Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, November 24, 1948, Volume 35, Part 4

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Minutes of
actions taken by the Board of Governors of the

Fed_

Reserve

System on Wednesday, November 24, 1948.
SENT:

Ir..
Mr.
Mr,
Mr.
Mr.
Mr.

McCabe, Chairman
Eccles
Szymczak
Draper
Evans
Vardaman
Mr.
Mr.
Mr.
Mr.

b

Carpenter, Secretary
Sherman, Assistant Secretary
Morrill, Special Adviser
Thurston, Assistant to the Board

Minutes of
actions taken by the Board of Governors of the Fed—

'1e8er170

System on November
23, 1948/ were approved unanimously.
tor w. Meraorandura dated November
192 1948, from Mr. Bethea, Direc—
the
t
Division of Administrative Services, recommending that
eral3orEry a
ppointment of
that
Chester A. Dozier, a laborer in
1-01, be
extended on a permanent basis, with no change in his
l ent

salEry of $2,020 per annum, effective November 28 1948.

41,11e

Letter
411k

Approved unanimously.

to Mr. Rounds, First Vice President of the Federal Re—
, New York,
reading as follows:

19
,
A4
,
8
) Reo
e%
eteriee is
,d
made to your letter of November 10,
441112f
ng approval of a new scale of minimum
till and
as for the respective grades under
C sii.eries
Job
me411-a
,,,.̀1*()11 and Sala
Administration Plan at the
1
th re
Bank of New York and the Buffalo Branch.
"41erve°ard approves, effective November; 1, 1948,
:
,'ecti.17;"'ng minimum and maximum salaries or the re—
the-teracles at
the Federal Reserve Bank of New York
1-alffalo
Branch:




4/204
-2"Grade

3
4
5
6
7
8
9
10
11
12
13
14
15
16

Minimum Salary.
Head Office
$1,560
1,800
1,980
2,160
2,400
2,640
2,880
3,240
3,600

2:15:11,1
6,000
6,800
7,500
Buffalo Branch
1
21,440
1,620
3
1,800
4
1,920
5
2,220
6
2,400
7
2,640
8
2,940
9
3,240
10
3,700
Ii
12
4,000

Maximum Salary
$2,100
2,400
2,700
2,940
3,240
3,600
3,900

g
6,600
7,400
8,100
9,200
10,200
1,920
2,160
2,400
2,640
3,000
32°
6 t0
3:

4
5:70:
4:
04
4
5,
6,000
6,800
7,500
8,400

14
Cf )
1()
131
.; C)
5,600
15.
166,200
n7L,
7,000
Provici"Plan
of
Job
and Salary Administration
Evaluation
tlazirti es for ,
s,,, cx spread of 35 percent between minimum and
1 ;,t_d-gl s-:?les for the respective grades rounded off to
r,1-"4 140%
460 in the lower grades. In order to con:
11 43
4.0;- Ile ll,Y to this principle the Board has approved
41."'ea-ellps:?/7 of $2,100 for Grade I tlt the Head Office
O- "w<0-60 as proposed by your directors
el4P1 "The
eeR 33°0
,_,rd approves the payment of salaries to the
N:lih rler than officers, within the limits speci.i.
" e eltis„ e h;rades in
which the positions of the respec- 4ees are classified. It is assumed that all




..r1)
t..)

11/448
"ezpioYeee

whose salaries are below the minimum of their
1;roue as a result of the structure increase will be
a:1d -g"t within the
appropriate range as soon as practicable
not later
than January 1, 1949-"

44k

Approved unanimously.
Letter
to Mr.
N
Wiltse, Vice President of the Federal Reserve
e / York,

reading as follows:

lett "In
accordance with the request contained in your
apDol?r °f
November 18 1948, the Board approves the
exilrl
i ti4s4t of
Franklin F. Mittricker as an assistant
for the
?1e
Federal Reserve Bank of New York.
4L; advise us of
the date upon which the appointment
effective and also as to the salary rate.
Chari The Board
also approves the designation of
for 4,
.
e8 J. O
bermayer
as a special assistant examiner
"Federal
Reserve Bank of New York."

