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Minutes for To: Members of the Board From: Office of the Secretary August 11, 1961 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 °IllY that you have seen the minutes. Chm. Martin Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Minutes of the Board of Governors of the Federal Reserve System on Friday, August 11, 1961. PRESENT: Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Balderston, Vice Chairman Mills Shepardson Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Kenyon, Assistant Secretary Thomas, Adviser to the Board Shay, Legislative Counsel Molony, Assistant to the Board Noyes, Director, Division of Research and Statistics Holland, Adviser, Division of Research and Statistics Spencer, General Assistant, Office of the Secretary Yager, Economist, Division of Research and Statistics Axilrod, Economist, Division of Research and Statistics Mr. Holmes, Manager, Securities Department, Federal Reserve Bank of New York Money market review. Mr. Holmes reported on recent developments the Government securities market, after which Mr. Thomas described fielreloPments with respect to bank reserves, the money supply, and N.ated matters. At the conclusion of these reports, Messrs. Shay, Yager, and Rolnies withdrew from the meeting and the following entered the room: Mr. Hackley, General Counsel Mr. Farrell, Director, Division Operations Director, Division Solomon, Mr. Director, Assistant Mr. Benner, s Examination Mr. Langham, Chief, Call Report of Bank Operations of Bank of Examinations Division of Section, Division 4"V". -1 ,4C• A 8/11/61 -2Discount rates. The establishment without change by the Federal Reserve Banks of New York, Cleveland, Richmond, Kansas City, and Dallas c11411gust 10 1961, of the rates on discounts and advances in their elcisttag schedules was approved unanimously, with the understanding that Etriatipriate advice would be sent to those Banks. • Items circulated to the Board. The following items, which had been circulated to the Board and copies of which are attached to these :111.11tes under the respective item numbers indicated, were approved IMe zamously: Item No. IpeAtter to The Reaaing Trust Company, Reading, tinsYlvania, approving an extension of time 0 es tablish a branch at 1330 Schuylkill herme. 1 tettar to The Merchants and Farmers Bank, t in hrield, Virginia, approving an investment bank premises. 2 .C tetter to Waehovia Bank and. Trust Company, t„stort-Salem, North Carolina, approving establishment of a seasonal branch at 4-attersola Avenue and Liberty Street. tett-er to Gulf National Bank of Gulfport, cat, ort, Mississippi, approving its appli' 04 for fiduciary powers. tett eillaer to The First National Bank of Sullivan, Nhilran, Illinois, denying its application for ' clarY powers. l etter aim to Bank of Dearborn, Dearborn, Michigan, kl( ving the establishment of a branch at 211.309 °ad, Dearborn Township, in lieu of one at 66 044,,,, gorth Telegraph Road. 3 14. 5 6 C'WN 8/11/61 Item Itter to Bloomfield State Bank, Bloomfield, Irl&Lana, granting its request for permission to exercise a specific fiduciary power. 7 Letter to The Lake State Bank, Richland, Indiana, T: ting its request for permission to exercise a fiduciary power. 8 Letter to Mutual Trust and Deposit Company, New ! ,t11 ,31111Y, Indiana, approving the establishment of .4 °ranch in Floyds Knobs. 9 Letter to the Federal Deposit Insurance Corpo:tion r regarding the application of Farmers te Bank and Trust Company, Cuero, Texas, Ir?I' continuation of deposit insurance after ' ii. thdrawal from membership in the Federal ser-e System. 10 utter to the Federal Reserve Bank of San otancisco approving a revision of the minimum 4 Grade 1 in the employees' salary structure 1,1312-icable the Portland and Salt Lake City ' 441.11elles, to 11 r Regarding Item No. 5, there was a brief discussion at the instance Of G10'ernor Mills concerning the asset history and management factors at The First National Bank of Sullivan that had led the Division of Examinations t conclude that the bank's affairs had not been conducted in a satisfactory tax41 er for a period of time long enough to justify approval of the appliQat I .