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Minutes for
To:
Members of the Board
From:
Office of the Secretary
August 28, 1962
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
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Federal Reserve Bank of St. Louis
Minutes of the Board of Governors of the Federal Reserve
SYstem on Tuesday, August 28, 1962.
The Board met in the Board
Room at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Balderston, Vice Chairman
Robertson
Shepardson
Mitchell
Mr. Kenyon, Assistant Secretary
Mr. Young, Adviser to the Board and
Director, Division of International
Finance
Mr. Molony, Assistant to the Board
Mr. Cardon, Legislative Counsel
Mr. Noyes, Director, Division of Research
and Statistics
Mr. Solomon, Director, Division of Examinations
Mr. Johnson, Director, Division of
Personnel Administration
Mr. Hexter, Assistant General Counsel
Mr. Hooff, Assistant General Counsel
Mr. Holland, Adviser, Division of
Research and Statistics
Mr. Conkling, Assistant Director, Division
of Bank Operations
Mr. Goodman, Assistant Director, Division
of Examinations
Mr. Benner, Assistant Director, Division
of Examinations
Mr. Leavitt, Assistant Director, Division
of Examinations
Mr. Thompson, Assistant Director,
Division of Examinations
Mr. Bakke, Senior Attorney, Legal Division
Miss McShane, Training Assistant, Division
of Examinations
Mr. Mattras, General Assistant, Office of
the Secretary
Circulated or distributed items.
The following items, which
been circulated or distributed to the Board and copies of which
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Federal Reserve Bank of St. Louis
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re attached to these minutes under the respective item numbers
cated, were approved unanimously:
Item No.
Letter to Citizens National Bank of Lake Geneva,
Irlake Geneva, Wisconsin, approving its application
°r fiduciary powers.
1
letter to State-Planters Bank of Commerce and
7118t8, Richmond, Virginia, approving the
?Istablishment of a branch at Charles City Road,
kitties Lane, and Williamsburg Road, Henrico
Nulty.
2
tetter to The Chase Manhattan Bank, New York, New
I
rk, approving an extension of timw. to establish
- branch in Port-of-Spain, Trinidad, The West Indies.
3
Letter to the Federal Reserve Bank of San Francisco
t:garding the temporary assignment to the Seattle
ealch of officers from the head office because of a
Ileancy in the Branch staff.
4
Z
5-9
Ic?)ttier to the Secretary of the Federal Advisory
the
v1
,4c1-1 suggesting topics for inclusion on
meeting.
September
—Ida for the
10
Leg'rams to the Federal Reserve Agents at New York
Richmond authorizing the issuance of general
Ne6Ing permits to Financial General Corporation,
Nelr York, New York; The Morris Plan Corporation,
s,l,t York, New York; Potomac Securities Corporation,
1144-ver Spring, Maryland; North Virginia Shares, Inc.,
:
Ne York, New York; and Investors Financial Corporation,
thlg York, New York, covering stock in one or more of
si? following banks: American National Bank of
'
v J-Nrer Spring, Silver Spring, Maryland; The Shenandoah
ve
illeY National Bank of Winchester, Winchester,
Harrisonburg,
linalinia; and The National Bank of
-krisonburg, Virginia.
With respect to Item No. 10, the third topic in the letter to
Pederal Advisory Council, in the form in which the letter was
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Federal Reserve Bank of St. Louis
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%Droved, reflected a minor change in the language of the draft that
had been submitted to the Board for consideration.
Also in respect to Item No. 10, it was understood that there
/1°111d be distributed to the members of the Board for their information
amemorandum from the Board's research staff concerning the recent
ch
anges in Treasury Bulletin F relating to depreciation allowances.
It //as not thought necessary, however, to transmit copies of the
8ta4T memorandum to the Federal Advisory Council.
Mr. Johnson and Miss McShane then withdrew from the meeting.
11 and 12).
Application of Commercial Associates, Inc. (Items
to the decision reached by the Board at the meeting on August
9,
3.962, there had been distributed a proposed order and statement
11.ecting the Board's approval of the application of Commercial
Ass°ciates, Inc., Pensacola, Florida, to become a bank holding
l
e°111794.3T through the acquisition of voting shares of The Commercia
14t1°Tial Bank of Pensacola, Pensacola, Florida, and
Rank of Gulf
4eeze, Gulf Breeze, Florida.
d. Copies
The issuance of the order and statement was authorize
were issued on August 29,
or those documents, in the form in which they
1962, are attached as Items 11 and 12.
Mr. Bakke then withdrew from the meeting.
on (Items 13-15).
Aalication of First Virginia Corporati
At
It Illeeting on August 3, 1962, the Board decided, with Governor Mills
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dissenting, to deny the applications of The First Virginia Corporation,
ItIlLington, Virginia, to acquire shares of Farmers and Merchants National
13`11*, Winchester, Virginia; Southern Bank of Norfolk, Norfolk, Virginia;
Peqles' Bank, Mount Jackson, Virginia; and Shenandoah County Bank and
Ihtst company, Woodstock, Virginia.
However, at the meeting on August
8 1962,
the staff was directed to prepare for the Board's consideration
EL4 order and statement dealing only with the Winchester application,
8411ithere had now been distributed a proposed order and statement
l'ellecting the Board's denial of that application.
In discussion, Governor Mitchell inquired whether there was
14ence in the record that First Virginia was not rendering services
"
t° its subsidiary banks.
He thought that that point had been made
consideration by the
Illien the First Virginia applications were under
state--u-, yet no reference to it was found in the proposed Board
he
Mr. Solomon replied that, while opinions might differ,
believed First Virginia was rendering services to its subsidiary banks.
that First Virginia
lie thought it would be subject to challenge to say
not rendering such services. Mr. Thompson concurred in Mr. Solomon's
b°MMent.
view that the impact of
Governor Mitchell then expressed the
the
as it pertained to the
Droposed statement was rather weak insofar
b°111/0et1tive situation in the Winchester area.
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Federal Reserve Bank of St. Louis
On the other hand, he
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relt that the portion of the statement dealing with the classified
stock of First Virginia Corporation was well executed.
He inquired
whether it might be desirable to let the Board's decision rest on
that issue alone.
Governor Robertson indicated that he would not favor such an
alDI'roach.
In his view the competitive situation in Winchester,
e°tIsidered particularly from the standpoint of the third--and sma1lest-1°cal bank, would be adversely affected if more than 80 per cent of
the bank deposits in the community were held by banks controlled by
holding companies (First Virginia and Financial General Corporation).
Re
suggested that the proposed statement could be strengthened by
illc uding a reference to the decision of the Court of Appeals uphold14 the Board's denial of the application of Northwest Bancorporation
to
44quire a bank in Pipestone, Minnesota. In that case the Court
'
hela that the Bank Holding Company Act requires the Board to consider
the
hole field of banking competition, including the possible adverse
el4leet of the expansion of bnnk holding company groups upon the
C011 etitive position of the banks in the area concerned that are
hct controlled by holding companies.
There was general agreement that the Board statement should
be ,
c llgmented by including a reference to the case referred to by
'
Otive
rnor Robertson.
In addition, a minor change was agreed upon in
841crther section of the draft statement.
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Federal Reserve Bank of St. Louis
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-6It being understood that these changes would be made, the
isstlance of the order and statement was authorized.
Copies of the
c)rcier and statement, in the form in which they were issued on
414Ni8t 29, 1962, pursuant to the foregoing action, are attached as
13 and 14.
A copy of Governor Mills' dissenting statement,
which was issued along with the order and majority statement, is
attached as Item No. 15.
Mr. Thompson then withdrew from the meeting.
Revenue bond underwriting.
There had been distributed a
illeale'randum from the Legal Division dated August 24, 1962, submitting
"raft of letter to the Chairman of the Senate Banking and Currency
Coh„—
'mulattee reporting on S. 3131, a bill "To assist cities and States
with
bY841ending section 5136 of the Revised Statutes, as amended,
l'e8Pect to the authority of national banks to underwrite and deal
14 securities issued by State and local governments, and for other
-1,oses.0
The bill would amend the seventh paragraph of section 5136
14 t1'70 respects.
First, it would confer upon national banks and
St4te member banks special powers with respect to short-term obligatio„
are secured by an agreement
4 of public housing agencies that
'
the State to lend to the agency an amount sufficient to pay such
bilgations at their maturity.
In this respect the proposed letter
l'°11:41 report favorably, but certain technical suggestions would be
Wrerect.
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Federal Reserve Bank of St. Louis
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-7Second, and more importantly, the bill would permit banks
to underwrite and deal in so-called "revenue" securities of State
41.4 local governments and their agencies--that is, securities that
4re not supported by the full faith and credit of the issuing
g°vernmental entity.
The proposed letter would state that the
8°4ba questioned the advisability of legislation along these lines.
In the event, however, that the Banking and Currency Committee
84111d decide to report favorably on the proposal, certain technical
811-16,
testions would be offered in an attached memorandum.
The Legal Division's memorandum pointed out that the proposed
letter,
g
insofar as it related to the revenue bond underwritin
131'°1 °sal, would be similar to a letter that the Board agreed upon
in 1957.
That letter, though addressed to the Senate Banking and
Committee.
CillsrencY Committee, was never actually sent to the
It was
8ert instead to the Bureau of the Budget with a request for advice
to the relationship of the proposed legislation to the program of
the President.
No reply was received from the Budget Bureau.
In discussion, Mr. Cordon stated that there was no pressure
elea the Senate Banking and Currency Committee for a report from the
'
rl
on the bill.