Colh,

Approved unanimously.
ra
lernonrq
--um dated November 19, 1948, from Mr. Vest, General
ee°1nraending that, in accordance with a letter to Mr. W. F.

164

c -an, Comm
ittee on Delayed Return of Unpaid Items, Bank

hl-44,

°Zrrtission of the American Bankers Association dated
3 1948,
to lb
P
the -oard
at this time adopt the following amendments
.
4-st1,0
11
1949:
') Check
Clearing and Collection, effective January 1,

e1e !
r 4fecti
ve January 1,
1949, Regulation J, 'Check
1.. "111g
rscte:Etnd Collection', is amended in the following
Paragraeh (2) of
section 5 is amended by addL?edthi,e,ieri,d of such paregraLh the following sentence:
Ileseve
r
bank, or any agent to which such
r4'137*D;:ise forwarded by a
Federal Reserve bank,
eoll;-;sent such
checks pursuant to any specl
Seerj-,°11 agreement not inconsistent with the
'
grouoi-- this
regulation or may present them
a clearing
house subject to the rules
—"tices
thereof.




1974
11/24/48
-4Section 5 is amended by inserting therein anew
thecral!h (4) reading as set forth below and by changing
sive esi-gnations of present paragraphs (4) to (8), inclu).so that such
paragraphs will be designated (5) to
I
nclusive:
,, (4) Any check which a Federal Reserve bank
an agent thereof presents to the drawee bank
lor PaYment or sends to the drawee bank for colie
sctl°n, and for which remittance or settlement
made by the
drawee bank on the day on which
it
c rieceives3
such check, may be returned for
or
re'?lt or refund at any time prior to midnight
the
drawee's next business day following
S
vilT1 day of receipt or prior to the time proed by
applicable clearing house rule or
c?-al collection agreement, whichever is
a,
rler, except that this paragraph shall not
411Y to
checks presented over the counter.
3A
0'11, heck
received by a drawee bank on a day
s. ner than its
business day, or received on
h°business day
after its regular business
141,111.8.0r during afternoon or evening periods
it has reopened (or remained open) for
functions, shall be deemed to have
ra
131-.1:11tedr1
received on its next succeeding business
"3.
-ection 6 is amended to read as follows:
gate r
Each Federal
Reserve Bank may also p
t1,7s not inconsistent with the terms of the law
°Perti"-`8 Regulation, governing the details of its
°t1ler'an8 in
cleering and collecting checks and
pedes•sh items.
Such rules shall be set forth by
'Sto-e4rel Reserve
Bank in its letters of instrucand
'
L 41,11; ,8 Member
and nonmember clearing banks
clean..
b- e 1.j:
3-sliding upon any member or nonmember clear814
sends any check or other cash item
Fe
Reserve Bank for collection or ;
'ederal Reserve Bank for the account o
-ral Reserve Bank for collection."
Approved unanimously, together with
the f
ollowing statement for the press
and a
letter transmitting a copy of the
Illndmentsto the Federal Register. In
EICing these actions, it was understood

