19440908_Minutes.pdf

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A meeting of the Board of Governors of the Federal Reserve

SY8 tenl

Ilas held in Washington on Friday, September 8, 1944, at 11:00

PRESENT: Mr. Eccles, ChairmanMr. Ransom, Vice ChairmanMr. DraperMr. Evans

art,—referred to was taken by the Board:

The minutes of the meeting of the Board of Governors of ther-

Mr. Bethea, Assistant SecretaryMr. Carpenter, Assistant SecretaryMr. Clayton, Assistant to the Chairman

The action stated with respect to each of the matters herein—

1 Reserve System held on September 7, 1944, were approved unani—

Telegrams to Messrs. Treiber, McCreedy, and Clouse, Secretariesot

the Federal Reserve Banks

N)ectively, Mr. Leach,

11.11141°11c11 Messrs.4/*\re

Banks of Chicago

l'Neiclent of the Federalthe

Federal

tile Pederal

the Pederal

11'°\reci the establi

Louis and San

of New York, Philadelphia, and Cleveland,

President of the Federal Reserve Bank of

Dillard and Stewart, Secretaries of the Federal Re—

and St. Louis,

Reserve

Reserve Bank of Kansas

respectively, Mr. Ziemer, Vice

Bank of Minneapolis, Mr. Hall, Secretary

City, Mr. Gilbert, President of

Reserve Bank of Dallas, and Mr. Earhart, Vice President of

Reserve Bank of San Francisco, stating that the Board ap—

shment without change by the Federal Reserve Banks

Francisco on September 5, by the Federal Reserve

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

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sank of Dallas on September 6, and by the Federal Reserve Banks ofNew y

(Irk, Philadelphia, Cleveland, Richmond, Chicago, Minneapolis,ICknea

8 Cltr, and San Francisco on September 7, 1944, of the rates of

(11"°11/1t and purchase in their existing schedules.

—2—

Approved unanimously.

Memorandum of this date from. Mr. Bethea recommending that Mrs.

Ire"rown be appointed as a charwoman in the Secretary's Office on a

te4114/7 basis for a period of not to exceed 60 days, with basic salaryattherate

of $1,200 per annum, effective September 8, 1944, with the

114clel‘8tarictitig that if anything derogatory develops in the investigation

°the"eferences her services may be terminated immediately.


Ilemorandum dated September 7, 1944, from. Mr. Leonard, Director" the Di

ision of Personnel Administration, recommending, with the con—ellrreric

e of the Secretary's Office, that Miss Evelyn Underwood, a fileelezit

A . the latter Office, be transferred to the Division of Personnel

istrA4.—lon as leave clerk, with no change in her present basic salary

the rate

of 81,560 per annum, effective September 16, 1944.


Telegram to Mr. Evans, Vice President of the Federal Reserve Bank

reading as follows:


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"Pursuant to request your wire September 8, Boardc.pProves designation of James 0. Russell as special as-sletent examiner for the Federal Reserve Bank of Dallas."


Letter to the board of directors of the "State Bank of Spring

Green"' SPring Green, Wisconsin, stating that, subject to conditions of

41111".hip numbered 1 to 3 contained in the Board's Regulation HI the

11°41'cl aPProves the bank's application for membership in the Federal Re-

erile 878telll and for the appropriate amount of stock in the Federal Re-serve 8

of Chicago.

Approved unanimously, together witha letter to Mr. Young, President of theFederal Reserve Bank of Chicago, readingas follows:

tern "The Board of Governors of the Federal Reserve Sys-

01: aPProves the application of the 'State Bank of Springpeeciehl, Spring Green, Wisconsin, for membership in the in !ral Reserve System, subject to the conditions prescribedto 'he enclosed letter which you are requested to forwardof he

e Board of Directors of the institution. Two copiesftleuch letter are also enclosed, one of which is for yourto es and

t the other of which you are requested to forward00 i.le

Chairman, Banking Commission for the State of Iiis-nsln, for his information.

banvI nIt is assumed that you will follow the matter of thela; 8 bringing into conformity with the provisions ofap and the Board's regulations the requirements with re-ect to notice of withdrawals from savings accounts."

Telegram to the Presidents of all the Federal Reserve Banks read-

r°11ows:

"Last paragraph of Board's September 6, 1944, letter


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id2 states that Board contemplates releasing presss atement regarding T—loan program on September 11. Since12rculars are to be mailed out by Reserve Banks on September

it is thought best to delay issuance of press state—until that date. Press statement will contain state—

ter•It to effect that Reserve Banks are on that date dis—

trbl uting forms and instructions relating to T—loan programall banks in their districts. Copy of press statement

'all be wired you later today."


Telegram to the Presidents of all the Federal Reserve Banks read—

as follows:

ts "Referring Board's wire sent you earlier today there

to Voted below for your confidential information statementgiven to press on September 11, 1944 for release in

-"ang newspapers of Tuesday, September 12, 1944='The Board of Governors today announced in—

auguration of the program of guaranteed loansand commitments authorized under the ContractSettlement Act of 1944. Such termination loans,e4,°111monly called T loans, will be made by private:inancing institutions, chiefly commercial banks,

'mar production contractors to liquefy or nun—Ireeze" working capital tied up in terminatedcontracts pending final settlement of claimsta_rising therefrom. Guarantees will be executedV the Federal Reserve Banks as fiscal agentsof the United States acting in behalf of theWar Department, the Navy Department, and thenited States Maritime Commission. The Reservefanks are today distributing to pll banks in'heir districts printed forms and detailed in—formation.

