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Minutes for August 28, 1961 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 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. Ohm. Martin Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Minutes of the Board of Governors of the Federal Reserve System on Monday, August 28, 1961. PRESENT: Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Balderston, Vice Chairman Mills Shepardson Mr. Kenyon, Assistant Secretary Mr. Young, Adviser to the Board and Director, Division of International Finance Mr. Fauver, Assistant to the Board Mr. Solomon, Director, Division of Examinations Mr. Connell, Controller Mr. Chase, Assistant General Counsel Mr. Furth, Adviser, Division of International Finance Mr. Leavitt, Assistant Director, Division of Examinations Mr. Sprecher, Assistant Director, Division of Personnel Administration Mr. Spencer, General Assistant, Office of the Secretary Mr. Young, Assistant Counsel Mr. Potter, Assistant Counsel Discount rates. The establishment without change by the Federal Ileserve Banks of New York, Philadelphia, Cleveland, Richmond, Kansas City, flcl Dallas on August 24, 1961, of the rates on discounts and advances in tIleir existing schedules was approved unanimously, with the understanding t4t appropriate advice would be sent to those Banks. Items circulated or distributed to the Board. The following items, 1441ch had been circulated or distributed to the members of the Board and e°Pies of which are attached to these minutes under the respective item IllIalbera indicated, were approved unanimously: Item No. ter to Manufacturers Trust Company, New York, New _, 1.et to brqc approving an extension of time to establish a 411eh at 515 Madison Avenue, Borough of Manhattan. 1 291)0 8/28/61 -2Item No. _Letter to First National Bank of Arlington, Arlington, rginia, approving its application for limited fiduciary powers. 2 etter to Wells Fargo Bank American Trust Company, San ' 'ancisco, California, approving the establishment of e• branch at 1702 Tennessee Avenue, in Vallejo, rather than in the vicinity of Solano Avenue and Georgia Street. L 3 Telegram to the Federal Reserve Bank of New York approving loan on gold to the Central Bank of Costa Rica. 4 r e,legram to the Federal Reserve Bank of New York authorizing 5 4 16 to open and maintain an account in the name of the Leopoldlie Office of the Monetary Council of the Congo. Telegram to the Federal Reserve Bank of San Francisco Isvising that a bank loan for the purpose of purchasing : es of Life Insurance Investors, Inc., would not -1313ear to be subject to Regulation U. 6 I tter to the Federal Reserve Bank of Chicago approving t ! .1„?e Payment of salaries to certain officers at the rates CecI by the Bank's Board of Directors. 7 Report on competitive factors (Mount Vernon-Danville, Ohio). A (4e-it of report to the Comptroller of the Currency on the competitive tactors involved in the proposed purchase of assets and assumption of 114bi1ities of The Danville Bank, Danville, Ohio, by The First-Knox 114tional Bank of Mount Vernon, Mount Vernon, Ohio, had been distributed '1-t11 a memorandum from the Division of Examinations dated August 22, 1961. Governor Mills commented that the report, as drafted, made only DaS 4 reference to the fact that The Knox County Savings Bank, also in l'i°11nt Vernon, was affiliated with a bank holding company, BancOhio 8/28/61 -3- Corporation. In checking a map shaving the geographic location of banks °Perated by BaneOhio, he had observed that that Corporation also operated banks in three counties abutting on Knox County. It was his feeling that it would be desirable to take cognizance of that fact and to indicate that the proposed transaction might intensify competition with The Knox County 88-vings Bank. In discussion, it was agreed that certain changes would be made in the report in recognition of the point raised by Governor Mills. With this 114clerstanding, the report was approved unanimously for transmittal to the C°12IPtroller. The conclusion of the report, as transmitted, read as follows: The proposed purchase of assets and assumption of liabilities of The Danville Bank, Danville, Ohio, by The First-Knox National Bank of Mount Vernon, Mount Vernon, Ohio, would not result in the elimination of a significant amount of competition between the two