Z




4
4IJ

11124/

that Mr. Lawson and the Presidents of
all Federal Reserve Banks would be
notified of them in letters under today's date:
"BOARD OF GOVERNORS
OF THE
..EgmLLTESERVE sysm
por
"Statement for the Press
on November 2fi 1948..
"Amendments to Rtgulation J
Regarding.
Dia ed Return of Unoid Items
no_
L'everal months ago,
the American Bankers Association
innded that the
Board of Governors of the Federal Reamend its Regulation J, relating to the clear0collection of checks by Federal Reserve Banks, in
authorize
a procedure for the conditional payment
to
items
the
presented by Federal Reserve Banks subject
Of a drawee bank to return unpaid items for
'ell)ii .h;',.!eflind on the next business day after their rewle drawee. The recommendation was made in the
ht,
ado
the fact
that in recent years many banks have
ProeLtile
pte
Practice of 'delayed posting' which involves
,
1114qta re of this kind with respect to therecognized
return o
'Ythe :'els and that the practice has been
and
riges ;i:114(tment of
atates
number
of
statutes
in
a
by
0,r1ted bY
numerous clearing house associations.
he
16 1948, the Board of Governors published
Feder
4c4lre-"is to Re!ristera preliminary notice of proposed
its Regulation J to give effect to the pro41,
111 at .1-;:ilmended by the
American Bankers Association;
proposed
-;:t time a statement with respect to the
bal!
7, sent by the Federal Reserve Banks to their
nprtteTzs for
their information.
4-°11 J'
38
.rd
has
now adopted the amendments to Regula4-11 e,k to beco
1Alme effective January 12 1949, in the form
iete;":11eY were
previously published in the Federal
e-1110kexes
t 1.•
,1, t for a change in
• the
e footnote and one
4
r
-Lenge).
Ped
amendments
are being published
These
„kpzse
Register on or about November 30, 1948.
t:4
)
.tei7.1301ated that the Federal Reserve Banks will
:
01.1eet. Parating circulars or letters relating to
q:Qa p,1°11 of cash items to conform to the amendInts
In effect, the amendments to the Regr t°
the operating circulars or letters of the

8er;

me;74

S




"h4/48
-6—
Reserve Banks authorize the Federal Reserve Banks
ceept, as
conditio-aal, payment for checks and other
eietbemanskilde on the day such items are received by: a
d to p'rir..it the drawee bank to returnma.d
items
4
11, Paid, for
credit or refund, at any time up to
.n
0-Light
of the
receipt
following
drawee's
business
day
next
aticin r
emittance for such items.
zelita It should be
noted that adoption of these amendthe cl°es not mean that any bank is required to follow
end vractice of
delaying the return of unpaid cash items;
its .1.1"Y bank may continue to return unpaid cash items with
re,traittance on the day of receipt.
for . It is also to
be noted that the procedure provided
the I
dri
endm
,,,nts
for the return of unpaid itemston
aythese
eh_e
after8:11
ict
acshKs and
and remittance applies only o
Other items handled by the Reserve Banks as
4 trl items, and does
not apply to items handled by them
--(3nrteash items' under the Board's Regulation G.
raitted
'
t I'l
Il
1948 the American Bankers Association trans4.'4) bank which are members of the Association a
fo°1,-us,,ed form
of collection agreement with depositors,
and
the e by
banks on deposit tickets, signature cards,
-e I in
iti e,ceProte order that the banks may be afforded adection with respect to the collection of items
The. As
:
rdance with such conditional payment procedure.
:
°eiation has
drafted a model statute author-,
of Gov.- Procedure
of this kind and has informed the Board
,
2tatut:n°rs that it
will send a copy of the proposed
ote,t,„ 8-) together
with an explanatory statement, to the
arikers
Association of each State, urging its
o

'The -e'
"
3 of the amendments to Regulation J is
"'4chedll
Lett
4 kle_
er to I
ral /les

Johns, vice President and General Counsel of the

er
'
7e Bank of
Kansas City, reading as follows:
19481, "Thi
ir,is i• s in reply
1 to your letter of November 10
'%- sing a o
'
of an advertisement which appeared
'948,b;4
the 1a
Daily
cpy
World Tulsa, Oklahoma, on October27.,
Ilttr.rrt•
'
lgskin Davis Furniture Company of Tulsa. Our
'`st() k Verl
d
directed to the advertised terms on an open
ll
7fered ea.ch, asuite
bed consisting of a vanity and chest
for 134.93 and a bench for t
-ticit-tials
•a suite at
92, which is the sum of the
P• ieces without reduction. The down payment
,




trAP

11/24/48
-7"te
quotad were $1.00 for each item or $4.00 for the
irr Piece
suite, with the deferred balance payable at
e rate of
$3.00 per week.
t "With reference
to the applicability of Regulation
th %sales of the above character, you inquired as to
Is:Current status of the interpretation concerning
s and Groups
of Articles' published in the March
36`
4.
8yeder-1.1 Reserve
Bulletin at page 270 (F.R.L.S. #
S..101
1 • In the second
paragraph of the Board's letter
') dated
thre
October
8,
1948, reference is made to
liarche
Interpretations published at page 270 of the
1947 Federal
Reserve Bulletin which are applicable
ider
il.theflew regulatio
n. The last one of the three is
vrhichit;a0u..,. r
In
efa
el
rr
lea
r.
espects with the interpretations to

