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Minutes for To: August 1, 1957. Members of the Board From: Office of the Secretary Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement With respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. Otherwise, if you were present at the meeting, please initial in column A below to indicate that you approve the minutes. If you were not present, please initial in column below to indicate that you have seen the minutes. A Chm. Martin Gov. Szymczak Gov. Vardaman Gov, Mills Gov, Robertson Gov. Balderston Gov. Shepardson 2143 Minutes of actions taken by the Board of Governors of the Federal Reserve System on Thursday, August 1, 1957. The Board met lathe Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Balderston, Vice Chairman Vardaman Mills Shepardson Mr. Carpenter, Secretary Mr. Fauver, Assistant Secretary Mr. Johnson, Controller, and Director, Division of Personnel Administration Mr. Masters, Director, Division of Examinations Mr. Solomon, Assistant General Counsel Mr. Sprecher, Assistant Director, Division of Personnel Administration Mr. Young, Assistant Counsel itheBank Plan of the Retirement System of the Federal Cl ---1@a_e_a_k Res erve Banks illenibers Items 1 2 and There had been circulated to the of the Board prior to the meeting memoranda from the Division of 44e1 Administration dated July 22, 30, and 31, 1957, relating to r°1'ma1izing the changes in the Bank Plan of the Retirement System of the Federal Reserve Banks decided at the Board meeting on June 26, 1957. A qlecial meeting of the Board of Trustees of the Retirement System had been held in Washington on July 29, 1957, at which by resolution, attached' aS 'tell approval was given to amendments to the rules 44d regUlations of the Retirement System to give effect to the recommendati0 48 °f the Special Joint Committee together with certain other changes, fteentially of a technical nature. The memoranda of the Division of Personnel Administration proP as a letter to the Presidents of all Federal Reserve Banks 2441 8/1/57 -2them to make a lump sum payment of the amount necessary to liquidate the accrued liabilities of each Bank resulting from the Changes in the benefits of the Retirement System. There were also proPosed alternative drafts of a letter to the Chairman of the Board of Trustees of the Retirement System informing him that the Board had Considered and approved the amendments to the rules and regulations of the Retirement System applicable to the Bank Plan in the form approved by the Board of Trustees. The draft with the memorandum of July 30, 1957, stated that in the event the Chairman of the Board of Trustees Should find it necessary to make further changes in the rules and regulati s the Board would be glad to consider such amendments and be Pl'ePared to act on them promptly. The alternative draft with the memoof July 31, 1957, would have given blanket authority to the Cha r a of the Board of Trustees, in accordance with the resolution of i the Board of Trustees, to make further editorial changes in the rules and r egulations to meet the requirements of the Internal Revenue Service. °44 1.4 4 Changes of a substantive nature had been necessary in order to c514Lin - 4 ruling from the Director of Internal Revenue that the Retirement -g continued to meet the requirements of the Internal Revenue Code Ist°uld the , 1 cuanges have had to be submitted to the Board for approval. Governor Vardaman stated that while he had no objections to the sed letters to the Reserve Banks and the Board of Trustees of the Retirem ent SYetem, he desired the record to show his continued opposition e;**L-1 15 ,* -3to he EtPProval by the Board of the proposed changes for the reasons 11114 PreVi011131y outlined during the discussions of this subject. He 1311U;ested that a report be samitted to the Board shaving the lump sum Banks which eln°Int Paid to the Retirement System by each of the Reserve 1.4311.1(1 show whether the payment was in excess of the approved budgets of the Banks. Further, he hoped the annual report of the Board to the Congr„ this revision would likewise indicate the amount involved in Of the retirement program. there was that He stated that he was not implying be did feel a anything improper in the Board's action but strMg difference of opinion as to the responsibility and obligation Of the B°0trd ,and the Federal Reserve Banks in the area of retirement benefits. revision in the retireGovernor Shepardson pointed out that the flierit Pr°graill current year's had. actually been under way before the 1514/4ets were prepared. however, At the time of their preparation, there vas no way of knowing the exact amount of money involved and therefore the sums could not be included in the 1957 budgets. He e5Pressed the view that the budgets were targets and not appropriation Ulit and he felt that it would carry an unfortunate connotation to amounts had 811Y that ifl authorizing these expenditures appropriated beerx exceeded. which there was general Governor Mills expressed a preference, with Board of Trustees —rence, for the letter to the Chairman of the to 17111eh would require any further changes in the rules and regulations Board e 611bmitted to the Board for approval. It was his belief that the 211 8/1/57 -4- should not authorize any amendments to the rules and regulations of the Retirement System that it had not seen and approved. He agreed with the idea that the budgets were essentially targets but he exPressed disappointment that frequently extra curricular activities had been introduced and approved that were not contemplated at the time of budget consideration, which had the effect of undermining the " tire process of budget review. He expressed the hope that the 1958 budge ts would be more carefully reviewed and more carefully adhered t° 'because he felt that this was a weak spot Which might expose the SY5 ten1 at some point to possible criticism. Governor Vardaman said he shared Governor Mills! view. Governor Shepardson asked whether the amendments adopted by the Bo_ erd of Trustees at their special meeting were in exactly the same f °rm as they had been submitted to the Board previously. Mr. SPre -e replied that there had been no change except that it had been reed that section 12 of the proposed rules and regulations should be itcluded in the printed copies. In accordance with the view expressed by Governor Mills, 1- Xin1o1.1,§ a royal was given to letters to the Chairman of the Board Of T rustees of the Retirement System and to the Presidents of all Fader , 1"- Reserve Banks attached as Items 1 and 2. Governor Balderston kalted that the Chairman had told him before leaving for a Co Ilqresq4 --°nel hearing that he favored this action. The Secretary stated 8/1/57 -5- that Governor Szymczak, after having met with the Board of Trustees or the Retirement System at their special meeting, had expressed the Iiew that the amendments should be approved. Following the discussion of this matter Messrs. Johnson, 813recher, and Young withdrew from the meeting. LIEstablishgAL2La_hraUll_ty_g_qpniA_Bailroad Bank & Trust Co , Georgia (Item No. )). The Board then considered a ntemorandum dated July 29, 1957, from the Division of Examinations, Ithich had been circulated among the members of the Board, with respect tc) the application of Georgia Railroad Bank & Trust Company, Augusta, Georgia ) to establish a branch at the southwest corner of Walton Way at LibertY Street. Mr. Masters reviewed the circumstances surrounding the appl and particularly the strong stand in opposition which had been iest°4 takenbY Mr. Mills B. Lane, President of the Citizens and Southern Nation., Bank of Savannah, Georgia. Mr. Lane alleged that there was 40 co unity need for an additional branch in the area. On the other helld 'Mr. Masters pointed out that the examiner for the Federal Reserve BariL of Atlanta who investigated the application stated that although ther an apparent lack of community need at the present time he ecn— ended favorable consideration of the application because (a) Railroad Bank & Trust Company risked the loss of many accounts to '14Petitors unless it provided equal convenience and facilities; and 8/1/57 -6- (b) the main office of the applicant had reached the state of conMition which could be remedied only at considerable cost. Therefore, it appeared more practical to provide such facilities through the Proposed branch. Governor Vardaman stated he had personally visited in Augusta ol° March 16, 1957, and was thoroughly familiar with the facts concerning this application. There was no question, he said, that this application Should be approved as a service branch. Governor Balderston stated that he and Chairman Martin, who had "en the file, felt the recommendation of the Reserve Bank in this matter should be supported. It was pointed out during the discussion that Mr. Lane had l'ecillested an opportunity to appear personally before the Board before the sPPlication was approved and Governor Balderston said that while it /it 8 the general policy of the Board to hear all interested parties °n '" a matter, it did not appear that any purpose would be served 4Y such a course in this instance. The other members present were in agl'esnlent that the information at hand was entirely adequate for a On and nothing would be gained by hearing from Mr. Lane. Governor Shepardson also agreed with the recommendation for 4P151'"al of the branch. He stated that in matters of this kind it has hes11 cliff --icult for him to distinguish questions of need and possible ° ‘ ter-ban_ng it; from the question of permitting banks adequately to meet QmPetiti --ve situations. Governor Vardaman replied that his principal -7Midepost had been whether the situation involved the establishment °r a branch bank or a new bank. A branch bank, he said, could be cicamd or opened without exposing a community to the consequences which would attend the opening or closing of a unit bank. Whenever the board of trustees of a bank are willing, he said, to divert earnings ti" ' °r the stockholders in order to provide increased facilities for the d°Positors he was unwilling