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930 Pede ral Minutes of actions taken by the Board of Governors of the Reserve System on Wednesday / November 17, 1942. in the Board Room at 10:30 "I" PRESENT; Mr. McCabe, Chairman Mr. Eccles Mr. Szymczak Mr. Draper Mr. Evans Mr. Vardaman Mr. Clayton The Board Mr. Mr. Mr. Mr. Mr. Mr. Carpenter, Secretary Sherman, Assistant Secretary Morrill, Special Adviser Thurston, Assistant to the Board Riefler, Assistant to the Chairman Thomas, Director of the Division of Research and Statistics Mr. Vest, General Counsel Mr. Leonard, Associate Director of the Division of Bank Operations Coheider ati" of the response to be made to the President's N Or ovember the 6' 1948, with respect to material for the State Union the Economic Report, and the legislative proIles3r1" .N111,7z e or restimed ;At the close of the discussion, it was undert4,t, the _ „e materi ton the State of the Union message and the 4tter 11 Port 'would be prepared by Mr. Thomas and that a draft of to the tood, 811re411 of the Budget outlining in general terms the glelatt °/.1 t be Proposed by the Board would be prepared by Mr. 441 s, , *, L' m3 lltted for the consideratton of the Board. I)a co rlric tlon with the foregoing discussion, 111.. Riefler • Goldenweiser formerly Economic Adviser to the At QT:it 11/17/48 B(lard 'had prepared a book for publication by the Committee for Eco41114 Development In which he presented a proposal for a ceiling reeeN Plan, and he suggested that Hr. Goldenweiser, as a Consultant t0 the Board, be asked to present this plan at a meeting of the Iloarci4 Mr. Riefler's suggestion was approved unanimously, with the understanding that a letter to 11r. Goldenweiser would be prepared fixing a time for the discussion which would be convenient to the members of the Board. Ineftach aS it had been agreed that the letter to the Bureau tildget on legislation 4 to the rlature would be in general terms and questions 't the and scope of the legislative proposals had not been cle"eci by the Board, Mr. Eccles suggested that a staff committee be aPkIllted t° Prepare alternative proposals of the legislation that railltbe Presented at the forthcoming session of Congress. It was agreed unanimously that the staff committee consisting of Messrs. Thurston, Morrill, Riefler, Thomas, Vest, and Carpenter appointed by Chairri McCabe in accordance with the ac1 at the meeting on October 12, 1948, e notild undertake the work, with the nderstanding reached at that meeting Uthat the committee would consult with seeers. McCabe and Eccles (with Messrs. zYmczak and Draper as alternates). At this Point Messrs. Riefler, Thomas, Vest, and Leonard withNI the raee ting and the action stated with respect to each of tter s her elflafter referred to was taken by the Board: 11/17/48 -3Minutes of actions taken by the Board of Governors of the Federa]., 4eserve System on November 16, 1948 were approved unanimously. , 111,nutes of the meeting of the Board with the Federal Advisory "e-Lci on November 16, 1948, were approved unanimously. Letter to the Department of State reading as follows: 1948 "Reference is made to Cable 8955, of October27 co Lf ,r°m the United States Embassy in Colombo,Ceylon, of theing the Finance Minister's oral acceptance John-nrcl of Governors' offer of the services of M• trifo gw.ter, and u the Minister's request for addition servionicY4 respecting Mr. Exter and the terms of his tralls , This information is supplied herewith for it a n4esion to the Ceylon Government, if you consider deerT2Priate. Exter is 38 years old. He holds a Bachelor's degrL the Colleo.e of Wooster in Ohio and a Master's i Massa' l()fll the Fletcher School of Law and Diplomacy ing tchusetts. He received his principal graduate train1110/leyriaL e°11011lics at Harvard, where he specialized in H ' lard banking, and he also taught economics at air ,1a8 at " hthree years before the war. During the war ne bee,,t:e Mas sachusetts