“41, to exercise fiduciary powers. It was pointed out that the rqco ntaendation of the Federal Reserve Bank of Chicago and the views of the hie National Bank Examiner for the District were adverse. Re ort on competitive factors Haddonfield-Collingswood, New A draft of report to the Comptroller of the Currency on the e 8/11/61 -4- competitive factors involved in the proposed consolidation of Haddonfield NIttional Bank, Haddonfield, New Jersey, and First National Bank of C0111ngswood, Collingswood, New Jersey, had been distributed under date er August 7, 1961. The report, which contained the following conclusion, was approved Una nimously: The proposed consolidation of Haddonfield National Bank, Haddonfield, New Jersey, and First National Bank of Collings'wood, Collingswood, New Jersey, would eliminate only a small amount of competition between the two banks. The consolidated bank should be in a somewhat stronger competitive position than the participants are separately and it seems probable there would be an increase in competition with the other banks in the area, Itithout appreciable adverse effects on smaller banks. Continental Bank and Trust Company (Item No. 12). There had been clistl'ibuted a memorandum dated August 10, 1961, from Mr. Hackley regarding 111°"ti°ns now before the Board with respect to the matter of The Continental 11111k and Trust Company, Salt Lake City, Utah. In reviewing the pending motions, Mr. Hackley brought out that they invol 4-ved essentially the question whether the Board's "show cause" order, 1411Q4 called for a hearing beginning September ri \re.Qate- pending the bank's anticipated appeal from the District Court's (11411ent, reaffirmed on August 11(4scis 6, should be stayed or 5, dismissing the bank's suit against the Mr. Hackley further stated that before the Board reached a decision t l'r°111d. appear desirable to him to afford Counsel for Continental an opporto comment upon Board Counsel's memorandum of August 7, 1961, which CI* 8/11/61 -5- %/lied proceeding with the hearing and recommended that any stay of proel d.ings, if decided on by the Board, be conditioned upon the following °t an accelerated appellate procedure. Mr. Hackley therefore recommended that a letter in the form of the draft attached to his memorandum of August lebe sent to Counsel for Continental. After general discussion in which the Board expressed agreement 'with Mr. Hackley's recommendation, the letter to Counsel for Continental ItEtsa -:1Zrved unanimously. A copy is attached as Item No. 12. Revised Fonm FR 416a (Item No. 13). In connection with a letter 1111411. Bryan, President of the Federal Reserve Bank of Atlanta, commenting "Ically on the adoption of a revised Form FR 416a (Changes in Commercial Industrial Loans by Industry), there had been distributed a draft of l'el3INY proposed to be signed by the Director of the Division of Research 4418tatistics. In discussion of the proposed letter, Governor Mills inquired if 1141Yeomments had been received from other Federal Reserve Banks relative to tle revised form, and Mr. Noyes observed that the Banks apparently were 131sePELl'ing to go ahead with the use of the form. Inasmuch as the Board's lett 1. e- °4 July 25, 1961, concerning the revised form did not request any 0 Se, he thought it Was doubtful that other comments would be received. Mr. Bryan's letter had asked that his views be brought tothe Board's ttellti°n, and it was felt that a fairly detailed reply might be appropriate. 8/11/61 -6Question was raised whether President Bryan's letter did not infer that the decision to adopt the revised Form 416a had been made without 1)r0vid-ing a full opportunity for the expression of views, to which Mr. 11°Yes replied in terms that the revision had been under consideration at the staff level for about two years and developments had been reported ItIlarlY through the customary channels. Although the matter may have e°171e to a head somewhat more rapidly than might have been anticipated, he understood that Mr. Irons, Chairman of the Committee on Research and S'tatisties of the Presidents' Conference, had been properly informed. It 11414r. Noyes' impression that in most quarters the revision of the form Ira 's l'egarded as a relatively minor matter, involving the tidying up of a l'el3cTting series, while Mr. Bryan apparently felt that the series should be iven a complete overhaul. As far as he knew, Mr. Bryan was the only awho held any strong view that this was the proper time for such an 13er '311eThaul. The immediate problem seemed to be to convey to Mr. Bryan, in a:Pproin*i.ate manner, the fact that the staff was sympathetic with the bro a41- Objectives he had in mind and that the current revision represented 4 c°11113romise, worked out mainly by Reserve Bank personnel. Chairman Martin commented that the need for proper communication m°4141. be watched carefully in matters of this kind, and Mr. Noyes replied that his would be done. The sending of the proposed reply to President Bryan was then °Ired unanimously, with the understanding that Mr. Noyes would also 8/11/61 -7- elxmaunicate with Mr. Bryan by to confirm to him that the Board 441 discussed. his letter and was cognizant of the points he had made. A copy