to put himself in the position of questioning their judgment. There followed a general discussion of the bases for the past actic)ns of the Board in this field and the considerations which should be taken into account in Board action, but no conclusions were reached. Following the discussion, and after the careful consideration Of the contrary views on the record, the Board unanimously approved the letter to Georgia Railroad Bank & Trust Company, Augusta, Georgia, attached to these minutes as Item No. 4. Items circulated to the Board. The following items which had been circulated to the members of the Board and copies of which are ttached to these minutestaer the respective item numbers indicated _ - 4Tpszlesi unanimously: Item No. Lett pr er to the Federal Reserve Bank of San Sco approving the extension of rel'ement dates for certain of its employees. Lett . -l eL .o the Federal Reserve Bank of St. l'in : 3,regarding insurance practices of the M4 -- taawn Bank & Trust Company, Pine Lawn, 5 6 2150 BM7 Item No. Letter to American Overseas Finance Corporation AYing to its request for a certificate !encing dissolution and termination of that Q°11)oration. J The meeting then adjourned. Secretary's Note: Governor Shepardson today approved on behalf of the Board a letter to the Federal Reserve Bank of Richmond approving the designation of J. Carl Cook and William H. Gentry, Jr., as special assistant examiners, a copy of which is attached as Item No. 8. 2151 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM ' Item No. 1 8/1/57 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD August 1, 1957 Mr. Delos C. Johns, Chairman, Board of Trustees, Retirement System of the Federal Reserve Banks, Federal Reserve Bank of St. Louis, St. Louis, Missouri. Dear Mr. (Johns: This refers to Mrs. Frank's letter of July. 29, 1957, !nclosing a certified copy of the resolutions adopted by the board of Trustees on this date in connection with the amendments to the Rules and Regulations of the Retirement System. The Board has considered and approved the amendments to the Rules and Regulations of the Retirement System applicable 1!•0 the Bank plan in the form approved by the Board of Trustees 1.0 become effective September 1, 1957, except that the rates °f contributions of members who are members on August 31, 1957, shall be continued in effect under the present Rules and Re gulations until October 1, 1957. In the event the Chairman or Vice Chairman of the Board of Trustees should find it necessary or desirable to Take further changes in the Rules and Regulations as provided Idn the third resolution adopted by the Board of Trustees on 12-37^ 29, 1957, the Board of Governors will be glad to consider 84011 amendments and will be prepared t ct o them promptly. Very t • ec: Mrs. Valerie R. Frank pent ▪ Secretary. 21_52 BOARD OF GOVERNORS OF THE Item No. 2 8/1/57 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. • 4% aeA J ADDRESS arriciAL CORRESPONDENCE TO THE BOARD ku.to4V,'' August 1, 1957. Dear Sir: of For your information, there is enclosed a copy the of a letter from the Board of Governors to the Chairman Board of Trustees of the Retirement System of the Federal Reions "I've Banks relative to amendments to the Rules and Regulat of the Retirement System. -sum Your Bank is hereby authorized to make a lump accrued its te liquida payment of the amount necessary to of the liabiltes, resulting from the changes in the benefits Rules the to nts Re tirement System by reason of the amendme and Regulations adopted by the Board of Trustees on July 29, 1957. Very truly yours, enter, , n. C ar Secret ry. TO THE PRESIDENTS OF ALL THE FEDERAL RESERVE BANKS 2153 RETIREMENT SYSTEM OF THE FEDERAL RESERVE BANKS Item No. 8/1/57 3 the Secretary of the Retirement System of the Federal Reserve b„.-1"0, do hereby certify that the following resolutions were duly adopted 8f Ihs Board of Trustees of the Retirement System of the Federal Reserve er:8 at a special meeting held on July 29, 1957, and that said resolutions 6 naw in full force and effect: RESOLVED, That the amendments to the Rules and Regulations of the Retirement System set forth in Exhibit A attached to the notice dated July 12, 1957 from the Chairman of the Retirement Committee to the members of the Board of Trustees and of the Board of Governors be and they hereby are approved; and further RESOLVED, That if said amendments are approved by the Board of Governors, said amendments shall become effective September 1, 1957 with respect to members who are in active service on or after August 31, 1957, except that the rates of contributions of members who are members on August 31, 1957, shall be continued in effect under the present Rules and Regulations until October 1, 1957; and further RESOLVED, That the Chairman of this Board or the Vice Chairman of this Board be and each of them hereby is authorized to make such changes in the Rules and Regulations, including the aforesaid amendments thereto, as he may with the advice Of counsel deem desirable to secure a ruling from the Director of Internal