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t 18')3 A meeting of the Board of Governors of the Federal Reserve Systern was held in Washington on Thursday, September 17, 1942, at 11:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Ransom, Vice Chairman Szymczak McKee Draper Mr. Mr. Mr. Mr. Morrill, Secretary Bethea, Assistant Secretary Carpenter, Assistant Secretary Clayton, Assistant to the Chairman The action stated with respect to each of the matters hereinafter referred to was taken by the Board: The minutes of the meeting of the Board of Governors of the Federal p -eserve System held on September 16, 19420 were approved unanimousiz. Memorandum dated September 15, 1942, from Mr. Paulger, Chief of the D. , lvisi°n of Examinations, recommending that the sick leave heretotore from alleh granted T Carroll Noell, a Federal Reserve Examiner, be extended September 16 until November 1, 1942, with the understanding that leave will not be charged against any annual or sick leave which he may accumulate in the future. Approved unanimously. Letter to Mr. Davis, President of the Federal Reserve Bank of St, Louis, reading as follows: 18'4 9/17/42 -2- "In accordance with your request, the Board of Governors approves the change in the personnel classification plan of your Bank involving the establishment of the position of Assistant to the General Counsel, Legal Department, with maximum salary of $4,500, submitted with Your letter of September 1, 1942." Approved unanimously. Letter to Mr. Hays, Vice President and Secretary of the Federal Reserve Bank of Cleveland, reading as follows: 'This refers to your letter of September 11, 1942, enclosing a bill from Squire, Sanders and Dempsey in the unt of $5001 covering legal fees incident to the dos':446 of a 13b loan for $500,000 to the Bardco Manufacturttf. and Sales Company, Dayton, Ohio. It is noted that " 18 elnolint will be deducted from the amount which would ordinarily be billed to the War Department and the Navy Department for legal services for the month of July. "In the light of the circumstances stated in your ietter, the Board approves the payment of this bill of :500 to Squire, Sanders and Dempsey. In doing so, of .?urse, the Board does not intend to indicate at this tune position which it may wish to take with respect to bills covering legal services for the month of July When submitted for consideration." n Approved unanimously. Letter to Mr. Bowman, Assistant Vice President of the Federal lies re Bank of Atlanta, reading as follows: refers to your letter of September 110 1942, rethe extent to which copies of documents executed in Connection with guaranteed loans, including copies of loan agreements and note forms, should be forwarded to the Board r,,' transmission to the War Department, the Navy Department, -"' the Maritime Commission. , "It is our understanding that at present, in accordance :lth the Board's letter of May 23, 1942 (S-486), the only Pneral requirement of the three Services, except with reieect to copies of the guarantee agreement, is that two copof any loan agreement that is executed be furnished by 2 r 1825 9/17/42 -3- "the financing institution to the Reserve Bank, one copy- to be forward ed to the Board of Governors for transmission to the War as the Department, Navy Department, or Maritime Commission, case may be. It is expected, however, that some provisions regarding the furnishing of documents executed in cCnnection with guaranteed loans may be contained in instructions to be issued by the three Services in the near future. "We are forwarding a copy of your letter, together with a copy of this reply, to each of the Services for its information.n Approved unanimously, together with letters transmitting copies of the incoming letter and the above reply to Lieutenant Colonel Paul Cleveland, Acting Chief Of the Advance Payment and Loan Branch, Fiscal Division of the War Department, Mr. Sidney A. Mitchell, Chief of Finance Section of the Office of Procurement and Material, Navy Department, and Mr. B. B. Griffith, Assistant to Director of Finance of the United States Maritime Commission. Letter to Mr. Hays, Vice President and Secretary of the Federal Re8erve Bank of Cleveland, reading as follows: "Reference is made to your letter of August 27 to Mr. arrY commenting on matters mentioned in his liaison comenl eunicati on of August 22 on Regulation W. Your informal omments are being studied with interest. "With respect to Mr. Parry's Item 7 regarding out-oftown b ranches, it appears possible that the Standard Oil COmn th' -arlY of Ohio may not correctly understand the effect of e Regulation on credit card transactions and that consequently the difficulties which confront it may not be as great as they seem. t, "The usual arrangement between dealers and a corpora_J-c'n which issues credit cards is that the corporation will nl:rchase the accounts from dealers . However, this does not alt ;Zet lillt all: fact that the dealer is the seller of the article or the purposesof section 5(b), the dealer is the Registrantf 1826 9/17/42 -4- "Accordingly, if a customer had not paid for an article purchased from one dealer within the time prescribed in section 5(c), the Regulation would not prevent another dealer from extending credit to that customer; and an account arising from the extension of credit by the second dealer could be purchased by the Standard Oil Company or by a bank without violating the Regulation. "On the other hand, if the Company knew from its records that a customer's account with a particular dealer was in default, the Company would be prohibited from purchasing aciL;.:ilscitional account of the same customer with the same for a listed article, because of section 3(a)(3). "These conclusions, of course, may present a practical dlffioulty in that the dealer will not know whether the ?ustomer has paid the Company for previous purchases with3..n the time elects to notify the dealer prescribed unless the Company of the accounts which are in default. It seems tossible, however, that the Company would find it easier notify each dealer of defaults in accounts purchased irom him, dealer of rather than its present plan of notifying every all defaults." Approved unanimously. Letter to Mr. Stroud, First Vice President and General Counsel oft e Federal Reserve Bank of Dallas, reading as follows: "The Board agrees with your conclusion that the followng question lSeptember under Regulation W, contained in your letter of 10, should be answered in the affirmative: 'An individual has ten charge accounts created in good faith for listed articles with ten different stores which are in default. He goes to a lending agency and applies for an instalment loan of sufficient amount to pay off these ten separate accounts. The lending agency takes an instalment note for the total amount, payable in six equal monthly instalments, each of which exceeds the sum of 45.00 but is less than $50.00. Is t this permissible under the regulation?' 6(13\ 'The answer, as you point out, is governed by sections a‘i) and 6(c) of the Regulation. Section 6(h) provides that 44?an tiring which the Registrant knows is for the purpose of rea charge account shall have a maximum maturity of six months. Section 6(c) provides that loans subject to section p) shall have instalments of not less than $5 per month on the aggregate instalment indebtedness of the debtor to the creditor. Z 18'A, 17 9/17/42 -5- "Of course, this does permit the lender to give terms Which the seller could not have given, but the same is true under Option 2 in section 10(b)." Approved unanimously. Telegram to the Presidents of all the Federal Reserve Banks, re • adIng as follows: "Please furnish two summary statements for each of the following „ five classes of member banks in your district and in each ot.ate: A. Central reserve city banks B. Reserve city banks C. Country banks in places with population of 100,000 or more D. Country banks in places with population of 15,000100,000 E. Country banks in places with population under 15,000 , In support of the summary statements please prepare and Dank:;urnieh statement showing following information for each member Name of bank Class of bank City F. R. District No. State for(Amounts in thousands of dollars. Daily average figures s emimonthly p period ended August 31, 1942, in the case of eQuntrY banks; and for week ended September 11, in the case of central reserve and reserve city banks.) 1. Required reserves 2. Total reserves 3- Per cent, item 2 divided by item 1 4. Balances due from domestic banks 5- Total reserves plus balances due from domestic banks Per cent, item 5 divided by item 1 The Lo w summary statements are as follows: First summary statement Percentage ratio of Number of total reserves to Total required banks in per- Required reserves citn3aboveJ reserves cent age group reserves Less (2) 100 than 100 per cent or more but less than 125 125 or more but less than 150 (4) 150 or more but less than 175 (5) 175 (6) 200 or more but less than 200 or more (7) Total (1) (3) 9/17/42 -6- “Second summary statement Percentage ratio of total reserves plus balances Number of due from banks to required banks in percentge group .....sAttlat!a_11-1DILLIL9.2:0 (1) Less than 100 per cent (2) 100 - 150 (3) 150 - 200 (4) 200 250 (5) 250 - 300 (6) Total reserves and balances Required due from reserves banks 'znn -)vv - 350 (7) 350 - 400 (8) 400 500 (9) 500 or more , 'The summary figures for the district, by classes of banks, be Zit, mailed or telegraphed to reach Board by Saturday, Septemif at all practicable. LA "Percentages should be carried to one digit beyond decimal, -.1 1°5-9. All figures should be carefully checked, and balces due from banks should be examined to see that they appear i reasonably correct in view of errors in this item when last sim, !r analysis was made. Totals of required reserves should be i-lared with deposits in semi-monthly and weekly reports on forms R. 413 and 422 and total reserves should be in substantial agreement with averages of total reserves in daily balance sheet, form 34.” Approved unanimously. /4em°randum dated August 31, 1942, from Mr. Thomas, Assistant Director of the Division of Research and Statistics, recommending, for the reas,s_ vas stated in the memorandum, that $125 be added to the item of postage and " expressage in the 1942 nonpersonal budget of that Division. Approved unanimously. Thereupon the meeting adjourned. 136.,ift) S cretary.
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