Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, November 7, 1946, Volume 33, Part 4

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1588
Minutes of actions taken by the Board of Governors of the
Federal Reserve
System on Thursday, November 7, 1946.
PRESENT:

Mr.
Mr.
Mr.
Mr.

Eccles, Chairman
Ransom, Vice Chairman
Draper
Evans
Mr.
Mr.
Mr.
Mr.

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

As stated in the minutes of October 30, 1946, Mr. Vardaman
lias

absent on official business.
Minutes of actions taken by the Board of Governors of the Fed-

41 Res

'I've System on November 6, 1946, were approved unanimously.

Minutes of meeting of the Board of Governors of the Federal Re—
serv
,
6Yetem with
the executive committee of the Federal Advisory Council
held
un November 6, 1946, were approved unanimously.
Memorandum dated November 5, 1946, from Mr. Leonard, Director
q the Di ,
-vlsion of Examinations, recommending the appointment of Miss
et Ei Jenkins as a stenographer in that Division, on a tempora—
rY

deflflite
basis, with basic salary at the rate of $2,394 per annum,
t
117-

as of the date upon which she enters upon the performance of

}lel
'duties
after having passed the usual physical examination. The
rner,,
.4)1.814
also stated that Miss Jenkins was a member of the Civil
ervic

e Retirement System and would remain in that system.
Approved unanimously.

Memorandu
m dated November 5, 1946, from Mr. Bethea, Director
the
Division of Administrative Services, recommending the appoint—

taerit of
Donald A. Hurst as a clerk in that Division with basic salary
at the

rate of
$2,548 per annum, effective as of the date upon which




1589
11/7/46
-2he

enters

upon the performance of his duties after having passed the

usual physical

examination.

The memorandum also stated that it was

contemplated that Mr. Hurst would become a member of the Federal Re3ente
retirement system.
Approved unanimously.
llemorandum dated November 4, 1946, from Mr. Bethea, Director
°:rthe D. .
1-vlsion of Administrative Services, recommending that an increase .
in the basic
salary of Thomas G. Cook, a guard in that Divisjon, f
r°111 $2,020.00 to ;2,318.76 per annum be approved effective
N°Ifezb
er 17,
1946.
Approved unanimously.
liem°randum dated November 4, 1946, from Mr. Nelson, Director
°I*the
Division of Personnel Administration, recommending the retention in active
service of Seaton Dyson, a messenger in the Division

of

s'unistrative Services, at his present salary of v

16.00 per

e2It111141 f°r a period
of seven months beginning January 1, 1947. The
41144°11411k/1 also
stated that Dyson will be 70 years old on July 4,
19°
'and
that under the
Rules and Regulations of the Retirement
ite14
'he mbe
retired not later than August 1, 1947.
Approved unanimously.
ttee

Memorandum dated November 1, 1946, from the Personnel Cornreading as follows:

wa8
:
At a meeting of the Board on October 11, 1946 there
tioll;discussion of
the practice of collecting contribu- among
employees for going-away presents, floral




1590
-3"tributes, etc., and the Personnel Committee was instructed to give
consideration to the matter and make a recommendation as
to the action to be taken.
Nelson talked with representatives of the DmCommittee regarding the collecting of contribuIJ°Yee
:
!
114 from employees and attempted to ascertain their
a,
,
-ae'don to
the prior
olfProval of prohibiting the practice without
the Personnel Committee. The representatives
Ehployeesi Committee felt that such an order from
e Board would be too restrictive, and they favored a
sta em nt„
to employees merely calling attention to the
:
11
'
that they were under no obligation to make contriIls for the above purposes.
Accordingly, it is recommended that the following
statement be
handed to the heads of the divisions of the
IB3ceardl5
Staff with the request that they advise the mem,
colr
4 of their respective divisions informally of the
ents of the
statement:
'Questions have been raised regarding the
collection
from employees of the Board of funds
for such purposes as gifts for employees who
v'ere being married or leaving the service of
the Board
or for flowers for the funeral of an
eITIPloyee or a member of his immediate family.
'The Board has considered these questions
does not wish to place any prohibition on
the
L'ne collection
Collection of funds for these purposes as
1°ng as they are kept within reasonable limits
e°nsistent with the fine spirit of friendship
that exists
among the employees. However, it
wants to make it entirely clear that members
of the staff
are under no obligation or presiscl.lre whatsoever to make contributi-ns of this
bIT1 and that they should not make any contriuuicns which for any reason they might not
wish to make.
„„,, 'With respect to contributions for what
"''Y be termed outside Tmrposes, the Board has
requested that (with the exception of the anal campaigns of the Community Chest and the
erican Red Cross which will continue to be
trducted with the support of the Board as in
e Past) no collection be undertaken in the
rdl s offices for such purposes without first
Obtaining
through the Director of the Division
r ersonnel Administration the approval of
e Personnel
Committee.'”

