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Minutes for
To:
Members of the Board
From:
Office Of the Secretary
April 19, 1963
Attached is a copy of the minutes of the
Board of Governors of the Federal Reserve System on
the above date.
It is not proposed to include a statement
With respect to any of the entries in this set of
minutes in the record of policy actions required to
be maintained pursuant to section 10 of the Federal
Reserve Act.
Should you have any question with regard to
the minutes, it will be appreciated if you will advise
the Secretary's Office. Otherwise, please initial
below. If you were present at the meeting, your
initials will indicate approval of the minutes. If
You were not present, your initials will indicate
only that you have seen the minutes.
Chm. Martin
Gov. Mills
Gov, Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
Gov. Mitchell
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Federal Reserve Bank of St. Louis
Minutes of the Board of Governors of the Federal Reserve
System on Friday, April 19, 1963.
The Board met in the Board
Roam at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Balderston, Vice Chairman
Mills
Robertson
Shepardson
King I/
Mr. Sherman, Secretary
Mr. Kenyon, Assistant Secretary
Mr. Young, Adviser to the Board and Director,
Division of International Finance
Mr. Fauver, Assistant to the Board
Mr. Johnson, Director, Division of Personnel
Administration
Mr. Brill, Adviser, Division of Research
and Statistics
Mr. Holland, Adviser, Division of Research
and Statistics
Mr. Solomon, Associate Adviser, Division of
Research and Statistics
Mr. Sammons, Adviser, Division of International
Finance
Mr. Katz, Associate Adviser, Division of
International Finance
General Assistant, Office of
Spencer,
Mr.
the Secretary
Mr. Eckert, Chief, Banking Section, Division
of Research and Statistics
Mr. Yager, Chief, Government Finance Section,
Division of Research and Statistics
Miss Dingle, Senior Economist, Division of
Research and Statistics
Mr. Gemmill, Economist, Division of International
Finance
Money market review.
There was distributed a table summarizing
41°1aetary developments in the four weeks ending April 17, 1963, and also
°Ile that showed dealer operations in Treasury bills for the weeks ending
in a
aalluarli 2 through April 17, 1963, to which Mr. Yager made reference
1/
- Withdrew at point indicated in minutes.
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report on recent developments in the Government securities market.
Mr.
Rolland then discussed changes in bank reserves and bank credit, after
vhich Mr. Gemmill reported on foreign exchange developments.
Following these reports, Messrs. Solomon (Research), Katz,
Eekert,
Yager, and Gemmill, and Miss Dingle withdrew from the meeting
and the following entered the room:
Hackley, General Counsel
Farrell, Director, Division of Bank Operations
Solomon, Director, Division of Examinations
Connell, Controller
Hexter, Assistant General Counsel
Shay, Assistant General Counsel
Hooff, Assistant General Counsel
Furth, Adviser, Division of International Finance
Conkling, Assistant Director, Division of Bank
Operations
Mr. Goodman, Assistant Director, Division of Examinations
Mr. Leavitt, Assistant Director, Division of Examinations
Mr. Hill, Attorney, Legal Division
Mr. Millea, Chief, Administration Section, Division of
Research and Statistics
Mr. Smith, Senior Economist, Division of Research and
Statistics
Mr. Veenstra, Chief, Call Report Section, Division of
Bank Operations
Mr. Hunter, Supervisory Review Examiner, Division of
Examinations
Mr. Poundstone, Review Examiner, Division of Examinations
Mr. Kakalec, Assistant to the Controller
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Discount rates.
The establishment without change by the
?cetera” Reserve Banks of New York, Philadelphia, and San Francisco
Oil April 18, 1963, of the rates on discounts and advances in their
nding
e3ttst1ng schedules was approved unanimously, with the understa
t44t appropriate advice would be sent to those Banks.
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-3Circulated or distributed items.
The following items, copies
af which are attached to these minutes under the respective item numbers
indicated, were approved unanimously:
Item No.
Letter to the Federal Reserve Bank of New York
interposing no objection to the granting of a
leave of absence to John J. Clarke, Assistant
General Counsel, to lecture at the Center for
Latin American Monetary Studies, Mexico City.
1
Letter to Manufacturers Hanover Trust Company,
New York, New York, approving an extension of
. 1-nle to establish a branch at 41-01 Kissena
.bioulevard, Flushing, Borough of Queens.
2
Letter to the Federal Reserve Bank of Cleveland
I'egarding the terms of a time certificate of
cr ePosit used by The Oberlin Savings Bank
!
°1 Pany, Oberlin, Ohio.
3
Letter to The Farmers & Merchants Bank of
?faig County, New Castle, Virginia, approving
aPPlication for membership in the Federal
xleserve System.
14
Letter to The Archer National Bank of Chicago,
4ieago, Illinois, granting its request for
verlaission to maintain reduced reserves.
5
Letter to the Federal Reserve Bank of Chicago
1_Ithorizing the Bank to waive assessment of any
!
ialties incurred by The Archer National Bank
A r Chicago, Chicago, Illinois, for reserve
"eficiencies since November 3, 1962.
6
liter to First State Bank of Red Bud, Red Bud,
7
2
r
4-Llnois, approving an investment in bank premises.
Letter to Sidell State Bank, Sidell, Illinois,
,tiving the requirement of six-months' notice
withdrawal from membership in the Federal
eserve System.
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-4Item No.
Letter to Bank of Rangely, Rangely, Colorado,
1310roving its application for membership
la the Federal Reserve System.
9
Letter to Heights State Bank, Houston, Texas,
(1) noting without objection an investment
made in bank premises, and (2) urging that
consideration be given to the sale of additional
capital stock.
10
Letter to First State Bank of Lynwood, Lynwood,
California, waiving the requirement of sixnotice of withdrawal from membership
ln the Federal Reserve System.
11
Letter to The Sumitomo Bank of California, San
Francisco, California, approving the establishment
• a branch in the vicinity of 20th and Franklin
S
treets, Oakland.
12
Letter to Congressman Patman, Chairman of the
1,1°11se Committee on Banking and Currency, regarding
vtirther tabulating work requested in connection
ith the survey of chain banking.
13
Memorandum from Mr. Young, Adviser to the Board
Ild Director, Division of International Finance,
!
Etted April 9, 1963, regarding System participation
the Seventh Meeting of Central Bank Technicians
• the American Continent.
14
Letter to Western Bancorporation, Los Angeles,
u ifornia regarding questions relative to
"estern Bancorporation International Bank.
15
Messrs. Young, Furth, Sammons, and Poundstone then withdrew
froM the meeting.
Application of Norfolk County Trust Company (Items 16-18).
There had been distributed a proposed order and statement reflecting
4PProval by majority vote on April 12, 1963, of the application of
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4(Irfolk County Trust Company, Brookline, Massachusetts, to consolidate
/lith Wellesley Trust Company, Wellesley, Massachusetts.
Following discussion, the issuance of the order and statement
1418 authorized, subject to an editorial change in the statement.
Copies
(If the order and statement, as issued, are attached hereto as Items 16
41141 17.
Attached as Item No. 18 is a copy of the dissenting statement
cif Governor Robertson, in which Governor Mitchell concurred.
Report on competitive factors (Milford-Batavia-Williamsburg,
°hio)
There had been distributed a draft of report to the Comptroller
c)f the Currency, and later a revised draft, on the competitive factors
illvolved in the proposal of Clermont National Bank, Milford, Ohio, to
llegIlire the assets of and assume liability to pay deposits made in The
'
Pirst National Bank of Batavia, Batavia, Ohio, and The Farmers and
Melichants Bank, Williamsburg, Ohio.
The revised report was approved unanimously for transmittal
to the Comptroller, the conclusion therein being stated as follows:
There does not appear to be a significant amount of
competition existing among the three banks involved in this
Proposal.
It would appear that the small banks in Clermont County
serve primarily their own communities. However, the remaining
small banks in the county might be adversely affected competitively
aS the resulting institution would operate 6 of the 11 offices
in the county and hold about 60 per cent of the total individual,
Partnership, and corporation bank deposits in the county.
While the proposed transaction will increase the deposit
size of the largest bank in Clermont County, substantially
larger Cincinnati banks through branch systems operate in
Close proximity to the resulting bank's service area and represent
n.
effective competition to the continuing institutio
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-6Application of State Bank of Albany.
There had been distributed
a memorandum from the Division of Examinations dated April 15, 1963,
and supporting papers with respect to the application of State Bank
Of Albany, Albany, New York, to merge with The Unadilla National Bank,
Unadilla, New York.
The Division did not find that a weighing of the
statutory factors indicated clear reason for approval or denial.
In the
absence of significant unfavorable factors, it seemed to the Division
that the wishes of management and shareholders were entitled to
e°11sideration.
Since the Unadilla bank had indicated a desire to
withdraw from
the banking business, the Division recommended approval
or the application.
At the Board's request, Mr. Leavitt reviewed the facts of the
ease, the competitive factor reports received from the other Federal
bank supervisory agencies and the Department of Justice, and the reasons
tulcierlying the recommendation of the Division of Examinations, his
c°raments being based on the material that had been distributed.
Following Mr. Leavitt's remarks, Mr. Shay pointed out that
14 cases where consideration of the statutory factors does not seem
t° Point strongly in the direction of either approval or disapproval,
he wishes of the stockholders probably should be given some consideration.
110I'lever, the Board had not given expression to this concept in its
PUblished statements on merger applications.
In this particular case,
he felt that it would be fairly difficult to draft a statement on other
11.°1111ds if the Board decided upon approval.