The only pressure from within the Government was
(Ittling from the Bureau of the Budget; it was understood that the
was being studied
gile"ion of supporting legislation of this kind
the Executive Branch of the Government.
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Federal Reserve Bank of St. Louis
The only apparent
32:3,9
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for the Board to go on record at this time was that, if the
13()arci had adverse views, it might want them recorded so as to resist
the Prospect of a favorable recommendation next year by the Administr'ation to the Congress.
Governor Robertson indicated that his thinking on the revenue
b0
proposal had changed somewhat and was presently along the follow-
14 lines.
e^nr
He did not feel that a case had been made that there was
strong need for additional underwriting facilities, to be provided
tIll ugh the commercial banks.
He doubted whether there was enough
cilliference in cost between revenue bond financing and general
bliga.tion financing to indicate any particular lack of sufficient
111114riting facilities at the moment.
Therefore, he did not see a
't Public interest feature in the proposal.
Eit4
At the same time, he
1148 leaning to the view that there might be no good reason to prohibit
bara.
from entering the field of underwriting and dealing in revenue
1104A
'
When the provision confining the underwriting and dealing
Etivities of commercial banks to Federal Government securities and
tiReri
eral obligations of any State or of any political subdivision
tle°f" was inserted in section 5136 by the Banking Act of 1933, the
4111(
of revenue bond financing was negligible.
bEtzik
8
Further, commercial
were now empowered to underwrite and deal in obligations such
those of the Inter-American Development Bank and the Tennessee
--4-eY Authority.
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Federal Reserve Bank of St. Louis
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Accordingly, whereas Governor Robertson had felt previously
that legislation of the kind, now proposed would simply be a way of
bteaking down the concept adopted in 1933 of separating commercial
and investment banking, his present feeling was that a differentiation
between public and private obligations probably would satisfy what
tile Congress had in mind in the beginning, and that no great difficulties
11°41d be created.
The current bill would provide that a bank could
(1/14 underwrite and. deal in obligations that it could purchase for its
c14'141 account, and there would be a limitation on the amount of such
°41gations that the bank could hold at any one time.
°Mrlion, would. be adequate safeguards.
These, in his
The problem, he added, was not
latge enough to cause him to feel that the Board should get in the
t(*etront and object.
He doubted that a strong enough case could be
rtukle to convince anyone that participation in revenue bond financing
It°141d be an improper function for commercial banks.
As to making a
l'eP°1`t at this time, he would report if there was pressure, but he
`11v1 not see the pressure and therefore would be inclined to go along
'kitliout making a report if that could be done properly.
Governor Shepardson questioned whether it was necessary to
414ke a report at this time if the Senate Banking and Currency Committee
114 not pressing for a report.
Going to the question of the desirability
or tIle Proposed legislation, he said he had been inclined to feel that
the
44verse position previously taken by the Board was appropriate.
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Ikvever, it might be that Governor Robertson's points deserved consideration.
Governor Mitchell said he was not certain, on the mechanics
q the matter, whether the Board should make a report at this stage.
Pc
'
r a long time, however, he had taken the position that it would
be advisable to permit commercial banks to underwrite and deal in
ehue bonds, primarily for the reason that in State and local
il(5vernment financing he thought the revenue bond development was
desirable and Should be encouraged. The use of revenue bonds
44tat that if a governmental entity wanted to build a water system,
trir example, it must Mike the size and cost proportionate to the revenue
to be derived therefrom. Thus, there was an automatic device for
elating State and local borrowing and debt by identifying the source
°I
'income with the social expenditure. In his view, any action that
be taken to encourage the use of revenue bonds was an action
that ought to receive support.
He did not know to what extent per-
commercial banks to underwrite revenue bonds would affect the
Drie4
4.ng of such issues. However, more competition should result in
1)etta-r.
-- prices. In summary, on the substantive question, he would
ttl„
a strong position that the use of revenue bonds should be encouraged.
114ther this was the appropriate time for the Board to take such a
1141tion was another matter.
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Federal Reserve Bank of St. Louis
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-11There followed discussion with respect to the record of
Venue bond financing, after which Chairman Martin said he agreed
with the desirability of revenue bond financing and the encouragement
or its use. The only question was whether commercial banks should be
Permitted to underwrite revenue bonds; whether there should not
e°11t1nue to be a separation between commercial banking and this type
or underwriting.
A long time had passed and many had forgotten, but
he still had in mind the troubles of the 20s and early 30s. To him,
the Principle of separation of functions probably continued to be
re
'
irlY sound.
He granted that there probably would be some price
14:11%)vement if commercial banks were permitted to underwrite revenue
b0
1:48, and. he thought the banks could do a better job of selling the
b°1.1cle in some instances.
OlA
He also thought, however, that the banks
get into trouble with the revenue bonds at times when they
1/ere trying to obtain business.
Mr. Hexter expressed the view that political pressure probably
been primPrily responsible for the exemption of general obligations
-4 Ole prohibitions of the Banking Act of 1933. As to revenue
bom
he noted that many revenue bond issues of State and local
1(11rellinients were quite comparable to private issues. If banks were
L.1.4/reszi. to underwrite revenue water supply bonds., for example, it
tililiCht be difficult to resist an extension of the underwriting privilege
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t° Private water supply bonds of equal quality.
Governor Mitchell noted that there was frequently an option
**Wean issuing general obligation bonds or revenue bonds.
that
It might be
a small community would not have good access to investment banking
"Ices but would have good access to commercial banking services.
If
the eommercial bpnks could underwrite only general obligation bonds, the
comm—,
—"Aulty might move in that direction rather than to issue revenue bonds.
443
he had said, it was his contention that the use of revenue bonds
84°144 be encouraged because they identified the cost of the facility
the earnings derivable therefrom.
At present, however, the
e°Nlercial banks--organizations closer to the communities than invest44t bankers--were permitted to handle general obligation bonds only,
414 40t revenue bonds.
Governor Balderston suggested that it might be well for the
keLrA
to
that
reserve a final position on the matter.
It was his thought
8411°ng other things the Board might want to hear the views of the
u..1- Advisory Council before such a position was taken.
rOti
—Am the volume of expressions
trom
both investment bankers and
%Izte
4ted on the experience with
Nboa
%%rude.. He went on to say
After
of opinion that had been forthcoming
commercial bankers, Governor Balderston
revenue bonds in the State of
that he could visualize the underwriting
by e
°Incilerejai hanks of a great many securities, including some of lower
11AEtl
ity,
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Federal Reserve Bank of St. Louis
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-13Following additional discussion along the foregoing lines,
Chairman Martin inquired as to the wish of the Board concerning the
cillatt of letter to the Senate Banking and Currency Committee.
Governor Robertson indicated that he had reason to believe
that Governor Mills might have rather strong views in opposition to
1)erflitting commercial banks to underwrite and deal in revenue bonds.
Cellsequently, and in light of the varied views stated at today's
ttleetlhig, it seemed to him that it might be desirable to hold the
49*tter over for further discussion when a full Board was available,
ticu1arly since it did not appear that pressure was being exerted
'
138*I
bY' the Senate Banking and Currency Committee for a report at this time.
Accordingly, it was agreed to hold the matter over for further
c°11sideration when a full Board was available.
Reference was made to the technical suggestions of the Legal
°J-on with respect to the provisions of S. 3131, and question was
1111.11 "whether it would be advisable to make them available to the
8e1/41:te Banking and Currency Committee or to the Bureau of the Budget.
n
Eirdon suggested, however, that this might be somewhat premature.
It
841110eared that nothing was going to happen at this session of the
e()Ill ess with respect to the proposed legislation. Next year, if the
Atiki
41stration should decide to sponsor legislation of this kind, that
ntht be a more appropriate time to provide the benefit of the technical
N4gestions.
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Federal Reserve Bank of St. Louis
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-14There was general agreement with the view expressed by
Mr. Cardon,
Messrs. Benner, Goodman, and Leavitt then withdrew.
Federal funds series (Item No. 16).
There had been distri-
btthed a memorandum from Mr. Noyes dated August 24, 1962, with respect
to a proposed revision in the Federal funds series, along with a
ciraft of letter to the Presidents of all Federal Reserve Banks.
The memorandum pointed out that the proposed basic revision
had
been recommended by the System Research Advisory Committee and
-lesaied with the Reserve Bank Presidents.
The System, it was noted,
484 been collecting information on Federal funds transactions of
/Etl'iger banks for the past three years, and the authorization for the
tent
series would expire August 31, 1962.
Intensive study of the
rePorted data by System technicians had led to the conclusion that
the needs of continuing money market and bank reserve analysis at
the national level could be met adequately by a sharply curtailed
ael.les.
Accordingly, there was now proposed a concentrated series
on telephone or wire reports of aggregate Federal funds activity
- a small number of leading banks at the close of each business
It was suggested that the revised series be instituted beginning
eraber 13, 1962, with the respondent banks that would be retained
the
new series asked to continue reporting on the present form until
the
ellt-off date.
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Federal Reserve Bank of St. Louis
Arrangements also were being planned for Reserve
132
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13artlis to assemble and forward from their own records daily information
°II the reserve balances, required reserves, and borrowings of all
ban4 reporting Federal funds data in order to permit the System
°Pell Market Account Management and others to follow the reserve
s:)81.tion of all these leading bamks.
