Minutes of actions taken by the Board of Governors of the

Federal Reserve System on Thursday, September 7/

PRESENT: Mr. McCabe, ChairmanMr. SzymczakMr. EvansMr. VardamanMr. NortonMr. Powell

1950.

Mr. Carpenter, SecretaryMr. Sherman, Assistant Secretary

Minutes of actions taken by the Board of Governors of the

RePem--erea

serve System on September 6, 1950, were approved unanimously.

14smorandum

Ot the Division ofdated September 5, 1950, from Mr. Bethea, Director

teAdministrative Services, recommending that the

l4P°rary

tallk or pal

appointment of Hiram J. Roush as a Guard in that Division,

be e:114ed on aPermanent basis, effective September 11, 1950, with

Present basic salary of $2,450 per annum.

Approved unanimously.

40 chalige in his

Tele,5.ram to Mr. DeMoss, Vice President of the Federal Reserve

las, reading as follows:

or j "urlet August 30 Board approves designationfor Z

1'48,°r1 A. Burow as special assistant examinere Federal Reserve Bank of Dallas."

Approved unanimously.Lette

ottlev Sproul, President of the Federal Reserve Bank

readl as follows:

Ntle'ttltl,'erence is made to Mr. Sheehan's letter of1950, enclosing a letter addressed to

Cotilpaeral Reserve Bank of New York by Bankers TrustNew York, New York, requesting the Board's

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ft

oconsent to the absorption of the Lawyers Trust:!TPanY of New York without increasing the capital

to surplus accounts of the Bankers Trust Companyexilounts equal to the aggregate totals of these

accounts as they now exist in the individual banks., "As recommended, the Board of Governors hereby.7es consent pursuant to the provisions of Section

the of the Federal Reserve Act, as amended, to_ e absorption by Bankers Trust Company of LawyersTirsust--mParlY upon condition that: the absorption

pl arried out substantially in accordance with theisall,as submitted; formal approval of the programezd°°tained from the appropriate State authorities;pea 11-th the understanding that counsel for thesatetral Reserve Bank of New York will review andt.,,-LsfY himself as to the legality of all stepsto effect the absorption."

Approved unanimously.

Telegram to the Presidents of all Federal Reserve Banks,

as follows:

Re, ,"SUpplementing our telegram September 1 rew.

the 'JT:ExPectations now are that President may signis efense

Production Act today or tomorrow. Board

to be prepar.A

eff'eC4tlil e

ore adopt Regulation W promptly thereafter

, PPress 0111 is signed in time Board plans to make

84zouncement for release in papers Saturday the .11 ) SePtemb to9. We will advise you later as oaate-ctual issuance of the Regulation and confirm thestat: the Press release. Text of the proposed press141til-ellt follows. Please keep strictly confidentialt, reieased , 0y

the Board.0;

°r

elease in morning papers September , 1950

September , 1950.tor 1950 de r the authority of the Defense Production Acttion 0,0, the Board of Governors today reinstituted regila-effeci; c°nsumer

instalmentvil credit through Regulation 0.,-;-;e at the opening of business September 18,

195(11' $5,0n1,1e Regulation covers automobile instalment creditsalga 14-' alla less d other instalment credits of $2,500s'

an ccept that home improvement credits are now

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"'covered and terms are generally tightened, theRegulation is in much the same form as the Regulationvhich expired June 30, 1949.

"'The limitations initiallyestablished are:

'Down payments of at least one-third,and maximum maturities of 21 months forautomobiles.

'Down payments of at least 15 per cent,and maximum maturities of 18 months foraPPliances: refrigerators, food freezers,radio or television sets, phonographs, cook-ing stoves, ranges, dishwashers, ironers,/lashing machines, clothes driers, sewingmachines, suction cleaners, air conditionersand dehumidifiers.

'Down payments of at least 10 per cent, and18 months maximum maturity for furniture and rugs

'Down payments of at least 10 per cent, and30 months maximum maturity for home repairs,alt

erations or improvements.-Lion, ollowing the past policy of placing fewer restric-tailisa°n small credits, the new Regulation does not con-thall 4:°1'711. Payment requirements for articles costing lessare 111(i)Otetthough, unlike the former Regulation, maturities

Inst ia- martici -ent loans for the purchase of any listedinstni! carry the same limitations that apply to theare 1i ent sale of the article; other instalment loans

flii!ted to a maximum maturity of 18 months.ilito a 14 establishing the initial terms the Board tooktrade ce°unt the prevailing practices and terms in theilart;pos_affected. There has been a material relaxation ofthe 17, ent credit terms during the past year or more, andtightec,121!"fements of the Regulation are substantially

n-T `'ilan ixiste.1:'n the automobile field the great majority of recent

the terms now widely offered.

reporiZeint sales of new cars and late model used cars areeither :a! havine been financed on substantially easier terms,,Mittea to down

;,,0Y the Payments or maturities or both, than per-new Regulation.

many instalment sales of appliances and-erits loleiare reported as having been made with down pay-40 4.0 Per cent or less; in many cases only token or

PaYments have been required. Maturities of 24

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'months on instalment sales of such articles havebeen reported as widely prevalent with longer

Maturities offered in some cases."'Consumer credit has undergone an unprecedented

"Dansicn, particularly in recent months. Under presentes?nditions continued excessive growth of consumer in--8-1-ment credit adds materially to inflationary pressures.rise 7"The Regulation of consumer credit is one of the

ELL, monetary and credit measures designed to restrainZ: inflationary pressures that result in higher pricesma'4 to facilitate diversion of critical material and

.X1POwer to production of defense needs as such diversion

tion "'As the Board has frequently emphasized, the Regula-flat 8 a useful supplementary instrument to combat in-one ,1,°11- It applies to an important part, but only toby irrt, of the credit structure and therefore cannot

-tTelf effectively control inflationary forces.Re,. "The Regulation is being published in the Federalth;oleter and copies of the Regulation will be made availableposstl all Federal Reserve Banks and branches as soon as

by ti:11: The Regulation will be administered in the field

located 4-2

The

Reserve Banks and their 24 branchesshota:c1 conveniently throughout the country. Inquiriesor 1,

rano, I be addressed to the nearest Federal Reserve Rinku .

4ectIti'Regulation W was first put into effect under

1, 194 Ve Order Peptember 1, 1941. It expired November,statut70; It was reinstated September 20, 1948 underbusial Y

communitywhich expired June 30, 1949. The d

the end the buying public, the Board anwith-e'eral Reserve Banks have thus had extensive experiencethis

type of credit regulation.b Thrranch ()ugh the 12 Federal Reserve Banks and their 24tanks es) and. the more than 250 directors of the

Reserve

trulE arld branches, the Board has the advantage oftrade'ate and close contact with all segments of commerce,iiel.11411.1d industry, and with consumers affected.by thethis Tol°n. Because of this advantage, a regulation

of

has 41.d can be promptly adapted in the future, as itthe b: the Past, to changing conditions as reported on

-818 of experience in all parts of the Nation.'

Approved unanimously•

..0401! /_aiddi....46AAIR Ab..ML

Secretg7r

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