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Minutes for To: August 19, 1960 Members of the Board Prom: 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, please initial below. It You were present at the meeting, your initials will indicate approval of the minutes. If you were not present, Your initials will indicate only that you have seen the minutes. 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 on Friday, August 19, 1960. 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. Hackley, General Counsel Mr. Noyes, Director, Division of Research and Statistics Mr. Farrell, Director, Division of Bank Operations Mr. Johnson, Director, Division of Personnel Administration Mr. Masters, Associate Director, Division of Examinations Mr. Conkling, Assistant Director, Division of Bank Operations Mr. Hostrup, Assistant Director, Division of Examinations Mr. Nelson, Assistant Director, Division of Examinations Mr. Goodman, Assistant Director, Division of Examinations Mr. Hooff, Assistant Counsel Mr. Collier, Chief, Current Series Section, Division of Bank Operations Items circulated or distributed to the Board. The following Which had been circulated or distributed to the Board and copies °t//hich are attached to these minutes under the respective item numbers 14(licated, were approved unanimously: Item No. tette,, to the Federal Reserve Bank of Atlanta h:r°ving the appointment of Jack Sicard, D. E. p4ster, and Eric Hingst as Alternate Assistant el'al Reserve Agents. 1 8/19/60 -2Item No. Letter to Vafley Bank and Trust Company, Springfield, Massachusetts, approving an extension of time to establish a branch at 82 North Elm Street, Westfield. 2 Letter to the Federal Reserve Bank of San Francisco stating that the office of California Bank, Los Angeles, California, located at 626 South Spring Street will no 34-. onger be regarded as a branch in view of the recent ransfer of certain functions to the head office of the bank. 3 Letter to The Chase Manhattan Bank, New York City, allthorizing the establishment of a branch in Lagos, lageria. 4 Letter to Citizens State Bank, Tupelo, Mississippi, , rallting permission to operate its present branch at c2 West Main Street as a permanent branch. 5 Letter to City National Bank of Tulsa, Tulsa, Oklahoma, anting its request for permission to maintain reduced 4eserves. 6 f Messrs. Johnson and Goodman then withdrew from the meeting. Oklahoma City Branch building program (Item No. 7). A memo- dated August 18, 1960, from the Division of Bank Operations l'egarding the building program of the Oklahoma City Branch had been distributed. On June 22, 1960, the Board authorized the Federal Reserve Bank t 1Ca18as City to call for bids for construction of an addition and alterations to the Oklahoma City Branch building. The Board was advised n a letter dated August 12, 1960, from President Leedy that seven bids 1184 been received and that the directors of the head office and the branch ree ommended acceptance of the low bids for general construction and . 8/19/60 rfti iret -3- Vault and kitchen equipment. The bid data contained in the Reserve Bank's letter had been reviewed by the Board's Consulting Architect, who concurred in the recommendation of the Bank. The total cost of the 13rogr5m, including the architect's fee and allowance for contingencies, Igas ($2,117,200, approximately $414,000 less than the estimate compiled by the Bank's architect last May. In commenting on the matter, Mr. Farrell stated that, since the low bid was substantially less than the estimate compiled last May, the 13alik's architect had been asked to review the principal items with the 1W bidder. Subsequently, the Board was advised that the architect was satisfied that nothing required by the program specifications and drawings had been omitted. The Board then approved a telegram to the Kansas City Bank irlterposing no objection to acceptance of the low bids and authorizing 11 total expenditure of approximately S2,117,200 for the Oklahoma City 13r411.1ch building program. A copy of the telegram is attached as Item No. Conference of examiners. Pursuant to the recommendation in a eMorandum dated August 11, 1960, from Mr. Solomon, which had been "-reulated, the Board authorized a conference of representatives of the 33a4k Examination Departments of the Federal Reserve Banks on Friday, SePtember 23, 1960, in connection with the Annual Convention of the 4Ettl°48-1 Association of Supervisors of State Banks in Atlantic City, New Jersey. 7. _I 8/19/60 Application of security-Mutual Bank and Trust Company (Item There had been circulated a memorandum from the Division of 1. 112., Examinations dated July 25, 1960, regarding an application of SecurityMutual Bank and Trust Company, St. Louis, Missouri, to merge with The plaza Bank of St. Louis, St. Louis, Missouri, under the charter and name of the applicant bank. Also, a memorandum from Mr. Solomon dated August 15, 1960, discussing certain rather unusual features of the proposed merger Ilacl been distributed. As pointed out in the memoranda, the Missouri statutes forbid branch banking, except that each bank may have one limited-power drive-in ' °I walk-up office within 1,000 yards of its head office. Such an office IllaY only receive deposits Under the cash checks, and make change. Proposed merger the present office of Plaza Bank would be closed, and Ilelq facilities being built by that bank would be operated as a limitedbranch by the continuing institution. As a result, the area would 1°8e an office now providing lending and safe deposit facilities; the tlearest such facilities would be the present main office of SecuritylAtrtuaa about six blocks away. Reports from the Comptroller of the Currency, the Federal Deposit I4Burance corporation, and the Department of Justice on the proposed iliel'ger indicated that it would not affect competition adversely. The ?eder , -1. Reserve Bank of St. Louis recommended approval of the merger, but the Division of Examinations recommended disapproval. 