19470203_Minutes.pdf

155

Minutes of actions taken by the Board of Governors of the

Federal Reserve System on Monday, February 3, 1947.

PRESENT: Mr. Eccles, ChairmanMr. DraperMr. EvansMr. Vardaman

Li-. Carpenter, SecretaryMr. Sherman, Assistant SecretaryMr. Morrill, Special AdviserMr. Thurston, Assistant to the Chairman


Federal Reserve System on January 29, 1947, were approved unanimously.


Federal Reserve System on January 30 and 31, 1947, were approved

atld the actions recorded therein were ratified unanimously.

Letter to Mr. Douglas, Vice President of the Federal Re-

8erve Bank of New reading as follows:

"The Board of Governors approves the changes in thepersonnel classification plan of the Federal Reserve Bankof New York, involving the Gable Division of the ForeignDepartment, as submitted with your letter of January 29,1947•"

Approved unanimously.

Letter to Mr. Earhart, President of the Federal Reserve

Balik of San Francisco, reading as follows:

"The Board of Governors approves the changes in thepersonnel classification plan of the Federal Reserve Bankof San Francisco and its Branches, as submitted with yourletter of January 23, 1947."


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

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Letter to Mr. Dillard, Vice President of the Federal Re-

serve Bank of Chicago, reading as follows:

"This refers to your letter of January 14, 1947,in reply to the Board's letter to you of January 7,1947, regarding the interpretation of section 6(h) ofRegulation W which concerns 'Sets and Groups of Arti-cles'.

"In view of the purpose of the section, whichwas to minimize any tendency on the part of sellersto break up into parts combinations of things ordi-narily sold together in order to get each part below$50 and thereby avoid the operation of the regulation,it has seemed to us that we should not extend thesection to cover a:11 combinations however composed.Voe have the impression that such a rule as you sug-gest, while perhaps somewhat more clean cut, woulddevelop considerable opposition. We recognize thatthe rule as now in effect does not carry out thestated purpose perfectly, but it would seem to comeas close to that purpose as any Tiroposal so far con-sidered, while at the same time attaining some degreeof administrative feasibility.

"Nor are we sure that the proposal you have madewould be completely satisfactory administratively.You have suggested, in effect, that any combinationof items be deemed to be an 'article' if offered ata single price. This would seem to exclude any com-bination where the separate items are priced sepa-rately, even if they could only be bought together.

"The criteria we have suggested are certainlynot free from a degree of uncertainty. But we shouldlike to try them out to see how they work in practice.One reason for this is that we would prefer not toamend the regulation at this time.

"The suggestion you have made about the relation-ship requirement -- that one or both of the items mayhave appreciably less utility or worth if acquiredseparately -- is a helpful idea, and we are amplify-ing the proposed interpretation to cover this point.


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"We do not believe it can be made a hard and fast rule,but it will serve to assist in the making of a decisionin a number of cases. On this basis, it seems to usthat, not withstanding our letter to you of June 26,1946, a rug and rug-pad should be considered a set,while a lamp-table and table lamp should not.

1%e should much appreciate being informed as tohow the rules work out in actual practice."

Approved unanimously, togetherwith a letter to the Presidents ofall the Federal Reserve Banks read-ing as follows:

"In reply to a recent request for its advice re-garding the application of section 6(h) of RegulationA covering 'Sets and Groups of Articles' the Boardexpressed the following viers.

"In determining whether several items are to beconsidered a single 'article' for purposes of Regula-tion as a 'set, group, or assembly', three basicrequisites must be considered:

1. The items must be so related as toconstitute a set, group, or assembly;

2. They must be commonly merchandised asa single unit; and

3. They must be sold or delivered at sub-stantially the same time.

"The first requisite is that the items shall berelated. This is principally a matter of function.Examples which would be included are components ofa sectonal bookcase, dining-room table and extensionleaves, lounge chair and matching ottoman, living-room, dining-room, and bedroom suites. On the otherhand, a refrigerator and a vacuum cleaner or a radioand a chair clearly would not be deemed sets even ifoffered in combination. Similarity of design wouldbe a contributing factor, confirming the determina-tion made on functional grounds and helping to de-cide doubtful cases. But some variation in designwould be possible without necessarily excluding theitems from being considered to be a set. In manyInstances, one or both of the items would have ap-preciably less utility or -.orth to the purchaserif acquired separately, as for example in the caseof a rug-pad and rug but not in the case of a lamp-table and table lamp.


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"The second requisite is that the items shall becommonly merchandized as a single unit. This requisiterefers to the merchandising practices of the particularseller, and practices in the particular trade would besignificant in throwing light on the practices of theseller. The essential consideration is how the itemsare offered to customers. In this connection, suchmatters as the ways in which the items are advertised,ticketed, and priced would be important. Mien theyare available at a price which is less than the totalof the prices for the components if bought separatelyor when it is only seldom that the seller is Ailingto sell them separately, there would be a strong in-dication that the items are to be considered a set.In some cases, the same items will be offered bothas sets and for individual purchase, as when a tanktype vacuum cleaner and a motor-driven brush typevacuum cleaner are offered separately and also incombination at a reduced price.

"The third reauisite is self-explanatory."In order for section 6(h) of Hegulation W to

be applicable to the items as a set, all three req-uisites must be present. For example, a sofa andmatching lounge chair or bed-springs and mattressmight meet fully the requirement that they be re-lated) but the method of offering might be suchthat they are separately priced, without reductionwhen bought in combination, and the customer has afree choice as to whether he will buy one or theOther or both. In such cases, the items would notbe considered to be a set even though bought at thesame time."

