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Feder
Minutes of actions
taken by the Boar:l of Governors of the
al Reserve
System on Friday, November 5, 1948.
in the
Board Room at
10:30 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
The Board met
McCabe, Chairman
Szymczak
Draper
Evans
Clayton
Mr. Carpenter, Secretary
;11/
1
:
: Sherman, Assistant Secretary
Mr. Morrill, Special Adviser
Mr. Thurston, Assistant to the Board
Thomas, Director of the Division of
Research and Statistics
Mr. Nelson, Director of the Division of
Personnel Administration
Mr. Townsend, Associate General Counsel
There
were presented
telegrams to the Federal Reserve Banks
0.1 c)atort,
New
York, Philadelphia, Atlanta, Chicago, St. Louis, and
4tisas
City
stating that the
%It ch
Board approves the establishment withange by
the
15Y th
Federal Reserve Bank of St. Louis on November 3,
cht:
Nleral
Reserve Banks of New York, Philadelphia, Atlanta,
"
(I Kansas
tlibrve
atillk
th
City on November 4,
and by the Federal Re1948,
of
Boston today of the rates of discount and purchase in
ng
schedules.
e
Approved unanimously.
Mr.
?
4a118 stated
that Chai
McCabe recently suggested that
81115
mit topics
for discussion at the meeting of the
Adviso
7
'
1 Council on
November 14-16, 1948, and that he agreed
11/5/48
-2lth this
s
uggestion. He also said that Chaiman McCabe had talked
"
Mr. Brown,
President of the Federal Advisory Comeill and that
thie arrangement vas
acceptable to him. The members of the Board
Present
concurred with the foregoing suggestion.
with
Mr. Evans stated that, subsequent to the meeting of the Board
the
Prestdents of the Federal Reserve Banks on October 5, 1948,
he
discussed with
Mr. Bartelt, Fiscal Assistant Secretary of the
Treas
the question
raised by the Presidents as to whether the
ChM°dit7
Credit
414 the
Corporation might increase from 1-1/2 to 1-3/4 per
interest rate allowed banks in connection with financing
odity
Credit r
-orporation crop loans, and that Mr. Bartelt said
114 co
lleernw°111d be with the question whether the Treasury would be
ekileA
B 04 to do
::
the financing if the interest rate were not in—
trea
Mr
4 Evans went on to say that Mr. Bartelt informed him he
Cit8e1188eci
th
Ptseal
question with Mr. R. H. Fuchs, Acting Director of the
l'elleh)
Production and Marketing Administration, in September
tIcl that IA
Fuchs Stated that he felt there would be no difficulty
ill OA 14
irlterE
: —ng auPPert of the
banks for their program with the present
t rlite
'that if the rate allowed banks were increased it
be
the
ilecesaerY for the Commodity Credit Corporation to increase
11QA- char,
Nattitiir
ged Producers;
that the matter was discussed with repre1440i ::
the American
Bankers Association who did not like the
'41erease in the rate to producers for the
e
thElt th
suggested,
C°14hi°ditY Credit Corporation would not find it possible
K.
*
1115/48
-3t° give the
bellks a larger share of the 3 per cent rate now charged
t° Pl'°dUeere.
Mr. Evans stated that Mr. Bartelt had given him copies
of%/Tespondence and a memorandum with respect to the matter, that
tlie8e copies had
been sent to Mr. Leedy, President of the Federal Re111111n]it of
Kansas City, for his information, and he (Mr. Evans)
suggest that
no further action be taken by the Board at this
time
vith the
thought that
if necessary the matter could be recon814
"
next year.
Mr. Evans' suggestion was approved
un
animously, with the understanding
that Mr. Evans would report the developments in the matter to the Presidents
at the
time of the next Presidents'
Conferenc
e.
Ref
WR
October
198,
t:::e to a memorandum from
Mr.
