The 1965 TM9-2320-209020 on page 309, sub section c, figure 241 tells and shows how to adjust the belt on the water cooled air compressor found on the stock REO Gasser engine.
Basically, as already posted. Loosen the set screw and twist that part of the pulley the set screw is in counter clockwise to loosen the belt. There is a special tool that is supposed to be used for this job. However, I did it on my Gasser several times before I had the tool.