of the letter sent to President Bryan pursuant to this tle °II is attached to these minutes as Item No. 13. Messrs. Thomas, Molony, Hackley, Holland, and Benner withdrew from the fleeting at this point. It.'22uest for data on State member banks. "ftorandum dated August There had been circulated 4, 1961, from the Division of Bank Operations ec)/leelsning a request from a graduate student at Yale University for IBM e&I ' ls or magnetic tape containing certain condition data reported by a sa/fro -w4-e of State member banks over a period of time. In discussion, Mx. Farrell noted that the graduate student requesting the information (Stanley M. Besen) proposed to use the data in research work , to r ti-r11,1 requirements for a doctoral degree. 4t4J3, The Division of Bank Oper- although sympathetic to Mr. Besenis request, recommended that it saPProved, principeilly because it was felt that approval might be riled by other students as a precedent and thereby lead to similar elt"S• The Division also noted that the cost to the Board, including th necessarY computer time, might run between $500 and $600, and that it not be possible to furnish the requested data except in a form in Vhich k.tata reported by individual banks could be identified. These data include unpublished figures from the reverse side of condition tT40-1.t. 8/11/61 -8Mr. Noyes indicated that the Division of Research and Statistics '"•111 inclined to feel that the request probably Should be granted. While it might not be possible to furnish figures of this kind without having them in such form that data reported by individual banks could be identified it 8. student set out to do that deliberately, this man had been well recom- 'leaded by an economics professor at Yale University and the degree of risk (11(1 not seem substantial. In addition, Mr. Noyes pointed out, it would 413Pear worthwhile to encourage research in the field of money and banking 1:7 competent students at recognized educational institutions. If access to needed data was denied, such students might decide to direct their etIldies to other areas. The availability of high-speed processing el°4cent made it seem likely, Mr. Noyes brought out, that requests of this kind would be received from time to time. Governor Mills indicated that he would be inclined to agree with the r easoning of the Division of Bank Operations. He felt it was asking 44."eat deal for the Board to provide data of this sort to a graduate stt4ent and that a request of this kind could be distinguished from one l'eelved from a person of the rank of Professor Bach, Dean of the Graduate khom of Industrial Administration at the Carnegie Institute of Technology, M4ob 4,ad been furnished somewhat similar information in 1958 in connection with a Proposed studY• Governor Shepardson observed that it was always difficult to know holt rex to go in compiling information, with some effort and expense, for graduate students. However, the arguments mentioned by Mr. Noyes were in line with the Board's concern about building up relations with academic institutions, and they also had relevance from the standpoint of the Stem's recruitment problem. He assumed that if the data were furnished ill this instance, it would be specified that none of the data should be Used by the student in a dissertation or otherwise in such manner as to clivillge the identity of individual banks. Although some risk might be 111 1ved in this respect and there was the question of precedent to be e°11sidered, the number of graduate students doing work in this area was 4(4 too large and some encouragement would seem in order. On balance, therefore, he would be inclined to grant the request. In reply to a question raised by Governor Shepardson, Mr. Langham ipc)intecl out that it had been the practice of the Board, when it granted IseliSt6 of this kind, to furnish the data without charge. Chairman Martin stated that he found himself rather persuaded +.1. '"e reasoning that had been advanced in favor of granting the request. 