Reserve
Examiner
Elizabeth A. Kropog,
Stenorrai-.:her
2,990

3,920
3,920
4,870
3,110

Memorandum from Mr. Bethea, Director,
Division of Administrative Eervices
3/27b2

Harry F. Kern,
Eupervisor, Procurement
ection

,060
'

Memorandum from Mr. BootiTic-!,
Credit Regulation
Division of Selective

3/19/52




Ruth D. stone,
.-,ecretary to Mr. Noyes
Approved unanimously.

14,295

4,420

r;

4

3/28/52
Letter to Mr. Erickson, President, Federal Reserve

Br:thk

of Roston,

reading as follows:
"In view of the circumstances descriled in your letter of March 19, 1952, the Board of Governors approves the
Payment of salary to Mr. John J. Fogg, Vice I-resident, for
the period July 1, 1952, throuch March 31, 1953, at his
present rate of *13,000 per annum, uhich is the rate fied
by your Board of Directors as indicated in your letter."
,proved unanimously.
Telegram to Mr. Mlbur, Chairman of the Federal deserve

"cL3an

Francisco, authorizing him to leS1)±3 a limit,(2d votinc, permit,

141der the provisions of Eection 5144 o r the Revised ;46.1tutes of the
UTlited Etates, to Transamerica CorPoraton, Can Yrancisco, California,
elltitlinE such organization to vote the stock which it owns of the
l'ir.ut National Bank in Delano, Delano, California, at

ny time prior

increase the capital
to July 1, 1052, to act upon Proposals (1) to
stock of such bank, and (2) to amend the articlek-, of association of
the Comptroller of the
Ile/1 bank to conform to articles recommended by
shall be in accordance with
ell'rre ncY, provided that all action taken
Currency.
iplans satisfactory to the Comptroller of the
Approved unanimously.
Lanh,?.m, 71v ,se of Reyrerent;
Letter to the Honorable Henderson
'"InEton, D. C., reading as follows:
you addressed a
"Under date of February 11, 1952,
Deposit Insurance
letter to Chairman Hanl of the Federal




571

3/28/52
"Corporation forwarding correspondence from the Appalachian
Oak Flooring and Hardwood Corporation, Ellijay, Georgia,
relative to drafts drawn by the Unity Container CorporaTrust
tion for collection through the South Side Bank &
Company, Chicago, Illinois. As this Lank is a member of
the Federal Reserve Fystem, your letter was referred to
this office for consideration.
Federal Re"In response to the Board's request, the
serve Bank of Chicago made a thorough investigation of this
g
case, including discussion with the State Bankin Depart
by
any claims
ment. The consensus of their views was that
ation for
Corpor
d
Hardwoo
the Appalachian Oak Flooring and
negotiation
damages or losses should be handled by direct
Side
South
the
and
ation
Corpor
With the Unity Container
court
a
h
Bank & Trust Company, or, if necessary, throug
authority
of equity; and that bank supervisors have no
to become involved in a dispute of this nature.
d by this
"On the basis of the information receive
of private
one
is
Office, it appears that the controversy
no jurishas
System
rights over which the Federal Reserve
isory
superv
certain
diction. While this Board exercises
Systhe
of
members
powers with respect to banks which are
n
such
'hanks,
betwee
s
tem, the settlement of private dispute
within the scope
their customers and third parties is not
are matters
ersies
controv
of the Board's functions. Such
nation by the
determi
or
for negotiation between the parties
courts.
be of assistance in
"We regret that we are unable to
understand the
will
this matter but it is hoped that you
Board's position."
with
Approved unanimously,
PresiVice
a copy to Mr. Diercks,
Chicago.
of
Bank
dent, Federal Reserve
Assistant Manager, Foreign DepartLetter to Mr. C. P. Loveland,
Philadelphia, Pennsylvania, reading
Girard. Trust Corn Exchange Bank,
follows:
inquiry of March 7,
"This is in response to your
graph (3) of
subpara
1952 regarding the application of