4
It was recommended that, after
suitable period, the Board consider the public release of summary
riglares on average weekly sales and purchases of Federal funds by
Porting banks, and the Federal Reserve Bank of New York was considelling the public release of the daily effective rate on Federal funds
48 determined by the Securities Department of that Bank.
Also suggested
/14s the eventual publication of an appropriately edited and revised
lielision of the basic study of Federal funds statistics that had been
III'ePared by an employee of the Federal Reserve Bank of Chicago.
rornsa
at
A
draft would be presented for approval as a System publication
a later date.
Following comments by Mr. Noyes in supplementation of the
41e111°randu1n, the proposed revision of the Federal funds series was
unanimously.
Attached to these minutes as Item No. 16 is a
cY. of the letter sent to the Presidents of the Federal Reserve
4411kR
4
-Ln this connection.
The members of the staff then withdrew and the Board went into
ekkartive session.
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Federal Reserve Bank of St. Louis
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-16Leased space.
Governor Shepardson informed the Secretary's
°trice later that during the executive session he advised the Board
that in accordance with the authorization given to him at the meet-
On June 15, 1962, he had concluded negotiations with the Federal
tePosit Insurance Corporation for the lease of space in the new
bnading of the Corporation, on terms generally in accord with the
Understanding at the June 15 meeting.
He also reported to the Board
that a lease had been executed on behalf of the Corporation as of
A143'llst 23, 1962; that copies had been forwarded by the Corporation
r(Ir execution on behalf of the Board; and that the lease would now
be executed on behalf of the Board.
The lease provided for the occupancy by the Board of approxsecond and third floors
lt4eLtelY 16,347 square feet of space on the
or the building located on 17th Street, N.W. between New York Avenue
rental rate fixed at
Street, in Washington, D. C., with the
annual rental of
41)131‘c)ximately $5.25 per square foot for a total
other date shortly after
5,800, beginning February 1, 1963, or such
the Premises were completed and ready for occupancy as might be mutually
the date of commencement. (A
eeci. upon, and ending five years from
letter from Chairman Cocke to Governor Shepardson dated August 24, 1962,
t1'44eMitting four copies of the lease, stated that it now appeared that
the building would not be ready for occupancy until sometime between
41:114arY 15 and February 1, 1963.)
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Federal Reserve Bank of St. Louis
The lease provided that, at the
247
8/28/62
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of the lessee, it might be renewed for a period of five years
on the same terms, provided notice was given in writing to the lessor
Itt least six months before the lease would otherwise expire,
and
131.0vided further that the lease or any such renewal lease could be
cancelled by either party by notice to the other party at least
12 months in advance of the date of such cancellation.
It was pro-
vicied the occupancy of the premises would include, as part of the
l'entaa consideration, the use of ten spaces in the garage consisting
°r sPaces for seven standard size automobiles and spaces for three
c°mPact" size automobiles; the use of the cafeteria and all other
rEteilities of the building by any employees of the lessee working
re'r the lessee in the leased premises, upon the same terms and conditi°118 as employees of the lessor; and custodial and maintenance
el. Ices in the leased premises in the same manner and to the same
"I;emt as such services were provided in the portions of the building
c'ecuPied by the lessor.
The lessor was to erect at its own expense
other fittings, as
sUch Partitions, including necessary doors and
the lessor and lessee might mutnall y agree upon as necessary to meet
the Isequirements of the lessee's beginning occupancy, but subsequent
the convenience of the
l'eallx'angement or alterations other than for
lessee, and made only with the
l'es°r would be at the expense of the
Q°48ent of the lessor.
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Federal Reserve Bank of St. Louis
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Secretary's Note: On August 31, 1962, the
lease was executed on behalf of the Board
by the Assistant Secretary as of August 23,
1962. Two executed copies were retained for
the Board's records. Two executed copies
were returned to the Federal Deposit Insurance
Corporation with a transmittal letter from
Governor Shepardson to Chairman Cocke dated
August 31, 1962.
The meeting then adjourned.
Secretary's Note: Governor Shepardson today
approved on behalf of the Board the following items:
d
No
Letter to the Federal Reserve Bank of Richmond (attache Item
t
as
assistan
Angel
R.
Daniel
---t-11) approving the appointment of
etirkiner.
and Statistics recommendMemorandum from the Division of Research
Frances D. Skehan,
of
salary
an increase in the basic annual
to $5,005 per annum,
54,840
from
„atistical Assistant in that Division,
''rective August 19, 1962.
1,_
Examinations dated August 3, 1962,
re
Memorandum from the Division of
clieQmmending that authority be sought through National Archives for
0J,Posa1 on a continuing basis, after a five-year retention period,
ralscellaneous Board records pertaining to State member banks.
Assistant Secretary /
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 1
8/28/62
WASHINGTON 25. D. C.
ADDRESS orriciAL CORRESPONDENCE
TO THE BOARD
August 28, 1962
Board of Directors,
Citizens National Bank of Lake Geneva,
Lake Geneva, Wisconsin.
Gentlemen:
The Board of Governors of the Federal Reserve System
has given consideration to your application for fiduciary
powers and grants Citizens National Bank of Lake Geneva authority to act, when not in contravention of State or local law, as
trustee, executor, administrator, registrar of stocks and bonds,
guardian of estates, assignee, receiver, committee of estates of
lunatics, or in any other fiduciary capacity in which State banks,
trust companies, or other corporations which come into competition
With national banks are permitted to act under the laws of the
State of Wisconsin. The exercise of such rights 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 formal certificate indicating the fiduciary powers
that your bank is now authorized to exercise will be forwarded
in due course.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
250
BOARD OF GOVERNORS
Item No.
OF THE
FEDERAL RESERVE SYSTEM
2
8/28/62
WASHINGTON 25. D. C.
ACORES!, Olf1CIAL, CORRESPONDENCE
TO THE BOARD
August 28, 1962
Board of Directors,
State-Planters Bank of Commerce and Trusts,
Richmond, Virginia.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch by State.
Planters Bank of Commerce and Trusts at the intersection
of Charles City Road, Brittles Lane and Williamsburg
Road, Henrico County, Virginia, 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.
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Federal Reserve Bank of St. Louis
19rik4
P
BOARD OF GOVERNORS
OF THE
Item No.
FEDERAL RESERVE SYSTEM
3
8/28/62
WASHINGTON 25, O. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 28, 1962
The Chase Manhattan Bank,
1 Chase Manhattan Plaza,
New York 15, New York.
Gentlemen:
In view of the request contained in your letter
of August 13, 1962, transmitted through the Federal Reserve
Bank of New York, and on the basis of the information
furnished, the Board of Governors extends to June 1, 1963,
the time within which your Bank may establish a branch
in the City of Port-of-Spain, Trinidad, The West Indies,
as authorized by the Board on December 20, 1961.
Please advise the Board of Governors in writing,
through the Federal Reserve Bank of New York, when the
branch is opened for business, furnishing information as
to the exact location of the branch.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
Item No.
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
02062
ADDRESS OFFICIAL. CORRESPONDENCE
TO THE BOARD
August 28, 1962
Mr. H. E. Hemmings,
First Vice President,
Federal Reserve Bank of San Francisco,
San Francisco 20, California.
Dear Mr. Hemmings:
Thank you for your letter of August 14 advising the
Board of the temporary assignment to the Seattle Branch of
Officers from the Head Office because of the vacancy in the
official staff following Mr. Reffis death.
It is noted that Mr. Retallick will serve as Acting
4
Assistant Manager of the Seattle Branch from September
same
the
fill
will
position
Williams
through 14, and that Mr.
from September 17 through 28.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
TELEGRAM
fj.0/r
'
LEASED WIRE SERVICE
Item No.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
8/28/62
11ZED - NEW YORK
August 28, 1962
KEBJE
A,
Financial General Corporation, New York, New York.
13.
American National Bank of Silver Spring, Silver Spring, Maryland.
The Shenandoah Valley National Bank of Winchester, Winchester, Virginia
The National Bank of Harrisonburg, Harrisonburg, Virginia.
C.
(1) Prior to issuance of permit authorized herein, applicant shall execute
and deliver to you in duplicate an agreement in form accompanying Board's
letter S-964 (F.R.L.S. #7190), (2) simultaneously with issuance of general
"ting permit authorized herein, there shall be issued to The Morris Plan
Corporation, North Virginia Shares, Inc., Investors Financial Corporation,
and Potomac Securities Corporation, the general voting permits authorized
it Board's telegrams of this date; the latter mentioned permit will be
issued by the Federal Reserve Agent at Richmond.
STOP.
When issuing the general voting permit, please advise the applicant that,
in accordance with paragraph (c), Section 5144, Revised Statutes, the
Board has designated Financial General Corporation, New York, New York,
4e the holding company affiliate which shall establish and maintain any
reserve of readily marketable assets required by that Section.
STOP.
Please forward
to Richmond Reserve Bank, copies of permits issued by your
1/4nk to Financial General Corporation (New York), The Morris Plan Corpora..
ti°n, North Virginia Shares, Inc., and Investors Financial Corporation.
(Signed) Kenneth A. Kenyon
KENYON
beri
----.111-119n of KEBJE
The
Board authorizes the issuance of general voting
a
permit, under
the provisions of
section 5144 of the Revised Statutes of the
United States, to the holding company affiliate named
below
after the letter AAA, entitling
such organization to vote the
etock which it owns or controls of the bank(s)
named below
after the letter "B" at all meetings
of shareholders of such
subject to the condition(s) stated below after the
bl:Ig!)
