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Minutes for
To:
April i, 1960
Members of the Board
From: Office of the Secretary
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.
Chin. Martin
Gov. Szymczak
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
Minutes of the Board of Governors of the Federal Reserve System on
Wednesday,
April 13, 1960.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
The Board met in the Board Room at 10:00 a.m.
Martin, Chairman
Balderston, Vice Chairman
Szymczak
Mills
Robertson
Shepardson
King
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Sherman, Secretary
Young, Adviser to the Board
Shay, Legislative Counsel
Hackley, General Counsel
Noyes, Director, Division of Research
and Statistics
Farrell, Director, Division of Bank Operations
Hexter, Assistant General Counsel
02Ccnnell, Assistant General Counsel
Hostrup, Assistant Director, Division of
Examinations
Nelson, Assistant Director, Division of
Examinations
Landry, Assistant to the Secretary
Walter Young, Assistant Counsel
Mr. Rudy, General Counsel of the Federal Reserve Bank of Dallas,
/41° assumed duties as a special assistant in the Board2s Legal Division
effective April 1, 1960, pursuant to agreement with the Dallas Bank
aPProved by the Board on March 2, 1960, was also present.
Items circulated or distributed to the Board.
Items,
The following
which had been circulated or distributed to the Board and copies
of 'which are attached to these minutes under the respective item numbers
indicated, were approved unanimously:
Item No.
Letter to The Connecticut Bank and Trust Company,
Hartford Connecticut, approving the establishment
c'r a branch in Thompsonville.
1
I284
4/13/60
-2Item No.
Letter to the Marine Midland Trust Company of
Southern New York, Elmira, New York, approving
the establishment of a branch in Nimmonsburg.
2
Letter to the Montgomery County Bank and Trust
Company, Norristown, Pennsylvania, approving the
establishment of a branch in Upper Merion Township.
3
Letter to Congressman William L. Dawson, Chairman of
the Committee on Government Operations, recommending
against enactment of H. R. 8302, a bill introduced by
Mr. Patman requiring an audit of the Federal Reserve
System by the Comptroller General.
4
Letter to the Bureau of the Budget (Item No. 5).
There had
been distributed a draft of letter to the Bureau of the Budget responding to its legislative referral memorandum of April 5, 1960, requesting
the views of the Board as soon as possible on a report prepared by the
Bureau of Federal Credit Unions of the Department of Health, Education,
and Welfare, entitled "A Study of the Nature and Role of Central Credit
UnicIns and of the Desirability of Providing for Federally-Chartered
Central Credit Unions."
The proposed reply indicated that the Board,
it its letter to the Bureau dated May 12, 1959, commented on H. R. 5777,
a bill "To amend the Federal Credit Union Act," to the effect that
although Federal Credit Unions served a useful and constructive purpose,
they should be limited to the areas of operation for which they were
°IsiginallY authorized.
That letter had also stated the belief that
el-edit unions should avoid undesirable commercialism.
reiterated in
the proposed reply to the Budget Bureau.
These views were
-I2
4/13/60
-3During a discussion of the draft letter, Mr. Shay pointed out
that the Board also reported on August 20, 1959, to Chairman Robertson
Of the Senate
Banking and Currency Committee, a copy of which report
had been sent to
the Bureau of the Budget, commenting on the Senate
counterpart to
H. R. 5777, placing the Board on record in opposition
to the
establishment of a central credit union as proposed by the
Bureau of Federal Credit Unions.
Mr. Ralph Young reported that Mr. Wallich, a member of the
C°uhcil of Economic Advisers, had inquired as to whether the Boards
Position on this legislation had changed since its report last August.
Mr. Wallich had indicated, he said, that the Council was opposed to the
commercialization
of credit union activities or to the establishment of a
central credit
union.
There followed a discussion of the prepared letter to the Budget
Bureau, during which a suggestion for an editorial change was accepted.
Unanimous approval was then given to the letter to the Budget Bureau in
the form
of attached Item No. 5.
Mr. Upshaw, formerly Legal Assistant, Legal Division, entered the
r"ra at this point, and Mr. Walter Young withdrew.
Bank acquisition in Arizona
(Items 6 and 7). There had been
distributed
a memorandum dated March 16, 1960, from the Legal Division
attaching a study dated March 14, 1960, by Mr. Upshaw entitled "Bank
AcqUisition in Arizona in the Light of Section 7 of the Clayton Act."
V13/60
Mr. Hackley commented on the Legal Divisions memorandum, noting that
°n January 12, 1956, the Board requested the San Francisco Reserve
Bank to obtain information regarding banking competition in the State
Of Arizona with special reference to "the acquisition by Arizona Bancorporation
of stock of the Bank of Douglas and other banks" and "the
acquisition of stock of Southern Arizona Bank and Trust Company by
Transamerica
Corporation."
