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Minutes for To: April 18, 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 441 Minutes of the Board of Governors of the Federal Reserve System on Monday, April 18, 1960. PRESENr: Mr. Mr. Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Balderston, Vice Chairman -/ . Szymczak2 Mills Robertson Shepardson King Sherman, Secretary Thomas, Adviser to the Board Young, Adviser to the Board Molony, Assistant to the Board Fauver, Assistant to the Board Noyes, Director, Division of Research and Statistics Mr. Koch, Adviser, Division of Research and Statistics Mr. Landry, Assistant to the Secretary Mr. Yager, Economist, Division of Research and Statistics Mr. Mr. Mr. Mr. Mr. Mr. Report on money market conditions. Messrs. Thomas and Yager lpressnted a report on money market conditions including a reference by Mr Thomas to the influence of higher vault cash holdings of member hebtks on projections of their reserve positions and estimated changes 14 the money supply. Mr. Yager withdrew following this presentation, and Messrs. 4ckleY, General Counsel, Farrell, Director, Division of Bank Operations, Solomon, Director, Division of Examinations, Hexter, Assistant General e°44sel, Hooff and Young, Assistant Counsel, and Veenstra, Technical Assistant, Division of Bank Operations, entered the room. 1/ - w ithdrew from meeting at point indicated in minutes. 4/18/6o -2• 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 President's Committee on Government EmPloyment Policy transmitting the results of a surveY requested by the Committee. 1 Letter to The Peoples Bank and Trust Company, Dayton, ° 131110, approving an extension of time to establish a ranch in Kettering. 2 Letter to the Federal Reserve Bank of Minneapolis 3 Pr°ving the appointment of John A. MacDonald and Fueodbre J. Vander Noot, Jr., as Alternate Assistant ederal Reserve Agents. 4 ' Ivetter to the Comptroller of the Currency and the ederal Deposit Insurance Corporation concerning collection of deposit data by counties and making 1)1113110 such data for reporting banks. l ' eette!" to the Presidents of all Federal Reserve Banks ; cs'ing a recent letter of the Board regarding the c1 17,1 ) -- Vjering competitive effects of (a) a bank merger, and 0 'establishment of branches incident to a merger. 5 Mr. Walter Young withdrew at this point and Miss Hart, Assistant Counsel, entered the room. Days of grace on savings accounts (Item No. 6). There had been distributed a memorandum from the Legal Division dated April 11, 1960, referring to the amendment approved by the Board on August 27, 1959, efrective October 1, of section 3(d) of Regulation Q to authorize uniform r- 1,t 4/18/60 -3- monthly grace periods for the allowance of interest on savings deposits at the maximum rate for the entire month. The memorandum referred to the fact that before the amendment ten business days were permitted in any month commencing a quarterly or semiannual interest period and five business days were allowed in any other month, whereas the present uniform provision allowed ten calendar days in all months. Various questions regarding this provision had been raised with the Board since last August, some for clarification reasons- Ana some because of substantive The latter were on the grounds that banks were placed at a competitive disadvantage with savings and loan associations paying interest for the full period on share accounts purchased any time during the first ten business days of such periods. The New York Federal Reserve Bank, in a letter dated March 4, 1960, had suggested a further anierldment to the Regulation that would provide member banks with an OlDtion of using the present uniform provisions of ten calendar days in ' ellY month or the provision in effect before the recent amendment. In the opinion of the Legal Division, such an amendment did not seem able, and there was presented a proposed reply to the Reserve Bank cle8il ' that would take this position, if the Board concluded that the present Prow 8i on of the Regulation should not be amended. In a comment on the proposed rejection of the Reserve Bank's ee°mmendation, it was stated that informal discussion indicated that the legal staff of the Federal Deposit Insurance Corporation, thinking V18/6o -4- in terms of that Corporation's similar regulation governing maximum interest rates payable by insured nonmember banks, also felt that no alnendment of the present graze period provision was called for. Unanimous approval was then given to a letter to the New York Reserve Bank stating the Board's conclusion that the present provision Of section 3(d) of Regulation Q should not be amended. attached as Item No. This letter is 6. At this point Mr. Hooff withdrew and Messrs. Shay, Legislative Counsel, and Donald Farrell, Assistant Counsel, joined the meeting. Transfer of undermargined accounts and loans under Regulations T 414 U, and proposed amendments to those Regulations (Items 7, 8, and 9). There had been distributed a memorandum dated April 12, 1960, from the Legal Division to which was attached a letter from a law firm presenting the question whether undermargined brokerage accounts formerly held by a decedent and now held by his executors might be transferred to accounts In the names of the decedent's four residuary legatees so that each would h°Id one-fourth of the securities and would be Obligated with respect to °tie-fourth of the decedent's debit balance. The brokers had taken the 1:1°81tion that the new accounts would be subject to the present 90 per cent 14Eirgin requirement under Regulation T, Credit by Brokers, Dealers, and Members of National Securities Exchanges, but the lawyer representing the estate urged that the transfer be effected with the new accounts 11 inheriting" the undermargined status of the decedent's account. 4 4/18/6o -5In discussing this question, the memorandum pointed out that in a number of classes of situations the Board had provided exceptions to the general rule that a broker cannot establish a new account with less margin than is required by the currently effective supplement to Regulation T. Examples of exceptions are special arbitrage accounts, sPecial subscription accounts, and transfer accounts set up pursuant to section 220.6(d) of Regulation T, under which a broker may set up an account for the executor of a decedent's estate with the same debit balance and collateral as the decedent's own account. With respect to the last-mentioned exception, reference was made to a ruling of the /3°ari published in 1946 which stated that the new withdrawal requirements adcled to Regulations T and U in 1945 vitally affected the right to transfer undermargined accounts and held that a partial transfer, underto the same degree as was the transferor's account, "would elearlY violate the present requirement that...the loan be 'reduced by an amount equal to the current market value of the collateral with(32 Federal Reserve Bulletin 613). Although this ruling dealt rith Regulation U, in the opinion of the Legal Division the reasoning seemed equally applicable to similar situations under Regulation T. however, reversal of this ruling by the Board seemed justified in the 1.11ision's opinion since, from the viewpoint of equitable treatment, it /ras difficult to defend a ruling that made the privilege of transferring 114dermargined accounts in such situations depend on the number of legatees. 