Institute of Technology, where 4abore.7e assistant to the director of the Radiation lierovlanr) a laboratory R engaged in the development of 8erva B v e radar. He joined the staff of the Federal enl '30111f4 1945. In 1946 he represented the Board ;(11ataiser' i-- 1. of the Joint Philippine-American Finance in Manila which included in its recommenda.at tral-1 : the PhiliPpine Government should establish a • He later returned to Manila to partici-attorl draftin of appropriate central bank legisK't;er : 1 In ad qa, ditiOr1 g to s work in the Philippines, Mr. krld 0 trave led on Federal Reserve Board business "Ildi a ' -414 La irelc̀4m°hetary and banking conditions at first d "04 a) Siam, China, Hong Kong, and Japan. the 813 of comparable arrangements by which of "the s_ United States Government customarily Perla Ceylon wrvices of American experts, we ofpropose tt es itivireimburse the Board for a part e exAay°gecl in Mr. Exter's mission. The Board will • Exter's regular salary and will ask to 11/1748 nbe re• n imbursed for only the expenses incurred by it as inb 'lgeat to Mr. ExtPrts services in Ceylon, reimbursement to iriclil e i acl , e upon the Board's voucher. The reimbursable items dt3 -0 -lrl' y\e aggregate allowancesto Mr. Exter at the rate of and ' a Year; transportation from Washington to Ceylon in iL st 41-irri for him, his wife, and his three small children, toc : f17:fig a Per diem while in travel status corresponding fexpol:ei,;are t al xtrrlo:ed in the Foreign Service and flight insurance himself; and the sum of $1,000 for special ilsoes, such as clothing, equipment, luggage, etc. 'In cltlon, with respect to certain requirements in Cenon adi Board- -involving expenditures in Ceylonese currency, the by theProPoses that, in lieu of payment of such expenses terit +1, 8°ard and its reimbursement by the Ceylon GovernfEtraii,'"e Ceylon Government provide Mr. Exter and his tiairvt "at its expense, suitable living quarters and Obllacicleiatell,ance thereof (including servants), and local inservices including reasonable use Extert ofen autoit 18- and C s work, hauffeur. With respect to Mr. hitt 8 "esumed that the Ceylonese Government will provide l•rorititttable offices, a secretary, and other necessary required ocfatcerillisties, including transportation if duties. 41erit 0; e shall appreciate being informed by the Govern; ceylon these terms are acceptable to it, an 8exi0r fl be glad to discuss the details with the Ambas!erve j °111 CeYion, who is now in Washington. This will ° Mr. Extert s departure, which will have Place ile-th citt,.verY promptly if he is to arrive by Decemue mentioned by the Ceylon Government." Approved unanimously. c)t the Metorandum dated November 5, 1948, from Mr. Smead, Director bivisiori of 4140 Bank follolrieincogmmending that the temporary operations, killIte bq tae,ci appointments of the employees in that Division : 11e1744rient, effective litez 'zI.D., immediately: ItN. t'Nee liz . Lucille Van 11 B. Order ',1illard 4e-Ill t% Woociley Approved unanimously. Designation Clerk Clerk-Typist Clerk 11/17/48 -5Memorandum dated November 10, 1948, from Mr. Bethea, Direct4'orthe D ivision of Administrative Services, recommending the 4P1MlitAent of John E. Osborne as an operating engineer in that 1)brision, with basic salary at the rate of 3,601.80 per annum, rtective as of the date upon which he enters upon the performance s cliatdes after having passed the usual physical examination. Approved unanimously. tor of Memorandum dated November 17, 1948, from Mr. Bethea, Directhe Division of Administrative Services, recommending the 413Poirltztient of Mrs. Lela M. Wilson as a cafeteria helper in that (Y4 a tempora___ ry basis for a period of two months, with salkry at 4te 111)on the rate of $2,020 per annum, effective as of the 'which she enters upon the performance of her duties having passed the usual physical examination. Letter to Mr. Of st, L (kis, Approved unanimously. Peterson, Vice President