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'9/61
Minutes for
To:
Members of the Board
From:
Office Of the Secretary
April 26, 1963
Attached is a copy of the minutes of the
m
Board of Governors of the Federal Reserve Syste on
the above date,
It is not proposed to include a statement
set of
with respect to any of the entries in this
red to
ns
requi
actio
y
polic
minutes in the record of
the
al
of
Feder
10
on
secti
to
be maintained pursuant
Reserve Act.
d
Should you have any question with regar to
e
you
if
d
will
advis
ciate
appre
the minutes, it will be
e
al
pleas
wise,
initi
Other
the Secretary's Office.
ng, your
below. If you were present at the meeti
the
es. If
of
minut
val
appro
initials will indicate
will
ate
als
indic
initi
your
you were not present,
es.
minut
the
only that you have seen
Chin. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
Gov. Mitchell
Minutes of the Board of
Governors of the Federal Reserve
System on Friday, April 26, 1963.
The Board met in the Board
Room at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Balderston, Vice
Mills 1/
Robertson
Shepardson
Mitchell
Chairman
Sherman, Secretary
Kenyon, Assistant Secretary
Fauver, Assistant to the Board
Noyes, Director, Division of
Research and Statistics
Mr. Connell, Controller
Mr. Koch, Associate Director, Division
of Research and Statistics
Mr. Brill, Adviser, Division cf Research
and Statistics
Mr. Holland, Adviser, Division of
Research and Statistics
Mr. Solomon, Associate Adviser, Division
of Research and Statistics
, Adviser, Division of
Furth
Mr.
International Finance
Mr. Hersey, Adviser, Division of
International Finance
Mr. Katz, Associate Adviser, Division
of International Finance
Mr. Bass, Assistant Controller
Mt. Mattras, General Assistant, Office
of the Secretary
Mr. Eckert, Chief, Banking Section,
Division of Research and Statistics
Mr. Yager, Chief, Government Finance
Section, Division of Research and
Statistics
Mx. Axilrod, Senior Economist, Division
of Research and Statistics
Miss Dingle, Senior Economist, Division
of Research and Statistics
Mr.
Mr.
Mr.
Mr.
Withdrew from meeting at point indicated in minutes.
-2-
4/26/63
Mr. Bernard, Economist, Division of
Research and Statistics
Mr. Goldstein, Economist, Division of
International Finance
Money market review.
There were distributed tables on the
May refinancing operation and
securities involved in the Treasury's
on monetary developments during the five-week period ending April 24,
1963.
Mr. Bernard commented on recent developments in the Government
attention to the Treasury refinancing
securities market, with particular
Operation, after which Miss Dingle discussed changes in bank reserves,
bank credit, and the money supply.
Mr. Goldstein then commented on
recent foreign exchange market developments and on the U. S. gold stock.
Mr. Koch supplemented Mr. Bernard's comments on the Treasury refinancing,
With particular reference to System holdings of maturing securities and
the alternative courses that might be followed in connection therewith.
All members of the staff then withdrew except Messrs. Sherman,
Kenyon, Fauver, Noyes, Connell, Bass, and Mattras and the following
entered the room:
Mr. Hackley, General Counsel
Mr. Solomon, Director, Division of Examinations
Mr. Johnson, Director, Division of Personnel
Administration
Mr. Hexter, Assistant General Counsel
Mr. Shay, Assistant General Counsel
Mr. Leavitt, Assistant Director, Division
of Examinations
Mr. Doyle, Attorney, Legal Division
4/26/63
Discount rates.
-3The establishment without change by the
Federal Reserve Banks of Cleveland, Richmond, Chicago, St. Louis,
Minneapolis, Kansas City, and Dallas on April 25, 1963, of the rates
on discounts and advances in their existing schedules was approved
unanimously, with the understanding that appropriate advice would be
Sent to those Banks.
Circulated or distributed items.
The following items, copies
Of which are attached to these minutes under the respective item numbers
indicated, were approved unanimously:
Item No.
Letter to the Federal Deposit Insurance Corporation
regarding the application of Rochester State Bank,
Rochester, Illinois, for continuation of deposit
insurance after withdrawal from membership in the
Federal Reserve System.
1
Letter to Rising Sun State Bank, Rising Sun, Indiana,
approving an investment in bank premises.
2
Letter to Fidelity-Philadelphia Trust Company, Philadelphia,
Pennsylvania, approving an investment in bank premises.
3
Letters to Rhode Island Hospital Trust Company, Providence,
Rhode Island, approving the establishment of branches at
(1) 60 Newport Avenue, East Providence, and (2) Mendon and
Albion Roads, Cumberland.
Letter to Wachovia Bank and Trust Company, Winston-Salem,
North Carolina, approving the establishment of a branch
on U. S. Highway 401, near Raleigh.
Letter to Wachovia Bank and Trust Company, Winston-Salem,
North Carolina, approving the establishment of a branch
at 176 Sharon-Amity Road, South, Charlotte.
