19481105_minutes.pdf

Feder

in the

Minutes of actions taken by the Boar :l of Governors of the

al Reserve System on Friday, November

Board Room at 10:30 a.m.

PRESENT: Mr. McCabe, ChairmanMr. SzymczakMr. DraperMr. EvansMr. Clayton

There were presented telegrams to the

0.1 c)atort, New York, Philadelphia, Atlanta,4tisas City

stating that the Board approves%It change by the

Federal Reserve Bank of

5,

15Y thcht:

Nleral Reserve Banks of New York, Philadelphia,

"(I Kansas City on November 4, 1948,

tlibrve

th

atillk of Boston today of the ratese

ng schedules.

1948. The Board met

Mr. Carpenter, Secretary1;11/1:: Sherman, Assistant Secretary

Morrill, Special AdviserMr. Thurston, Assistant to the BoardMr. Thomas, Director of the Division ofResearch and Statistics

Mr. Nelson, Director of the Division ofPersonnel Administration

Mr. Townsend, Associate General Counsel

Federal Reserve Banks

Chicago, St. Louis, and

the establishment with-

St. on November 3,

Atlanta,

and by the Federal Re-

of discount and purchase in

Approved unanimously.Mr.

Louis

4a118 stated that Chai McCabe recently suggested that

? 81115mit topics for discussion at the meeting of the

Adviso1'7 Council on November 14-16, 1948, and that he agreed

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

11/5/48

lth -2-

thissuggestion. He also said that Chaiman McCabe had talked

" Mr. Brown, President of the Federal Advisory Comeill and that

thie arrangement vas acceptable to him. The members of the BoardPresent

concurred with the foregoing suggestion.

Mr. Evans stated that, subsequent to the meeting of the Boardwith

the Prestdents of the Federal Reserve Banks on October 5, 1948,

hediscussed with Mr.Treas Bartelt, Fiscal Assistant Secretary of the

the question raised by the Presidents as to whether theChM°dit7 Credit

Corporation might increase from 1-1/2 to 1-3/4 per414 the

interest rate allowed banks in connection with financingodity

Credit r114 co -orporation crop loans, and that Mr. Bartelt said

ekileA lleernw°111d be with the question whether the Treasury would be

trea ::04 toB do the financing if the interest rate were not in—

Mr4 Evans went on to say that Mr. Bartelt informed him he

Cit8e1188eci thquestion with Mr. R. H. Fuchs, Acting Director of the

l'elleh ) Production and Marketing Administration,tIcl that IA in September

Fuchs Stated that he felt there would be no difficultyill OA 14

irlterE: —ng auPPert of the banks for their program with the present

Ptseal

t rlite' that if the rate allowed banks were increased itbe

the ilecesaerY for the Commodity Credit Corporation to increase11QA- char,Nattitiir ged Producers; that the matter discussed with repre-

1440i :: the American Bankers Association who did not like the

'41erease in the rate to producers for ethElt th the suggested,

was

C°14hi°ditY Credit Corporation would not find it possible


K.*

Ireio

1115/48-3-

t° give the bellks a

t° Pl'°dUeere. Mr. Evans stated that Mr. Bartelt had

of%/Tespondence and a memorandum with respect to the matter, that

tlie8e copies had been sent to Mr. Leedy, President of the Federal Re-

111111n]it of Kansas City, for his information, and he (Mr. Evans)

suggest that no furthertime

vith the thought that if814" next year.

larger share of the 3 per cent rate now charged

given him copies

action be taken by the Board at this

necessary the matter could be recon-

Mr. Evans' suggestion was approvedunanimously, with the understandingthat Mr. Evans would report the devel-opments in the matter to the Presidentsat the time of the next Presidents'Conferenc

WR

e.Ref

October 198,

t:::e to a memorandum from

that,c'n September 29, 1948/ the

eats at its methe qaestioa ofect

possEirt of

the

rnerilorendum Went

"415ted to the

114rd give

its

klak of Atlanta

t}1"1 441k be Permitted11111Q4 ke

$25,000 for the

recent

eting

ible

pursuant

System

in

Mr. Thomas dated

to the action

Committee

Boston

studies

Supreme

by

Court

on to say that

regional

approval

on Current

on October 16,

the Federal

decision

studies

or the Board

Business De-

1948, considered

Reserve Banks of the

on basing point pricing.

of this type were well

research program end it recommended that the

to the proposal submitted by the Federal Re-

under date of September 17, 1948, and that

to exceed its current research budget by as

purpose of undertaking the study.


11/5/48—

In this connection Mr.Eccles

dated October 26, 1948, in°13134ed to the proposal of the Atlanta Bank principally for the rea-

8°11 that the study was outside the field that should bethe

research departments of the System.

111'‘ Evans said that he would not wic/fthe

request from the Atlanta Bank becausbasingPoint

pricing would have to be settled by Congress. Mr.15Ner

expressed a similar view."t811 to

Irote against the study proposed by the Atlanta Bank, but that

Carpenter read a memorandum from Mr.

which he stated that he would be

Mr.

covered by

sh to recommend approval

e he felt the issue of

Szymczak stated he would not

4 relit it should be deferred until therewas an indication whether

°Tigress vbuld take any action with respectdecieloii.

Mr. Thomas reiterated the viewkited to regional

P°11It decision

im

research, that the

would have porth 'arious

sections tan

that the , of the country,

a.ktiks should not maketh'

Nelonai research

I'll IleBel'Ire tanks atIn

the courseP

'eeelbe

discuss the matter with Mr.Ileserve

to the Supreme Court

that the study

ramifications

was one ideally

of the basing

effects upon economic development

and that a decision by the Board

studies of this type would discourage

program which had been undertaken by the Fed-

the suggestion of the Board.

of the discussion it was suggested that Chair-

Neely, Chairman of the Fed-

of Atlanta, when he visited that Bank next week.

This suggestion was approvedunanimously.


,

11/5/48-5_

Chairman McCabe referred to a letter from Fr. Pvery, Chairman

qtbeFederal Reserve Bank of Chicago, dated October 29, 1948, stat-ing

that, on orders of his physician, he would not be able to con-

t141111"8 Chairmen and a Class C director of the Federal Reserve BankOf Chicago after his term expired at the end of this year.

McCabe su

Chairmen

gested that, in view of the reason for Mr. Avery's let-ter) the

Board had no choice but to accept his decision.

The other members of the Board present concurred.

In a discussion of a possible successor to Mr. Avery, refer-

elice was Izade to the suggestion in Mr. Avery'st411 be given

letter that considera-

to Mr. Nicholas H. Noyes, presently a Class B director

the Chicago Bank living in Indianapolis, Indiana. Mr. Szymczak

:71 1'eaBed the view that it would be desirable to select a Chairman

14eci Chicago.

Cabe suggested that when Mr. Szymczak was in Chicago

he look thq into the question h stion of a possible appointee

kr. 417:e ft4d out more about Mr. Noyes as a possible successor to

Chairman McCao= .suggestion wasapproved unnn

the _Referetlee was made to the decision announced by Judge MorrisNc)vettlteUritted

StatesDistrict Court for the District of Columbia on

t4 13 r 3' 1948, dismissing the complaint for injunction againstottrd ft,

led bY Transamerica Corporation on October 8, 1948, end


it63

11/5/48

-6-

i'sellssei at the meeting on October 11, 1948. -r. Townsend suggestedthat

in view of the action of the Court, the date for hearing ofthe ellaqee in the Complaint issued by the Board against Transamerica

C°rPoratio_a on June 24, 1948, under the provision of Section 11 of

the ClaYtOrl Act, be set for 6 time within the next 30 days.

There was a discussion of a date forthe hearing, at the conclusion of which,upon motion by Mr. Evans, the followingnotice was approved unanimously:

"UNITED STATES OF AMERICA

B°A BEFORE THE

OF GOVERNORS OF THE FEDERAL RESERVE SYSTEMTHE tTRAN u

-TTER OF'JkultRICA

CORPORATION

Notice • "NOTICE thett e is hereby given you, Transamerica Corporation,trI toe

he;074147, of December, A. D. 1948, at 10:30 o'clock

is hereby fixed as the time Ejt,nhe of-the Board of Governors of the Federal Reserve

l'11:191(11:1418ch"i'llu-'11.11.1thhteehree hearing will be had on the charges setCaity of Washington, D. C., as he place,

complaint issued by the Board on June et:mAct 'altIrlde/' the provisions of Section 11 of the Clayton1114, h1

the

time and place you shall have the right,8hollad-a'd Act, to aopear and show cause why an orderce4se ot be

entered by said Board requiring you o eatezilldesist from the violation of the law

chargedc

r;"Citi:-InPlaint and to divest yourself of the stock of

',41.troi,;;Zene National Trust & Savings Bank, Los Angel

es,1t a, and the stocks of any or all of those banksni4 Paragraph Four of said complaint./ecierai .4.WITNESS WHEREOF the Board of Governors of the

s:esex've System has caused this notice to be signed

;-1, ;;:e- etarY, and its official seal to be hereto af-'1' I). 1g;t8'"shingtons D. C., this 5th day of November,

''•Y the Board.

(SEAL) (signed) S. R. Carpenter

Secretary"


1860

The following statement forthe press was also approvedunanimously:

At its meeting on Friday, November 5, 1948,tvra_ered the Board

that the hearing on the charges contained in the77ard's complaint of June 24, 1948, against TransamericarrIctration be scheduled to commence at the offices of theboard at 10:30 A. M. on December 7, 1948."

Mr. Szyinez ak stated that because of a speaking engagement.1144°4 on November 20, 1948, he would not be able to be presentleeting Of the Boardested that

on Friday, November 19, 1948, and he sug-

the discussion of the ouestion of a further increase

1"Irerecillirements,Scheduled for discussion at that time,

D08tP0ned until the meeting Tuesday, November 23.

It was agreed unanimously thatthe discussion of this topic wouldbe postponed in accordance withthe request of Mr. Szymczak.

said that he would like to have considered

as

be

in

at

in

a sug-

in the Federal Reserve

aiding in stabilizing the Govern-

might make a public announcement that

issues of Government bonds could take them

a member of the Federal Reserve System and ob-

interest for the bonds, the member bank to act

Pederel

11/548-7--

Mr. Evans

13t.1()11 that, as a means of making membershiptetti more

attra.ctive as wellkett bond

market, the System'`14" holder of

marketableto '11114r barilt

'which was

accrued

Daa, plus

11/ Itgeht for the

Dtivilege of

itziediatelYl'eeqvirig

payment therefor

Plus

turning

Reserve Bank of its district with the

them over to the Reserve Bank and

a service fee or to have the option


11/5/48

-8-

()fh°1cling the securities for its own account, if eligible for in-

veatilent by the bank, until the next coupon matured or interest pay-

ment Irea due. The suggestion was discussed, and it was recognizedthatttc°11cerned a matter which should be considered by the Federal

°Pen yarket C

ommittee or its executive committee.At this point Messrs. She, Morrill, Thurston, Thomas,Naiso

n' Townsend withdrew from the meeting.

recsi7e, Chairman McCabe stated that earlier in the morning he had

al a telephone call from 14r. Creighton, Chairman of the Fed-erfti Res

erve Bank of Boston, who stated thnt the directors had in-N.zia

taro, 14agreed that appointment as President of the Federal Reserveof iq

-"ton should be tendered to Mr. Joseph A. Erickson, Ex-tbr

11°sto1I e 'lee-President of The National Shawmut Bank of Boston,

he'd br "14esachusetts. Chairman McCabe also said that Mr. Creighton°tight rtemb ckson to Washington to visit and have luncheon

kt. era °f the Board today and that he (Chairman McCabe) andbr

thiell Ett:e,r riled° independent checks with respect to Mr. Ericksonclicated

that he was the most capable vice president in the"'4111t tank

rederal -arld well qualified for the position as President ofthe t

Reserve Bank.Mr.

1) 1, ‘,,Layton stnted that he had known Mr. Erickson for a num-el' Years

th4t %thile 4134 that he was a most capable individual. He also said

l'44 als he If" in the West he discussed the matter with Mr. Eccles

°kMe14 14r* Erickson and indicated that his appointment would


18INAbe

satisfa.ctory to him,

been ra.de that if Mr. EricksonIf he could arrange to spend a

Mr. Clayton added that the suggestion had

'1.e0 visit two or three of the Federalalltned his

duties.

Ig.l'eefflent with this suggestion.

Following a discussion of 1,1r. Erick-8°n's qualifications and experience asthey were known to the Board, Mr. Drapermoved that the Secretary be requested toadvise Messrs. Eccles and Vardaman ofthe discussion at this meeting and that,In the absence of objection from them,Fhairman McCabe be authorized to adviselir. Creighton informally that the BoardOf

Governors would approve the appoint-ment of Mr. Erickson as President of theFederal Reserve Bank of Boston if madeby the board of directors of the Bank.In taking this action it was understoodthat, if possible, a program would benrked out along the lines suggested by'4r. Clayton to have Mr. Erickson visitthe Board's offices and two or three ofthe Federal Reserve Banks before he as-;Umed his duties as President of theederal Reserve Bank of Boston.

Draper's motion was out by the

were appointed it would be desirable

Ch

44*et r,elledejis Note: Following the meeting Mr. Carpenter

iP"ssrs' Eccles and Vardaman, and Mr. Eccles statedhPollati he were present he would vote to approve etict °Pt* Mr. Vardaman stated th- t in view of the in he other members of the Board on the matter :1-

1.ols)1zT.-

lto el'Pose no objection to approval of the app?1

Erickson. Unon b3ing informed of the views0:8!Eccl<ls and Vardaman, Chairman McCabe informed"Lis 4ierjng

ton in accordance with the action taken att .

lerthe act ion stated with respect totifter

"red t° Was then taken by the Board:

week or

The other members

so at the Board's offices and

Reserve Banks before he as-

of the Board present indicated

air and carried unanimously.

each of the matters herein-


18b3

11/5/48-10-

Minutes of actions taken by the Board of Governors of the Fed-eral

Reserve System on November 42 1948, were approved unanimously.

Letter to the Honorable Maple T. Han, Chairman, Federal De-klit

Insurance Cornoration, reading as follows:

let t"In accordance with the request contained in your

tse l,r ed:2ovember 1, 1948, the Board of Governors ofReserve System hereby grants written con-0;12 pursuant to the provisions of sub-section (k)(2)

f.oru;teion 12B of the Federal Reserve Act, for examinerse

Federal Deposit Insurance Corporation to make anilanation of The North Side Bank, Evansville, Indiana,inZinection with its application for continuance ofelZirs:rElrtfetry.s=drawal from membership in the Fed-

the 121ers have been no corrective programs urged upontlateitiKor agreed to which have not been fully consum-gest ilalr in connection with which the Board would sug-atat

orporation of conditions for continuing itsus as an insured bank."

Approved unanimously.

4 0 Letter to the Presidents of all Federal Reserve Banks reading

(31101,Ts.

"Th1.2er,eirreid2 9et:,efulation W enforcement Report, form F. R. 639,

, -n the Board's letter S-10411 dated „eparlpe %Nre Z8' rills now been revised for use by the Federal111,14r 4-,11k8

Re-as a monthly report of enforcement activities1.ngse-:e Present regulation. One hundred copies are 411:41; t.,. to

Will YOU under separate cover and an additional"c 4. be sent upon request.

4ria3r thecn"ges in the form have been minor, reflecting pri-re e'llges in the classes of Registrants subject t.,7Nporigui,,,,nion• The Banks were in general agreement

, ( nto ra4.-' 60 the Board's letter of September 3, 1946 thatItliec)r,,' r"ision of the previous report was needed. As,

VIstructsvious report explanations of the headings and;T, sill) i. rls With respect to additional info tooZe f ed with the report are printed on the back

of

't'iti:-';11Zh'ethtoNs°e. wIt' aRegistrants' in column 4 is to

oi4e0” guI i re currently registered under

"dt ltelrelat.on.

tio lis have been added to the four items ofr1.11 info tion' requested to be

submitted in


80

11/548

"theuad

- 'ormer report. Item 5, the number of concerns that.th ailed to register, had previously been recuested inra e )3°ard t letter of May 28, 1947, which transmitted sum-tse _ries of the reports for April, 1947. This item is toN

r('-'•°vemb ported beginning with November, 1948, in view of

the

erth„1. 9 d on registration. deadline iic Item 6 The Board hopes

86 a short description of 'Class B' violator

ti8(- -L3. will be helpful in makilig information availablea1 Banks about the particular violating practices'11/1cit to be a problem by individual Banks.

cora 'In view of the emphasis to be placed on financeterPtY investigations, as suggested in the Board's let-the rec,i 1,41) the Board will be especially interested n

,v-Lrig also comments and data from the Banks indicat_

?',/ effective sales finance company investigations

'Tendon

fs

' Providing leads for selective investigations o,

data-r* It has been suggested that useful statisticalLaves ?r thePurpose would be provided by the number of

uled 8t1,,c'a'i°ns of each class of vendor Registrant sched_

zade d-La result of sales finance company investigations3rn'ilig the month. The Board would appreciate hay-

data :lir views as to the desirability of making suchbe re-pwroizguled bar egnnigpart ofinformation' f the 'additional infoationt

to

14hich -(1-,1 re with the report for November.Porting Item 3 under 'additional information!,

b,e helpf-w,e'Ls With cooperating agency relations, it would-Liae or if your first monthly report included an

out_

en, ,arrangementsle Your

arrangements that you have establishedtrict.'eu of these agencies for enforcement in your dis-gistr this connection please specify any classes

of

--Les wha. normally examined by other supervising agen-rlierlt 3r°11 Plan to investigate in the present enforce-

,em.3-,_ suggested that, after the initial report, theeach raorii;11,6 report be sent to the Board by the tenth of4.4iltia1;" beginning with the report for November. The

OctoicePort should submittedcover the period from September 20

AA sing ---er 31 and be bmitted as soon as is practicable.:°4rdile,e°PY each report will be sufficient for thevL4e the:, eTP°3es• The reports will be summarized as soonthe autraa e received in the Board's offices and copies ofbe Is Sinri,es will be forwarded to each Federal Reserve

bilt 14'e the reports

will include details that may41

tb ch Other Banks in their enforcement programst at elle '

to

Ennot be readily summarized, it is suggested

P dePort to

h e eral Reserve Bank send a copy of its monthlysa.)- of the other Banks as well as to the Board.

-11-


11/5/48

-12-

2, "This letter supersedes the Board's letter of AugustPot' 1946 (S-930) which referred to monthly enforcement re-is under the previous regulation."


as folio:es:ter to the Presidents of all Federal Reserve Banks reading

N.ses "An InquirY has been received by the Board which1.1 a question as to the applicability of Regulation

"Ilit° certain transactions for the sale of refrigerators,li°113 quanti

a

ties, to owners of apartment houses,,..ac-TIn s

ubstance, it appears that it is a commr pzed7 to use conditional sales contract as the financing a c30'11111 for such a transaction. Among other things, suchtothe 1113,i! Provides for deferred deliveries according

Peri 'orris request, sometimes over a fairly extend

Itime, and permits price changes by the seller

le,

oft-'-rlgerators yet to be recuested and cancellatior the heo?ntract by either party. The seller anticipatesby:,

Ple.eri,--lu'rellients of such a conditional sales contract ythe ;-g o t

qarders with his suppliers, so that deliveries o

rtment house owner are ordinarily made promptly.slick t aPPears further that a substantial number of,

ii.ere'&,onditional sales contracts, pursuant to which (71—or zari68 of some refrigerators are yet to be requestede

c)fth;e) 'ere entered into in good faith in various partsT%ti c°11ntrY Prior to September 20, 1948. Hence, . :t°thec'rpi arises as to whether such contracts are suboe

t

concerj:gulation, especially in the light of S-1043,

110 Pre-September 20 arrangements.e'otioli „-Le the

41ie the

mi circumstances of each particular trans-type in question necessarily are deter

n.s_

11100111.s,

):.. transactions1 t as generally described in the

.t!r''''Illsin °111d aPPear . o involve arrangements for future;,4ether--' of credit depending for final consummation IIIV/1g the 'tors are requested and delivered. Suchci:lirisibl case, the transactions are to be consider?

as

el:4veri„.8-11'd treated accordingly under the Regulation,;edit bs-,„; Prior to September 20 involving extensions of1,"zaviriz '0re that date and subsequent deliveries in-' e3ctensions f 1 credit after that date and, there-

11._ ) subie__, . o cre ."17 foil' to the Regulation. Of course, where de-

-(Ywing a given reauest by an apartment house


4 (.. ‘, 14..--

11/5/48

-13-

"owner is the only detail of an extension of credit re-

Yed involves a situation such as that covered

be after September 201 and the de-

th

rdeptember 292 paragraph of the Board's press statement of

su1948 (3-1043-c), the extension of credit

'wo„,iting from that particular request for refrigerators"%not be subject to the Regulation.at The basic question raised by the inquiry is the timeiziFeIrliteiZtain extensions of credit occur. The recent

of the new Regulation operates to cover onlyett„:eriee and the resulting extensions of credit on orPlet tember 201 as above indicated, unless after com-117.211 °I all anticipated or previously requested de-it ;;I'es2 the instalment credit arising therefrom, IfRegilina+ta.ount of 45,000 or less, becomes subject to the

--lma through a renewal or revision after that date."


.Telegram to IfirReserve Smith, Assistant Vice President of the FederalBank of Cleveland, reading as follows:

8114ks 'ur telegram, . of November 41 1948, to all Reserve(!lartilit,ag registration under Regulation V of Rexairtele .x) was replied to by St. Louis Reserve

Ban

YUrtelaT of same date which reads as follows: Quote:::atr 11„.;°daY concerning issuance of certificates

toR

etate;''ere. Received reauest today for 100 regis rationeizetil'5.:at2 to be distributed to dealers who sell Airwaycal taners on terms which I understand are iden 11403 1111"44e terms on which Rexair dealers sell cleaners.Itc. s:4t8.nd the 50 local dealers of Airway Branches,

tY :1111PaPe r Inaohines as individual dealers and

instalment

such fromPurchasers runs to dealer salesmen

and

Airv1;4ealer salesmen is discounted with distributorAirw:Y Branches, Inc. It seems to us that the status

,3Y dealer salesmen is identical to the status oAter salesmen and if it is you may want to

work

,:rellile —,T,11°(31edo

Tile Office Airway Branches Inc., 2101 Aubunr4,°11 h44: 12 Ohio

' arrangements similar to

what

"0414 1; worked out with Martin-Parry Corp successors.ated) -;1,:waY outfi4 and Rexair (Martin Parry) be affili_

Uncuote.,11'.4ti°r1 le4inuld aPPI:'eciate your investigating Airway sit-r'''11 view to establishing with Airway same

arrnge-

egardirig a single registration as were accomplished


1.'867

INA

"in theident ease of Rexair if the two situations are sufficientlyical. In this regard, refer to letter of October 18,pa;44 to

In

Blair from Hutchens, Counsel for Martin-14.-;','.J.Y and negotiations between Blair, Paul Hodge and Hutchens.Airlira7e suggested that St. Louis Bank delay registration ofY dealer-salesmen. Please advise of progress."

-14-



19481105_minutes.pdf

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