lip".14

3/28/52

-6-

a situation
"Paragraph (a) of section 1 of Regulation C to
ws:
stated in your letter to be as follo
dity in
'One of our clients purchases a staple commo
is
ased
purch
dity
commo
bulk in a domestic market. The
to
s
truck
own
his
in
loaded immediately and transferred
ns
a
obtai
he
se
purcha
his plant storage. Promptly upon
r,
selle
the
but
r
selle
letter of credit to reimburse the
rehe
e
befor
dity
commo
in most instances, releases the
does not
ceives the letter of credit. As our client
commodity
the
s
store
operate a commercial warehouse and
use
receipt
wareho
of
In his own premises, a standard form
r's
the
selle
from
made
is not obtainable. As delivery is
g
is
ladin
er's
truck
no
stores to our client's own trucks,
obtainable.
ation be met if
'Would the requirements of the regu]
pt which
recei
dial
custo
our client issued a deposit or
rty of the
prope
the
as
acknowledged the commodity stored
disposal? The bank,
bank, subject to their sole right of
of the commodity
in turn, to release such amount or amounts
st Trust Receipt
as may he required from time to time, again
nted to the
prese
be
Such deposit or custodial receipt(s) to
the
presentation
with,
bank at the time, and in conjunction
relative
the
under
of any draft or drafts for sccentance
letter(s) of credit.'
Regulation C reerred to
"The portion of section 1 of
above provides as follows:
may accept drafts
'(a) Authority. - Any member bank
which Grow out of
or bills of exchange drawn upon it
*:
any of the following transactions *
***
rtates or in any
'(3) The storage in the United
marketable staples, proforeign country of readily
exchange is secured
vided that the draft or bill of
warehouse receipt or
at the time of acceptance by a
securing title coverother such document conveying or
staples.'
ing such readily marketable
you have described, the
which
"In the circumstances
be issued by the customer
'deposit or custodial receipt' would
the goods would be stored
for whom the acceptance is made and
the Board over many years
on his premises. The position of
or other such document
has been that the warehouse receipt
endent of the customer
Indep
must be issued by a person who is
ly, a draft or bill
quent
Conse
for whom the acceptance is made.




57

3/28/52

-7-

"of exchange secured by a custodial receipt issued by the
customer in the circumstances stated in your letter would
not be eligible for acceptance."
Approved unanimously, with
a copy to Mr. Hill, Vice President,
Federal Reserve Bank of Philadelphia.
Letter to Mr. Millard, Vice President, Federal Reserve Bank

of

i'a.r1 Francisco, reading as follows:
20,
"This is in reference to your letter of March
and
form
lease
a
of
1952, with which you enclosed a copy
Lumber
Lincoln
the
an 'option' letter currently used by
Company, Venice, California, in the leasing of homes.
The question is whether the leasing arrangement of this
on 7.
Company is subject to the provisions of Regulati
nd
we
understa
us,
to
d
submitte
"From the information
of
Period
a
for
leased
that the Company as lessor has
is rethree years a number of new homes; that the lessee
the first and
quired to make a payment of rent to cover
the Company
last ten months of the rental Period and that
lessee
the
offering
furnishes the lessee with a letter
of the
month
ixth
thirty-s
the exclusive right within the
the lease.
lease to purchase the property covered by
on _Pct, as
Producti
Defense
"Section 602(d)(2) of the
on 7, defines 'credit'
incorporated in section 2(c) of Regulati
, or any
contract
e
-purchas
as including '* * * any rental
use
of propother
or
contract for the bailment, leasing,
has the option
user
or
lessee,
erty under which the bailee,
* and any transaction or
of becoming the owner thereof,
purpose or effect.'
similar
series of transactions having o
the Comrsny's leasthat
on
conclusi
"We agree with your
tioned definition
tove-men
a
ing arrangement comes within the
ent is suborrontem
leasinr
the
of 'credit' and, accordingly,
en
F.
Thereiiegulati
of
ns
ject to the restrictive provisio
with the rubulation
comply
not
does
fore, the leasing arrangement
lessor an amount
unless the lessee has advanced to the




574

3/28/52
"equivalent to the down payment that would be required if a
sale had taken place."




Approved unanimously.