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Minutes for
To:
Members of the Board
From:
Office of the Secretary
August 21, 1963
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
only that you have seen the minutes.
Chin. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
Gov. Mitchell
cIS
2831
Minutes of the Board of Governors of the Federal Reserve
SYstem on Wednesday, August 21, 1963.
The Board met in the Board
Room at 10:00 a.m.
PRESENT:
Mx.
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman 1/
Balderston, Vice Chairman 1/
Mills
Robertson
Shepardson
Mitchell
Mr. Kenyon, Assistant Secretary
Mr. Fauver, Assistant to the Board
Mr. Farrell, Director, Division of Bank
Operations
Mr. Johnson, Director, Division of
Personnel Administration
Mr. Shay, Assistant General Counsel
Mr. Daniels, Assistant Director, Division
of Bank Operations
Mr. Goodman, Assistant Director, Division
of Examinations
Mr. Leavitt, Assistant Director, Division
of Examinations
Mr. Sprecher, Assistant Director, Division
of Personnel Administration
Mr. Mattras, General Assistant, Office of
the Secretary
Senior Attorney, Legal Division
Young,
Mr.
Discount rates.
The establishment without change by the
Pedel'al Reserve Bank of Boston on August 19, 1963, of the rates on
disc
°Iants and advances in its existing schedule was approved unani41°1181Y3 Ylth the understanding that appropriate advice would be sent
tothat Bank.
Circulated items.
The following items, copies of which are
ElttetChed to these minutes under the respective item numbers indicated,
1?er.
.221 unanimously:
'11PIET
fltered meeting at point indicated in minutes.
2832
8/21/63
-2Item No.
Letter to Chase Manhattan Overseas Banking
Corporation, New York, New York, granting
c°nsent to a change in the location of the
srasilia
Il
Branch of Banco Lar Brasileiro,
4., Rio de Janeiro, Brazil.
1
i)Letter to Lafayette Trust Company, Easton,
ennsylvania, approving (1) the establishment
,2f a branch on William Penn Highway, Palmer
“)1411ship, and (2) an investment in bank
Dremises.
2
12etter to Northeastern Banking Company)
10111merce, Georgia, approving the establishr4ellt of a branch at 17 Little Street.
3
140rter to Trust Company of Georgia, Atlanta,
b,°rgia, approving the establishment of a
,
44noh on Edgewood Avenue between Ivy and
''cturtland Streets.
4
lA' ter to the Federal Reserve Bank of
nta regarding the head office building
Drogram
5
Governor Balderston joined the meeting at this point and
Goodman withdrew from the room.
Report on competitive factors (Norfolk-Suffolk, Virginia).
Illere had been distributed a draft of report to the Comptroller of the
on the competitive factors involved in the proposed merger of
The
ranters Bank of Nansemond, Suffolk, Virginia, into The Seaboard
4tizens National Bank of Norfolk, Norfolk, Virginia.
prepared,
Mr. Leavitt noted that since the proposed report was
the ,
National
`'omptroller of the Currency had approved a merger of the
tazik
cl" Suffolk into the Virginia National Bank of Norfolk.
This would
eessitate a revision of that part, of the report in which the merger was
2833
8/21/63
-3-
referred to as awaiting approval.
He also noted that upon the consummation
°I* such merger and the merger currently under consideration the city
°Is
Suffolk would have offices of two large banks along with one independ-
entbank of relatively small size.
Governor Shepardson observed that the conclusion of the report,
"rafted, would state that consummation of the two proposed mergers
131tich relatively large banks would expand into Suffolk would alter
the
banking structure in Suffolk and represent a potential threat to
the ability of the remaining local bank to offer effective competition
a'rld. maintain an independent status. He had understood it to be felt
ene1"8-1-1Y that in a market area of any size there might well be a place
both for larger banks, which would handle the credit needs of larger
c141tomers, and for smaller neighborhood-type banks.
This point of
'had been suggested by the Board in certain previous cases. He
1'14
iligIlired whether it was not the view that under such circumstances a
44€111er independent bank could exist and prosper.
In discussion of this point, Mr. Leavitt expressed the opinion
that
normally a small local bank could continue to exist in such eircumstall
eee if it desired to stay in business and meet the increased competition.
•
lie
P°1mted out, on the other hand, that the application in the current
ce.se
had stated that if the then proposed merger of National Bank of
krfolL
44s- into Virginia National Bank was consummated, the merger contemplated
1/Y the
current application would become a matter of sheer necessity; that
'1%th
er of the banks participating in the current application could
2834
8/21/63
-4-
ctlerwise continue to compete effectively for important business in
the Suffolk area.