The Reserve Bank had submitted its report
under date of November 23, 1956, concluding that the evidence was not
sufficient to establish a violation of Section 7 of the Clayton Act
vith respect to Transamerica's acquisition of stock of Southern Arizona
Bank and Trust Company, but that a violation could probably be shown as
to
Potential effects on competition if the facts were supplemented by
"admissible testimony."
As to Arizona Bancorporation's acquisition
c)f stock of the Bank of Douglas, the San Francisco Bank's report
exPressed the opinion that the Clayton Act probably had been violated.
In commenting on the memorandum from Mr. Upshaw and the history
°f the Board's consideration of this matter, Mr. Hackley noted that
in viav of the concurrent jurisdiction of the Justice Department under
the Clayton Act, the Board on April 3, 1957, sent a copy of the Reserve
Bank's report to that Department.
On June 4, 1957, the Department
Iq'ote the Board
that before giving the matter further consideration it
l'11311-14 appreciate "some reflection of the Board's thinking" in order to
4v°id possible duplication of time and effort, to which the Board replied
4/13/60
-5-
on June 25 that it had not yet reached any conclusion on the matter.
Mr. Hackley went on to say that when the Reserve Bank was asked, in
January 1956, to make its investigation, the Board indicated that no
action would be taken on Transamerica's then pending application for
a general voting permit with respect to Southern Arizona Bank and
Trust Company until completion of the Board's study.
A new appli-
cati°n for a general voting permit in this respect was filed with
the Reserve
Bank in July 1958 by Firstamerica Corporation, as successor
to Tr
ansamerica, but it had never been submitted to the Board and was
being held by the Reserve Bank until completion of the Board's study
Of banking competition in Arizona.
Mr. Hackley said that Mr. Upshaw's
Mem°randum analyzed in detail the competitive effect of banking
devel
-Lopments in Arizona as described in the Reserve Bank's report of
November 23, 1956, as well as the effect of bank mergers that had taken
Place since the date of that report, and that the memorandum also contained a thorough consideration of the implications of recent court
decisions under the Clayton Act which, while not relating to banks,
might have a
significant bearing upon the applicability of the Clayton
Act
'u acquisitions of bank stock.
The conclusions of Mr. Upshaw's
memorandum were:
(1) The evidence does not establish a violation of the
claYton Act in the case of Firstamerica's acquisition of
Southern Arizona Bank and Trust Company;
(2) It is doubtful that such a violation could be proved
th respect to any of the transactions involving Arizona Bancorporation and its affiliated Valley National Bank; and
4/13/6o
-6-
(3) The transactions
Valley National Bank might
Of trade under the Sherman
in the jurisdiction of the
involving Arizona Bancorporation and
have resulted in an unlawful restraint
Act, but enforcement of that Act falls
Department of Justice.
On the basis of these findings, said Mr. Hackley, the Legal
Division recommended (1) that the Board advise the San Francisco Reserve
Bank that it has concluded (a) that the facts do not warrant institution
Of a Clayton Act proceeding with respect to Firstamericats acquisition
Of Stock
of Southern Arizona Bank and Trust Company; (b) that, while
subject to greater doubt, the stock acquisition by Arizona Bancorporation likewise does not warrant such a proceeding, largely for legal
reas°ns; but (c) that developments in banking in Arizona as reflected
bY the Reserve Bank's report and by subsequent bank mergers clearly
indicate the desirability of careful consideration of the effects
Upon
competition of any proposed mergers or establishment of branches
in that State
that may hereafter require the Board's approval; (2) that
the Board advise the Justice Department substantially to the same effect
in view of previous correspondence with Justice regarding this matter,
it not being
proposed to express any opinion to Justice as to whether
anY or the transactions might violate the Sherman Act; and (3) that
the letter to the Reserve Bank indicate that the Board is now prepared
to cons
ider Firstamericats application for a general voting permit with
resPect to Southern Arizona Bank and Trust Company.
thescs
In accordance with
recommendations, Mr. Hackley observed that drafts of proposed
letter
to the San Francisco Reserve Bank and the Department of Justice
I 214
V13/6o
-7-
were attached to the Legal Divisionts memorandum.
Should the Board
concur in the Legal Division's recommendations, Mr. Hackley said it
would seem desirable to furnish a copy of Mr. Upshaw's memorandum
to the San
Francisco Reserve Bank and that possibly the Board might
4180 wish to consider whether a copy of the memorandum should be sent
to the
Justice Department for its information.
In addition, since
c°Pies of the November 1956 report of the San Francisco Reserve Bank
had been sent to all other Reserve Banks, the Board might wish to
advise the latter of the Board's decision in this matter and send
each a copy of Mr. Upshaw's memorandum.
However, he believed, as he
had two years ago when a similar question came up in connection with
flaking the Reserve Bank's report available to the Valley National Bank
4104 the First National Bank of Arizona, that the Upshaw memorandum
should not be made available to these banks.