;
. A)1 C". The period within which a permit may
be
Pursuant to this authorization is limited to thirty issued
days from
the date of this telegram
unless an extension of time is granted
bY the Board. Please proceed in
accordance with the instruc
tions contained in the Board's
letter of March 10,
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1947, (5-964).
5
Item No.
6
8/28/62
TELEGRAM
LEASED WIRE SERVICE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
August 28, 1962
112ED - NEW YORK
ICEBJE
A. The
Morris Plan Corporation, New York, New York.
B.
American National Bank of Silver Spring, Silver Spring, Maryland.
The Shenandoah Valley National Bank of Winchester, Winchester, Virginia.
The National Bank of Harrisonburg, Harrisonburg, Virginia.
C. t,
kJ-) Prior
to issuance of permit authorized herein, applicant shall execute
and deliver to you in duplicate an agreement in form accompanying Board's
letter S-964 (F.R.L.S. #7190), (2) simultaneously with issuance of
general voting permit authorized herein, there shall be issued to Financial
General Corporation, North Virginia Shares, Inc., Investors Financial
Corporation, and Potomac Securities Corporation, the general voting permits
authorized in Board's telegrams of this date; the latter mentioned permit
11111 be issued by the Federal Reserve Agent at Richmond. STOP.
When issuing the general voting permit, please advise the Tplicant that,
in accordance with paragraph (c), Section 51144, Revised Statutes, the
Board has designated Financial General Corporation, New York, New York,
aa the holding company affiliate which shall establish and maintain any
reserve of readily marketable assets required by that Section.
(Signed) Kenneth A. Kenyon
KENYON
Definition of KEBJE
The
Board authorizes the issuance of a general voting permit, under
the provisions of section 5144 of the Revised Statutes of the
United States, to the holding company affiliate named below
after the letter "Ail, entitling such organization to vote the
stock which it owns or controls of the bank(s) named below
at all meetings of shareholders of such
after the letter
bank(s), subject to the condition(s) stated below after the
letter 0C". The period within which a permit may be issued
pursuant to this authorization is limited to thirty days from
the
data of this telegram unless an extension of time is granted
by the Board. Please proceed in accordance with the instruchttp://fraser.stlouisfed.org
tions contained in the Board's letter of March 10, 1947, (5-964).
Federal Reserve Bank of St. Louis
54
TELEGRAM
SERVICE
LEASED WIRE
Item No.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
1)4CKII? - RICHMOND
8/28/62
August 28, 1962
44.TE
A,
Potomac Securities Corporation, Silver Spring, Maryland.
13
American National Bank of Silver Spring, Silver Spring, Maryland.
C. (1)
Prior to issuance of permit authorized herein, applicant shall
execute and deliver to you in duplicate an agreement in form accompanying
Board's letter S-964 (F.R.L.S. #7190), (2) simultaneously with issuance
°f general voting permit authorized herein, there shall be issued by the
the
Federal Reserve Agent at New York, general voting permits covering
aforementioned bank authorized today for Financial General Corporation,
New York.
New York, New York, and The Morris Plan Corporation, New York,
STOp.
When issuing the general voting permit, please advise the applicant
that, in accordance with paragraph (c), Section 5144, Revised Statutes,
the Board has designated Financial General Corporation, New York, New York,
as the holding company affiliate which shall establish and maintain any
by that Section.
reserve of readily marketable assets required
STOP.
permit issued by your
?lease forward to New York Reserve Bank, copy of
Bank to Potomac Securities Corporation.
(Signed) Kenneth A. Kenyon
KLNYON
Definition of KEBJE
The Board authorizes the issuance of a general voting permit, under
of the
the provisions of section 5144 of the Revised Statutes
below
named
affiliate
United States, to the holding company
vote the
after the letter AAA, entitling such organization to
below
named
bank(s)
the
of
etook which it owns or controls
after the letter ABA at all meetings of shareholders of such
the
bank(s), subject to the condition(s) stated below after
issued
letter AC". The period within which a permit may be
pursuant to this authorization is limited to thirty days from
granted
the date of this telegram unless an extension of time is
by the Board. Please proceed in accordance with the instructions contained in the Board's letter of March 10, 1947, (8-964).
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Item No.
TELEGRAM
8
8/28/62
LEASED WIRE SERVICE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
August 28, 1962
Mee -
NEW YORK
Q;13,j
North Virginia Shares, Inc., New York, New York.
13,
C,
The Shenandoah Valley National Bank of Winchester, Winchester, Virginia.
(1) Prior to issuance of permit authorized herein, applicant shall
execute and deliver to you in duplicate an agreement in form accomPanying Board's letter S-964 (F.R.L.S. #7190), (2) simultaneously
With issuance of general voting permit authorized herein, there shall
be issued to Financial General Corporation, The Morris Plan Corporation,
Investors Financial Corporation, and Potomac Securities Corporation, the
general voting permits authorized in Board's telegrams of this date; the
latter mentioned permit will be issued by the Federal Reserve Agent at
Richmond.
STOP.
When issuing the general voting permit, please advise the applicant that,
in accordance with paragraph (c), Section
5114,
Revised Statutes, the
Board has designated Financial General Corporation, New York, New York,
as the holding company affiliate which shall establish and maintain any
reserve of readily marketable assets required by that Section.
(signed) Kenneth A. Kenyon
KENYON
Definition of KEBJE
The Board authorizes the issuance of a general voting permit, under
of the
the provisions of section 5144 of the Revised Statutes
named below
affiliate
United States, to the holding company
to vote the
organization
such
after the letter HP, entitling
named below
etock which it owns or controls of the bank(s)
of such
after the letter °Bog at all meetings of shareholders
after the
bank(s), subject to the condition(s) stated below
be issued
letter (V. The period within which a permit may
days from
to
thirty
limited
is
pursuant to this authorization
granted
the date of this telegram unless an extension of time is
by the Board. Please proceed in accordance with the instruchttp://fraser.stlouisfed.org
tions contained in the Board's letter of March 10, 1947, (5-964).
Federal Reserve Bank of St. Louis
AM
TELEGR
WIRE SERVICE
Item No.
LEASED
8/28/62
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
August 28,
- NOW YORK
KEBJE
A.
Investors Financial Corporation, New York, New York.
The National Bank of Harrisonburg, Harrisonburg, Virginia.
C.
n, applicant shall
(1)Prior to issuance of permit authorized herei
agreement in form accomexecute and deliver to you in duplicate an
), (2) simultaneously
Panying Boards letter S-964 (F.R.L.S. #7190
shall
with issuance of general voting permit authorized herein, there
s Plan Corporation,
be issued to. Financial General Corporation, The Morri
n, the
North Virginia Shares, Inc., and Potomac Securities Corporatio
rams of this date;
general voting permits authorized in Board's teleg
the latter mentioned permit will be issued by the Federal Reserve Agent
at Richmond.
voting permit, please
STOP. When issuing the general
raph (c), Section
advise the applicant that, in accordance with parag
cial General
5144, Revised Statutes, the Board has designated Finan
Corporation, New York, New York, as the holding company affiliate
ly marketable
Which shall establish and maintain any reserve of readi
assets required by that Section.
(Signed) Kenneth A. Kenyon
KENYON
Definition of KEBJE
t, under
permi
The Board authorizes the issuance of a general voting
d Statutes of the
Revise
the
of
the provisions of section 5144
company affiliate named below
United States, to the holding
organization to vote the
after the letter "A", entitling such
bank(s) named below
the
of
stock which it owns or controls
shareholders of such
of
ngs
after the letter "B" at all meeti
below after the
stated
s)
tion(
condi
bank(s), subject to the
may be issued
permit
a
letter "C". The period within which
ed to thirty days from
limit
is
n
izatio
author
pursuant to this
extension of time is granted
the date of this telegram unless an
ance with the instrucaccord
by the Board. Please proceed in
March 10, 1947, (S-964).
of
r
lette
's
Board
the
tions contained in
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
1962
9
:W5S
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 10
8/28/62
WASHINGTON 25. D. C.
Acionces orrociAL
CORRIESPONOENCE
TO THE BOARD
August 29, 1962
III% Herbert V. Prochnow, Secretary,
Pederal Advisory Council,
The First National Bank of Chicago,
'
hicago 90, Illinois.
near Mr. Prochnow:
ageThe Board suggests the following topics for inclusion on the
or the meeting of the Federal Advisory Council to be held on
8
f_naa
a for
Se
17, 1962, and for discussion at the joint meeting of the
flcil and the Board on September 18:
1. What are the observations of the Council regarding
(a) the performance of the economy thus far this year, and
(b) the business outlook for the remainder of this year and
early 1963? In reviewing recent developments, what factors
are considered of most significance by the members of the
Council?
2. How does the Council appraise the current and prospective strength of the automobile and housing markets? Does
the high proportion of multi-family housing starts appear to
be solidly based or mainly, speculative?
3. What is the Council's judgment regarding the probable
F
effect on business capital decisions of the recent Bulletin
of the
Changes? What effects would be envisaged from enactment
?
provision
proposed investment tax credit
4. What are the prospects for loan demand at banks during
the next several months, including the demand for real estate
and consumer loans?
5. What are the Council's views regarding the degree of
liquidity of the banking system?
6. What are the Council's observations concerning the
recent and prospective trend of savings and other time deposits,
and the effects from the standpoint of bank portfolio management?
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Federal Reserve Bank of St. Louis
Mr. Herbert V. Prochnow
-2-
79 What are the views of the Council with respect
to the impact of current monetary and credit policy?
