Minutes of actions taken by the Board of Governors of the ... · Minutes of actions taken by the...

Minutes of actions taken by the Board of Governors of the

Federal Reserve System on Friday, February 29, 1952. The Board metin the Board Room at 12:30 p.m.

PRESENT: Mr. Martin, ChairmanMr. SzymczakMr. EvansMr. VardamanMr. PowellMr. MillsMr. Robertson

Mr. Carpenter, SecretaryMr. Sherman, Assistant SecretaryMr. Kenyon, Assistant SecretaryMr. Thurston, Assistant to the BoardMr. Riefler, Assistant to the ChairmanMr. Thomas, Economic Adviser to the BoardMr. Leonard, Director, Division of Bank

OperationsMr. Bethea, Director, Division of Adminis-

trative ServicesMr. Vest, General CounselMr. Williams, Assistant Director, Division

of Research and StatisticsMr. Sprecher, Assistant Director, Division

of Personnel Administration

Telegrams to the Federal Reserve Banks of New York, Cleveland,kiehrao..

"ds St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco,etatih-

that the Board approves the establishment without change by the?ecierThl.4.

Reserve Bank of St. Louis on February 25, by the Federal Reserve

Or u+1ew y

(4‘ks Cleveland, Richmond, Minneapolis, Kansas City, and Dallasripeb

ary 28, 1952, of the rates of discount and purchase in their

tabok of

San Francisco on February 261 and by the Federal Reserve Banks

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

2/29/52

v.ing s cheduies

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Approved unanimously.

Before this meeting there had been submitted a memorandum cover-

oPios to be discussed at a joint meeting of the Board and the

Presidents of the Federal Reserve Banks to be held today at 2:15 p.m.

The Beard considered the topics listed and it was agreed that the views

°tithe Board would be stated substantially as recorded in the minutes

of the .joint meeting.

At this point all of the members of the staff with the exception

orLiessrs. Carpenter, Sherman, and Kenyon withdrew, and the action stated

with respect to each of the matters hereinafter referred to was taken

13r the Board:

Minutes of actions taken by the Board of Governors of the

Reserve System on February 28, 1952, were approved unanimously.

Memoranda recommending that the basic annual salaries of the

r011°Iling employees be increased in the amounts indicated, effective

karch 21 1952:

ate f .lemorandum Name and Title Memorandum from Mr. Young, Director,

Division of Research and Statistics

Salary IncreaseFrom To

Joan N. Yamamoto,Statistical Assistant $3,255 $3,1110


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2/29/52

Date of Memorandum

2/27/52

2/27/52

-3-Salary Increase

Name and Title From To

Memorandum from Mr. Bethea, Director,Division of Administrative Services

Raymond J. Martin,Operator, Duplicating Devices $21830 $2,910

Memorandum from Mr. Williams, Assistant Director,

Division of Research and Statistics

Harvey A. Robinson,Clerk


4116o 4,295

Memorandum dated February 20, 19520 from Mr. Young,

Direct„, Division of Research and Statistics, recommending the

aPPointment of Jane S. Sundeen as Clerk-Typist in that Division,

:11 teMPOrary indefinite basis, with basic salary at the rate of

921950 Per annum, effective as of the date upon which she enters

41404 the performance of her duties after having passed the usual

PkYaical examination and subject to the completion of a satisfactory

etaPlorkent investigation.


Memorandum dated February 27, 19520 from Mr. Leonard,

1°11lector r.14-vision of Bank Operations, recommending the appoint-

Of

Relen A. Bennett as Clerk-Typist in that Division, on a

1441Por417 indefinite basis, with basic salary at the rate of $2,950

44114m, effective as of the date upon which she enters upon the


338

2/29/52

-4 -piano

r ance of her duties after having passed the usual physical

er.alnination and subject to the completion of a satisfactory employ-

ment investigation.


Letter to ,jr. Neely, Federal Reserve Agent, Federal Reserve

klak of Atlanta, reading as follows:

, "In accordance with the request contained in your4etter of February 25, 1952, the Board of GovernorsaPPr°ves the payment of salary to Mr. Nicholas Bandi,Federal Reserve Agent's Representative at the Newleans Branch, at the rate of $41080.00 per annumo"

ile


Letter to Mr. Wiltse, Vice President, Federal Reserve Bank of

-4, reading as follows:

"In view of the recommendation contained in youreetter of February 27, 1952, the Board of Governorswends until September 14, 1952, the time withinm:4-ch the Liberty Bank of Buffalo, Buffalo, New York,

establish a branch in Niagara Falls, New York, asPProved by the Board on September 14, 1951."


Letter to Mr. Wiltse, Vice President, Federal Reserve Bank of

reading as follows:

let, "In view of the recommendation contained in yourev4ver of February 271 1952, the Board of Governors-"erlds until September 14, 1952, the time within which


odt 31

2/29/52-5-

"The Marine Trust Company of Western New York, Buffalo,New York, may establish an additional branch in NorthTonawanda, New York, as approved by the Board onSeptember 14, 1951."


