The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
609
Minutes for
To:
Members of the Board
From:
Office of the Secretary
April 11, 1966
Attached is a copy of the minutes of the
Board of Governors of the Federal Reserve System on
the above date.
It is not proposed to include a statement
with respect to any of the entries in this set of
minutes in the record of policy actions required to
be maintained pursuant to section 10 of the Federal
Reserve Act.
Should you have any question with regard to
the minutes, it will be appreciated if you will advise
the Secretary's Office. Otherwise, please initial
below. If you were present at the meeting, your
initials will indicate approval of the minutes. If
You were not present, your initials will indicate
only that you have seen the minutes.
Chm. Martin
Gov. Robertson
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Gov. Maisel
Gov. Brimmer
rs'
Minutes of the Board of Governors of the Federal Reserve
System on Monday, April 11, 1966.
The Board met in the Board Room
at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Shepardson
Mitchell
Daane
Maisel
Brimmer
Mr. Sherman, Secretary
Mr. Kenyon, Assistant Secretary
Mr. Broida, Assistant Secretary
Mr. Holland, Adviser to the Board
Mr. Solomon, Adviser to the Board
Mr. Molony, Assistant to the Board
Mr. Fauver, Assistant to the Board
Miss Eaton, General Assistant, Office of
the Secretary
Messrs. Brill, Garfield, Williams, Axilrod,
Sigel, Smith, de Leeuw, Eckert, Gehman,
Keir, Thompson, Trueblood, and Wernick
of the Division of Research and Statistics
Messrs. Sammons, Irvine, Katz, Reynolds, Wood,
Gekker, Gemmill, Hayes, Klein, and Nettles
of the Division of International Finance
Mr. Austin, Economist, Federal Reserve Bank
of Cleveland
Economic review.
The Division of International Finance reported
°n international financial conditions, following which the Division of
Research and Statistics presented information relating to the domestic
economy. The staff then responded to questions by members of the
Board concerning the presentations, which were based to some extent
011 material prepared and distributed by the staff for the purpose of
1307
4/11/66
-2-
tomorrow's meeting of the Federal Open Market Committee.
Copies
of the relevant documents have been placed in the files of the Committee.
All members of the staff then withdrew except Messrs. Sherman,
Kenyon, Molony, Fauver, Smith, and Austin, and Miss Eaton and the
following entered the room:
Mr. Hackley, General Counsel
Mx. Solomon, Director, Division of Examinations
Mr. Shay, Assistant General Counsel
Mr. Leavitt, Assistant Director, Division of Examinations
Messrs. Heyde and Via of the Legal Division
Messrs. Egertson, McClintock, Poundstone, and Sanford of
the Division of Examinations
Approved items.
The following items, copies of which are
attached to these minutes under the respective numbers indicated,
were approved unanimously after consideration of background material
that had been made available to the Board:
Item No.
Letter to Manufacturers and Traders Trust
Company, Buffalo, New York, approving the
establishment of a branch (mobile banking
facility) in the Town of Boston.
1
Letter to Chase Manhattan Overseas Banking
C°tporation, New York, New York, approving
an amendment to its Articles of Association
114 acquisition of shares of Privat-und
ommerzbank, Vienna, Austria.
2
Letter to the Federal Deposit Insurance
Poration regarding the application of
'he Hicksville Bank, Hicksville, Ohio, for
continuation of deposit insurance after
tbdrawal from membership in the Federal
"serve System.
3
n
1308
4/11/66
-3Item No.
Letter to the Federal Deposit Insurance Corporation regarding the application of State Bank of
Kewaunee, Kewaunee, Wisconsin, for continuation
of deposit insurance after withdrawal from
membership in the Federal Reserve System.
4
Letters to United California Bank, Los Angeles,
California, approving the establishment of
branches at specified locations in San Jose
and Fresno.
5-6
Letters to Wells Fargo Bank, San Francisco,
California, approving the establishment of
branches at specified locations in Danville
and Sonora.
7-8
Application of Harter Bank & Trust Company.
There had been
d istributed a memorandum from the Division of Examinations dated
April 5, 1966, and other pertinent papers regarding the application
(
If The Harter Bank & Trust Company, Canton, Ohio, to merge The
Waynesburg Bank, Waynesburg, Ohio.
The Division recommended approval.
Following summary comments by Mr. Egertson based on the material that had been distributed, the application was approved unanimously,
with the understanding that an order and statement would be drafted
for the Board's consideration.
Philadelphia merser cases.
In accordance with the understand-
at the meeting of the Board on April 4, 1966, there had been distributed under date of April 7 (1) a memorandum from the Legal Division
Concerning a letter of March 7, 1966, from the Comptroller of the
1309
4/11/66
-4-
Currency criticizing the Board's adverse competitive factor report
on the recently-approved proposed merger of Provident National Bank
and Central-Penn National Bank, both of Philadelphia, Pennsylvania,
and making comparisons with another Philadelphia merger previously
aPproved by the Board, and (2) a draft of possible reply to the
Comptroller.
