19430518_Minutes.pdf

727

A meeting of the Board of Governors of the Federal ReserveSYstem was

held in Washington on Tuesday, May 18, 1943, at

PRESENT: Mr. Eccles, ChairmanMr. Ransom, Vice ChairmanMr. SzymczakMr. McKeeMr. Draper

11:55

Mr. Morrill, SecretaryMr. Bethea, Assistant SecretaryMr. Carpenter, Assistant SecretaryMr. Clayton, Assistant to the ChairmanMr. Thurston, Special Assistant to the

ChairmanMr. Goldenweiser, Director of the

of Research and StatisticsMr. Smead, Chief of the Division

OperationsMr. Parry, Chief of the Division

LoansMr. Thomas, Assistant Director of the Divi-

sion of Research and StatisticsMr. Brown, Administrative Assistant in the

Division of Security Loans

Chairman Eccles stated thatprseelled at the

meeting of the Board-141411: Ch

airman of the SecuritiestelePhone

rti

that the Board

'll‘Thi requirements

el'ecat by Brokers

-'411gee3 and Regulation U,c31Cellr)ring

Stocks Registered

a. in.

in accordance with the understanding

on May 12, 1943, he had told Mr.

and Exchange Commission, over the

of Governors

Prescribed

Dealers,

Division

of Bank

of Security

was considering increasing the

in Regulation T, Extension and Maintenance

and Members of National Securities Ex-

Loans

l'4)4.1c1 like to have the views411 4ction

and the extent to1411t.).-Y reported,

Chairman Eccles

on

by Banks for the Purpose of Purchasing

a National Securities Exchange, and

of the

which

Commission as to the desirability of

it should go. Mr. ipurcel] subse-

said, that four of the five members of

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7285/18/43

the Commission felt that, while inunediate action was not called for, some-

thing should be done in the not too distant,

iherease in margin re.juirements tothe

action. was very important.

E.eti°4 should be takenthe

Proposed executive

t'egqiate the use of credit

111°(tities, real estrte,

be taken in connection withcohtrol

rather than separately.in favor of aCtiOn at this

'41.se taken it shoulci be to

shoilld be applied

Chairman Ecclesthat the

Commission hadthat had been

suggestedbY the Board the

Commissi°nelleh action

would like tottm,'4-tig on the floor of

—'—

future, t hat they would favor

100 per cent, and that the timing of

One member of the Commission who felt that

was of the opinion that it should be delayed until

order that would confer authority on the Board to

for purchasing, carrying, or trading in corn-

or securities had been issued and that then action

action in the whole field of credit

The member of the Comidssion who was not

time, Chairman Eccles said, felt that if action

increase margin requirements to 100 per cent,

to everyone including specialists.

made the further statement that Mr. Purcell said

no objection to certain, proposed technical changes

in Regulations T and U, and that if action v,ere

simultareously or shortly following

take action in the direction of prohibiting

eh,t''t14'e

national securities exchanges and prohibiting

Put"arid.ncall" transactions. Chairmen Eccles added that Mr.„cell.

e)cl°ressed appreciLtion on behalf of the Commission for the op-P°rtntlity affor _,

41(1 t deu by the Board to the Commission to consider the matter

ot Gov

o express its

views as to the desirability of action by the Board

e'll'r8 at this time.


7295443

-3-

Chairman Eccles went on to say that he had stated in the dis-

e1188iOn with Mr. Purcell that he was in agreement with the position that,le

Pri

a

ces and the volume of trading on the exchanges ere much higher

than Year ago,there was no appreciable difference inrities aad the volume of trading

therefore, no immediate action

°1311lic'n that when action was taken it would be better to increase marginregllirenleat s

-0' a single step to 103 per cent rather than to increase it1.80111e lesbe

ser amount with the thought that subsequentzade.

Prices

ket on

toard as possible

•ra4ecl, and there

/3(3arci With respect

control, i

hasirig ncludingc

real est

14. McKee expressedof

securities

a cash basis

during

at this

should be

Vlas

ate

turing this

Bero,a c 6111s meet in each member

as

was

compared with 30

prices of secu-

days ago, and that,

called for. However, it Was his

Or or

17111 a memorandum prepared by Mr.ch, ft__referring to the alternative

'I`u.rertients to the 55 or the 100tor arid

against the latter action.

to

increases might

the opinion that the anticipated trend of

the war would not justify placing the war-

time and that as much of the power of the

reserved for use after the war. Mr. Ransom

a discussion of, the relation of action by the

margin requirements to the whole field of credit

consumer credit and credit for the purpose of pur-

and unlisted securities.

discussion Mr. Goldenweiser left the room.

