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Minutes for August 18, 1960 To: 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 proposed to place in the record of policy actions required to be kept under the provisions of Section 10 of the Federal Reserve Act an entry covering the item in this set of minutes commencing on the page and dealing with the subject referred to below: Page 22 Establishment of a discount rate of 3 per cent for the Federal Reserve Banks of Philadelphia, Chicago, and St. Louis. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. °therwise, please initial below. If you were present at the Ineeting, your initials will indicate approval of the minutes. If You were not present, your initials will indicate only that you "ave seen the minutes. Chin. Martin Gov. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Minutes of the Board of Governors of the Federal Reserve System Oil Thursday, August 18, 19(0. PRESENT: Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Balderston, Vice Chairman Szymczak Robertson Shepardson King Mr. Kenyon, Assistant Secretary Miss Carmichael, Assistant Secretary Mr. Molony, Assistant to the Board Mr. Hackley, General Counsel Mr. Farrell, Director, Division of Bank Operations Mr. Masters, Associate Director, Division of Examinations Mr. Kiley, Assistant Director, Division of Bank Operations Mr. Nelson, Assistant Director, Division of Examinations Mr. Goodman, Assistant Director, Division of Examinations Mr. Hooff, Assistant Counsel Report on competitive factors: Englewood-Bergenfield, New Jersey. A dr—c. "t of report to the Comptroller of the Currency on the competitive racrs involved in the proposed consolidation of The Bergenfield National 3441c mid Trust Company, Bergenfield, New Jersey, and the Citizens National 33exlk Of Englewood, Englewood, New Jersey, under the charter and title of the lat --e, t had been distributed under date of August 9, 1960. The conclusion 8t/Ited therein was as follows: The proposed consolidation will eliminate no existing banking facilities. Competition between the two banks now is limited, and Bergenfield customers should benefit as the consolidated bank will be able to provide more and better services for them. Area competition may be enhanced by the entry of this larger bank into Bergenfield. Any effect on competition at the county level should be negligible as such competition will continue to be very keen. 3148 8/18/60 -2No objection being indicated, the report was approved unanimously for transmittal to the Comptroller. Report on factors: Alma-Riverdale, Michigan. A draft °f report to the Federal Deposit Insurance Corporation on the competitive factors involved in the proposed consolidation of the Bank of Alma, Alma, Michigan, and the Riverdale State Savings Bank, Riverdale, Michigan, had been distributed under date of August 1, 19(0. The conclusion stated therein was as follows: The proposed consolidation will result in the elimination Of a small country bank and the limited competition it provides. It would increase the concentration of banking resources of the Bank of Alma in the immediate trade arca. No Objection being indicated, the report was approved unanimously for transmittal to the Corporation. Change in location of South African bank (Item No. 1). Pursuant to to he ' favorable recommendations of the Division of Examinations and the ' ral Reserve Bank of New York, as set forth in a file that had been etre ulated to the Board, unanimous approval was given to a letter to Chase attan Overseas Corporation, New York City, consenting to a change in the loc"ion of the head office of The Chase Manhattan Bank (South Africa) Ltd., 'fleaburg, Union of South Africa, and the establishment of a branch in the 131'ernisea now occupied by the present head office. ttached as Item No. 1. A copy of the letter is 3 8/18/60 -3Application of Citizens Fidelity Bank and Trust Company (Item No. 2). There had been distributed to the members of the Board copies of a memorandum frQra the Division of Examinations dated August 9, 1960, regarding the appli- cati°11 of Citizens Fidelity Bank and Trust Company, Louisville, Kentucky, to Purchase the assets and assume the liabilities of the Bank of Louisville, Lcluisville, Kentucky, and to operate the present offices of the latter bank as branches. Both the Federal Reserve Bank of St. Louis and the Boardts Division f xaminations recommended approval of the application. Reports from the C° Ptroller of the Currency and the Federal Deposit Insurance Corporation essed the opinion that the proposed merger would not affect competition aciverselY, but the report of the Department of Justice stated in part that it is our conclusion that the proposed merger between Citizens Fidelity Balik and Bank of Louisville would