This was partly because
the latter report was not entirely consistent with the Reserve Bank
study and also because it seemed unnecessary to furnish these banks
Ilith the Board's detailed study of banking competition in the State.
Mr. Molony, Assistant to the Board, joined the meeting at this
Point
and
Mr. Noyes withdrew.
Governor Robertson said that he agreed with each of the recomIllendations made by the Legal Division and that he would suggest certain
additional steps.
First, he believed the banks in Arizona that were
ir1v°11red should be advised of the Board's position regarding any subsequent
1290
4/13/6o
-8-
applications by them for branches or mergers, indicating that they
must show a strong evidence of serving the public interest through
such actions to gain Board approval.
Second, he would like to see
copies of Mr. Upshaw's memorandum and of the Board's letters to the
Justice Department and the San Francisco Reserve Bank sent to the
Comptroller of the Currency and the Federal Deposit Insurance Corporation) because of their interest in the matter.
Reference to this fact
should be included in the letter sent to Justice.
President
ngels
°f the Federal
Reserve Bank of San Francisco should also be supplied
with a copy of
Mr. Upshaw's memorandum and a statement of the Board's
reasons for reaching the conclusions that it did, and all other Reserve
18ank6 should receive a copy for their information.
In his estimation
'Iving Justice a copy of the Upshaw memorandum would avoid duplication
°f effort by a second Government agency concerned with the problems involved.
Mr. Hackley referred to the recommendation he had made that the
San Francisco Reserve Bank be advised that the Board was now prepared to
COnsider the application of Firstamerica Corporation for a general voting
IpsrMit regarding stock of Southern Arizona Bank and Trust Company.
He
noted that
merger legislation was under active consideration in Congress
alid might be enacted at this session.
While issuance of such a general
14)ting permit to Firstamerica would not disturb him from the legal standiloint, Mr. Hackley said that it was conceivable that the Board might be
1291
4/13/60
-9-
subject to criticism if it granted such a permit, which would make
Possible a merger between Southern Arizona Bank and Trust Company
and First National Bank of Arizona while the bank merger bill was pending.
Governor Robertson said that this possibility did not disturb
him personally, but in any event he doubted that the application for a
general voting permit could be processed and acted upon before the
merger bill was disposed of one way or another for this session of
Congress.
If the bill were enacted soon, any merger of Southern Arizona
Bank and Trust Company and First National Bank of Arizona would have
to take account of the legislation, and if it were not enacted, the
Board could hardly justify delaying indefinitely considering Firstamerica Is application for a general voting permit
on the grounds that
rilerger legislation might be passed sometime in the future.
Mr. OtConnell then referred to Governor Robertsonts suggestion
that the Arizona banks be informed that future applications for branches
Or mergers would have to show evidence of benefiting the public interest.
Iie -.questioned the desirability of such a statement on the grounds that
it could be assumed the Board would require a showing as to public
interest
in all applications of this type that might come before it
for consideration.
Governor Robertson responded that he thought the Board might,
nevertheless, admonish the banks in Arizona that there should be
we
,
"Loeptionally strong evidence of public interest shown" to warrant
Board approval.
1292
-10-
4/13/60
Governor Szymczak suggested that in lieu of sending a letter
to the banks in Arizona regarding this point, it might be preferable
for the San Francisco Reserve Bank to advise them informally that the
Board would, of course, require full presentation of the public
appliinterest as well as other factors in considering any subsequent
cations for branches or mergers.
Mr. Hexter suggested that a letter such as Governor Robertson
Oentioned might be gratuitous and indicate a degree of opposition to
an application by the banks concerned before the matter came before
the Board.
and granted
It might be possible, if the Board considered
a general voting permit to a company interested in Arizona banks, to
bring out that the Board was concerned by the degree of concentration
°I' banking in that State and would look with care at any further
te
ndencies in that direction.
clear presentsGovernor Mills observed that in the light of the
Of this case by Messrs. Hackley and Upshaw, the Board was left in
the position of having no solution to the problem presented, although
it Inia disturbed by the developments shown.
Since the report prepared
November 1956
.br M. Upshaw had been developed as an outgrowth of the
Port of the San Francisco Reserve Bank, it had been undertaken with
the knowledge of the Valley National and Firstamerica interests. These
with
t14° banking groups were on notice that the Board was concerned
be deduced
banking developments in Arizona, from which it could easily
That the Board would look unfavorably on any future attempts of these
I 2!
4/13/60
-11-
two groups to expand their holdings.
Therefore, he believed it
unnecessary
for the Board to send these banks a letter of the type
Proposed by Governor Robertson.
He went on to say that a "shadow of
violation of
the antitrust laws" was indicated in the 1956 report of
the Reserve Bank but that this was not apparent in Mr. Upshawss
memorandum, although the background of both of these reports evidenced
division of the market by two strong banking groups to the exclusion
Of would-be competitors.