institutions. It would expand the position of dominance in Knox County, of The First-Knox National Bank of Mount Vernon, with possible adverse effects on the remaining small independent bank in Danville. It might intensify competition with The Knox County Savings Bank, subsidiary of BancOhio Corporation. Report on competitive factors (Hamilton-Oxford, Ohio). A draft of l ePort to the Comptroller of the Currency on the competitive factors involved ' in the proposed purchase of assets and assumption of liabilities of The Bank and Trust National Bank, Oxford, Ohio, by The First National distributed with a memorandum C°111Pany of Hamilton, Hamilton, Ohio, had been *°111 the Division of Examinations dated August 23, 1961. The report, in which the conclusion read as follows, was approved t414111imously for transmission to the Comptroller: 8/28/61 _1_ The proposed purchase of assets and assumption of liabilities of The Oxford National Bank by The First National Bank and Trust Company of Hamilton would eliminate very little competition as little exists between the two banks. While the proposal would enhance the latter bank's area of competition, it does not appear that the general banking situation would be significantly altered or that other banks would be unduly affected. Messrs. Furth, Leavitt, and Potter withdrew from the meeting at this point. Legislation regarding investment of idle funds. There had been distributed a memorandum dated August 24, 1961, prepared by Mr. Young, Assistant Counsel, regarding a request for a report on suggested State legislation authorizing investment of idle funds by local governmental Units. As stated in the memorandum, in a letter dated August 18, 1961, the Bureau of the Budget requested the views of the Board on proposed ete;te legislation suggested by the Advisory Commission on Intergovernmental ilelations for consideration by the Council of State Governments. The pro- under consideration, if adopted by the States, would authorize local ecrvernmental units or political subdivisions to invest idle funds in illteTest-bearing accounts or investments. Investments would be authorized, 811fically, in (1) obligations of the United States, (2) bonds or certifiektes of indebtedness of the particular State and of its agencies and illetrumentalities, and (3) shares of building and loan associations 111811xed by the Government of the United States up to the amount so 8/28/61 -5- insured. A proposed reply, submitted with Mr. Young's memorandum) would indicate that the Board had no objection to the suggested legislation. In discussion, question was raised by Governor Balderston as to the appropriateness of that part of the proposal which would authorize investment of idle funds in shares of building and loan associations. He suggested that at the least the reply to the Budget Bureau might be changed editorially to state that the Board would "interpose" no objection to the proposed legislation. This led to a rather extended discussion during which it was brought out, among other things, that the proposed legislation would state that its 131107isions were not intended to impair the power of a local governmental Ilatt to hold funds in deposit accounts with banking institutions. Aoted It was also, that the proposed legislation would be in such form as to r°41&e it possible for individual States, in their discretion, to extend the list of authorized investments beyond the three forms of investment 8Decifica11y mentioned. This suggested the possibility of a reply to the /(lcieet Bureau which would question the specific authorization for investment of die funds in shares of building and loan associations, although individual tea could augment the list of authorized investments in such manner if they 884 it. At the conclusion of the discussion, it was understood that an elternative draft of reply along such lines would be prepared for the 1I4.1'd's consideration. 