1354 4/18/6o -6- The memorandum pointed out that any danger that partial transfer of unclermargined loans and accounts would create a loophole for circumventing margin requirements could be obviated by narrowing the scope of the "transfer of accounts" provisions. This could be done by amending section 220.6(d) of Regulation T and section 221.3(e) of Regulation U t° make clear that the transfer of accounts and loans permitted thereby /4as confined to cases in which the transfer was to be made principally for some purpose other than to transfer to the new customer the low illargin Previously enjoyed by the account being transferred. Attached to the memorandum were drafts of amendments to Regulations T and U designed to effectuate this suggestion, as well as a draft letter that would itlform the law firm that had raised the question that transfer to the rotIr be neficiaries of their proportionate parts of these accounts might be made, subject to proportionate parts of the debit balances, within the Purpose of section 220.6(d), since the transfers appeared to be 1301141 fide incidents to probate proceedings. Mr. Hexter commented that if the recommended position were 84°Pted by the Board it would seem advisable to publish a new interpre- tation that would constitute, in effect, a reversal of the position takerl by the Board in 1946 with regard to Regulation U. However, he 84egested that publication of the new interpretation be delayed until the Proposed amendments to Regulations T and U became effective to 1) rttlit s• imultaneous publication of both the amendments and the 4/18/60 -7- interpretation. This would not, however, call for delay in sending a Proposed draft letter to the law firm of Garrity and Phillipps, Washington, D. C., that had presented in its letter of January 27, 1960, a specific case for a ruling by the Board. In response to Governor Robertson's request for a statement of the opposing point of view, Miss Hart said that a case could be made for recommending no amendment to Regulations T and Ur, since the Board could refuse to permit the proposed transfer of accounts and loans and itvoke its 1946 interpretation of Regulation U. It could be argued, she seid-5 that amendment of the Regulations as suggested in the Legal Division's memorandum would be a venture into unknown territory and that before Itu*ing that move the Board should look into the frequency and the circumstences surrounding transfers of undermargined accounts in general. 14veetigation could then be made of the means of closing the loophole in RegUlations T and If which seemed to permit the transfer of an undermargined 4ccount from one customer to another regardless of the purpose of the transfer. Mr. Solomon said that when the Board issued its 1946 ruling, 414rgirl requirements were at 100 per cent. The 1946 interpretation made It impossible to divide up a decedent's undermargined account, whereas before that interpretation it had been permissible to do so. While the Itles'tion was close and could be decided either way, the decision in 1946 seemed reasonable under the circumstances. The question was still one 4/18/6o -8- that could be decided either way, and he would not be disturbed by a reversal of the 1946 position, nor by its retention. Mr. Hackley said that in his view the proposed interpretation of section 220.6(d) of Regulation T, which would reverse that of 1946, was re asonable as applied to the instant problem. It would avoid what he believed would be an illogical and almost absurd result that would follow if the Board held that the whole account of the decedent could be transferred to one legatee but that the transfer would not be permissible if made to four legatees in equal parts. inte rpretation. Thus, he favored the proposed Such an interpretation permitting partial transfers of Old accounts might open the door to evasions of the margin requirements, alla the proposed amendments to Regulations T and U would prevent such ev4siona and thereby preclude the danger of abuses envisaged when the 1946 rtaing was adopted. Such amendments would provide that a transfer r this sort would always be limited to involuntary transfers. Governor Szymczak said that he agreed with the proposed new 14terpretation. it While the question might be answered either way, he felt Preferable to permit the transfer of the account from the executors t° the four heirs, and he would follow this with an amendment of the Reetaations designed to prevent evasions. Governor Mills inquired as to the possibility, under the proposed of creating dummy successor arrangements for the purpose of °btaining the advantages of the ruling. V18/60 9. Mr. Hackley said that the draft notice of proposed rule making contained examples of successors constituting permissible situations that Illight arise under the suggested amendment. These could be shortened, but he deemed it unlikely that a corporation set up solely for the purpose of r eceiving a transferred account could properly be regarded as a "legal successor" for purposes of the Regulation. Mr. Hexter suggested the't it would be preferable to retain this language in the notice of Proposed rule making, because if a "dummy" corporation were set up for this Purpose it would not be a successor corporation, since to qualify as Such it would need to continue the same sort of business as that (2'114148.11Y engaged in by the predecessor corporation. Following further discussion of this point, unanimous approval as given to the Notice of proposed rule making under Regulations T and U, coPies of which are attached as Items 7 and 8, as well as to a letter tO the law firm of Garrity and Phillipps that had presented the question cating that the proposed transfers are not prohibited by the "wit hdrawal" provisions of section 220.3(b)(2) of Regulation T and are the purpose of section 220.6(d) of that Regulation. the letter is attached as Item No. 9. A copy of In taking this action, it was that the necessary steps would be taken to combine the proposed 644"41blents to the Regulations with those proposed on March 25, 1960, . reg lng arbitrage transactions in a manner that would result in all °r the , cuanges that might be adopted becoming effective at the same With simultaneous announcement of their adoption. 