4-5
6
-4-
4/26/63
Item No.
ppi,
Letter to Farmers and Merchants Bank, Forest, Mississi
Forest.
in
branch
a
of
approving the establishment
8
ia,
Letter to Wells Fargo Bank, San Francisco, Californ
Fremont.
in
branch
a
of
approving the establishment
9
ion,
Letter to Chase Manhattan Overseas Banking Corporat
hment
the
establis
to
consent
New York, New York, granting
ro,
S.A.,
Brasilei
Lar
rio
Hipoteca
of branches of Banco
Rio de Janeiro, Brazil, at specified locations in Bahia,
Brazil.
10
ration
l
Memorandum from the Division of Personne Administ
y
accident
voluntar
dated April 23, 1963, recommending a
insurance program for Board employees.
11
12 and J51.
Application of State Bank of Albany (Items
Pursuant
to the decision reached at the meeting on April 19, 1963, there had
t
been distributed a proposed order and statemen reflecting the Board's
of Albany, Albany, New York, to
denial of the application of State Bank
merge with The Unadilla National Bank, Unadilla, New York.
The issuance of the order and statement was authorized.
Copies
Of the order and statement, as issued, are attached to these minutes as
Items 12 and 13.
at this point.
Governor Mills withdrew from the meeting
Messrs.
Doyle also withdrew and Messrs. Dembitz,
Johnson, Connell, Shay, Bass, and
Capital Markets Section, Division
Associate Adviser, and Partee, Chief,
Of Research and Statistics, entered the room.
Extension of Securities Exchange Act.
There had been distributed
a memorandum dated April 23, 1963, from Messrs. Hexter and Dembitz
the Securities Exchange Act.
regarding a proposed amendment of
The
the Bureau of the Budget
memorandum noted that on April 19, 1963,
,
-5-
4/26/63
transmitted to the Board copies of a draft bill to amend certain provisions of the Act, and that on the same day the Securities and Exchange
Commission requested the Board's assistance in drafting a suitable
Provision for a particular section of the bill.
As explained in the memorandum, the draft bill would amend the
Securities Exchange Act to make certain provisions relating to financial
reporting, proxy regulation, and controls on insider trading applicable
to all corporations with 300 or more stockholders of record, whereas at
Present these provisions extended only to issuers of securities registered
on securities exchanges.
The draft bill would provide no exemption with
respect to banks, and it contemplated that regulation and administration,
insofar as banks were concerned, would be vested in one or more of the
Federal bank supervisory authorities.
The first question, then, related
to the Board's views on the draft bill apart from the question of coverage
Of banks.
The second question related to the Board's views on applying
the provisions of the draft legislation to banks with 300 or more stockholders.
If this was regarded favorably, there was the further question of aaministration of the provisions of the bill as they applied to banks.
In commenting on the matters covered in the memorandum, Mr. Hexter
noted that the draft bill was now in the process of redrafting, so the
draft on which the Budget Bureau had requested the Board's comments was
not current.
He also noted and read a proposed statement that it was
Understood might be read in the Congress if the draft legislation were
-6-
4/26/63
introduced.
Mr. Hexter presented certain information that had been
Obtained from the Securities and Exchange Commission affording some
rough indication of the volume of staff work that might be involved
in the administration of the provisions of the draft legislation as
they related to the issuance of securities by banks.
There followed a general discussion of the kinds of financial
the question whether the subjecting
reporting that would be envisaged and
Of banks to requirements such as contemplated by the proposed legislation
of banks to raise
would create any significant impediment to the ability
of stock.
additional capital through the sale
It appeared to be the
that this should create no substantial
consensus of Board and staff views
impediment.
During the discussion, question also was raised as to the
grounds on which there might be objection on the part of banks to legislation of the kind proposed.
It was noted, in this connection, that in the
each bank was examined and
Past the argument had been made that since
supervised by Governmental authorities it was unnecessary for the individual
information as needed in the case of other
stockholder to have as much
corporations.
some members of the Board that it
A view was expressed by
ts of the draft legislation, as
would be undesirable for the requiremen
they applied to banks, to be administered by the bank supervisory authorities, particularly if the responsibility for administration was divided
among different agencies.
-7-
4/26/63
The discussion at this meeting did not go beyond the exploratory
phase, and it was understood that the subject would be considered further
at another meeting of the Board.
Mr. Partee then withdrew from the meeting.
Drafting of legislation.
In its recent report to the President,
the Committee on Financial Institutions had suggested that consideration
of an increase in the coverage of insurance of bank deposits and share
accounts should await the resolving of certain other regulatory and
supervisory matters, including an extension of reserve requirements to
savings and loan associations and mutual savings banks, a strengthening
of the authority of supervisory authorities over liquidity positions,
standby authority over rates paid on savings and time accounts, and
conflicts of interest to additional
broadening of safeguards against
institutions.
In light of subsequent developments, steps were being
taken to prepare draft legislation covering the areas mentioned, and an
for Monday, April 29.
interagency meeting had been called
The Budget
Bureau had inquired whether a member of the Board's staff could be present
to offer technical assistance.