8/19/60 -5In commenting on the proposed merger, Mr. Nelson said that at the time the July 25, 1960, memorandum was prepared the Division of Examinations had recommended disapproval of the application on the groluids that replacement of the full banking services now offered by Plaza Bank by the limited type that could be offered by a branch under State law would result in a lessening of bank services and, accordingly, the merger would not be in the public interest. When President Johns of the St. Louis Reserve Bank was at the 1/ftra earlier this week, Mr. Nelson had discussed the proposed merger Itith him. Mr. Johns pointed out that there was a parkway to the west of the Missouri Pacific Building, in which Plaza Bank is located. The bank, Mr. Johns said, offered services primarily to people in the Missouri ll'acific Building, although it also served some small businesses in the 41 ' ea. Mr. Johns was of the opinion that if a branch were established in the Plaza Bank area, it would to a large extent take care of the bank's customers in that vicinity and, accordingly, the lessening of banking 8"viees would not be significant. The merger would, according to Presi- 44t Johns, increase competition and improve management. On the basis of his conversation with Mr. Johns, Mr. Nelson thought that the Division of 4E011nations could recommend approval rather than disapproval of the eller, despite some lessening of service in the area of the present "rice of the Plaza Bank. 8/19/60 -6Mr. Hackley said it had not been clear to him that the lessening (Ot banking services would be substantial. In view of President Johns' °Pinion, he now had even more doubt as to whether the lessening of services, involving only the elimination of lending and safe deposit rEcilities, would be sufficient to Justify disapproval. Governor Robertson said that he did not find a sufficient basis to Justify disapproval of the application. The competitive factor was ra4.1"1Y neutral, and he believed that the convenience and needs of the could be met by the kind of an office that would be established by thp be continuing institution even though the range of services would not complete. While some people would want other types of service, he telt that this factor was not sufficient to warrant disapproval of the ekaication. Other members of the Board having indicated that they concurred 14 the views expressed by Governor Robertson, unanimous approval was given t° a letter to Security-Mutual Bank and Trust Company granting consent to the merger of The Plaza Bank of St. Louis into and under the corporate title of Security-Mutual Bank and Trust Company and approving the est4blis1ment of a branch at 1230 Olive Street, St. Louis, Missouri. A e%r of the letter is attached as Item No. 8. Application of Citizens Fidelity Bank and Trust Company. Mr. 1448ters reported that Mr. Lee P. Miller, Chairman of Citizens Fidelity Bank Trust Company, Louisville, Kentucky, had indicated that he would like 31. 8/19/60 -7- to come to Washington to discuss the disapproval by the Board of his bara's application to merge with the Bank of Louisville. After discussion, it was understood that arrangements would be tnade for Mr. Miller to meet with the Board on Tuesday, August 23. Additional items circulated to the Board. The following additional items, which had been circulated to the Board and copies of which are attached to these minutes under the respective item numbers indicated, Were approvd unanimously: Item No. Letter to Manufacturers Trust Company, New York City, ,13r(3ving 141 the establishment of a branch at 607 Sound4-e Avenue, Clason Point, Bronx. u tter to Union Bank, Los Angeles, California, approving establishment of a branch in the vicinity of 2400 "4-shire Boulevard, Santa Monica. Letter to the Comptroller of the Currency recommending itieNcrably with respect to an application to organize a orial bank at Safety Harbor, Florida. Letter to the Federal Deposit Insurance Corporation ;:!?rding the application of Union State Bank, Carrizo aii ngs, Texas, for contination of deposit insurance s er withdrawal from membership in the Federal Reserve Ystem. 9 10 11 12 In connection with Item No. 9, an application by Manufacturers Trust Company to establish a branch, Governor Robertson commented that brala e" applications of large banks should always be reviewed carefully to e'vcAd a situation where such a bank might blanket an area. Ordinarily, he said) the State banking authorities are in a better position to -8_ 8/19/60 aPPraise the situation than the Board, but he felt that sometimes it might be advisable for the Board to have meetings with the State authorities to be sure they were not following practices that the Board could not condone. Otto Bremer Company hearing. There had been distributed a memo- from the Legal Division dated August 18, 1960, regarding the need for a hearing in connection with the proposed acquisition by Otto Bremer Cc)rt1PanY, St. Paul, Minnesota, of stock in Western State Credit Company. 