He recalled that in its unsuccessful prosecu-
tion of the Transamerica Corporation case, settled in 1953, the Board
had been
required to prove impairment of competition in each fraction
°f the market but that the Board had found it difficult to criticize
restraint of competition in the overall market.
He favored making
Mr. ",,pshaw4a memorandum available to the Justice Department, which
already had a copy of the Reserve Banks 1956 report, he did not favor
sending a letter "uttering warnings" to the banks in Arizona, and he
v°41d withhold action on the application of Firstamerica Corporation
for a general voting permit until the bank merger bill was passed.
Governor Shepardson said that he agreed largely with the views
exPressed by
Governor Mills.
As to Firstamericals application for a
general voting permit, in view of the long delay that had already occurred,
he thought there could be no harm in withholding action until it was
knot)...
iv" what this session of Congress would do on the pending bank merger
legislation.
He felt that copies of the Upshav memorandum should be
4/13/60
-12-
furnished to the Department of Justice and other Government agencies
mentioned and to the Reserve Banks, and he concurred in the other
recommendations of the Legal Division.
He would not favor a letter
such as Governor Robertson had mentioned warning the Arizona banks on
future branch or merger applications, but he could see no harm and
there might be benefit if the San Francisco Reserve Bank were, in the
course of its contacts with those banks, to call attention to the
Problem that had developed because of the concentration of banking in
Allz°na, which would mean that any moves toward further concentration
vould be studied especially carefully.
Governor King said that he would not favor sending a letter
Of 'fling to the Arizona banks since he considered they had been on
11°.tica right along.
If they filed additional applications and the
circumstances called for denying them, he would feel no hesitancy in
"ting to disapprove them.
As to the Legal Division's recommendation,
he vould furnish the memorandum of March 14 to the Department of Justice
arid the
other Government agencies mentioned as well as to the Reserve Banks.
Governor Szymczak said that he agreed substantially with the
icva expressed by Governor Robertson, except that, as suggested by
G°7arnor Mills, he would not write a letter to the Arizona banks regarding
rUtUre applications, and he would not be inclined to act on Firstamerica's
4PPlication for a general voting permit until the outcome of pending
rilerger legislation was clearer.
4/13/60
-13Governor Balderston inquired why a court might not regard as
a subterfuge the indirect acquisition of stock by the Valley National
Bank of the Bank of Douglas, First State Bank, and Bank of Flagstaff
through the medium of the employees* profit-sharing plan of Valley National.
Mr. Hackley replied that this was possible but that the real
difficulty was evidential in nature, that is, the difficulty of establishing this as a fact.
In this connection, he recalled that one of
the Board*s
recommendations regarding possible amendment of the Bank
Holding Company Act of 1956 was to include the use of such a device
as falling within the "indirect acquisition" clause of the Act.
This
recommendation implied that the Board recognized the use of such a
device was not explicitly outlawed by the language of the Holding
C°TaParlY Act.
Governor Balderston then suggested that the point might be
made more apparent in the Upshaw memorandum.
Chairman Martin commented that it appeared there was agreement
vith the
recommendations in the memorandum from the Legal Division dated
March 16, except that the letter to the Federal Reserve Bank of
aan F
rancisco would omit any reference to sending in Firstamericals
application
for a general voting permit for stock of Southern Arizona
Sank and Trust Company.
All members of the Board indicated concurrence
In this
comment, and unanimous approval was then given to the proposed
letters
to the Federal Reserve Bank of San Francisco and to the Department
4/13/60
-14-
of Justice, with the understanding that they would be modified in
the light of the discussion at this meeting and that copies of the
Upshaw memorandum would be sent to the Department of Justice, the
Comptroller of
the Currency, the Federal Deposit Insurance Corporati°n, and the other Federal Reserve Banks.
Copies of the letters to
President Mangels of the San Francisco Reserve Bank and to Mr. Robert A.
Bicks, Acting Assistant Attorney General, Antitrust Division, Department
°f Justice, are attached to these minutes as Items 6 and 7.
Question was then raised as to what response should be made
in the event the San Francisco Reserve Bank inquired whether it should
send to the Board Firstamericass application for a general voting
Permit, and it was agreed that in that case the Bank should be told
to send
the application on to the Boards offices.
Mr. Fauver, Assistant to the Board, entered the room during
the preceding discussion, and Messrs. Young, Shay, Molony, and Upshaw
Idthdrew from the meeting at this point.
A plication of The First Virginia Corporation, Arlington, Virginia.
There had been distributed a memorandum from the Division of Examinations
dated March 30, 1960, recommending issuance of a Notice of Tentative
Corporation,
Decision granting the application of The First Virginia
Arlington, Virginia, for prior approval pursuant to section 3(a)(2) of
the Bank
of 3,107 or
Holding Company Act of 1956 of the acquisition
rilc/re shares of the 4,000 voting shares of the Purcellville National
4/13/60
-15-
Bank, Purcellville, Virginia.