Thomas dated
that, pursuant to the action or the Board
September 29,
1948/
Ireio
the System Committee on Current Business Deeats at
its me
eting in Boston on October 16, 1948, considered
the
qaestioa of
possible studies by the Federal Reserve Banks of the
Eirtect
of
the recent
Supreme Court decision on basing point pricing.
rnerilorendum
Went on to say
that studies of this type were well
"415ted to
the r
egional research program end it recommended that the
114rd
give
its
approval to the proposal submitted by the Federal Reklak
of
Atlanta under date of September 17, 1948, and that
t}1"1 441k
be
Permitted to exceed its current research budget by as
11111Q4 ke
$25,000 for
the purpose of undertaking the study.
c'n
11/5/48
—
In this
connection Mr. Carpenter read a memorandum from Mr.
Eccles
dated October
26, 1948, in which he stated that he would be
°13134ed to
the proposal
of the Atlanta Bank principally for the rea8°11 that the
study was outside the field that should be covered by
the
research de
partments of the System.
c/fthe
basing
111'‘ Evans said
that he would not wish to recommend approval
request from
the Atlanta Bank because he felt the issue of
Point
pricing would have to be settled by Congress. Mr.
15Ner
expressed a
similar view. Mr. Szymczak stated he would not
"t811 to
Irote
against the study
proposed by the Atlanta Bank, but that
4 relit
it
should be
deferred until therewas an indication whether
°Tigress vbuld
take any action with respect to the Supreme Court
decieloii.
Mr.
kited
Thomas
reiterated the view that the study was one ideally
to
regional research, that the ramifications of the basing
decision
would have impor
effects upon economic development
th
'arious
sections of the country, and that a decision by the Board
that
the,
tan
a.ktiks
should not
this type would discourage
th'
make studies of
P°11It
Nelonai
research program which had been undertaken by the FedI'll IleBel'Ire
tanks at
the suggestion of the Board.
In
the
P
course of the discussion it was suggested that Chair'eeelbe
discuss the
matter with Mr. Neely, Chairman of the FedIleserve
of Atlanta, when he visited that Bank next week.
This suggestion was approved
unanimously.
,
11/5/48
-5_
Chairman McCabe referred to a letter from Fr. Pvery, Chairman
qtbeFederal Reserve
Bank of Chicago, dated October 29, 1948, stating
that, on
orders of his physician, he would not be able to cont141111"8 Chairmen
and a Class C director of the Federal Reserve Bank
Of
Chicago
after his term
expired at the end of this year. Chairmen
McCabe su
gested that, in
view of the reason for Mr. Avery's letter) the
Board had
no choice but to accept his decision.
The other
members of the Board present concurred.
In a d
iscussion of a possible successor to Mr. Avery, referelice was Izade
to the
suggestion in Mr. Avery's letter that considerat411 be
given to
Mr. Nicholas H.
Class B director
Noyes, presently a
the
Chicago Bank
living in Indianapolis, Indiana. Mr. Szymczak
:71 1'eaBed the view that it would be desirable to select a Chairman
14eci
Chicago.
Cabe suggested that when Mr. Szymczak was in Chicago
he look into the question
stion of a possible appointee
thq h
kr. 417
:e ft4d out more
about Mr. Noyes as a possible successor to
Chairman McCa
.suggestion was
o=
approved unnn
the _Referetlee was made to the decision announced by Judge Morris
Nc)vettlteUritted
StatesDistrict Court for the District of Columbia on
t4 13 r '
3 1948, d
ismissing the complaint for injunction against
ottrd ft,
led bY Transamerica Corporation on October 8, 1948, end
it63
11/5/48
-6i'sellssei at
the meeting on October 11, 1948. -r. Townsend suggested
that
in view of the
action of the Court, the date for hearing of
the
ellaqee in the
Complaint issued by the Board against Transamerica
C°rPoratio_
a on June
24, 1948, under the provision of Section 11 of
the ClaYtOrl
Act, be set for 6
time within the next 30 days.