have a seriously adverse effect on cornpetit i°n in Louisville, that it would lessen competition and foster a teridencY to monopoly in the area." In commenting on the matter, Mr. Nelson pointed out that the proposal inwo ' 4-ved the first and seventh largest banks in Louisville. As of December 31 '1959, Citizens Fidelity Bank and Trust Company had deposits of $257,386,000 Ilarlk of Louisville had deposits of $20,007,000. Deposits of Citizens ticielitY included a number of large commercial accounts; those of the Bank of °1118ville represented chiefly accounts of individuals. The facilities of 8/18/60 _1; Citizens Fidelity included a main office and nine branches; two additional branches had been approved but were not yet open for business. The Bank of 14)ulaville was operating a main office and three branches, all of which the resulting bank would contemplate continuing as branches. Mr. Nelson then commented on the various factors enumerated for consideration under section 18(c) of the Federal Deposit Insurance Act. In cl°ing 801 he noted that the condition of both banks was generally satisfactory; the capital of Citizens Fidelity was considered satisfactory, and that of the Bank of Louisville slightly inadequate. The earnings records of both banks were reasonably satisfactory. The management of Citizens Fidelity was tS"IrOr ly regarded, while the management of the Bank of Louisville was some- 'that aged and there was a problem of replacement. The main offices of the Upo b , "Rs planning to merge were approximately two blocks apart in downtown and if the merger were effected the continuing bank would have six °f the eighteen downtown banking offices. There would be no serious °Irell-aPPing of areas served by the offices of the resulting bank, and it th°ught that adequate competition would be supplied by offices of other banks. Mr. Nelson noted that the city of Louisville contained nine banks, 11 'th 69 Offices. After the proposed merger, the resulting bank would have 4b°U't 35 per cent of local deposits and 23 per cent of banking offices. the proposed merger would result in some contraction of competition, 8/18/60there would be an improvement in the capital situation and management fr°m the standpoint of the Bank of Louisville. Also, the resulting bank Wiuld have a larger loan limit and would offer full trust services. Mr. Nelson then referred to a proposed merger of The First National 181.1k of Louisville and Lincoln Bank and Trust Company, both of Louisville, ICentlleitY, which was now pending before the Comptroller of the Currency. In a report dated August 1, 1960, to the Comptroller of the Currency on the coal:)etitive factors involved in this proposed merger the Board had indicated that — Lne transaction would eliminate from local and regional competition an 1111Pertent competing bank and would increase to a substantial degree the Cone__ tmtration of commercial banking resources of the community. If the merger 1"ar the Jurisdiction of the Comptroller of the Currency were effected, the l'esQlting bank would have about 32 per cent of local deposits and 36 per cent Or the banking offices. If both mergers should be approved, the two resulting banks would have about 67 per cent of deposits and 59 per cent of the banking offices. Mr. Masters commented that the business of the two banks (Citizens Ilidelity and Bank of Louisville) was more complementary than competitive that the relative position of Citizens Fidelity in the city of Louisville 1'1°1114 hot be changed greatly by the merger. He was of the opinion that the difre_e r nee in the types of business handled by the two banks was rather t jf -cant. Citizens Fidelity concentrated on serving the commercial and 8/18/60 -6- industrial needs of the community and had an important correspondent banking business, while the other bank served smaller depositors and engaged rather extensively in making consumer and real estate loans. The Bank of Louisville had no trust business and its correspondent bank business was relatively unimportant. that the On balance, Mr. Masters thought proposed merger should be approved as in the public interest. Mr. Hackley commented that this appeared to be a close case. As a reaUlt of the merger there would be an improvement of the capital situation of the Bank of Louisville, and possibly improvement in management. Iii v1el4 of the limited extent of the lessening of competition, he felt, for the reasons Mr. Masters had stated, that the merger could be considered to be in the public interest. Governor Robertson said he would vote to disapprove the application °r Citizens Fidelity, feeling that it fell squarely within the area of cases c°ntelnlolated for disapproval by the recent bank merger legislation. In this Qase, the largest bank in the city was attempting to take over the seventh 4rgest bank. This would, of course, be advantageous so far as Citizens Pitlelity was concerned, since that bank would thereby increase its consumer 1411 business and obtain four additional banking offices in an economical vsY. However, the merger would permit Citizens Fidelity, already the largest batik in the city, to become larger through taking over offices of another A thereby eliminating alternative sources of credit, and this was exactly the k, 'fld of merger that in his opinion the statute was intended to prevent. 