4-ng in terms of a competent student, he would hate to have the Federal Rese, " -e regarded as an organization that was not flexible and appeared to ' ettempt to withhold information. He was on the side of encouraging competent 4A14ent5, also, because there were relatively few working in this field who he4111Zusual talent or capacity. Governor Balderston expressed the view that the question of etEtb lishing a precedent was not the vital point in this case. If it rww.y0) e 14) 8/11/61 -10- °111d develop that the Board's facilities were misused or overused, that Problem could be dealt with in due course. He was impressed, moreover, by the fact that the number of talented graduate students in the field of rinance had been relatively small in the years since the 1930s. Further, he had found that doctoral dissertations were not infrequently of high "tliber, and the topic selected by this student, having to do with the Iseferences of commercial banks as among various earning assets under hangiag conditions, was one of interest to the Board. On balance, 4ile he recognized the difficulties involved, he would be disposed to 8.cel3t a calculated risk and furnish the requested information in this krti cular case. After further discussion along these lines, it was understood that the requested data would be furnished in this instance and, in ete or dance with the Board's usual practice, without charge. The meeting then adjourned. Governor Shepardson today Secretary's Note: approved on behalf of the Board memoranda from the Division of Research and Statistics and the Office of the Controller dated August 2 and August 3, 1961, respectively, recommending that the organizational groupings of the Division of Research and Statistics for budget and payroll purposes be revised and established as follows, effective at the beginning of the first pay period in 1962: -11Administration (To include Officers and Officers' Secretaries only) Banking Business Conditions Capital Markets Consumer Credit Flow of Funds Government Finance National Income Statistical Operations Planning Staff Services (To include Administration Section staff, Floating Supply, Recruit Economists, Summer Research Assistants. Also to include Economic Editing, Economic Illustrating, Research Library.) f;66: 15 /7 Assistant Secretary BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 1 8/11/61 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD August 11, 1961 Board of Directors, The Reading Trust Company, Reading, Pennsylvania. Gentlemen: Pursuant to your request submitted through , . t11e Federal Reserve Bank of Philadelphia, the Board of Lrovernors has approved an extension until March 20, 1962, of the time within which The Reading Trust Company may establish a branch at 1330 Schuylkill Avenue, Reading, Pennsylvania. The establishment of this branch was authorized in a letter dated September 20, 1960. Very truly yours, (signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 2 8/11/61 AOORESU OFFICIAL CORRESPONOCNCE TO INIE BOARD August 111 1961 Board of Directors, The Merchants and Farmers Bank, Sm ithfield, Virginia. G entlemen: Pursuant to your request submitted through the Federal Reaerve Bank of Richmond, the Board of Governors of the Federal teserve System approves, under the provisions of Section 24 (A) ! :4 the Federal Reserve Act, an additional investment by The flerchants and Farmers Bank, Smithfield, Virginia, of $141,500 in flank premises. I This approval is in accord with and is for the purposes Ilet forth in a letter dated July 10, 1961, by the president of Your bank and addressed to the Federal Reserve Bank of Richmond. It is understood that the banking premises presently owne,, an tr /144 occupied by your bank will be disposed of within 90 days trft the date of this letter and that proceeds of the sale theren, c/In will be applied as a reduction to the book value of the bank sea account. It is further understood that the bank premises ount will be reduced by charge off or depreciation to an amount nj in :in excess of $125,000 and that this will be accomplished not than the end of the calendar year 1964. Weemi Very truly yours, (Signed) Elizabeth L. Carmichael Elizttiv.th L. Carmichael, .10-318Lant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM go WASHINGTON 25, D. C. Item No. 3 8/11/61 ADDRESS OTTICIAL CORRESPONDENCE TO THE BOARD IV t14 ttl c'! August 11, 1961 Board of Directors, Nachovia Bank and Trust Company, Winston-Salem, North Carolina. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Richmond the Board of Governors of the Federal Reserve System approves the establishment by Wachovia Bank and Trust Company, Winston-Salem, North Carolina, of a seasonal branch in Taylor's warehouse at the corner of Patterson Avenue and Liberty Street, Winston-Salem, North Carolina, provided the branch is established Within six months from the date of this letter. Very tru4 yours, (signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 4 8/11/61 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD August 11, 1961 Board of Directors, Gulf National Bank of Gulfport, Gulfport, Ussissippi. Gentlemen: The Board of Governors of the Federal Reserve System has . :ven consideration to your supplemental application for ficiug , 1 co -larY powers and grants you authority to act, when not in a ,ntravention of State or local law, as trustee, executor, t( elministrator, guardian of