There was a discussion of a date for
the hearing, at the conclusion of which,
upon motion by Mr. Evans, the following
notice was approved unanimously:
"UNITED STATES OF AMERICA
BEFORE THE
B°A OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM
THE tu
TRAN
-TTER OF
'JkultRICA
CORPORATION
"NOTICE
•
thettNotice
e is
hereby given you, Transamerica Corporation,
he
, of December, A. D. 1948, at 10:30 o'clock
7 147
trI toe ;
04
is hereby fixed as the time j
E,tnhe ofthe Board
of Governors of the Federal Reserve
a
City of Washington, D. C., as he place,
hearing will be had on the charges set
l'11:191(11:1418ch"i'llu-'11.11.1thhteehree
complaint issued by the Board on June et:m
Act'
altIrlde/' the
provisions of Section 11 of the Clayton
h1
1114,
time and place you shall have the right,
8hollad-a
'
d Act, to
aopear and show cause why an order
ce4se ot be
entered by said Board requiring you
o
charged
eatezilldesist from the violation of the law
c of
r "Citi:-InPlaint and to divest yourself of the stock
;
Angel
',41.troi,;;Zene National
es,
Trust & Savings Bank, Los
a, and
1t
the stocks of any or all of those banks
ni4 Paragraph
Four of said complaint.
/ecierai .4.WITNESS
the
WHEREOF the Board of Governors of signed
s:esex've System has caused this notice to be
;-1, ;;:e- etarY, and its official seal to be hereto af'
'1 I). 1g;t8'"shingtons D. C., this 5th day of November,
''•Y the Board.
(SEAL)
(signed) S. R. Carpenter
Secretary"
1860
11/548
-7-The following statement for
the press was also approved
unanimously:
At its
meeting on Friday, November 5, 1948, the Board
tvra_ered that the
hearing on the charges contained in the
77ard's complaint of
June 24, 1948, against Transamerica
rrIctration be scheduled to
commence at the offices of the
board at
10:30 A. M.
on December 7, 1948."
Mr. Szyinezak
stated that because of a speaking engagement in
.1144°4 on
November
20, 1948, he would not be able to be present at
leeting Of
the Board
on Friday, November 19, 1948, and he sug-
ested that
the
discussion of the ouestion of a further increase in
1"Irerecillirements,
Scheduled for discussion at that time, be
D08tP0ned until
the meeting
Tuesday, November 23.
It was agreed unanimously that
the discussion of this topic would
be postponed in accordance with
the request of Mr. Szymczak.
Mr.
Evans said
that he would like to have considered a sug13t.1()11 that,
as a
means of making membership in the Federal Reserve
tetti
more
attra.ctive as well as aiding in stabilizing the Governkett
bond
market, the
'`14"
System might make a public announcement that
holder of
marketable issues of Government bonds could take them
to '11114r
barilt
'which was
Daa,
a member of the Federal Reserve System and obplus
accrued interest for the bonds, the member bank to act
Itgeht for
the
Pederel Reserve Bank of its district with the
Dtivilege of
11/
l'eeqvirig
itziediatelY turning them over to the Reserve Bank and
payment
therefor
have the option
Plus a service fee or to
11/5/48
-8()fh°1cling the
securities for its own account, if eligible for in-
veatilent by the bank,
until the next coupon matured or interest payment Irea due. The
suggestion was discussed, and it was recognized
that
ttc°11cerned a matter
which should be considered by the Federal
°Pen
yarket C
ommittee or its executive committee.
At this
point Messrs. She, Morrill, Thurston, Thomas,
Naiso
n'
Townsend withdrew from the meeting.
Chairman McCabe
stated that earlier in the morning he had
recsi7e,
al a telephone
call from 14r. Creighton, Chairman of the Federfti Res
erve Bank of
Boston, who stated thnt the directors had in-
N.zia
14agreed that
taro, of iq
appointment as President of the Federal Reserve
-"ton should
be tendered to Mr. Joseph A. Erickson, Extbr
e 'lee-President of
The National Shawmut Bank of Boston,
11°sto1I
he'd br"14esachusetts. Chairman McCabe also said that Mr. Creighton
°tight
r
ckson to Washington to visit and have luncheon
temb
kt.
era °f the
Board today and that he (Chairman McCabe) and
br
er riled° independent checks with respect to Mr. Erickson
thiell :
Ett ,
clicated
that he was the
most capable vice president in the
"'4111t tank
the t
rederal -arld well qualified for the position as President of
Mr.
Reserve Bank.
1) 1,
‘,,Layton
stnted that he had known Mr. Erickson for a numel Years
'
th4t %thile 4134 that he was a most capable individual. He also said
'
l44 als
he "
If
in the West he discussed the matter with Mr. Eccles
°kMe14 14r* Erickson and indicated that his appointment would
18
NA
I
be
satisfa.ctory to him, Mr.