After discussion, Mr. Solomon, Director of the Division of
Examinations, was designated to attend the meeting on Monday, with the
for additional staff to accompany
Understanding that he might arrange
him if he desired.
-8-
4/26/63
Disappearance of securities at San Francisco Bank.
Mr. Sherman
informed the Board of a telephone call from President Swan of the San
Francisco Reserve Bank advising that he was recommending to the Bank's
Board of Directors that they authorize for inclusion in the public record
the minutes of a meeting of the Audit Review Committee on August 16, 1962,
and the report of the General Auditor of the Bank dated August 15, 1962,
regarding the disappearance of certain Treasury securities from the Bank's
The inclusion of these documents in the record had been requested
vault.
during the hearing held on April 22, 1963, by the Subcommittee of the House
Banking and Currency Committee that was investigating the disappearance
of the securities.
Mr. Sherman also advised the Board of a request from a staff member
Of the House Banking and Currency Committee that the Subcommittee be
furnished copies of the operating procedures and instructions of all
Reserve Banks regarding custody of securities.
In order that full up-
to-date information might be available to the Board in considering this
request, it was proposed at this point to send a telegram to the Reserve
Banks requesting that they
the Board with copies of their complete
current procedures and instructions.
It was understood that the operating
procedures of the San Francisco Reserve Bank had been incorporated into
the record of the hearing held by the Subcommittee.
However, it was not
Clear whether the operating procedures of the other Banks would be made
Public.
4(
4/26/63
After discussion, the Board approved the sending of the proposed
telegram, with the understanding that the matter would be brought back
to the Board after the requested information was obtained from the Reserve
Banks.
Mr. Solomon commented that the aforementioned Committee staff
member had also inquired whether there was available a report on the
disappearance of a Treasury security at the Richmond Reserve Bank similar
to the report previously transmitted by the Board on the disappearance
at San Francisco.
It seemed likely, therefore, that a request for such
a report would be forthcoming from the Committee.
Mr. Solomon added
that the Richmond Bank had been preparing a report and only recently had
sent a draft to the Board's staff.
Governor Balderston suggested that the Reserve Bank Presidents be
advised that they were free to make available to branch directors and
officers, as a matter of information, the report on the San Francisco
Incident that was transmitted by the Board to the Chairman of the House
Banking and Currency Committee on April 1, 1963. If it developed that
the report, as understood, had been included in the public record of
the hearing held by the Subcommittee of the Banking and Currency Committee
on April 221 there would obviously be no objection to general use of
the document.
The meeting then adjourned.
-10-
4/26/63
Secretary's Notes: On April 25, 1963,
Governor Shepardson approved on behalf
of the Board the following items:
Letter to the Federal Reserve Bank of Chicago (attached Item No. 14)
er.
approving the appointment of Peter M. Layden as assistant examin
Memoranda from appropriate individuals concerned recommending the
following actions relating to the Board's staff:
Salary increases
effective April 28, 1963
Lee Sawyer Elliott, Supervisor, Clearing Unit, Office of the
Secretary, from $5,375 to $5,725 per annum.
Albert A. Portnoy, Supervisor-Inspector, Division of Administrative
Services, from $4,885 to $5,205 per annum.
Acceptance of resignation
e
Ted Edward Garner, Assistant Federal Reserv Examiner, Division
of
business May 21, 1963.
Of Examinations, effective at the close
Pursuant to recommendations contained
in memoranda from appropriate individuals
concerned, Governor Shepardson today
approved on behalf of the Board increases
in the basic annual salaries of the
following persons on the Board's staff,
effective April 28, 1963:
Division
Name and title
Basic annual salary
From
To
Legal
$8,575
$8,84o
9,475
9,790
e
6,280
James H. Joyce, Assistant Federal Reserv Examiner
ant
Assist
6,9oo
M. Patricia McShane, Training
Carl A. Zimmerman, Assistant Federal Reserve Examiner 6,650
6,675
7,125
7,125
Samuel E. Entriken, Attorney
International Finance
Rodney H. Mills, Jr., Economist
Examinations
4/26/63
-11-
increases, effective April 28z 1963 (continued)
Slyy
:
....12
Name and title
Division
Basic annual salary
From
To
Administrative Services
Wesley B. Collins, Senior Mail Clerk
Leroy H. Cooley, Senior Teletype Operator
(change in title from Telegraph Operator)
Esmond C. Langley, Senior Messenger
$4,950
5,845
$5,090
6,225
4,580
4,705
6,055
6,465
4,530
4,885
Data Processing
Albert C. Bain, Senior Operator (Tabulating
Equipment)
Marjorie M. Gray, Digital Computer Programraing
Assistant
\
Secretary
c
F,Ate
BOARD OF GOVERNORS
Item No. 1
4/26/63
OF THE
FEDERAL RESERVE SYSTEM
Z:
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
RE.S-s-•
•
•••—•••
April 26, 1963
Honorable Erie Cocke, Sr., Chairman,
Federal Deposit Insurance Corporation,
Washington 25, D. C.