of the Federal Reserve reading as follows: "Refer 1 elles is made to your letter of November 8, , '4itette-tl'ding the report of examination of The First 11948,-;,°f Mounds Mounds, Illinois, as of October .ecithe -, the apparent violation of section 2.4A arising in the investment in banking of amouni exceeding the common capital b "It S noted that the bank disposed of its old -gore quarters, carried °31, "ed at *3)750 for &)1250 and has th 0 1 -e carrying Pe )00. value of banking premises tc:c1, 1, amount 44'1 t is understood that the total am ng, reconstructing and furnishing n new of -Iters, net of the book profit from sale 1/4141/4/1 -*4 C111.21 11/1748 -6"the °J-cl quarters, was approximately $87,600 but the manaorlent does not contemplate increasing the carrying value theits premises beyond $35,000. It is noted, also, that tio bank intends to adopt an annual program for depreciationJ begi aniuG in 1949, which provides for annual reduc48,am0unting to $2,500. tiott 'In the circumstances, and in view of your recommendato ' be Board of' Governors will interpose no objection Stet:,,rePorted investment in banking premises by The First of Mounds." Approved unanimously. Lette r to Mr, )2qt4it Phelan, Vice President of the Federal Reserve or New I'prk, reading as follows: "This eloein refers to your letter of November 5, 1948, enl'ark vg correspondence between yo your Bank and the Asbury Jers:ati°118-1 Bank and Trust Company, Asbury . Park New c°neerning Principally the application.oP ' section curta°; Regulation W. The question presented whether 1948 ' arid renewal erfected subsequent to September 20 , t the1711 +1 211"t to an agreement or understanding therefor n' '- ts " ‘ - 4 of an which credit creditappears on extension or tecie --e to be an extension of a single payment or trP eri .or to S eptember 20, would constitute a 'renewal' Nig '71siorit ation. within the meaning of section 5(a) of the 4 "As illiail, Y°1.1 indicate the original extension of credit, ,„c°11ti.t--1,i_g the c ommitment for curtail and renewal, would '''e llin —je en instalment loan, if made today, within the t Pkyrilei4 of the s summary interpretation entitled 'Single e itstalment credit' at page 6 of S-1044.-a. ; pB Ekbe ' e-a, g4...,tIle case the obligation, in its entirety,t bs,?TiletIttnT,,',"-ally- the same as the more usual instalment '-'.1gation. In either case, the fact that t ebe ;" 20 cir,°1% lictuidation arrangements occur after Sepem h, t-°111 : thQ" 'lot affect the exemption of the transaction 1,Elde anal'egulation where the original contract was filjo °%%r-sei : s bthefe_flinc_ls were disbursed or credited to the llot ; is the ' t'l e,September 20 The Board's view, theren9titutf,rle curtail and renewal in question would ri 'le of e-"' a: 'renewal? or ?revision? within the I'll sUchection 5(a) even though payment or lio uida: - manner would involve the substitution ti: If 48 -7- ttor or different paper for the original evidence of tives Section 5(a), as you suggest, would become effeca41,;,.°tilY if the origina.1 loan contract, including the the —lerit or understandino- for curtail and renewal, were sunbject of a 'renewal' or 'revision'. e.ppii The foregoing would not seem to find widespread eita,„"tion because of the necessary underlying factual for.-a.`,. 1 For example, it would seem especially unusual , u81100n note to be made subject to an agreement or surrisi ing of the kind in auestion which would be of ciliatit%ell ,:t definiteness to justify the view that subseorig,, • **, e inancing or revision would be a part of the ' (lepe;a4" 1°an contract. The solution in each case must the particular facts and circumstances involved. W Approved unanimously. Tele , ' ' 4 .