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The competitive factors
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seemed to work in an adverse direction, without discernible offsetting
benefits.
Governor Mills said in his thinking this case was close, but
that he would deny the application.
State Bank of Albany and its
Principal competitor had previously expanded their operations through
merger, but principally in communities situated near Albany or in
localities to the north where introduction of the services of larger
banks had brought definite benefits.
In this case he knew the area
In the direction of Unadilla to be one of rich farm country; it contained
a number of good, thrifty towns, with banks of various sizes, that
ere self-sufficient. The distance between Albany and Unadilla was
about 100 miles; and State Bank's nearest branch office was approximately
53 miles from Unadilla. If this application were approved, it would
illvolve a "leap frogging" situation, tempting State Bank to close the
EWP between offices by inviting merger with other small banks in the
int
ervening area.
This would further increase the concentration of
ecmmercial banking resources, and the potential competition resulting
rr°M the presence of State Bank in Unadilla could put the smaller banks
ln the area under increasing competitive disadvantage with the passage
°f tiMe.
Governor Robertson concurred with the views expressed by
G°11ernor Mills and said that he too would deny the application.
There
a clear history of State Bank, through mergers, increasing the
"
II
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concentration of commercial basking resources in the general area.
In this particular case there was a lack of need for the merger, and
4 lack of benefits that could be derived by the community, sufficient
to offset the further tendency toward concentration.
Governors Shepardson, King, and Balderston and Chairman Martin
also indicated that they would disapprove the application, general
agreement being inferred with the views expressed by Governors Mills
and Robertson.
Thereupon, the application of State Bank of Albany to merge with
The Unadilla National Bank was denied by unanimous vote.
It was under-
stood that an order end statement reflecting this decision would be
13rePared for the Board's consideration.
Messrs. Hill and Hunter withdrew from the meeting at this
Point.
Banking Markets Unit.
There had been distributed a memorandum
dated April 12, 1963, from Mr. Noyes, Director, Division of Research
4401 Statistics, recommending establishment of three additional economist
Positions in the Banking Markets Unit.
The memorandum outlined the nature
Or work being handled and discussed the problem of an expanding workload
l'estIlting from additional responsibilities that were being assigned to
tIle Unit.
Also discussed in some detail was the proposed staff organiza-
by the
t1°11 if the three additional economist positions were authorized
lIclard.
This would include the use for temporary periods of persons on
1°11n from other Board divisions or from Federal Reserve Banks as well as
tIle services of consultants.
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A memorandum dated April 15, 1963, from the Office of the
Controller, which also had been distributed, concurred in the Research
Division's proposal to increase the staff of the Banking Markets Unit.
Rovever, it was recommended that the increase be accomplished by the
transfer of vacant Positions from elsewhere within the Division to the
Banking Markets Unit at the time appointments to the Unit were made.
It was pointed out that this procedure would permit reappraisal of
8taffing requirements by the particular section from which a position
Ilsd been transferred before a recommendation was made to reestablish the
transferred position.
This proposal was being made to reduce the number
unfilled vacancies in the budget of the Research Division; in the
Past several years the Division had underexpended its budget significantly
because of inability to fill budgeted positions.
In discussion, Governor Shepardson indicated that he felt
tIte scope of the work being undertaken by the Banking Markets Unit
inetified approval of the additional staff positions.
He went on to
note that there had persistently been a number of vacancies in the
Research Division.
The proposal made by the Office of the Controller
to transfer certain existing vacant positions, rather than to create
Positions, therefore seemed practical.
If and when someone was
t°Und to fill a certain position that had been transferred to the
13anking Markets Unit, consideration could be given to reestablishing
the position.
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-10Mr. Holland, commenting in supplementation of the information
contained in the Research Division's memorandum, expressed the view
that administrative arrangements were of secondary importance to the
maior concern of the Division, which was to keep the recruiting effort
41°ving forward in an orderly and planned fashion.
There were at present
Utelve vacancies at the professional level, all of which represented
functions that should be performed.
In the circumstances, the Research
Division was not doing certain jobs, the performance of which would make
Its operations tighter and more sound.
In recommending three additional
economist positions for the Banking Markets Unit, the Division was
seeking to make that operation more effective.
While the Division
telt that it could operate under the type of administrative arrangement
131%°Posed by the Office of the Controller, this was with the understanding
that such an arrangement would not preclude a continuation of efforts
to recruit personnel for vacant positions currently included in the
huclget.
Governor Shepardson agreed that the proposed administrative
1"angement need not interfere with the recruiting and employment
'
141
°f eUitable persons as they could be located.
It simply obviated
the necessity of adding positions to the budget as long as a backlog
Or
vacant positions existed within the Division.
Following further discussion, the recommendation to establish
thee
-93.21
additional economist positions in the Banking Markets Unit was
.221, with the understanding that those positions would be transferred
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from existing vacancies within the Division of Research and Statistics
but that this administrative arrangement would not preclude the Research
Division from actively seeking to recruit and employ appropriate
Personnel to fill the vacant positions now provided for in the budget.
Messrs. Johnson, Connell, Brill, Conkling, Millea, Smith
(Research), Veenstra, and Kakalec then withdrew and Messrs. O'Connell,
Assistant General Counsel, Smith, Assistant Director, Division of
248m1nations, and Doyle, Attorney, Legal Division, entered the room.
Bankers Trust-Farmingdale question (Item No. 19).
There had
been distributed a memorandum from the Legal Division dated April 17,
1963) regarding an application pending before the Comptroller of the
CUrrency under the Bank Merger Act by First National Bank of Farmingdale,
ParMingdale, New York, a newly-organized national bank, to acquire
the assets and assume the liabilities of The First National Bank of
41"r1ingdale, an existing national bank in Nassau County, New York.
Me stock of the new bank was to be purchased by BT New York Corporation,
41/11°11Y-owned subsidiary of Bankers Trust Company, New York, New York,
4 State member bank of the Federal Reserve System, which raised the
qUeation whether this transaction would violate the twentieth paragraph
Or section 9
of the Federal Reserve Act, which makes applicable to
State member banks the same limitations and conditions as to purchases
corPorate stock that are applicable to national banks under section
5136 of the Revised Statutes.
The memorandum discussed this question at some length, indicating
that it involved an interpretation of a provision of section 5136 that
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provides that "Except as hereinafter provided or otherwise permitted
by law,
nothing herein contained shall authorize the purchase by the
association (a national bank) for its own account of any shares of
stock of any corporation."
It was the conclusion of the Legal Division
that Bankers Trust Company would be prohibited from itself purchasing
the stock of a national bank, and that Bankers Trust's subsidiary,
g
ET New York Corporation, would be prohibited from lawfully purchasin
stock of First National Bank of Farmingdale.
of
The Legal Division's memorandum noted that the question
by the
the Proposed stock purchase had been discussed informally
CotaPtroller of the Currency with Chairman Martin on February 28, 1963.
°4 March
6, Bankers Trust Company and the Comptroller of the Currency
ere advised by the Board that this matter was under consideration.
Subsequently, on March 11, 1963, the Comptroller wrote to Chairman
Martin and inquired whether the Comptroller was correct in his
114clerstanding that the Board "reserves to itself the right to interpret
411 sections of the National Banking Laws and regulations issued by the
C°mPtroller of the Currency in their application to State member banks
4a it reserves the right to interpret section 5136 of the Revised
Statutes by virtue of the twentieth paragraph of section
Reserve Act, as it applies to State member banks."
9 of the Federal
It was concluded
by the Legal Division that, as a matter of principle and in conformity
the practice followed by the Board for many years, the Board might
section 5136 as applied
131‘°PerlY interpret the stock-purchase provision of
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to State member banks by section 9 of the Federal Reserve Act.
However,
since consistency of interpretations was clearly desirable, efforts
should be made as far as possible to achieve that end.
Aside from the foregoing questions, there were two other
questions that the proposed stock purchase raised, and these were also
discussed in the memorandum.
One was whether the continued holding
by Bankers Trust Company of stock of BT New York Corporation was in
Itself a violation of section 5136, since BT New York Corporation was
°I1Zanized by Bankers Trust in 1952 to acquire and liquidate certain oil
PlioPerties pledged as collateral for a defaulted loan made by Bankers
144St, which salvage operation had now been completed.
The Legal
ilivision considered it questionable whether Bankers Trust could lawfully
continue to hold such stock indefinitely.
Another question was whether, if the proposed transaction
14°11-1d not violate section 5136, it required the approval of the Board
"Governors as well as the Comptroller of the Currency under the Bank
4erger Act, in view of the fact that the Act requires the Board's approval
the acquisition by a State member bank, either directly or indirectly,
01' the
assets of another bank.
The Legal Division had concluded that
lf it should be determined by the Board that the proposed transaction
14/4101 not violate section 5136, the proposed acquisition of assets
01'
The Farmingdale National Bank would not require approval by the Board
14 addition to approval by the Comptroller of the Currency.
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The recommendation in the memorandum from the Legal Division
/las that there be sent to the Comptroller of the Currency a letter,
ill form submitted with the memorandum, that would constitute a reply
to his letter of March 11, 1963, and invite his views on the conclusions
Ileached with respect to the Bankers Trust Company matter.
As an
41-ternative, there was submitted a letter that might be sent to Bankers
Trust Company.
some detail
At the Board's request, Mr. Hackley commented in
cqa the questions covered in the memorandum, the conclusions reached by
the Legal Division, and the reasons therefor.