estates, assignee, receiver, commitof estates of lunatics, or in any other fiduciary capacity /iii.14hich State banks, trust companies, or other corporations ael tell Come into competition with national banks are permitted to sue under the laws of the State of Mississippi. The exercise of of 4 4_ rights shall be subject to the provisions of Section 11(k) Go e Federal Reserve Act and Regulation F of the Board of ernors of the Federal Reserve System. In addition to the fiduciary powers herein authorized, was granted authority, on June 6, 1950, to act as triustee for bond issues and registrar of stocks and bonds. the b that in A A formal certificate indicating the fiduciary powers Your bank is now authorized to exercise will be forwarded course. Very truly- yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 5 0/11/61 AODRESS OFFICIAL CORRESPONDENCE TO THE BOARD August 11, 1961 BOa ,111_ rd of Directors, First National Bank of Sullivan, SIII1Avan, Illinois. The Gentlemen: The Board of Governors has given consideration to your aPPlicati -on for fiduciary powers which was forwarded through the pede ral Reserve Bank of Chicago. In passing upon an application for permission to exercise theti ilese uciary powers authorized by Section 11(k) of the Federal fac4rve Act, the Board gives special consideration to a number of auth"'°rs having a bearing on the proper exercise of the fiduciary b °IltY requested. These include the general condition of the abiai the adequacy of its capital funds, the general character and expel,!;3r of the management of the bank, and the qualifications and ' tertt erice of the proposed executive officer of the trust depart.. The Board has considered the condition of your bank as OOThpl'etlected- in reports of examination made by examiners for the thai &oiler of the Currency for the past several years and notes eati /111ile the present asset condition of the bank is apparently 1,01th:factory, at certain fairly recent examinations a substantial capi-J,of assets was classified and criticized. In respect to ' 4. adequacy, examiners have commented on the substantial sala sticill7, bonus, and dividend payments made by the bank, stating q'prpnaY,Illents were not in keeping with prudent banking procedure ,44ing ample capital funds for the protection of depositors. a%Ltici-;' !apitjanking policy suggests the need for regular accumulation in br- accounts of a satisfactory portion of the bank's earnings Lo ' to de for normal banking risks and to give adequate support cr broadened functions which may be contemplated, such as g 4_ -1-11 fiduciary activities. 2780 The Board is also concerned about the apparent lack of 4 fid ,„„,.tetary experience and qualifications of the officer who would "4401141ster the trust activities of the bank. In the view of the Board, the bank has not operated in a ticompietel,y satisfactory manner for a sufficient period to jus„rYthe assumption of the additional responsibilities of a cor. v vl'ate fiduciary. Accordingly, the Board cannot approve your „ 14alcation for trust powers. Very truly yours, (Signed) Kennetb. A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRIENIS Item No. 6 8/11/61 orriciAL CORAIESPONOENCE TO THE BOARD August 11, 1961 Board of Directors, Bank of Dearborn, Dearborn, Michigan. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Chicago, the Board of Governors of the Federal Reserve System approves the establishment of a branch at 24309 Joy Road, Dearborn Township, Wayne County, Michigan, by Bank of Dearborn, provided the branch is established within six months from the date of this letter. Establishment of this branch is being approved in lieu of a branch at 8650 North Telegraph Road, approved by the Board on March 30, 1961. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. 4.• ( BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 7 8/11/61 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD August 11, 1961 Board of Directors, Bloomfield State Bank, Bloomfield , Indiana. Gentlemen: This refers to your request for permission, rder applicabl e provisions of your condition of mem. " ship numbered 1, to act in a specific fiduciary c apacity. Following consideration of the information submitted, the Board of Governors of the Federal Reserve SYSteM will interpose no objection to Bloomfield State Bloomfield, Indiana, acting as trustee, registrar, Paying agent of a first mortgage bond issue of ;(20,000 of the Eastern School Building Corporation, l'eene County, Indiana. The acceptance of a large Co trust reqpires the exercise of great care 'Z1 fidelity, and the Board requests that you work t,"e],Y with your counsel to assure conformance with "e terms of the trust indenture and applicabl e law. Furthermore, it