8/18/60 -7- While, as had been said, Citizens Fidelity engaged primarily in extending large loans, it had also gone into consumer credit and was competing with the Bank of Louisville in this field. By the merger the Bank of Louisville, /41th deposits of about $20 million, would be eliminated and mould no longer be available for customers preferring a bank of this size or persons who ht have been turned down by a larger bank. the If the Board should approve aPplication of Citizens Fidelity and the Comptroller of the Currency h°41d approve the merger of The First National Bank of Louisville and Litlecan Bank and Trust Company, there would appear to be no way of preventing the tvo resulting institutions from absorbing other smaller banks, since the same arguments could be used as presented by Citizens Fidelity in this ease. the Accordingly, he would disapprove the application on the grounds that proposed transaction would be inconsistent with the spirit of the merger st"Ilte, there being in his opinion no factors that would outweigh the c41194huti0n of competition resulting from the merger. In further comments, Governor Robertson noted that the Bank of 411i8ville was slightly undercapitalized, but that this was essentially a l 'erviaory problem. Eit No one could say that the bank was not well managed the moment, but if it were not, that again was a supervisory problem. It hed no trust department, but persons desiring trust services could go to °tIler banks. d. In summary, as he had said before, he found no factors that °ffset the diminution of competition that would result from the merger. 1, I k ' V 8/18/6o -8Governor Shepardson stated that although there were certain arguments for approval of the application, this seemed to be one of those Ila rginal cases involving a tendency for the largest bank in the area to gain a still more dominant position. He felt that the Board could not Werlook the fact that another proposed merger in Louisville was pending it the Office of the Comptroller of the Currency. If it were consummated " a the Board should approve the application of Citizens Fidelity, there l'13111d be a high degree of concentration of banking in Louisville within the two resulting banks. Therefore, taking into account the somewhat gllestionable features of the application of Citizens Fidelity as well as the Other pending application, he would vote to disapprove the application 11(47 before the Board. Governor King observed that this case would seem to be an ideal niax.riage from the standpoint of the two banks involved. No doubt both bEtt* ' 8 were convinced that the merger would be good for them, and possibly the Merger would also have some good effects for the public in certain ways. yen) according to information that had come to his attention, the business %balm_ -'"itY in Louisville looked upon both of the proposed mergers with quite a bit nf. apprehension. It was felt that if the mergers should be effected, the tvo resulting banks would be so dominant that many of the business ace— 'utts would have no choice except to deal with one of these two banks, it vcruld be relatively easy for the two large competitors to get their 8/18/60 heads -9- together. Governor King then indicated that he would disapprove the application. Governor Szymczak commented that he regarded this case as a verY close one, as indicated by the Examinations and Legal Divisions. R°vever, on balance, he thought it would be preferable to disapprove the PPlication, and he would so vote. Governor Balderston indicated that he agreed. Question then was raised as to whether the Board wished to advise the Federal Reserve Bank of St. Louis that it proposed to disapprove the aPPlieation inasmuch as the Reserve Bank had recommended favorably. Governor Robertson felt that there were arguments on both sides of e Procedurul question. There had been a policy of checking with the Reserve Banks in similar circumstances in cases involving the establishment °f branches and granting of national bank charters. In this case a new involved and a precedent was being set. In view of the pressures statute was that 14041d flow out of a situation of this type, he believed it would be better for the Board, which had final responsibility for the action, to act "LQ/lit going back to the Reserve Bank. 111-ace,4 the If it went back, the Bank would be 111 a difficult position, particularly because of its closeness to -veal scene. 