Clayton added that the suggestion had
been ra.de
that if Mr.
Erickson were appointed it would be desirable
If he
could arrange
to spend a week or so at the Board's offices and
'1.e0 visit
two or three
of the Federal Reserve Banks before he asalltned his
duties. The other members of the Board present indicated
Ig.l'eefflent with
this suggestion.
Following a discussion of 1,1r. Erick8°n's qualifications and experience as
they were
known to the Board, Mr. Draper
moved that the Secretary be requested to
advise Messrs. Eccles and Vardaman of
the discussion at this meeting and that,
In the absence of objection from them,
hairman McCabe be authorized to advise
lir. Creighton informally that the Board
Of
Governors would approve the appointment of Mr. Erickson as President of the
Federal Reserve Bank of Boston if made
by the
board of directors of the Bank.
In taking
this action it was understood
that, if
possible, a program would be
nrked out along the lines suggested by
'4r. Clayton to have Mr. Erickson visit
the Board's offices and two or three of
the Federal Reserve Banks before he as;Umed his duties as President of the
ederal Reserve Bank of Boston.
F
Draper's motion was out by the
Chair and
carried unanimously.
44*et r,
elledejis Note: Following the meeting Mr. Carpenter
'Eccles and Vardaman, and Mr. Eccleshstated
PollatiiP"ssrs
he were
e 1.ols)1zT.approve
tict °Pt* Mr. present he would vote to
Vardaman stated th- t in view of the
in he other
:
app?1
1members of the Board on the matter
lto el'Pose no
objection to approval of the
Erickson.
Unon b3ing informed of the views
:
0 8! Eccl<ls and
Chairman McCabe informed
Vardaman,
"Lis
ton in
accordance with the action taken at
t
4ierjng
.
tifter erlthe act
ion
stated with respect to each of the matters herein-
"red t
° Was then taken by the Board:
18b3
11/5/48
-10Minutes of actions
taken by the Board of Governors of the Fed-
eral
Reserve
System on November
42 1948, were approved unanimously.
Letter to the
Honorable Maple T. Han, Chairman, Federal De-
klit
Insurance C
ornoration, reading as follows:
lett"In
accordance with the request contained in your
t e l,ed
s
r :2ovember 1,
1948, the Board of Governors of
Reserve
System
hereby grants written con0;12 pursuant
to the provisions of sub-section (k)(2)
e ;
f.oru
t
eion 12B of the
Federal Reserve Act, for examiners
Federal Deposit Insurance Corporation to make an
ilanation of
The North Side Bank, Evansville, Indiana,
inZinection with its
application for continuance of
elZir
:
s rElrtfetry.s
=drawal from membership in the Fedthe 121ers have been no corrective programs urged upon
tlateitiKor agreed to which have not been fully consumgest ilalr in connection with which the Board would sugatat
orporation of conditions for continuing its
us as
an insured
bank."
Approved unanimously.
Letter to
40
the Presidents of all Federal Reserve Banks reading
(31101,Ts.
"Th
2 9et:,efulation
2er
1. ,ei
W enforcement Report, form F. R. 639,
rreid
, -n the Board's letter S-10411 dated „eparlpe
%Nre Z8
'rills now been
revised for use by the Federal Re,14r
111
4-,11k8 as a monthly report of enforcement activities
1.ngse-:e Present
411:41
;
t.,. to
regulation. One hundred copies are
YOU under separate cover and an additional
"cWill
4. be
sent upon request.
4
ria3r
thecn"ges
in the form have been minor, reflecting prire e'
llges in the classes of Registrants subject,
The Banks were in general agreement ( n
to ra4.
'
- 60 the
Board's letter of September 3, 1946 that
Itliec)r
,,' r"ision of
the previous report was needed. ,As
VIstructsvious report
explanations of the headings and
;T, sill) i. rls With respect
to
o
of
to additional info
Ze f
ed with the
report are printed on the back
aRegistrants' in column 4 is to
't'iti:-';11Zh'ethtoNs°e.wIt' re currently registered under
oi4e
0
” gu
I
i
ltelrelat.on.