KJ-1,1 tlAh e You suggest, instalment sales in accordance
(11.1eati,
,
e °ffering contained in the advertisement in
would not appear
to be in violation of the
a`
'
tiiic311,
especially in view of the last paragraph
(
of
the re
atorerzentioned interpretation of section J(h)
„
shollici
egU
ril
;ati°n• However, if the Registrant's records
'- erezlt --Lsclose that
sales of single pieces or difIMe tF°1-11)s of the 'open stock' furniture are rarely
,
ellato
en a cluestion would arise as to whether the
;3,-;,$) regardless
of the advertisement, may not
er,+ree Choice to buy the items separately or in
groups so that, in effect, the items would
s°1d
Prtees.
Combination price, rather than separate
thp,
'
11 such event, there would not be compliance
regulation
Payinent
unless the Registrant obtained a
based on the combination price."
Approved unanimously.
Lettc4r

tt

'430 Libe

to

Mr. Frank
Warner, Secretary, Iowa Bankers AssociaBuildin,,, Des Moines 9, Iowa, reading as follows:
,

o

"The B
oard of
the
Novembermuocfh
very
Governors appreciates
Q°411ez.iglV af
1 to
1.111zie,,,ab c'n theford.ed by your letter of
letter received by you from one
the
l'rni:) ,)
_.ks in Iowa with respect to
W.
1
ib
t,
;
- -g-ut be helpful to restate briefly
Regulationle
the
isgow
thetl,oe.;`,i'ground forthe new regulation. As you
,
i.-1,‘`e Iftl°5
:
118-1 Regia t'
W
which was in effect during
''''
'Ill'
Iath""nci
until
ority
of an
a1c)n
November
1 1947, was issued under
xecutive
, Order of the President




C

/

1978
no,
4 the United
States dated August 9, 1941. The auth°rity 4or
the relation was terminated by Public Law
3
08
guaproved
August
8, 1947- when the special session
thie
:
311gress was called by the President in August of
to consider what might be done to combat a
e0
c,h`lition of
continuima inflation, the regulation on
suot4suraer
credit was again Droposed as one field in which
co;ae,effective action might be taken. The question was
cornmsl-Ldered at
hearings before the Banking and Currency
is —ltees of both
the House and the Senate and there
11°1
'1
-ached a Copy of the statement submitted by Goverauth "axis at that
time. On August 16, Public Law 905
inat„c)r
lizing the Board of Goveraors to regulate consumer
-n'Aent credit
was stoned by the President.
rqgtli While not
objecting to other eroirisions of the
i°fly the bank does object to the pro,ision of the
tioja 'Plation
In this connecreauiring registration. requiremen.+
t
should be mentioned th:it this
,
11crt Only to member and nonmember banks, but to
oretro'vicluals, partnerships, associations, and corpincluding merchants, loan. companies, sales
exten4 Companies, etc., engaged in the business of
the re-ng °r financing instalment credits subject to
tact tri,ation. Reference might also be made to the
the 1e,8- u it was
reinstated
on
clearly stated during the hearings
11,11 a-bout'.1181
.,
ation that the regulation would be
une same form as
when it was discontinued in
4?irlecl-n
r 1947, and
since the earlier regulation con,`.ha-t
3
cf,,
- Provision for registration it is apparent
be
ih"geress
anticipated that this requirement would
ae
nl nee regulation authorized by the new legislation
-&11ist
ess'i-rY pert of the machinery- for effective adth reglaatit
'
e
°I.1• Failure to register is a violation of
the
°11 and the violator would be amenable to
Penalti
es'
rm.
.ated in the regulation.
to
4ue de .st
tLelsion of the President and the Congress
ue B0E
Reg
of Governors as the agency to adW was consistent with the Board's
e5
ioqic)r. -ThP0nsibility in the field of national credit
raeaeuresese r
esponsibilities are not always limited
knfi Provi,.1 affecting only member banks. For example,
j o'Reg-tli:
3/13 of the Securities Exchange Act of
1934
S T and U
4
'
1
issued under that Act by the
*elat
Istve-rcil„ e to credit
in connection with listed stocks
r\,;,eb
th_er
°f whether such credit is extended by banks,
11°t• members of the Federal Reserve System,
"c)ek brokers.




