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Minutes of actions taken by the Board of Governors of the Federal Reserve System on Thursday, September 7/ 1950. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. McCabe, Chairman Szymczak Evans Vardaman Norton Powell Mr. Carpenter, Secretary Mr. Sherman, Assistant Secretary Pem --erea Minutes of actions taken by the Board of Governors of the Re serve System on September 14smorandum dated September 6, 1950, were approved unanimously. 5, 1950, from Mr. Bethea, Director Ot the Division of Administrative Services, recommending that the tel4P°rary appointment of Hiram J. Roush as a Guard in that Division, be e:114ed on a 40 chalige in his Permanent basis, effective September 11, 1950, with Present basic salary of $2,450 per annum. tallk or Approved unanimously. Tele, pal 5.ram to Mr. DeMoss, Vice President of the Federal Reserve las, reading as follows: or j "urlet August 30 Board approves designation for Z8 ,°r1 A. Burow as special assistant examiner 1'4e Federal Reserve Bank of Dallas." Approved unanimously. Lette ot Sproul, President of the Federal Reserve Bank tlev readl l'erence Ntle'ttlt, as follows: is made to Mr. Sheehan's letter of 1950, enclosing a letter addressed to Cotilpaeral Reserve Bank of New York by Bankers Trust New York, New York, requesting the Board's 9/7/50 -2- ft oconsent to the absorption of the Lawyers Trust :!TPanY of New York without increasing the capital to surplus accounts of the Bankers Trust Company exilounts equal to the aggregate totals of these accounts as they now exist in the individual banks. , "As recommended, the Board of Governors hereby .7es consent pursuant to the provisions of Section of the Federal Reserve Act, as amended, to the _ e a T ir sustbsorption by Bankers Trust Company of Lawyers --mParlY upon condition that: the absorption pl arried out substantially in accordance with the isall,as submitted; formal approval of the program ezd°°tained from the appropriate State authorities; pea 11-th the understanding that counsel for the satetral Reserve Bank of New York will review and t.,,-LsfY himself as to the legality of all steps to effect the absorption." Approved unanimously. Telegram to the Presidents of all Federal Reserve Banks, as follows: Re, ,"SUpplementing our telegram September 1 re w. the T:ExPectations now Board are that President may sign is 'Jefense to prepar.A Production Act today or tomorrow. e adopt be Regulation W promptly thereafter eff'eC4tlil ore , P 0111 is signed Press in time Board plans to make 84zouncement for release in papers Saturday the. 11 ) SePtemb 9. We will advise you later as to o aate-ctual issuance of the Regulation and confirm the stat: the Press release. Text of the proposed press 141til-ellt follows. t, °r Please keep strictly confidential reieased , 0y the Board. 0; elease in September , 1950 morning papers September , 1950. or 1950 tder the authority of the Defense Production Act tion 0, 0, the Board of instalmentvi l Governors today reinstituted regilaeffeci; c°nsumer Regulation 0. credit through ,; -; - e at the opening of business September 18, (11 '$5,0n1 , 1e Regulation credits covers automobile instalment 195 alga 14' alla less and other instalment credits of $2,500 s' ccept that home improvement credits are now 9/7/50 -3"'covered and terms are generally tightened, the Regulation is in much the same form as the Regulation vhich expired June 30, 1949. "'The limitations initially established are: 'Down payments of at least one-third, and maximum maturities of 21 months for au tomobiles. 'Down payments of at least 15 per cent, and maximum maturities of 18 months for aPPliances: refrigerators, food freezers, radio or television sets, phonographs, cooking stoves, ranges, dishwashers, ironers, /lashing machines, clothes driers, sewing machines, suction cleaners, air conditioners and dehumidifiers. 'Down payments of at least 10 per cent, and 18 months maximum maturity for furniture and rugs 'Down payments of at least 10 per cent, and 30 months maximum maturity for home repairs, alt erations or improvements. -Lion, ollowing the past policy of placing fewer restrictailisa°n small credits, the new Regulation does not conthall 4:°1 ' 711. Payment requirements for articles costing less are 111(i)Otetthough, unlike the former Regulation, maturities m artici Inst ia -ent loans for the purchase of any listed instni !carry the same limitations that apply to the are 1i ent sale of the article; other instalment loans ! flii ted to a maximum maturity of 18 months. ilito a 14 es tablishing the initial terms the Board took trade ce°unt the prevailing practices and terms in the ilart;pos_affected. There has been a material relaxation of the 17, ent credit terms during the past year or more, and tightec , 121!"fements of the Regulation are substantially n-T `'ilan the terms now widely offered. ixiste.1:'n the automobile field the great majority of recent reporiZeint sales of new cars and late model used cars are , ! a havine been financed on substantially easier terms, either: Mittea to down Payments or maturities or both, than per;,,0Y the new Regulation. many instalment sales of appliances and -erits lolei are reported as having been made with down pay40 4.0 Per cent or less; in many cases only token or PaYments have been required. Maturities of 24 1 1 9S 9/7/50 'months on instalment sales of such articles have been reported as widely prevalent with longer Maturities offered in some cases. "'Consumer credit has undergone an unprecedented "Dansicn, particularly in recent months. Under present es?nditions continued excessive growth of consumer in-8-1-ment credit adds materially to inflationary pressures. rise 7"The Regulation of consumer credit is one of the ELL, monetary and credit measures designed to restrain Z: inflationary pressures that result in higher prices ma ' 4 to facilitate diversion of critical material and to .X1POwer production of defense needs as such diversion tion "'As the Board has frequently emphasized, the Regulaflat 8 a useful supplementary instrument to combat inone , , 1°11- It applies to an important part, but only to by irrt, of the credit structure and therefore cannot -tTelf effectively control inflationary forces. Re,. "The Regulation is being published in the Federal th; o leter and copies of the Regulation will be made available posstl all Federal Reserve Banks and branches as soon as The Regulation will be administered in the field by ti: :11 4-2 Reserve Banks and their 24 branches located shota:c1 conveniently throughout the country. Inquiries or 1, `I be addressed to the nearest Federal Reserve Rink urano,. 'Regulation W was first put into effect under 4ectIti 1, 194 Ve Order Peptember 1, 1941. It expired November ; It was reinstated September 20, 1948 under 0 ,statut7 busial Y which expired June 30, 1949. The d the community end the buying public, the Board an with-e'eral Reserve Banks have thus had extensive experience this type of credit regulation. b nch Thra ()ugh the 12 Federal Reserve Banks and their Reserve 24 tanks es) and. the more than 250 directors of the trulE arld b ranches, the Board has the advantage of trade ' ate and close contact with all segments of commerce, iiel.11411.1d i of ndustry, and with consumers affected.by the this Tol°n. Because of this advantage, a regulation has 41 .d can be promptly adapted in the future, as it the b: the Past, to changing conditions as reported on -818 of experience in all parts of the Nation.' Approved unanimously• ..040 1! AIR /_aiddi....46A Ab..ML Secretg7r
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