At this meeting Mr. Shay distributed certain additional
language that might be included in the draft reply.
In comments supplementing the memorandum, Mr. Shay said it
was his initial view, after the letter was received, that it need
not be answered.
As he saw it, all the Board could do was, as
indicated in the draft reply, to point out the differences between
the considerations involved in a competitive factor report and a
Illerger case decision.
Governor Maisel noted that he had made the suggestion that
the Board consider a possible answer because the Comptroller's letter
contained several incorrect statements.
If the Board was going to
answer the letter--and on that he could go either way--he would
Pt°Pose that the reply be much stronger than the draft.
He outlined
the type of language he would have in mind.
Chairman Martin commented that originally he had felt it
would be better to do nothing.
However, upon reading the draft
letter he thought it might help to clarify the issue, particularly
1310
4/11/66
-5-
if Governor Maisel's language was included.
be useful at this juncture, he did not know.
Whether or not it would
Much might depend on
Whether people read it carefully.
There followed discussion of various aspects of the matter
such as the role of competitive factor reports, efforts by the Board
in the past to clarify the nature and function of such reports, the
aPparently increasing tendency of the Comptroller to release various
Pieces of interagency correspondence to the public, and the manner
in which a Board reply to the March 7 letter might be construed in
relation to the current litigation on the proposed Philadelphia
merger, which had been made the subject of antitrust proceedings by
the Department of Justice.
Chairman Martin then suggested that in the circumstances
the
re was a good deal to be said for making no reply.
He inquired
Whether any members of the Board felt strongly that the matter should
"t he dropped, and there was no indication to such effect.
'ugly, it was understood that no reply would be sent.
The meeting then adjourned.
Secretary's Note: Governor Shepardson
today approved on behalf of the Board a
memorandum from John A. Devera, Operator,
Tabulating Equipment, Division of Data
Processing, requesting permission to
engage in part-time work at a boat dock
in Occoquan, Virginia.
Secretary
Accord-
1311
Item No. 1
4/11/66
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRCISPONOCHCC
TO THC BOARD
April 11, 1966
Board of Directors,
Manufacturers and Traders Trust Company,
Buffalo, New York.
Gentlemen:
The Board of Governors of the Federal Reserve System
approves the establishment by Manufacturers and Traders Trust
Company, Buffalo, New York, of a branch (mobile banking facility)
on the east side of U. S. Route 219, about 300 feet south of its
intersection with State Route 277, Town of Boston (unincorporated
area), Erie County, New York, provided the branch is established
Within six months from the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
°f the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
°f November 9, 1962 (S-1846), should be followed.)
312
BOARD OF GOVERNORS
Item No. 2
4/11/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 11, 1966.
Chase Manhattan Overseas
Banking Corporation,
1 Chase Manhattan Plaza,
New York, New York. 10005
Gentlemen:
Reference is made to your letter dated February 23, 1966,
enclosing a consent signed under date of February 23, 1966, on behalf of The Chase Manhattan Bank (National Association), sole shareholder of your Corporation, consenting to the amendment of the
Articles of Association of your Corporation to increase the capital
stock to $13,717,000, consisting of 13,717 shares of par value of
$1,000 each. The Board of Governors approves the amendment to
Article SEVENTH of your Articles of Association. Please advise the
Board of Governors when the capital increase has been effected.
As requested in your letter, the Board of Governors grants
consent for Chase Manhattan Overseas Banking Corporation ("CMOBC")
to
Purchase and hold up to 100 per cent of the shares of Privat-und
lo mmerzbank ("Kommerzbank"), Vienna, Austria, at a cost of approximately $1,412,150, provided such shares are acquired within one year
from the date of this letter.
The Board's consent to the proposed purchase and holding
Of shares of Kommerzbank by CMOBC is granted subject to the following
conditions:
(1)
That CMOBC shall not hold, directly or indirectly,
any shares of stock in Kommerzbank if Kommerzbank
at any time fails to restrict its activities to
those permissible to a corporation in which a corporation organized under Section 25(a) of the Federal
Reserve Act could, with the consent of the Board of
Governors, purchase and hold stock, or if Kommerzbank
establishes any branch or agency or takes any action
or undertakes any operation in Austria or elsewhere,
in any manner, which at the time would not be permissible to CMOBC,
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Chase Manhattan Overseas
Banking Corporation
-2-
(2)
That, when required by the Board of Governors, CMOBC
will cause Kommerzbank (a) to permit examiners selected or auditors approved by the Board of Governors
to examine Kommerzbank and (b) to furnish the Board
of Governors with such reports as it may require
from time to time;
(3)
That CMOBC shall not carry on its books the shares
of Kommerzbank at a net amount in excess of its
proportionate share of the book capital accounts
of Kommerzbank, after giving effect to the elimination of all known losses; and
(4) That any share acquisitions or dispositions by
Kommerzbank be reported under Section 211.8(d) of
Regulation K in the same manner as if Kommerzbank
were a corporation organized under Section 25(a)
of the Federal Reserve Act.