8/28/61 -6Organization manual. There had been distributed, with a memorandum fl'ola Governor Shepardson dated August 10, 1961, copies of a loose-leaf Zatual containing information on the basic and recurring programs of work sn each division of the Board's organization. In commenting, Governor Shepardson noted that prior to this time there had not been any one document that outlined the recurring activities anA responsibilities of the various divisions of the Board. Each year the 131dgets of the respective divisions presented some information of this type, but in no place was there drawn together a complete listing of all the activities. The Office of the Controller felt that it would be helpful if the manual were in loose-leaf form, in order that it might be kept cill'rent, and the availability of the manual would eliminate the necessity r°/' repetitive statements in the budget each year. Governor Shepardson recommended adoption of the manual as an official c/°cullient for the information and guidance of the Board and its official staff, rl-th the understanding that the Controller would be charged with the responsibilitY for its maintenance on a current basis. Following a brief discussion in which it was agreed that editorial ilariges would be made relating to the presentation of certain functions of I ivision of Personnel Administration and the Office of the Controller, the ) the Manual was approved unanimously, with the understanding it would be used 414 Maintained in the manner indicated by Governor Shepardson. The meeting then adjourned. I 8/28/61 -7Secretary's Notes: Pursuant to recommendations contained in memoranda from appropriate individuals concerned, Governor Balderston, acting in the absence of Governor Shepardson, approved on behalf of the Board on August 24, 1961, the following actions relating to the Board's staff: ointment James S. Nystrom as Economist in the Division of Research and Statistics, lath basic annual salary at the rate of $6,435, effective the date of entrance 1113°Ii duty. leav e • Katherine P. Hichborn, Secretary, Division of International Finance, for period September 5 through October 1, 1961. 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: 'P.,: 2141947 increases, tam- effective September 3, 1961 Division Basic annual salary To From Office of the Secretary 4111d-reY A. Taylor, Records Clerk $ 4,250 $ 4,355 5,685 14,705 5,850 15,030 6,600 6,765 10,895 12,210 14,705 11,155 12,470 15,030 Research and Statistics 444 D m Clary, Librarian 4)114 Dingle, Chief, Consumer Credit ,a4(1, Finances Section °L ' ert M. Steinberg, Economist International Finance tcbri, A. Anderson, Economist k" 4,12 7 1 Gekker, Economist C. Wood, Chief, European Section 8/28/61 -8- .2creases, effective September 3, 1961 (continued) _14 Basic annual salary To From Division Bank Operations Edvin G. White, Analyst $ 7,095 $ 7,260 10,635 10,895 Examinations Rain C. Maurer, Review Examiner Advance of sick leave .Prances Skehan, Statistical Assistant, Division of Research and °R atlstics, for the period August 21 (one hour) through September 29, 1961. Accetaof nas Roland I. Robinson, Adviser, Division of Research and Statistics, ftrective at the close of business August 31, 1961. Loreto J. Clavelli, Property Clerk, Division of Administrative Services, Irective at the close of business September 1, 1961. ' . Peter C. Fulghum, Property Clerk, Division of Administrative Services, rective at the close of business August 30, 1961. K. Edwin Keen, Jr., Supply Clerk, Division of Aftinistrative Services, ective at the close of business September 8, 1961. e,. Harry G. Felix, Budget and Planning Assistant, Office of the Controller, ective at the close of business September 4, 1961. Assistant Secretary, ACdr,C. 4,. f BOARD OF GOVERNORS OF THE pt,it C-(47.4•1 FEDERAL RESERVE SYSTEM II WASHINGTON 25. D. C. f:11 Item No. 1 3/28/61 AEIDRESS OFFICIAL CORRESPONDENCE TO TNE BOARD ,Amt August 28, 1961 Board of Directors, Manufacturers Trust Company, New York, New York. Gentlemen: The Board of Governors of the Federal Reserve System extends to June 4, 1962, the time within which Manufacturers Trust Company, New York, New York, may establish a branch at 515 Madison Avenue, Borough of Manhattan, New York, New York. Very truly yours, (Signed) Elizabeth Le Carmichael Elizabeth L. Carmichael, Assistant Secretary. 