Should both mergers be consummated
Mr. Leavitt
th°1-Ight it was probably true that the sole remaining local bank would
rind it even more difficult to continue to operate effectively for
ilVortant business in the Suffolk area.
This was reflected to a
certain extent in comments by the bank's president, as set forth in
the draft report.
Mr. Shay pointed out that increased competition
'
alve.Ys posed a "potential threat" to the ability of a local bank
to
operate effectively.
On the basis of this discussion, Governor Mills proposed that
the
conclusion of the competitive factor report be shortened by
°rIlitt*
lng the reference to the ability of the remaining local bank in
to maintain an independent status.
Question then was raised whether the Board would want to add to
the Conclusion of the report a sentence expressing the view that on
baln„
-"ee the effect of the proposed merger on competition would appear
to b
e slightly adverse.
Governors Shepardson and Mitchell indicated that they would regard
the i
nclusion of such a sentence as acceptable. Governor Robertson,
ver, expressed a preference for leaving the conclusion as it had
oril3
411Y been drafted.
He regarded that language as covering the
4ertti
-s-1- issue involved in an appropriate way.
/1°111-1
He doubted whether it
be feasible to try to categorize conclusions in terms of the effect
11110etition being, for example, slightly or moderately adverse.
Governor
2835
8/21/63
-5-
14111s indicated that his preference would be against including the
ProPosed additional sentence; he would prefer to state the conclusion
in the
manner that he had previously suggested.
Governor Balderston
BIleZead that the Board's discussions of competitive factor reports
4 tend to become still more extended if it became necessary to
8:ttempt to arrive at labels such as slightly, moderately, or substantially
a4verse.
He favored phrasing this report in the manner suggested by
C"rnor Mills.
have
Governor Robertson then stated that although he would
preferred the conclusion as originally drafted, the difference
13t.;"en that and the modification proposed by Governor Mills was not
411'ic2ent to cause him to vote against sending the report in such
tOrni.
The report was then approved for transmission to the Comptroller
'
1..th the understanding that the conclusion would read as follows:
There is virtually no direct competition between The
Seaboard Citizens National Bank of Norfolk and The Farmers
Bank of Nansemond. However, Citizens National originates
a small amount of deposit business and extends lines of
credit to a few large businesses in Suffolk.
Consummation of the proposed mergers by which relatively
large banks would expand into Suffolk would alter the
banking structure in Suffolk and represent a potential threat
to the ability of the remaining local bank to offer
effective competition in the community.
Circulated items.
The following additional items, copies of
Yht
ch are attached to these minutes under the respective item numbers
.cated, were approved unanimously:
2836
8/21/63
-6Item No.
Letter to Chairman Dawson of the House
90Ininittee on Government Operations reportOn H. R. 7879, a bill to establish
DePartment of Consumers.
6
Letter to the Federal Reserve Bank of
/3°8ton approving a revision of the
"V-oyeest salary structure.
7
Chairman Martin joined the meeting at this point, and Messrs.
Parr. 11
Johnson, Daniels, and Young withdrew from the room.
Retirement Syiem of the Federal Reserve Banks.
At the meeting
°II June 27, 1963, it was agreed that Mr. George B. Buck, Actuary of
the Retirement System of the Federal Reserve Banks, should be informed
that the Board would like to have him meet with the Board at a mutually
cl31venient time to discuss certain studies that Professor Dan M. McGill
4.1,a
made in connection with the Retirement System.
Professor McGill,
°t the Wharton School of Finance and Commerce, University of Pennsylvania,
had
been engaged by the Board as a Special Consultant in connection
tth
that
this study of the Retirement System, and it had been contemplated
he would participate in the meeting with the Board.
It was now reported that Professor McGill apparently would be
84411a1D1e on September 23, 24, or 25 for such a meeting, but that
Buck would not be free to attend on September 23.
Governor Mitchell stated that according to his schedule there
148 4 Possibility he could attend a meeting held on September 24;
he
°lad not be available on September 25.
2837
8/21/63
It was then agreed that the meeting with Dr. McGill and
It% Buck should be arranged for September 24, 1963, if convenient
t0them.
It was also understood that if Governor Mitchell was not
bleto attend he would consider submitting questions that could be
ked on his behalf.
Fund and Bank meetings.
There was a brief general discussion of
the schedule for the annual meetings of the International Monetary
h.td and
the International Bank for Reconstruction and Development, to
be hei
d in Washington from September 30 through October 4, 1963, including
the
extent of Federal Reserve participation. It was noted that luncheons
Irel'e to be given at the Federal Reserve Building on October 1 and 3 for
to/4,4
'
4.gn central bankers attending the meetings and that the Reserve
441k Presidents, who would be in Washington on October 1 for a meeting
orthe Federal Open Market Committee, would participate in the luncheon
that date.
airing the discussion, question was raised whether the
14elithers of the Board should not receive invitations to attend the business
east
°tIs of the annual meetings, and Chairman Martin explained some of
the ,
`4friculties involved in expanding the list of those receiving such
ir1vitations.