135 4/18/6o -10Mr. Donald Farrell and Miss Hart withdrew from the meeting at this Point. Draft letter to the Secretary of the Treasury. At the meeting Of the Board and the Conference of Presidents of the Federal Reserve 8enks on March 22, 1960, there had been further discussion of the proposal Inade in 1959 by the Treasury Department that the Reserve Banks extend their activities as fiscal agents of the Treasury to include the receiving f quarterly payments made by individuals on estimated Federal income axee. t' At that time, the suggestion was made that a letter might be sent bY Chairman Martin to the Secretary of the Treasury stating why it /las believed that assumption of that additional fiscal agency activity 134111 not be in the best interests of the Federal Reserve System. Pil-relaant to that understanding, a draft of such a letter had been distributed for consideration at this meeting. Mr. Farrell noted that President Leach of the Federal Reserve Batik 4. (34 Richmond, Chairman of the Committee on Fiscal Agency Operations Of the Presidents' Conference, had expressed a willingness to examine e441 ec)bliment on any letter on this subject before it was sent to the Secretary of the Treasury. Governor Robertson questioned the advisability of including any reference In the draft letter to the System's reluctance to having its etivlties audited by the General Accounting Office, or of mentioning illfavorable connotations" popularly associated with the tax-collecting 4/18/60 -11- function. On the other hand, since the System was required by law to act as fiscal agent for the Treasury, the Reserve Banks could hardly Object on legal grounds to accepting the proposed extension of their clePositary activities as fiscal agents of the Treasury. He suggested that the only position that could be taken on this point was that, alth°11gh legal, it was undesirable for the System to assume the tax-colfunction. Following further discussion, Chairman Martin suggested that Perhaps no letter need be sent to the Treasury. Instead, he would nge to discuss the matter further with the Secretary. ar There was lulanimous agreement with this proposal. Messrs. Robinson, Adviser, Division of Research and Statistics, Associate Adviser, Division of International Finance, Eckert, Chief, 13al11 ing Section, and Ford, Economist, Division of Research and Statistics, then entered the room and Mr. Thomas withdrew. Firstamerica Corporation developments. There had been distributed Inemorandum from the Legal Division dated April 15, 1960, pertaining to telePhone call received by Mr. Hackley from Mr. Mangels, President of the San Francisco Reserve Bank, reporting developments in connection with the anti-trust proceeding brought by the Justice Department against Pirstamerica Corporation. r the The memorandum noted that Mr. King, Chairman Board of Firstamerica Corporation, had advised Mr. Mangels that o4 '46•Veernent had been reached between Firstamerica and Justice under 4/18/60 -12- 14hich there would be set up from the Firstamerica system a third independent State-wide banking organization with about 65 offices and aggregate deposits of around $500 million. In this connection, Mr. King had also indicated to Mr. Mangels that a representative of Justice would Probably call at the San Francisco Reserve Bank sometime during the current week for the purpose of discussing this matter. Mr. Mangels had Stated he would prefer to have clearance from the Board before talking to the representative from Justice. Mr. Hackley said that in the opinion of the Legal Division there Ironld be no objection to the proposed discussion between the representative from Justice and Mr. Mangels. Governor Mills suggested that there should be an indication to Mangels that the discussion should be limited to a meeting with the le lpartment of Justice representative. If the Department of Justice should 811ggest that a representative of Firstamerica Corporation be included, that Would create a difficult situation which, in his opinion, should be avoided. A meeting of the latter sort would, in his judgment, reopen the Possibility that he had mentioned before of being drawn into a case that technically was closed so far as the Board was concerned. The 11°4ra had handed down its decision, Governor Mills said, and if both PEtrties to the issue should be thrown together with the Federal Reserve Bank representative, the position that the Board had taken on the case e°41a be weakened. Governor Mills noted however, that a meeting of I :if 4/18/60 -13- Mr. Mangels with only the Department of Justice representative would be a different matter. Governor Robertson said he did not see how the Board could refuse to discuss this matter with Justice or how it could justify indicating to Mr. Mangels that he should not discuss it. He commented On some of the questions that might come before the Board for considerstion in its supervisory capacity if the proposed compromise were agreed upon by Firstameriea and Justice, stating that he believed that the Board 14ould be in an unfortunate position if the arrangement were worked out to that point and it (the Board) then found that it could not approve it. For this reason, he felt it desirable to have 11 of the questions brought Out into the open before the settlement was jelled. Mr. Hackley emphasized that the suggested meeting between the l'ePresentative of Justice and Mr. Mangels was intended to be only a 131 ' sliminary discussion of the proposed compromise settlement and that Kiag understood this to be the case. Chairman Martin said that the situation was difficult but that he u_ wc1ieved the Board must keep in touch with developments in the case. Ile suggested, therefore, that Mr. Mangels be informed that the Board 14.°11141 not object to his talking with a representative of Justice, it being 141clerstood that no impression should be given that the Board had considered the banking soundness of the suggested agreement. There was agreement with this suggestion. I,36" 4/18/60 -14Bank stock acquisitions in Arizona. Mr. Hackley stated that ia his telephone call Mr. Mangels also requested clarification of the letter sent him by the Board on April 13, 1960, regarding the Board's conclusion with respect to whether various bank stock acquisitions in the State of Arizona would warrant the institution by the Board of a Proceeding under section 7 of the Clayton Act. Mr. Mangels was bothered because the Board's letter did not indicate one way or the other whether he vas free to inform Valley National Bank and First National Bank of Arizona of the Board's decision. Since he had received inquiries from 13°th of those banks from time to time as to the progress of the Board's studY of banking concentration in Arizona, he would like to be able to tell them that the Board had completed its study and had decided that it 11°41d not institute proceedings under the Clayton Act. Mr. Hackley said that in his opinion it would be appropriate for Mr. Mangels to give the .470 banks this information. Chairman Martin said that he felt such action by Mr. Mangels *3111-cl be appropriate, and the other members of the Board concurred. It %las understood that Mr. Hackley would so inform Mr. Mangels, that he /.7(341d also call attention to the fact that this in no way affected the illl'isdiction of the Department of Justice under the Clayton Act, and that the Board was not authorizing him to indicate to the Arizona banks the manner in which the Board would approach consideration of applications t(Ir branches or mergers that they might submit to it in the future. 