He noted that the
Ne'4 York State banking authorities reportedly were deferring action on
the Purchase of stock by Bankers Trust Company's subsidiary pending the
4v4i1abi1ity of the Board's opinion, that the Comptroller of the Currency
sirailarly was deferring a decision on the takeover of The First National
)344k of Farmingdale by the newly-organized First National Bank of
?armingdale, and that Bankers Trust Company was anxious to receive the
13°ard's opinion.
He further stated that if the Board agreed with the
e°401usions of the Legal Division and if Bankers Trust Company should be
to
advised accordingly, the member bank quite possibly might elect
colatest the opinion in some manner.
If Bankers Trust Company should
the
e4rrY through the Proposed transaction despite the Board's opinion,
ellforcement measures available to the Board would be to bring proceedings
Reserve System
either to terminate the bank's membership in the Federal
'to remove its officers or directors.
°I
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-15Mr. Hackley also said that the Legal Division, upon further
consideration, wished to modify the recommendation contained in its
memorandum.
It would now recommend sending to the Comptroller of the
Currency a brief letter inviting his views on the proposed letter to
.
I3ankers Trust Company, a copy of which would be enclosed
This would
leave for separate correspondence the question raised in the Comptroller's
letter of March 11 concerning the Board's position on its right to
interpret provisions of the national banking laws and the Comptroller's
l eglaations in their applicability to State member banks.
'
the members
From the discussion that followed, it appeared that
g
°f the Board concurred in the conclusions of the Legal Division regardin
proposed
the applicability of the provisions of section 5136 to the
13ankers Trust-Farmingdale transaction, as expressed in the draft of
letter to Bankers Trust Company.
(Governor Mills indicated that he
t°11nd the Legal Division's memorandum persuasive, yet entertained some
l'eeervations.
relating
He directed to Mr. Hackley a number of questions
(enerally to the terms of the statute and their applicability to cases
th4t had arisen in the past, and in response Mr. Hackley amplified his
eltrlier comments on the Legal Division's position.)
proposed
The discussion then turned to the question whether the
letter should be sent at this time to Bankers Trust Company or whether
to comment
the Comptroller of the Currency should be given an opportunity
before the letter was sent.
Members of the legal staff recommended the
.
latter procedure in spite of the further delay that would be involved
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Although the Comptroller had initially expressed the opinion that no
violation of section 5136 would be involved, there was the possibility
that a review of the points brought out in the draft of letter to
Bankers Trust Company would lead him to alter his earlier opinion.
Even if it did not, nothing would have been lost, and the Board would
have evidenced its desire to work toward a consistency of interpretation
of the statutes.
ral
The decision of the Board was to follow the procedu
recommendation of the Legal Division; a copy of the letter sent to
the Comptroller of the Currency in conformity with that decision is
attached as Item No. 19.
It was understood that if further inquiries
should be received by the staff from Bankers Trust Company, reply would
be made in terms that the Board continued to have the matter under
consideration.
foregoing
Governor King withdrew from the meeting during the
discussion; before leaving he indicated that he would favor the procedure
°r sending a draft of the proposed letter to Bankers Trust Company to
the Comptroller of the Currency for comment.
ll,
At the conclusion of the discussion Messrs. Hexter, O'Conne
meeting.
11°°rr, Goodman, Leavitt, and Doyle withdrew from the
Statement on H. R. 5130.
Pursuant to the understanding at the
meeting on April 17, 1963, there had been distributed a revised draft of
ce limit
statement on H. R. 5130 (a bill that would increase the insuran
fr°111 $10,000 to $25,000 on baak deposits and savings and loan shares)
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t° he presented by Vice Chairman Balderston before the House Banking
and Currency Committee on April 25.
Comments by members of the Board indicated that the revised
draft of statement was regarded as generally appropriate, and it was
understood that any specific suggestions regarding the statement would
be sent direct to Governor Balderston.
Disappearance of securities at San Francisco Bank.
Mr. Sherman
Ported a telephone call from Mr. Swan, President of the Federal Reserve
on behalf
11411k of San Francisco, transmitting a request by a staff member
°r a Subcommittee of the House Banking and Currency Committee for (1) a
rePort dated August 20, 1962, prepared by Mr. Smith, Assistant Director
Of the Board's Division of Examinations, covering the disappearance of
certain Treasury certificates of indebtedness from the vault of the
San Francisco Benk, and (2) the Reserve Bank's copies of the Board's
rePorts of examination of the Federal Reserve Bank of San Francisco
nlade in 1961 and 1962.
It was understood that these documents were
being requested for use of the Subcommittee in connection with
PreParations being made by the Subcommittee for a hearing in San Francisco
to begin on Monday, April 22, concerning the loss of the securities.
Following discussion, it was understood that Mr. Swan would be
4dvi8ed that the Board had authorized the furnishing of the documents,
lilth the understanding that the examination reports were available
°n a confidential basis only to members of the Congress and their staff.
Mr. Smith then withdrew from the meeting.
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Testimony by bank examiner.
At its meeting on October 25, 1962,
the Board interposed no objection to an examiner of the Federal Reserve
Bank of Dallas testifying at a trial of criminal charges involving a
clisaPpearance of funds of First State Bank, Premont, Texas, or to his
furnishing to the court, if requested, a memorandum he had written
regarding the incident in question.
The examiner was expected to
testify to the effect that during the December 1961 examination of the
bank five promissory notes had been placed in the bank's vaults, which
11°tes were removed under circumstances tending to incriminate an officer
clf the bank. (The bank's operations were suspended effective December 30,
1961.)
Mr. Shay now reported that be had received a telephone can
fr(111 Mr. Rudy, General Counsel of the Federal Reserve Bank of Dallas,
1711° stated that the examiner had been subpoenaed to testify on Monday,
11 22, 1963, at a trial of perjury charges growing out of the criminal
'
41
13rosecution on which the examiner testified in October 1962.
The
Periury charges were against the attorney for the officer of First
State Bank, and the examiner possibly might be asked to produce the
eraorandum concerning the disappearance of the five promissory notes.
141". Rudy raised the question whether the Board would object to the
examiner's testifying at the perjury trial.
There being no objection, it was understood that Mr. Shay would
44vise General Counsel Rudy to such effect.
The meeting then adjourned.
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Secretary's Notes: Pursuant to the discussion
at the meeting on March 6, 1963, a letter was sent
today over Chairman Martin's signature to Mr. H.
H. Bennett, President, National Retail Merchants
Association, with respect to the department store
reporting program. A copy of this letter is
attached as Item No. 20. There is also attached,
as Item No. 21, a copy of a letter sent over
Chairman Martin's signature to Mr. William N.
Batten, President, J. C. Penney Company, regarding
participation in a proposed national departmental
reporting program.
The requirements contemplated by the Board's
action on March 18, 1963, in approving the
issuance of a preliminary permit to The
Company for Investing Abroad, Philadelphia,
Pennsylvania, having been completed, a letter
was sent to that corporation on April 19, 1963,
transmitting a final permit to commence business.
Pursuant to recommendations contained in
memoranda from appropriate individuals concerned,
Governor Shepardson today approved on behalf
of the Board the appointment of the following
persons to the Board's staff, effective the
respective dates of entrance upon duty:
Bette Silver as Economist, Division of Research and
Statistics, with basic annual salary at the rate of
$8,045.
Henry F. Lee as Economist, Division of International
Finance, with basic annual salary at the rate of
$9,475.
CA.,1
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Federal Reserve Bank of St. Louis
1278
Item No. 1
4/19/63
BOARD OF GOVERNORS
OF THE
FEDERAL. RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 19, 1963
Mr. Thomas M. Timlen, Jr.,
Secretary,
Federal Reserve Bank of New York,
New York 45, New York.
Dear Mr. Timlen:
Receipt is acknowledged of your letter dated
April 5, 1963, in which you indicated that the directors
of your Bank had approved a request from the Center for
"tin American Monetary Studies that Mr. John J. Clarke,
Assistant General Counsel, lecture at the Center in
Mexico City during May of this year, and that they had
granted Mr. Clarke a leave of absence for a period of two
weeks, plus travel time, for this purpose. The Board of
Governors has no objection to this proposal.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
1299
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 2
4/19/63
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 19, 1963
Board of Directors,
Manufacturers Hanover Trust Company,
New York, New York.
G entlemen.:
The Board of Governors of the Federal
Reserve System extends to November 1, 19630 the
time within which Manufacturers Hanover Trust
Company, New York, New York, may establish a
branch at 41-01 Kissena Boulevard, Flushing,
Borough of Queens, New York, New York, under
authority granted in the Board's letter dated
August 4, 1961.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
0
Item No.
3
4/19/63
BOARD OF GOVERNORS
OF THE
Tr%
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO TNE BOARD
April 19, 1963
Paul C. stetzelberger, Vice President,
preral Reserve Bank of Cleveland,
''.4eveland 1, Ohio.
1)ear Mr.
Stetzelberger:
This refers to your letter of March 25, 1963, enclosing
the t,
sa_, orm of a time certificate of deposit used by The Oberlin
0,41•Lngs Bank Company, Oberlin, Ohio, and requesting the Board's
4 Ilion as to whether the terms of the certificate comply with
RIllation
Q.
The instrument has a one-year maturity with automatic
10 „I wals for similar periods unless presented for redemption within
th$'aYs, and provides for the payment of interest semiannually at
rate of 4 per cent per annum. In addition, it is stated that
claZ l‘unds may be withdrawn by the depositor between annual maturity
Re:s "upon the terms and conditions stated in the supplement to
tiOfl Q, section 217.6."