Would the Council be inclined to place relatively more
weight on domstic considerations or on international
considerations?
Very truly Yogrs
(Signed) Kenneth A. Kenyon
Kenneth A, Kenyon,
Assistant Secretary,
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Federal Reserve Bank of St. Louis
UNITED STATES OF illialRICA
Item No. 11
8/28/62
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
III the Matter of the Application of
eCkIERCIAL ASSCCIATES,
T Permission to become a bank
f0;l,c,44ing
company by acquiring stock
'two banks in Florida
ORDER APPROVING APPLICATION UNDER
BANK HOLDING COMPANY ACT
There has come before the Board of Governors, pursuant to
°11 3(a)(1) of the Bank Holding Company. Act of 1956 (12 U.S.C. 1842)
44d section 4(a)(1) of the Board's Regulation Y (12 CFR 222.4(a)(1)),
'Palcation by Commercial Associates, Inc., Pensacola, Florida, for
1
the ,
31°arCITS
prior approval of action whereby Applicant would become a
holding company through the acquisition of more than 50 per cent
thC
voting shares of The Commercial National Bank of Pensacola,
kris
acola, Florida, and the Bank of Gulf Breeze, Gulf Breeze, Florida.
Hoticp.,
receipt of said application was published in the Federal
-- of
8ter on 'larch 30, 1962 (27 F. R. 3017), which notice provided for
the .
ling of comments and views regarding the proposed acquisition.
Ho
c)111111ents or views have been received.
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
9")
-2IT IS HEREBY ORDERI]D, for the reasons set forth in the Board's
Stat'ement of this date, that the said application be and hereby is
Dthi- A
th
and the acquisition by Applicant of more than 50 per cent of
,
°t1nir, shares of the above-mentioned banks is hereby approved
irc)1Tid,=d that such acquisition shall not be consummated (a) within
elIeri calendar days after the date of this Order or (b) later than
th e
- months after said date.
Dated at t'ashington, D. C. this 29th day of August, 1962.
Er
o
the Board of Governors.
Voting for this action: Chairman Nartin and
Governors Balderston, Hills, Robertson,
Shcpardson, and Kin.
Absent and not voting:
Governor ritchell.
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
Item No. 12
8/28/62
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY COMERCIAL ASSOCIATES, INC.
FOR PERMISSION TO BECOIE A PANK HOLDING CallANY
STATEMENT
Commercial Associates, Inc., Pensacola, Florida ("Applicant"),
1118 applied, pursuant to section 3(a)(1) of the Bank Ho3ding Company
Act of 1956 ('the Act"), for the Board's prior approval of action that
11°1114 result in Applicant becoming a bank holding company - namely,
4N1lisition of more than
5o
per cent of the voting shares of The Corn-
National Bank of Pensacola, Pensacola, Florida ("Commercial"),
lirith deposits of approximately
$4
million, and the Bank of Gulf Breeze,
Qt11-1 Breeze, Florida ("Gulf Breeze"), with deposits of approximately
l'1.5 million.
Views and recommendations of supervisory authorities. - As
11111-red by section 3(b) of the Act, the Board notified the Comptroller
"the
the State of
Currency and the Commissioner of Banking for
Nr.
their views.
Ida of the receipt of the application and requested
on be
'omptroller of the Currency recommended that the applicati
°Ited, and the State Commissioner of Banking issued a Certificate
"APProval.
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-2-
Statutor7 factors. - Section 3(c) of the Act requires
the Board to take into consideration the following five factors:
(1) the financial history and condition of the holding company and
the banks concerned; (2) their prospects; (3) the character of their
management; (4) the convenience, needs a-id welfare of the communities
and area concerned; and (5) whether the effect of the acquisitions
would be to expand the size or extent of the bank holding company
sYstem involved beyond limits consistent with adequate and sound
banking,
the nublic interest, and the preservation of competition in
the field of banking.
Discussion. - It is proposed that Applicant wpuld become a
bank holding company by a consolidation of two existing corporations,
Commercial Associates, Incorporated (CAI) and Gulf Commercial
Holding Corporation (GCH), the principal assets of which are shares
Comercial and Gulf Breeze, and by acquiring the stock in
CQmmercial and Gulf Breeze now held by one R. A. Hepner and by
Carden Properties, Inc., of which the Hepner family is sole owner.
The Hepner family, through the stock ownership of Mr. Hepner
individually and of Garden Properties, holds substantial interests
ill CAI and GCH.
Thus, the proposed transaction would have the effect
c't consolidating the interests of the shareholders of CAI, GCH, and
Garden Properties in Commercial and Gulf Breeze, together with the
shares of the banks personally held by R. A. Hepner, except for his
directorts qualifying shares.
These interests presently own 51.8 per
tent of the outstanding shares of Commercial and 51.6 per cent of the
1-lares of Gulf Breeze.
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Federal Reserve Bank of St. Louis
2C1
proposal, Applicant would own
:Zter consummation of the
es of Gulf Breeze and 51.6 per cent
5O07 per cent of the outstanding shar
ly would own or control
Of the shares of Commercial. The Hop= fami
of Applicant immediately
per cent of the 144,100 shares
ar.plated sales of a portion
folla7ing the proposed transaction, but cont
interest in Applicant to 40 per cent.
Of their holdings would reduce their
n, prospects, and management
The financial history, conditio
about
45
e,
the propos d financial structur
Of the banks are satisfactory, as are
Applicant.
Proposed management, and prospects of
that, by reason of their
Also, it appears in this case
company, the banks involved
Closer affinity through the holding
concerted effort to bettor
rlic_tt in due course bring to bear a more
needs and
ing convenience and
serve the public in regard to bank
economic welfare.
i2
about six miles apart: Commercial
The two ban':o involved are
and Gulf Breeze is located in the
located in the city of Pensacola,
t five miles
ed municipality abou
tY of Gulf Breeze, a recently form
Pay. Access between the two
southeast of -)ensacola across Iscambia
four miles in length.
ge approximately
cities is by a four-lane brid
loans which originate
hold deposits and
°M111rcia1 and Gulf Breeze each
ors in
other. However, there are fact
ill the primary service area of the
entirely due to active
thls case which suggest that this may not be
ness, and geographical
banks for such busi
°°mPet'tion between the two
to place certain practical limitaand other considerations would appear
ificant competition might develop between
tions on the extent to which sign
them in the future.
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
any system
Although the proposed holding comp
-14• ht
competition
to reduce to some extent the degree of existing
between rommere.:ial and Gulf 'Freeze, the creation of a some.ilhat stronger
71Petiti1Te force in an over-all area served by several much larger
c°
'
131111ks would offer compensating public benefits.
holding company arrangeThe affiliation of these banks through the
of the banking strucwould have little effect on the concentration
tilr e in the area.
by the proposed holding
The total resources controlled
nor would formation
L• anY would not represent an undue concentration,
Qf the holding company materially alter the present situation with
respect to concentration.
Applicant would be relatively small in terms
f the aver-all banking business in the Pensacola area; as of
bee„
proposed subsidiary banks
''uer 31, 1961, aggregate deposits of the
were
3.5,353,000, which represented only
• all banks in the Pensacola area.
6.4 per cent of total deposits
This consideration, when related
tothe other circumstances bearing on the application, leads to the
holding company system
e011°111sion that the proposal would not create a
.
consistent with adequate
he slze
or extent of which would exceed limits
sound banking, the public interest, and the preservation of competition
&lithe field of banking.
purposes of the
Viewing the relevant facts in light of the
Act
thereof, it is the
and the factors enumerated in section 3(c)
holding company
jildigillent of the Board that the proposed formation of a
avtem embracinc, The Commercial National Bank of Pensacola and the
11
Ilk of Gulf Breeze would not be inconsistent with the statutory
c'13,1isotives and the public interest and, accordingly, that the applicatl ",
° should be approved.
http://fraser.stlouisfed.org
Federal Reserve Bank of1962
St. Louis
UNITED STATES OF AMERICA
Item No. 13
8/28/62
THE FEDERAL RESERVE SYSTEM
BEFORE THE BOARD OF GOVERNORS OF
WASHINGTON, D. C.
Fa
amp
14 the Matter of the Application of
1117, FIRST VIRGINIA CORPORATION
to
DDrlor approval of the acquisition
per cent or more of the outstanding
11°14-ng shares of Farmers and Merchants
'a-Lional Bank, lanchester, Virginia.
•••
-----
OMB
------
------
N
ORDER DENYING APPLICATIO
ACT
ANY
COMP
ING
UNDER BANK HOLD
d of Governors, pursuant to
There has come before the Boar
any Act of 1956 (12 USC 1842)
'leotien 3(a)(2) of the Bank Holding Comp
on Y C12 CFR 222.4(a)(2)),
44d section 4(a)(2) of Federcl Reserve Regulati
Virginia Corporation, Arlington,
44 aPPlication on behalf of The First
oval of the acquisition of 80 per
glnia, for the Boardis prior appr
voting shares of Farmers and Merchants
ce4t or more of the outstanding
IT4tional Bank, Winchester, Virginia.
Application was published in the
A Notice of Receipt of
(26 F.R. 11742), which provided an
P°cIel'al Register on December 7, 1961
s regarding the proposed
clVortunity for submission of comments and view
and views has expired
4ccillisition, and the time for filing such comments
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
3267
alld 84.1
ered
comments and views filed with the Board have been consid
by it.
IT IS ORDERED, for the reasons set forth in the Board's
.
Statetnent of this date, that said application be and hereby is denied
August, 1962.