Revenue that the Rules and Regulations and the trust established in connection therewith continue to qualify as a plan and trust meeting the requirements of Sections 501(a) and 401(a) of the Internal Revenue Code; and further RESOLVED, That the Chairman of this Board or the Vice Chairman of this Board be, and each of them hereby is, authorized to execute such documents and to take such action as he may deem necessr.ry to larry out the foregoing resolutions and the intent thereof." I further certify that the attached document entitled Exhibit A copy of the Exhibit A referred to in said resolutions and contains Of the amendments to the Rules and Regulations of the Retirement 8Yete" m referred to in said resolutions. ia a tr ue eo,or a. e e ecretary 2154 BOARD OF GOVERNORS OF THE Item No. 4 FEDERAL RESERVE SYSTEM 8/1/57 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD August 1, 1957 Board of Directors, Georgia Railroad Bank &Trust Company, Augusta, Georgia. G entlemen: Pursuant to your request submitted through the Federal Reserve Bank of Atlanta, the Board of Governors °f the Federal Reserve System approves the establishment °f a branch by the Georgia Railroad Bank &Trust Company, Augusta, Georgia, at the southwest corner of Walton Way at Liberty Street, Augusta, Georgia, provided the branch 1-8 established within nine months from the date of this letter and the necessary permit is obtained from the approPll-ate State authorities prior to the date of its establishluent Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. 2155 BOARD OF GOVERNORS OF THE Item No. FEDERAL RESERVE SYSTEM 8/1/57 WASHINGTON 25. D. C. AODRESS OFFICIAL CORRESPONDENCE TO THE BOARD August 1, 1957 14r. H. N. Mangels, President, Federal Reserve Bank of San Francisco, San Francisco 201 California. Dear Mr. Mangels: your In view of the circumstances outlined in extenthe g letter of July 24, 1957, to the Board concernin the , employees sion of retirement dates for four of your Board of Governors approves the retention in service and the payment of salary to the following persons through September 30, 1957: B. B. Gottie A. B. Oswald Nellie P. Sloan Leone Broderick the It is understood that if the benefits from effective become proposed changes in the Retirement System prior to October 1, 1957, these retentions will extend only to such prior date. Very t.,!uly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. BOARD OF GOVERNORS 4404*,4 tilopoo 4 4, 4% OF THE Item No. 6 FEDERAL RESERVE SYSTEM WASHINGTON 8/1/57 25. D. C. AD OR SS OFFICIAL CORRESPONDENCE TO THE BOARD August 1, 1957 Mr. Geo. E. Kroner, Vice President, Federal Reserve Bank of St Louis, St. Louis 2, Missouri. Dear Mr. Kroner: This will acknowledge your letter of July 12, 1957, d the letter from Mr. Wyrick of July 23 with enclosure ,r3m Mr. James T. Dodds, jr., Vice President of the Pine .2-41v11 Bank & Trust Company, Pine Lawn, Missouri. r The actions you have taken to bring about so satisfac+ °0rY a conclusion to the insurance practices of the member nk criticized by the Antitrust Division of the Department of oustice are greatly appreciated. Very tri y yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. BOARD OF GOVERNORS 01 ,00*4 OF THE ta% Item No. 7 FEDERAL RESERVE SYSTEM 84/57 WASHINGTON 25, D. C. ADORES!! orriciAL CORRESPONOCNOC TO THE SWAPO August 1, 1957 1 44'3 41* Ame • H. Stok, Vice President, l'Ican Overseas Finance Corporation, Pine Street, ell' York 5, New York. kar 4. Stok: 19571 This is in further reference to your letter of June 25, till and the Board's reply of July .19, 19570 concerning progress itircoilliquidation of American Overseas Finance Corporation and ' 144tion desired by the Board in that connection. kit Your letter related, among other things, to the possit4 Your applying to the Board for a certificate evidencing cij° ssolution and termination of the Corporation. to Section 25(a) of the Federal Reserve Act does not refer Dtev aieeztit s icate of the kind mentioned in your letter, and in certi T-1 ,8 oases of voluntary liquidation under section 25(a) such a iiilttiate has not been issued. When the Board is advised that Retetlation of American Overseas Finance Corporation has been camaary.; 3 such advice will be acknowledged, and it will not be necesYou to apply to the Board for such a certificate. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. BOARD OF GOVERNORS ettst4 ,14.0141444'4 4 OF THE 41% N* Item No. 8 FEDERAL RESERVE SYSTEM N 8/1/57 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE 't,;44.tv,t0. TO THE BOARD 44440'4 August 1, 1957 Mr. N. L. Armistead, Vice President, Federal Reserve Bank of Richmond, ftlohmond 13, Virginia. Dear Mr. Armistead: In accordance with the request contained in Your letter of July 29, 1957, the Board approves the designation of J. Carl Cook and William H. Gentry, Jr. apecial assistant examiners for the Federal Reserve al* of Richmond to participate in the examinations of State member banks only. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary.
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