All members of the staff then withdrew and the Board went into
iltive session.
The Secretary's Office was informed later by Governor Sherardson
th
clilring the executive session the following actions were taken:
2838
8/21/63
-8Proposed annex building.
As an outgrowth of earlier discussion
about the possibility of underground extension of garage space in
connection with the proposed annex to the Federal Reserve Building,
/4h1oh would be located on the Board's property across "C" Street,
Governor Shepardson had distributed to the other members of the Board
a nielnOraridUM dated August 20, 1963, recommending for reasons stated
that the architect be instructed to abandon any plan for use of land
111:31th of the Board's present property line and that the architect proceed
171th feasibility studies of lateral underground extensions to the
el111) lines on 20th and 21st Streets and/or the use of one or more
41)(1Are-ground floors for needed garage space.
Governor Shepardson's recommendation was approved.
Proposed overseas study program.
An overseas study program
that had been proposed for a member of the Board's staff during a
tlihe-Impitth period from October 1963 through June 1964 was not approved
tIthe Board, on the basis that it did not come within the scope of
13°8.1‘ci Policy relating to foreign study and travel assignments.
The meeting then adjourned.
Secretary's Notes: Pursuant to the recommendation contained in a memorandum from
the Division of Examinations, Governor
Shepardson approved on behalf of the Board
on August 20, 1963, acceptance of the
resignation of Donald O. Starr, Assistant
Federal Reserve Examiner in that Division,
effective September 1, 1963.
Pursuant to recommendations contained in
memoranda from appropriate individuals
concerned, Governor Shepardson today
approved on behalf of the Board the following actions relating to the Board's staff:
283)
8/21/63
-9-
"1-'•1-)flment
Fayette Didjunas as Clerk-Stenographer, Division of Personnel
2411ni5trati0n, with basic annual salary at the rate of S,O3O,
'fective the date of entrance upon duty.
Acri-
of resignation
William Lane Porter, Jr.
ective August 23, 1963.
Clerk (Summer), Legal Division,
Assistant Secreta
2840
Item No. 1
8/21/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, O. C.
ADDRESS
OFFICIAL
CORRESPE1,101_4i
TO THE 00A1.111
August 21, 1963
Mr. Charles Cain, Jr., President,
. 114as Manhattan Overseas Banking Corporation,
Chase Manhattan Plaza,
Plew York 5, New York.
near Mr. Cain:
This will acknowledge your letter of August 16, 1963,
iq -Ling to a proposed change in location of the Brasilia Branch of
fr co Lar Brasileiro, S.A. ("Banco Lar"), Rio de Janeiro, Brazil,
Present quarters at Super-Quadra 108-Sul, Setor Comercial Local,
t1
:
1118 25 and 26 to Conjunto Comercial do Hotel Nacional-Loja 43, in
tte Hotel Nacional, Brasilia, Brazil.
In accordance with the request and on the basis of the
ill :(3rmation furnished, the Board grants consent to the change in
.t1on as requested. Please advise the Board of Governors in
liTi4a
lir Ling, through the Federal Reserve Bank of New York, when the
anch is removed to the new location.
In the event of any further change in location within the
eitY of
add
Brasilia, please notify the Board of Governors of the new
mress.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
2841
Item No. 2
BOARD OF GOVERNORS
OF THE
8/21/63
•
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 21, 1963
Board of Directors,
Lafayette Trust Company,
Easton, Pennsylvania.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment of a
branch by Lafayette Trust Company on the north
side of William Penn Highway between Beech and
Arlington Streets, Palmer Township, Northampton
County, Pennsylvania, provided the branch is
established within one year from the date of this
letter. The Board also approves, under the provisions of Section 24A of the Federal Reserve Act,
an investment of $125,000 in bank premises by
Lafayette Trust Company to purchase land and to
construct quarters for the new branch.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested, the
procedure prescribed in the Board's letter of
November 9, 1962 (S-1846), should be followed.)
2842
BOARD OF GOVERNORS
Item No. 3
8/21/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 21, 1963
Board of Directors,
Northeastern Banking Company,
Commerce, Georgia.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by Northeastern
Banking Company, Commerce, Georgia, of a branch (drivein facility) at 17 Little Street, Commerce, Georgia,
provided the branch is established within one year from
the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserve Bank stated that the Board
also had approved a six-month extension of the period
allowed to establish the branch; and that if an extension
should be requested, the procedure prescribed in the
. rd's letter of November 9, 1962 (S-1846), should be
13°a
followed.)