is requested that your bank 11111 not accept any other fiduciary appointments with°Ilt first obtaining the permission of the Board. Very trey yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 8 8/11/61 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD August 11, 1961 Board of Directors, The Lake State Bank) Richland, Indiana. Gentlemen: This refers to your request for permission, under applicable provisions of your condition of membership numbered 1, to act in a specific fiduciary capacity. Following consideration of the information submitted, the Board of Governors of the Federal Reserve SYstem grants permission to The Lake State Bank, Richland, Indiana, to act as trustee, registrar, and paying agent or a 470,000 first mortgage bond issue of the Luce ochool Township Building Corporation, Spencer County, Indiana. This permission is given with the understanding that your bank will not accept any other fiduciary appointments without first obtaining the permission of the Board. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. 27S. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 9 8/11/61 WASHINGTON 25. D. C. Apooces arm:sm. comoterropiocmot TO MC •OAPIO August 11, 1961 Board of Directors, Mutual Trust and Deposit Company, New Albany, Indiana. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of St. Louis, the Board of Governors of the Federal Reserve System approves the establishment by Mutual Trust and Deposit Company, New Albany, Indiana, Of a branch in the unincorporated community of Floyds Knobs, Indiana, provided the branch is established within nine months from the date of this letter. Very truly yours, (Signed) Fli zabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 10 8/11/61 WASHINGTON 25, D. C. ADORES!, OFFICIAL CORRESPONDENCE TO THE BOARD August 11, 1961 The Honorable Lrle Cocke, Sr., Chairman, Federal Deposit Insurance Corporation, Washington 2$, D. C. Dear Mr. Coke: Aeference is made to your letter of July 24 lol, cone rning the application of the Farmers State Bank and Trust Company, Cuero, Texas, for continuance of deposit insurance after withdrawal from membership in the Federal Reserve 6ystem. No corrective programs which the Board of Governors should be incorporated as conditions to the contin,11ance of deposit insurance have been urLsed upon or agreed to DY the bank. be.1aves Very truly yours, (signed) Elizabeth L. Carmichael izabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item bTo. u 8A1/61 ADDRESS orriciAL CORRESPONDENCE TO THE BOARD August 11, 1961 CONFIDENTIAL (FR) 1Y. Eliot J. Swan, President, Federal Reserve Bank of San Francisco, San Francisco 20, California. Dear Mr. Swan: The Board of Governors approves a revision of the 'Port s_ aand-Salt Lake City employees' salary structure, effective 'Ptamber 1, 1961 to the extent of establishing the minimum of Grade 1 at $2,400, in accordance with the action Your Board of Directors as reported in your letter of 4118t 33 1961. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. 4,000, ocii4c;4 BOARD OF GOVERNORS OF THE t' "!1 V .; 'iqi:•:!* id tr $* I} FEDERAL RESERVE SYSTEM Item No. 12 8/11/61 WASHINGTON 25. D. C. 4 4 44 ADDREBB OFFICIAL CORRESPONDENCE '40t4iifa TO THE BOARD t41; 14*** August 111 1961 I.sron K. Grier, Esq., Mill sq.,& Chevalier., ;Lu01 Co nnecticut Avenue, N. W•3 'Tashingt on 13e ar Mr. Grier: In connection with the matter before the Board of Gover,, Llke or involving The Continental Bank and Trust Company, Salt liemo, C1tY, Utah, the Board has received from Board Counsel a '11 in tr Response to Respondent's Motion for Stay of Proceedcaul; and to Respondent's Motion to Vacate the Board's Order to Show liQmr (;! and for Hearing Thereon. It is understood that a copy of that ' andum has been furnished to you. The Board is informed that on August 5, 1961, the District Court (kly 6for the District of Columbia denied Respondent's Motion of 1961 3 1961, to alter or amend that Court's judgment of June 27, ari a.LI- case No. 5097-60, to vacate the same, and for leave to file -nued and supplemental complaint. that a Board Counsel's Memorandum referred to above recommends 11c1 fo2Y,staY of the Board's Order of June 28, 1961, to show cause ace,0'nearing thereon be conditioned upon the following of an --Lerated appellate schedule. bc) ore Before reaching a decision as to the motions now pending 1). t ln this matter, the Board will consider any further cornflay wish to submit not later than August 17, 1961, includ° -67ents with respect to what your plans may be to note an appeal Aepec,0 District Court's judgment and, in the event of appeal, with Board Counsel's recommendation regarding an accelerated Very truly yours, 4/477?