Dear Mr. Cocke:
Reference is made to your letter of April 12, 1963,
concerning the application of Rochester State Bank, Rochester,
Illinois, for continuance of deposit insurance after withdrawal
from membership in the Federal Reserve System.
No corrective programs which the Board of Governors
believes should be incorporated as conditions to the continuance of deposit insurance have been urged upon or agreed to
by the bank.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
30:1.
Item No. 2
4/26/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 26, 1963
Board of Directors,
Rising Sun State Bank,
Rising Sun, Indiana.
Gentlemen:
The Board of Governors of the Federal Reserve
of the Federal
System approves, pursuant to Section 24A
premises by Rising
Reserve Act, an investment in bank
including the
$119,000,
Sun State Bank, of not to exceed
new banking
ing
construct
cost of land, for the purpose of
quarters.
It is noted that in accordance with approval
given by the Indiana Department of Financial Institutions,
t of $175,000
only $125,000 of the proposed total investmen
that
and
the carrying
ed,
capitaliz
in fixed assets is to be
$100,000
to
within
reduced
be
value of fixed assets will
three years.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
Item No.
3
4/26/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADORES. OFFICIAL CORRESPONDENCE
TO THE BOARD
April 26, 1963
Board of Directors,
Company,
Fidelity-Philadelphia Trust
Philadelphia, Pennsylvania.
Gentlemen:
The Board of Governors of the Federal
the provisions of
Reserve System approves, under
Act, for the
Reserve
Section 24A of the Federal
onal investadditi
an
remainder of the year 1963,
tyby
es
Fideli
premis
ment of $214,500 in bank
,
elphia
Philad
y,
Compan
Philadelphia Trust
of effecting leasehold
Pennsylvania, for the purpose
and for improvements
office
main
improvements at the
olds.
leaseh
and
to branch real estate
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
55
BOARD OF GOVERNORS
Item No. 4
OF THE
4/26/63
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOAR"'
April 26, 1963
Board of Directors,
Rhode Island Hospital Trust Company,
Providence, Rhode Island.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by Rhode Island
Hospital Trust Company, Providence, Rhode Island, of a
branch at 60 Newport Avenue, East Providence, Rhode
Island, provided the branch is established within one
year from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserve Bank stated that the Board
also had approved a six-month extension of the period
allowed to establish the branch; and that if an extension
should be requested, the procedure prescribed in the Board's
letter of November
9, 1962 (S-1846), should be followed.)
BOARD OF GOVERNORS
Item No. 5
4/26/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL, CORRESPONDENCE
TO THE BOARD
April 26, 1963
Board of Directors,
Rhode Island Hospital Trust Company,
Providence, Rhode Island.
Gentlemen:
The Board of Governors of the Federal Reserve
Island
System approves the establishment by
,
Rhode
Providence
of a
Island,
Hospital Trust Company,
and
Albion
Mendon
Roads,
of
on
branch at the intersecti
Cumberland, Rhode Island, provided the branch is
established within one year from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
Item No.
BOARD OF GOVERNORS
oc- THE
6
4/26/63
FEDERAL RESERVE SYSTEM
WASHINGTON 25, 0. C.
Z*
AOORESS OFFICIAL CORRESPONDENCE
TO THE BOARD
,F
IREStO,'
••••••
April 26, 1963
Board of Directors,
Wachovia Bank and Trust Company,
Winston-Salem, North Carolina.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch by
Wathovia Bank and Trust Company on U. S. Highway 401,
.3 of a mile south of the city limits of Raleigh,
North Carolina, provided the branch is established within
one year from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
stated that the
(The letter to the Reserve Bank
six-month
extension
a
Board also had approved
the
establish
branch;
to
of the period allowed
be
,
requested
should
and that if an extension
Board's
letter
the
in
the procedure prescribed
should be followed.)
of November 9, 1962 (S-1846),
BOARD OF GOVERNORS
Item No. 7
OF THE
4/26/63
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 26, 1963
Board of Directors,
Wachovia Bank and Trust Company,
Winston-Salem, North Carolina.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch by
Wachovia Bank and Trust Company at 176 Sharon-Amity Road,
South, Charlotte, North Carolina, provided the branch
is established within one year from the date of this
letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
Bank stated that the
(The letter to the Reserve
six-month extension
Board also had approved a
establish the branch;
of the period allowed to
be requested,
and that if an extension Should
s letter
Board'
the
the procedure prescribed in
be
followed.)
should
of November 9, 1962 (S-1846),
rkY
BOARD OF GOVERNORS
Item No.
8
4/26/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 26, 1963
Board of Directors,
Farmers and Merchants Bank,
Forest, Mississippi.
Gentlemen:
The Board of Governors of the Federal Reserve
the establishment of a branch (drive-in
approves
System
and Merchants Bank, Forest,
Farmers
by
facility)
the branch is established within
provided
Mississippi,
six months from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
stated that the
(The letter to the Reserve Bank
extension
six-month
Board also had approved a
branch;
the
establish
of the period allowed to
requested,
be
should
and that if an extension
the procedure prescribed in the Board's letter
be followed.)
of November 9, 1962 (5-1846), should
1:7“0
Item No.