Section 217.6 prescribes the maximum rates of interest
that 4-,
or tl,V be paid on time certificates depending upon their maturity
sio "e notice of withdrawal actually given. However, these proviclsells are in the nature of limitations; they are not suitable for
ret ribiug withdrawal privileges in deposit contracts and, therefore,
the-rence to them for this purpose is inappropriate. In addition,
set eertificate is fatally defective as it does not "on its face"
the!
°1-th all the provisions of the contract regarding repayment of
alla, Posit, as is required by section 217.1(c) of the Regulation,
riat therefore, would not clearly acquaint the depositor with his
ts of withdrawal.
Even if appropriate provisions with respect to withdrawal
Drivi,
ox '-eges are included on the face of the certificate, the provision
DaYment of interest semiannually at the 4 per cent rate may result
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Federal Reserve Bank of St. Louis
SiBOARD
OF GOVERNORS
Mr. Paul C. Stetzelberger
or
THE FEDERAL RESERVE SYSTEM
-2-
in confusion and misunderstanding if a withdrawal is made upon 30-day
!otice after the semiannual interest is paid since interest would have
be recomputed for the whole term of the certificate and confined to
1e one per cent rate permitted for a 30-day time deposit. This would
"ecessitate recovery of some interest paid or reduction in the princi1 returned to the depositor. Therefore, a provision providing for
!
r Payment of interest semiannually at a rate of 4 per cent per annum
snld be amplified to indicate that interest may have to be recomputed
i
a withdrawal privilege is exercised.
2
t
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
Item No.
BOARD OF GOVERNORS
OF THE
4
4/19/63
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 191 1963
Board of Directors,
Farmers & Merchants Bank of Craig County,
Nei./ Castle, Virginia.
Gentleme
n:
The Board of Governors of the Federal Reserve System
Elp
of
n Praves the application of The Farmers & Merchants Bank
Federal
the
in
stock
Re g County, New Castle, Virginia, for
heserve Bank of Richmond, subject to the numbered conditions
reinafter set forth.
1.
Such bank at all times shall conduct its business
and exercise its powers with due regard to the
safety of its depositors, and, except with the
permission of the Board of Governors of the
Federal Reserve System, such bank shall not cause
or permit any change to be made in the general
character of its business or in the scope of the
corporate powers exercised by it at the time of
admission to membership.
2.
The net capital and surplus funds of such bank
shall be adequate in relation to the character
and condition of its assets and to its deposit
liabilities and other corporate responsibilities.
In connection with the foregoing conditions of membership,
etticular attention is called to the provisions of the Board's
ilke
in gulation H, regarding membership of State banking institutions
se the Federal Reserve System, with especial reference to
etion 208.7 thereof. A copy of the regulation is enclosed.
If at any time a change in or amendment to the bank's
e at!ter is made, the bank should advise the Federal Reserve Bank,
f
copies of any documents involved, in order that it may
_1
be I,ishing
8t "termined whether such change affects in any way the bank's
"as a member of the Federal Reserve System.
at
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Federal Reserve Bank of St. Louis
RESERVE SYSTEM
BOARD OF GOVERNORS OF THE FEDERAL
Ihe Farmers & Merchants Bank of Craig County
-2-
Acceptance of the conditions of membership contained in
this
, letter should be evidenced by a resolution adopted by the board
% d irectors and a certified copy of such resolution should be
b!nsmitted to the Federal Reserve Bank. Arrangements will thereupon
11 made to accept payment for an appropriate amount of Federal Reserve
:
stock, to accept the deposit of the required reserve balance,
to issue the appropriate amount of Federal Reserve Bank stock to
the bank.
The time within which admission to membership in the
Feder i
a Reserve System in the manner described may be accomplished
is
sp limited to 45 days from the date of this letter, unless the bank
4Plias to the Board and obtains an extension of time. When the
ar d is advised that all of the requirements have been complied with
:
of Federal Reserve Bank stock has
beenthat the appropriate amount
ce n issued to the bank, the Board will forward to the bank a formal
tificate of membership in the Federal Reserve System.
The Board of Governors sincerely hopes that you will find
Illember
snip in the System beneficial and your relations with the
Iles
Bank pleasant. The officers of the Federal Reserve Bank
establishing your relationships with
the be glad to assist you in
ttv Federal Reserve System and at any time to discuss with representaus," of your bank means for making the services of the System most
ul to you.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
vaure
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Federal Reserve Bank of St. Louis
194
Item No.
5
4/19/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS orriciAL CORRESPONDENCE
TO THE SOAR°
April 19, 1963
Board of Directors,
The Archer National Bank of Chicago,
Chicago, Illinois.
Gentlemen:
With reference to your request submitted through the
Pederal Reserve Bank of Chicago, the Board of Governors, acting
'under the provisions of Section 19 of the Federal Reserve Act,
6/tant8 permission to The Archer National Bank of Chicago to
zaintain the same reserves against deposits as are required to
e maintained by nonreserve city banks, effective with the first
oiweekly reserve computation period beginning after the date of
this letter.
Your attention is called to the fact that such peris subject to revocation by the Board of Governors.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
••••
'
:T45
Item Nol
4/19/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 191 1963
Leland Ross, Vice President,
4'eaeral Reserve Bank of Chicago,
O. Box 034,
'
Ilicago 90, Illinois.
Deals Mr. Ross:
Reference is made to your letter of March 28, 1963, concerning
1*
EiP
114
tor P ication by The Archer National Bank of Chicago, Chicago, Illinois,
re Permission to maintain the same reserves against deposits as are
beggired to be maintained by banks located outside of reserve cities, to
effective as of November 3, 1962.
After consideration of the information submitted, the Board
"uvernors concurs in the recommendation of your Bank that the subject
h: be permitted to carry reduced reserves. The Board is of the opinion,
Q14ever, that because the applicant has already been included as a reserve
1.Ybarik in published statistics, the effective date should not be made
peractive. Therefore, pursuant to the provisions of Section 19 of the
ta:,1"al Reserve Act, the Board grants permission to The Archer National
cle"A Of Chicago, Chicago, Illinois, to maintain the same reserves against
1,ePosits as are required to be maintained by nonreserve city banks, efctive with the first biweekly reserve computation period beginning
e.r,
the date of this letter.
Or n
In the circumstances set forth in your letter, the Board authorlze,
:Your Bank to waive assessment of any penalties incurred by the subject
bah
4' for reserve deficiencies during reserve computation periods since
:
110
IlvellIber 3, 1962, on a reserve city basis, and until authorization for reAper?cl reserves is effective. It is understood from your Bankls telegram of
11 5, 1963, that these penalties totaled $1,090.56 through April 3.
4
Please forward the enclosed letter addressed to the subject bank;
Co
PY is enclosed for your files.
Very truly yours,
(Signed) Merritt Sherman
IleloSUres
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Federal Reserve Bank of St. Louis
Merritt Sherman,
Secretary.
'
)Mf
Item No. 7
4/19/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONOENCE
TO THE BOARD
April 19, 1963
Board of Directors,
First State Bank of Red Bud,
Red Bud, Illinois.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves, under the provisions of Section 24A of
the Federal Reserve Act, an investment in bank premises
by First State Bank of Red Bud, Red Bud, Illinois, of
$85,000. This approval includes $15,000 for the cost
Of land adjoining present banking quarters and for other
estimated costs in connection with the bank's proposed
expansion and modernization plan. .
Very truly yours,
(signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
Item No.
OF THE
8
4/19/63
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 19, 1963
Beard of Directors,
Sidell State Bank
Side'', Illinois.
t
lemen:
The Federal Reserve Bank of Chicago has forwarded to
the
da; zoard of Governors Vice President and Cashier Cooper's letter
dated April 4, 1963, together with the accompanying resolution
taenr March 28, 1963, signifying your intention to withdraw from
the ershiP in the Federal Reserve System and requesting waiver of
siZ months' notice of such withdrawal.
The Board of Governors waives the requirement of six
tiorfth ,
of s 8 notice of withdrawal. Accordingly, under the provisions
tionection 208.10(0 of the Board's Regulation H, your institu-4nlaY accomplish termination of its membership at any time
tvith
"
1 eight months from the date that notice of intention to
71.til.
4dAdtew from membership was given. Upon surrender to the
sto`,,
ral Reserve Bank of Chicago of the Federal Reserve Bank
4twe
'
issued to your institution, such stock will be canceled
aPPropriate refund will be made thereon.
It is requested that the certificate of membership be
fled to the Federal Reserve Bank of Chicago.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
Item NO.
4/19/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
AL3ONESS OFFICIAL CONNE5PONDENCI:
,
To
THE BOARD
RESO''.•
.•4 4..
April 19, 1963
Nanization
Committee,
11111c of Rangely,
-alligelY, Colorado.
Gentle/nen:
The Board of Governors of the Federal Reserve Systemapproves
the ,
for TIllication made on behalf of Bank of Rangely, Rangely, Colorado,
144 stc3ck in the Federal Reserve Bank of Kansas City, effective if and
the bank opens for business under appropriate State authorization,
ject to the numbered conditions hereinafter set forth.
Such bank at all times shall conduct its business and
exercise its powers with due regard to the safety of
its depositors, and, except with the permission of
the Board of Governors of the Federal Reserve System,
such bank shall not cause or permit any change to be
made in the general character of its business or in
the scope of the corporate powers exercised by it at
the time of admission to membership.
The net capital and surplus funds of such bank shall
be adequate in relation to the character and condition
of its assets and to its deposit liabilities and other
corporate responsibilities.