Z




Approved unanimously.

1591
-4Letter to Er. Liltse, Vice President of the Federal Reserve
of New York,
reading as follows:
"In accordance with the request contained in your
letter
of October 31 1946, the Board approves the apPcintment of
1
Daniel J. Clifford
Charles B. Fischer
V.alter
E. Jones
as e .
xaminers for the Federal Reserve Bank of New York,
the a
ppointment of
Louis J. Conroy
Charles J. Peter, Jr.
H. Van Saun
Stuart
as as
slstant examiners, and the designation of
John J. Stiles
as a s e .
the ,P oial assistant examiner. Please advise us of
uates upon thich the appointments of the explainers
'
401 the
assistant examiners become effective."
Approved unanimously.
Re

Letter to Mr. Meyer, Assistant Vice President of the Federal
erve

zank of
Chicago, reading as follows:
1946 "Reference is made to your letter of November 1,
er's
vising of the increase in costs of the Blue
than for Hospital Care and the action taken by
- "4:2(ecutive Committee approving the absorption of
the nereased costs by your Bank, which would result
inthe
of the ticalabsorbing 69.74% and the employees 30.26%
lig liA8

indicated in its letter of March 11, 1946,

the
byecIthe
-°ard aPproved the general progrEm as recommended

e,,- residentsi Conference, which provided that each
cosi-a4. Reserve
Bank would assume to-thirds of the
empic,°,f Providing hospital and surgical benefits for
the W ees- At the time this matter was considered by
e4/1011
rd it was contemplated that the proportionate
'
of cost to be absorbed would be uniform among
thethe
There is, of course, some variation in
but ;cost of the benefits in the various localities,
change in the costs in one locality would not
resi
appepa
er to
justify a change in the uniform policy with
"orb.ct to the proportionate amount the Banks may ab-




1532
11/7/46
—5—
"Accordingly, the Board is unwilling to approve the
tr Ption by the Federal Reserve Bank of Chicago of more
two-thirds of the cost of providing hospitalization
'4 surgical
benefits for its officers and employees."
Approved unanimously.
Letter to Mr. Volberg, Vice President of the Federal Reserve
of San

Francisco, reading as follows:

"This refers to your letter of September 27, 1946,
o
r trding a question presented by the Canadian Bank of
--"erce, Portland, Oregon, regarding Regulation U.
to a "That bank presents a case in which it made a loan
customer on registered stocks for the purpose of
i
PaYing off a real
estate mortgage. If the purpose was
n fact as
stated, the original loan was of course ext2t from the
provisions of the regulation. The cusviT.7r now wishes to know, in effect, whether the loan
s;;4. continue
to be exempt from the regulation if he
the-Lle the
registered stocks securing the loan and uses
Pf'cceeds to purchase other registered stocks.
lapon •Since each such case necessarily depends largely
lte oval facts, it seems desirable to discuss the
fi;!ral Principles that are involved. The Board agrees
sa,: Y°ur view that in deciding such cases it is neces(1114 0 look to
the original purpose of the loan in
thatt°r
" So lowg as the loan remains outstanding,
laterl
.rP°se is controlling, i.e., changes in the colof the loan do not change its exempted
charprinciplIt may
well be therefore, that under this
e the
%continueloan described in the instant case
to be exempt.
to
:
st
exPlanation of the principle, the Board wishes
etio e, again concurring in your oval view, that transezipt Ile that
give a superficial appearance of being exPox, fr°111 the regulation may
in fact be subject to it.
GovelZ
e raPle, as you suggest, if a borrower purchases
later-"ent securities with the proceeds of a loan, but
gisterTle such securities and replaces them with re°sten-s-i stocks, there is a strong probability that the
%ttrFeinal purpose of the loan was not the
eTeldtt
oicn.
e real purpose was to purchase