-47, 15 /#7, 7VAl Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 13 8/11/61 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD August 11, 1961. tir• Malcolm Bryan, President, rederal Reserve Bank of Atlanta, Ataarta 3, Georgia. 1)ear Mr. Bryan: concerning the revision of the weekly b Your letter of July 27, 1961, The„, Usiness loan series has been given consideration by the Board. of;inave asked me to indicate their appreciation for your expression tnatti:ews, which was of interest, both with respect to the particular on _'r at hand and the related question of the gaps in our information ether aspects of bank lending. general. In addition, the Board requested that I convey some of our 1.4111vm, thinking on the bank loan series. As is often true in our F4 4.1'a44 statistics program, the recent revisions in the weekly Form eert r, Changes in Commercial and Industrial Loans by Industry, repre: 4 a compromise among considerations of data needs, collection procedij .es, and reporting burdens. It was the consensus of the System Res were'al'eh Advisory Committee that the present revisions in Form FR 416a illg desirahle in order to deal with the chief shortcomings of the existParticular problems and points of view are not always fully testeicl hY such compromise revisions, of course, and further thinking, Worthlig, and experimentation concerning the series may conceivably make liptnnile Salle additional alterations in the series in the years ahead. hoPe that included in such future changes would be some which "al with persisting reporting bank problems. thev , The purpose in revising 416a procedures currently stems from Nveia ,„4-1.1e which is attached to this series for monetary analysis. Pliea ents in bank lending to different industries have different lin' rilerts °rIs for the strength and duration of over-all business loan movebliElit1,4hd are significant in analysis of the economy in general. Since trldej s lean data have historically been among the key figures weighed eritlining the course of general credit policy, the development of : 4 icitti, 'eric;'"rial insight into these movements is much to be desired. The Ne is judged to have been very helpful in the decade of its existreliab ll the present basis, and the revision should make the data more and more useful in a number of respects. Specifically, BOARD 4. Malcolm Bryan OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM -2- )11 1 8e8 of bank credit developments presented to the Board every week a: 8 observat41°se presented to the Open Market Committee usually include tio, oils as to the areas of strength or weakness of loan demand based on the be ,Lreports. The differences often lead to conclusions that would not 'awn from total figures. banks have found detailed loan elas„r. We are informed that some large in their own internal analyuseful 8es u-L- lcations in one form or another to employ the 416a planning or loa„ and We understand some are employing classification in their bookkeeping practices. Among other uses, '-'11.11dual bankers have reported using the data to judge loan prospects, Portfol4 444 , -Lo diversification among industries, and competitive positions vs to other large banks in the financing of particular industries. it arbl t° bs expected that such respondent uses will continue to grow, arld n eY should encourage increased willingness and accuracy in reporting Veli-a7A sometimes contribute findings of broader analytical interest as ato doPtion of the current 416a revision, with its more useful and rell' before the Older -Ls basis of classification, is regarded as desirable classification becomes firmly established in bank records. loans 4 Your comments concerning the liquidity and quality of bank tore 4ruch upon an area that has been of concern to the Board, although ""us far from the point of view of bank supervision than of overicnetary policy. To assist deliberations on this subject, some atkc 8tical investigations are presently underway. Experimental tabulation "11 bank examination reports are being considered here to clae,;-;:e aggregate information on loans of varying degrees of liquidity, Elear-lisd loans, and loan delinquencies. In addition, the System ReCommittee has approved efforts to broaden data collection cer 1416.;,ning term loans, an area pioneered by the Federal Reserve Bank of rk. Additional knowledge in the general field of bank loan liqui; qght-8 to be desired, and any exploratory investigations which can cast ataft °11 the subject will be most welcome. If you or members of your be gi2;ave further thoughts or findings bearing on this issue, we should to have the benefit of them. Sincerely, (Signed) Guy E. :oyes Guy E. Noyes, Director, Division of Research and Statistics.
@FedFRASER