At the time of admission to membership, such bank shall
have paid-in and unimpaired capital stock of not less than
$75,000, and other capital funds of not less than $75,000,
In connection with the foregoing conditions of membership,
1,4ttip,,
44,041 —d-ar attention is called to the provisions of the Board's
Pede2tion H, regarding membership of State banking institutions in the
A co'al Reserve System, with especial reference to Section 208.7 thereof.
PY of the regulation is enclosed.
1
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
°rganization Committee
-2-
It is noted that under its charter the bank may exercise
powers and it is understood that the bank intends to accept
fidu •
It will be expected,
of clary business upon admission to membership.
e course, that when such business is undertaken, your bank will be
fcP,413Ped to handle it in conformity with recognized principles of sound
"ciary administration.
trus t
If at any time a change in or amendment to the bank's charter
ieso "de, the bank should advise the Federal Reserve Bank, furnishing
APles of any documents involved, in order that it may be determined
ther such change affects in any way the bank's status as a member of
"e Pederal Reserve System.
Acceptance of the conditions of membership contained in this
letter
aft
should be evidenced by a resolution adopted by the board of directors
reser the hank's charter has been issued and a certified copy of such
14,?luti0n should be transmitted to the Federal Reserve Bank. Arrangements
thereupon be made to accept payment for an appropriate amount of
baleral Reserve Bank stock, to accept the deposit of the required reserve
to anee, and to issue the appropriate amount of Federal Reserve Bank stock
the bank.
The time within which admission to membership in the Federal
4se
System
in the manner described may be accomplished is limited to
45 drve
aYs from the date of this letter, unless the bank applies to the
"and obtains an extension of time. When the Board is advised that
ql
arao of the requirements have been complied with and that the appropriate
n,t of Federal Reserve Bank stock has been issued to the bank, the
iloau,
Pecitu will forward to the bank a formal certificate of membership in the
eral Reserve System.
14ellther L. The Board of Governors sincerely hopes that you will find
Law, slap in the System beneficial and your relations with the Reserve
ass'; Pleasant. The officers of the Federal Reserve Bank will be glad to
tst You in establishing your relationships with the Federal Reserve
SysI
for ern and at any time to discuss with representatives of your bank means
'flaking the services of the System most useful to you.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
Item No. 10
4/19/63
BOARD OF GOVERNORS
VC01
:
4:s..
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, O.
AD
Eg
PrrICIAL FilltvPiElaPoNDENCE
tt) tP4
tiAton
.ts
April 19, 1963
Board of Directors,
Heights State Bank,
Houston, Texas.
Gentlemen:
The Board of Governors of the Federal Reserve
System has received the request of your bank for approval of
recent expenditures totaling $431,081.35 for bank premises.
Section 24A of the Federal Reserve Act requires a State
member bank to obtain the approval of the Board of Governors
for an investment in bank premises which, when added to the
carrying value of present investments in such premises, will
aggregate an amount in excess of the bank's capital stock.
Since the expenditures in this case have already been made,
the prior approval contemplated by the statute cannot be
given.
However, if a timely request had been made for the
equired approval, it appears on the basis of information
before the Board that such approval would have been granted.
Accordingly, the Board offers no objection to the expenditures
totaling $431,081.35 for the recently constructed new banking
quarters.
In view of these recent expenditures, the directors
are urged to consider augmenting the capital account through
the sale of additional stock.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
I 4')t
BOARD OF GOVERNORS
11
Item No. 11
4/19/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 19, 1963
Board of Directors,
State Bank of Lynwood,
'Inwood, California.
Gentlemen:
co has
The Federal Reserve Bank of San Francis
rg's
Greenbe
Narded to the Board of Governors President
nying
accompa
etter dated April 1, 1963, together with the
:
ion
intent
your
tesolution dated January 17, 1963, signifying
"
System
Reserve
withdraw from membership in the Federal
"d requesting waiver of the six months' notice of such
withdrawal.
fo
ment of
The Board of Governors waives the require
ons of
the
provisi
months' notice of withdrawal. Under
instituyour
H,
ion
Regulat
t ction 208.10(c) of the Board's
!
'
any
hip
at
members
its
trn may accomplish termination of
intention
of
notice
that
date
me Within eight months from the
to
er
Upon
surrend
given.
f° withdraw from membership was
Reserve
the
Federal
of
co
Francis
e Federal Reserve Bank of San
d
cancele
be
will
stock
such
tion,
acook issued to your institu
.
lid appropriate refund will be made thereon
six
cate of membership
It is requested that the certifi
be returned to the Federal Reserve Bank of San Francisco.
Very truly yours,
(signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
Item No. 12
4/19/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADORES! OFrICIAL COIRAIESPONOCNCE
TO THE (BOARD
April 19, 1963
Board of Directors,
The Sumitomo Bank of California,
San Francisco, California.
Gentlemen:
The Board of Governors of the Federal Reserve
rystem approves the establishment of a branch by The
Ilmitomo Bank of California in the vicinity of 20th and
i
t:ranklin
Streets, Oakland, California, provided the
°ranch is established within one year from the date of
this letter.
In approving this application, the Board notes
that
steps are being taken to improve your bank's
caPital position through the sale of new stock.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
(The letter to the Reserve Bank stated that the Board
also had approved a six-month extension of the period
411awed to establish the branch; and that if an extension
should be requested, the procedure prescribed in the
Iloard's letter of November 9, 1962 (S-1846), should be
followed.)
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
OF THE
Item No. 13
4/19/63
FEDERAL RESERVE SYSTEM
WASHINC3TON
OFFICE OF THE CHAIRMAN
April 19, 1963.
The Honorable Wright Patman, Chairman,
Committee on Banking and Currency,
Use of Representatives,
Washington 25, D. C.
4ar Mr. Chairman:
This is in response to your letter of April 11, 1963,
requesting- that the Board process and tabulate the remaining member
wcm reports, received in response to the chain banking survey
osich You initiated during the 87th Congress while Chairman of
c4e Select Committee on Small Business, in the manner previously
e°mPleted for the 200 largest banks. The Board will continue to
°Operate in this effort.
It is noted that details of the tabulations will be
.died on a staff level, and staff arrangements have been made to
b e listings of individual banks showing per cent of shares held
each of the 20 largest stockholders furnished to your staff, a
Strict at a time as each is completed, beginning toward the end
Of may.
Staff estimates indicate that reports of the approximately
uu smaller member banks will be edited, processed, and on computer
11413e ready for tabulation, about the end of June. The last stock°1der listing will be furnished soon thereafter. It is, of course,
,
"
i°asible that the demands on the tabulating equipment will be
a:creased more than proportionally in handling 6,100 bank reports,
e compared with the previous handling of 200 reports, which could
unforeseen mechanical problems and difficulties that were
t encountered in the first 200.
Because of the greater number of banks involved and the
lest,
lia7 Prominent position of stockholders of the smaller banks, it
rat) t not be possible to match stockholders appearing on one or
(ete reports with dissimilar addresses and/or variations in names
a84g.) John Smith at his home address and J. Smith at his business
—4ress).
Sincerely yours,
Wm. McC. Martin, Jr.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
Item No. 14
4/19/63
OF THE
FEDERAL RESERVE SYSTEM
(lIfrice Correspondence
Date
April 91 1963.
,N ---jard of
'
GovernorsSubject:System participation in the
Seventh Meeting of Central Bank
RalPh A. Young
Technicians.
On February 27, 19631 the Board of Governors approved
Sy-e#
%ern participation in this meeting and the dispatch of a letter
i° the host officials in Brazil accepting the invitation. The
2.ard was advised that detailed arrangements regarding the composition
l the System's delegation could be worked out later. The purpose
ovt
this memorandum is to make a recommendation regarding the size
4Z' composition of the System's delegation. While it is recognized
;[.l, at the meeting is still several months in the future and that
1 Tmstances may necessitate changes, formal Board approval at
4,
:
:"Ie time would assist the staff in making the necessary plans and
grrahgements.
theAt the two last preceding meetings of the technicians,
System was represented by delegations of seven persons: three
rr
N.:30171 the Board's staff, three from the Federal Reserve Bank of
and one from another Federal Reserve Bank (Boston and
n ‘
ChieYork,
In view of the increasing importance being given to
,7.1 4‘44 American affairs by the U.S. Government, and the resulting
rairability of having a particularly strong Federal Reserve
1agati0n to the forthcoming meeting, I recommend that the
ofard approve the participation of the following staff members
the System in this meeting: Mr. Guy E. Noyes, head of the
pation; Mr. David Grove, Vice President, Federal Reserve Bank
n Francisco; Mr. Frank Schiff, Miss Madeline McWhinney, and
lift Scott Pardee, Federal Reserve Bank of New York; and Messrs.
'
a'Qert L. Sammons, and Reed J. Irvine of the Board's staff. It
'
ill
also prove desirable and practicable for me to attend the
aions at least part of the time, and I understand that there
aa a Possibility that Governor Mitchell may also wish to attend
an observer.
4
It is, therefore, recommended that the Board authorize
tra,
and
tr,vel
per diem allowances according to standardized Government
togvel regulations (or actual expenses, if necessary to avoid loss
ae the employee) for the trip to Rio de Janeiro and attendance at the
"ions for the members of the Board's staff named above.
The Board's attention is also invited to the fact that, in
_
th ilection with previous meetings of the central bank technicians,
IriZLBoard authorized a representation allowance not to exceed $5001
r the understanding that the furnishing of receipts under this
14,'horization would not be required, although such expenditures
'
r0411d be reported to the Board. I would favor a similar authorization
r this meeting.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 15
4/19/63
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 19, 1963.
lir. Frank L. King,
Chairman of the Board,
W
estern Bancorporation,
600
South Spring Street,
Los
Angeles 14, California.