411EllY6i8 Furthermore, the Reserve Bank had already submitted its of the case and its recommendation, and he doubted that the Bank Q041 d _-rnish additional information that would be of significance. In the 8/18/60 -10- circumstances, a further check with the Reserve Bank might seem to represent st effort to induce the Bank to change its recommendation. Accordingly, his inclination was to think that the Board should act on the basis of the inforillation at its disposal. In further discussion of the procedural question, other members of the Board expressed views similar to those stated by Governor Robertson. At the same time, it 14813 felt that the Reserve Bank should be notified of the Boardts decision before that decision was made known to the applicant, Md that there should be an opportunity for the Reserve Bank to advise its 44118vil3e Branch. The application of Citizens Fidelity Bank and Trust Company to purchase the assets and assume the liabilities of the Bank of Louisville was then disapproved by unanimous vote, with the understanding that an appropriate letter reflecting the decision would be prepared for transmittal to the 11/1icant bank. It was also understood that the President of the Federal Re"Isve Bank of St. Louis would be advised by telephone of the decision, that an opportunity would be given for him to inform the Louisville Branch, 11114 that the Chairman of the Board of Citizens Fidelity Bank and Trust Ocqrm who had expressed an interest in being informed of the Boardts cleciBion as promptly as possible after it was made, would then be advised °t the decision by telephone, after thich the letter reflecting the decision 14°11111 he sr.nt to the bank. 8/18/60 A copy of the letter sent to Citizens Fidelity Bank and Trust Conlin --ranY pursuant to this action is attached as Item No. 2. During the discussion of the foregoing item Mr. Smith, Assistant eetor, Division of Examinations, entered the room, and at this point " 14 8111. Nelson and Hooff withdrew. Supplemental reply to question from Hardy Subcommittee. There had beela distributed to the Board copies of a memorandum from Mr. Farrell dated 41428, 1960, submitting a supplemental reply to one of the questions raised 11' the Subcommittee on Foreign Operations and Monetary Affairs of the House ge'verriment Operations Committee in the letter from the Subcommittee Chairman to Chairmen Martin dated June 10, 1960. This question related to whether it '4°14141 be of economic advantage to the Treasury and the Federal Reserve System to v."avide for destruction of Federal Reserve notes at the Federal Reserve 14144. On June 29, 1960, information on this subject had been submitted by 130ard to the Subcommittee. At that time it VW indicated (a) that, while t4t.e 14041d be some savings if Federal Reserve notes were destroyed at the eliel ' ve Banks rather than in Washington, there would appear to be a broader Illesti°A as to whether the savings would be great enough to offset the additi°11a1 risks involved, and (b) that there would be submitted a supplemental keitor Eeldum comparing in some detail the cost and procedures of the present 44(1 41, " proposed methods of destroying Federal Reserve notes. In commenting, Mr. Farrell pointed out that the supplemental reply %letrt 411to considerable detail in describing the way in which Treasury currency 8/13/60 -12- Mid Federal Reserve notes are handled at the Federal Reserve Banks. It wcUld afford the Subcommittee an opportunity to appraise the differences between the dangers inherent in handling fit and unfit currency and would "1"le, perhaps, to show that the Board was not "seeing ghosts" when it said there were dangers in any operation involving the destruction of currency. , (11"10uelY those dangers would be greater in the case of Federal Reserve ri°tes than in the case of Treasury currency because of the higher denominations involved. By destroying Federal Reserve notes at the respective Banks, about $17o ,000 per year in shipping charges to Washington would be saved on the basis of present volume, but it was estimated that about two-thirds of this '4°1-14 be offset by the decentralization of work now done at a centralized 1c3cation, thus leaving a net saving of about $63,000 per annum. The con- elusion stated in the supplemental memorandum was that the advantage of such SaVing through decentralization of the destruction of Federal Reserve notes to the Federal Reserve Banks was outweighed in importance by the potential risks. After discussion the supplemental reply was approved unanimously, ' 41th t he understanding that it would be sent to