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C"N Ct 4r:p Minutes of actions taken by the Board of Governors of the Reserve System on Tuesday, October 3, 1950. PREsENT: Mr. Mr. Mr. Mr. Mr. Mr. McCabe, Chairman Szymczak Evans Vardaman Norton Powell Mr. Carpenter, Secretary Mr. Sherman, Assistant Secretary Mr. Kenyon, Assistant Secretary mmr.a.3. 14 17Utes of actions taken by the Board of Governors of the "erve System on October 2, 1950, were approved unanimously. 4 eril0reliclum dated September 28, 1950, from Mr. Young, Director : tlie3)4181011 of Research and Statistics, recommending that the 14°4"1151111 of Mrs. Charlotte T. Breckenridge, a clerk in that Division, llecoAted to be effective, in accordance with her request, at the '14ee or blIsiness September 291 1950. Approved unanimously. tut 4en6um dated October 2, 1950, from G. L. Boothe, II, 4 4J1rector of the Division of Administrative Services, Nktla 4 that the resignation of Mrs. Wanda H. Thompson, key- r °- in 0 that Division, be accepted to be effective, in ilea:tee 1,1 1950. ith her request, at the close of business September 28, Approved unanimously. ketn401 ''-e-adum dated September 29, 1950, from G. L. Boothe, II, etttilt il'eet°r of the Division of Administrative Services, 1q3/50 -2reco ell6Ling that the temporary appointment of Rudolph Reece, a loorer ktober kteor illthat Division, be extended on a permanent basis, effective I, 1950, with no change in his present basic salary at the $2,120 per annum. Approved unanimously. 14emorandum dated September 30, 1950, from Mr. Leonard, bitect t °- °f the Division of Bank Operations, recommending that the tekk)re, 17'glIdefinite appointment of Mrs. Frances L. Franklin, a q414st leea clerk in that Division, be extended on a permanent basis, k(I that h -er salary be increased from $2,650 to $2,730 per annum, vctober 15, 1950. Approved unanimously. re kenloranda from the heads of the divisions indicated below eric114 t§1 izicreases in the basic annual salaries of the following 1): 4 ; 3 48 those divisions, effective October 15, 1950: ker401°1:1, bate or (A1) 4t/trirci, , Name q011 lib, el.4-tviitivE RVICES t.7„, 3 1950 11 ItAI%E. b4e1. orsey. ataela ,t tee ites icur 444414 R lieading ' 0 10 11118ontz 441'114e G'ilagher Title Supvr. Proc. Sec. Printing Clerk Publications Clerk Pay Roll Clerk Operator (Key Punch) Page Cafeteria Helper Salary Increase To From $4,o75 3,825 3,600 3,350 2,650 2,280 2,190 $4,200 3,950 3,725 3,475 2,730 2,360 2,260 O/3/ 50 -3tioision, Date of ,ketto Nat Naze OPERATIoNS 8eAteraber aoilla 30, 1950 J. BurleyLoretta 14. Goheen Rite. S. Jo114 14. Boyer krgaretpoutdstone Dorothy Griset CEtri 14. Werner kirEar skituier et C. Gough Title Analyst Supvr., F. R. Bank Statement Unit Statistical Asst. Settlement Clerk Clerk-Stenographer Clerk-Stenographer Clerk Clerk-Stenographer Salary Increase From To $5,100 4,325 $5,225 4,450 3,950 3,825 3,475 3,475 2,970 2,650 4,075 3,950 3,600 3,600 3,050 2,730 Approved unanimously. Letter the Fecieraa to Mr. Lunding, Chairman and Federal Reserve Agent of Reserve Bank of Chicago, reading as follows: 114,.;i4 accordance with the request contained in llootieel "8 letter the 1950- °f Governors of September 29, 1950, approves, effective October 9, PettL:the PaYment of salary to Mr. August J. Detr,2 Federal Reserve Agent's Representative, it B ranch, at the rate of $5,700 per annum. 4 ve Approved unanimously. Letter 4._ Mr. Stetzelberger, Vice President of the Federal telik 'v Of Cleveland, reading as follows: httx, 'yield of the recommendation contained in QI5ve J-etter of September 27, 1950, the Board of titezlIors further extends to May 16, 1951, the which 'The Elyria Savings & Trust branch 3-Yria, Ohio may establish the der Attte ° ,; 1 ,take, Ohio as approved by the Board under november 16, 1949." Approved unanimously. 