Attached to this memorandum was a
second memorandum of the same date from the same Division and a
memorandum dated April 11, 1960, from the Legal Division on
this subject.
Noting that the Richmond Reserve Bank and the Comptroller
of the Currency recommended that the application be approved, Mr. Hostrup
said in his review of the application that it was not clear that the
bankta management succession problem could not be solved satisfactorily
without its
acquisition by The First Virginia Corporation, although it
/4113 clear that there was a problem here that needed to be solved. As
to the
fourth statutory factor required to be considered by the Bank
R°1ding Company Act, namely, the convenience, needs, and welfare of
the communities and the area concerned, no strong basis for approving
the application was presented.
So far as the fifth statutory factor
'4118 concerned, namely, consistency with adequate and sound banking, the
PUblic interest, and the preservation of competition in the field of
b84kilig, there seemed to be such consistency.
Governor Robertson expressed agreement with the recommendation
Or th
uivision of Examinations regarding the application.
However,
he vould like to clarify the statement in the memorandum from the
Legal Division that "one conception Pf the purposes of the Bank Holding
CO
InPanY Acq is, of course, that an expansion rgy a bank holding company7
84411d not be approved unless there are at least some positively favorable
129S
4/13/60
-16-
considerations."
As had been pointed out by the Division of Examina-
tions, Governor Robertson said, no reasons were suggested for refusing
to approve
the present application, since all factors were neutral.
He felt that the Legal Division memorandum would be clearer if the
Pertinent part of the statement just quoted were changed to read
ft
• • • an expansion which results in a diminution of competition or
in undue concPntration of banking resources* should not be approved
unless there are at least some positively favorable considerations."
Mr. Hackley agreed with Governor Robertsonts approach as indicated
by
the words he would insert in the Legal Division's memorandum.
He
noted that
the Legal Divisionts memorandum had referred to the fact that
the Board had approved certain applications where the considerations
for and against approval were as neutral as those present in the instant
'
Case
He went on to say that, since there would be no lessening of
c°mpetition resulting from acquisition of the Purcellville National
134111k by The First Virginia Corporation, he personally would give some
ight to the argument that such acquisition would solve the management
811cces61on problem of the bank.
However, he thought that it would be
1t-1i
Be to insert a statement to that effect in the Boardts Tentative
Deeisi°11, since it would serve as a precedent, and Governor Robertson agreed.
Governor Mills stated that, on balance, he would approve the
application.
His reasoning was somewhat different from the approach of
G°/Ternor Robertson, Mr. Hackley, or the Division of Examinations.
cored words added.
His
4/i3/60
-17-
approval rested upon the consideration that the part of Virginia within
vhich the Bank was located was not strongly banked, being characterized
by small banks in rather indifferent economic areas.
Consequently,
the entrance into such an area of a bank holding company with its
resources, added strength to the banking situation there.
Unanimous approval was then given to the issuance to The First
Virginia Corporation of a Notice of Tentative Decision granting its
erTlication, with the understanding that the Legal Division would prepare
a draft of such Notice for consideration by the Board.
All of the members of the staff except Messrs. Sherman and Fauver
then withdrew from the meeting.
Appointment of director at Little Rock Branch.
Before this
Meeting there had been distributed a memorandum from Mr. Fauver dated
ilal'eh 31, 1960, giving biographical information concerning two individuals
141° might be considered for appointment by the Board to fill the vacancy
*in the board of directors of the Little Rock Branch of the Federal Reserve
knk of St. Louis for the remainder of the term expiring December 31, 1960.
Governor King commented on the names of the persons suggested
the basis upon which he had brought these suggestions to the Board.
"
Ek
Aft
er a discussion, it was agreed that the usual steps should be taken
to ascertain whether Mr. Fred P. Blanks, a farmer of Parkdale, Arkansas,
II"
to
eligible and would accept the appointment, if tendered, and, if so,
make the appointment.
13. 0
14113/6o
-18Secretary's Note: It having been ascertained
that Mr. Blanks was eligible and would accept
the appointment, if tendered, a telegram making
the appointment was sent to him on April 15, 1960.
Letter to group of Senators in reply to their letter of March 12,
1960. Chairman Martin referred to the draft of proposed letter to 21
Senators
in reply to the letter that had been sent to him under date of
March 12, 1960.
Copies of the draft had been sent to the Presidents of
all Federal Reserve Banks following the meeting of the Board on Friday,
4111
8, and an editorial change had been suggested by Mr. Deming,
President of the Federal Reserve Bank of Minneapolis, when he was in
Waahington on April 12.
Chairman Martin suggested that, no other proposals
for change
having been made, the letter be prepared for transmittal individually
to the 21 Senators who had signed the letter to him on March 12,
ilth a view to sending it to them promptly.