'The T loan program is a logical extension(0)f the V and VT loan programs under Executive,1:der 9112, which provide war contractors with'lnancing necessary for production. VT loans, in1,_1” since September 1, 1943, provide both produc—Q.on and termination financing, but have not


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"been available after cancellation has takenPlace. T loans, which are authorized under theContract Settlement Act, may be guaranteed afterthe borrower's war production contracts have beenterminated. However, commitments for such loansmaY be guaranteed in advance of cancellation. Thusthe program affords war production contractors ameans of insurance against the freezing of theirworking capital which might result from suddentermination of their war contracts.

'New schedules of guarantee fees and commit-ment fees have been prescribed for T loans and willalso be made applicable to VT loans when executedcn new forms which will be made effective in thenear future. The new schedule of guarantee feesfollows:

T LOANS Per cent of Guarantee Fee

loan guaranteed (Per cent of interestpayable by borrower onguaranteed portion of

loan)80 or less 1085 1590 2095 30Over 95 50'The maximum commitment fee that may be charged

the borrower by a financing institution will be 1/4°f 1 per cent per annum, or in the alternative aflat fee of not to exceed $50.00. Under the newschedule, the fee is not shared by the guarantor.

b 'The maximum rate of interest on any T loan wille 4-1/2 per cent per annum, as compared with 5 per

cent heretofore. This maximum will likewise be madeaPPlicable to VT loans on the new forms.

'While the prospective need of war production!?ntractors for T loans cannot be accurately es-L'mated, the commercial banks should be prepared toTake a large number of such loans within the firsttew weeks after the end of the European phase of

Wax. If applications for such loans were notriled until after cancellations occur in large


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trig

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"'volume, it might be physically impossible toprocess them promptly. Therefore, the programurn emphasize the desirability of contractorsand their banks, in advance of cancellation, ne—gotiating commitments to make such loans. Thesecommitments will be guaranteed by the FederalReserve Bank, acting as fiscal agent of the UnitedStates, so that upon termination, borrowers canPromptly obtain such loans and the banks will al—ready have the protection of the guarantee.

'In comparison with the V and VT loan pro--garils, the T loan program is simplified andliberalized in recognition of the obligation ofthe Government, as expressed in the ContractSettlement Act, to provide prompt and adequateInterim financing to contractors pending finalsettlement of their claims.'

Approved unanimously, together withletters to Honorable Robert H. Hinckley,Director of Contract Settlement, ColonelJohn C. Mechem of the War Department,Lieutenant Commander Donald P. Welles ofthe Navy Department, and Mr. R. E. Andersonof the Maritime Commission transmittingcopies of the above press release fortheir confidential advance information.

Letter to the Presidents of all the Federal Reserve Banks read—

f 1°4-1-Ows:

the "In connection with the execution of T—loan guarantees,toje is enclosed a copy of a memorandum received by theei I'd from the War Department, dated September 5, 1944,417d bI Colonel Paul Cleveland, Chief, Advance Paymentor .;.:,"n Branch, enclosing a proposed form of Statementb,sr i7;-Lgibility of Borrower for Proposed T Loan to be usedDen;"aison Officers pursuant to instructions from the War1.9rI4traent, to R11 Federal Reserve Banks dated September 4,


9/8/44-7--

'Kline Colonel Cleveland's memorandum refers to a,.Proposed, form of Statement of Eligibility of Borrowerr.Proposed T Loan, we have been advised by him that it

4.8 Intended that this form shall be used by Liaison Of-Unless and until changes are made therein."

itle A j.

s48 10110WS:

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Letter to the Presidents of all the Federal Reserve Banks read-

, "For your information, there is enclosed a copy of

;letter dated September 5, 1944, received by the Boardjom the Comptroller of the Currency, in which the opin-f°11i8 expressed that guarantees executed on the standard

of T-Loan Guarantee Agreement, identified by the1,k)rds f(Draft of August 7, 1944)', which was approved

Director of Contract Settlement in his General Reg-

the No. 1, dated August 18, 1944, would come within84, Purview of Exception 10 to section 5200 of the United

6es Revised Statutes and of the definition of the term0,7Lconditional' as used therein which was issued by theuniPtroller of the Currency on June 18, 1942.

id The standard form of T-Loan Guarantee Agreement,a entitled by the words '(Draft of August 7, 1944)f, asPProved by the Director of Contract Settlement and as

the to in the Comptroller's letter, is identical with

th b; standard form of T-Loan Guarantee Agreement, identified

words 'Form of September 1, 1944', which has beentir a'"orized by the War and Navy Departments and the Mari-of ;_Commission for use in connection with the executionthe 1°a.4 guarantees, a copy of which was enclosed with

Bardis letter of September 6, 1944 ( S-782)."


Letter to Mr. Day, Chairman of the Presidents' Conference at

c/el'ea Reserve Bank of San Francisco, reading as follows:

are r "14e understand that some of the Federal Reserve Banksaced with problems in connection with the payment


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retroactively of overtime under the standards establishedy the Fair Labor Standards Act of 1938 and that specifically

'ills problems arise in connection with adjustments under the101°Iving circumstances:

1. Where payment for overtime has beencomputed on basic salary only, exclusive ofsupplemental compensation.

2. Where certain employees or classes ofemployees formerly considered by the bank asexempt under the standards established by theAct are subsequently determined to be nonexempt.

, "It would seem that the situation, which is alreadyb'._nlatter of concern to some Federal Reserve Banks and may

4,5 concern to others, involves questions of System't]l,7 tleY and practice. Accordingly, it is suggested that

ta Tatter be brought up for consideration at the comingetlng of the Presidents' Conference."


Thereupon the meeting adjourned.

Assistant Secretary.

Chairman.


Documents

19440908_Minutes.pdf