of the Board was furnished with

Parry under date of May 17, 1943,

Proposals of increasing margin

per cent level, discussect the arguments

The memorandum was read at this point


5/18/43—4—

the meeting,

tiiieness of the two

kets and (2) whether

bet°re a decision was

11°111d be issuedto

/'egillate the ofor trading in

4rrived at on

ert trend ofthe pendency

that a decision

ti'n sholald be taken by°4 the

t° act without

waitine, for that decision.At this point Messrs. Thurston, Smead, ,Parry,

the :Lew from the meeting, and the action stated with respect to each of

t'cters hereinafter referred to

The minutes of the meeting, of the Bard of Gover.nors of the

th

Pecleri,J

11 Reserve System held on May 17, 1943,

Memorandum dated

were approved

May 17, 1943'the

fromttia Re,slon of Personnel Administration,

1-en Lindsley Brown

thatthe

resignationc41.1,ence be

°r the Division of

and there

use

was a discussion of (1) the comparative effec—

Proposals

the need

reached

730

in diverting credit from the securities mar—

for action was such that it should be taken

on the question whether the executive or—

which would confer additional authority on the Board

credit for the purpose of purchasing, carrying,

coMmodities,

the basis

prices

of the

real estate, or securities. The conclusion

of the discussion was that, in view of the pres—

and volume of trading in the securities markets and

proposed executive order on which

might

at the moment, but that if a decisionorder were too long delayed it might be

it was possible

be reached within the next week or 10 days, no ac—

the Board

e aa°t the close

of

as

necessary for the Board

Thomas,

was then taken by the Board:

mr. Leonard,

submitting

and Brown

unanimously.

Director of

the, resignation of

a clerk in that Division, to become effec—

business on May 27, 1943, and recommending (1)

accepted as of that date and, (2) with the con—

Research and Statistics, that Miss Virginia M.


7315443

—5—Paquin be transferred from that Division to the Division of Pen,onnel

41r4inistration as a clerk, with no change in her present salary at the

liate °f 41,620 per annum, effective immediately.

Approved unanimously.

Letter to Mr. Fleming, President of thc Federd Reserve Bank of

Cleveland, reading as follows:

m "In accordance with the recuests contained in your, lettersSte0r21, 1943, the Board approves the appointment of Paul C.icre.,.7-1-°erger as an examiner and the appointment of Don L.ot

er as an assistant examiner for the Federal Reserve BankCleveland

Please advise us of the dates upon which theser)lntments become effective, and also as to the salary rateMr.

Kreider."


Telegram. to Mr. Cameron, Assistant Cashier of the Detroit Branch°i` the Federel Reserve Bank of Chicago, reading as follows:

.fire May 17 regarding commitment and other fees onrovie,-1°r1 v loans. Under Board's wire of May 12, 1943, bor-Dart: IllaY not be charged service or handling fee by trust d?--j.1 3trit Or other trustee representing participating financingo"Iti°ns• however, charges may, of course, be made for

c).L-Pocket exoenses in connection with the loan."

Approved unanimously, together with (1)a.similar telegram to Mr. McConnell, AssistantVice President of the Federal Reserve Bank ofMinneapolis, which contained a further state-ment that coDies of his letter of May 13 andthe Board's reply were being furnished theservices for their information, and (2) let-ters to the War and Navy Departments and theMaritime Commission transmitting copies ofMr. Cameron's telegram of May 17 and Mr.McConnell's letter of May 13 and the Board'sreplies thereto.

Letterto Mr.or 411

Bale, Vice President of the Federal Reserve Bankeranei

CO, reading as follows:


5118/43-6--b-

th "In reply to your letter of April 24, 1943, regardingthe Procedure to be followed in the substitution of the new

srll of guarantee agreement for guarantee agreements now out-

from °Ilding, there is enclosed a copy of a memorandum received

Co*.1.the War Department, dated May 14, 1943, signed by Lt.Paul Cleveland, with respect to this matter."


Memorandum dated May 14, 1943,the bi . from Mr. Leonard, Director of

vlsi°n °f Personnel Administration, submitting a memorandumciated

May 12, 194.7,, addressed to the heads of executive departments andagencies by

direction of the President, which stated that the necessity

lfling

for nr.

maY um output in Government activities throughout thewar Period

required that days normally observed by the departments and

as holidays,siaereci with the exception of Christmas, should be con-

732

kemorancl 48 regular work days for the duration of the war. Mr. Leonard's

rec°111rdended that the Board follow this policy and that itsell1P1oyeesbe advised oromotly in order that they might make their plans.


the t. ,Meillorandum dated May 17, 1943, from Mr. Leonard, Director of

Ilrlsion of Personnel Administration, requesting, for the reason4̀dateilin the

memorandum, that $75 be added to the item of books andsktbacriptions

in the 1943 non-personal budget of that Division.


Thereupon the meeting adjourned.

631a4)E0LI)r)6A/IbL-99Secre ary.

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

19430518_Minutes.pdf

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