This suggestion was approved unanimously.
Thereupon the meeting adjourned.
Secretary's Note: Pursuant to recommendations
contained in memoranda from appropriate individuals concerned, Governor Shepardson approved
on behalf of the Board on the dates indicated
the following actions affecting the Board's staff:
il 12 1960*
Arnold M. Katz as Economist in the Division of Research and
8tati..„
th, °61ca, with basic annual salary at the rate of $7,030, effective
date he assumes his duties.
1 31
4/13/60
-19-
Extension of leave without pay
Arthur L. Broida, Economist, Division of Research and Statistics,
for the period September 1, 1960, through June 30, 1961.
On April 13
1960*
Transfers
--------Catherine B. Davian, from the position of Secretary in the
Division
of Research and Statistics to the position of Secretary in the
Division of International Finance, with no change in her basic annual
salarY at the rate of $5,390, effective the date she assumes her new duties.
Daisy L. Polk, from the position of Stenographer in the Division
Bank
Examinations to the position of Secretary in the Division of
to
$4,135
from
salary
annual
basic
her
4Terations, with an increase in
‘
duties.
new
her
assumes
P4)340, effective the date she
19.S_Sptance of resignation
Hallie A. Desmond, Secretary, Legal Division, effective April 11,
n 'with the understanding that her advance of sick leave amounting to
196-,
aPproximately 21 days need not be repaid.
Lea
without pay
Daviette H. Stansbury, Research Assistant, Division of Research
Statistics, authorized to take leave without pay each business day
1960.
°m 315 to 5:15 p.m. for a period of six months, effective April 17,
'
fl
and
Secretary's Note: On April 12, 1960, Governor
Shepardson noted on behalf of the Board the
application for retirement of Beverly A. Carter,
Senior Mail Clerk, Division of Administrative
Services, effective May 1, 1960.
BOARD OF GOVERNORS
OF THE
Item. No. 1
4/13/60
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 13, 1960
Board of Directors,
The Connecticut Bank and Trust Company,
Hartford, Connecticut.
Gentlemen:
Pursuant to your request submitted through the
Federal Reserve Bank of Boston, the Board of Governors of
the Federal Reserve System approves the establishment of a
branch at 890-900 Enfield Street, Thompsonville, Connecticut,
by The Connecticut Bank and Trust Company, provided the branch
is established within one year from the date of this letter,
and the existing office at 10 Prospect Street is discontinued
simultaneously.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
4r;fr''''
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 2
4/13/60
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE MOARD
April 13, 1960
Board of Directors,
Marine Midland Trust Company
of Southern New York,
Elmira, New York.
Gentlemen:
Pursuant to your request submitted through the
Federal Reserve Bank of New York, the Board of Governors
approves the establishment by the Marine Midland Trust
Company of Southern New York, Elmira, New York, of a
branch at 1137 Front Street, in the unincorporated village
°f Nimmonsburg, Town of Chenango, Broome County, New York.
This approval is given provided the branch is established
within six months from the date of this letter.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
1304
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
Item No.
4/13/60
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 13, 1960
Board of Directors,
Montgomery County Bank and Trust Company,
Norristown, Pennsylvania.
ue ntleMen:
Pursuant to your request submitted through the
Federal Reserve Bank of Philadelphia, the Board of Governors
Pproves the establishment of a branch in the Valley Forge
01)Ping Center, Upper Merion Township, Montgomery County,
e nnsYlvania, by Montgomery County Bank and Trust Company,
'orristown, Pennsylvania. This approval is given provided
the branch is established
within six months from the date
of this
letter.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No.
4
4/13/60
WASHINGTON
OFFICE OF THE CHAIRMAN
April 13, 1960.
The Honorable William L. Dawson, Chairman,
Committee on Government Operations,
House of Representatives,
Washington 25, D. C.
Dear Mr. Chairman:
Your letter of July 22, 1959, requested a report on
HR. 8302, which would direct the Comptroller General to make
an audit of the Board of Governors of the Federal Reserve
System, the Federal Reserve Banks, and the Federal Open Market
Committee for the period December 23, 1913 to December 31, 1958.
The proposed legislation, except for the period
covered, is similar to H.R. 2643, introduced in the 84th Congress,
uPon which the Board has previously expressed its views in a letter to your Committee dated March 18) 1955. The Board also had
Previously reported to your Committee by letter dated March 30,
1954, on H.R. 7602, a similar bill introduced in the 83rd Congress
and concerning which I testified in a hearing before your Commiton June 2, 1954.
As stated in the above-mentioned reports and as emphasized in my statement to your Committee, the Board of Governors
recognizes
the importance of budgetary, accounting, and auditing
Procedures that will make for effective, efficient, and proper
?perations throughout the Federal Reserve System. The Board,
Towever, believes that fully effective procedures are being
lollowed.