the Subcommittee Chairman ri.th an appropriate letter of transmittal. Contingent fund at Kansas City Reserve Bank. A memorandum dated Allglast 11 --) 1960, from the Division of Examinations regarding a contingent kiad /It the Federal Reserv, Bank of Kansas City had been distributed. The kertior andum pointed out that the fund, in existence for many years, had a 8/18/60 —13— Present balance in excess of $11,000. It was not recorded on the general bc)ciks of the Reserve Bank and did not appear in any of the Bankts stateMentes Since the Board apparently had not considered this fund in recent Years) the memorandum suggested that it might be appropriate to review the nlatter at this time. The contingent fund had its origin in an arrangement that was in effect prior to 1924 for handling notary fees derived from the protesting of unpaid items. Since the fees collected exceeded the expenses incident to r endering notary services, a balance was accumulated and the surplus was Used for other purposes. In a letter dated April 25, 1919, the Kansas City l'eserve Bank indicated that the fund was maintained for the purpose of small contributions that could not legally be made by the Bank and charged to expense. On March 6, 1924, the Board advised the Kansas City Reserve Bank thet the practice whereby its notary was deprived of official fees for "tell-al services rendered should be discontinued. At that time the Board ex-n, ' essed the thought that the balance of the fund could be used "for the TAtrpose Of promoting legitimate welfare work among employees of the Bank." On February 15, 1940, the Board of Directors of the Kansas City Ile"1.1/e Bank adopted a resolution to consolidate the contingent fund with "chalsitY fund" and an "employees emergency fund." l'e lution, an Of Pursuant to that amount of $500 subsequently was allocated from the fund to the Reserve Bank's branches and the fund of each office was held 8/18/60 in the custody of an appointed trustee. Disbursements at the head office vere to be made only upon approval of the President or a Vice President, arld those at the branches would require approval of the Vice President or °ashier. It was determined that the fund would be used for minor disburse- its involving donations to charities and civic and religious groups; "Vloyee welfare and education; flowers for funerals, table decorations, et c.; and other incidental expenditures for which charges to Bank expense 1()Il1 d be questionable. Later the fund was placed in the custody of a tIllstee at the head office and subsequent disbursements for all offices in the District were made subject to the approval of two senior officers of the head office staff. It was suggested in the memorandum that the existence of the fund seem to give rise to the following questions: (1) Is it appropriate, 116 a matter of principle, for the Reserve Bank to hold assets that are not Isee°rded on the books? (2) Is it equitable that, by use of the fund, the der Reserve Bank of Kansas City is enabled to make donations or other die}, rsements that would not be considered an appropriate type of expense Et Federal Reserve Bank? In commenting on the fund, Mr. Smith noted that it apparently had ti()t b e e-n considered by the Board for a number of years and that it therefore be helpful to have the guidance of the Board as to what, if any, steps 611°tIld be taken. 8/18/60 Governor Balderston inquired whether the Kansas City Reserve Bank Maiztained a loan fund for the benefit of employees, and Mr. Smith replied that such loans were made from the Bank's funds. Mr. Farrell expressed the view that it was an undesirable practice for the Bank to administer a fund of this kind which was not included on its bookSe In this manner, he pointed out, the Bank could make various contrib-11:i.cts 80ardis that, if made at other Reserve Banks, might be questioned by the examiners. He suggested that the money could be turned over to an erl.clYepes club, whose officers could administer the fund in a manner similar t° that in which the funds of the Reserve Board Club are handled. Mr. Hackley expressed agreement with the views stated by Mr. Farrell. Re ea:w no objection to such a fund if it were used solely for employee 11'8.1se, but he concurred in the thought that the fund should not be maintalted and administered on the current basis. It would be preferable, in 1118 °Pinion, for the fund to be subject to the control of an employee group. There followed comments by the members of the Board, from which it 910ed to be the unanimous opinion that the Reserve Bank should not conto maintain and administer the contingent fund on the present basis. There tO th 14a8 _reement with the suggestion that the Board's view be communicated e Reserve Bank informally, leaving the management of the Bank to