"dttio
lis have been added to the four
submitted
items of
t.,7
Nporigui,,,,nion•
r1.11
info
tion' requested to be
in
80
11/548
-11"the
- 'ormer
report. Item 5, the number of concerns that
uad .
th
ailed to
register, had previously been recuested in
ra e )3°ard t letter of May 28, 1947, which transmitted sumts_ries of
the reports for April, 1947. This item is to
the
Ne ported
beginning
in
view
of
1948,
with
November,
d
th„r('-'•°vemb
1. er 9 deadline
on registration.
The Board hopes
ii
c
Item 6
a short description of 'Class B' violator
ti8(-86-L3.
will be helpful in makilig information available
a1 Banks about
the particular violating practices
'
11/1ci t to be a
problem by individual Banks.
cora 'In view of
the emphasis to be placed on finance
terPtY inve
stigations, as suggested in the Board's letrec,
i,
141) the Board will be especially interested
n
indicat_
,
v-Lrig also
comments
Banks
the
and
from
data
?',/
effective sales finance company investigations
o,
'Tendon' Providing
leads for selective investigations
data -r*
fs It has been suggested that useful statistical
Laves ?r the
Purpose would be provided by the number
sched_
of
uled 8
t,1'
,c'
a i°ns of each class of vendor Registrant
zade d-La result of sales
finance company investigations
3rn ilig the month.
'
The Board would appreciate haydata
:
lir views as to the desirability of
be re-pwroizguled
infoationt
making such
bar
part ofinformation'
egnnig
f the 'additional
to
November.
with
report
for
the
14hich (-,
1- 1 re
Porting Item 3 under 'additional information!,
,e
b helpf
-w,
e'Ls With cooperating agency relations, it would
out_
-Liae or
if Your
your first monthly report included an
en, ,arrangementsle
trict.
'
eu of these arrangements that you have established
of
agencies for enforcement in your disclasses
any
specify
connection
please
gistr
this
--Les wha
.
normally examined by other supervising agen3r°11 Plan to investigate in the present enforcerlierlt
,em.3-,_
suggested that, after the initial report, the
each raorii
;
,
116 report be
sent to the Board by the tenth of
4.4iltia1;" beginning with the report for November. The
OctoicePort should
cover the period from September 20
A sing ---er 31 and be submitted
bmitted as soon as is practicable.
:°4rdile,e°PY
each report will be sufficient for the
4e
vL the:
, eTP°3es• The reports will be summarized as soon
the
autraa e received
in the Board's offices and copies of
be Is Sin
r,
ies will be forwarded to each Federal Reserve
'
e the reports will include details that may
bilt 1441 to
tb
ch
programs
Other Banks in their enforcementsuggested
t at elle'
Ennot be readily summarized, it is
ePor h P d
t to sa
e.)eral Reserve Bank send a copy of its monthly
- of the other Banks as well as to the Board.
11/5/48
-122
, "This
letter
Pot' 1946 (S-930) supersedes the Board's letter of August
which referred to monthly enforcement reis under
the previous regulation."
Approved unanimously.
as folio
:
s
e:ter to the
Presidents of all Federal Reserve Banks reading
"An InquirY has been received by the Board which
1.1N.ses a question
as to the applicability of Regulation
"
Ilit° certain transactions for the sale of refrigerators,
T
li°113
quantities, to owners of apartment houses,
,
..acIn s
ubstance,
it
is
a
appears
that
it
commr
p
zed7 to use a
conditional sales contract as the financing
a c3
'
011111 for
such a transaction. Among other things, such
to
the 1113,i!