4/18/6o -15Mr. Hexter withdrew from the meeting at this point. Interest rates payable under Regulation Q. There had been distributed a memorandum dated April 15, 1960, from Mr. Noyes relating to time and savings deposit developments since February 'hich 5, 1960, to was attached a memorandum dated March 15, 1960, from Messrs. Rainson and Ford concerning the possible use of a formula for administration of Regulation Q. Mr. Furth stated, in response to a question from the Chairman, that although some reversal of the flow of foreign funds out of time Posits into Treasury bills had taken place recently, the general sitIzation in this regard had not changed significantly. Mr. Robinson added ' that shifts between time deposits and Treasury bills were to be ex-pected regardless of Regulation Q. In this respect, he cited the ex-Perience of the 1953-54 recession period when there WS a pronounced s4irt of funds from Treasury bills to time deposits. In the light of this witching of funds between short-term investments, he emphasized the fundamental importance of paying heed to what banks could afford to by Way of interest on time and savings deposits as a primary factor ihrluencing the Board's decision on whether or not to change the maximum rates permissible under Regulation Q. Governor Szymczak withdrew from the meeting at this point. Noting that the April 15 memorandum summarized a few recent (leVei oPments in this area, Mr. Noyes said that the analysis in the I 4/18/60 -16- Robinson-Ford memorandum of March 15 in his opinion needed no extensive discussion at this juncture, since it provided no immediate solution to the problem of whether maximum rates payable under Regulation Q should be raised in the near future. In his estimation, it would be propitious for the Board to make an upward adjustment in these rates sometime during the current quarter, making no distinction between the rate paid on time certificates of deposit and savings deposits. Mr. Young stated that, in his judgment. the formula approach to 84zin1stration of Regulation Q offered promise and deserved further study. Governor Balderston referred to a proposal that he had made on this subject at the meeting on March 30, 1960. and to the reasons he had given at that time for delaying any increase in maximum rates payable tIncler Regulation Q. The situation had now changed in his estimation, " Pecially with the completion of the Treasury's April cash borrowing, a° that he was now inclined toward an increase to a maximum rate of 3 1/2 Per cent on any savings deposit and of 3-1/2 per cent on any time ' ciel)c)sit having a maturity date of not less than six months after date r clePosit. He would leave unchanged the present ceilings on time ciel)°sits having maturity dates of less than six months, and on postal a4vings deposits which constitute time deposits. He noted that this slligestion represented a change from his previous position, since it ell-lid-noted any differential rate between time and savings deposits and 1148 based on the following considerations: f;'S 4/18/60 -17- (1) The world-wide demand for capital argues for such stimulation of saving as higher interest rates may provide. (2) Of all banks in New York State and of the 400 larger banks in the Seventh District, 70 per cent appear to be paying the ceiling rates now. (3) The average amount actually paid by commercial banks tends to be somewhat lower, say 1/2 per cent, than the rates posted. This means that the strain to invest and to lend at high rates is Slightly less than it would otherwise be. (4) The current regulation prevents increasing the rates posted by banks. To some extent, at least, this restriction keeps savers from benefiting, through their banks, from the rates on savings that now prevail. This limitation encourages the shifting Of.savings to other institutions, such as savings and loan associl!tions, and augments the loss of deposits to competing types of xnstitutions, a process which seems to injure the banking structure more than is required by the current degree of credit restraint. (5) Banks are now able to invest savings and time deposits iJ1 , mortgages yielding above 6 per cent and in tax exempt securities knew issues) yielding over 3-1/2 per cent. Chairman Martin, who had withdrawn from and reentered the meeting cillrilag Governor Balderston's statement, inquired whether there were reasons 'considering action to change the maximum permissible rates at this r01 1341ticular time. He stated reasons why, in his opinion, any such decision raiOrt preferably be deferred for a few weeks, but he added the comment that he believed it would be desirable for the Board to attempt to make 4 definite decision one way or the other before mid-year. Mr. Noyes suggested that, since most banks still computed interest °4 savings deposits as of quarterly or semi-annual dates, July 1, 1960, 7c)111-d be the earliest date when a change in the present maximum might be 11PPlied. I 4 A 4/18/6o -18In the discussion that followed, it was the consensus that announcement of a decision by the Board around the end of May would give banks and others notice sufficiently in advance of the July 1 interest date to enable them to plan accordingly. Governor King commented that on his recent West Coast trip he had received the overwhelming impression from bankers he had met, both large and small, that as increase in interest rates payable under Reguiation Q would not solve any of their problems in this area at the Present time. He agreed with an observation from Governor Robertson that it 'Ias extremely difficult to predict the trend of interest rates. Mr. Solomon reported that at the Federal Reserve examiners' cc:inference held in the Board building late in March, the Philadelphia Reserve Bank representatives noted that the current spread of 1/2 pererltage point between rates paid by commercial banks and those paid by savings and loan associations was one to which the market was now aectIstomed, with the commercial banks for the most part at 44a the savings and loan associations at 3-1/2 per cent. 3 per cent It had been allgegsted that the commercial banks would be better off to stay on this bltais than they would be should the Board permit the rate to go to 3-1/2 per cent at commercial banks, thereby stimulating savings and 1044 associations generally to advance their dividend rates to 4 per cent, vhich might give them a psychological benefit through advertising of this latter figure. % I '3 r 4/18/60 -19Governor Mills noted that many savings and loan associations already had dividend rates at 4 per cent with 4-1/2 per cent common in s°pae western States, and Governor Robertson added that at the present tize the average dividend rate on savings and loan shares was slightly abo ve 3-1/2 per cent. Mr. Robinson said that it clearly would have been inappropriate t° consider a formula approach if early action were needed on rates under Regulation Q. On the other hand, since it appeared that the Board would clefer consideration of the question for a month or so, he inquired whether lt would wish to have further study of a formula approach. Personally, he was confident that there would always be uncertainty about the future Of interest rates and, for that reason, a formula which would fluctuate with changes in the rates might have some merit and could be considered 14 the future. The staff memorandum of March 15 did not recommend the Ilse of a formula, but if the Board desired, further study could be made With a view to presenting a possible alternative approach. 8414 that Mr. Robinson the chief merit of a formula approach would be that it would 411°Id the forecasting problem that otherwise confronted the Board in jilci@ng what might happen to the level of interest rates. Chairman Martin said that he could see no reason for not studying a f°rmula approach and presenting it for the Board's consideration. It was agreed that further consideration be given to the question Or rtia-ximurri permissible rates of interest under Regulation Q at a meeting °t the Board prior to June 1, 1960. 4/18/60 Mr. Shay then withdrew from the meeting. Operation Alert 1960. Governor Robertson referred to Operation Alert 1960 scheduled for May 3 through 5, 1960, stating that he planned to go to the Board's relocation site along with about 30 members of the ste'ff. This exercise would consist of a review of the Treasury's EmergencY Planning Regulations, over-all planning activities, and the "Guide Lines for Emergency Monetary Policy" formulated by Mr. Robinson's staff Committee on Monetary Policy following OPAL 1959. Governor Robertson said that after reviewing the results of the operation with the Reserve Banks, it was planned to tie together the information and cleveloP a specific proposal which, if the Board agreed, would result in Pre positioning at all Federal Reserve Banks in a manner that would Provide guides for action in the event of an attack that knocked out Arn cor-"'unication facilities. He added that he hoped the group going to the Board's relocation site would include two persons who had not 13reviou8ly participated in such exercises, whose function would be to 4et 4S inquisitors to help test the validity of the guide lines for emtergency monetary policy. No objection to the proposed arrangements was indicated by the llbers of the Board. The meeting then adjourned. Secretary's Note: Pursuant to recommendations contained in memoranda from appropriate individuals concerned, Governor Shepardson today approved on behalf of the Board the following actions affecting the Board's staff: :1369 4/18/60 tmenent 1,„ Sally Lou Diffley as Stenographer, Division of Examinations, with "tale annual salary at the rate of $3,685, effective the date she assumes her duties. 911111de business activities t Glenn B. Hopkins, Painter, Division of Administrative Services, 17? eugsge in civic work for the Town Planning Commission in Manassas, Y-trginia, and to be a partner in a pizza carry-out business. 1 A, Secret BOARD OF GOVERNORS OF THE Item No. 1 FEDERAL RESERVE SYSTEM 4/18/6o WASHINGTON OFFICE OF THE CHAIRMAN April 18, 1960 Archibald J. Carey, Chairman) rile President's Committee on G overnment Employment Policy) 4ashington 25, D. C. Doar Mr. Carey: In Memorandum No. 14 dated January 20) 1960) you reTzested that a survey be made of full-time Negro employees serving 4-11 Classification Act positions at G. S. 5 and above. indAs you know, the Board does not maintain any records boating the racial origin of its employees. However) in line th the instruction sheet accompanying your memorandum, a survey of the employees of the Board of Governors has been completed as 313 1960) and the results based on a visual count are tabulated z 'wulated on the enclosure. Since positions in the Board's organition are not subject to the Classification Act, it is not possible kJ list them by G. S. grades. They have been listed according to titles, having in mind salary ranges and levels of responsi4tY comparable to Classification Act grade 5 and above positions. j M u If there are any questions concerning the information nished, please let us hear from you. Sincerely yours, (Signed) Wm. McC. Martin, Jr. Wm. McC. Martin, Jr. Enclosure EMPLOYMENT OF NEGROES IN FULL-TIME POSITIONS as of March 31 1960 ased on visual survey Board of Governors of the Federal Reserve System Washington, D. C. Total employment 589 Positions Comparable in Salary Ranges and Levels of Responsibility to Classification Act Grade 5 and Above Positions Job Title Bindery Worker Foreman Operator Library Assistant Mimeograph Operator Operator Offset Press Photographer (Offset) Senior Mail Clerk Total No. Negroes 1 1 1 1 1 1 1 BOARD OF GOVERNORS *4419(2060to,•''0 *44 -,--.t" -•-,..-t!, -41` 1 * ;1 41 11 .:82A 1 ' Trl OF THE FEDERAL RESERVE SYSTEM Item No. 2 4/18/6o WASHINGTON 25, D. C. : 41111P ' ADDRESS OFFICIAL CORRESPONDEN CE * !11,:g7 'ottowtt# TO THE BOARD April 18, 1960 Board of Director The Peoples Bank s, and Trust Company, Dayton, Ohio. Gentlemen: Pursuant to your request submitted thro ugh the Federal Reserve Bank of Clev elan d, the Boar d of Gove has appr rnors oved an extension of time until Nay 2, 1960, in Illich The Peop les Bank and Trust Company may establish a ?ranch at the inte rsection of Kettering Boulevard and 3 Doro thy Lane , Kettering, Ohio. The establishmen t of this l'anch was authorized in a lett er dated April 8, 1959. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. C ) I BOARD OF GOVERNORS OF THE FEDERAL RESERVE 'SYSTEM WASHINGTON 25, D. C. Item No. 3 4/18/60 ADDRESS OFFICIAL CORRESPONDENCE TO THE HOARD April 181 1960 UV* 0. B. Jesness, Chairman of the Board and Federal Reserve Agent, Federal Reserve Bank of Minneapolis, Minneapolis 2, Minnesota. near Mr. Jesness: In accordance with the request contained in your letter of 1960, the Board of Governors approves the appointments of John A. MacDonald and Theodore J. Vander Noot, Jr., as A lternate Assistant Federal Reserve Agents at the Federal Reserve Bank of Minneapolis. APril u This approval is given with the understanding that Mos sre. MacDonald and Vander Noot will be solely responsible to the 4:,edera1 Reserve Agent and the Board of Governors for the proper per00,,ndance of their duties, except that, during the absence or disability i the Federal Reserve Agent or a vacancy in that office, their respon— ) tY Will be to the Assistant Federal Reserve Agent and the Board of Governors. slili When not engaged in the performance of their duties as . t!rnate Assistant Federal Reserve Agents, Messrs. MacDonald and prufler Noot may, with the approval of the Federal Reserve Agent and the ?sident, performsuch work for the Bank as will not be inconsistent ,,4111 ". their duties as Alternate Assistant Federal Reserve Agents. Z It will be appreciated if Messrs. MacDonald and Vander Noot informed of the importance of their responsibilities as members ne staff of the Federal Reserve Agent and the need for maintenance of ndence from the ooerations of the Bank in the discharge of these Aeeponsibilities. are P...1, of It is assumed that Messrs. MacDonald and Vander Noot will 'clIte the usual Oaths of Office which will be forwarded to the Board of ao ern°rs along with the notification of the effective dates of their •Pointments. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Mr. 0. B. Jesness -2- The Board notes that Mr. Earl Benson, presently an Alternate Assistant Federal Reserve Agent, is to be transferred to an operating department of the Bank in the very near future, that Mr. Benson's auties in connection with his new assignment would conflict with his responsibilities as a member of the staff of the Federal Reserve Agent, nd that as soon as possible after he assumes his new responsibilities nls ePpointment as Alternate Assistant Federal Reserve Agent will be ter; m -.J.nated s Very truly yours, (Signed) Merritt Sherman Merritt Sherman) Secretary. P BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 4 4/18/60 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD April 21, 1960 The Honorable Ray M. Gidney, Comptroller of the Currency, Was ton 25, D. C. Dear Mr, Gidney: It is planned to continue the biennial collection of deposcounties this year, as outlined in our letter of May 15, 1958. v whi!Alld appreciate your continued cooperation in the current program bi .?r1 has been discussed informally with Mro Smith of your Statistical vJ-sion. its MY The supplementary data will again be used in compiling the POIPhl .t, Distribution of Bank Deposits by Counties and Standard Metre 147 .8 rRas, similar-to the June pas 1 in order to compile this pamphlet, information will have to be collected as to the distribution by county of deposits of —48 having cross-county offices. 25-,-195b—aes. This information has not previously been made public as to agor dual banks except as it was necessarily disclosed in giving dal egate figures for each county. In view of the need for usable regarding the distribution of deposits among different banks withIn ch county, it is proposed that this information be collected this sear utdes as discussed with Mr. Hollis Haggard of your office, with the rstanding by the reporting bank that it will be considered public ormation. public could be detertnizied _ The method of making the information pa.,,,4ater. One method would be to include it in the usual biennial - 4et by listing the banks and the deposit totals under each county -4 4 tion.ted, or to issue a supplementary report containing this informaA possibly preferable method would be simply to hold the into Ililatiun available for such public use as might be appropriate with ree,,_ thev'et to individual applications for mergers or branches or under v. Balik Holding Company Act. In any event, there is no thought of .41141,4 oir ing banks to publish such tabulations in "newspapers of general tio,'-ation" as is required in the case of official reports of condi" °f national and State member banks. The Honorable Ray M. Gidney -2- Special listings of deposits by individual offices will be ne cessary for the following 13 national banks in order to prepare tab ulations that conform to the metropolitan area definitions in New England: Connecticut National Bank, Bridgeport) Connecticut Hartford National Bank and Trust Company, Hartford, Connecticut H?The National Bank and Trust Company, Meriden, Connecticut First New Haven National Bank, New Haven, Connecticut Canal National Bank, Portland, Maine N”ional Bank of Plymouth County, Brockton, Massachusetts Middlesex County National Bank, Everett) Massachusetts Merrimac Valley National Dank, Haverhill, Massachusetts Uni.on National Bank, Lowell, Massachusetts Frst Machinists National Bank, Taunton, Massachusetts First National Bank, Webster, Massachusetts Worcester County National Bank, Worcester, Massachusetts Industrial National Bank, Providence, Rhode Island It 10.11 Of course, not be necessary to ask any of these banks to sub! it t-I-L,te reports ports by counties if the listings by individual offices are obtained. ta Reports of deposits by counties will be needed for the atDec Ped list of 116 national banks that had out-of-county branches on ember 31 1959. The following three items would be requested in both the recounties and the reports by individual offices: Demand deposits of individuals, partnerships, and corporations. (Total should agree with item 13 of the report of condition.) Time deposits of individuals, partnerships) and corporations. (Total should agree with item 14 of the report of condition.) Other deposits. (Total should agree with items 15, 16, 171 and 18 of the report of condition.) A similar letter is being sent to the Federal Deposit Insurknee the Corporation and the usual request for approval has been sent to eau of the Budget. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 5 4/18/64) ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD April 18, 1960. Dear Sir: There is attached for your information a copy of a recent letter of the Board concerning the differing competitive effects of (a) a bank merger, and (b) establishment of branches incidental to a merger. The principles stated in this letter need not be treated as confidenAal and, as you will note, are in fact largely summarized from public documents. However, the letter itself should not be given distribution, since, even with the deletions that have been made, it might be identified as to the recipient or the banks involved. Very truly yours, Merritt Shpi:Na Secretary. Enclosure TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS BOARD OF GOVERNORS CF THE FEDERAL RESERVE SYSTEM , 1960 Mr. .•••••.„., Dear mt.. Mi••• This refers to your letter of , 19604 submitting copies °f a statement application by LBank with respect to an for approval by the Bard of Governors of the establishytent ctdain branches in connection with the proposed merger of /Tank pi with i°ank g, The Board has carefully considered the analysis contained in the --Is statement and the view therein expressed that approval of _ aPplication "will substantially lessen competition in, and will conuultute an unreasonable restraint on, commercial banking." In this case, as in all other cases involving the est-,blishment ( 4:4 branches by State member banks, the Board has considered, arrLng other „ 'Ns, the probable competitive effects of the establishment of the prot IT ,s_ed branches. As pointed out in the statement enclosed with your letter, e; authority of the Board to consider the competitive effects of the SttaZblishment of branches in a case of this kind was upheld by the United T. es District Court for the District of Columbia in Old Kent Bank and V. Martin (172 F. Supp. 951 (1959)). As you know, the proposed merger in this case does not, under i Pl'le:!flt law, require the Board's approval. The Board's only jurisdiction loaf'ne matter derives from its authority under the Federal Reserve Act to 's Upon the establishment of branches by a State member bank. Consequent com ) the extent, if any, to which the merger itself may eliminate .?ravion is not a factor that the Boarm may properly consider in dete2 fling ning whether or not to approve the proposed branches. In this connection, the distinction between the Board's authority 11.1th , poiy -spect to bank mergers and its authority with respect to branches was tri ed out in a memorandum filed in the above-mentioned Old Kent litigation Position to the plaintiff's cross motion for sumpary judgment. At page resq the memorandum, it was observed that the Board's authority with panP s?ct to branches "enables the Board to consider only the effect of ex, -°n of a State member bank through additional offices; it does not erAll kerrpqe the Board to consider the even more far-reaching effects of a terler itself upon banking competition and the public interest," The difor bng competitive effects of (a) a bank merger, and (b) the establishment keraol'anohes incidental to a merger, were described as fellows in a separate tletorandum filed on behalf of the Board in the Old Kent case in reply to a randum submitted by the National Association of Supervisors of State variks: "A merger itself results in the elimination of an existing bank and the assumption by the surviving bank of the assets and -2liabilities (including the deposits) of the merging bank. Whether or not the surviving bank establishes branches at locations of former offices of the merging bank has no immediate effect on the amount of the assts and liabilities of the surviving bank, although conceivably some deposits acquired from the merging bank may be lost if brcnch,g are not establisIJ at all former offices of that bank. The merger itself may have adverse competitive effects by increasing the surviving bank's proportion of deposits and loans of banks in the community. the establishment of branches through the merger may have quite distinct adverse competitive effects by widening the geographic area of the surviving bank's operations and thus enhancing its Potential ability to obtain new customers, both depositors and borrowers ° * * the Board had no power under the law to prevent the merger by which Old Kent acquired about 55 per cent of the total deposits of all banks in the greater Grand Rapids area With these considerations in mind, the Board has considered the the xpressed in the statement submitted with your letter in relation to Rowee°mpetitive effects of establishment of the branches here proposed. 14.111 ver, the Board feels that here, as in the Old Kent case, it may not, itsZ. existing law, properly consider the competitive effects of the memer yoll ; Lf• In this connection, it is noted that the statement enclosed with inv:„,letter expresses the view that competition between the two banks here ti4 : 31-vd is substantial and that it "will be eliminated by the proposed eerii/ and also that the transaction would "destroy existing competition betw grollZen two healthy banks as well as preventing potential competition and vt3ljadh by them as separate competitive entities," Any such consequences 3 °f course flow from the merger rather than the establishment of brarlehes. to di As indicated in the memorandum in support of defendantin motion cane 81111-3S the suit in the Old Kent Bank case (page 58), the Board, in a by ti °f this kind, considers the application as in effect an application bratl! bank resulting from the merger for permission to establish the bearienee involved; in other words, the size of the resulting bank has a illea,r1g upon the competitive potential of the proposed branches. AccordBoard has carefully considered the possible effects on competia(k 0the operet4 on by the merged institution of the branches to be cit,,u:e1 by it. In doing so, the Board has taken into account the differing 1 cortillIces relating to each of the branches, including the location of offices of large banks in or near the community in which the branch Mlich located. The Board has also considered the extent, if any, to °Jrfic the Public would be served by banking facilities at the sites of the "to be acquired by LBank totica On the basis of all the facts and circumstances, the Board has !treeltIded that the establishment of such branches would not have such adverse ociard!on banking competition as to warrant disapproval. Accordingly, the has approved /Bank Ail/ application. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. 0 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 6 4/18/60 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE EIOARD April 18, 1960 1?. Howard D. Crosse, Vice President, leral Reserve Bank of New York, 'ffallYork 45, New York. te l'rr. Crosse: til4tThi5 refers to your letter of March 4, 1960, suggesting Orb_ u e Board consider the advisability of amending section 3(d) lert"iirlation Q so as to provide member banks with an option in In tting days of grace for the receipt of savings deposits, either : 111 °rdance with the present provision allowing 10 calendar days lo b verY month or in accordance with the former provisions allowing laltalllaeiness days in any month commencing a quarterly or semi-annual est Period and 5 business days in any other month. As the Board stated when notice of the proposed provision lqas lIplished in the Federal Register, the purpose of the amendment crsatc) reduce misunderstandings, make possible uniform advertising, trit„%b i.etter customer relationships, and enable banks that compute on a cycle basis to facilitate computation of interest on arnerie accounts and eliminate difficulties being encountered. The 04 a`411ent was not solely to accommodate banks which calculate interest teieveyele basis. Ample time was given interested parties to submit No ob7lt data, views, or arguments before the amendment was adopted. kiese°ections were received and the Board is of the opinion that the PeriorInt,Provision permitting banks to allow a uniform 10-day grace s4 J.8 preferable for all parties concerned. , Furthermore, it would appear that commercial banks in ths °ric have actually an advantage over mutual savings banks if to avail themselves thereof, as section 245(3)(d) of the te/le•L'_°rk Banking Law, which you mention, permits mutual savings banks cia.yq of grace in most months of the year than are now permitted Mr. Howard D. Crosse -2- esontwrcial banks. It is true that commercial banks could receive 8"igtil accounts only through January 8th of this year whereas mutual !r91.1110 banks could receive deposits through January 15th. However, the month of February the latter banks had only until February 3rd r 5th to receive deposits, depending upon whether they were on a c8TTerly or semi-annual basis, whereas commercial banks could receive f;r.:!.rig8 deposits until February 10th. This gave commercial banks uusineas days whereas mutual savings banks had from 3 to 5 business or* This same advantage to commercial banks held true in the month Th March and will hold true in six of the remaining 9 months of the year. i.ereforel although the purpose of the present provision of Regulation Q bat to equalize competition between commercial banks and mutual savings Ike, it seems doubtful that commercial banks are being placed at a urVetitive disadvantage in this respect. Very truly yours, (signed) Merritt Sherman Merritt Sherman, Secretary. FEDERAL RESERVE SYSTEM 1:12 CFR Part 220) Item No. 7 4/18/6o [Reg. T] CREDIT BY BROKERS, DEALERS, AND MEMBERS OF NATIONAL SECURITIES EXCHANGES Notice of Proposed Rule Making The Board of Governors of the Federal Reserve System recently has considered situat ions arising under paragraph (d) of 5 220.6 of Part 220 (Regulation T), relating to the transfer of general accounts between customers. In order to eliminate possible ambiguities and to make clearer what situat ions are covered by that Provision, and what situations are not, it is proposed to amend Paragraph (d) of section 220.6 to read as follows: 2205. Certain technical details. (d) Transfer of accounts--(l) In the event of the transf er of a general account from one credit or to another, such account may be treated for the purposes of this part as if it had been maintained bY the transf eree from the date of