48 pointed out in the memorandum, the proposed acquisition could not be lalffully consummated unless the Board first determined after a hearing that the activities of the company were so closely related to the business °I. banking or managing or controlling banks as to be a proper incident thereto and as to make it unnecessary for the prohibitions of section 4 of the Bank Holding Company Act to apply. Accordingly, it was recommended that the Legal Division be authorized to make the necessary arrangements tc)r such a hearing, after which the Division would report back to the 13°41\1 as to the nature of the arrangements and submit for the Board's 4PProval a draft of order for the hearing. In discussion of the matter, question was raised as to the need , the staff to request authorization from the Board to make arrangements tor a hearing that was required by law. The consensus being that this vas — ' Li-necessary, it was understood that hereafter, in cases of this type, the a, ''aff would make the necessary arrangements and report on them at the , a draft of order for hearing was submitted to the Board. /19/60 The Legal Division then was authorized to make the necessary arrangements for a hearing in connection with the application of Otto Bremer Company. Report on competitive factors (Akron, Ohio). A draft of report to the Federal Deposit Insurance Corporation on the competitive factors involved in the proposed merger and consolidation of The Bank of Akron e°mPanY, Akron, Ohio, into and with The Dime Bank, Akron, Ohio, had been distributed under date of August 15, 1960. The report indicated that the Pr°P°sed transaction would eliminate one competing bank and appear to ' lesult in a concentration of banking offices in the central business area bY the continuing bank, that there would be no reduction in banking ices available, and that the resulting bank would provide stronger c3raPetition due to its enlarged capital and resources. In commenting on the proposed merger, Mr. Nelson pointed out that It ' /7°14.1d. combine the third largest bank in the area with the fifth largest bank) and that the continuing bank would become the second largest bank Irith respect to total resources and continue in second place with respect t° the number of offices operated. The head offices of the two banks 141rc1ved were about a quarter of a mile apart, and it appeared that the , s' was some competition between the banks. First National Bank of Akron. 'the largest bank in the city, had total resources of more than ,P264 million and its activities overshadowed those of the other institutions. e there would be some lessening of competition if the merger were 31S1 8/19/60 -10- effected, it was felt that the increase in size of the resulting bank would permit it to compete more successfully with First National. Governor Shepardson inquired as to the significance of a statemeat in the proposed report to the effect that the Bank of Akron had lower loan rates than The Dime Bank, to which Mr. Nelson replied that the two banks had different ranges of rates, the schedule of The Dime Baak being a little higher than that of The Bank of Akron Company. After discussion of this point and other pertinent factors, Governor Robertson suggested changing the conclusion to indicate that the two banks were only a quarter of a mile apart, that they were competing lastitutions, and that the bank to be merged had been growing at a faster 114te than the other and had been charging lower minimum rates on its 1°a4s, all of which raised a question as to whether the competition eliminated by the merger could be offset by other factors. Certain other changes in wording were then suggested, after hich the proposed report was approved unanimously for transmittal in a r°rm reflecting those suggestions. follows: The report, as sent, concluded as Although there would be no reduction in banking offices a4d the continuing bank could provide stronger competition to the largest bank in the city, the proposed transaction would eliminate one competing bank in the area and appears to result Iii a concentration of banking offices in the central business 8'‘ea _ by the resulting institution. The Bank of Akron Company flas been growing at a faster rate and its minimum rate on loans IS reported to be somewhat less than The Dime Bank. Consequently, the Board is of the opinion that competition would be adversely affected by the proposed transaction. 31 8/19/60 -11Mr. Hooff withdrew from the meeting at this point. Application by Brenton Companies. There had been circulated a memorandum dated July 14, 1960, from the Division of Examinations and a memorandum dated August 9, 1960, from the Legal Division recommending issuance of a Notice of Tentative Decision granting approval of the acquisition of voting control by Brenton Companies, Des Moines, Iowa, of 25 per cent of the outstanding voting shares of the following banks: P°weshiek County National Bank of Grinnell, Grinnell, Iowa; The First Ne.tional Bank of Perry, Perry, Iowa; Brenton State Bank, Dallas Center, I°14a; and Jefferson State Bank, Jefferson, Iowa. The application was prompted by a ruling of the Board dated Deeember 9, 1959, that Brenton Companies was in violation of section 4(a)(2) ct the Bank Holding Company Act in that it was "furnishing services to or Pellb°rming services for" the four banks named, which was not permissible sill "the holding company owned or controlled less than 25 per cent of the voting shares of each bank receiving the services. The ownership of the four banks had been in the Brenton family r°1'manY years before the passage of the Bank Holding Company Act of 1956. It 14as asserted in the application that, as a practical matter, the banks Ilere controlled by the applicant, since the controlling group of stockh01,4 LLers of the applicant also controlled these four banks. In the case or eaeh of the banks, it was contemplated that the acquisition would be 'Qe°111P11shed by means of a voting trust agreement to be executed by the 14311eant and by one of the major individual stockholders. 8/19/60 -12Following comments by Messrs. Hostrup and Hackley, the staff was requested to prepare for the Board's consideration drafts of a Notice of Tentative Decision and Tentative Statement granting the applications of Brenton Companies. Mr. Hostrup then withdrew from the meeting, and Mr. Robinson, Adviser, Division of Research and Statistics, entered the room. Reserve requirements of Franklin National Bank of Long Island (Item No. 13). There had been circulated a draft of reply to letters aated April 28 and July 15, 1960, from the Federal Reserve Bank of 4e14 York regarding an inquiry from Franklin National Bank of Long Island as to the effect the establishment of offices in New York City would have on the reserve requirements for that bank. In its letter of July 15, the Reserve Bank had expressed the view that in the event Franklin N4t1°11a1 Bank were to establish a branch in New York City, the Board sh°111d grant permission for it to maintain the reserves required of e01111trY banks, subject to revocation if the character of business of 'Ian National Bank should change materially. The proposed reply to the New York Reserve Bank would indicate that if Franklin National should establish a branch in any of the five 'ighs of New York City, revocable permission would be granted to the barge 4. maintain the reserves required of reserve city banks and action Ig°1116- be deferred on any request from the bank to carry country reserves the Board had established general criteria for the classification elt reserve cities and banks. 8/19/60 -13In commenting on the proposed letter, Mt. Farrell noted that a rather unusual situation was involved in this case. Ordinarily, if a bank established a branch in New York City but outside of Manhattan, it might seem appropriate to grant permission for the bank to maintain country bank reserves. However, in view of the size of Franklin National Bank, it was felt that this approach should not be followed. At the same time, it seemed in order to inform the bank that it would not have to carry central reserve city reserves if it should establish a branch in New York City. In discussion, Governor Robertson observed that The Meadow Brook Bpnk of Nassau County was considering going into New York City thr°11g11 a merger with Colonial Trust Company, so that the question ' 121esented by Franklin National was almost certain to be presented in Other cases. He also suggested that the final paragraph of the proposed letter be changed to eliminate any reference to the characteristics of centra reserve city banks. In further discussion, it was noted that if any of the plans l'eeelitlY considered by the Board for the classification of reserve cities 811°11-14 be adopted, Mineola, New York, in which the head office of National Bank is located, would become a reserve city and Nation,-1 would be a reserve city bank. The proposed letter to the Federal Reserve Bank of New York was the 4 ITZOas.d. unanimously subject to the changes suggested by Governor 11°bertson• A copy of the letter, as sent, is attached as Item NO. 13. 8/19/60 -14Maximum permissible rates of interest. Governor Robertson said that he would like to suggest that the Board ask the staff to explore the possibility of raising the ceiling on rates of interest payable by member banks on time and savings deposits to either usury requirements of the various States. 6 per cent or the He noted that practically all of the demand and pressure for raising the maximum rates of interest on time and savings deposits had now ceased. Consequently, with one possible reservatice, this might be the best possible time to act. With no pressure t° raise the interest rate ceiling, the Board could adjust the maximum rates to a Point that no bank would touch and thus effectively eliminate the maximum rate problem without the action being construed as meaning that the Board thought high interest rates were here to stay or indicating that the Board thought the banks could afford to raise their interest rates. This would put the burden on a bank to determine what rates it could afford Pay in the light of conditions ann competitive aspects in its own ten..,"ory, The banks would have to decide themselves rather than hide behind a decision of the Board. Governor Robertson noted that some banks had been requesting that 1218"ximimi rates be raised on time deposits, including foreign time deposits, hIlt that rates on savings deposits be maintained, so that they could pay higher rates on those accounts for which they wanted to pay such rates but hid behind a Board decision on other accounts. If the Board could move 4°14 0n an experimental basis, the move would permit free competition and 8/19/60 -15- /g°111c1 put the burden on the banks to decide what they could afford to PV, at a time when, generally speaking, there was no demand or necessity to move the maximum rates upward. If the experiment did not work, the Board could always move the maximum rates dawn again. Over the years, Governor Robertson said, he had felt that a meximum rate was necessary in order to prevent some banks from going out into the speculative