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Minutes for August 7, 1958 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, if you were present at the meeting, please initial in column A below to indicate that you approve the minutes. If you were not present, please initial in column B below to indicate that you have seen the minutes. Chm. Martin Gov, Szymczak Gov. Vardaman Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 2276 Minutes of the Board of Governors of the Federal Reserve System on T hursday, August 7, 1958. PRESENT: Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 9:15 a.m. Martin, Chairman 1/ Balderston, Vice Chairman Vardaman Mills Shepardson Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Kenyon, Assistant Secretary Fauver, Assistant Secretary Thurston, Assistant to the Board Riefler, Assistant to the Chairman Leonard, Director, Division of Bank Operations Molony, Special Assistant to the Board Shay, Legislative Counsel Solomon, Assistant General Counsel Hostrup, Assistant Director, Division of Examinations Nelson, Assistant Director, Division of Examinations ProvidinR Quarters for State bankers associations in Reserve Bank build. At Governor Balderston's request, Mr. Kenyon read an excerpt fr°m the minutes of the meeting on July 30, 1958, regarding the Board's discu . sslon of correspondence received from Congressman Multer relating to qgarters occupied by the New York State Bankers Association in the builr;k 4411g. of the Federal Reserve Bank of New York and by the Maryland State ' r8 Association in the building of the Baltimore Branch of the Federal rye Bank of Richmond. At that meeting it was understood that Governor BalA_ .terston would contact the two Reserve Banks involved and inform them of Z/ Wi thdrew at point indicated in minutes. nter(.1 at point indicated in minutes. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 227;' 8/7/58 -2- the Board's view that occupancy by such organizations should be terminated as soon as the necessary arrangements could be made. Governor Balderston then reported to the Board the results of his e°nversations with Messrs. Hayes and Treiber, of the Federal Reserve Bank of New York, and Mr. Leach at the Federal Reserve Bank of Richmond. He indicated that Mr. Hayes had stated that the New York Bank was extremely reluctant to disrupt its long-standing arrangement with the New York State Bankers Association but had expressed the view that, while the Bank thought A. he -oardis decision was incorrect, it would abide by it if the Board 811°111d insist. earned Later Mr. Treiber had called, indicating that he had from President Leach that the Board intended to discuss the matter with representatives of the Richmond Bank following the Open Market C°111111ittee meeting on August 19. Mr. Treiber wondered whether the New York Bahl, -- could also have its "day in court." Mr. Leach had pointed out in his conversation that he felt the 8itilati0n with regard to the Maryland Bankers Association was somewhat cliff erent from that in New York inasmuch as the lease which the Bank held was wlth the Clearing House Association and not with the State bankers He said it was true, of course, that the same individual served as 8ecr e'"IrY of the Clearing House Association and the State bankers ass°ciation. Governor Balderston had said in reply that the Board had no desi re to evict the Clearing House but that it did feel the offices of the and Bankers Association should in no way be associated with the Pede_ "al Reserve branch building. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 2273 8/7/58 Governor Balderston stated he had brought the matter back to the Board because he wanted to make certain the Board was firm in its Position of opposing the occupancy by bankers' groups of any space in a Federal Reserve building. With regard to the inquiry of the New York Bank as to whether it would receive a directive in this regard, his reply had been that, while this should not be necessary, if the New York Bank felt it needed such direction he was sure the Board would be glad to Provide it. He told Mr. Treiber the Board's hope had been that the matter CotIld be handled on a friendly basis with the bankers' association so that the s ituation could be corrected with a minimum of inconvenience. During Governor Balderston's explanation of the developments Chairman Martin left the room and Governor Shepardson joined the meeting. 8ef°re leaving, Chairman Martin indicated that he continued to be in eYrnPathy with the position previously taken by the Board. Governor Vardaman said that the reluctant attitude on the part of the Reserve Banks toward terminating the existing arrangements with the bahip associations was further indication to him that several of the Rese„ ve Banks, and the New York Bank in particular, regarded themselves as ' cr eatures of the commercial banks. He said he had come to the conclusion that the Federal Reserve Banks were acting in such manner as to serve barik era first and the public second. By acting thusly, he felt the Federal 4e, 've Banks were forcing a fundamental revision of the Federal Reserve Act nd 4--) in his view, the sooner it came the better. With regard to a http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 8/7/58 —4— reply to Congressman Multer, he felt the letter should contain a paragraph which would point out that under the law the Board exercises only general supervision over the operations of the Federal Reserve Banks and that it does not attempt to engage in the detailed management of Reserve Bank oPerations such as, for example, the management of Reserve Bank buildings. Governor Mills commented that he felt most certainly the New York Bankers Association should leave the Reserve Bank building and that the Sanle Principle should apply to the Maryland group. He questioned, however, whether as a matter of law the Board could enforce an order to a Reserve Bank to evict a given tenant. He recognized that the Board did have the tatutory power of general supervision but wondered whether such power ' l4)111d carry through to a specific matter such as the one before the Board. In reply, Mr. Solomon pointed out that this is a different uation than in the matter of personnel compensation, for example, where the law is specific with respect to the Board's authority. There might be 8°41e question, he said, with regard to the Board's authority and for this l'eas°n it might be better to phrase any letter in terms of the Board's or the Board's opinion. In this regard Governor Shepardson stated that he felt the Board had ample authority to issue an order to a Reserve Bank. On this, Mr. soi °Illon commented that he had not meant to imply that the Board lacked "Ispl'itY, but simply that the authority was not clear-cut because it was riot sPelled out in the law. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 2280 8/7/58 _5_ Governor Balderston suggested that (1) he be authorized to call Messrs. Treiber and Leach again and tell them that the Board had reaffirmed its decision in a discussion of the matter in a Board meeting this morning; and (2) Messrs. Leonard and Solomon prepare a draft of a reply to C°ngressman Multer's letter which, when approved, would also be sent to the Ilew York and Richmond Federal Reserve Banks as an indication of the Board's Po sition. Governor Shepardson stated that perhaps it would be advisable to send the other Reserve Banks copies of the correspondence so that they 11°111d be advised as to the Board's policy, which would help to guard agairlst any future arrangements of this type at any of the other Reserve Bank s. By sending them notice at this time there would be an opportunity, if they wished, for the Banks to raise questions at the Presidents' C0110_ 1„ ence scheduled for early September. Governor Vardaman said he would like to see a survey made by the of Bank Operations of arrangements by the Federal Reserve Banks 14ith the various clearing house associations. He would like to know, for eaMPle, Whether they have only a "clearing room" where the checks change 114nds, or Whether there is also provided in some of the Banks office space ter the records and permanent personnel, if there are any, of the local ering house associations. It was unanimously agreed to proceed on the basis of the '11,esti0n5 made by Governors Balderston, Shepardson, and Vardaman. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 2281 8/7/58 —6— At this point Messrs. Thurston, Molony, and Shay left the meeting. Discount rates. Unanimous approval was given to a telegram to the Federal Reserve Bank of San Francisco approving the establishment without change by that Bank on August 6, 1958, of the rates on discounts and advances in its existing schedule. Items circulated to the Board. The following items, which had been circulated to the members of the Board and copies of which are attached to these minutes under the respective item 1"re a numbers indicated, roved unanimously: Item No. oer to The Peoples-Merchants Trust Company, Canton, Ideillt t of an additional bra ) approving the establishmen nch in Massillon. (For transmittal through the e eral Reserve Bank of Cleveland) ' 1 egliam to the Federal Reserve Bank of St. Louis cn erPusing no objection to an expenditure of funds - c"nection with the Louisville Branch building. 2 At this point Mr. Leonard withdrew from the meeting. Arst Bank Stock Corporation matter (Item No. 21. At Governor uerston's request, Mr. Solomon outlined the contents of his memorandum August 6, 1958, which had been distributed prior to this meeting of the board . This memorandum reported the receipt of a request from counsel for First Bank Stock Corporation that the date for filing exceptions and 41Pp be 3rting brief to the hearing examiner's report and recommended decision 'ended to September 15, 1958. Under the Board's Rules of Practice for http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 2282 8/7/58 _7_ F°rmal Hearings, the time for such filing would expire on August 9 unless e xtended. This would be 15 days after receipt of a copy of the hearing examiner's report on July 23. Counsel for the applicant had stated that the considerable length °I. the hearing examiner's report required careful review, and that ecInsultation between the applicant and counsel and preparation of a brief Could not reasonably be expected to be completed within a 15-day period. The Legal Division recommended granting the extension of time requested by the applicant, as did the Board's counsel in this matter, Mr. Strothman of the Federal Reserve Bank of Minneapolis. Thereupon the Board unanimously agreed to the issuance of an Order ill the form attached to these minutes as Item No. 3 extending the time for tiling exceptions and brief to the hearing examiner's report and 11ee°111mended decision by First Bank Stock Corporation to and including September 15, 1958. Procedural matter concerning,_examination of the Continental Bank " "1111-2.21-184_CompLly of Salt Lake City. Also, at Governor Balderston Is l'eg4est, Mr. Solomon discussed a procedural matter relating to a recent nation by the Federal Reserve Bank of San Francisco of the Continental 84/1k and Trust Company of Salt Lake City. In the course of the examination eert • aln facts were developed which pointed either to a Section 30 proceeding Or to a reference to the Department of Justice as a possible criminal n. The San Francisco Bank had not been able to develop all of the http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 2283 8/7/58 -8- facts it desired in the matter and was seeking advice as to whether it Igculd be desirable for representatives of the Bank to go to Salt Lake City and to discuss the matter with Mr. Cosgriff and other officers of the bank. Mr• .olomon said Mr. O'Kane, of the San Francisco Bank, had talked with rnernbers of both the -Legal Division and the Examinations Division to keep the informed of the developments. Mr. Solomon pointed out that essentially this was a matter which *°uld be resolved at the Reserve Bank level. He felt, however, that the Barlk was anxious to have the Board's view as to the appropriate procedure because of its possible effect on the administrative proceeding already in Process. of Mr. Solomon said he personally would question the desirability additional personal contacts with the member bank at this time. If any Centacte were to be made, he thought it would be better to reduce the matter to writing. In any event, he thought the Reserve Bank should discuss the rilatter with the Board's Special Counsel, Mr. Powell, to see whether in his view additional action by the Reserve Bank at this time might have an effect upon the Board's administrative proceeding. Following a discussion of the matter, it was the consensus of the Boa-, L.-Q. that personal discussions between Reserve Bank representatives and °fricers of the Continental Bank would not be advisable. Further, it was the n__r 'ua d's view that if the Reserve Bank felt impelled to carry on further esPondence on the matter with the Continental Bank, any such esPondence should be cleared with the Board's Special Counsel. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis This 2284_ 8/7/58 _9... was especially true in the light of assurances that the matter in question did not pose a threat to the solvency of the institution. It was understood that Mr. Solomon would advise the Reserve Bank of the Board's views on the matter. Thereupon the meeting adjourned. Secretary's Notes: It having been ascertained, pursuant to action taken by the Board on August 4, 1958, that Mr. John H. Warden of Houghton, Michigan, would accept appointment, if tendered, as a Class C director of the Federal Reserve Bank of Minneapolis for the unexpired portion of a term ending December 31, 1958, a telegram was sent to Er. Warden today notifying him of his appointment. In the absence of Governor Robertson, and in accordance with the procedure authorized by the Board on December 7, 1956, Governor Shepardson today authorized the execution of commissions certifying that the following persons, who are members of the examining staff of the Federal Reserve Bank of New York, have been designated as Federal Reserve examiners for the purpose of examining Edge Act and Agreement corporations, in line with the program outlined in Governor Robertson's memorandum of July 2, 1958, which was approved by the Board on July 9, 1958: Clark, James J. Meyer, Harry J. Clark, Joseph A. Fleetwood, Harvey Cooney, John J. Kendrick, William D. Crumb, Howard F. Ciancimino, Matthew R. Gaffney, Donald F. Straub, Warren C. Graveman, Harry K. Drenning, Herman J. Harrison, John B. Frey, Frederick L. Honan, Abram V. Garfinkel, Joseph Kranik, Eugene C. Halpern, Joseph M. Lederleitner, Stephen T. Quinn, John J. Moreschi, Robert F. Robert Ritchie, Paul, Emil J. Accardi, Robert P. Reilly, Edward M. Allen, Carl H. Russell, John G. Bozio, Albert J. Zaloom, Charles B. Brasseur, Edward A. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 2285 8/7/58 -10Governor Shepardson today approved on behalf of the Board a letter to the Federal Reserve Bank of San Francisco approving the appointment of Marvin D. Lawrance as assistant examiner, a copy of which is attached as Item No. 4. Assistant Secretary http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 2286 BOARD OF GOVERNORS OF THE Item No. 1 FEDERAL RESERVE SYSTEM 8/7/58 WASHINGTON 25. D. C. ADDREBB OFFICIAL CORRESPONDENCE TO THE BOARD August 71 1958 Board of Directors, The Peoples-Merchants Trust Company, Canton, Ohio. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Cleveland, the Board of Governors of the Federal Reserve System approves the establishment of a branch at 124 Lincoln Way East, Massillon, Ohio, by The Peoples-Merchants Trust Company, Canton, Ohio, provided the branch is established within one year from the date of this letter and the approval of the State authorities is in effect as of the date of the establishment of the branch. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 2287 TELEGRAM LEASED WIRE SERVICE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON Item No. 2 8/1/58 August 70 1958 JOhrts -Y 31 letter. Board will interpose no objection to your 111‘°ceeding to treat exposed surface of south wall of Louisville —% as outlined in your letter at an estimated cost of Ppro Ita20000 plus architect's fees and expenses. (Signed) Kenneth A. Kenyon KENYON. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Item No. 8/7/58 UNITED STATES OF AMERICA BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM L'ASHINGTON, D. C. In the Matter of the Applications of ?IRST BANK STOCK CORPORATION for de terminations pursuant to sceeti°n 4(c)(6) of the Bank Holding (IMPany Act of 1956 DOCKET NOS. BHC — 36 and 37 ORDER EXTENDING TIME FOR FILING EXCEPTIONS AND BRIEF TO THE HEARING EXAMINER'S REPORT AND RECOMMENDED DECISION BY FIRST BANK STOCK CORPORATION Additional time having been requested by First Bank Stock voration within which to file with the Secretary of the Board its ecePtions and brief to the Hearing Examiner's Report and Recommended °"1310r1 and it appearing to the Board that such request should be er4riteds it is hereby ORDERED that the time within which First Bank Nek Corporation may file such exceptions and brief be, and the same hel'obvi -4s, extended to and including September 15, 1958. This 7th day of August, 1958. By order of the Board of Governors. (SEkt,) --------Rnneth A. Kenyon, Assistant Secretary. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 3 2289 BOARD OF GOVERNORS "eel • OF THE FEDERAL RESERVE SYSTEM ``.}.to A* , t4 1 Item No. AooRrss , 411. 44*** OF- FACIAL CORRESPONDENCE TO THE BOARD August 7, 1958 Mr. R. H. Morrill, Vice President, Federal Reserve Bank of San Francisco, San Francisco 20, California. Dear Mr. Morrill: In accordance with the request contained in your letter of August 4, 1958, the Board approves the appointment of Marvin D. Lawrance as an assistant exaniner for the Federal Reserve Bank of San Francisco. Please advise as to the date upon which the appointment is made effective. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis I. 3/7/58 WASHINGTON 25, D. C.
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