-8211 to Mr. Of Cleveland Blair, Counsel of the Federal Reserve Bank 'reading as follows: the tiftil°11 are authorized to send letter to Treasurer oftle.i,-rWaY companies regarding registration under g ; 11 I'l as proposed in your wire of November 5e Banks regardie a-re sending following wire to all Re . ti°111 b.rig the matter: Quote In connection wit sh erve istraIfith -4A4cier R to th-o'r-Wayegulation W arrangements have been r com gpleted D iscount, Ohio, Corporation, Toledo, similar sect to IlEtz,t B° , nientioned in our wire of November 4 with re ti°11 Ofl'rjr,.rrY 'Y Corporation (successor to Rexair Corpo praNe So c' far as registration is concerned tion, be of Air-Way may now, with one exce.p1 ora: ce'neidered on same basis as those of Rexair.. 4 " excertion tolY, sells 19 tht i in the city of Chicago, ir0 1 is) Fred mr1 Y at to an independent diste Wholesale rio bfu 48:Ne.- el.:4's Minerly, doing business under the name ei'4'ekeri-,1-4-eato Company. ' I'•fr. Yinerly and his dealer*114d f,',110t, sell paper to Air-way and are not infur' 4 .c,ne toi.101;:t 141re arrangement. Unquote. to Bank we are adding the t4Qtizl e41 quoteChicaogo if You deem Miner, auit advisable, you are NEIrtlid ivt0 -1,4 wc)rk out, similar arrangement with Mr. y dealer-salesmen. Unquote." :11 Approved unanimously. •, • ;•141) 1 -8Telegratt Ilkk of to Mr. DeMoss, Vice President of the Federal Reserve tallas, reading as follows: 'Reurtel November 10, 1948, concerning the applica co ltY °I' Regulation W to instalment refinancing byfinance toni7 PanY of balloon balance of instalment note made payable ve erici°1 'by purchaser of house trailer and endorsed by ornclor to finance company. You state also that both sale forh°11se trailer and endorsement by vendor occurred ben!Ptember 20, 1948, and present refinancing by an cblet,8 suezr,.uicm Payable to the finance company would be purlib " uo un derstanding at time of sale and on terms rm int more preterea then provided by regulation. Under summary er netee:tion entitled or fiseller 'Obligation payable to saielel ins titution' at page 7 of 5-104.4-a, original exempted Els itarli.d financing Board apparently would be of type coneur s c1m : ,ent sale of unlisted article. However, rielf ex-; - 6hat refinancing in question would constitute 411t ie,elleicm of credit in form of unclassified instalthe un-all subject to section 4(b) of regulation unless feet derstanding for refinancing constitutes, in ef811ch ' eav .,,b, inding obligation of the instalment note. In Ae.yrtient—r4e: Parties merely would be complying with reext.P1'°*visions of pre-September 20 contract and no 41411 1-,risi°r, of instalment credit of section 5(a) resllbstitc3„-.1.11,evision would be involved, notwithstanding rialle1.42," 01.1 of new for original paper. Such a refinl'ee411;11lirarigeTnent, however, would seem unusual esease of balloon note and, for foregoing to .4)1cler es""viuerstanding' must be binding on the subsequent ell as the original payee." Letter t Approved unanimously. 8,g ° the Presidents of all Federal Reserve Banks reading 114 811 —e October 1, 1948, Presidents' Conference it ti"ltedggested that the weekly telegraphic advice ofeartaecolllitgold and su securities Securities held in custody for foreign ,estt0 , 8 be el iminated. The Board concurs in the °I' the C R onference and accordingly, has amended .4`ttoti ''" 'i, ernellt of Proc dure with Respect to Foreign 811-4. ' FederaleReserve Banks' enclosed with the e IL!1;;ci 11117/48 _9_ nBo ardis letter of December 14 1943 (5-718; F.R.L.8. the bY eliminating itE;m(d) Under Section 3(g)(6) of Statement, effective immediately." Approved Memoranda dated November unanimously.from Carpen 15, 1948/ ot fer t : et'lrY of% the Board, and Mr. Leonard, Associate eSe e D'711 .ir .ector pi el vi8ion of Bank Operations, recommending, for the reasons stated in the )11e1c)liazida, that the following items in the 1948 non-personal bildgets of those divisions be inc eased by the amounts indicated: 01,,pickn. N411.4 1, °}' THE Amount SECRETARY bIli4i08wirlci $ 92.50 Maintenance - 41g °F BANK OPERATIONS ' and Binding 3,500.00 Approved unanimously. iilDtoved. ,* Chairman.
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