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• Minutes of actions taken by the Board of Governors of the ederal Reserve System on Friday, May 231 1952. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Martin, Chairman Szymczak Evans Powell Mills Robertson Mr. Carpenter, Secretary Mr. Sherman, Assistant Secretary Mr. Kenyon, Assistant Secretary Minutes of actions taken by the Board of Governors of the _ al' Reserve System on May 221 19521 were approved unanimously. Telegrams to the Federal Reserve Banks of Nex York, Philadel— Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, 4.nsas the -1t;,Y, Dallas, and San Francisco stating that the Board approves et without change by the Federal Reserve Bank of St. Louis °I1 May 191 by the Federal Reserve Bank of San Francisco on Ma'Y 20 , 1 3 -Y the Federal Reserve Bank of Minneapolis on May 211 and by the Feder al Reserve Banks of New York, Philadelnhial Cleveland, Rich— inond At ' lanta, Chicago, Kansas City, and Dallas on May 22, 1952, of he ra, of discount and purchase in their existing schedules. Approved unanimously. Meinuranda recommending that the basic annual salaries of the followi ng employees be increased in the amounts indicated, effective 14'V 25, 1952: ‘` 5/23/52 -2Salary Increase From To Name and Title Memorandum from Mr. Williams, Assistant Director, Division of Research and Statistics P ?, Date 0, ulemorandum 5/19/52 Doris P. Warner, Economist Wilellyn Morelie, Economist Loretta Freedman, Clerk Doris Bruderer, Clerk-Stenographer Margaret Notter„ Clerk 45,940 $6,1140 4,830 4,955 3,575 3,655 3,495 3,575 3,1]0 3,190 Memorandum from Mr. Marget, Director, Division of International Finance 5/7/52 Arthur B. Hersey, Chief, Special Studies Section Florence I. Jaffy„ Economist Robert Solomon, Economist 10,000 10,200 6,140 6,340 5,940 6,1h0 Memorandum from Mr. Dembitz, Assistant Director, Division of International Finance 5/20/52 Amanda Patricia Brown, Clerk-Stenographer 2,830 2,950 Memorandum from Mr. Sloan, Director, Division of Examinations 5/12/52 G. C. Page, Assistant Federal Reserve Examiner 6,000 6,125 Memoranda from Mr. Leonard, Director, Division of Bank Operations 5/12/52 5/19/52 Kathryn E. Ridgway, Statistical Clerk Barbara Bauman, Clerk 3,030 3,175 3,110 3,255 t 5M/52 DA+ oP —3— Salary Increase From To Name and Title Memorandum from Mr. Bethea, Director, Division of Administrative Services .10.•••=. 5/7/52 Iloen C. Shepherd, Printing Clerk Valeria Faina„ Charwoman $3,785 $3,910 2,420 2,490 Approved unanimously. Letter to Mr. Diercks, Vice President, Federal Reserve Bank of Chicago reading as follows: "In accordance with the request contained in your letter of May 20, 1952, addressed to Mr. Sloan, the Board aPProves the designation of Richard A. Moffatt as special assistant examiner for the Federal Reserve Bank of Chicago." Approved unanimously. Letter to Mr. Slade, Vice President, Federal Reserve Bank of Sari Francisco, reading as follows: s "The Board of Governors of the Federal Reserve _Ystem has considered the recommendation of your Bank 7°1711-t?aned in your letter of May 14 and, pursuant to the sion of Section 19 of the Federal Reserve Act, Lants permission to Sun Valley National Bank of Los t-eles, Los Angeles (Sun Valley), California, to maint(83-in the same reserves against deposits as are required andbe maintained by banks located outside central reserve me ,reserve cities, effective as of the date of commence" r of business by the subject bank. m i. "Please advise the bank of the Board's action in this 4dter, calling its attention to the fact that such permis' th ll is subject to revocation by the Board of Governors of 6 Federal Reserve System." 4 Approved unanimously. 