2843
Item No.
4
8/21/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 21, 1963
Board of Directors,
Trust Corn ,any of Georgia,
Atlanta, Georgia.
Gentlemen:
The Board of Governors of the Federal
approves the establishment by
System
Reserve
Trust Company of Georgia, Atlanta, Georgia, of
a branch in the proposed Hartford Insurance
Company Building on Edgewood Avenue between Ivy
and Courtland Streets, Atlanta, Georgia, provided
the branch is established with two years from the
date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserve Bank stated that the Board
also had approved a six-month extension of the period
allowed to establish the branch; and that if an extension
should be requested, the procedure prescribed in the
Board's letter of November 9, 1962 (S-1846), should be followed.)
2844
Item No. 5
BOARD OF GOVERNORS
8/21/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDEACE
TO THE BOARD
August 21, 1963
h%
H„'Lcolm Bryan, President,
71"4.41 Reserve Bank of Atlanta,
..,,Larta, Georgia 30303.
'Dea.
Air. Bryan:
:
tran,
This refers to Mr. Patterson's letter of June 27, 1963,
esCillittinj, detailed plans and specifications and revised cost
tioillmates for the West Addition to the Atlanta Head Office buildinc
ukier construction.
as /14ri_
:um— The Board notes that the cost is estimated at $4,542,886,
tevis-/'
with the preliminary estimate of $4,344,000, and that the
A
'kat .1)ett red
estimate includes approximately $196,000 for ilork in the
"Ililding which was not included in the preliminary estimate.
• Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
2845
Item No.
ottztr,)
6
8/21/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
OFFICE OF THE CHAIRMAN
44.4.04.*
August 22, 1963
The T,
h nonorable
William L. Dawson,
airmah,
„
Committee on Government
lio vPe
rations,
Weilm,
87 of Representatives,
-L-Lhgton 25, D.
C.
bear
. Chairman:
%
rectile
This is in response to your letter of August
ben8ting the views of the Board on the bill, H.R.
5, 1963,
7879, ilTo establish
tralfntallent of Consumers in order to secure within the Federal Governtoc a4rective representation
of the economic interests of consumers;
Vinate the administration of consumer services by transferring
. Department certain functions of the Department of
cillo:44
Health,
tor , and Welfare, the Department of Labor, and other agencies; and
cw er purposes."
Q
kollo
While the Board is sympathetic with efforts to protect the
interests of consumers, it questions whether the proposed separate
°Are department of Government would be
desirable or effective for
blicCurPcse. Existing public agencies should be guided in their
decisions
consideration of consumers as well
as
other
interests,
all
included
14141,%th
e2,tist,
general welfare. To the extent that any serious problems may
:qe t the consumer field, the Board believes that it would be prefer'4tho — consider legislation addressed
directly to these specific problems
t.14
th
'Ooris an to the creation of a new Government agency whose statutory
ib
ilities might be difficult to define.
• Sincerely yours,
(Signed) Wm. McC. Martin, Jr.
WM. McC. Martin, Jr.
2846
Item No. 7
8/21/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
'
WASHINGTON 25. D. C.
;4p)
,
ADDRESS OFFICIAL COFIRESPONOENCE
TO THE HOARD
ac,')
RESt' •
".....•
August 21, 1963
N'IDENTIAL (FR)
George H. Ellis, President,
8' ez*.al Reserve Bank of Boston,
oston,
Massachusetts. 02106
be° Mr. Ellis:
As requested in your letter of August 6, the Board of Governors
PrWee the following minimum and maximum salaries for the respective
"
aclea of the employees, salary structure at the Federal Reserve Bank of
4ten, effective August 6, 1963.
r
Grade
--___
Minimum Salary
Maximum Salary
2,600
1$
2
2,600
3
4
2,770
3,080
5
6
7
8
)
3
3 ,%
4,200
9
10
11
12
13
14
15
16
0
)
511
4,t
$ 3,080
3,400
3,740
:
54:1
167:
5
4,
6,290
5,830
7,010
7,870
6,530
7,290
8,1140
9,120
10,3140
11,600
8,820
9,840
10,990
12,310
13,960
15,660
lilthiln
The Board approves the payment of salaries to the employees
'l ape,,,
the limits specified for the grades in which the positions of the
4ho-ve employees are classified. It is assumed that all employees
41thit iaries are below the minimums of their grades will be brought
the appropriate ranges not later than November 1, 1963.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
@FedFRASER