Dated at Washington, D. C., this 29th day of
By order of the Board of Governors.
and
Voting for this action: Chairman Martin,
King,
dson,
Shepar
son,
Robert
Governors Balderston,
and Mitchell.
Voting against this action:
Governor Mills.
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
Item No. 14
8/28/62
OF THE
FEDERAL RESERVE SYSTEM
ATION, ARLINGTON,
APPLICATION BY THE FIRST VIRGINIA CORPOR
OF SHARES OF
VIRGINIA, FOR APPROVAL OF ACQUISITION
STER, VIRGINIA
FARMERS AND MERCHANTS NATIONAL BANK, WINCHE
STATEMENT
"Applicant"),
The First Virginia Corporation ("First" or
Arlin
gton, Virginia, a registered bank holding company, has applied,
111r8uant to section 3(a)(2) of the Bank Holding Company Act of 1956
the
Act"),
acquisition of 80 per cent
for the Board's approval of the
or la
Farmers and Merchants
°re of the outstanding voting shares of
1/
„
14440
-8-L Bank ("Farmers"), Winchester, Virginia.
isor" authority.
Views and recommendations of superv
of the
required by section 3(h) of the Act, the Board gave notice
apro z
expressed no
"--1-cati0n to the Comptroller of the Currency, who
°Ilect•
-lon to approval.
of the Act requires
Statutory factors. - Section 3(c)
the
s:
Board to take into consideration the following five factor
g company and
t
he financial history and condition of the holdin
al of its
k4 80 Pending are applications by First for approv
Bank of Norfolk,
rn
in
Southe
sts
Noio-Tsltion of controlling stock intere
and Trust
Bank
doah
County
Nli.,:ee t Bank of Mt. Jackson, and Shenan
"
Il3, Woodstock.
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-2bank concerned; (2) their prospects; (3) the character of their
of the communities
Management; (4) the convenience, needs, and welfare
the acquisition
allci the area concerned; and (5) whether the effect of
company
1/°111c1 be to expand the size or extent of the bank holding
7.Stem involved beyond limits consistent with adequate and sound
of competition
banking, the public interest, and the preservation
the field of banking.
six banks, all in
Discussion. - First presently controls
of
1741nial having a total of 22 offices and total deposits
taking
416 million, based on figures for December 31, 1961 and
and
into account First's subsequent acquisition of Richmond Bank
Tr4st Company and the consolidation in 1962 of Mount Vernon Bank
Trust Company with Old Dominion National Bank of Fairfax
e(knty (now Mount Vernon National Bank and Trust Company of
Nrfax County).
about $47 million
Of the system's total deposits,
a`re held by Old Dominion Bank, Arlington. Farmers, the largest of
three
and about $22 million
banks in Winchester, had four offices
14 total deposits as of December 31, 1961.
ification of First's capital
Except insofar as the class
e to these factors, there
discussed hereinafter, may relat
condition, or in the
ilothing in the financial history and
NcO.
be unfavorable to
131)sPects, of First itself that would seem to
the
have been operated successProposed acquisition. Its banks
3r and soundly and their prospects are favorable. At the same
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Federal Reserve Bank of St. Louis
tine,
ition are also satisfactory
Farmers' financial history and cond
14oensequently there is no indication in this respect of a need
tc3lb affiliation with a holding company.
Moreover, Farmers has
and its prospects
PlsPered as the largest bank in its community
4az independent bank are good.
Its management is capable and it
nt can be adequately provided
4believed that continuity of manageme
ilr the bank's own efforts.
needs, and welfare of the
With respect to the convenience,
tom,.
t cites benefits expected
'''11/1a.ties and area concerned, the Applican
to fl
ers' ability to meet
-4-W from the acquisition relating to Farm
Pl'e8erlt and future credit needs in its area.
The Applicant asserts
in the future.
ould assist Farmers in raising capital if needed
11Id;
lt from the holding
--reet benefits to the public expected to resu
business development,
assistance in such matters as
training, are also cited.
-rig) and personnel recruitment and
The ,
facilitate the granting of
uelding company affiliation might
bank's lending limit, and
ID4rti- •
olpations in loans in excess of the
the,
such loans.
'e is some evidence of a local demand for
Applicant's assertions with
On the whole, however, the
ree,
s of possible future
Peet to the fourth factor are cast in term
u,
-ye,
terms of present or reasonably
-°Pments and needs, rather than in
'
NA.
facilities in the Winchester
'4.1-etable inadequacies of banking
kte.
Winchester and its
- So far as appears, the banks serving
measure of service in relation
1"°/18 are providing a satisfactory
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Federal Reserve Bank of St. Louis
I
t() their markets, and there seems to be no reason for believing that
theY cannot continue to do so. Farmers itself, the largest bank in
the-,
t of
vlcinity, appears to be in a good position to keep abreas
al'ea demands for banking service generally.
light of
Upon consideration of this application in the
the first four statutory factors, therefore, the Board is unable
to •
find significant support for approval.
, the proposed
With respect to the fifth statutory factor
acre
qllisition would seem to be consistent with adequate and sound
bark4.
effect on banking
'ng. However, from the standpoint of its
NVetition the Board does not vim the application favorably and,
the absence of affirmative grcunds for approval under the first
tour
acquisition wGuld not be
factors, the Board concludes that the
°(3r48istent with the public interest.
and First's present
Existing competition between Farmers
of
4141aries does not appear to be substantial and the extent
'
Pot;e .
Also, the size
ntial competition between them is conjectural.
Of
the holding company system relative to the total banking resources
°Ib the State is presently not a cause for concern, and the proposed
n; in addition,
4-sition would have a relatively slight effect thereo
'
wn„
position in the northern
-"-Lci. have little effect on First's
aa area where most of its subsidiaries are located (although
of banking resources in
holds a considerably higher percenta?:e
that
area than of resources in the entire State).
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
li/k4.1Vt
Igr
On the other hand, Farmers now holds about 50 per cent
' I'the deposits and 5C per cent of the banking offices of Winchester
,K13, Sherandoah Valley National Bank, a subsidiary of a holding
.(311IPallY* that is exempt from the Act, holds about 31 per cent of such
elito •
The only other bank in
—1Le and 25 per cent of such offices.—
'ester is Commercial & Savings Bank. There are two other banks
P—
'cierick County and 13 more within a 20-Aj1e radius of Winchester,
,
1311t each
-cu of these banks, except Shenandoah Valley National Bank, is
leBs th
-an half the size of Farmers and most of them are beyond
4rr4el's? principal area of competition.
holding
the transfer of control of the bank to the
vould not in itself change the pretent distribution of
.11g resources in the Winchester area, it may be assumed that
net effect
affiliation with the holding company would, in
a period of time, benefit Farmers in its competitive efforts.
tia
Bank, being a
4160 be assumed that Shenandoah Valley National
ldiary of a group banking system with substantial resources,
1114 not be materially disadvantaged by such improvement in Farmerst
Ilpe •
tative capacity as might result. The acquisition would, however,
Commercial & Savings Bank not only the smallest bank but also
'
011lY independent bank in Winchester.
Thus, apart from derogat-'-
rz,
cm the present balance of competition between independent
The figures in this paragraph are as of December 31, 1961.
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Federal Reserve Bank of St. Louis
tit
-6holding company banking tri the area, the acquisition would tend to
illcrease the competitive disadvantage of smaller area banks without
44Y substantial likelihood of beneficial effects on competition.
The present ea-3e is somewhat compar-lble, in this aspect, to
the situation presented in Matter of Northwest Bancorporation, 47 FedReserve Bulletin 408 (1961); the Board's decision in that matter
44 affirmed in Northwest Bancorporation v. Board of Governors of the
'
?Z,!Sral Reserve System (C.A. 81 1962) 303 F. 2d 832. In that case it
1.148 Pointed out that the presence of another holding company system in
tIle arca may be directly relevant to the question whether the proposed
I4'rt1cu1ar acquisition by the applicant holding company would expand
it
-ystem in a manner that would adversely affect potential banking
c°4110etition.
,held that the Bank Holding Company Act
It was then
4
,
'uquires the Board to consider the whole field of banking competition,
illcallding the possible adverse effect of the expansion of bank holding
banks in the area
°b4ellY groups upon the competitive position of the
e°11eerned that are not controlled by holding companies."
(47 Fed. Res.
kiletin at 411)
it is concluded
On the basis of these facts and principles,
that/ while the immediate effects might not be particularly detrimental
t° competition, the proposed acquisition of control of Farmers by First
1°111-01Lbe potentially anticompetitive.
For the reasons heretofore stated, it is the Board's judgment
th4t the acquisition here proposed would be inconsistent with the
1)1tervation of banking competition and with the public interest under
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Federal Reserve Bank of St. Louis
41.7;
3274
_7_
tIle fifth statutory factor, and that, in the absence of offsetting
benefits to the public or other favorable considerations under the
t1st four statutory factors, the application should therefore be
44Lied,
This case also presents special circumstances, described in
the following paragraphs, that bear upon the "character of the manageof the applicant bolding company in a broad and impersonal sense
a4111.Pon whether the proposed expansion of the holding company system
°111e.. be consistent with the public interest; these circumstances, in
tile Boardts opinion, would themselves preclude approval of the applicati0n
in
the absence of overriding favorable considerations.
two
The holding company's capital stock is divided into
,,.es of common stock, Class A and Class B, in such manner that
11°Iders of the Class B stock are able to perpetuate their voting control
of the company despite their minority ownership of the company's
'
t()-11 outstanding common stock.
i
Article IV of the Articles of Incor-
tion of First contains the following provisions:
**
section
"(d) Except as otherwise specifically provided in this
the
law,
by
required
lly
specifica
or as may otherwise be
of
the
holders
the
in
vested
entire voting powers shall be
said
of
A
Class
holders
the
Class B Common Stock . . . .
all
have
class,sh
a
as
and
y
Common Stock, voting separatel
the following voting rights:
"(1) To elect twenty per centum in number of each
class of directors of the corporation (the word
class here refers to a classification of the
directors with respect to the term for which
they shall severally hold office rather than to
a director representing a particular class of
stock) up for election, but in no event less
than one director. . . .