As an agent of Congress and as directed in the Federal
Reserve Act, the Board of Governors conducts annual examinations
c)f the Federal Reserve Banks and branches, and of the System
?Pen Market Account. A staff of examiners versed in the operaof the Federal Reserve Banks is maintained exclusively for
'uie work, and the Board is confident that its examination pro!edures meet the highest standards of the accounting profession.
-,111 order to be assured that such standards are maintained, the
board has for a number of years retained public accounting firms
71,
The Honorable William L. Dawson
-2-
of recognized reputation to accompany the examiners on one
Federal Reserve Bank examination each year for the purpose of
reviewing and observing the adequacy of the procedures and
practices.
Nationally known public accountants also are retained to audit the Board's books. The auditor's certificate
is published each year in the Board's Annual Report, and copies
Of the audit report are sent to the Senate and House Banking
and Currency Committees.
No restrictions or limitations are placed upon the
public accounting firms either as to their audit of the Board's
accounts or their review of the procedures followed by the
Board's examiners at Federal Reserve Banks.
The Board, of course, stands ready at all times to
furnish the appropriate committees of Congress upon request
Ml information concerning the accounts and operations of the
System. In this connection, it may be noted that the Board has
Made available to the House Banking and Currency Committee the
reports of examinations made by the Board's examiners of the 12
Federal Reserve Banks and their 24 branches covering the years
1949 through 1958 and the reports of examinations of the System
Open Market Account for the years 1939 through 1958.
Should your Committee or any subcommittee hold hearings with respect to H.R. 8302, we would appreciate an opportunity to be heard.
Sincerely yours,
(Signed) Wm. McC. Martin, Jr.
McC. Martin, Jr.
1,#:!
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 5
4/13/60
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 13, 1960
Phillip S. Hughes, Assistant Director
for Legislative Reference,
Bureau of the Budget,
Washington
25, D. C.
Dear Mr. Hughes:
This letter is in answer to your legislative referral
of April 5, 1960, requesting the views of the Board of
/
1
410v
or ernors on a report prepared by the Bureau of Federal Credit Unions
of.
Department of Health, Education and Welfare entitled, "A Study
oi Lhe Nature and Role of
Central Credit Unions and of the Desirability
X'Oviding for Federally-Chartered Central Credit Unions." Enclosed
Your communication was a copy of the report.
MemOr
alldthll
The position of the Board regarding the establishment of
%1:I„ tral credit unions was stated in the enclosure with the Board's
41114er to you dated August 20, 1959, commenting on certain bills to
seend the Federal Credit Union Act then under consideration by the
ern!!'e Banking and Currency Committee. While recognizing that Federal
„
,eu-lt unions serve a useful and constructive purpose, that letter
thated the Board's belief that credit unions should be restricted to
the areas of operation for which they were originally authorized; and
in view of the special privileges accorded them because of their
811?rofit and cooperative character, the activities of credit unions
114 be required at all times to conform to such character and to
0
.01
,
eh J-cl undesirable commercialism. The Board questioned the need for
coirPering
k
central credit unions on the ground that they would not
ope'l'ibute
to
the soundness or stability of credit unions that are
at
ing in their proper sphere and in some instances might tend to
adcgrage undesirable promotional activity. The availability of the
'ional credit facilities that would be provided by central credit
creZ8 would involve the potential danger of undue expansion of
1111, t union activities in a manner inconsistent with their basic
4Poses.
erlj
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
p4 01X
F$*
OF THE
N,7-12'.0
FEDERAL RESERVE SYSTEM
X
Item No. 6
4/13/60
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
G
o%
**t4itcatt\t,
a
TO THE BOARD
0a4***
April 13, 1960
Mr. H. N. Mangels, President,
Federal Reserve Bank of San Francisco,
San
Francisco 20, California.
Dear Mr. Mangels:
On January 12, 1956, the Board requested your Bank to
2taila information regarding banking competition in the State of
;',:inz,°/141, with particular reference to the effect of the acquisition
,
.
J ir
Corporation in 1955 of stock of Southern Arizona Bank
ax ransamerica
Trust Company, and the acquisition by Arizona Bancorporation of
:
:
.4!elc of the Bank of Douglas and other banks. A Report regarding
("fills matter was submitted by you to the Board in November 1956.
On the basis of your Bank's Report and after a careful review
all the facts and later events, in the light of the antitrust laws,
'the
80 .-b,u ard has concluded that Transamerica's acquisition of stock of
lellthern Arizona Bank and Trust Company did not result in a substantial
Ac48
.3ening of competition within the meaning of section 7 of the Clayton
pal and that bank stock acquisitions by the Employees' Profit Sharing
1
4 0f the Valley National Bank of Phoenix and the subsequent acquiin 4i211 of such stock by Arizona Bancorporation, while perhaps resulting
a substantial lessening of competition, would probably not be within
noZ reach of the Clayton Act. In the latter connection, it has been
it"that the Profit Sharing Plan is not a corporation; that any lessen,,Of competition probably occurred prior to the acquisitions by
h (3rla Bancorporation; and that, in any event, Clayton Act proceedings
1,1 3 Probably been foreclosed with respect to certain stock acquisitions
1112'43480n of the subsequent mergers of the banks involved. For your
Ilig'rMation, there is enclosed a copy of a memorandum regarding this
prepared in the Board's Legal Division.