Upon completion of the proposed transaction, it is requested
the Board of Governors be furnished a translation of the amended
4ttic1es of Association and By-Laws of Kommerzbank.
th
at
A
Subject to continuing observation and review, the Board
su
spends, until further notice, the provisions of subparagraph (1)
°f the third paragraph of this letter so far as they relate to
!
estrictions on loans granted by Kommerzbank in Austria in the cur'
encY of that country.
The foregoing consent is given with the understanding that
investment now being approved, combined with other foreign loans
"
4
investments of your Corporation, The Chase Manhattan Bank (National
leta"ciation), and Chase International Investment Corporation will not
17118s the total of such loans and investments to exceed the guide0 nes established under the voluntary foreign credit restraint effort
1.°14 in effect and that due consideration is being given to the priorcontained therein. The Board considers that compliance with
"
0 Priorities expressed in Guideline 4 would require that total
nexPort credits to developed countries in Continental Western
eutope not exceed the amount of such loans and investments as of the
41114 of 1965, unless this can be done without inhibiting the bank's
thilitY to meet all reasonable requests for priority credits within
e over-all target.
the
e
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
1314
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 3
4/11/66
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 11, 1966
The Honorable K. A. Randall, Chairman,
Federal Deposit Insurance Corporation,
20429
Washington, D. C.
Dear Mr. Randall:
Reference is made to your letter of March 25, 1966,
concerning the application of The Hicksville Bank, Hicksville,
Ohio, for continuance of deposit insurance after withdrawal
from membership in the Federal Reserve System.
There have been no corrective programs urged upon
the bank, or agreed to by it, which have not been fully consummated, and there are no programs that the Board would advise
be incorporated as conditions of admitting the bank to membership in the Corporation as a nonmember of the Federal Reserve
System.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
13ir
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 4
4/11/66
WASHINGTON, D. C. 20551
AOORCIIIS orrociAL COMPICIIIPONOENCC
TO THIC •OANO
April 11, 1966
The Honorable K. A. Randall, Chairman,
Federal Deposit Insurance Corporation,
Washington, D. C. 20429
Dear Mr. Randall:
Reference is made to your letter of March 24, 1966,
concerning the application of State Bank of Kewaunee, Kewaunee,
Wisconsin, for continuance of deposit insurance after withdrawal
from membership in the Federal Reserve System.
There have been no corrective programs urged upon the
bank, or agreed to by it, which have not been fully consummated,
and there are no programs that the Board would advise be
Incorporated as conditions of admitting the bank to membership
in the Corporation as a nonmember of the Federal Reserve System.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
BOARD OF GOVERNORS
Item No. 5
4/11/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON. O. C. 20551
ADDRESS 0111CIAIL CORRESPONDENCE
TO THE •OARD
April 11, 1966
Board of Directors,
United California Bank,
Loa Angeles, California.
Gentlemen:
e
The Board of Governors of the Federal Reserv
rnia
Califo
United
System approves the establishment by
in the vicinity
branch
a
of
rnia,
Califo
s,
Bank, Los Angele
California,
Of North First Street and Gish Road, San Jose,
from
year
one
provided the branch is established within
the date. of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
131_7
BOARD OF GOVERNORS
Item No. 6
4/11/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, CI. C. 20551
AOCHIRMIE
orrociAL COOPHEMPONOICHCE
TO THE •0A1110
April 11, 1966
Board of Directors,
United California Bank,
Los Angeles, California.
Gentlemen:
Reserve
The Board of Governors of the Federal
ia
Californ
United
System approves the establishment by
the
in
Bank, Los Angeles, California, of a branch
vicinity of Blackstone and Garland Avenues, Fresno,
hed within
California,. provided the branch is establis
one year from the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
BOARD OF GOVERNORS
Item No. 7
4/11/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
AOORE111111
orricim. CORRESPONOCNOIC
TO TUC •OARO
April 11, 1966
Board of Directors,
Wells Fargo Bank,
San Francisco, California.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by Wells Fargo Bank,
San Francisco, California, of a branch in the vicinity
of the intersection of San Ramon Valley Boulevard and
Town and Country Drive, Danville, Contra Costa County,
California, provided the branch is established within
one year from the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
131
BOARD OF GOVERNORS
Item No. 8
4/11/66
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20531
A0001E118
orricsAL cowocaromocmcc
TO THE •OARO
April 11, 1966
Board of Directors,
Wells Fargo Bank,
San Francisco, California.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by Wells Fargo Bank,
San Francisco, California, of a branch on South
Washington Street, in the downtown section of Sonora,
Tuolumne County, California, provided the branch is
established within one year from the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
@FedFRASER