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A meeting of the Board of Governors of the Federal Reserve System was held in rashington on Thursday, October 1, 1942, at 11:00 a.m. PRESENT: Mr. Eccles, Chairman Mr. Ransom, Vice Chairman Mr. Szymczak Mr. MdKee Mr. Draper Mr. Evans Mr. Morrill, Secretary Mr. Carpenter, Assistant Secretary Mr. Clayton, Assistant to the Chairman The action stated with respect to each of the matters herein1.191' re ferred to was taken by the Board: The minutes of the meeting of the Board of Governors of the Fed"serve System held on September 30, 1942, were approved unanimously. Memorandum dated September 25, 1942, from Mr. Stark, Assistant Dillector of the Division of Research and Statistics, recommending that 114.A€11ste Laursen be appointed as an economic assistant in that Di- 1'41°11) with salary at the rate of $2,000 per annum, effective as of 4te upon which she enters upon the performance of her duties after Passed satisfactorily the usual physical examination. Approved unanimously. Memorandum dated September 24, 1942, from Mr. Stark, Assistant tit,ee tO 1" of the Division of Research and Statistics, recommending that atoll 14"eEiret Elizabeth Mitchell be appointed as a clerk in that Divi- 'with salary at the rate of $1,740 per annum, effective as of the 10/1/42 -2- " 4 6 Upon which she enters upon the performance of her duties after Ingp Passed satisfactorily the usual physical examination. ' Approved unanimously. Memorandum dated September 29, 1942, from Mr. Morrill, recomtlencling that the following increases in salaries of employees in the Secreterrs Office be approved, effective as of October 1, 1942: Name Designation Salary Increase To From ice Functions 411:111 Sherrod Illar YDeuterman Jessie Sexton Claiborne Sohnson Warren Kidvell P. L. Vatkins Leiter Peregory 8tanley Bloch %Mond Twomey Toaeph E. Kelleher Junior Operator (Duplicating Devices) Clerk Telephone Operator Mail Clerk Junior Operator (Duplicating Devices) Senior Mail Clerk Operator (Duplicating Devices) Foreman Operator (Duplicating Devices) Foreman Operator (Duplicating Devices) Supervisor, Duplicating and Mail Section ' L etariEtl and Administrative Ilwood Page bin 111. L. Clerk Staley Xenneth Emery Supply Clerk Chttrles Overmiller Clerk Yilek Supply Clerk Clerk °01ari N. Kern Kiley, Ir. Supervisor, Procurement Section $1,260 1,440 1,440 1,560 ,c_!1,380 1,560 1,560 1,680 1,620 1,800 1,860 1,980 1,860 2,040 2,300 2,500 2,300 2,500 2,700 2,900 1,200 1,440 1,440 1,500 1,500 1,620 1,260 1,560 1,500 1,620 1,620 1,740 2,700 2,900 Approved unanimously. Letter to Mr. Paddock, President of the Federal Reserve Bank of 17.10 t Ott, reading as follows: 4. 10/1/42 "In accordnnce with the request contained in your letter of September 25, 1942, the Board approves the aPpointment of Richard Irving Gilman as an assistant :rrainer for the Federal Reserve Bank of Boston. Please vise us of the date upon which the appointment becomes effeetive,,, Approved unanimously. Letter to Mr. Sproul, President of the Federal Reserve Bank of 1,Zew y, ii‘k reading as follows: w, "This is in reply to your letter of September 24, 1942, with respect to the appointment of Mr. Harry M. Boyd, as 11)eIleeer of the newly created Savings Bond Redemption partraent. to "The Board of Governors approves the payment of salary Mr. Boyd at the amount fixed by your directors; i.e., at "e rate of t5,250 per annum, his present salary, for the iljriod September 25th through September 30, 1942, and at rate of $6,000 per annum effective October 1, 1942, for 1the period ending March 31, 1943, subject to his reappointin 'ellt as an officer of the bank for the period from the first eeting of the directors in January 1943, to March 31, 1943." Approved unanimously. Letter to the board of directors of the "Tipton State Bank", 1'4404 stating that, subject to conditions of membership numbered 1+vo 3 contained in the Board's Regulation H and the following special °°11(litin the the the Board approves the bank's application for membership in l'ederal Reserve System and for the appropriate amount of stock in ederal Reserve Bank of Chicago: "4P it * --r'.0r to admission to membership, such bank, if has not already done so, shall charge off or otherwise eliminate estimated losses of „”,653.04, as shown in the report of examination of such bank as Of August 31, 1942, made by an examiner for the Pederal Reserve Bank of Chicago." 1920 10/1/42 -4The letter also contained the following special comment: "It appears that although the bank possesses authority exercise fiduciary powers, on the date of examination for 1 , membership it was administering only two trust accounts, and ie understood that the trust department is to be discontinued as soon as these accounts are closed out. In the 3 circ umstances the application has been approved on the same is as if the bank were not exercising fiduciary powers and " attention is called to the fact that if the bank should ders in the future to exercise such powers, other than to ! : e extent necessary in connection with the accounts now beadministered, it will be necessary under the provisions " condition of membership numbered 1 to obtain the Board's ' eer11118eion to do so." to r Approved unanimously, for transmission through the Federal Reserve Bank of Chicago. Letter to Mr. Strathy, Assistant Cashier of the Federal Reserve Of Di --'oamond, reading as follows: "Reference is made to your letter of September 22, ,-,'_)42, in which you raise certain questions as to the ! lint which should be reported in Column 4 of Form F. R. 579. There is attached a copy of a letter we have written to the other Federal Reserve BRIlks, partly to cover the clue stions raised in your letter and partly because several t ks were not reporting amounts under Column 4 of the form e°1'rectly. the purposes which Form F. R. 579 Was „,"With reference to el,m2leeiPmed to serve, it was not intended to reflect a -172-ative record of loans to finance war production but 13 144marily to provide information as to (1) the outstanding tnbility of the Tar Department, Navy Department, or MariZ7I/3 Commission on guaranteed loans and (2) any additional 11/1t for which they might become liable under outstanding ellarantee agreements, as of the date of the report." Approved unanimously, together with the following letter to the Presidents of all the Federal Reserve Banks, except Richmond: 1921 10/1/42 -5- "It has been brought to our attention that some of fle Reserve Banks are not reporting amounts properly in eolumn 4 on Form F. R. 579. "The amount to be reported in Column 4 should be the 811/11 (31* (1) the amount outstanding on the loan and (2) any Eridditional amount available to the borrower on date of the ePort. The following will serve for purposes of illustration: "1. If a straight loan has been advanced in full the amount to be entered in Column 4 will be the same as the amount outstanding, reported in Column 7. "2. If a straight loan is being advanced in installments and the total amount has not been advanced and no repayments have been made, the amount to be entered in Column 4 will be the total amount authorized to be advanced under the guarantee agreement. "3. If a credit is being advanced as needed and rePayments are made in the interim, the amount to be entered in Column 4 will be the amount outstanding R3 shown in Column 7 plus the difference, if any, between the total amount authorized to be advanced and the total of amounts actually advanced. "4. In the case of a simple revolving line of credit the amount to be reported in Column 4 will be the aggregate amount which under the guarantee agreement may be outstanding at any one time regardless of whether any amount is outstanding at the time. "5. In case a revolving line of credit has a condition attached limiting the total amount that may be advanced under the agreement, the amount to be entered in Column 4 will be the maximum which IllaY be outstanding at any one time or the sum of the amount actually outstanding and the amount Which may still be advanced under the agreement, Whichever is smaller. "6. In case a revolving line of credit has a condition stipulating that the amount outstanding at any time shall not exceed a designated percentage of the amount of monies due or to become due under the contract or contracts assigned to secure the loan, the amount to be entered in Column 4 will be the amount of the line of credit or, if smaller, an amount equal to the designated percentage of the remaining assigned payments under the assigned contract or contracts. It is assumed that this latter information will be obtained from financing institutions at the end of each month. 1922 "/1/42 -6- "If a loan has been paid and the guarantee agreement terminated at the report date, but the loan is listed on P2r111 F. R. 579 inasmuch as there was an amount outstanding the end of the preceding month, nothing will be reported 11 , Column 4. In this connection it has been suggested that flal liquidations of loans under a guarantee agreement or vuher terminations be explained in the 'Comments' column." ; Letter to Mr. Bowman, Assistant Vice President of the Federal IleSer "Bank of Atlanta, reading as follows: "Reference is made to your letter of September 21, 1942, in which certain questions are raised as to guarantee fees accrued or collected on behalf of the War Departent9 Navy Department, and Maritime Commission. "The quarterly period for computation of the guarantee tee should begin with the datevof the first advance ide ir in contemplation of the guarantee agreement. If the flelleing institution makes an advance prior to the actual : eutien of the guarantee agreement but such advance is after the approval of the guarantee, the fee would accrue ' l'om the date of such advance rather than the date of the ellarantee agreement. am nith respect to waiving the collection of nominal pa nts of interest or guarantee fees, or disregarding overN;'ents in connection with loans that have been repaid in it is (mite possible that the Federal Reserve Banks or7 be asked to furnish detailed data as to how the amount the fees is arrived at, and, if so, it is doubtful whether he, General Accounting Office would accept anything less than 11"e exact amount due. Whether you wish to take up with fia6Incing institutions nominal differences in amounts due is ismatter for determination by your Bank, but in any case it sugCesteci that the Government be credited with the exact iri fll°11nt of fees due on each guaranteed loan. On an outstandroe loan there is, as you assume, no objection to carrying 1"liard from one period for adjustment in the next period zirall difference between the amount due and the amount reby the financing institution." 4 2 Approved unanizIously, with the understanding that copies of the above letter would be sent to the Presidents of all the Federal Reserve Banks except Atlanta. 1_923 10/1/42 —7— Letter to Mr. Chalfont, Managing Director of the Detroit Branch, liecierel Reserve Bank of Chicago, reading as follows: "This refers to your letter of September 18, 1942, addressed to Air. Cravens, enclosing a copy of a letter from — S. F. Verhelle, Vice President and Controller, The Lianulacturers National Bank of Detroit, dated September 15, 1942, the meaning of the words 'original maturity' as Used Id in the next to the last sentence of section 1 of the standard form of guarantee agreement. t "It is our understanding that the words 'original maas here used were intended to refer to the expressed turitY 2 of a loam and were not intended to refer to an accelerated maturity, whether automatic or otherwise. Moreover, With respect to any particular advance made by the financing Institution which is subject to the guarantee, the 60-day period during which demand must be made for purchase by the rllrantor begins with the date of maturity of the note repsuch advance, regardless of the fact that there reY be an agreement between the bank and the borrower for a °17ing credit extending over a period of years during ilj ex1 4 1 att e me further advances may be made and further notes "Accordingly, in the example cited in Mr. Verhelle's lett n, er, the 60-day period would begin to run on September 15, 43, the maturity date of the note, irrespective of the fact that the loan agreement extends until September 1, 1946, or whT fact that an event of default occurs on January 15, 1943, under the loan agreement, operates to accelerate 4 "While we have not submitted this matter to the armed Ber1,4 lins"4ces, we shall be glad to take the question up with the ;fticular Agency concerned if the question should become -terial in any particular case." Approved unanimously, together with letters transmitting copies of the incoming letter and the above reply to Lieutenant Colonel Paul Cleveland, Chief of the Loan Section, Advance Payment and Loan Branch Of the Fiscal Division, War Department, Mr. Sidney A. Mitchell, Chief of Finance Section, Office of Procurement and Material, Navy Department, and Mr. B. B. Griffith, Assistant to Director of Finance, United States Maritime Commission. 1924 10/1/42 Letter to the Comptroller General of the United States, reading Rs 1 4Reference is made to your letter of September 25, :42, in which it is statea tliat you 'understand certain .rilecks issued by the Board of Governors of the Federal "I've System (particularly the Gold Certificate Fund), 4 en paid by the Treasurer of the United States, are re`'Ilrned to the Bo-rd. it "Pursuant to the authorization contained in paragraph of Section 16 of the Federal Reserve Act, the Federal qeserve Banks and Federal Reserve Agents maintAn deposits °D g°1(1 certificates with the Treasurer of the United States. 1Nithd -rawals from these accounts are made by check but the ,ctilecks drawn on the accounts are not, as you assume, rell-fled to the issuing office. The question of having such eeck sent to your office should, therefore, be taken up th the office of the Treasurer of the United States." J 4 Approved unanimously. Letter to the Comptroller of the Currency, reading as follows: It is respectfully requested that you place an order with the Bureau of Engraving and Printing, supplementing the .,, Order of June 17, 1942, for printing of $50,400,000 of i ''`'eral Reserve notes of the 1934 series for the Federal °serve Bank of St. Louis in the $5 denomination." Approved unhnimously. Thereupon the meeting adjourned.
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