develop 4 8°11Ati -on to the problem. Accordingly, it was understood that Governor tald_ 'rston would discuss the matter with the Chairman of the Board of the 8/18/60 -16- /Ca1zes City Reserve Bank, advising the latter of the Board's concern and requesting advice as to the steps decided upon by the Kansas City Bank. Loans to foreign branch officers of American bank. At the request ()f G Wernor Balderston, Messrs. Hackley and Goodman reported on their further "114 of a matter, discussed at yesterday's meeting, to which attention had been drawn informally by the President of The First National City Bank of Ne1.7 Y°111- The problem involved an apparent conflict between the terms of C°10mbian Executive Order requiring banks in that country to make loans to c)fficers and employees at a stipulated rate of interest for the purpose or ac q4iring homes and the provisions of section 22(g) of the Federal Reserve Act vh4 4-ch prohibit loans by member banks to executive officers in amounts in e)cce88 of $2,500. With respect to the situation in Colombia, Mr. Hackley said it °IPPeared that as a result of a labor dispute affecting bank employees in that c°411trY, an Executive Order was issued requiring all banks to make loans to erm, -1"1°15reee for the purpose of purchasing homes. Under a provision of e°1cl'I1 b1an law, such loans were merely authorized, but the Executive Order rtiMe theril mandatory and a subsequent Order extended the decree to The First 14"1414a1 City Bank. It appeared to him that without question any loans made 11111.81Aant to the Order would be loans in a legal sense and that they would 111°1-ata the letter of section 22(g). On the other hand, loans made under co nditions could hardly open the door to the abuses that were contemplated bY that sect _ on 1 of the Act, so it could be said that the spirit and purposes 8/18/60 -17- °f section 22(g) would not be violated. In view of the fact that these 'Would be "forced loans", it might also be argued that they could be regarded as in the nature of fringe benefits, like certain other benefits Provided by Colombian law. His own feeling, Mr. Hackley said, was not based °n the theory that such loans would be in the nature of fringe benefits, but rather that they were mandatory under local law and for that reason would riot seem to be inconsistent with the purposes of section 22(g). . Mr. Goodman reported having discussed the problem informally with the D ePuty Comptroller of the Currency, Who indicated that he would be the sympathetic toward trying to help out the member bank in the circum- stelae es. Mr. Goodman then suggested the possibility that First National City might regard any advances under the Colombian Executive Order as in the nature Of compensation rather than loans, that any such advances be 1411tten - off immediately, and that repayments be regarded as recoveries. There followed discussion during Which it was stated that the bank tim ' l eceived thus far six applications from officers totaling about $50,000. Governor Robertson then expressed the view that any such transaQtio 118 must be regarded as loans Which would therefore come within the letter although not the spirit, of section 22(g). In the circumstances, he au ggested indicating to First National City that it might be prefereble thp. bank not to present the question to the Board formally. This rite -Plated that no suggestion would be made as to how First National City h sndle the matter within its own organization. While it was recognized 8/18/60 -18- that the bank had the right to raise the question with the Board formally if it 80 desired, the Board apparently would have no alternative except to repay in terms of the language of the pertinent provisions of the Federal Reserve Act. In the discussion that ensued, Governor Szymczak expressed the °Pillion that the matter was of a more serious nature than might be indicated by the single incident in Colombia, for similar questions were likely to allae elsewhere and the whole problem of the basis of operations of foreign hIsallches of American banks was involved. He noted that in connection with the Financial Institutions Act a suggestion had been made for legislation that vould have permitted branches of American banks abroad to operate in the sarne manner as banks in the countries where the branches were located, thereby placing such branches on a fully competitive basis. However, such legislation was not enacted and problems such as that confronting First NtIti°nal City in Colombia continued to arise. It was his opinion that the c)nlY answer to the general problem was in securing legislation. In the Preae„ circumstances, he felt that the procedure suggested by Governor Roberts °n was appropriate, but that a full record of the current incident Bhouiri " be placed