field to increase their earnings to take care of higher costs. However, he was not sure whether this was a problem. ecmditions were different now from when maximum rates of interest were first established in terms of management practices and the ability of supervisors t° Itet• There would be an opportunity to see whether a plan such as he had. suggested would work or whether there was a real need for having 1°Iger maximum rates of interest. e The Board could watch the results and a position to move downward if necessary. There was one aspect, Governor Robertson said, that gave him some conce-u. That was whether this would be a wise move in a political year, because u ndoubtedly such a move would be opposed by most of the banks or the count17. In his opinion, however, this was not a political matter, 44d action along the lines suggested could not be so construed. He IN*tted that, if the Board was inclined to move in this direction, he could not think of a better time. The Board always disliked to move under ll'esstlre, because action under such conditions would be construed to mean th4t the Boa thought banks could afford to pay higher rates and there • 8/19/60 -16- would be pressure to move up to the maximum. This would impel some banks to raise their rates of interest even though they could not afford to do 8° and would create difficult supervisory problems. On the other hand, if action should be taken at this time, it might be beneficial to the bara, --tag system and to the economy. Some banks, of course, might move their rates up unwisely to compete more with savings and loan associations, 441-this might have repercussions in the building and housing industries. Governor Robertson then repeated that he would like to have the 8telf devote real time and effort to developing all of the factors that slickld be considered by the Board. During a discussion that followed, reference was made to various t€tetors, both of a legal and economic nature, that appeared pertinent to ""e problem, and it was agreed that these matters would have to be e3c131°red further before any decision was reached. Governor King expressed the opinion that it would be unwise, under 131‘eseat circumstances, to take any action with respect to changing the 1118411m interest rates. devote He hoped, therefore, that the staff would not time to studying the problem at the expense of other matters that he c, `JIlsidered more urgent. cl°11btpel As far as his own thinking was concerned, he that any work the staff might do would make much of a difference; it he 11434 a strong conviction that the Board should move in the manner that he4 bee, -4 suggested, he would make the move. However, the banks had Veatl"ered the problem for the present. Although they might come back 8/19/60 -17- again later, the fact that savings and time deposits were now increasing was rather good proof that the Board had done the right thing in the past Yea17. If higher rates were permitted, he felt that the big banks would "t bigger and some smaller banks would be eliminated) and he could get 40 satisfaction if the move worked in that direction. It was always a l°01d thing to explore both sides of a problem of this kind. However, in lew of the practical situation over the next few months, he would hesitate to have the staff spend a lot of time on the matter at the expense of other ProJects. There ensued further discussion of what kinds of information the starf might supply that would be helpful to the Board and the types of info) , —"ation that might be compiled without undue interference with other chlties. At the conclusion of the discussion, it was understood that the "r would proceed to study the problem and present material to the for its consideration, having in mind the various comments made at this meetinz. The meeting then adjourned. Secretary's Notes: Pursuant to recommendations contained in memoranda from appropriate individuals concerned, Governor Shepardson today approved on behalf of the Board the following items relating to the Board's staff: App tMents Szybaej°1111 Thomas McNeil as Secretary, Board Members' Offices (Governor efre„44.a:ki s with basic annual salary at the rate of $4,830, - vJ-ve the date of entrance upon duty. Office), 8/19/6o APP9intments -18(continued) 4 Ann Wentworth as Personnel Clerk, Division of Personnel Administration, /4-th basic annual salary at the rate of $4,345, effective the date of entrance upon duty. 4-larY increases t .John C. Brennan, Personnel Assistant, Division of Personnel Adminisration, from $8,860 to $9,215 per annum, effective August 21, 1960. $4 Lee E. Sawyer, Clearing Assistant, Office of the Secretary, from )355 to $4,510 per annum, effective August 21, 1960. Tr4nsfers Gena Gander, from the position of Placement Technician to that of ,7toYee Relations Technician, Division of Personnel Administration, with 4 " Increase in basic annual salary from $5,820 to $6,015, effective 4gust 21, 1960. 