1O/3/50 -4Letter to Mr. Langum, Vice President of the Federal Reserve 4111t# o Chicago, reading as follows: ' ckri : The expansion in borrowing in margin accounts b5, -4.16 the last year or so has not been accompanied or, c°rresPonding increases in loans for purchasing de,ZrYing securities to others than brokers and be-a "rs at weekly reporting member banks. This may 1)4: to actual differences in credit activities, i;er,e is some concern as to whether it might 854 -4used at least in part by the incorrect 111141;74-tication of some of these loans. The attached -re11141-1m discusses the question in some detail. iliqu "It would be appreciated if you would make the ( 01).1i1L111:: Ia a following banks to try to determine have been any significant amount 1)11reitadvertent misclassification of loans for • is atmsing or carrying securities, or (2) if there kay 1;11,1"ge volume of loans, the proceeds of which 4ellal.. :e been used for purchasing or carrying illfor;les, but are otherwise classified because Act In:t i°11 available at the reporting bank does '--411lit definite determination of the purpose: Chicago National Bank Harris Trust and Savings Bank Lake Shore National Bank Merchandise National Bank of Chicago "T, Northern Trust Company 44 1118 group of bpylks, all located in Chicago, beI ected partly for your convenience in recillestZlese inquiries. Similar inquiries are being 4re al, in two other Reserve Bank cities. If there 4Eitist 7 °ther banks that you feel might be more /1,1thbae.ie .Lt°rY for this purpose, feel free to substitute '"e list or expand it as seems necessary to "14 sat isfactory explanation. thet t the examiners are at any State member bank 4Birkight ble shed light on the matter, it might be to ask them to look briefly into the Copy of this letter has been sent to tez : 197 1q3/50 Approved unAnimously, with the understanding that similar letters would be sent to the Federal Reserve Banks of Philadelphia and St. Louis. Letter to the Presidents of all Federal Reserve Banks, reat ng as follows: re, "In connection with the administration of the cle'/fltlY instituted V-loan program for guaranteeing se„nse production loans, the Board's telegram of civ‘eraber 26 stated that procedures will follow as tZlY as possible the same procedures which were 80 evIged during the V-loan program of World War II. IZ questions have arisen as to the extent to which procedures and forms utilized during the previous gra41 are applicable to the new program. esseh : Iri general, it is believed that most of the Var7;141 Procedures established during the viorld pres-;:iy-loan program can be followed under the Program with only a few necessary changes. ohal,"°110stantially the same information should be connection with applications for guarantees cluctIs required for guarantees of loans for war prok)ce_cillring the previous program. Likewise, Vith 1 instructions issued during World War II 4ree;:sPect to the number of copies of the guarantee (1.111; to be executed, submission of communications -te, and similar matters should be equally pltrs vrlate Ii , the processing of guarantees authorized tli4vos tio the Defense Production Act and the PresiNi t -4ceoutive Order No. 10161. It is assumed that 43.11 has available copies of such procedural rittiorle. ZIZIe , i;111) %nrderstand, of course, that in certain procedures will necessarily differ ttezipin°se followed during the previous program. For aluaranteeing agencies have not delegated lotiheeFetdhe: Reserve Banks authority to approve sallteez b' uP to a specified amount without submission goto.dHcations to Washington, as was the case during the br4e'r Also, all determinations as to whether ective borrower's operations are in fact e 441 e'r/ to expedite defense production so as to for a guaranteed loan will be made by the L 10/3/50 -6glaaranteeing agencies in Washington, at least for .itIllePresent. For this purpose, as stated in the t:k1116 telegram of September 26, a copy of each 141)lication should be forwarded immediately to the jukr(i for agetcy. transmittal to the appropriate guaranteeing "It is recognized that as the program develops ti°ns of procedure will arise which may not be covered by procedural instructions issued ci;r1t.g. the V-loan program of World War II. Any such sZi°n8 should be referred to the Board for conand determination after consultation - n, 4he several guaranteeing agencies. ?ea zor reference purposes and in order that the Nreral Reserve Banks and the guaranteeing agencies Pro: 2 18 11tain complete files with respect to the ?sal,"°14a, all letters addressed by the Board to the esdl-,!al Reserve Banks which relate to general procopi7a8 and policies will bear an identifying V-number. okres of such letters will be furnished to the MaiZliiteeing agencies for their information. In illter;°12) alokY such letters which are of general such as interpretations of the form of to t'inLee agreement, may be furnished by your Bank liAoh 4 -74cing institutions having guaranteed loans request." e Approved unanimously. etN Lette r to Honorable Preston Delano, Comptroller of the hey) u neshington 25, D. C., reading as follows: rrn_ ptera,“11$ refers to Mr. Robertson's letter of the op -ioij 1 2 1950, in which it was stated that in „, 15r .,°1)0 a-, r1412r1 Office loans guaranteed on the `4J-ttecie";form of V-Loan Guarantee Agreement sub1,( ,s" 1° You with the Board's letter of September would come within the purview of Exception 1.t eti°n 5200 of the Revised Statutes and thet ;',1 "orript,";°4 of the term 'unconditional' issued by er of the Currency on June 18, 1942. SePtember 26, 1950, the Board of Governor gletit the Federal Reserve Banks by telegram of the Uti°4 of a new V-loan program for guaranteeing of your 1O/3/50 -7:lerenSe production loans pursuant to the Defense j°duc j tion Act of 1050 and the President's Execuve Order No. 10161. Among other steps taken in connection, the Board, after consulting the _ 562arattee4lag agencies, prescribed the form of Zliar,Tea agreement to be used in connection with IZ,72-14 Program; and a printed copy of that form eillj " i ified as 'Form of September 27, 1950' is 1/;4)sel. This form is identical with that which 2e 6 ellelosed with the Board's letter of September eZcept for three minor changes as described e Board's telegram to the Federal Reserve of that telegram is enclosed. or 8' " Aiscopy teirIt assumed that the changes in the form /v:antee agreement indicated in the enclosed the : 84 will not affect the unconditionality of corltrararitee agreement. However, we will appreciate thEvt-1 ;:!:ation by your Office of our understanding SepteZ11118 guaranteed on the prescribed form of " Z;ver 27/ 1950) will come within the purview StEtt;?.elption 10 to Section 5200 of the Revised tiota ::" and the definition of the term 'uncondi43 as used therein. are °I. Your information in this connection, there ieEller enclosed a copy of the press statement or the h respect to the new program and a copy SerYt - etabe ard's Regulation V as revised effective r 27, 1950." tal: Approved unanimously. tetter to Honorable Jere Cooper, House of Representatives, -11 ,04, -* C.) reading as follows: kre res requested in your letter of September 21, we h14 Vrit 'j lL laing Mr. Henry A. Fowlkes' letter of September ?ersim,711 ort behalf of the Meriwether Furniture Company, 'tlbject—g, Tennessee, of which he is president, on the "Iirc)r , this Board's consumer credit Regulation W. 'rowlkes suggests that down payment requirements should 4 set l'"ure under the provisions of Regulation W , as '4'1 1/ ''"--113 per cent of the cash price instead of c)st cerlt as the regulation now requires on articles 4 $100 or more. He also appears to be under the 1.400 14V3/50 -88."1111Preesion that during the war Regulation W required °Ile-third down payment on furniture as it did on 414°140hiles. le a: 1111e re,7-ulation has generally required something thEL ' fl the way of minimum down Payments on furniture zi.1-4011 other listed articles, particularly automobiles. 10e11111mum down payment for furniture has ranged from to i7 cent in 1941 to 20 per cent in 1942, then down ero-;::, 13ft" cent in 1949 and when the last regulation in June of 1949 a 10 per cent minimum down t10---rit vas required. All during that period the iettn#PaYllient requirement of automobiles has been at -" °Ile-third of the cash price. lieu:It has seemed to the Board that there are good pethi—Ae for permitting in Regulation W a minimum down : to illt for furniture different from that applicable kri;ornobiles d some other listed articles. The Eteso : t i llre trade in expressions through its national --,e.tion seems to support that view and, incidentally, tive-literences we had with the association representa1 1,,,hey appeared somewhat apprehensive that the reetr;'°Ils of the regulation might be made more Ot! tive for furniture than those that were adopted. vouzi'se) there is nothing in the regulation which P ,!!vent any merchant from requiring a higher re 4.'llnent than the minimum established in the ation. pronTlie Board is constantly studying conditions and Vheilev -Pared to change the terms of Regulation W 48 thoe „ r it aPpears appropriate to do so. Views such ezPressed by Mr. Fowlkes are considered in tor 4 with changes in terms, and. we thank you his letter to our attention." Approved lIngnimously. oor Letter to Mr. C. N. Nichols, Managing Director, Northeastern tktic4vt "°11i. and Insulating Contractors Association, Inc., 12 Street, New York 17, N. Y., reading as follows: t atil,Ne refers to your letter of September 21, 1950 and September 25, 1970, to Chairman McCabe reIlegUlation W. I401 -9"You refer