BOARD OF GOVERNORS
9
4/26/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 26, 1963
Board of Directors,
Wells Fargo Bank,
San Francisco, California.
Gentlemen:
The Board of Governors of the Federal
of a
Reserve System approves the establishment
co,
Francis
branch by Wells Fargo Bank, San
intersection
California, in the vicinity of the
Boulevard,
Mission
of Warn Springs Boulevard and
is
branch
the
Fremont, California, provided
of
date
the
from
months
established within six
this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)
1
tr;!
1
Item No. 10
4/26/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL. CORRESPONDENCE
TO THE BOARD
April 26, 1963
11r. Charles Cain, Jr., President,
Chase Manhattan Overseas Banking Corporation,
1 Chase Manhattan Plaza,
New York 5, New York.
Dear Mr. Cain:.
This will acknowledge your letter of April 22, 1963 relating
Proposed changes in location of branches of Banco Hipotecario Lar
urasileiro, S.A. ("Banco Lar"), Rio de Janeiro, Brazil, as follows:
to
The moving of Banco Lar's present branch in Bahia, Brazil,
from Rua Juliano Moreira 6 to the corner of Rua Chile and
Rua Bonifacio Costa; and
The closing of one of Banco Lar's present branches in Rio
de Janeiro, Brazil, located at Avenida Ernani Cardoso 77,
and the opening of a second branch in Bahia, Brazil, at
Avenida Estados Unidos 58.
In accordance with the request and on the basis of the informati
On furnished, the Board grants consent to the establishment of branches
the locations indicated. Please advise the Board of Governors in
a„Iting, through the Federal Reserve Bank of New York, when the branches
ofe removed to the new locations and opened for business. In the event
ni anY further change in location of branches within the City of Bahia,
"ease notify the Board of Governors of the new address.
n
As you know, the Board has recently published proposed revisions
ha t‘egulations K and M which, if adopted, would simplify the procedure for
ofndling applications to establish overseas branches of member banks and
co Section 25 and 25(a) Corporations. If adopted, it is contemplated, of
cepe, that appropriate modification would be made in the existing proii.,11re for handling requests to establish branches and agencies of subv.uiaries of such Corporations. Your request of January 3, 1963 is being
tdied further, but, in the circumstances, it may be desirable to resolve
ov
"question as a part of the general consideration being given to the
erseas branches of member banks and of Section 25 and 25(a) Corporations.
Very truly yours,
(Signed)Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD Or 010VERNOREI
or THE
Item No. 11
4/26/63
FEDERAL RESERVE SYSTEM
°ffice Correspondence
Date April 23 1963.
. Voluntary Accident Insurance
.--Board of Governors&Wed
4
for Board Employees.
Division of Personnel Administration
Recommendation:
Board's insurance program be enlarged to
It is recommended that the
(accidental death, dismembe'ment, and
include accident insurance coverage
ary', payroll-deduction, employee-pay-all
volunt
total permanent disability) on a
basis.
the Board designate Marsh & McLennan, Inc.,
It is also recommended that
understanding that there will be no cost to
as its insurance broker with the
the Board for its services.
that the Board authorize the Division of
It is further recommended
complete whatever arrangements are necessary to
Personnel Administration to
Board employees, including selecting an
make this insurance available to
would go into effect as soon'as negotiations
insurance carrier. The program
can be completed..
Contract:
aaallTplated Provisions of
group coverage would be available on a
It is contemplated that
their wives with a minimum amount of
and
voluntary basis to all employees
to a maximum of $100,000 per individual.
up
0
$5,00
$10)000 and in multiples of
coverage could be continued to age 70 for him
Upon retirement of an employee,
maximum of $25,000 per individual. Payment of
and also h18 wife, but only to a
remittance to the insurance broker. The ,
premium by retirees would be direct
yees would be 72 cents a year per $1,000,
emplo
cost to both active and retired obtained on a non-group basis.
be
substantially less than could
in the attachment.
Further information is given
Accident Insurance for Board Employees
Reasons for Recommendation
In order to maintain a sophisticated current personnel program this
Division continuously reviews what other progressive employers are doing and
analyzes the desirability and practicality of adopting new developments. High
Protection and low cost group accident insurance appears to be worthy of
consideration.
Because of the constantly increasing number of fatalities attendant
Upon greater mobility of the population, 24-hour-a-day insurance protection
against accident hazards, particularly where employers offer coverage at
greatly reduced rates under group contracts, is becoming increasingly attractive.
Seven of .the Federal Reserve Banks have recently made group accident
insurance arrangemints on an employee-pay-all basis and the other 5 Banks are
actively considering plans. The extent of participation at the Banks is from
40 to 80 per cent of staff. . In the Government, the Executive Office of the
President (White House employees, Bureau of the Budget, etc.) and the CIA now
have accident insurance, employee-pay-all programs. A random survey of the
Board's employees, conducted by a written questionnaire, showed that 28 of the
30 employees polled would like to have the insurance if it were made available.