1)csr Mr. King:
of February 27, presenting
This is in reply to your letter
two
questions relating to Western Bancorporation International Bank,
the Edge
subsidiary of Western Bancorporation.
Act banking
Your first inquiry relates to WBIB "acting as agent for
F, -Lliated banks in cases involving acceptance financing". SecEl'cn 211.6(c) of Regulation K describes a number of classes of trans'
:.tions, some of which involve acceptance financing, that ordinarily
0.41e considered permissible for an Edge Act banking corporation as
tincidental to [its] international or foreign business". If the funca °ns performed by WBIB, as agent for affiliated banks, fall within
nr_IY of these categories, the transactions would be permissible as far
Regulation K is concerned.
aff4
The other aspect of this question is whether the proposed
art.
angements, which are not described in detail, would be permissible
Ir the affiliated banks for which WBIB would be acting as agent. In
ic)
arts connection, as you know, one question would be whether the
bal'angement involved any extension of credit or other action by a
ofnking subsidiary of your Corporation in violation of section 6(a)
. the
44e
Bank Holding Company Act. A second inquiry would be whether
aneeptance transactions by a bank in California, for example, through
vi agent in New York, would be in conformity with applicable proofsiems of law relating to the place or places at which the business
the bank may be transacted.
f
i
The foregoing comments are necessarily general, since the
exa
et nature of the contemplated transactions was not described in
1111r letter. If you should decide to submit complete details concern)
Y(
i
specific transactions (even if hypothetical), including copies of
forms and instruments involved, the Board would give early con'aration to your request for a ruling.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Mr. Frank L. King
1041
-2-
Your second question is whether a banking subsidiary of a
bank holding company may own an Edge Act corporation. Section 6(a)
°f the Bank Holding Company Act prohibits a holding company bank
from investing any of its funds in the capital stock of any other
subsidiary of its holding company. It is the position of the Board
that this statutory provision makes it unlawful for a banking subsidiary of a holding company to purchase stock of an Edge Act
cesrPoration if 25 per cent or more of the latter's stock is owned,
°r will be owned, by the holding company system, since that would
°11stitute the Edge Act corporation a "subsidiary" as defined in sec!
011 2(d) of the Holding Company Act.
The Board has repeatedly emphasized, in its reports to
C°11gress the desirability of repealing or, at least, amending secOn 0 of the Holding Company Act, on the ground that it constitutes
!severe and unnecessary restriction upon the operation of banks
. 011tro1led by holding companies. However, until Congress takes action
11)11 accordance with this recommendation, the Board has no alternative
4t to administer the Act in its existing form.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
I 297
k
Item No.
16
4/19/63
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
Illthe Matter of the Application of
11°11FOLK COUNTY TRUST COMPANY
Irc3li
ti approval of consolidation with
.e4
es1ey Trust Company
ORDER APPROVING CONSOLIDATION OF BANKS
There has come before the Board of Governors, pursuant to the
Merger Act of 1960 (12 U.S.C. 1828(c)), an application by Norfolk
e°11tY Trust Company, Brookline, Massachusetts, a State member bank of
the
Federal Reserve System, for the Board's prior approval of the
)1.1(31idation of that bank and Wellesley Trust Company, Wellesley,
Ma8t,
'
3aohusetts, also a member of the Federal Reserve System, under the
4.1.4
'er and title of the former. As an incident to the consolidation,
the to
offices of Wellesley Trust Company would be operated as branches
et N
°'f01k County Trust Company. Notice of the proposed consolidation,
approved by the Board, has been published pursuant to said Act.
Upon consideration of all relevant material in the light of
the ,
4
'Lactors set forth in said Act, including reports furnished by the
"'Pt
roller of the Currency, the Federal Deposit Insurance Corporation,
411A
he Department of Justice on the competitive factors involved in the
Dt h
"(38ed consolidation,
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Federal Reserve Bank of St. Louis
1298
-2Board's
IT IS HEREBY ORDERED, for the reasons set forth in the
Statement of this date, that said application be and hereby is approved,
Provided that said consolidation shall not be consummated (a) within
8""en calendar days after the date of this Order or (b) later than three
illorths after said date.
1963.
Dated at Washington, D. C., this 19th day of April,
By order of the Board of Governors.
Voting for this action: Chairman hartin, and
Governors Balderston, Mills, and Shepardson.
Voting against this action:
Absent and not voting:
Governors Robertson and Mitchell.
Governor King.
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
(stAL)
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Federal Reserve Bank of St. Louis
1299
Item No. 17
4/19/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY NORFOLK COUNTY TRUST COMPANY
FOR APPROVAL OF CONSOLIDATION WITH
WELLESLEY TRUST COMPANY
STATEMENT
Norfolk County Trust Company, Brookline, Massachusetts
("Norfolk Trust"), a State member bank of the Federal Reserve System,
Ilith deposits of $118.5 million as of December 28, 1962, has applied,
141rsuant to the Bank Merger Act of 1960 (12 U.S.C. 1828(c)), for the
Boa„t
-" s prior approval of the consolidation of that bank and Wellesley
411st Company, Wellesley, Massachusetts ("Wellesley Trust"), also a
tlierriber bank, with deposits of $8.9 million as of the same date. The
batik
s would consolidate under the charter and title of Norfolk Trust.
As
incident to the consolidation, the two offices of Wellesley Trust
110to A
become branches of the resulting bank, increasing the number of
litllorized offices of Norfolk Trust from 25 to 27.
Under the Act, the Board is required to consider, as to each
'fle banks involved, (1) its financial history and condition, (2) the
Cie n
stuacY of its capital structure, (3) its future earnings prospects,
(4) the general character of its management, (5) whether its corporate
are consistent with the purposes of 12 U.S.C., Ch. 16 (the Federal
bepo,
'it Insurance Act), (6) the convenience and naeds of the community
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Federal Reserve Bank of St. Louis
1_300
-2-
to be served, and (7) the effect of the transaction on competition
(including any tendency toward monopoly).
The Board may not approve
the transaction unless, after considering all these factors, it finds
the transaction to be in the public interest.
Banking factors. - The financial history and condition of
Norfolk Trust are satisfactory.
The bank's capital structure is
adequate, its management is competent, and its earnings prospects are
favorable.
These attributes would also characterize the resulting bank.
Wellesley Trust's financial history and condition are generally
satisfactory, and it has an adequate capital structure.
Consummation of
he proposed consolidation would solve the problems that have arisen at
/4ellesley Trust largely from its unsuccessful efforts to correct the
e3tisting lack of depth in management and a persistent lag in the rate of
its deposit and loan growth, compared to its nearest competitor.
If
effectuated, the proposal also would provide a basis for needed improvein the earnings of the Wellesley Trust offices, which have been substa ntially below the average for banks of comparable size in the First
?aderal Reserve District.
There is no indication that the powers of the banks involved
4re or would be inconsistent with 12 U.S.C., Ch. 16.
Convenience and needs of the communities. - Norfolk Trust has
Its
main office and one branch in Brookline (1960 population 54,000).
4°°kl1ne, in Norfolk County, is contiguous to Boston in Suffolk County.
111Q
40 other branches operated by the bank also are in Norfolk County,
Tri°st of which lies within the Boston Standard Metropolitan Statistical
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Federal Reserve Bank of St. Louis
-3-
Area ("snsA").
The bank has authorizations for the establishment of
three additional branches in the County.
The service area!' of Norfolk
41.1st, which is primarily industrial and residential, and which contains
c317
"one million people, includes all of Norfolk County and portions of
Suffolk, Middlesex, and Plymouth Counties.
Both offices of Wellesley Trust are in Wellesley (1950 population
26,000), which is situated in Norfolk County 13 miles southwest of Boston
flci 9 miles west of Brookline.
is chiefly residential.
Wellesley is a relatively high income area
In addition to Wellesley, the service area
c'f Wellesley Trust (with over 131,000 inhabitants), includes Needham and
a 5
-11 part of Dover, both of which also are in Norfolk County, and
Weston, and Natick, which are parts of Middlesex County.
All of
IlellesleY Trust's service area, which had a population increase of 26 per
cerit during the past decade, lies within the Boston SMSA.
The proposed transaction would affect primarily the banking
c°4venience and needs of the Wellesley area.
The only other commercial
bank in Wellesley is Wellesley National Bank, which has four offices
Q11(1 deposits more than three times greater than those of Wellesley Trust.
Illesley National Bank's deposits were $27.4 million as of December 28,
1962.
trt the
The proposed consolidation would result in a substantial increase
Present loan limit at the two offices of Wellesley Trust, and
4c3tIld be expected to make available at those offices broadened banking
4z.v.
Ices, includins
, trust facilities, automobile dealer financing, retail
Vim t
area from which a bank obtains 75 per cent or more of its
sits ot individuals, partnerships, and corporations.
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Federal Reserve Bank of St. Louis
1302
-4-
credit services, the benefits of records mechanization, and various
Other specialized services.
The result, therefore, would be to enhance
the capability of the offices of Wellesley Trust as convenient alternative sources of bank credit and services in the area.
Competition. - The primary effect of the proposal on competition
14ou1d occur in and around Wellesley.
The shortest distance between Wellesley Trust and Norfolk Trust
is the 2-1/2 miles that separate the former's main office and one of the
latter 's three branches in Needham, which is contiguous to Wellesley.