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Federal Reserve Bank of St. Louis
"(2) To vote upon any amendment to the Articles of
Incorporation of the corporation which would
adversely alter or change the privileges,
special rights or powers given to such stock.
"(3) In addition to the foregoing voting powers,
the holders of the Class A Common Stock shall
have all additional voting powers as may be
required by law."
***
c,
All .hares
of both classes of stock have equal rights to dividends and
111 /11 liquidation.
The principal distinction in rights and powers
between the two classes is in the distribution of voting power with
resPect to the e1ect4on of directors.
The Class A shareholders' right
t° elect a minimum of one director in each class up for election would
them to elect more than 20 per cent of any such class that
rillbered less than five.
13.1
Co
However, these voting provisions effectively
.ude the Class A shareholders from electing a majority of the
a majority
directors at any time, even though they hold
tho holding company's common stock.
of which
Originally, First had only one class of stock, all
ovned by Old Dominion Bank, Arlington.
After two classes of stock
Old Dominion Bank
authorized in December 1958, the shareholders of
B shares of First.
ICe4411Ced their shares of the bank's stock for Class
ed 1.5 million shares
At the present time there are authoriz
A stock.
(1 Class B stock and 5 million shares of Class
There are out-
a majority was owned
%41ng 1,095,792 shares of Class B stock, of which
by 0
ricers and directors of First as of March 31, 1962, and presumably
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Federal Reserve Bank of St. Louis
'
..9_
still is.
The ownership of a large majority of the Class B stock,
itteluding the holdings just mentioned, stems directly from stockholdings
11101d Dominion Bank prior to the exchange of that bank's shares for
those
of First, although the number of Class B stockholders has increased
l'ract about 200 when the Class B stock was first issued to approxi41°:telY 624.
There are now 1,439,863 shares of Class A stock outstanding.
141tia11y, in October
1959, 600,000
shares were issued through public
8ale, which was followed by a 2 per cent stock dividend in 1960. In
°etOber 1961, the class A shareholders voted to increase the 1.5 million
he
es of Class A stock originally authorized to 5 million shares. The
hold
rs of more than 77 per cent of the Class A shares voted for the
ilirease, with less than
01a.„
3
per cent voting against.
In 1962,
113,520
A shares were issued to shareholders of Richmond Bank and Trust
ColtY,fl
"IlY in exchange for their shares in that bank and 712,903 shares
1?(*-
Issued to the shareholders of Mount Vernon Bank and Trust Company
its consolidation with Old Dominion National Bank of Fairfax
e°1111tY (flow called mount Vernon National Bank and Trust Company of
County).
4ttca
-- just under
prior to that consolidation, the Class A stock repre-
4o
per cent of the total equity in the holding company.
1
/
1
4
°Ting the consolidation, the Class A shareholders owned, and they
tiolg 0
1411, about 57 per cent of the total equity. Thus, the consolidation,
was not subject to approval by the Board, gave the Class A share-
hoLle
rs a majority interest in the holding company for the first time,
1411.1_
voting control was retained by the Class B shareholders.
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Federal Reserve Bank of St. Louis
-10-
Where a corporation has a single class of stock, minority
8tockholders may, as a practical matter, exercise control of the
corporation, but in such cases there is always a latent power which
cual be exercised whenever the majority chooses to act. This is not
Ilith a capital structure such as is here involved, since it prec1ud33 the owners of the majority interest from ever exercising control
over the affairs of the corporation.
The proposed acquisition of Farmers would increase the equity
illterest of Class A shareholders in First to about 65 per cent without
iticreasing
their minority voting power. It is not merely the quantitati
ve increase from 57 to 65 per cent that gives the Board concern, but
ria'ther the fact that the correspondence of equity ownership with control
bas
already been eliminated, and that any further acquisitions by the
method here proposed and without further investment by the Class B
*141'eho1ders would further increase the disparity- between their control
the venture and their proportionate investment in it. If all of the
14'esently authorized shares of both classes were issued, the Class A
°Ik"eholders would have approximately a 77 per cent ownership interest
4a.gu1n5t 23 per cent for Class B. If the balance of the authorized
4413s A stock were issued without additional Class B stock being issued,
Class A stockholders would have approximately an 82 per cant interest.
authorized Class A stock
It is true that no increase in the
r he voted without the affirmative vote of the holders of two-thirds
c)lethe Class A stock, and that the increase from 1.5 million to
5 N4
shares authorized received a clearly favorable vote of Class A
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Federal Reserve Bank of St. Louis
-11-
811areholdLrs in spite of the fact that no pre-emptive rights attached.
Irabe argued that, since existing Class A shareholders have been
aling to permit the reduction of their proportionate interest in the
c°rPoration to such extent, and since persons to whom Class A shares
ere offered are free to reject the offers if the terms, including those
'
48 to voting rights, are not to their liking, the matter is therefore
04e of freedom of contract involving no need for special protection of
lareholders' interests.
Whatever weight this argument might carry in
the °rdirlary business context, it does not, in the Board's view, negate
tilQ Board's responsibilities under the Bank Holding Company Act with
l eqlect to the acquisition of control of banks by bank holding companies.
'
There are now about 4,450 Class A shareholders.
tf
Not only do
hold a 57 per cent equity interest in the corporation but they
IlePresent about 88 per cent of the total number of stockholders. Each
till* a bank is acquired by First through the issuance of Class A stock
a
yie1,7 segment of the public is added to the roster of owners; yet these
"blab]
--on stockholders' voice in the affairs of the corporation is not
illereased and the broader distribution of the Class A stock in fact
Nith-er
diminishes the participation of individual Class A stockholders
IlIthe control of First's affairs.
The Act requires the Board to consider the "character of
4141c4gement" of an applicant holding company.
This term comprehends not
Y the personal competence and integrity of the directors and officers
41- company, but also the organizational relationship of management
()1''ue
°14nership, particularly where, as in this case, the ownership of the
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
,471.67,(
41?
-12degree from the ownership of
hslding company derives to a stgntficant
the banks and would, as proposed, do so increasingly.
The present
ion
e4Pita1 structure of First is expressly designed to permit expans
°t the holding company through the increase of public ownership.
Not
acquisition of additional banks
°IllY is the class A stock to be used for
the advantages
bIlt the public market for the stock is cited as one of
to be obtained by bank shareholders in exchanging their less marketable
shIlres.
exchanges may make the
This and other aspects of proposed
offerees in spite of the fact
Clans A shares economically attractive to
.
that proportionate voting rights do not attach
Nevertheless, they are
rights to offset the lack of
e°111111011 shares and carry no preferential
tt111 voting power.
Company Act, Congress concerned
In enacting the Bank Holding
might be injured by the concenitself with the way in which competition
g company systems.
tl'`'Ition of banking resources in holdin
Within the
n of the
legitimate scope of this concern, however, is consideratio
control of its banks is ultimately
e teat to which a holding company's
g company.
c°11centrated in the owners of the holdin
ksition that; however that ownership may
ti
distributed, the distribu-
company should be reasonably related
of voting power of the holding
hereto.
the
The Board takes the
expansion, the management must ask
If, to accomplish desired
of banks in particular to join
Public generally and the owners
economic risks and benefits, then
41118-gement in ownership with the same
ta
riately accountable to them.
44gement should be willing to be approp
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Federal Reserve Bank of St. Louis
()
-13
In practice, the charting of a corporation's course can
()tterl be entrusted completely to management even though it has a minority
illterest. The fact that voting control may rest in others should not,
ill the ordinary case, interfere with effective control by management so
1°11g e.s it is well exercised.
Good performance provides assurance
ellQligh to management that its effective control can continue, and it
1114be the rare case in which assurance of that control in a minority
th-c device of nonvoting or limited-voting stock should accomplish
e. t
who no longer enjoy
11`' hing except the perpetuation of control in those
the confidence of the majority. In such event, it would be difficult
interest in the success
t() see why the majority owners, with their prime
the corporation, should not be able to elect management of their own
ctioiee.
on the competence or
These views do not in any way reflect
the .
Virginia. Under the Act,
Integrity of the present management of First
the ,In
which the power of a
4 0ard must consider not merely the extent to
1101A
the control of banks
company may presently be exercised through
a given market, but also the potential extent of its exercise.
ktianziy,
it is
appropriate for the Board to consider the extent to
1/111^
Concentrated,
itself could be exercised
control of a holding company
relatively small proportion of the owners.
enough that Virginia law gives
For this purpose, it is not
ecy—
'quorations generally the freedom to limit the voting rights of common
courts if improper
or that stockholders may have recourse to the
c111.41atage is taken of their limited rights.