Further, in a check conducted of the members of the Employees' Committee by its
of 11) favored the inauguration of the
chairman, all of them contacted (10 out
the Personnel Division believes
samplings
these
of
basis
insurance. On the
recommended
program to a substantial
that the staff will participate in the
of
percentage
participation.
extent. There is no required
All Board employees and their dependents are presently protected
without cost by Federal Employees' Compensation for accidental death or injury
suffered by the . employee in line of duty. Also, all employees who have not
affirmatively waived the protection in writing are insured on a
which provides
basis under the Federal Employees Group Life Insurance Program, 'which
double indemnity protection for accidental death and for dismemberment; but
this protection is limited by the annual salary rate of the employee. Most of
the Board's employees also have health insurance that affords substantial prosurgical costs resulting from accidents,
tection against hospitalization and
However,
coverage on .any accident for '214 hours
cause.
other
any
from
as well as
available
on a group basis.
a day anywhere in the world is not
Use of an Insurance Broker
The use of the services of a broker will involve no expense to the
Board, the.firm's fee being paid by the insurance aompany. The broker will
counsel the Board, secure quotations from insurers4 recommend a company to
Provide the coverage, and handle all the. liaison work between the Board and
the insurance company selected. The broker will also provide samples of
material to be used in explaining the program to the Board's staff. Marsh and
McLennan, Inc., a well-recognized, capable firm, whose services are being
currently utilized by the Federal Reserve System for its major medical program
as well as by three of the Reserve Banks in their accidental death insurance
A,
7
- 2program, is being recommended to serve as the Board's broker.
Administration of Program:
All administrative details of presenting the program to employees,
processing enrollmente and subsequent claims, and maintaining liaison with the
broker and the insurer would be handled by the Division of Personnel Administration. The deduction of premiums from employees' salaries and payment to the
insurance broker would be handled by the Office of the Controller. The additional workload in both divisions would be absorbed by the present staffs.
ItEp of Group Contract Desired:
We have reviewed the various group accident insurance oontraots, that
are available and have consulted informally with insurance specialists. We
..
believe that the plan now in effect at the Boston, Cleveland, and Chicago Reserve
Banks would be substantially the most desirable one for adoption here. The
details of the coverage are explained below.
Eligibility
All employees of the Board (employee defined an any regular member
Of one of the Board's retirement plans), would be eligible for coverage to an
individual maximum of $100,000. Wives of. those employees who enter the program
Would Also be eligible. Coverage may be continued after retirement to age 70
in the maximum of $25,000. The wife may not be covered to a greater extent than
the husband, and may not continue coverage following the huebandle death, either.
Mile he is in active service or after he retires. The husband of a female
employee is not eligible.
Description of Coverage
Each participant in the program would be insured 214 hours a day,
worldwide, against all accidents. If injury results in any of the following
losses within 365 days after the date of accident, the insurance company would
Pay the amount specified opposite each loss:
'oee of Life
lt'Ces
of both hands or both feet
:
48e of one hand and one foot
t4es of the entire sight of both eyes
'°ea of the entire sight of one eye and
; one hand or one foot
:
4es of one hand or one foot
4488 of the entire sight of one eye
The
The
The
The
Principal
Principal
Principal
Principal
Sum
Sum
Sum
Sum
The Principal Sum
One-half The Principal Sum
One-half The Principal Sum
Only one benefit, the largest to which the insured is entitled, is
Payable for all losses resulting from one accident.
Permanent Total Disability
When as the result of an injury, and commencing within 365 days of the
date of accident, an insured person is totally and permanently disabled, and prevented from engaging in each and every occupation or employment for compensation
°r profit for which he is qualified by reason of his education, training, or
experience, the insurance company will pay, provided such disability is continued
for a period of 12 months and is total, continuous, and permanent at the end of
the 12-month period, the principal sum less any other amount paid or payable
Under the policy as a result of the same accident.
Beneficiary Designation
Benefit in the event of loss of life would be payable to the benefioifAry or beneficiaries named in the application for this insurance. If no such
eenefioiary is named or if the named beneficiary is not surviving, then benefits
8411 be payable to 'the estate of the insured person.
Exclusions
A. Suicide or self-destruction or any attempt thereat,
sane or insane.
B.
War or any act of war.
C.
Accidents 000urring in Military, Naval, or Air Force
Service of any country.
D. Injury sustained while engaged in, or taking part in,
aeronautics and/or aviation of any description or •
resulting from being in an aircraft, except while a
passenger of any aircraft then licensed to carry
passengers.
Limits and Premiums
Each employee may select the amount of insurance for self only and for
kite in any multiple of $5,000 up to a maximum of $100,000 subject to a minimum
1 $10,000, and with the proviso that the wife's insurance may not exceed the
(,'
nusband's. Premium payments will be made by payroll deduction in the amounts
shown in the center column immediately hereunder:
Principal Sum
$10,000 Minimum
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
Bi-Weekly Cost
$ .28
6.
.84
1.12
1.40
1.68
1.96
2.24
2.52
2.80
Annual Coat
$ 7.20
14.40
21,60
28.80
36.00
43.20
50.40
57.60
64.80
72.00
-
14
Life insurance premiums are ordinarily scheduled for payment on an
annual basis, and where there are 24 pay periods a year (as for Members of the
Board) 30 cents per $10,000 of insurance may be deducted twice a month with no
overpayment or underpayment. But where there are 26 pay days, (as for members
of the staff) the closest appropriate deduction for the minimum $10,000 coverage is 28 cents, and an annual 8 cent overpayment will have been made on each
$10,000 of insurance. The accumulation of these small overpaymenta could gross
about $100 a year for the entire program. As this would be impractical to pay
back to the employees, an appropriate disposition could be left to the decision
of the Board Member in charge of the Board's internal affairs, upon a recommendation made to him Jointly by the Office of the Controller and the Division of
Personnel Administration.
After retirement, the premium for an individual and for his wife if
she is covered, is remitted direct to the insurance broker by the retiree.
No physical examination is required for this insurance.
Item No. 12
4/26/63
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
In the Matter of the Application of
STATE RANK OF ALBANY
for approval of merger with
The Unadilla National Bank
MERGER OF BANKS
ORDER DENYING APPLICATION FOR APPROVAL OF
Governors, pursuant to
There has come before the Board of
ion by
the Bank Merger Act of 1960 (12 U.S.C. 1828(c)), an applicat
State Bank of Albany, Albany, New York, a member bank of the Federal
approval of the merger of that
Reserve System, for the Board's prior
bank and The Unadilla National Bank, Unadilla, New York, under the
Charter and title of the former. As an incident to the merger, the
would be operated as a
single office of The Unadilla National Bank
branch of State Bank of Albany.
Notice of the proposed merger, in
published pursuant to said Act.
f°rm approved by the Board, has been
in the light of
Upon consideration of all relevant material
the factors set forth in said Act, including reports furnished by the
Comptroller of the Currency, the Federal Deposit Insurance Corporation,
in
slut the Department of Justice on the competitive factors involved
the proposed merger,
.4
V 68
the
IT IS HEREBY ORDERED, for the reasons set forth in
be and hereby
Board's Statement of this date, that said application
iS denied.
of April, 1963.
Dated at Washington, D. C., this 26th day
By order of the Board of Governors.
and
Voting for this action: Chairman Martin,
son,
on,
Shepard
Roberts
Governors Balderston, Mills,
and King.
Absent and not voting:
Governor Mitchell.
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
(sEAL)
Item No. 13
4/26/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
ALBANY
APPLICATION BY STATE BANK OF
WITH
R
MERGE
OF
FOR APPROVAL
THE UNADILLA NATIONAL BANK
STATEMENT
York ("State Bank"),
State Bank of Albany, Albany, New
apwith deposits of $492.6 million as of September 28, 1962, has
(12 U.S.C. 1828(c)),
Plied, pursuant to the Bank Merger Act of 1960
tOr the Board's prior approval of the merger of that bank and The
,
Unadilla National Bank, Unadilla, New York ("Unadilla National")
with deposits of $4.7 million as of the same date.
The banks would
is a member
merge under the charter and title of State Bank, which
ent to the merger,
bank of the Federal Reserve System; and, as an incid
would become a branch of State Bank,
the only office of Unadilla National
increasing the number of its authorized offices from 24 to 25.
required to consider, as to each
Under the Act, the Board is
tion, (2) the
°f the banks involved, (1) its financial history and condi
future earnings prospects,
adequacy of its capital structure, (3) its
(4) the general character of its management, (5) whether its corporate
., Ch. 16 (the FedPowers are consistent with the purposes of 12 U.S.C
nience and needs of the
et'al Deposit Insurance Act), (6) the conve
n on
community to be served, and (7) the effect of the transactio
1.390
-2-
monopoly).
competition (including any tendency toward
The Board may
considering all these factors,
n°t approve the transaction unless, after
it finds the transaction to be in the public interest.
with a satisfactory financial
Banking factors. - State Bank,
h mergers with
condition, acquired 14 of its banking offices throug
9 other banks during the past 10 years.
More than one-half of the
bank's deposits of individuals,
increase of over 200 per cent in the
the past decade
Partnerships, and corporations ("IPC deposits") during
resulted from this series of mergers.
State Bank's capital structure
ble, and its management is
is adequate, its future prospects are favora
satisfactory.
had a modest deposit growth
Unadilla National, which has
financial condition, and its
since 1952, has a generally satisfactory
capital structure is adequate.
While the net current operating earnings
during recent years have been someand the retained earnings of the bank
able size in the Second Fedwhat below the averages for banks of compar
heless, fairly satisfactory and
eral Reserve District, they are, nevert
Showed improvement for 1962.
The management of Unadilla National is
satisfactory.
would be under the management of
The resulting bank, which
financial condition and an adequate
State Bank, would have a satisfactory
prospects would be favorable.
eaPital structure, and its future
powers of the banks involved are
There is no evidence that the
es of 12 U.S.C., Ch. 16.
or would be inconsistent with the purpos
1371
-3Convenience and needs of the communities. - The head office
and one branch of State Bank are in Albany (1960 population 130,000;
trade area population 700,000), the State capital.
As of December 31,
1962, State Bank operated a total of 23 offices in 10 of the 15 counties
in the Fourth Banking District of New York, which covers a large area
in the eastern and northeastern part of the State.
The bank has
authorization for still another branch.
The sole office of Unadilla National is the only banking
lies
office in the village of Unadilla (1950 population 1,600), which
Albany
in the southwest corner of Otsego County 100 miles southwest of
and about 45 miles northeast of Binghamton.
Unadilla serves a good
agricultural area and is growing steadily.
In addition to the usual
communities, the village
small business and retail stores found in such
has three small industrial plants.
A number of Unadilla residents are
Delaware County, about
employed in Sidney (1950 population 5,200) in
five miles southwest of Unadilla.
tion on banking convenience
Any effect of the proposed transac
areal/ of
and needs would be limited almost entirely to the service
Unadilla National.
a, the bank's
In addition to the village of Unadill
13,000 people, encompasses Sidney
service area, which contains about
and Franklin in Delaware County.
Both Sidney and Franklin (which is
banking offices, and the bank in
about 12 miles east of Unadilla) have
Sidney offers trust facilities.
1/
or more of its
— That area from which a bank obtains 75 per cent
deposits of individuals, partnerships, and corporations.
I 3 er
-4-
Unadilla National offers the usual services provided by most
rural banks of comparable size.
While it is expected that State
Bank would make available a number of additional services at the
Office of Unadilla National if the application were approved, including trust facilities, there is virtually no indication in the record
of need for these expanded services or evidence that they would
materially contribute to the convenience of the area.
Unadilla
National appears to be serving its community and service area satisfactorily.
Competition. - The branch of State Bank nearest Unadilla
Rational is at Richfield Springs (1960 population 1,600), also in
Otsego County and 50 road miles north of Unadilla.
The service areas
of this branch of State Bank and of Unadilla National do not overlap
snd there are a number of intervening banking offices.
There appears
to be very little competition between the two banks.
Unadilla National's chief competitor is the First National Bank
in Sidney, with deposits of $7.2 million as of September 28, 1962.
Expan-
sion by State Bank into the Unadilla area would expose the bank in Sidney,
end also the other six banking offices located from 10 to 16 miles from
Unadilla, to the strong competitive capabilities of a significantly larger
bank.
As of June 30, 1962, there were 50 commercial banks in the Fourth
Banking District of New York.
State Bank was the largest, holding over
30 per
cent of the total commercial bank deposits in the District.
National
C°mmercial Bank and Trust Company of Albany was the second largest, holding
23 per cent of the commercial bank deposits in the District.
Combined,
0 0f
0111-..
4
.4..
-5commercial bank deposits in
these two banks held 53 per cent of the total
the District.
, State Bank held 21 per
On the basis of IPC deposits alone
Company of Albany held 20 per
cent and National Commercial Bank and Trust
they held about 41 per cent.
cent of the District total, and together
State Bank maintains offices, it
In the 10 counties in which
its of all banks as of June 30,
held 28.5 per cent of the total IPC depos
1962.
Bank's holdings to about
The proposed merger would increase State
of these counties.
30 per cent of the total IPC deposits
approved, this merger would replace
Summary and conclusion. - If
one of the two largest banks in
the only bank in Unadilla with a branch of
having its main office 100 miles
the Fourth Banking District of New York
in a significant series of bank
away, and would constitute one more step
absorptions by State Bank.
There is no substantial evidence that the bank-
are not being served adeing needs or convenience of the Unadilla area
cannot continue its operations profitably.
quately, or that Unadilla National
c as a consequence of the merger
Any benefits that might accrue to the publi
circumstances of this case by the increase
would be more than offset in the
Fourth Banking District of New York,
in the size of the largest bank in the
ng resources in
by the increase in the already high concentration of banki
potential effect on banking competition
that District, and by the adverse
in Unadilla and the surrounding area.
unable to find that the proposed
Accordingly, the Board is
est.
merger would be in the public inter
April 26, 1963.
BOARD OF GOVERNORS
Item No. 14
4/26/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
April 26, 1963
AIR MAIL
Mr. Leland Ross, Vice President,
Federal Reserve Bank of Chicago,
Chicago 90, Illinois.
near Mr. Ross:
In accordance with the request contained in your letter of
tPril 19, 1963, the Board approves the appointment of Peter M.
taYden as an assistant examiner for the Federal Reserve Bank of Chicago.
I'lease advise the effective date of the appointment.
Very truly yours,
(Signed) mizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
@FedFRASER