Of
4
In the light of all the facts and the legal considerations
involv
11104;ad, the Board has decided that it would not be warranted in
it ,,,°1ting proceedings under section 7 of the Clayton Act. However,
gkipars that, as a result of the transactions described in your
dtite 3 RePort, as well as bank mergers that have occurred since the
coll of that Report, control of banking resources in Arizona has betilt
:almost entirely concentrated in two dominant banking groups. For
l'°ason, the Board will be disposed to consider unfavorably any
BOARD
Mr. H. N. Mangels
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
-2-
I‘lture applications involving either of such groups for the approval
Of branches
or mergers in that State that may require the Board's
!PProval under the law, in the absence of strong evidence that such
nsactions are in the public interest.
Inasmuch as a copy of your Bank's Report was furnished by
the
Pit
nrl -oard
to the Department
of Justice on April 3, 1.957, the Board is
Zflaing the Department of its conclusions in this matter and is
4"rnishing the Department with a copy of the enclosed memorandum.
A copy of this letter and the enclosed memorandum are being
,
faent to the Presidents of all Federal Reserve Banks and to the
ntptroller of the Currency and the Federal Deposit Insurance Corpora-
'
10n for their confidential information.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
4'°10aure
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 7
4/13/60
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 13, 1960
Mr. Robert A. Bicks,
Acting Assistant Attorney General,
Antitrust
Division,
naPartment of Justice,
Washington
25, D. C.
Dear It'. Dicks:
On April 3, 1957, the Board of Governors transmitted to
the H
onorable Victor R. Hansen, then Assistant Attorney General in
a.l'ge of the Antitrust Division, a two-volume report by the Federal
;78erve Bank of San Francisco, dated November 23, 1956, embodying the
:pults of a study of banking developments in the State of Arizona
:tth respect
to particular corporate acquisitions of bank stocks and
i4.te Possible applicability thereto of section 7 of the Clayton Act.
wa 14as indicated in the Board's letter of transmittal that this matter
1,2 receiving consideration from the point of view of the Board's
:
0 8Ponsibilities under the Clayton Act with respect to acquisitions
bank stock.
The Board has now completed its consideration of this matter
et the basis
of the report made by the Federal Reserve Bank of San
giancisco and study of later events. Particular attention has been
tiven to the effect of the acquisition in 1955 by Transamerica Corpora(flow known as Firstamerica Corporation) of stock of Southern
ti zona Bank and Trust Company and the acquisition by Arizona Banccrpora°II of stock of the Bank of Douglas and certain other banks.
On the basis of this consideration, the Board has concluded
Iransamerica Corporation's acquisition of stock of Southern
11a Bank and Trust Company did not result in a substantial lessenc)f competition within the meaning of section 7 of the Clayton Act;
'
and t
bank stock acquisitions by the Employees' Profit Sharing Plan
°
of the
Valley National Bank of Phoenix and the subsequent acquisition
111:1311ch stock by Arizona Bancorporation, while perhaps resulting in a
reanaritial lessening of competition, would probably not be within the
that" of the Clayton Act. In the latter connection, it has been noted
or the Profit Sharing Plan is not a corporation; that any lessening
°InPetition probably occurred prior to the acquisitions by Arizona
that,
Ari
BOARD
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Mr. Robert A. Bicks
-2-
Bancorporation; and that, in any event, Clayton Act proceedings have
probably been foreclosed with respect to certain stock acquisitions
151Y reason of the subsequent mergers of the banks involved.
In the light of all the facts and the legal considerations
Ilavolved, the Board has decided that it would not be warranted in
-n3tituting proceedings under section 7 of the Clayton Act with respect
1° any of the bank stock acquisitions here involved. However, it
aPPears that, as a result of the transactions described in the report
of the Federal Reserve Bank of San Francisco and events that have
?ocurred since the data of that report, control of banking resources
?
1 Arizona has become almost entirely concentrated in two dominant
lo_allking groups. For this reason, the Board has advised the Federal
7serve Bank of San Francisco that the Board will be disposed to
'°nsider unfavorably any future applications involving either of such
)uPs for the approval of branches or mergers in Arizona that may
elpire the Board's approval under the law, in the absence of strong
"
-clence that such transactions are in the public interest.
1
r
For your information in this connection, there is enclosed
of a memorandum regarding this matter prepared in the Board's
-gal Division.
LA "TY
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
4'40108-tire
@FedFRASER