Letter to the Presidents of all the Federal Reserve Banks

z'e4cling as follows:

"As you know, the question whether kitchen cab-inets should be classified as furniture for the pur-poses of Regulation v has been the subject of muchstudy and correspondence. The first ruling (F.R.L.S.0667) listed kitchen cabinets with stools, chairs andOther items which were obviously furniture, and a morerecent ruling (F.R.L.S. iY8667.5) refers to the factthat many kitchen cabinets are permanently installedand are of such a character as to raise a question


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"whether they should be classified as furniture. How-ever, this latter ruling said that for administrativereasons it seemed undesirable to attempt to distinguishbetween those which are permanently installed and thoseWhich are portable. The problem has been accentuatedby the amendments to the Regulation which exempted re-pair and modernization credits.

"The Board and the Reserve Banks have assembledconsiderable information regarding the matter since theabove rulings were made and on balance it appears thatat the present time a substantial number of the cabi-nets selling for more than T75O - the only cabinetswhich would be subject to the Regulation - representinstallations of a kind which -would not normally beconsidered to be furniture by the trade. In partthis development has been the result of a grolkth inthe kitchen cabinet business which has emphasizedtypes which were not so prominent five years ago.The Board considers that any attempt to hold thatsome cabinets are subject to the regulation andOthers not would be administratively unworkable.It has accordincly concluded that the previous rul-ings should be reversed in toto and the classifica-tion 'furniture' should no longer be considered asincluding any type of kitchen cabinet.

"The following ruling will appear in the Fed-eral Reserve Bulletin and can be made available tohegistrants:

'In view of recent developments inthe type of kitchen cabinets currentlybeing marketed in volume, the Board hasrevie7ved its previous rulings (1941 Fed-eral Reserve Bulletin, p. 848 and 1946Federal Reserve Bulletin, p. 1240) andhas concluded that kitchen cabinetsshould no longer be considered to be"furniture" for purposes of Regulation• t II


Letter prepared in accordance with the action taken at

the zeeting of the Board on January 27, 1947, to the Presidents

al1 the Federal Reserve Banks and reading as follows:

"In its letter of October 30, 1936 (X-9729) theBoard set forth its position with respect to partici-Pation in and support of activities of the American


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"Institute of Banking by the Federal Reserve System, in-cluding the selection of officers and employees to attendthe Graduate School of Banking at Rutgers. Its lettersof February 26, 1937 (X-9829), December 28, 1938 (5-137),and January 13, 1939 (5-141) contain further expressionsof the Board's views on this matter.

"Question has arisen as to attendance of officersand employees of Federal Reserve Banks at the CentralStates School of Banking at the University of Vdsconsinand the Pacific Northwest School of Banking at the Uni-versity of li,ashington, and in that connection the Boardhas reviewed again the entire question of attendance atbanking schools and its policy in the matter is containedin the statement set forth below which supersedes the twoParagraphs under the heading 'Selection of officers andemployees to attend the Graduate School' in the state-ment accompanying the Board's letter of October 30, 1936(X-9729) and the other three letters referred to above.

'Selection of officers and employees to attendbanking schools

'The Board feels that officers and employeesof the Federal 1-Zeserve Banks should be encouragedto participate in the Graduate School of Banking,the Central States School of Banking and the PacificNorthvbest School of Banking, and that the FederalReserve Banks should follow a System policy whichis as nearly uniform in its application as may bepracticable in view of the varying local conditionsand responsibilities of the individual Federal Re-serve Banks. To this end the Board would interposeno objection to the payment by each Federal ReserveBank of the transportation expenses to and from theschools and the registration and resident and ex-tension tuition fees of officers and employeesselected to attend, and the granting to such of-ficers and employees of leave of absence with payof such duration as may be necessary to enablethem to attend the resident sessions of theschools, in addition to their regular annualvacations. As it is felt that each studentshould have a personal financial stake in attend-ing one of these schools and that the Federal Re-serve Bank should not bear the entire expense,it appears reasonable that the student should beexpected to pay his living expenses, and that,therefore, no reimbursement should be made bythe Federal Reserve Banks for dormitory anddining hall charges and incidental expenses.


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"Under the policy that has been ineffect in the past, total attendance at theGraduate School of Banking of representativesfrom the Federal Reserve System has been lim-ited in order to prevent System representationfrom becoming disproportionate in relation tothe entire student body of the school. hilethe Board does not believe that it should pro-vide for a specific limitation on the numberof officers and employees that might be sentto the banking schools by any Federal ReserveBank, an arrangement should be retained to re-view the situation with respect to the totalnumber proposed to be sent by the Federal Re-serve Banks and the Board each year. Accord-ingly, it is requested that as soon after thefirst of each year as possible and not laterthan February 1, each Federal Reserve Bank ad-vise the Board of the total number of officersand employees it proposes to send to the variousbanking schools. As soon as this advice is re-ceived from all of the Federal Reserve Bankseach Bank will be inforaed whether the totalnumber proposed to be sent is too large inrelation to the total student body of eachschool and, in the event it is, the necessaryreduction will be worked out.

'The advice sent to the Board regardingthe prospective attendance of officers andemployees at each banking school should in-clude the following:

(a)

(b)(c)(d)(e)

(f)

(g)

(h)

Total number who will attend forth-coming session

Number of first-year studentsNumber of second-year studentsNumber of third-year studentsNumber who will be granted necessaryleave with pay

Number whose transportation expenseswill be paid by bank

Number whose registration and residentand extension tuition fees will bepaid by bank

Number who will attend entirely attheir own expense during theirannual vacations


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"'(i) Number who have attended the firstor second sessions, or both, butwho will not attend the forth-coming session.'

"Reports have been received that registrations atthe Graduate School of Banking at Rutgers University areheavy and, therefore, prospective students should filetheir applications promptly."


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19470203_Minutes.pdf