in the Boardts files so that this and other illustrations 4)11t1d be available at such time as legislation might be under consideration. G overnor Robertson then added to his previous comments by saying thAt. h the would see no objection to pointing out to First National City that Problem of operations of branches of American banks in foreign countries 8/18/60 -19- 1ad been raised in connection with the Financial Institutions Act and that the problem was one that would have to be taken up by the Congress sooner or later. After further consideration, agreement was expressed that the 'matter should be handled along the lines suggested by Governors Robertson and Szymezak. All of the members of the staff except Messrs. Kenyon and Molony then "withdrew and Messrs. Young, Adviser to the Board, and Knipe, Consultant to the Chairman, entered the room. Public information program. Governor Balderston referred to arsati0n5 that he had had with certain members of the staff regarding the matter of communicating information on the philosophy, problems, and 131'°cedure5 of the Federal Reserve System to various audiences, ranging trc academicians to less sophisticated groups. He suggested that the Board might want to have some discussion of this matter and perhaps request the et., to go forward with the preparation of a program, for the Boardts °Ilaideration, that would meet what he considered to have been a long- need,. The other members of the Board indicated that they would favor 81101 a discussion and each expressed certain views. Governor Robertson stated that in his opinion there was a substantial relations problem that had not been met over the years and that he Qnsider it appropriate to request members of the staff to come forward 8/18/60 -20- th a list of suggestions that the Board might consider in laying out a PrOgraM. As examples of projects that might be considered, Governor Robertson mentioned a revision of the booklet on the purposes and functions r the Federal Reserve System that could be read more easily by the average ipers°11, or perhaps a different type of booklet; the preparation of a review °D Federal Reserve operations over a given period of time for submission to clItetanding economists who would be asked to come to the Board for discussion; "II the extending of invitations to various groups periodically to visit the 110ere d 8 offices for the presentation of programs along the lines of the chart h°1.is now presented to various groups upon request. Governor Shepardson referred to the various types of audiences that 811°111d be reached and suggested that perhaps too much of the Boardts literature 114(1 been directed toward a limited segment of the total audience. He felt that information should be made available in terns that the general public c°111d grasp and understand more easily, and that possibly two different of literature were needed. In making this comment, he did not mean to inrels a lowering of the accuracy or competence of material issued by the c)8*I'd) but rather an exploration of the different ways in which information 144ght b -e provided. For this purpose, augmentation of the editorial staff "the Board might be indicated. Governor King suggested a need for the Board to take action on its 441itiative instead of waiting for requests to be received. Also, he telt hat articles in the Federal Reserve Bulletin or other similar publications 0'2 8/18/60 -21- not likely to be read by a wide audience and that an effort therefore oxwad be made to try to reach the general public in other ways, with "laasis on encouraging articles in the press from time to time. Along these lines, he suggested that when members of the Board went out to make Illeehes they might endeavor to place themselves at the disposal of members c)t the press. Governor Szymczak noted that this was a subject to which consideration had been given many times over the years and that some progress had been made. Re felt that efforts at further progress should continue looking toward the m4nation of information concerning the System by whatever means were kV 1 -Lable and appropriate. Governor Balderston expressed the view that a piecemeal approach l'i°1114 not be adequate, that consideration should be given to the types of I/4°11: beinr, ---b done by the Federal Reserve Banks, and that an appropriate program u be formulated even if some cost was involved. Messrs. Young, Molony, and Knipe then presented their views on the nt status of the Board's public information program and on the kinds of kciditioy, --al work that might be undertaken. At the conclusion of the discussion, it vas understood that each of them would give further consideration to the Intttt e- and would submit a memorandum outlining existing problems and the steps tilat 444 418 Opinion might appropriately be taken. The meeting then adjourned. 