4 •714 % BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 2 8/28/61 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD August 28 1961 Board of Directors, First National Bank of Arlington, Arlington, Virginia. Gentlemen: The Board of Governors of the Federal Reserve System has given consideration to your application for fiduciary powers in a specific case and grants First National Bank of Arlington the right to act, when not in contravention of State or local law, as transfer agent and escrow agent for shares of stock issued, under declaration of trust dated July 14, 1961, by American Realty Trust. The rights so granted may be exercised only to the extent that State banks, trust companies or, other corporations which came into competition with na. tional banks are permitted so to act under the laws of the State of Virginia. The exercise of such rights also shall be subject to the provisions of Section 11(k) of the Federal Reserve Act and Regulation F of the Board of Governors of the Federal Reserve System. A. certificate covering such authorization is enclosed. Very truly yours, (signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. Enclosure ,BOARD OF GOVERNORS OF THE, FEDERAL RESERVE SYSTEM Item No. 3 8/28/61 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE EICIARO August 28, 1961 Board of Directors, Wells Fargo Bank American Trust Company, San Francisco, California. Gentlemen: 'The Board of Governors of the Federal Reserve System approves the establishment of a branch at 1702 Tennessee Avenue, near the southeast corner of Tennessee Avenue and Tuolumne Street, Vallejo, Solano County, California, rather than in the vicinity of the intersection of Solano Avenue and Georgia Street, Vallejo, California, under the authorization contained in the Board's letter of March 200 1961. Authorization to establish the proposed branch will expire one year from March 20, 1961. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. Item No. 4 GRAM TELE WIRE LEASED / 8 2 8/61 SERVICE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON August 28, 1961 SANFORD - NEW YORK Your wire August 24. Board approves granting of loan on gold up to a total of $2 million by your Bank to the Banco Central de Costa Rica on the following terms and conditions: (a) To be made up to 98 per cent of the value of gold bars set aside in your vaults under pledge to you; (b) To mature in three months with option to repay at any time before maturity, both the advances and repayments to be made in multiples of $100,000; (c) To bear interest at the discount rate of your Bank in effect on the date on which such loan or loans are made; and (d) To be requested and made at any time during the month beginning with the date of the Banco's acceptance of your terms and conditions. It is understood that the usual participation will be offered to the other Federal Reserve Banks. (signed) Kenneth A. Kenyon KENYON Item No. TELEGRAM 5 8/28/61 LEASED WIRE SERVICE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON August 28, 1961 SANFORD - NEW YORK Your wire August 24« Board approves the opening and maintenance of an account on your books in the name of the Leopoldville Office of the Conseil Monetaire de la Republique du Congo (Monetary Council of the Congo), subject to the usual terms and conditions upon which your Bank maintains accounts for foreign central banks and governments. It is understood that you will in due course offer participation to the other Federal Reserve Banks. (Signed) Kenneth A. Kenyon KENYON TELEGRAM LEASED WIRE SERVICE Item No. 6 8/28/61 BOARD OF GOVERNORS OF THE FEDERAL RESERVE WASHINGTON YSTEM August 29, 1961 Barrett - San Francisco Reurtels of August 15 and 17, Life Insurance Investo rs, Inc., 1431114 at this time still not be included in the Board's List of Redeemable Securities of Certain Investment Companies on the basis Or tacts stated. Therefore, list may be relied upon in this case aeCOrdanCe with section 221.3(c) of Regulation U. (Signed) Kenneth A. Kenyon Kenyon BOARD OF GOVERNORS OF THE Item No. FEDERAL RESERVE SYSTEM 7 8/28/61 WASHINGTON 25. D. C. ADDRESS OFFICIAL COP/RESPONDENCE TO TI-4E BOARD August 28, 1961 „90NFIDENTIAL (FR) Mr. Carl E. Allen, President, Federal Reserve Bank of Chicago, Chicago 90, Illinois. Dear Mr. Allen: The Board of Governors approves the payment of salaries to the following officers of the Federal Reserve Bank of Chicago for the period September 1 through December 31, 1961, at the rates indicated, which are the rates fixed by the Board of Directors as reported in your letter of August 17, 1961: Name E. T. Baughman Karl A. Scheld Annual Salary Title Vice President Assistant Cashier $20,000 10,500 Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary.
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