19430518_Minutes.pdf
Transcript of 19430518_Minutes.pdf
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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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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.
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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
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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
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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.
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—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."
Approved unanimously.
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:
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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."
Approved unanimously.
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.
Approved unanimously.
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.
Approved unanimously.
Thereupon the meeting adjourned.
631a4)E0LI)r)6A/IbL-99Secre ary.
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