its origin: Provided, That the transferee accepts in good faith the signed statement of the transferor that no cash or securities need be deposited in the account in. connection with any transaction that has been effected in the ace°unt or, in case he finds that it is not practicable to obtain such a statement from the transferor, accepts in good faith such a signed statement from the custom er. -2- (2) In the event of the transfer of a general account from one customer to another (or to others) as a bona fide incident to a legal succession, each such transferee account may be treated by the creditor for the purposes of this part as if it had been maintained for the transferee from the date of its origin. Examples of such successions are: Trustees in bankruptcy and receiver, in place of bankrupts and other ina°1vents; executors, administrators, and beneficiaries, in place °f decedents; successor trustees or other fiduciaries, in place Of their predecessors; beneficiari es, in place of trustees or Other fiduciaries . This notice is published pursuant to section 4 of the Adrair svrative Procedure Act and section 2 of the rules of Pl'°0edure of the Board of Governors of the Federal Reserve System (12 CFR 262.2). The proposed change is authorized under the authority cited at 12 CFR Part 220. To aid in the consideration of the foregoing matter the Board will be glad to receive from interested persons any relevant data, Ite", or arguments. Although such material may be sent directly to the Board, it is preferable that it be sent to the Federal 1.384 _3_ Reserve Bank of the district, which will forward it to the Board tor Consideration. All such material should be submitted in 'writing to be received not later than May 160 1960. Dated at Washington, D. C., this 18th day of April, 1960. BOARD OF GOVERNORS OF TM FEDERAL RESERVE SYSTEM Merritt Sherman, Secretary.) a,aaa Item No. RESERVE SYSTEM 8 4/18/6o [12 CFR Part 2211 [Reg. U] LOANS BY BANKS FOR THE PURPOSE OF PURCHASING OR CARRYING REGISTERED STOCKS Notice of Proposed Rule Making The Board of Governors of the Feder al Reserve System recently has considered situa tions arising under paragraph (e) of § 221.3 Of Part 221 (Regu lation U), relating to the transfer of loans between borro wers. In order to eliminate possible ambiguities Novi to make clearer what situations are covered by that provi sion, 44d what situations are not, it is proposed to amend paragraph (e) Or '5 221.3 to read as fbllows: '5 221.3 Miscellane ous provisions. banit bona (e) A bank may (1) accept the trans fer of a loan from another °r (2) permit the transfer of a loan between borrowers as a ride incid ent to a legal succession, without following the l'eclUirernents of this part as to the making of a loan, provided the 1.044 4 '&8 not increased and the collateral for the loan is not Qt, end, after such transfer, a bank may permi t such with- 11:011a0 'a and substituti ons of collateral as the bank might have I3 -2Permitted if it had been the original maker of the loan or had originally made the loan to the new borrower. Examples of suc- cessions referred to in the preceding sentence are: Trustees in bankruptcy and receivers, in place of bankrupts and other insol vents; executors, admin istrators, and beneficiaries, in place of decedents; successor trustees or other fiduciaries, in place of their predecessors; beneficiar ies, in place of trustees or other fl duciaries. This notice is published pursuant to section 4 of the Adai nistrative Procedure Act and section 2 of the rules of Pr°oedure of the Board of Governors of the Federal Reserve System (12 CFR 262.2). The proposed change is authorized under the authority cited at 12 CFR Part 221. To aid in the consideration of the foreg oing matter the Board 11111 be glad to receive from interested perso ns any relevant data, or arguments. Although such material may be sent directly to the Board, it is preferable that it be sent to the Federal Reeetve Bank of the district, which will forward it to the Board tc)r co nsideration. All such material should be submitted in writing to be received not later than May 16, 1960. Dated at Washington, D. C., this 18th day of April, 1960. BOARD OF GO Dr IRS OF THE FEDERAL RESERVE SYSTEM (SEAL) Merritt Sherinan, Secretary; ; BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, O. C. Item No. 9 4/18/60 ADDRESS OFFICIAL CORF2E5PONDENCE TO THE BOARD April 19, 1960 RaYrnond P. Garrity, Esq., Suite 301-307 Tower Building, Washington 5, D. C. Dear 1,1r. Garrity: This is in reply to the request for an interpretation by the B , „"ru of Regulation T, contained in your letter of January 27, ' , 196 to the Federal Reserve Bank of Richmond. An estate which you represent holds two undermargined aceo— , one with H. Hentz & Company and another with Laidlaw & p ' 43mloan pr , Y. Under the terms of the final accounting in the probate be-!?edings, each holding of securities in these two accounts is to benuastributed pro rata (subject to minor adjustments) to the four ! ! i iaries of the estate, and each beneficiary will assume a proe a share of the debit balances in the two accounts. The executor -sh to effect these transfers under the authority of secn /g, tios However, the brokers holding these accounts take the riew''-Len that the transfer of a restricted account to four separate or 2:estricted accounts may not be thus effected under the provisions L.ae regulation. The relevant provision of section 220.6(d) reads as follows: "In the event of the transfer of a general account fro, - one customer to another, such account may be treated 7 1 the creditor for the purposes of this part as if it had " 11 maintained for the transferee from the date of its The 10 : 0 ---nciPal purpose of this provision is to facilitate the transfer brom-T°11-nts between customers where such transfer is to be effected, re,t,TY sPeaking, by operation of law--for example, the transfer of a belle cted account from a decedent to his executors and then to his to th:claries, or the transfer of a restricted account from a bankrupt these- trustee in bankruptcy. It is assumed that the transfer of efect eounts from the decedent to his executors has already been sellter1-1:` under this provision of the regulation. The question pre- -Ls lihether the executors and the brokers concerned may now, in °r BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM tOC , ( Raytiond F. Garrity, Esq. -2- Si littlous transactions, transfer to the four beneficiaries their )r_013ortionate parts of these accounts, subject to proportionate parts or the debit balances. In the Board's opinion, the proposed transfers are not Prohibit ed by the "withdrawal" provisions of section 220.3(b)(2), and hey appear to be bona fide incidents to probate proceedings, 67are within the purpose of section 220.6(d). In these circumre Ilees, the transfers may be effected without regard to the margin ille2irements of Regulation T that ordinarily apply to the establish1411 ' of new accounts. Needless to say, however, the new accounts, 4 eSta bliShed, will be subject to all provisions of that regulation. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary.
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