The
record indicates, however, that the amount of business which each of the
Participating banks has secured from the area served principally by the
°ther has been relatively small.
Most of Wellesley Trust's business has
Originated in Wellesley, while the major portion of Norfolk Trust's business has
come from the remainder of Norfolk County and from part of the
eitY of Boston.
The rate of deposit growth at Wellesley Trust has been much
slower over the past 12 years than that of Wellesley National Bank, the
closest and keenest competitor of Wellesley Trust.
that
For example, during
period Wellesley Trust's deposits increased by only 26 per cent,
l/hile those of Wellesley National Bank increased by 152 per cent.
The
"Pended banking services and depth of management which would result
'c'm effectuation of the proposed consolidation would provide a basis
fl
for improving the growth record at the Wellesley Trust offices.
While
4°.tfolk Trust would acquire by the proposal a significantly smaller perthan
centage of the banking resources in the Wellesley Trust service area
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Federal Reserve Bank of St. Louis
1303
-5-
held by Wellesley National Bank, the larger total resources of Norfolk
TI'llst would enable it to compete effectively with Wellesley National Bank,
CU
has indicated that increased local competition would be welcome.
Aside from the situation just related, consummation of the
Pt°Posed consolidation would be expected to have little competitive
efect upon either commercial or mutual savings banks in the service area
°f the
resulting bank.
The combined loans and deposits of individuals,
ilattnerships, and corporations ("IPC deposits") of mutual savings banks
itIllorfolk County exceed those of the commercial banking offices in the
Coun,
'Y- Mutual savings banks compete aggressively for savings deposits
mortgage loans and, to some extent, for personal loans in the service
41:ea of Wellesley Trust.
The office of one mutual savings bank in Wellesley
ilas °Re-third of all IPC deposits held by banking offices in Wellesley.
Norfolk Trust is one of the nine subsidiary banks of Baystate
Co„,
Poration, Boston, a registered bank holding company. Subsidiary banks
the
holding company hold 40.9 per cent of the total commercial bank
4Po
sits in the service areas of the participating banks, 9.8 per cent of
deposits in the Boston SMSA, and 9.7 per cent of such deposits in the
State
C.
Effectuation of the proposed consolidation would increase these
kre
entages, respectively, by only 2.3 per cent, 0.2 per cent, and 0.1 per
4tit.
Neither is it believed to be of determinative significance with
Pect to
this application that The First National Bank of Boston, the
lEtt
est
commercial bank in Massachusetts, owns directly 13.4 per cent of
stock of Baystate Corporation, and holds in a fiduciary capacity,
dire
ctlY and indirectly, slightly over 2 per cent of such stock. That
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Federal Reserve Bank of St. Louis
1304
The first
National Bank of Boston, which is actively engaged in correspondent
banking, would hold large balances of other banks is to be expected.
It
I1°111d not seem important in this regard, therefore, that The First National
44k of Boston holds around 25 per cent of the total balances due to the
ho •
ldlng company's subsidiary banks from all of their correspondent banks.
Summary and conclusion. - Consummation of the proposal would
ttengthen management, expand the banking services, and improve the earnings
growth prospects for the offices of Wellesley Trust.
The benefits which
141411d accrue from the transaction would more than offset the elimination of
the modest amount of competition between the participating banks.
Effective
e(411Petiti0n in the areas concerned from the several offices of noncommercial
ha,41„
-41g institutions with substantial resources may be expected to continue.
The
Proposed consolidation should have no adverse effect upon these institu404
s or upon any of the commercial banks with offices in the areas involved,
44d should provide more effective competition in the service area of
1"lesleY Trust.
Accordingly, the Board finds the proposed transaction to be in
the
Public interest.
Atiril 19,
1963.
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Federal Reserve Bank of St. Louis
1305
DISSENTING STATEMENT OF GOVERNOR RODERTSON
WITH WHICH GOVERNOR MITCHELL CONCURS
Item No. 18
4/19/63
I believe that in approving this consolidation the majority
f the Board has failed to give appropriate weight to the heavy concenttation of banking assets in the area concerned by the Baystate Corporabanks and to the close relationship between the Baystate group and
The First National Bank of Boston.
First, as a result of this consolidation, the Baystate Corporation
banks e
share of the commercial bank deposits in the areas served by the
Iticipating banks will step up to over 43 per cent.
Whenever concen-
ttation in banking reaches this order of magnitude, any increase therein,
t° be Warranted, must be offset by greater benefits to the public than is
tl7lie in this case.
Secondly, the fact that 13.4 per cent of the stock of Baystate
cotPoration is owned directly by The First National Bank of Boston should
not be dismissed as unimportant. In fact, the total shares of Baystate
co
lloration owned or controlled directly or indirectly by The First
°nal Bank of Boston amounts to over 15 per cent, which clearly might
be s ufficient to give the bank effective control over the holding company
tn
certain circumstances. Some of this stock apparently was acquired as
'age" for debts previously contracted during a period of about ten
Y"ts following the enactment of the Banking Act of 1933. Parenthetically,
It is
to be noted that the Comptroller of the Currency has ruled that
co,
'Porate stock acquired by a national bank in such circumstances should
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Federal Reserve Bank of St. Louis
-2-
130C
not be held for any longer period of time than proves to be necessary for
its disposition for an amount equal to or reasonably near the amount of
the indebtedness for which it was acquired (Digest of Opinions of the
°Ifice of the Comptroller of the Currency, par. 350).
Thirdly, The First National Bank of Boston, with deposits of
around $1,700 million, and 33 banking offices, as the majority point
°ut, is actively engaged in correspondent banking, so that the very substantial balances held by that bank for banks in the Baystate group might
14a11 be expected.
This, however, does not negative the importance of these
correspondent relationships, especially where, as previously indicated, the
large correspondent bank, through stock ownership, also has an obvious
Position of influence with the holding company, itself.
In these circumstances, it is my view that the potential, if
not the actual, adverse competitive effects flowing from the proposal
far
outweigh the benefits that may be expected to result therefrom.
On the basis of these considerations I would disapprove the
an 1.
4Pril 19, 1963.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 19
4/19/63
WAS
OFFICE OF THE CHAIRMAN
April 19, 1963.
The
Honorable James J. Saxon,
CT°111ptroller of the Currency,
,
reasury Department,
vvashington 25, D. C.
bear Jim:
This refers to your discussion with me on February 28, 1963,
and m
tio Y letter to you of March 6, 1963, regarding the proposed acquisiFarmingdale,
pa n of the assets of The First National Bank of
First National Bank
bank,
-organized
0frillingdale, New York, by a newly
for approval under
you
before
pending
th Farmingdale, a proposal now
that the
indicated
I
6,
March
of
Loe Bank Merger Act. In my letter
of
acquisition
the
whether
question
tl,ard's staff was studying the
14i'le stock of the new bank by BT New York Corporation ("BTNY"), a
bank,
/40°111Y-owned subsidiary of Bankers Trust Company, a State member
Federal
the
section
9
of
of
paragraph
els4(1 Violate the twentieth
erve Act, which makes applicable to State member banks the same
arrtations and conditions as to purchases of corporate stocks as
Revised
st aPPlicable to national banks under section 5136 of the
atutes.
This question is one of unusual difficulty and importance;
th
11(1
vali .e Board has carefully considered arguments in support of the
presented by Counsel for Bankers
Tru dltY of the proposed transaction
parst Company in a letter of March 15, 1963, and in a memorandum precopies of which are enclosed
"by the law firm of White & Case,
for
Your information.
On the basis of its study of the matter, the Board is inclined
to „
liar ue Views indicated in the enclosed draft of a proposed letter to
cc'rs Trust company. However, since the same question could arise
order,
if 0ther circumstances with respect to a national bank and in
as to
law
interpretations
of
the
botrssible, to achieve consistent
glad
banks,
the
be
would
Board
to h national banks and State member
before
decision.
reaching
a
ave the benefit of your comments
is
As indicated in the enclosed draft of letter, the Board
be
would
conteMplated
here
transaction
tric ally concerned that the
throughout
evident
Congress,
of
intent
°nsistent with the general
sPec i
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Federal Reserve Bank of St. Louis
308
The Honorable James J. Saxon
-2-
the banking laws, that a Federally supervised bank should not acquire
i'lortrol of additional banking offices without approval by the Federal
'
Inking agency responsible for the supervision of the particular bank.
The Bank Merger Act clearly contemplates that a particular
11,!!er shall be subject to approval by the Federal bank supervisory
ttority having jurisdiction over the "acquiring, assuming, or
4::sulting bank". This objective could be defeated if the transaction
84!a proposed should be considered permissible and should be cone'Luered a precedent. For example, if a national bank in New York
totY should seek the permission of the Comptroller of the Currency
emerge with or acquire the assets of X State Bank and if the
,
1 0 43troller should disapprove the application, it would then be
cofssible for the national bank to have a subsidiary acquire the stock
wan existing or newly-organized State bank in the same community
oru that bank could then, with the approval of the Board of Governors
despite the
co tha FDIC, acquire the assets of the X State Bank,
Indeed,
if the
transaction.
8i:tr0ller's prior disapproval of the
by the
purchase
a
as
regarded
tilljidiary's purchase of stock is not
the
of
stock
the
acquire
simply
'
s ellel bank, the subsidiary could
number
the
expansion
of
an
effect
of tate Bank and thus accomplish in
i4 (4fices of the national bank without approval by any Federal bankg agency.