8/18/60 -22Secretary's Note: Advice was received today that the directors of the Federal Reserve Banks of Philadelphia, Chicago, and St. Louis had established, subject to review and determination by the Board of Governors, the following rates: 3 per cent (rather than 3-1/2 per cent) on discountc for and advances to member banks under sections 13 and 13a of the Federal Reserve Act; 3-1/2 per cent (rather than 4 per cent) on advances to member banks under section 10(b); Philadelphia-4-1/2 per cent (rather than 5 per cent), Chicago-4-1/2 per cent (without change), St. Louis--4 per cent (rather than 4_1/2 per cent) on advances to individuals, partnerships, and corporations other than member banks under the lest paragraph of section 13. Pursuant to the Board's outstanding authorization, the Reserve Banks were advised by the Secretary's Office of approval of such rates, effective August 19, 1960. A press statement in the usual form was issued at 4:00 p.m. EDT, all Federal Reserve Banks and branches were informed by wire of the action taken, and arrangements were made for publication of a notice in the Federal Register. Pursuant to the Board's outstanding authorization, telegrams were sent on August 18, 1960, to the Federal Reserve Banks of New York and San Francisco approving the establishment without change on August 18, 1960, of the rates on discounts and advances in their existing schedules. ssistant Secretary BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. ItemNo. 1 8/18/6o ADDRESS 'OFFICIAL. CORRESPONOENCE TO THE BOARD 41.1fint , "bot,ot1. 4 ' August 18, 1960 4% Charles Cain, Jr., kairman and President, L" Manhattan Overseas Corporation, -1,4•Rilteen Pine Street, "elf York 45, New York. & 1/ear Dir. Cain= In accordance with your request and on the basis of the t40.-mlation furnished in your letter of June 30, 1960, transmitted eranlii,gh the Federal Reserve Bank of New York, the Board of Governors 8 its consent to: (1) A change in location of the Head Office of The Chase Manhattan Bank (South Africa) Ltd., Johannesburg, Union of South Africa, from S. A. Fire House, 103 Fox Street, to Eagle Star House, corner of Fox and Sauer Streets, Johannesburg; and (2) • The establishment of a branch of the South African bank to be located in the premises now occupied by the present Head Office at S. A. Fire House, 103 Fox Street, Johannesburg. The thprcatiaa of the Head Office, after removal, and the location of the130:1208ed branch may not be changed without the prior approval of I'd of Governors. the brn, Unless the Head Office is removed to the new locatiOn and ItiRtlat— leh is actually established and opened for business on or before ar,baridon;!, 1961, all rights granted hereby will be deemed to have been ' 4 that ":; and the authority hereby granted will automatically terminate Qste. BOARD OF COVEFRNORS OF THE FEDERAL RESERVE SYSTEM 317) Cain, Jr. Please advise the Board of Governors in writing, through the -4. Reserve Bank of New York, when the Head Office is removed to eneW location and when the branch is established and opened for esse All Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, assistant Secretary. BOARD OF GOVERNORS Item No. 2 8/18/60 OF THE 0 FEDERAL RESERVE SYSTEM t* WASHINGTON 25, D. C. 4 ADDRESS orricim. CORRESPONDENCE 0 TO THE BOARD :41ta August 18, 1960. A of ci47 \4 Boa/4 Directors, 17-"t4sns Fidelity Bank and Trust Company, -°u1sville, Kentucky. Gentlemen: Reference is made to your request submitted through the F ederal Reserve Bank of St. Louis for consent under the P ar"isions of section 18(c) of the Federal Deposit Insurance Act, S a or mended, to the purchase of assets and assumption of liabilities Ban18 ,411k of Louisville, Louisville, Kentucky, by Citizens Fidelity br-a7 and Trust Company and for approval of the establishment of loon4?hss by Citizens Fidelity Bank and Trust Company in the present aui°r1 of the offices of Bank of Louisville. After reviewing this proposal in the light of all the factor of 8 to be considered under the provisions of section 18(c) Govthe Federal Deposit Insurance Act, as amended, the Board of proernors does not feel justified in giving its consent to the Posed transaction. the 8 Despite certain favorable aspects of the proposal, it is to ,0ard'e judgment that those favorable factors are insufficient lee;°unterbalance other effects of the transaction, including a or bning of competition, the elimination of one alternative source corlo : nlcing facilities in Louisville, and a further increase in orle ;416ration of the commercial banking resources of the area in Institution. For these reasons the Board does not find the tra, "saction to be in the public interest. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary.