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MINUTES OF THE MEETING OF THE FEDERAL ADVISORY COUNCIL
M ay 15, 1955
T he second statu tory m eeting of the Federal Advisory Council for 1955 was convened
in R oom 932 of the M ayflow er H otel, W ashington, D .C ., on M ay 15, 1955, at 2:10 P.M .,
the P resident, M r. Brow n, in the Chair.
P resen t:
WTilliam D . Ireland
H enry C . A lexander
W illiam R . K . M itchell
Frank R . D en ton
R obert V. F lem ing
W allace M . D a v is
E dw ard E . B row n
W . W . C am pbell
Joseph F. R ingland
C harles J. C handler
G eorge G. M atkin
John M . W allace
H erbert V. Prochnow
District N o. 1
District N o. 2
District N o. 3
District N o. 4
District N o. 5
District No. 6
District No. 7
District No. 8
District No. 9
District No. 10
District No. 11
District No. 12
Secretary
On m otion d u ly m ade and seconded, the mimeographed notes of the meeting held on
F ebruary 13, 14, 15, 1955, copies of which had been sent previously to the members of
the C ouncil, were approved.
A com p lete list of the item s on the agenda for the meeting, and the conclusions of the
C ouncil are to be found in the Confidential M e m o ra n d u m to the Board of Governors from
the Federal Advisory Council, which follows on pages 15, 16 and 17.
T he m eetin g adjourned at 5:35 P.M .
HERBERT V. PROCHNOW
Secretary
13
MINUTES OF THE MEETING OF THE FEDERAL ADVISORY COUNCIL
M ay 16, 1955
At 10 A.M., the Federal Advisory Council reconvened in Room 932 of the M ayflower
Hotel, Washington, D.C.
Present: Mr. Edward E. Brown, President; Messrs. W illiam D . Ireland, Henry C.
Alexander, William R. K. M itchell, Frank R. Denton, Robert V. Fleming, W allace M .
Davis, W. W. Campbell, Joseph F. Ringland, Charles J. Chandler, George G. M atkin,
John M. Wallace, and Herbert V. Prochnow, Secretary.
The Council reviewed its conclusions of the previous day regarding the item s on the
agenda, and sent to the Secretary of the Board of Governors the Confidential M e m o r a n d u m
which follows on pages 15, 16 and 17, listing the agenda item s with the conclusions
reached by the Council. The M e m o ra n d u m was delivered to the Secretary of the Board of
Governors at 12:15 P.M . on M ay 16, 1955.
The meeting adjourned at 12 noon.
HERBERT V. PROCHNOW
Secretary
14
CONFIDENTIAL
M E M O R A N D U M TO T H E B O A R D OF G O V E R N O R S FR O M T H E F E D E R A L
A D V IS O R Y C O U N C IL R E L A T IV E TO T H E A G E N D A FOR T H E
JO IN T M E E T IN G O N M A Y 17, 1955
1. C onsideration of the salaries of the Chairman and the mem bers of the Board of
G overnors of the Federal Reserve System .
The m em bers of the Council have on various occasions expressed them selves in favor
of increasing the salaries of the Chairman and the mem bers of the Board of G overnors
of the Federal R eserve System . The Council again strongly urges that favorable considera
tion be given to this m atter and has unanim ously approved the following resolution:
W ith the establishm ent of the Federal Reserve System in 1913, the Congress
specified salaries for m em bers of the Board which were equivalent to those of
C abinet m em bers and in excess of those of m em bers of the Congress. For a
num ber of years that relationship prevailed. A t the present tim e the salaries of
m em bers of the Board are m aterially below those of C abinet officers and also
below those of m em bers of the Congress as well as of other governm ent officials
of less or no greater responsibility.
T he B oard of G overnors has responsibilities of far-reaching im portance to the
n ation ’s econom y. T he salaries of the mem bers of the Board should m ore ade
q u ately reflect these responsibilities and should be m ade m ore attractive to
persons w ith the highest qualifications.
A n increase in the salaries of the m em bers of the Board w ould also justify a
m uch-needed revision upward in the salaries of the m em bers of the staff in order
to retain and attract persons of high com petence.
T he C ouncil believes that legislation should be passed providing that the salary
of the Chairm an of the Board, who is its active executive officer, should be
$22,500 annually, and that salaries of the m em bers of the Board should be at
least $20,000 annually.
2. H . R. 2643, introduced by R epresentative Patm an on January 20, 1955, “To
direct the Com ptroller General to audit the Board of G overnors of the Federal
R eserve System , the Federal Open M arket C om m ittee, and the Federal R eserve
banks.”
T he atten tion of the Council has been called to H . R. 2643, a bill “to direct the
C om ptroller General to audit the Board of G overnors of the Federal R eserve System , the
Federal O pen M arket C om m ittee, and the Federal R eserve banks.” T he m em bers of the
C ouncil are unanim ously of the opinion that the auditing procedures suggested in H . R.
2643 are unnecessary, unwise, and contrary to the fundam ental concept of the independ
ence of the Federal Reserve System . T he Council believes that the exam ination and
auditing procedures of the Federal Reserve System should be set by the Federal R eserve
Board. T he Council has therefore authorized its officers to testify in opposition to the bill
if it should com e up for hearings in the Congress.
15
3. The Board would like to have the comments of the members of the Council on
the business and economic outlook throughout the spring and summer of the
current year, and it would appreciate having the Council’s views as to the
probable demand for bank loans in that period compared with demand during the
corresponding period of 1954.
Members of the Council report that business activity in general is at a high level in
all twelve districts but with some variations from industry to industry and with some
industries lagging behind. Consumer spending and construction are setting new records.
In all twelve districts, the over-all economic outlook for the spring and summer months is
good, and business sentiment is favorable, as reflected in plans for large expenditures for
the expansion of plant and equipment.
Agriculture, with a decline in the prices of farm products and farm income, is an
important exception to the broad upward trend in the economy. The outlook for farmers
has also been adversely affected over wide areas by drought and freezes.
All members of the Council anticipate that there will be an increasing demand for
loans in the months immediately ahead, and that the total volum e of loans will be larger
than in the corresponding period a year ago.
4. In addition to the views of the Council on the general business situation, the
Board would be interested in having the Council’s views as to the effects of
System credit policies since the last m eeting of the Council and whether these
policies should be changed in any w ay in the light of the business and economic
situation during the near term.
The effects of System credit policies since the last m eeting of the Council have been
good. The Council believes that a policy of mild credit restriction should be continued for
the near term if business continues to be buoyant.
Government financing for new m oney in substantial volum e is inevitable in the last
half of the calendar year. If, as seems probable, the banks m ust provide a considerable
part of the new money required, and if business continues at a high level with an increasing
demand for bank loans, the System must be prepared through open market operations or a
reduction in reserve requirements, or both, to put more reserves into the banks. In view
of the increasing activity of business and of the probability of an increase in loans in the
months immediately ahead, it m ay become necessary to consider raising the rediscount
rate. The use of the discount window by member banks should not be restricted or dis
couraged, as credit for good borrowers should continue to be available at reasonable rates.
5. The Board would appreciate receiving the Council’s views as to whether a change
in the substitution rule under Regulations T and U, to require that proceeds of
sales in under-margined accounts be applied to reduce the debit balance, would
be desirable or undesirable.
The Council is unanimously of the opinion that it would be undesirable at present to
change the substitution rule under Regulations T and U.
6. The present policy of the Board is to make a determination with respect to
whether there is a payment of interest on demand deposits under Regulation Q
only after development of all pertinent facts through an examination. The Board
would appreciate having the Council’s views as to whether various practices
being followed by banks result in a substantial noncompliance with the intent of
the law or the regulation, and what, if any, changes in Board policy or in the law
might be desirable?
16
The Council believes that member banks generally seek to and do obey the intention
of Regulation Q. As the Board memorandum states, “there appears to be no completely
satisfactory way of handling questions as to what constitutes an indirect payment of
interest” against the intent of the law.
Of the possible alternatives which the Board has presented in its memorandum, the
Council favors Paragraph (2), page 5 of the memorandum, with an amendment in the
language to read as follows:
The Board should adopt a policy to the effect that the legal prohibition against
indirect paym ents of interest is “self-policing”, that each member bank, therefore,
has the responsibility of determining whether its practices conform to the law;
but that the Board, through bank examinations, will be alert to obvious violations
and in such cases take steps to enforce the law.
T he Council believes it is unwise to publish the Board’s findings in individual cases,
or to publish in detail practices the Board considers contrary to the intent of the law.
Factual situations are almost never completely identical. Such publication would cause
confusion in the minds of bankers and increase the difficulties of administration.
The Council does not believe any change in the law affecting member banks is desirable.
17
MINUTES OF THE MEETING OF THE FEDERAL ADVISORY COUNCIL
M ay 16, 1955
At 2:15 P.M ., the Federal Advisory Council convened in the Board Room of the
Federal Reserve Building, W ashington, D .C ., the President, Mr. Brown, in the Chair.
Present: Mr. Edward E. Brown, President; M essrs. W illiam D . Ireland, H enry C.
Alexander, William R. K. M itchell, Frank R. D enton, Robert V. Fleming, W allace M .
Davis, W. W. Campbell, Joseph F. Ringland, Charles J. Chandler, George G. M atkin,
John M. Wallace, and Herbert V. Prochnow, Secretary.
Dr. Woodlief Thomas, Economic Advisor to the Board, and Dr. Ralph A. Young,
Director of the Division of Research and Statistics, w ith other members of the staff, gave
an audio-visual presentation on “From Recovery to Expansion” . The presentation was
off-the-record.
The meeting adjourned at 3:50 P.M .
HERBERT V. PROCHNOW
Secretary
18
m in u t e s o f j o in t c o n f e r e n c e o f t h e f e d e r a l a d v is o r y c o u n c il
a n d T H E B O A R D OF G O VERNO RS OF TH E FE D ER A L R ESERVE SY ST E M
M ay 17, 1955
A t 10:30 A .M ., a joint conference of the Federal Advisory Council and the Board of
Governors of the Federal Reserve System was held in the Board Room of the Federal
Reserve Building, W ashington, D.C.
P resen t: M em bers of the Board of Governors of the Federal Reserve S ystem :
Chairman W m. M cC. M artin, Jr.; Governors M . S. Szymczak, James K. Vardaman,
Jr., A. L. M ills, Jr., J. L. Robertson, Chas. N . Shepardson, and C. Canby Balderston;
also M r. S. R. Carpenter, Secretary, and Mr. M erritt Sherman, Assistant Secretary of
the Board of Governors.
Present: M em bers of the Federal Advisory Council:
M r. Edward E. Brown, President; M essrs. William D. Ireland, Henry C. Alexander,
W illiam R. K . M itchell, Frank R. Denton, Robert V. Fleming, W allace M . D avis, W. W.
Campbell, Joseph F. Ringland, Charles J. Chandler, George G. M atkin, John M . Wallace,
and H erbert V. Prochnow, Secretary.
T he President of the Council read the first item of the agenda and the conclusions of
the Council as given in the Confidential M e m o ra n d u m to the Board of Governors from the
Federal Advisory Council, as printed on pages 15, 16 and 17.
The President of the Council read the second item on the agenda and the conclusions
of the Council as given in the Confidential M e m o ra n d u m mentioned above.
President Brown then read the third item on the agenda and the conclusions of the
Council as stated in the Confidential M e m o ra n d u m previously mentioned. An extended
discussion followed.
President Brown read the fourth item on the agenda and the conclusions of the
Council as given in the Confidential M e m o ra n d u m cited above. President Brown added
that the use of the discount window should not be restricted or discouraged.
A discussion followed in which members of the Board and the Council participated.
The President of the Council read the fifth item on the agenda and the conclusions of
the Council as stated in the Confidential M e m o ra n d u m previously mentioned.
The sixth item on the agenda and the conclusions of the Council as stated in the
previously mentioned were read by President Brown. A brief
discussion followed.
Confidential M e m o r a n d u m
The meeting adjourned at 12:55 P.M.
HERBERT V. PROCHNOW
Secretary
19
NOTE:
This transcript of the Secretary's
notes is not to be regarded as complete or
necessarily entirely accurate. The trans
cript is for the sole use of the members
of the Federal Advisory Council. The con
cise o ffic ia l minutes for the entire year
are printed and distributed at the end of
the year.
The Secretary's notes of the meeting of the
Federal Advisory Council on May 15, 1955 >
at 2 :1 0 P . M. in Room 932 of the Mayflower
Hotel, Washington, D. C. All members of the
Federal Advisory Council were present.
The Council approved the Secretary's notes for the meeting of the
Council on February 1 3 , Hi and 15, 1955®
ITEM
I
CONSIDERATION OF THE SALARIES OF THE CHAIRMAN AND THE MEMBERS
OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.
Brown
asked Fleming to comment on this item.
Fleming.
The Council has previously expressed it s e l f in favor of
higher s a la r ie s f o r the Board of Governors. The American Bankers
Association has r e c e n tly taken steps to help re a lize this o bjective.
Fleming believes i t might be h elpfu l i f the Council also went on record
again for higher sala ries for members of the Board. The Comptroller's
office, the FDIC o f f i c e , and the Federal Reserve System are not sup
ported by the taxp ay ers.
Various proposals have been made regarding
the salaries which should be paid to members of the Board. The follow
ing are among the proposals which have been made regarding the salaries
of the Board of Governors:
Chairman
Other Board Members
$ 2 2 ,5 0 0
2 0 ,0 0 0
Chairman
Other Board Members
2 2 ,5 0 0
2 2 ,0 0 0
A l l Board Members, in clu din g
Chairman
2 2 ,5 0 0
Brown suggests that the Chairman of the Board o f Governors should
receive a salary equal to that of a Cabinet member, which is $ 2 2 ,5 0 0 ,
and other Board members should receive at least $ 2 0 ,0 0 0 .
The Council's
resolution might say that when the System was establish ed, the salaries
were equal to those of Cabinet members.
Since then the salaries of
Cabinet members have advanced, and the sala rie s of members of the Board
are now m aterially below those of Cabinet o ffic e r s .
ITEM
II
H. R. 26U3 INTRODUCED BY REPRESENTATIVE PATMAN ON JANUARY 20,
195$, "TO DIRECT THE COMPTROLLER GENERAL TO AUDIT THE BOARD
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, THE FEDERAL OPEN
MARKET COMMITTEE. AND THE FEDERAL RESERVE BANKS.11___________ _
Fleming.
Davis,
(Off-the-record comments).
(Off-the-record comments).
Brown# (Off-the-record comments). The Council may state that its
attention has been called to H. R. 26U3 and the Council is of the opinion
that the auditing procedures suggested in H. R. 26h3 are unnecessary,
unwise and contrary to the fundamental concepts of the operation of the
Federal Reserve System. The Council believes that the examination and
auditing procedures now established in the Federal Reserve System are
adequate. The Council has, therefore, authorized its officers to testify
in opposition to the bill if it should come up for hearings. (A
motion was made, seconded and approved unanimously by the Council in’
m
support of the views Brown had expressed).
ITEM III
THE BOARD WOULD LIKE TO HAVE THE COMMENTS OF THE MEMBERS OF
THE COUNCIL ON THE BUSINESS AND ECONOMIC OUTLOOK THROUGHOUT
THE SPRING AND SUMMER OF THE CURRENT YEAR, AND IT WOULD
APPRECIATE HAVING THE COUNCIL'S VIEWS AS TO THE PROBABLE DE
MAND FOR BANK LOANS IN THAT PERIOD COMPARED WITH DEMAND DURING
THE CORRESPONDING PERIOD OF 19SU.____________________________________
Ireland
reports that the business outlook in his district is good.
The t e x t ile industry is having a somewhat better volume. Production
in the boot and shoe industry is high .
Bank loans are up over a year
ago,
Ireland looks forward to a continuance of good business and to
some increase in bank lo an s.
Mortgage money is p le n t ifu l. Although
business is good, the margin of profit may be narrowing.
The Federal
Reserve Bank o f Boston has urged banks not to lib e r a lize installment
credit terms.
Alexander,
The second d is t r ic t has been recording g a in s , but
they are not as great as the gpdns for the country as a whole.
Con
struction is up, but it has not increased as much as it has for the
entire country.
There have been some layoffs in defense in du strie s.
Activity in the radio and te le v is io n industry is r e la t iv e ly low. The
automobile, steel and primary metal industries are very buoyant. The
textile industry is a l i t t l e better than it has been.
Farm income is
about U per cent below a year ago. Economic recovery is in progress
but not as great as the country generally is experiencing.
The demand
for commercial loans w i l l probably be greater than for the correspond
ing period a year ago,
M itc h e ll.
Business is expanding, but not as much as over the
rest of the country. Textiles and coal are a lit t le better.
The
automobile industry and housing are at high le v e ls .
Employment is im
proving, but it is still not good in some areas.
Business men, generally,
are o ptim istic.
Bank loans are higher, and Mitchell expects them to
increase.
-3Denton* Business currently is very good0 Business and industrial
loans are s t i l l a l i t t l e below a year ago, although at that time they
were d e c lin in g .
The present upward trend in loans is due in considerable
part to increases in consumer and real estate loans. Total commercial
loans, plus consumer and r e a l estate loans,are expected to show an up
ward trend*
The agricultural industry is experiencing a downtrend. The
coal industry is a l i t t l e better than it has been0
Davis * The economists report that business in the district is
good. The housing industry is strong; department store sales are ex
cellent; business generally is at a high level* However, the effects of
last summer’ s drought are now becoming evident* In addition, there have
been fr e e z e s *
In some ways, we appear to be entering a period like the
late 1 9 2 0 !s , when we had profitless prosperity® Loans are up over a
year a g o , and the demand for loans probably w ill increase*
Brown* Business is extremely good* Except for the dairy industry,
the ag ric u ltu ral industry is not especially bad* The steel industry is
operating at capacity*
Private and public construction are both at high
levels*
Large in d u s trial concerns are planning expansion* Such projects
once begun, must be completed* The increasing demand for credit has come
largely from various concerns seeking term financing, finance companies,
large department stores and mail order concerns which need more money
to carry receivables, and the contractors seeking funds for construction*
Other than these demands for c red it, the demand for commercial loans is
not p ar tic u la r ly la r g e « It now appears that the total volume of loans
w ill increase*
The large concerns are, with some exceptions, making
better p ro fits than a year ago*
Campbell* Business is operating at a high level, especially in the
metropolitan areas*
Department store sales in the large cities are good,
but r e t a il sales in the rural areas are not so good* The farm outlook
is not so b r ig h t, because of reduced acreage* With good weather and good
y ie ld s , the farmer w i l l make a small p ro fit, but with poor weather and
poor crops, the farmer w il l not do so well*
Farm loans and consumer
credit have increased*
Demand deposits are holding their own* Campbell
expects some increase in loans*
Ringlancji states that business in his district is about as that
described in the seventh d is tr ic t*
His d istric t could use moisture in
the a gric ultu ral area but the situation is not desperate* The outlook
for shipments of iron ore is good* An active demand exists for loans*
Agricultural income is o ff, and the dairy areas are dissatisfied*
Ringland
expects a risin g demand for loans*
Chandler* The situation in his d istrict is similar to that of the
rest of the country*
Department store sales are up 10 per cent over a
year ago.
The construction industry is good* The o il industry is some
what better than it has been. However, it now appears that the winter
wheat crop w i l l only be about £0 per cent of the normal crop and that
the y ie ld in Texas w il l be even lower* The winter wheat crop is much
lig h te r.
The rains have been spotty.
Loans are increasing and Chandler
expects total loans to rise further, although farm loans may be down.
The demand for consumer credit is lik e ly to be strong. The outlook for
business generally is good.
Matkin reports that conditions in his district follow the national
trends, which have beendescribed by other members of the Council* Almost
any kind o f new car now can be bought on used car lots* Moisture is
fa ir in a ou o n e-th ird o f th e d is t r ic t and poor in tw o-th ird s o f the d is
tr ic t* B u sin ess g en e ra lly i s very goodc C redit demands a t commercial
banks ai e in c i easin g and Matkin expects an expansion in t o t a l bank loans*
W allace* G eneral b u sin ess in h is d is t r ic t is w e ll above the
n a tio n a l average* R e ta il trade is above a year ago* Housing sta r ts are
higher than the n a tio n a l average* Loans are above a year ago and
W allace ex p ects the volume o f loans to increase* A new gas lin e from the
P a c ific N orthwest and oth er sim ila r developments w il l probably g re a tly
stim u la te fu r th e r in d u s tr ia l growth in the d is tr ic t* Some areas are
beginning to s u ffe r from"*the drought* W allace understands th a t a fte r
1975 more power p la n ts w ill be uranium fu e le d than otherw ise*
Business
fo r the b alan ce of the year i s lik e ly to be above the n ation al average*
Flem ing rep o rts th a t b u sin ess in h is d is t r ic t is g en era lly good*
One weak sp o t i s the low er cash income fo r agricu ltu re* There is a
stron ger demand fo r coa l; auto s a le s are very good* Consumer durables
account fo r most o f th e stren g th in business* Loans are sh arp ly higher
than a y ea r ago* The lumber and fu rn itu re in d u strie s are doing b e tte r ,
and department sto r e s a le s are higher*
Brown* The C ouncil may s ta te th a t the outlook fo r b u sin ess
through th e sp rin g and summer o f th e current year looks very good in
a l l th e d i s t r i c t s . The one major segment which i s not sharing in the
broad upward trend i s a g ricu ltu re* In some a re a s s the outlook fo r
farmers has been a d v ersely a ffe c te d by drought and freezes* A ll tw elve
d is t r ic t s ex p ect an in c r ea sin g d emand fo r loans in the sp rin g and sum
mer.
ITEM
IV
TN ADDITION TO THE VIEWS OF THE COUNCIL ON THE GENERAL BUSINESS
SITUATION THE BOARD WOULD BE INTERESTED IN HAVING THE COUNCIL'S
VTEWSAS TO THE EFFECTS OF SYSTEM CREDIT POLICIES SINCE THE LAST
V^KTTNG OF THE COUNCIL AND WHETHER THESE POLICIES SHOULD BE
™ D 2 S S WAY IN THE LIGHT OF THE BUSINESS AND ECONOMIC
SITUATION DURING THE NEAR TERM.
. c +h<a n o ssib le requirem ents o f the Treasury fo r the
Fleming ou ^
Thg present confidential estimates are that the
last half of
y
• , billion of new money in the last half of the
Treasury m y re^
e * J
t
to obtain about $1* billion in July and
calendar year. The Irea
y
j from September through December. Fleming
August a n d t h e
of the Board in raising margin requirements
believes that the actions ui
and the rediscount rate were good.
>^-h ,=vhs that System credit policies since the last
Alexander believes
S i e v e s a policy of mild credit restraint
meeting have been good,
should be continued*
.
+he views of the Council, and all members agree
Brown asks for
nolicies since the last meeting of the Council
that the System’ s cred
P
.
of mild restraint should be continued,
have been good, and tna
tnipht r e s t r ic t io n . No such stringency
The policy has been one o
now exists* The Treasury will need
existed in the early pa
reserves will be required in the
considerably
more
new
mo
•
either
by open market operations, or by
banks and they may be obtained
as
a
reduction in reserve requirements, or both* If, as seems probable, the
banks will be called upon to provide a considerable part of the new
money, and if business continues at a high level, with an increasing
demand for bank credit^ the System must be prepared, either through a
reduction in reserve requirements or by open market operations, or both,
to put more reserves into the banks* Brown points out that there
apparently has been a change in the view of some persons in the System
who now favor more use of the discount window. If the present business
buoyancy continues, and the demand for loan increases, it may'become
necessary to consider raising the rediscount rate. The oanks should
not be discouraged from using the discount window1*
Alexander*
higher rates.
Credit should be available to good borrowers, even at
Brown agrees that credit for good borrowers should be available
at present rates, ors if necessary, at higher rates.
ITEM
V
THE BOARD WOULIJ APPRECIATE RECEIVING THE COUNCIL'S VIEWS AS TO
WHETHER A CHANGE IN THE. SUBSTITUTION RULE UNDER REGULATIONS T
AND U, TO'REQUIRE THAT PROCEEDS OF SALES IN UNDER-MARGINED
ACCOUNTS BE APPLIED TO REDUCE THE DEBIT BALANCE, WOULD BE DE
___________ ____
SIRABLE OR UNDESIRABLE.
Mitchell
states that he does not like this idea.
-rr ■
♦
Brown
thinks a change now would be confusing.
J
Alexander
apt to be bad.
believes that any measure which forces liquidation is
Ireland. If and when a margin requirement increase is necessary,
could not this procedure be used in its place?
Brown* This procedure would greatly decrease activity in the market.
Denton
doubts the wisdom of taking this action now.
Brown* The continued uninterrupted rise in the market is the bad
feature in the market*
Ireland. With current yields on investment trusts where they are
now, they look much less attractive*
Brown* The Council may state that it is opposed at this time to
this change in Regulations T and U.
ITEM
VI
THE PRESENT POLICY OF THE BOARD IS TO MAKE A DETERMINATION WITH
RESPECT TO WHETHER THERE IS A PAYMENT OF INTEREST ON DEMAND DE
POSITS UNDER REGULATION Q ONLY AFTER DEVELOPMENT OF ALL PERTINENT
FACTS THROUGH AN EXAMINATION. THE BOARD WOULD APPRECIATE HAVING
-6
THE COUNCIL'S VIEWS AS TO WHETHER VARIOUS PRACTICES BEING FOLLOWED
BY BANKS RESULT IN A SUBSTANTIAL NONCOMPLIANCE WITH THE INTENT
OF THE LAW OR THE REGULATIONS, AND WHAT, IF ANY, CHANGES IN BOARD
POLICY OR IN THE LAW MIGHT BE DESIRABLE?
Brown states that when a bank pays checks agains an account it
renders a service and is indirectly paying interest*
I f you prohibited
interest, dir e c tly or in directly , you would require a service charge
on every account, and that would end the banking business*
Ringland believes that the substance of the Staff memorandum is
in the la st few lin es dealing with the absorption of exchange charges*
Davis cites cases of abuses in relation to indirect interest.payments*
However, he believes that in the main the banks are obeying the intention
of Regulation Q*
He would dislike to see this question become one for
public discussion*.
The Council need not deny that there are some
practices subject to c riticism *
He would like to have the Council adopt para
graph (2) on page 5> of the S taff memorandum.
R ingland*
(Off-the=>record comments)*
Brown cites situations in Indiana, Michigan and Ohio where a tax
is absorbed by banks*
I f the banks did not absorb the t a x , they would
lose th e ir deposits*
D av is*
There is a lim it in what can be done in absorbing charges.
Campbell believes as Wallace Davis does that there is a limit to
the absorption o f charges0
Ringland
cannot understand the views of the F. D. I . C. on the
absorption of exchange charges. He understands they use the word
"reasonable” in connection with the limit of such charges*
M itchell
vary widely*
reports that the views among the bankers in his district
Brown believes the question should not be opened up for wide
discussion.
Brown favors paragraph(2)on page 5 of the Staff memorandum.
He does not believe the rulings should be published.
(At this point
various members of the Council gave illustrations of practices similar
to those outlined in the S taff memorandum.)
Matkin recommends that the Board continue its efforts to get the
F . D . I . C . to conform to the view that the absorption of exchange charges
is a payment of interest*
Fleming does not favor publishing the findings of the Board.
Brown
would agree with Matkin® s suggestion,,
Fleming.
In the absence of an accord between the Board, the F .D .I .C .
and the Comptroller, Fleming thinks the examiners should report in their
examinations cases where there are violations.
He thinks the Board should
continue its efforts to get the F . D . I . C . to conform to the Board's views.
Brown suggests that the Council should state that it is in accord
with paragraph( 2 )on page £ of the Staff memorandum except that the para
graph should begin, "The Board should adopt a policy to the effect that*"#
-7-
Brown w il l state verbally at the meeting w ith the Board that the Council
hopes the Board w ill continue its efforts to synchronize the views of the
three agencies*
The Council also believes i t would be unwise to publish
the Board's fin din gs in individual cases*
The meeting adjourned at £:35> P .M .
* * •* * *
-8-
THE FEDERAL ADVISORY COUNCIL CONVENED AT 10 A.M. ON MAY 16,
19 S 5 , IN ROOM 932 OF THE MAYFLOWER HOTEL, WASHINGTON, D. C.
ALL MEMBERS OF THE COUNCIL WERE PRESENT.
The Council prepared and approved the attached Confidential
Memorandum to be sent to the Board of Governors relative to the Agenda
for the joint meeting of the Council and the Board on May 1 7 , 19^U.
The Memorandum was delivered to Mr. Carpenter, Secretary of the Board
of Governors at 1 2 :1 ^ P.M . on May 1 6 , 1955* It w ill be noted that
each item of the Agenda is listed together with the comments of the
Councilo
The meeting adjourned at 12 noon.
CONFIDENTIAL
MEMORANDUM TO THE BOARD OF GOVERNORS
FROM THE
FEDERAL ADVISORY COUNCIL
RELATIVE TO THE AGENDA FOR THE JOINT MEETING
ON MAY 17, 1955
1.
Consideration of the salaries of the Chairman and the
members of the Board of Governors of the Federal Re
serve System*
The members of the Council have on various occasions expressed
themselves in favor of increasing the salaries of the Chairman and the
members of the Board of Governors of the Federal Reserve System. The
Council again strongly urges that favorable consideration be given to
this :natter and has unanimously approved the following resolution:
With the establishment of the Federal Reserve Sys
tem in 1913, the Congress specified salaries for
members of the Board which were equivalent to those
of Cabinet members and in excess of those of members
of the Congress. For a number of years that relation
ship prevailed. At the present time the salaries of
members of the Board are materially below those of
Cabinet officers and also below those of members of
the Congress as well as of other government officials
of less or no greater responsibility*
The Board of Governors has responsibilities of farreaching importance to the nation1s economy. The
salaries of the members of the Board should more ade
quately reflect these responsibilities and should be
made more attractive to persons with the highest
qualific ati ons•
An Increase in the salaries of the members of the
Board would also justify a much-needed revision up
ward in the salaries of the members of the staff in
order to retain and attract persons of high compe
tence.
The Council believes that legislation should be passed
providing that the salary of the Chairman of the Board,
who is its active executive officer, should be $22,500
annually, and that salaries of the members of the Board
should be at least $20,000 annually.
2.
H. R. 261*3, introduced by Representative Patman on
January 20, 1955, ffTo direct the Comptroller General
to audit the Board of Governors of the Federal Re
serve System, the Federal Open Market Committee, and
the Federal Reserve banks.”
The attention of the Council has been c alled to H. R . 26U3,
a bill "to direct the Comptroller General to audit the Board of Governors
of the Federal Reserve System, the Federal Open Market Committee, and
the Federal Reserve b a n k s .” The members of the Council are unanimously
of the opinion that the auditing procedures suggested in H. R . 261*3 are
unnecessary, unwise, and contrary to the fundamental concept of the inde
pendence o f the Federal Reserve System. The Council believes that the
examination and auditing procedures of the Federal Reserve System should
be set by the Federal Reserve Board. The Council has therefore authorized
its officers to testify in opposition to the b i l l i f it should come up
for hearings in the Congress.
3.
The Board would lik e to have the comments of the
members o f the Council on the business and econo
mic outlook throughout the spring and summer of
the current y e a r , and it would appreciate having
the Council*s views as to the probable demand for
bank loans i n that period compared with demand dur
ing the corresponding period of 195h.
Members of the Council report that business a ctiv ity i n general
is at a high le v e l i n a ll twelve d is tr ic ts but with some variations from
industry to industry and w ith some industries lagging behind*
Consumer
spending and construction are setting new records.
In a ll twelve d is tr ic t s ,
the over-all economic outlook for the spring and summer months i s good,
and business sentiment is favo rab le, as reflected in plans for large expendi
tures for the expansion o f plant and equipment.
Agriculture, with a decline in the prices of farm products and
farm income, i s an important exception to the broad upward trend in the
economy. The outlook for farmers has also been adversely affected over
wide areas by drought and freezes#
A ll members of the Council anticipate that there w ill be an in
creasing demand for loans i n the months immediately ahead, and that the
total volume of loans w i l l be larger than in the corresponding period a
year ago.
lu
In addition to the views of the Council on the general
business s itu atio n , the Board would be interested i n
having the C o u n c il’ s views as to the effe c ts of System
credit p o lic ie s since the last meeting of the Council
and whether these p o lic ie s should be changed in any way
in the ligh t of the business and economic situation dur
ing the near term.
The e ffe c ts of System credit p o lic ie s since the last meeting of
the Council have been good.
The Council believes that a p olicy of mild
credit restric tio n should be continued for the near term i f business con
tinues to be buoyant.
Government financing for new money in substantial volume is
inevitable in the last h a lf of the calendar year.
I f , as seems probable,
the banks must provide a considerable part of the new money required, and
if business continues at a high level with an increasing demand for bank
loans, the System must be prepared through open market operations or a
reduction in reserve requirements, or both, to put more reserves into the
banks. In view of the increasing activity of business and of the
probability of an increase i n loans in the months immediately ahead, i t
may become necessary to consider raising the rediscount rate.
The use
of the discount window by member banks should not be restricted or d is
couraged, as credit for good borrowers should continue to be available at
reasonable rates.
$.
The Board would appreciate receiving the Council1s views
as to whether a change in the substitution rule under
Regulations T and U, to require that proceeds o f sales in
under-margined accounts be applied to reduce the debit
balance, would be desirable or undesirable.
The Council is unanimously of the opinion that it would be un
desirable at present to change the substitution rule under Regulations
T and U.
6.
The present p o lic y of the Board i s to make a determina
tio n w ith respect to whether there is a payment of in
terest on denand deposits under Regulation Q only after
development of a l l pertinent facts through an examina
t io n .
The Board would appreciate having the Council’ s
views as to whether various practices being followed by
banks result i n a substantial noncompliance with the
intent of the law or the regulation, and what, i f any,
changes in Board p olicy or in the law might be desirable?
The Council believes that member banks generally seek to and do
obey the intention o f Regulation Q.
Pa the Board memorandum states, "there
appears to be no completely satisfactory way of handling questions as to
what constitutes an in direct payment of interest11 against the intent of
the law.
O f the p ossible alternatives which the Board has presented in
its memorandum, the Council favors Paragraph ( 2 ) , page 5 of the memorandum,
with an amendment in the language to read as follows:
The Board should adopt a policy to the effect that the
legal pro h ibition against indirect payments of interest
is self- policing ” ; that each member bank, therefore,
has the r e s p o n sib ility of determining whether it s prac
tic e s conform to the law; but that the Board, through
bank examinations, w ill be alert to obvious violations
and in such cases take steps to enforce the law.
The Council believes it is unwise to publish the Board*s findings
in individual cases, or to publish i n d e ta il practices the Board considers
contrary to the intent of the law .
Factual situations are almost never
completely id e n t ic a l.
Such publication would cause confusion in the
minds of bankers and increase the d iffic u lt ie s of administration.
The Council does not believe any change in the law affecting
member banks i s d e s ir a b le .
9
- -
THE FEDERAL ADVISORY COUNCIL CONVENED IN THE BOARD ROOM
OF THE FEDERAL RESERVE BUILDING, WASHINGTON, D. C. AT
2 :15 P.M. ON MAY 16, 1955.
ALL MEMBERS OF THE COUNCIL
TTERE PRESENT.
Dr. Woodlief Thomas, Economic Adviser to the Board, and Dr. Ralph
A. Young, Director, Division of Research and Statistics of the Board
of Governors of the Federal Reserve System, with other members of the
staff, gave an audio-visual presentation on "’From Recovery to Expansion".
The presentation was off-the-record.
The meeting adjourned at 3:50 P.M.
-100N MAY 17, 1955, at 10:30 A .M ., THE FEDERAL ADVISORY
COUNCIL HELD A JOINT MEETING WITH THE BOARD OF
GOVERNORS OF THE FEDERAL RESERVE SYSTEM IN THE BOARD
ROOM OF THE FEDERAL RESERVE BUILDING, WASHINGTON, D.C.
ALL MEMBERS OF THE COUNCIL WERE PRESENT. THE FOLLWING
MEMBERS OF THE BOARD OF GOVERNORS WERE PRESENT:
CHAIRMAN MARTIN, GOVERNORS SZYMCZAK, VARDAMAN, ROBERTSON,
MILLS, BALDERSTON AND SHEPARDSON. MR. CARPENTER, SECRETARY,
AND MR. SHERMAN, ASSISTANT SECRETARY OF THE BOARD OF
GOVERNORS, WERE ALSO PRESENT.
ITEM
I
CONSIDERATION OF THE SALARIES OF THE CHAIRMAN AND THE MEMBERS OF THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.
Brown reads Item I and the conclusions of the Council as expressed in
the C onfidential Memorandum to the Board attached. He states that the
American Bankers Association has also expressed itself favorably on this
matter.
The Council passed the resolution which Brown read so that if
the b i l l comes up for hearings, officers of the Council can testify in
favor of i t .
Fleming believes that the chances are good for a b il l to be introduced,
but it is largely a matter of proper timing.
Martin states that he cannot add anything to the discussion. He
believes that there is a chance for a b i l l to be introduced. He has been
working for four years to have the salaries of the members of the Board
increased.
ITEM
II
H. R. 26U3 INTRODUCED BY REPRESENTATIVE PATMAN ON JANUARY 20, 1955,
"TO DIRECT THE COMPTROLLER GENERAL TO AUDIT THE BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM, THE FEDERAL OPEN MARKET COMMITTEE, AND
THE FEDERAL RESERVE BANKS".
Brown reads Item I I and the conclusions of the Council as expressed
in the Confidential Memorandum to the Board attached. The purpose of the
Council's action is to permit the officers of the Council to testify in
opposition to the b il l i f it should come up for hearings in the Congress.
Martin. No date has been set for hearings. The matter is in the
hands of the Committee on Government Operations. Robert H. Mollohan
of West Virginia is Chairman of the Sub-committee handling this matter.
ITEM
III
THE BOARD TDULD L I K E TO HAVE THE COMMENTS OF THE MEMBERS OF THE COUNCIL
ON THE B U S IN E SS AND ECONOMIC OUTLOOK THROUGHOUT THE SPRING AND SUMMER
OF THE CURRENT YEA R , AND IT WOULD APPRECIATE HAVING THE C OU N C IL'S VIEWS
AS TO THE PROBABLE DEMAND FOR BANK LOANS IN THAT PERIOD COMPARED WITH
DEM AND DURING THE CORRESPONDING PERIOD OF 195U.
____________________
-11Brown reads Item I I I and the conclusions of the Council as expressed
in the Confidential Memorandum to the Board attached.
In the past
there ge n e rally have been one or two districts -where conditions differed
materially from other d is t r ic ts .
While there are s t i l l some differences
in economic conditions in the various d is t r ic t s , general business in all
the districts is good.
Some small businesses are not sharing fu lly in
the upward trend.
Agriculture is experiencing lower prices and lower
income.
Industry is planning large expenditures for the expansion of
plant and equipment.
Although i t seems inevitable that a downturn w ill
come sooner or la ter in residential construction, at present there are
no serious signs of a major downturn in such construction.
The drought
in some areas has been severe and the effects of last y ear's drought
are being fe lt in r e t a il sales in farm areas.
The over-all prospects
are for the continuation of good business.
In all twelve districts an 4*
increasing demand for loans is anticipated, especially for consumer
credit, loans to finance companies, and loans for construction.
Fleming believes the S t a ff report to the Council yesterday tends to
confirm the views the Council expressed in its Memorandum.
Martin asks whether employment is lagging and also whether inventories
are accumulating*
Denton,
In h is d is tr ic t there are defin ite areas of unemployment*
Certain groups are not sharing in the prosperity.
Smaller foundries,
smaller merchants and smaller metal concerns are not sharing fu lly in the
upward trend.
The e lec tric al industry is not running at as high a rate
as the steel industry.
However, there is no shortage of credit*
Martin states that a member of Congress had told him there were
areas of distress and unemployment where credit would be helpful.
Denton comments that he would like to know of any such areas in
his d istric t so he could lend the money required.
Ireland has areas related to textiles which are not so prosperous,
but the problem is not one of credit,
Campbell.
In the agricultural areas there is unemployment due to
acreage r e s tr ic tio n s , but it is not a credit problem.
The small mer
chants are a ffected.
Brown.
The soft coal industry has problems because of o il and gas
displacing co al, but the problem is not one of credit.
The railroad car
building industry is also somewhat depressed, but it is not a matter of
credit,
Balderston.
Are there evidences of a lack of prudence in borrowing,
and is there borrowing for speculative purposes?
Brown. Without government backing some real estate borrowing might
be considered imprudent.
There does not seem to be much evidence of
large inventory accumulation.
Alexander states he is not aware of any excessive inventory
accumulation.
There is some increase in inventories, but it is not
excessive.
Most large banks are being besieged by finance companies
for more c red it.
Real estate commitments are being curtailed some
what, and there is some extension of the commitments.
Alexander does
not know of any cases where credit is not available when it is sought
for productive purposes,
Robertson.
Are you concerned about the stretching out of terms
for consumer credit?
Alexander b elieves there is some concern on this matter, but he
reports that those in the business are not inclined to agree that there
is any r e al reason for concern.
Those in the business believe they are
s t ill being prudent,
Robertson.
Are terms being used to finance or to sell cars?
Alexander,
The terms are probably being used to sell cars,
Robertson.
W i l l this affect future sales?
Alexander.
The demand for cars has been strong, and people are
meeting th e ir payments.
He is not certain that present terms w ill affect
future sales unfavorably.
Vardaman.
Are banks which lend to finance companies setting up
larger reserves to offset longer terms and possible losses?
Alexander bfelieves they are setting up reserves which they consider
adequate.
Brown states that his bank probably lends as much or more to finance
com paniesthan any other bank.
Every finance company wants increased
lin e s .
Brown does not believe there is any particular credit risk
involved.
Matkin does not believe there is a problem of unemployment in the
Dallas d is t r ic t .
The problem is one of drought. Matkin believes the
finance companies are inclined to give easier terns than the banks.
Ireland reports that in his district some banks are apparently
giving very easy terms.
Chandler,
There is lit t le unemployment in his d istrict, but th$re
is an acute drought situation,
D avis.
Nothing can be done in his district by credit to help any
unemployment that e x is ts .
There have been problems of drought and freezes,
and rural areas are suffering as a result.
Vardaman.
Is the farm machinery business improving?
Brown.
Farm machinery sales were very much depressed a year ago.
Sales are better now, but they are s t ill not good.
Denton reports that i f auto sales decline, one steel company has
advised him the demand for steel by farm machinery companies may partly
offset this decline.
-13ITEM
IV
IN ADDITION TO THE VIEWS OF THE COUNCIL ON THE GENERAL BUSINESS SITUATION,
THE BOARD WOULD BE INTERESTED IN HAVING THE COUNCIL'S VIEWS AS TO THE
EFFECTS OF SYSTEM CREDIT POLICIES SINCE THE LAST MEETING OF THE COUNCIL
AND WHETHER THESE POLICIES SHOULD BE CHANGED IN ANY WAY IN THE LIGHT OF
THE BUSINESS AND ECONOMIC SITUATION DURING THE NEAR TERM.
Brown reads Item IV and the conclusions of the Council as expressed
in the C onfidential Memorandum to the Board attached.
Brown outlines the
demands for new money with which he understands the Treasury w ill be con
fronted in the last h a lf of the calendar year.
He states that the Treasury
demand may coincide with heavy demands for bank credit by business.
He
also calls attention to the apparent change in views of the use of the
discount window as expressed in one of Sproul's speeches and in the comments
of other persons in the System.
Brown believes that the use of the d is
count window should not be restricted or discouraged.
I f the use of the
discount window becomes too heavy, the discount rate can be increased.
Martin.
The System faces d iffic u lt problems in the months immediately
ahead"!
It might be d iffic u lt to explain a reduction in reserves i f business
is booming.
Credit policy and debt management policies w ill need to be
meshed.
Fleming states that large insurance companies have l i t t l e or no long
term money a v a ila b le .
Handling the Treasury financing w il l be a delicate
operation.
Brown reports that no member of the Council favors raising the re
disc ourrE~~rate at present.
There is no talk of lowering the prime rate
now, but i f anything is done, the prime rate w ill be raised.
The Treasury
does not l i k e higher rates.
However, i f business is buoyant, and i f the
Treasury runs a 'd e f i c i t , perhaps the only answer is the healthy restraint
of a rise in interest rates.
Alexander.
I f the guesses are right that business w i l l continue to
be exceptionally good, and i f the Treasury needs new money, the Treasury
may have to pay a higher rate to make its borrowings more attractive.
The problem is now looming up clearly.
M itchell thinks it may be d iffic u lt to sell securities with a
maturity longer than one year.
Denton reports that banks in his area are not in a position to
participate in longer term financing.
He does not know how much of the
problem may be solved by the use of corporate funds.
Brown.
Most of the
in their bond accounts.
maturities.
These banks
but w ill want short-term
banks in his d istrict are showing some losses
The losses are principally in intermediate
w i l l therefore not buy intermediate securities,
s e c u rities.
Martin states that he would appreciate any comments from members
of the Council as the time for the financing approaches^.
Brown.
The Treasury w il l need an increase in its debt lim it.
(Off-the-record comments).
Vardaman asks whether the money market is too tight to take care
of the needs for financing.
Fleming b elieves the market will need reserves.
Alexander also believes the market will need reserves.
ITEM
V
THE BOARD WOULD APPRECIATE RECEIVING THE COUNCIL’S VIEWS AS TO WHETHER
A CHANGE IN THE SUBSTITUTION RULE UNDER REGULATIONS T AND U, TO REQUIRE
THAT PROCEEDS OF SALES IN UNDER-MARGINED ACCOUNTS BE APPLIED TO REDUCE
THE DEBIT BALANCE, WOULD BE DESIRABLE OR UNDESIRABLE._______________________
Brown reads Item V and the conclusions of the Council as expressed
in the C onfidential Memorandum to the Board attached.
He does not believe
the change suggested would have much effect in the banks, and he does not
know to what extent it would affect the brokers. Brown also states he
does not know whether the market is too high or too low. With recent
stock market b reak s, the illu s io n that the market can only move upward
has been at least p artly destroyed, and that is good.
The brokers are
accustomed to the present regulation,and a change at this time would not
seem d e sirab le .
The banks would not be much affected, but the brokers
would be. The higher the margin requirements are, t^e 'more xiifficiilt
it is to change the rule.
Szymczak.
ITEM
t
VI
THE PRESENT POLICY OF THE BOARD IS TO MAKE A DETERMINATION WITH RESPECT
TO WHETHER THERE IS A PAYMENT OF INTEREST ON DEMAND DEPOSITS UNDER
REGULATION Q ONLY AFTER DEVELOPMENT OF ALL PERTINENT FACTS THROUGH AN
EXAMINATION.
THE BOARD WOULD APPRECIATE HAVING THE COUNCIL'S VIEWS AS
TO WHETHER VARIOUS PRACTICES BEING FOLLOWED BY BANKS RESULT IN A SUB
STANTIAL NONCOMPLIANCE WITH THE INTENT OF THE LAW OR THE REGULATION,
AND WHAT, IF ANY, CHANGES IN BOARD POLICY OR IN THE LAW MIGHT BE
DESIRABLE?
Brown reads Item V I and the conclusions of the Council as expressed
in the C onfidential Memorandum to the Board attached. When a bank pays
checks against an account, it renders a service and therefore pays a
form of in tere st.
The banks make no service charges when interest
earned on the balances offsets the costs of handling a deposit account.
In this respect banks actually pay interest indirectly.
Banks also
tend to give lower rates to borrowers with large accounts.
This is
American banking.
The big problem is the absorption of exchange charges.
Brown had hoped the FDIC would agree with the Board, and he hopes the
Board w i l l continue its efforts to obtain the conformity of the FDIC
with the Board's views on this matter.
Ringland would appreciate the Board's opinion on this question,
and what gave rise to this question in the first place.
Robertson.
Mr. Brown has stated the problem exactly.
You can
and down the other.
Robertson does
argue each exception up one side
-15not believe any change w il l take place on the absorption of exchange
charges by the FDIC.
The last argument on this question was a "dog
fight" and he sees nothing to be gained by another argument on the
same subject.
He believes the statute is completely unenforceable,
and he cites various cases.
He comments that it is unfortunate that
an agency should be asked to enforce an unenforceable statute.
If
the Board could start from scratch, he thinks the statute should pro
hibit only the actual direct payment of interest credited to an account,
Matkin.
I f the FDIC and the Federal Reserve System could get
together on the question of the absorption of exchange charges, it
would eliminate one of the biggest problems,
Robertson agrees w ith Matkin.
He states that the Comptroller and
the Federal Reserve System can get together, but then it becomes a
question of member and non-member banks.
He believes that w ithin
fifteen years we shall have a ll par banks,
M itc h e ll,
Some groups w i l l suffer i f that occurs,
Davis states that he could add additional ways in which some banks
are paying interest in d ir e c tly .
He is inclined to disagree with some
of the views Robertson has expressed.
Davis believes that one of the
principal abuses is in purchasing accounts by these means.
I f a d is
approval of flagrant p ra c tic es, such as non-interest loans, were stated
in the reports of the examiners, he believes the practices would end.
He believes the Board could deal with the most flagrant cases.
In
general the problem is a self-eliminating one.
Robertson points out that the flagrant cases are included in the
examiners' reports.
Robertson also states that it is extremely d iffic u lt
and dangerous to publish rulings without getting very s p e c ific .
Brown comments that he sees lit t l e difference in a no interest
loan and a loan where you give a lower rate because of large balances.
He is pleased to note that Robertson agrees regarding the in a d v isa b ility
of publishing the ruling s.
The meeting adjourned at 12:1*5
*
Yc ){■
*
The next meeting w ill be held September 18, 19 and 20, 1955.
@FedFRASER