1593
11/7/46
-6"It should also be mentioned that even in the case
a.loan that was originally exempt, the exempt status
tlnues only during the actual life of that loan. If
v e loan is in fact paid off, a mere fictitious continua.1°11 could not cause the exemption to carry over to what
a ner, loan. The question whether the old loan
actually continue would necessarily depend upon all
1:e1evant facts of each case. Among such facts to be
14)nsidered would be such things as how the parties had
.1,reated
the transaction in connection with interest payluents and
other related matters."
Of

r

Approved unanimously.
Letter to the Honorable Herbert J. McGlinchey, House of
RePresentatives, Washington

D. C., reading as follows:

ce ni nThie is in reply to your letter of October 15, conRegulation
the Board's consumer credit regulaas-:. The purpose of
this regulation, as you know, -ts to
811:;ta in the Government's anti-inflation campaign which
ma;'"41 in due course be of special value, so far as it
succeed, to the small wage earner to whom you refer.
tie
:
he present and prospective status of the reguladiscussed briefly by Chairman Eccles in a recent
w'ees delivered in Boston, of which a copy is enclosed.
drZlici refer you especially to pages 8-10 of this adhave-;
eti
ec
sitleLbelieve will give you the information you
should like to add that although considerable
rlatus ion to the regulation has developed, as is quite
14 tc
:
1 4.2 from small-loan companies and others engaged
1
regte4consumer
credit business, the idea of continued
°11. of consumer credit has met with considerable
slapp
especially from small business.
aPPreciate
this opportunity to comment on the
ulons
you raise."
Opp° "I

Approved unanimously.
Letrh

to Mr. Boman, Manager of the Credit Department of

eral Reserve Bank of New York, reading as follows:




1594
11/7/46

—7—

"This
with which refers to your letter of October 22, 1946,
Your Bank you enclosed copies of correspondence between
and the Coin-O-Matic Equipment Corporation, 29
°adwaY, New York City, regarding the status under Regatim W of coin operated washing machines.
"As we understand its operations, the corporation
Purchases
washing machines which are 'coin metered' for
rental
installation. It is concerned with whether or
rIcIt such
machines are included in item 36 of section
13(a
)) since it wishes to finance their purchase outde the
regulatory limits. It may be, as you imply
bJ°ur letter to the corporation, that the unpaid
w;ance arising out of the financing of such
in a principal mount of more than 42,000
equipmntb
and
excepted from the regulation. Presumably such
11°.t always the case, however, since the corporation
du
les its arguments
for exclusion entirely on the 'prouse
of
its
equipment, comparing it, for
insterancit
t-tc
iie) with the use of a truck, or a taxicab.
lie agree with your opinion that the machines
be included in item 36. They vould differ
neither in
design nor use from other washing machines,
stra/
jaflY event it would not be feasible as an adminifact g:tmatter to
make a distinction based upon the
the articles would be rented."

j

Approved unanimously.
reatiti

Letter to the
Presidents of all the Federal Reserve Banks

g a8 f011ows:

re, "Referrins—

to the discussion of expenses at the
wo ent C
onference of Presidents, the Board of Governors
ike to have information on the practices of the
PeciA
pi -"I&J. Reserve
B,nks in reimbursing officers rd ?label'!" for traveling expenses. Accordingly, it will
eargPreciLted if you will submit a statement at your
convenience
but not later than December 1, setthe basis and conditions under which senior
fortre, junior officers, and employees are reimbursed
'°,9
aUtoX4'
of traveling, whether by train, air, or
Please include information as to
acwhatif
air;:a6i°ns are allowed for train travel and the
limits,
trall
on reimbursement of expenses other than for
813°rtatim; an esti:,ate, for each of the three




1595
11/7/46

-8nro
,sses mentioned above, of the amount of expense per
relmbursed
other than for transportation; and a
,
T
of the form of reimbursement voucher used by your
zank.0

J




Approved unanimously.