to the business advisory committees grovided for in section 701 (b)(ii) of the Defense Production Act of 1950, and you state that your :,tion requests that the Board 'permit it to - ablish such an advisory committee'. to A "As you know, the Board goes to great lengths ti '441sult with the persons affected by its regula: s. This is true of all the regulations for which 14,-! °a-rd }las responsibility, including Regulation ' ola will recall that the practice was followed but ° ..1 , 11Y with the present version of Regulation W The ; -180 with the versions issued in earlier years. EtEsn -e Igas consultation with representatives of your the-, el tion as well as with the representatives of the -c11,1r other industries and groups affected by colls,Zhe Board has every intention of continuing to vhers'" with those affected by its regulations Pilla717 , e!: it is practicable and consistent with the the u.nterest. The Board will follow this policy in coztv" 1. 4tUre, as in the Past, because the Board is %levy! t ced that it is the fairest and most effective ad minister a regulation. ror 1"13UsinesEi advisory committees of the kind provided Act m section 701 (b)(ii) of the Defense Production gIn some corisicases be appropriate for purposes of clear "4ti0n in connection with Regulation W. It is thel3, however, that it would not be appropriate for ,°411 to select a particular trade association SectiZrait it to establish such an advisory committee'. (b)(ii) specifically states that in the :he te;°!,1 of the advisory committees provided for by % I'011. 'there shall be fair representation for N;e111— ' elit small, for medium, and for large business 4s0cirl.Tes, for different geographical areas, for trade :14erla t.t.t°11 members and nonmembers, and for different Hos of the industry ....' 11, the ; ellsions will doubtless arise from time to time ;11ture, as in •the past, when the Board will be teD ,ardi 0 Consultsubject with persons to Regulation W 11z enanges in the regulation. As stated in 'lQ to t 0ri f09 Of the Defense Production Act, such conthe sometimes be 'impracticable or contrary 'erest of the national defense.' ' 3.01,t7 7°1 -104711L Board has long recognized the benefits to be 11h4:-Lved from consulting wherever appropriate with those are subject to its regulations. Such consultation course, relieve the Board of its duty to decisions that will give proper weight to the byllerel Public interest -- which is rarely represented 111:V organized group. But it can be helpful in tanding the particular problems and viewpoints 1fferent segments of various industries. veicf,2°11 may be sure that the Board at all times illtere8 the views of your association, and of all other the, e8ted Persons, with respect to any matter on which 41.°81Lrd has responsibility." Z Approved unanimously. Telegram to all Federal Reserve Banks and their branches, "f011ows wire being sent to all Federal Reserve Banks branches to give preliminary confidential 4tZi;7 011 regarding issuance of Regulation X, Real is‘74 ;1‘edit. Expected that Regulation X will be m1,1:; this week to be effective promptly. We will 14e 13; 1,Y°11 as soon as we have more definite information. or41-e-- to airmail photo offset negatives to your head c;„184 soon as available so that regulation may be end distributed promptly to interested persons D08-8--r di re,ible strict. We will also wire to you as soon as text of press release which will be issued etre41-. ! 4 regUlation. We will advise you later of to 11-;4:ve date and when regulation will be released ' 41rell ' lle. Please keep information contained in this cotridential until that time." illtzeslr Approved unanimously. Me torardum dated October 2, 1950, from Mr. Hooff, Assistant ti, re c°131Mending that there be published in the law department Oct b tiA er issue of the Federal Reserve Bulletin statements in tott 4ttached to the memorandum with respect to the following: t 403 1v3/50 -11Delegation of Functions under Defense Production Act Executive Order No. 10161 Loan Guarantees for Defense Production Regulation V ectsumer Credit Pre-effective Date Transactions (S-1139) Calculation of Maturity for Improvement Credit (S-1141) Construction of or Repairs to Detached Structures (S-1142) Rome Improvement "materials and articles" (S-1143) Purchase or Discount of Credits Extended Pursuant to Pre-effective Date Commitment (S-1144) Automobile Appraisal Guides l'ecleral Deposit Insurance Act Approved unanimously. 040 1r' i A. I "_. i Secretary.
@FedFRASER