440„, Robert B. Hamilton, Personnel Technician, Division of Personnel astration, from Budget Position No. 12 to Budget Position No. 8, with "ange in title or basic annual salary at the rate of $6,050, effective 46Lmt 21, 1960. ' of Charles W. Wood, from the position of Personnel Technician to that el:rsonnel Assistant, Division of Personnel Administration, with no al ge in his basic annual salary at the rate of $6,600, effective August 1960. Governor Shepardson also approved today on behalf of the Board the following items: 19,Memoranda from the Division of International Finance dated August 16, recommending that James C. Wallace, Economist in that Division, be rized to spend two weeks on official duty (with the usual per diem) at j tlIztt-T Bank of England while on leave in Europe, with the understanding Wallace would pay his expenses to and from Europe and would travel ' rsonal leave. (,1, 11 Memorandum dated August 15, 1960, from Mr. Noyes, Director, Division Teetesearch and Statistics, recommending that the services of Mrs. Nancy H. i rs be continued to December 31, 1960, on the basis of compensation Areve tIli5-c3us1Y approved by the Board on January 14, 1960, despite the fact that the olTuld go beyond the maximum number of hours of work contemplated by ' 4.ginal approval. I ,-,-/ I-221elci;tary, / Assis BOARD OF GOVERNORS vo,44,4** OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item :No. 1 8/19/60 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD tfr4 4 Nf4Nut 404*** August 19, 1960 HriV4alter M. Mitchell, Chairman of the Board and Federal Reserve Aent, FVeral Reserve Bank of Atlanta, Atlanta 31 Georgia. 1DarMr. Mitchell: In accordance with the request contained in your letter of et 1960, the Board of Governors approves the appointments of A;"8* Jack Sicard, D. E. Plaster, and Eric Hingst as Alternate letant Federal Reserve Agents at the Federal Reserve Bank of 'ilanta to succeed Mr. Floyd Greer and Mr. Hudson Johnson. TiN This approval is given with the understanding that tb, Sicard, Plaster, and Hingst will be solely responsible to iljede,ral Reserve Aeent and the Board of Governors for the proper abi rrlance of their duties, except that, during the absence or dis— thei:''Y of the Federal Reserve Agent or a vacancy in that office, reePonsibility will be to the Assistant Federal Reserve Agent the Board of Governors. When not engaged in the performance of their duties as Al-tern Hate Assistant Federal Reserve Agents, Messrs. Sicard, Plaster, and pini!'st may, with the approval of the Federal Reserve Agent and nistj,?sident3 perform such 1.,ork for the Bank as will not be incon— Imith their duties as Alternate Assistant Federal Reserve It will be appreciated if Messrs. Sicard, Plaster, and ; st are fully informed of the importance of their responsibilities al all ellibers of the staff of the Federal Reserve Agent and the need for inaini. disc enance of independence from the operations of the Bank in the 4rge of these responsibilities. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM 6 Wa ter M. Mitchell — 2 — It is assumed that Messrs. Sicard, Plaster, and Hingst will "e:eute the usual Oaths of Office, which will be forwarded to the Board ',.1,rvernors along with the notification of the effective dates of aPpointmentri. It i s understood that because of certain changes in personnel and addit Jena' responsibilities that will be placed on Messrs. Greer and , uohnson„ they will be• unable • to continue to serve as Alternate :Tstant Federal Reserve Agents and for these reasons their appoint— ts are being terminated. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. 4.. I:. ‘P• BOARD OF GOVERNORS OF THE Item No. 2 8/19/60 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE HOARD August 19, 1960 Board of Directors, Valley Bank and Trust Company, Springfield, Massachusetts. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Boston, the Board of Governors of the Federal Reserve System extends until October 3, 1960, the time within which Valley Bank and Trust Company may establish a branch at 82 North Elm Street, Westfield, Massachusetts, under the authorization contained in the Board's letter of July 31, 1959. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No. 3 FEDERAL RESERVE SYSTEM 8/19/60 WASHINGTON 25, D. C. ADORESS OFFICIAL CORRESPONDENCE TO THE BOARD Fae. ,Cttz ' 400- August 19, 1960 E. H. Galvin, Vice President, `*ral. Reserve Bank ? of San Francisco, 'all Fr ancisco 20, California. te44‘ Itr• Galvin: ing the Reference is made to your letter of July 27, 1960, regard. tain 0 transfer by California Bank, Los Angeles, California, of cer— its ReP , Irations frcv. its branch located at 626 South Spring Street to It appears that the Clearing and Transit Department /dal (. cc You tc"63-nue to function at the 626 South Spring Street Office and ,:dvice as to whether the authorization to operate a branch th11133t' a location should be relinquished. br h At the time the bank was authorized in 1956 to establish cort,,,, c at 626 South Spring Street it was stated that no public that."`:: : 1 01.1ld be had with the Clearing and Transit Department and : itET 65 flinction would be the processing of clearing and transit sczte messeners t messengers from other banks being in and out. There wle 11.̀ contact by the public with the Corporate Trust Division and to the—ri nezi '% ervi orf cin eg e.Division which you state have now been transferred 626 8 Based upon the information that the operations at the to4 131,1v," SPring Street Office will not involve transactions with it brazi !lich cl will not be regarded as a branch and should be removed to Oper assification. California Bank should be advised that ardts ations should not be resumed at this location without the vermission for the establishment of a new branch. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS e,cAsti,''te,„4' \ OF THE * 1 FEDERAL RESERVE SYSTEM g4 WASHINGTON 25, D. C. Item No. 14 8/19/60 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD August 19, 1960 The Chase Manhattan Bank, 4nieen Pine Street, 15, New York. Gentlement author. The Board of Governors of the Federal Reserve System to th lzes The Chase Manhattan Bank, New York, New York, pursuant Act3 ' e of Sections 9 and 25 of the Federal Reserve Nis,ert.oProvisions establish a branch in the City of Lagos, Federation of tag082-a La,t, 111 Broad Street, corner of Broad and Odunlami Streets, Provi;i"`"cl to operate and maintain such branch subject to the 40t be °Lis of such Sections. The location of the branch may c)f 2"anged, after establishment, without the prior approval °arcl of Governors. or 1, 3 Unless the branch is actually established and opened hereCs-Lness on or before August 1, 1961, all rights granted hereb, Y shall be deemed to have been abandoned and the authority granted will automatically terminate on that date. t.4014,th Please advise the Board of Governors, in 'writing, ope '4„,"ho Federal Reserve Bank of New York, when the branch for business. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE Item. No. 5 8/19/60 FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD August 19, 1960 Board of Directors, Citizens State Bank, Tupelo, Mississippi. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of St. Louis, the Board of Governors It the Federal Reserve System approves the continued ! eration pon a permanent basis,of the branch of Citizens int Bank, Tupelo, Mississippi, at 122 West Main Street, "-Pao, Mississippi. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS 4 4400044. oi coltIgq01,04 OF THE FEDERAL RESERVE SYSTEM $ Item No. 6 8/19/60 WASHINGTON 25. D. C. : 44 00 ADDRESS OFFICIAL CORRESPONDENCE 4"i',41tritst TO THE HOARD August 191 1960 Board of Directors, City National Bank, Tulsa, Tulsa, Oklahoma. Ge atlemen: Pursuant to your request submitted through the Federal Reserve Bank of Kansas City, the Board of Governors, acting the provisions of Section 19 of the Federal Reserve Act, the" . 68 Permission to the City National Bank, Tulsa, to maintain tai same reserves against deposits as are required to be mainby banks located outside of central reserve and reserve cit"Les, effective as of the date it opens for business. Your attention is called to the fact that such per' 4- 11 is subject to revocation by the Board of Governors. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. 31977 TE LE GR AM LEASED WIRE SERVICE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON Item No. 7 8/19/60 August 19, 1960 ectr sas City Board approves acceptance of low bid for construction t addition and alterations to Oklahoma City Branch building plus 1°14 —3 for vault and kitchen equipment as recommended by directors o °klahoraa City Branch and the Head Office and described in your tter of August 12, 1960. Board authorizes expenditure of approximately $2,1170200 t Program, which figure includes architects' fees and the .ted allowance of $100,000 for contingencies, to provide for ' lleoua minor costs and change order's, with the understanding th4t 40 major changes in the program will be made without first obta4._. aPproval of the Board. (Signed) Kenneth A. Kenyon Kenyon BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 8 8/i9/60 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD August 19, 1960 1,3‘oard of Directors, oecurity-Mutual Bank and Trust Company, St. Louis, Missouri. Ge ntlemen: Pursuant to your application submitted through the Federal Reserve Bank of St. Louis and subject to the cir;umstances described therein, the Board of Governors of the Feder Reserve System, after considering all factors set °rth in section 18(c) of the Federal Deposit Insurance Act, It1„: amended by the Act of May 13, 1960, finds the transaction m_ be in the public interest and grants its consent to the 7rger of The Plaza Bank of St. Louis, St. Louis, Missouri, ito and , under the corporate title of Security-Mutual Bank Trust Company. The Board of Governors also approves the 17tablishment by Security-Mutual Bank and Trust Company of a ,!anch at 1230 Olive Street, St. Louis, Missouri, it being zderstood that the branch will be moved to the northeast orrner of 13th and Olive Street in St. Louis upon completion construction of quarters at that location. Z This approval is given provided the transaction is eons lumated within six months from the date of this letter. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 9 8/19/60 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD August 19, 1960 Board of Directors, Manufacturers Trust Company, New York, New York. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of New York, the Board of Governors of the Federal Reserve System approves the establishment of a branch at 607 Soundview Avenue, Clason Point, Bronx, New York, by Manufacturers Trust Company, provided the branch is established within 81-X months from the date of this letter. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No 10 8/19/60 FEDERAL RESERVE SYSTEM WA6'HINGTON 25, O. C. ADORtell OfFICIAL CORRESPONDENCE TO THE BOARD August 19, 1960 Board of Directors, Union Bank) Los Angeles, California. Gentlemen: Pursuant to your request submitted through th6 Federal Reserve Bank of San Francisco, the Board ?f" Governors of the Federal Reserve System approves . 41?_!stablishment of a branch in the vicinity of 2400 11,4.4shire Boulevard, Santa Monica, California, by flicIn Bank, provided the branch is established by mcvember 1, 1961. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 11 8/19/60 ADDRESS orrIciAL CORRESPONDENCE TO THE BOARD August 191 1960 C°Illr)taioller of the Currency, TyireasurY Department, '.4hingt°n 25, D. C. Attention Mr. T. M. Taylor, Deputy Comptroller of the Currency. Deer Comptroller: ;1 Reference is made to a letter from your office dated April 4 31'!') batik enclosing copies of an application to organize a national Z,Safety Harbor, Florida, and requesting a recommendation as : to th 'ler or not the application should be approved. A report of investigation of the application conducted by 1 -1, illiiner for the Federal Reserve Bank of Atlanta indicates generally Nror, t41) findings with respect to the proposed capital structure of 3 Ond future earnings prospects. with respect to management, the ,rt indicates that the chief executive officer has not been 1)) Q1ect-,: .0 niaio and while several of the proponents are experienced bankers, -r' 4Il rtY of the proposed members of the board reside outside the ' AY' The group as a whole is not considered strong; however, 11,'" aPPear that an outstandinc executive officer could provide no.et%"arY leadership. Although the need for a bank in this area sufficient potential • h to urir,ent at this time, there seems to be suoport the institution. Accordingly, the Board of Governors favorable consideration of the application orovided 'aeto-,'"Illellto for executive manaffement of the bank are made satis•',Y to Your office. )tIT (11 , ctIts anT he Poord's Division of Examinations will be glad to it Y aspects of this case with representatives of your office You So (lesire. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. 32f " /4,0 BOARD OF GOVERNORS OF THE Item No. 12 8/19/60 FEDERAL RESERVE SYSTEM WASHINGTON 25, O. C. ADDRESS OPICIAL CORRESPONDENCE TO THE SOARO August 19, 1960 The Honorable Jesse P. Wolcott, Chairman, Federal Deposit Insurance Corporation, Itiashington 25, D. C. Dear Mr, Wolcott: Reference is made to your letter of August 9$ 1960 concerning the desire of the Union State Bank, Carrizo Springs, Texas, to continue as an insured bank lowing its withdrawal from membership in the Federal serve System. No corrective programs have been urged upon theb , enk or agreed to by it which the Board of Governors u_ e-Lieves should be incorporated as conditions to the Qontinuance of deposit insurance. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. 47. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item :No. 13 8/19/60 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD August 22, 1960. Ibward D. Crosse, Vice President, Necleral Reserve Bank of New York, el/Y°rk 45, New York. 4ar Mr. Crosse: This is in reply to your letter of April 28, 1960, enclosing theex rchange of correspondence with Mr. Howard Hilton Spellman regarding Lon ,?serve requirements of his client, the Franklin National Bank of This reply was delayed awaiting your comments, which have 11(3:baland* data been received in your letter of July 15, together with statistical earing on the question. 130arci In response to Mr. Spellman's questions, Regulation D of the Of Go vernors entitled "Reserves of Member Banks" provides in batik °11 204.2(a)(3) that for the purposes of the regulation a member officsuall be considered to be in a central reserve city if the head Nre;°r any branch of such bank is located in a central reserve city. if the bank establishes a branch in New York City, the retor (1-124nich it would be required to maintain would be those required lAkad rnk located in a central reserve city. The reserve requirement ahci air based on the deposits of the bank, including the head office branches. (See 1915 Federal Reserve Bulletin, page 125.) 19 0f tL however, the Board of Governors is given authority by section Nlerv "e Federal Reserve Act to permit a bank located in a central Nierv :City to hold and maintain the reserves required for a bank in a ,,Ildsucheity, or for a bank not in a central reserve or a reserve city, 'egillat7; Permission may be granted "either in individual cases or under :,111 apt ; (3ns Of the BoarC on such basis as the Board may deemreasonable -14-ber.fn°Priate in view Of the character of business transacted by the (United States code, Title 12, § 462.) ti„ Prior to the amendment of the statute by the Act of July 28, ce;'e Board of Governors was authorized to grant such permission in 1 , 1 reeee , Of banks located in the "outlying districts" of central reserve cttle r'e cities but this provision was repealed and the quoted qae -ge urn been —ks substituted on that date. Since the amendment, the Board c°nsidering, but has not yet adopted, standards to be used in Mr. Howard D. Crosse -2— inssing upon requests for permission to carry reduced reserves. Pendhe to" adoption of such standards, the Board has given such permission el _ aoms banks during the past year, but only in cases where it seemed Zr that the applicant would satisfy any standards that might be adopted No permission has been granted to any bank comparable to such the b,rranklin National Bank, which has some of the characteristics of 'nice that are now carrying reserve city reserves. Ordinarily the Board does not consider hypothetical questions. 1n t the 13 s case, however, because of the unusual circumstances involved, ard has indicated that, if the Franklin National Bank should estaj revo -Lish a branch in any of the five boroughs of New York City, tlerveable permission would be granted to the bank to maintain the rear ' ,es required of reserve city banks, and action would be deferred on e4..r?Tiest from the bank to carry country reserves until the Board had andd?lished general criteria for the classification of reserve cities panks. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary.
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