Letter to Mr. Bloomfield, Assistant Vice President, Detroit

4 'ar the Federal Reserve Bank of Chicago, reading as follows:

1 "Reference is made to your letter of January 23)w923 in which you advised the Board of the reasons4Y the expenses for certain items of expenditure atYour office exceeded the 1951 budget estimates.

'Appropriate notations are being made in theBoard's records concerning these overexpenditures."

& pre


Letter to Mr. Orville L. Freeman) Larson, Loevinger, Lindquist

ertlan, Midland Bank Building, Minneapolis, Minnesota, reading asfollows

105

, "Receipt is acknowledged of your letter of February 20,1,13 addressed to Chairman Martin regarding River Lake'Actor Company, Minneapolis, Minnesota.

As you pointed out in your letter, this case has,adY been referred by the Board to the Department of

C!s decide

The Board, therefore, is no longer in a positiont how it is to be handled. However, the fact that

Board referred the case to the Department of Justiceloates that it viewed the case in a different lightthat indicated in your letter."



2/29/52

310

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Letter to Mr. J. Saxton Lloyd, President, National Automobile

Lealt3rs Association, 354-60 North Beach Street, Daytona Beach, Florida,

reading as follows:

"This will acknowledge your letter of February 26requesting a meeting on Friday afternoon, March 7, inconnection with Regulation W--Consumer Credit--todiscuss the automobile situation.

"March 7, the suggested date, is satisfactory andthe meeting has been scheduled for 3 o'clock that after-noon. Mr. Deo of your Washington office has indicatedthat that time would be convenient. We shall advise Mr.ueo later as to the room to be used for the meeting."

St. L .°las, relative to the matter of Robert L. McManemY, doing business

as Standard Auto Sales, 4212 State Street, East St. Louis, Illinois,

a


Letter to Mr. Lewis, Vice President, Federal Reserve Bank of

l'egiStrant under Regulation W, Consumer Credit, reading as follows:

"Reference is made to your letters of February 11,and February 15/ 1952, regarding the above matter.

"In view of the circumstances described in yourlet ters and enclosures, and the telephonic advice which

;e have received from you, the Board concurs in your

Robert L. that an injunction be sought restraining

ert L. McManemy from further violations of Regulation

"SinceProceeding

Zatter.give you

your Bank has already handled one injunction

it is presumed that it will handle thiscourse, the Board's staff will stand readyany assistance possible."



2/29/52

:341

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Letter to Mr. Scheffer, Manager, Real Estate and Consumer

Credit Department, Federal Reserve Bank of New York, reading as follows:

"This refers to your letter of February 201 19522regarding the inquiry from Mr. Arthur S. Lesser, con-cerning the application of RegulationlY to two trans-actions each involving the extension of instalment2redit in the amount of $3,780 by Nash Kelvinator Salescrporation in connection with the sale of a total of41 refrigerators for delivery to three apartment houses!ach owned by a different corporation. In the first'raneaction, one individual owns all the outstandingst"k of each of the three corporations and executes4 single conditional sales contract covering all 21!?frigerators. In the second transaction, where alle outstanding stock of the corporations is owned by

v4O individuals, both individuals would execute the

single conditional sales contract and be liable jointly,not

severally, thereon.0. The transaction would not comply with the termst the regulation if there were deemed to be an exten-

of credit to each corporation with respect to the7svan refrigerators delivered to it, and the exemptiontn section 7(a) would not be available since the instal-

to credit with respect to the refrigerators delivered0. i_each corporation would be less than $21500. On the,wler hand, if each transaction involving 21 refrigera-14rs is deemed to be a single extension of credit, itweCuld be exempt under section 7(a) as a non-automotiveedit in excess of $2,500.. "There appear to be two especially significant

.Leatures of the transactions."1. In each case there would be a single contract,

;L?ne case with a single individual, and in the other11 two individuals. However, in the latter case the

h:pwculd be liable jointly on the contract, and they

Was a pre-existing community of business interest which

"a created for purposes unrelated to the regulation.

t "2. Although the refrigerators would not be delivered0 the obligors on the contracts, they would be delivered


2/29/52

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"to apartment houses that are the property of the corpora-tion whose stock is owned entirely by the respective obli-gors on the contracts.

"The Board agrees with your view that, if there isa single obligation, and both the conditions outlined inParagraphs 1 and 2 exist, each sale of 21 refrigerators?011.1d properly be treated as a single extension of credit

an amount exceeding $2,500."As you indicate, there is some possibility thatthis conclusion might lead to attempts to evade the regu-

]t-,ation by using transactions superficially similar toes°. Such an instance is reflected in the interpre-til

ration at 1950 Federal Reserve Bulletin 1613, Regulation!Service #855.1. Accordingly, in advising Mr. Lesser

would seem advisable to emphasize that the conclusionere is based on and limited to the particular factspresented."


Memorandum dated February 27, 1952, from Mr. Chase, Assistant

8°1icit", recommending that in accordance with the recommendation of

tIleFederal Reserve Bank of San Francisco, an Order be issued direct-

14 investigation and designating officers to take testimony in the

rnatter of S. E. Turner, Inc., Arcadia, California, a registrant under

R9g1"tion X, Real Estate Credit, as follows:

"UNITED STATES OF AMERICAAt a BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

meeting of the Board of Governors of the Federal Reserve Systemheld at its offices in the City of Washington, D. C.,

on the 2 th da of February, A. D., 1952.111r:the Matter of ORDER DIRECTING INVESTIGATION

E. TURNER, INC" AND DESIGNATING OFFICERS-readia California. TO TAKE TESTIMONY.


3Vz

2/29/52

MembersSan Franciscotonat ,

Bank hasthat

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"Iof the staff of the Federal Reserve Bank ofhave reported information to that Bank, whichtransmitted to the Board, which tends to show

eiu,,J B. E. Turner, Inc., of Arcadia, California, isin the business of extending real estate credit sub-

,2!et to at

Rego ion X, Real Estate Credit, issued by the Board

ul Governors of the Federal Reserve System.mit „2) B. E. Turner, Inc., has failed and refused to per-a,,„"ls Federal Reserve Bank of San Francisco, by its dulyyZ;410rized representatives, to inspect the books and records

riCompany is required to keep pursuant to the said

IIdee The Board, having considered the aforesaid report,madills it necessary and appropriate that an investigation be

f°r the purpose of determining whether or not Bo E.est-!rs Inc., is engaged in the business of extending real

credit subject to Regulation X and, if so, whether"as violated the provisions of Section 602(b) of the

il'e'enseg Production Act of 1950 and of Section 6(d) of

b,, 111, atito permit inspection of its

hul"s a°d"r LloT,drse. fusing III

prod It is ordered pursuant to Section 705 of the Defense .

10 1141.?ti°11 Act of 1950 and Section 902(a) of Executive Orderselfu lorththat an investigation be made to determine the matters

in Paragraph II hereof.E. A is further ordered,pursuant to Section 902 of the

xecutive Order, that for the purpose of such investi-thgation

ell ? 'John A. OlKane and Walter F. Scott, and each of3 is hereby designated an officer of the Board and em-

13°'rered tIttitrie 0 administer oaths and affirmations, subpoenarewisses, compel their attendance, take evidence and

he the production of such books, papers, correspondence,mater?-11-da or other records as may be deemed relevant orco,riljelal to the inquiry, and to perform all other duties in

ction therewith as authorized by law.By the Board.

(signed) S. R. Carpenter,Secretary."


2/29/52-10-

Approved unanimously, with the under-

standing that in the event of failure ofthe registrant to comply with the command

contained in the subpoena, the General

Counsel of the Federal Reserve Bank of San

Francisco would be authorized to file suitin the United States District Court askinga mandatory injunction requiring the re-

spondent to permit inspection of his books

and records as required by the regulation.

Letter to the Presidents of all Federal Reserve Banks, reading

a.8 follows:

ur "In the Board's letter of January 18, 1952, (S-1430,

n179)4 reference was made under item (6) to the desir-

ability of attempting to work out uniform standards0.-Lch could be followed by all Reserve Banks. In dis-irsions at the regional conferences on the regulation,

132as appeared that it would be helpful to the Reservetcuuts to have advice of the disposition of cases referred; the Board for action, including a brief statement0

the background of the case and the facts disclosed. by the investigation.

7Nith the thought that this procedure would be help-

it is contemplated that in the future there will be

oi"Z to the presidents of all Reserve Banks a statement

ri .4118 kind illustrating various types of cases. A suf-

the44te rylurzr of copies of the statement will be sent so

be furnished to individuals handling investi-f:;:lve work either at the head office or branches of the5ziyidual Reserve Banks. These statements will come to

ln the form of a separate series of bulletins to beirrn as Enforcement Bulletins -- (W-ENF 1) etc. The

cojat of these bulletins, which you will note is for use

Reserve Bank Personnel only, is enclosed.ear "We should be glad to receive any comments you may

8 to make concerning the usefulness of these reports

e(Innection with the compliance and enforcement programor either Regulation W or Regulation X."



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2/29/52

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Letter to Mr. Scheffer, Manager, Real Estate and Consumer

Credit Department, Federal Reserve Bank of New York, reading as follows:

'We understand from informal discussions with repro-!entatives of the Reconstruction Finance Corporation andthe Defense Production Administration that applicationhas been made to you for an exemption under section 5(m)of /egulation X for proposed construction of laboratoryf011ities by Ledoux and Company, Inc., in Teaneck, NewJersey, for the weighing, analysis, and testing of strate-p-e materials. We understand further that the Reconstruc-on Finance Corporation and a stockholder of the corpora-.,ion.Nho is or would be a Registrant under Regulation X are'0 finance the construction.d,„."Mr. Manly Fleischmann, Administrator, Defense Pro-0-"10n Administration, has certified that the proposed

accordingly is essential to the national defense and,

Zr?rdingly, we believe it will be proper for your Bankr(mrsolite

Regulation of exemption therefor under section

X. Copies of the certification made byPleis chmann and our reply are enclosed."



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