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Federal Reserve Bank of St. Louis
Where banks as quasi-public
4
-3.4institutions are concerned, the public interest, as reflected in the
1*.ENlatory and supervisory authority established by Congress, calls
difficulty so long as their
optimim standards applied in advance of
bank opera4Tlication does not unduly hamper economic and competitive
future integrity of
Therefore, with regard for the present and
tile banking industry in general the Board cannot view the expansion of
stock with
4141.k holding companies through the device of issuing common
described herein, as being in
Itnlited voting power, in the circumstances
the Public interest.
or proposed capital
Thus, in any case involving an existing
considerations
1:
'11.1.cture of the nature herein discussed, while other
1114?Ibe found that may
sufficiently favorable to approval of a particu-
the applicant's stock
acquisition to outweigh the adverse aspects of
unusually compelling
tIlacture, such other considerations would have to be
to
13ermit the Board to deviate from the policy herein expressed.
In the
considerations are absent, so
ittant case, such overriding favorable
add weight to
that the findings as to First's capital structure simply
Board's judgment
the other findings, previously discussed, that in the
l'ecillire denial of this application.
the relevant facts as
Conclusion. - On the basis of all
and in the light of the factors
)11tained in the record before the Board
underlying purposes of the
tQ't forth in section 3(c) of the Act and the
• is the Board's judgment that the proposed acquisition would not
Act, it
be
consistent with the public interest and that the application should
tb.e."
'efore be denied.
2 L' 29) 1962
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Federal Reserve Bank of St. Louis
DISSETING STATEMENT OF GOVERNOR MILLS
Item No. 15
8/28/62
Holding
In applying the five statutory factors of the bank
of The First
C41PanY Act of 1956 to consideration of the application
4qinia Corporation, Arlington, Virginia, for approval of acquisition
c3f shares of Farmers and Merchants National Bank, Winchester, Virginia,
effect of the
4ttenticn must focus on the fifth facto,- - whether the
9,1-lisition would be to expand the size or extent of the bank holding
adequate and
ec4rTlanY system involved beyond limits consistent with
preservation of competibanking, the public interest, and the
ience,
" am the field of banking - the fourth factor - the conven
ned - and,
8 and welfare of the communities and the area concer
14at1-Y, the third factor - the character of the managements of the
11°14.
order of relevance
Ing company and the bank concerned - in that
44 4
41POrtanCe to this case.
ia Corporation
At the year end of 1961 The First Virgin
(law
its system in
'Aiding one bank acquired and another merged into
1962)
3,3
its subsidiary banks
is estimated to have controlled through
ts of the State of
Per cent of the total of commercial bank deposi
by acquisition of
glnia„ which would be increased to 3.9 per cent
Winchester. On the one
'armers and Merchants National Bank,
harlA
would not increase the size of
consummation of the proposal
The
of the total commercial
irst Virginia Corporation as a proportion
b;41.1t,
ia to an extent that would be
14g resources of the State of Virgin
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
)
Contrary to
the public interest.
On the other hand, the mobilization
financial resources under a centralized administrative control
'Totad
offer opportunities for their economically constructive deploy-
1"1t throughout the areas in which the holding company would be
l' Presented.
The standing of the management and the financial history
414 condition of The First Virginia Corporation make a record that
1D4sses the conventional tests for grading an applicant holding company
and
such as to warrant the conclusion that these opportunities
'
l uld be realized.
The experienced managements of its subsidiary
ham -
'b contribute to the applicant's favorable prospects.
Moreover, on the basis of local standards, acquisition of
'I's and Merchants National Bank by First Virginia Corporation is
illharmony with my interpretation of the Bank Holding Company Act
01' lnr,
'7)6, which conceives that applications subject to its provisions
oho
'
44 be honored when representing the freely expressed wishes of
411
Parties concerned unless good and sufficient reasons can be cited
that
1,You1d call for their denial. The fact that Farmers and Merchants
4ati
°Ilal Bank has 50 per cent of the deposits of Winchester banks,
•
that lts
National Bank, has 31 per
largest competitor, the Shenandoah
tort
of such deposits, and that both banks would be bank holding company
NIt
if
the application were approved, does not argue for its
(1140
-41. The Board has objected to a situation affecting two bank
hold.
Itig companies that already occupy a dominant financial position
4
wide extent of the territory wherein an expansion was proposed
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Federal Reserve Bank of St. Louis
_3_
that would have resulted in pairing off the subsidiary bank facilities of the two bank holding companies as the sole source of commercial
bank services in a single community. In this case neither bank
11°14ing company occupies a dominant position in the commercial
13411king structure of the State of Virginia and as the possibility of
elleh a future development is a matter of pure conjecture, it is not
I tinent to deciding the application. Presently there is more reason
to
'e-Lleve that approval of the application, by stimulating stronger
e°N:Ietition between relative banking equals, would benefit the community
cl'illnchester and the surrounding area, which is served by a considernumber of indepenae,lt banks large enough to compete on their own
Pabilities and to offer alternative banking facilities to those
airailslole in Winchester proper.
The discussion regarding the propriety of the capital
strtim.
''ure chosen by The First Virginia Corporation that is set out at
lerIcp4,
ts`41 in the statement of the majority of the Board denying the
-a6i0n, bears on mana7erial considerations. No matter what
c11431.,
14e there may be for a corporate practice that fails to give
N'el)o
rtionate voting ricfhts to shareholders assumed to be entitled
t° that privilege, where such a practice enjoys legal sanction it is
t,
JOnA
/14" challenge by the Board and cannot properly be recorded as
Iferse factor calling for the denial of an application.
In
unfavorable weight in its decision in the instant case to a
tort,
Of capital structure adopted by The First Virginia Corporation
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-44-
13111"suant to the laws of the State of Virginia, the Board is in effect
Pl7esumin.,, to dispense a sort of vigilante justice and to write a
blue sky
laT, of its own tnatpre-omptc the police powers of the
°elleral Assembly of the State of Virginia.
Furthermore, although
the
Board can properly recommend that the Congress amend the sank
Roid.
lng Company Act of 1956 to provide that bank holding companies
c)11,form their capital structures to snecified reouirements, it lacks
"lority to anticipate enactment of such legislation by a unilateral
1 '1-°n that undertakes to accomnlish that purpose.
"
This is a close case but should be approved.
10.1F-'11st 29, 1962
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
S-1839
Item No. 16
8/28/62
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE SOAR°
August 30, 1962.
Dear Sir:
This refers to the revision of the series on Federal funds
transactions that has been proposed by the System Research Advisory
Committee and reviewed by the Presidents. The Board has authorized
this revision, to be effective beginning September 13, 1962. The
respondent banks that will be retained in revised aeries may be asked
t° continue reporting on the present form until the effective date of
the new series revision.
A suggested revision of the report form (F.R. 716, revised)
with self-contained respondent instructions is attached. This form
i8 being submitted to the Bureau of the Budget, and the approval
number will be telegraphed upon receipt. The Budget Bureau is being
!dvised that each Federal Reserve Bank may make minor variations in
he content and arrangement of the reporting form for use in the
Current Reporting Series
Particular district. The System Committee on
Will be in contact with each Federal Reserve Bank in order to assist
in the development of any needed refinements in reporting forms and
Procedures.
Each Federal Reserve Bank is requested to collect these data
from the banks in its district included in the attached list, plus any
additional banks that have been sufficiently active in the Federal
funds market in the first six months of 1962 to meet the three minimum
criteria adopted by the System Research Advisory Committee.
t
The information may be transmitted by responden banks
at
the
delivery
close of
messenger
or
either by telephone, telegram,
it is
but
ce,
convenien
reporting
upon
each business day, depending
by mail covering
Ngested that a confirming report form be obtained
telephoned or wired information. Instructions are attached for the
assembly of reported figures by the Reserve Banks and the transmission
and weekly to
data daily to the Federal Reserve Bank of New York
the
Board is
to
the Board. A sample form for Reserve Bank reports
and
detail of
the
scheduled timing
included with these instructions;
e.
experienc
this reporting may be altered somewhat after initial
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Federal Reserve Bank of St. Louis
e
S-1839
-2-
National summaries of the reported totals will be distributed
to the Reserve Banks and within the Board, in the form of a revised
confidential release F.R. L.6.2. After a suitable amount of experience
With the new reporting arrangements, it is contemplated that public
release will be made of summary figures on average weekly sales and
Purchases of Federal funds. In addition, the daily effective rate on
Federal funds as determined by the Securities Department ofthe Federal
Reserve Bank of New York may also be released to the public on a regular
basis shortly.
Inasmuch as these data are expected to provide the basis for
review and study of the Federal funds market and its relation to basic
reserve positions of leading banks, the detailed data developed regarding individual reporting banks should be preserved. Instructions for
to the
,F,c)cling and punching the underlying data will be distributed
Reserve Banks at a later date.
Very truly yours,
Kenneth A. Kenyon,
Assistant Secretary.
tnclosures (with addressed copies only)
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 17
8/28/62
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
August 28, 1962
CONFIDENTIAL (FR)
Mr. John L. Nosker, Vice President,
Federal Reserve Bank of Richmond,
Richmond 131 Virginia.
Dear Mr. Nosker:
In accordance with the request contained in
Your letter of August 221 1962, the Board approves the
appointment of Daniel R. Angel as an assistant examiner
for the Federal Reserve Bank of Richmond, effective today.
.
It is noted that Mr. Angel is indebted to
First Union National Bank of North Carolina, Charlotte,
North Carolina. Accordingly, the Board's approval of
Mr. Angel's appointment is given with the understanding
that he will not participate in any examination of that
bank until his indebtedness has been liquidated.
Very truly yours,
(signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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