5/23/52 -4Letter to Mr. Joseph McCord, Director, Department of Financial Institutions, State of Indiana, Indianapolis, Indiana, reading as follows: "This refers to your letter of May 17, 1952, inquiring as . to the prospects of passage in the near future of the ?ill S.2938, relating to capital requirements for membership the Federal Reserve System and for the establishment of branches by member banks. This bilk is still pending before the Senate Banking and Currency Committee and no similar bill has yet been IIIn - troduced in the House. As you know, the Senate Committee : Is been largely occupied by consideration of extension of 4.,e,tefense Production Act; and we are, of course, hopeful u_uat., the Committee may yet find it possible to consider the °aPltal requirements bill. "We appreciate your interest in this matter and we shall b 6 glad to -advise you of any developments." Approved unanimously. Letter to Mr. Pondrom, Vice President, Federal Reserve Bank of reading as follows: to "This refers to your letter of May 15, 1952, addressed all*. Sloan in which you requested permission to destroy d, .rePorts of condition and all reports of earnings and -,t-i-yldends of national banks and State member banks up to, 'Jut rTt including, the year 1947. In accordance with the authority given to the Reserve Barik, in the Boardts letter of July 24, 1946, S-925, the Bo ; 1 has no objection to the destruction of the reports m4. ' on- ned. The reports which you forwarded to the Board I4arch 12, 1947, for microfilming, have been destroyed." Approved unanimously. Dallas Letter to Mr. Pondrom, Vice President, Federal Reserve Bank of 3 reading as follows: 5/23/52 _5_ "Reference is made to your letter of May 13, 1952, addressed to Mr. Sloan in which you asked to be advised 'tether the Board's instructions regarding retention of reports of examination of State member banks apply in the ease of State member banks which have converted into national banks. ."It is believed that the reports of examination you ntlened as well as all correspondence and related reports rulling the period of membership as State banks should be eualned indefinitely. This procedure would seem to be c°nsistent with the policy outlined in the Board's letter Of JulY 24, 1946 - r Approved unanimously. Letter for the signature of the Chairman to Gruntal & Co., 25 Broad Street, New York, New York, reading as follows: "This will acknowledge receipt of your letter of Aily 10) 1952) in which you suggest that so-called Iconf i sioni transactions be exempted from Regulation U, the _7,gulation which relates to loans by banks for the purpose Purchasing or carrying stocks registered on a national cal-ties exchange. r _ 'In these 'conversion' transactions you simultaneously spde a stock, sell a 'call' on it, and buy a 'put' with re'„et t° it. Men you enter into such transactions you frA,sell the 'call' at a differential above the 'put' sufth : lent to cover costs and a small profit. You state that st-se transactions are 'absolutely riskless from a banking a ndpointl. • "The Board of course, welcomes suggestions for aiding In the • 3 ll 1_ wi administration of its regulations. Your suggestion fa „ ue carefully examined in the light of the relevant "s, and you will be advised further. use "The margin regulations are chiefly concerned with the anci °Ifs credit rather than with reducing the risks of lenders, tran vue carrying of the stock purchased in a 'conversion' llsaction does, of course, involve the use of credit. °Ilt in any way prejudging your question or preventing W3/52 11ts careful and independent consideration at this time, think I should mention that the Board has previously had occasion to consider a suggestion that such transactions be exempted, and it reached the conclusion at that time that it would not be appropriate to adopt such amendment.” Approved unanimously, together with the following letter for the signature of the Chairman to Mr. Sproul, President, Federal Reserve Bank of New York: "For your information there is enclosed a copy of letter and enclosures received from Gruntal & Co., 25 Street, Net York 4, New York, suggesting that soca t lled 'conversion' transactions be exempted from Regula1°n U. There is also enclosed a copy of my reply. "4e would appreciate any comments or suggestions that Your G ur, Bank might care to make on the question raised by runtal& Co. "For your convenient reference in connection with the b kdateme nt in my letter that the question has previously feen considered by the Board, there is enclosed an excerpt prom.a letter which Hr. Edward C. Gray, Executive Vice Gresldent of the New York Stock Exchange addressed to IZrnor Szymczak under date of April 25, 1951, together s,h the Board's letter of August 29, 1951, discussing the 'Aggestion."
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