1979
-9k
"
can be of further help in this matter, please
e to us
again."

rrit

Approved unanimously.
Letter
(31'Etio

to Mr. S. F.
D. Meffley, Recording & Statistical Corp-

p
(olio
8. 2'4'2 West Adams Street, Chicago 6, Illinois, reading as

the ptil°ur letter
of November 17, 1948, requests that
ratil(1,01 approve
several changes that you propose ,o
J 1:?facial
Automobile Guide, effective with the
-V I, 1949 Price
Edition.
The n
°t th
-°ard has no objection to your proposed change
tholl!l'ard
mr.esg" this'cash' to 'loan' in the column headings,
does not constitute approval of these figthe Pr the Purpose of the regulation; as
you know,
Ltabae.:eignation is limited to estimated average retail
pub_
Ii ill
Ale°, the Board has no objection to your
trealvaluations for overdrives or automatic
slle
11,,
1 1,eions.
the '"e
Board would not at this time designate for
you
IIII‘c3Pos?3 of Regulation 14 the new Region B th,n.—
'
(tioja An"-Lch includes
a large area now covered in c
141cha.r1D,:; You propose
to retain the present Region
4NEt. ir and to
reduce Region A to a relatively
smalt
design%_
Ilig yo
,
- the midwest.
While
we
would
consider
kr p7r guides for
your proposed Region A, along with
or 014,,resent de
for Region CI providing
satisfied
all..
e
Iltii et re
4qtarements for the designation were
1
Illtesi `atedeignation
'e
gil
would,
course,
leave
your
of
guides
•
Er)
niti
- la a large part of the country.
'
4.1)t. - gene
a , it does not appear practicable to
.rtizet, e aPPrai
sal guide designations to more precise
1
lrfe
8 Ittoll or re,1?.tial3
unless this is done through desci
ide books specifically designed for
er et
+,eatatireas.
than the present three Regions. If the
uqi%.
011 as
'
are
el6 thTee
extended to cover greater areas than
10
h-11 11 al, 4%egions, as
you request for your new Re-Eill a p i,!,
there would appear to be a loss rather
b-tir4ekt,:
'
- in the
precision with which the appraisal
thr:"cleeart:tehaePaPl_Yeain individual market areas. The
a+ .41.
cored„ the less accurately will
'
-e Prices reflect not only the differentials

!




(1
1 4.›.0
'
-'0

11/
4/48
-1011

ioe transPortation charges, but also all of the many
than
'
. 311PPlY
co nge from, and demand factors which cause prices to
time to time in one market or trading area
Rem2Pi'
ered with those in another area. Your proposed
Z.Tt
t
sc)
e,,
11
,1 a
Brw
:
e. 111
3 d include, for example, such widely sepas the East Coast and the tier of western
to :
u s'.i.frozi Montana southward, and it is not evident
silo
;hat used car
prices in such diverse areas would
anotheer°1:resPonding variations from one period to
ciartaastnelanfocronsjIdeering changes in the regions to be despurposes of Regulation WI the Board
alepin,e?rifine the problem to the case of one guide
theT;
must consider the question in relation to
of tLenersa Purposes of the appraisal guide provisions
Pitecf+treguiation and the way these provisions are apttir
'rough all of the designations.
understand, of
of
course, that the Board's positile 111,
111 this matter
designation
the
to
only
applies
6nd dr
Zaisal glades for the purposes of Regulation W,
.
elle,nge
r riot
involve any opinion as to whether the
10i you propose would be more suitable
lb°1'0th regions
-- Purposes."




Approved unankno

Secretary.