Provides for deferred deliveries according
extend
Peri'
orris request, sometimes over a fairly
Ile
time, and permits price changes by the seller
,
oft-'-rlgerators yet to be recuested and cancellatior
the heo?ntract
by either party. The seller anticipates
:,
Ple.eri,--lu'rellients of such a conditional sales contract t
by
y
the ;-g o
rders with his
suppliers, so that deliveries o
rtment house
of,
owner are ordinarily made promptly.
slick t aPPears
further that a substantial number
ii.ere'&,onditional sales contracts, pursuant to which (7
1—
or zari68 of some
requested
e
to
be
refrigerators
are
yet
c)fth;e) 'ere entered into in good faith in various parts
T%ti c°11ntrY Prior to September 20, 1948. Hence, .:
t
t°thec'rpi arises as to
whether such contracts are suboe
concerj:gulation,
especially in the light of S-1043,
110 Pre-September 20 arrangements.
e'otioli „-Le the c
min.s_
ircumstances of each particular trans41i the type in question necessarily are deter
11100111.s, e
as generally described in the
.t!r''''Illsin):..°111d
aPPear .to involve arrangements for future
transactions1
;,4ether'
-- of credit
depending for final consummation III
/1g the
'tors are requested and delivered. Such
as
ci:lirisibl case, the transactions are to be consider?
el:4veri„.8-11'd treated
accordingly under the Regulation,
;
edit bs,-„; Prior to September 20 involving extensions of
1,"zaviriz '0re
that date and subsequent deliveries in11._ '
) sube3ctensions
ie __, .
of credit
1
cre
.after that date and, there"
17
foil
'
to the Regulation. Of course, where de-(Ywing a given reauest by an apartment house
qa
V
4 (.. ‘
,..-14
-
11/5/48
-13is the
only detail of an extension of credit rebe
after September 201 and the deYed
involves a situation such as that covered
th
paragraph of the Board's press statement of
rdeptember 292 1948
(3-1 043-c), the extension of credit
wo„,it
su ing from that particular request for refrigerators
'
"%not be
subject to the Regulation.
at
The basic question raised by the inquiry is the time
iziFeIrliteiZtain extensions of credit occur. The recent
of the new Regulation operates to cover only
ett„:eriee and the
resulting extensions of credit on or
Plet
tember 201 as above indicated, unless after com117.211 °I all anticipated or previously requested deit ;;I'es2 the
instalment credit arising therefrom, If
Regilina+ta.ount
of 45,000 or less, becomes subject to the
--lma through a
renewal or revision after that date."
"owner
Approved unanimously.
Reserve Telegram to Ifir. Smith, Assistant Vice President of the Federal
Bank
of C
leveland, reading as follows:
8114ks 'ur tele
, gram. of November 41 1948, to all Reserve
(!lartilit,ag registration under Regulation V of Ban
Rexair
tele
.x) was replied to by St. Louis Reserve
YUrtelaT of same date which reads as follows: Quote::
toR :
atr 11„.;°daY
concerning issuance of certificates
etate;''ere. Received
reauest today for 100 regis ration
eizetil'
.
5:at2 to be
distributed to dealers who sell Airway
cal taners on
1403 1111"
44e terms on terms which I understand are iden 1
which Rexair dealers sell cleaners.
Itc. s:4t8.nd the
50 local dealers of Airway Branches,
instalment
PaPer
Inaohines as individual dealers and
and
tY such
:
1111 from
Purchasers runs to dealer salesmen
Airv1;4ealer salesmen is discounted with distributor
Airw:Y Branches,
Inc. It seems to us that the status
,3Y dealer
o
salesmen is identical to the statuswork
A ter salesmen and if it is you may want to
,:rellile —,T Tile Office
Aubunr
Airway Branches Inc., 2101 what
,
4°11 h4
4 ,11°(31edo 12 Ohio
:
to
similar
arrangements
"0414 1; worked
out '
successors.
affili_
ated) -;1,:waY outfi4 with Martin-Parry Corp
and Rexair (Martin Parry) be
Uncuote.
,11'.4ti°r1 le4inuld aPPI
:
arrngesitr'''11 view 'eciate your investigating Airway
to establishing with Airway same
egardirig a single registration as were accomplished
1.'867
INA
-14"in
the
ident
ease of Rexair if the two situations are sufficiently
ical. In this regard, refer to letter of October
18,
pa
to
Blair from Hutchens, Counsel for Martin14.-;','
.
.
J Y and negotiations
between Blair, Paul Hodge and Hutchens.
Airlira e suggested that St. Louis Bank delay registration of
Y dealer
-salesmen. Please advise of progress."
;44
7
Approved unanimously.
@FedFRASER