1
as
We would, of course, appreciate having your comments
—eLly as possible.•
Sincerely yours,
Wm. McC. Martin, Jr.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 20
4/19/63
WASHINGTON
OFFICE OF THE CHAIRMAN
April 19, 1963.
!!r• R. H. Bennett, President,
qational Retail Merchants Association,
eio Zion's Cooperative Mercantile Institution,
Salt Lake City, Utah.
Dear Mr. Bennett:
Your letter of December 24, 1962, presented two principal
ggestions in connection with the Federal Reserve's conclusions
rtegarding changes to be made in the department store reports, as
ransmitted to you in my letter of December 5.
Su
1. You agreed as to the desirability of a new
national departmental report, but you stated that a
report covering 25 departments would be far too restricted;
and you urged consideration of using the breakdown established for the 1963 Census of Business (approximately 50
departments).
2. With respect to our conclusion that we must
discontinue the present long departmental sales and stocks
report, you urged that the proposed date for its discontinuance be set for January 31, 1964, rather than January
Of 1963, the time that had been contemplated by the Federal
Reserve. You suggested that the later date would give the
trade and other users of these statistics opportunity to
evaluate their needs, and also that by that time a useful
national departmental series should have been established.
In addition to these two specific suggestions you expressed
PPort of a study of the possibility of a new merchandise series
prrePort, and you offered the active assistance of your association in a
:
cid 3gram of maintenance and improvement of the present weekly and monthly
9amment store sales reports.
8u
I understand that this whole subject has been discussed by
41embof the Committee of Five at meetings held in January and March,
/41,4
C'eh were also attended by Mr. Myron S. Silbert, Chairman of the NRMA
;
4 mmittee on Department Store Statistics, and Mr. Howard C. Grieves,
eistant Director of the Bureau of the Census.
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Federal Reserve Bank of St. Louis
Mrs H. H. Bennett
In view of your letter, the Federal Reserve Banks have
entinued up to the present time to collect monthly sales and stocks
°Y departments on the long form used for some years past. For the
teasons stated in my letter of December 5, we are quite reluctant to
centinue these compilations as a Federal Reserve report until next
Jtanuary, as you suggest. We recognize, however, that there is somel iug to be said for a brief transition period to permit the trade
elther to make its own arrangements for continuing the report or to
Permit determination of the feasibility of a new national departmental
tePort of the type referred to.
the best thing to
Under the circumstances, we believe that
the new shortened
whether
to
-Ls to make an immediate determination as
al
statistic
possibility.
rnational departmental report is a practical
t
departmen
store chains-aecause the active participation of the major
& Co.-Roebuck
Sears
and
, C.Penney Company, Montgomery Ward & Co.,
to
plan
discuss
we
report,
be essential to the success of such a
willingand
ability
their
with those firms the question of
to supply data in the manner that would be necessary. At the same
increased participation in
f,1.14e, we would discuss the question of their
reports of total
monthly
cruishing data needed for the weekly and
'
maintenance and
necessary
iePartment store sales, as a part of the
I am sending
that
letter
trnProvement in those series. A copy of a
Company, is
Penney
C.
e°day to Mr. William N. Batten, President of J.
for the
are
planned
Sears
and
21Closed, and similar approaches to Wards
'Isar future.
do
4
"ad
to a repreYou will note that my letter to Mr. Batten refers
sentative of NRMA accompanying the Federal Reserve representative, and
has expressed a willingness to
is my understanding that Mr. Silbert
to Mr. Batten (and subsequently
write
t- this. Perhaps you will wish to
Mr. Silbert as your repredesignate
the other firms) if you wish to
entative for this purpose.
and willingness
When there has been an indication of the ability
the new
for
would
be
that
needed
data
,f these three firms to supply
°
,
,
favorable
is
provided
their
response
and
onal departmental report,
t
would proceed to approach other necessary elements of the departmen
regarding
thcte trade as defined in the Standard Industrial Classification
weeks,
several
participation. It is realized that this may take
to the
but
as
definite
n
conclusio
a
at
arrive
we are anxious to
f
ceasibility of the proposed new report as rapidly as possible and, of
Federal Reserve's participation in the
p:Iitse, we desire to conclude the
:e8ent long departmental report promptly and in no event later than
4
'Ict January.
4
regarding the
To avoid any possibility of a misunderstanding
me say that
let
Pederal Reserve's position on department store reports,
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Federal Reserve Bank of St. Louis
14r. H. H. Bennett
-3-
0ur willingness to undertake the proposed new national departmental
tePort must be regarded as a step in a transition program of improving
retail data generally. Just how this may develop--whether through
raerchandise line series or through other improvements in the data now
eftPiled by the Census Bureau--can not be determined at this time.
is clear to us, however, that whatever is needed in the way of a
Yederal Government program for retail trade statistics should be
carried out under the general responsibility of a single agency and,
°I course, the Bureau of the Census is the agency having the respon81:bility for such work. Because of our long and favorable association
With department stores across the country, we do not want our withdrawal
4r0m this activity to cause inconvenience that is avoidable, and we are
certainly interested in the development of a program that will be
i,
ccnstructive not only from the standpoint of general economic analysis
°tit also from the standpoint of the trade with which we have had such
Pleasant and worthwhile relations.
Let me assure you that the Federal Reserve appreciates the
C n
structive efforts of the representatives of the National Retail
[.erchants Association in helping to develop a program satisfactory to
!
401,1 concerned, and we shall continue to work with them toward the end
improving retail trade statistics and ultimately blending them into
ue Bureau of the Census program.
Sincerely yours,
Wm. McC. Martin, Jr.
108ure
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Federal Reserve Bank of St. Louis
I "It
Item No. 21
4/19/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
OFFICE OF THE CHAIRMAN
April 19, 1963.
Hr. William N. Batten,
Pr
esident,
1. C. Penney Company,
330 West 34th Street,
1147 York, New York.
'
1)s8r Fir. Batten:
department store reports of the
As I am sure you are aware, the
Fed
during the past three years by a
ers1 Reserve have been under study
ed of representa4t(43int committee known as the Committee of Five, compos
nts Association,
Mercha
al Retail
ves from the Federal Reserve, the Nation
y because,
largel
arose
1. (1 the Bureau of the Budget. This joint study
:
data for many years, the Federal
,
1 ter having collected department store
sibility
serve and other Government agencies concerned felt that respon
. This
Census
the Bureau of the
21. such reports should be transferred to
ive
extens
recognized need for
sition was taken in part because of the
make
department store data in order to
t visions in the preparation of
!
tors of consumer takings, and in
indica
uem statistically reliable as
l Government collecirt because the primary responsibility for Federa
t4
'
the Bureau of the Census rather
then. of retail trade data lies with
responsibilities relate mainly to
whose
aan with the Federal Reserve,
nking and financial matters.
r
C
department store reports that were found
Several Federal Reserve
b „y
either to economic analysts or to
tb
Committee to be of little use
studies also
c--'s trade were discontinued two years ago. The Committee's
still being
data
the
y
of
c!nfirmed the need for improvement in the qualit
deficient
sly
seriou
the
most
iusllected. Of the current reports, probably
that covering monthly sales by departments.
ed the President of the
e
Last December, the Federal Reserv inform
Mr. Harold H. Bennett, of its
rNati-°nal Retail Merchants Association,
present monthly report of sales broken
d ae°ns for concluding that the
:
be discontinued with the
c_1.41 for approximately 100 departments would
year
ending January 1963.
liurmPletion of comparisons for the fiscal
(1) the statistical inwere:
sion
conclu
dieflY, the reasons for this
such
that it could not be
were
a-squacies of the departmental report
c
sales of the indiv?nsidered to be a reliable indicator of changes in
universe; (2) the
dual departments listed for the department store
justifies its collecting departmental
d derail. Reserve has no need that
comparisons were statistically reliable.
14t4 in such detail even if the
requested that discontinuance of this report
4 his response, Mr. Bennett
4
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
lir. William N. Batten
-2-
be deferred
until January 1964, rather than January 1963, in order to
give the trade and other users of the statistics opportunity to evaluate their needs and in the hope that a national report of sales by
departments might then have been established.
The new national departmental report to which Mr. Bennett
referred would be a substantially shortened report of sales by depart:Its. The Federal Reserve had indicated to Mr. Bennett in December
e
hat it was prepared to undertake the establishment of such a report
covering about 25 departments, provided there was an indication that
!representative sample of the trade would furnish the data in the
4c3rm needed.
T
My purpose in writing to you is to ask that you see a Federal
Reserve representative, Mr. Philip E. Coldwell, First Vice President
?f the Federal Reserve Bank of Dallas, who has served as a member of
ee
th Committee of Five and who would like to discuss with you and whomoer you may designate of your firm the question whether J. C. Penney
m mPany would be able and willing to provide monthly sales data in a
danner that would permit inclusion of your firm in the proposed national
ePartmental report. He would also wish to discuss the problem of im!
roving data for the weekly and monthly reports of total department
:tore sales. I shall not attempt to describe in detail the data that
uld be needed but would like to have Mr. Coldwell call upon you some
ilme early in May, preferably between May 7 and 10, for the purpose of
b”ting you know more about the problem and of discussing the possi4-LitY of your firm's participation.
j
j
I understand that a representative of the National Retail Mara
accompany Mr. Coldwell at the time of his visit
a lite Association may
1)4,1 that perhaps a representative of the Bureau of the Census may also
ce Present. I shall appreciate your letting me know whether it would be
0"venient for you to receive a call from Mr. Coldwell and the others on
ne of the days indicated.
Sincerely yours,
Wm. McC. Martin, Jr.
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
@FedFRASER