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FR 609
Rev. 10/59
Minutes for
To:
December 1, 1959
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
to any of the entries in this set of
respect
with
record of policy actions required to
the
in
minutes
to section 10 of the Federal
pursuant
ed
be maintain
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. Szymczak
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
(4"
Minutes of the Board of Governors of the Federal Reserve System
on Tuesday, December 1,
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
1959. The Board met in the Board Room at 10:00 a.m.
Martin, Chairman 1/
Balderston, Vice Chairman
Szymczak
Mills
Robertson
Shepardson
King 1/
Sherman, Secretary
Riefler, Assistant to the Chairman
Thomas, Economic Adviser to the Board
Molony, Assistant to the Board
Fauver, Assistant to the Board
Young, Director, Division of Research and
Statistics
Mr. Hackley, General Counsel
Mr. Farrell, Director, Division of Bank Operations
Mr. Solomon, Director, Division of Examinations
Mr. Daniels, Assistant Director, Division of Bank
Operations
Mr. Hostrup, Assistant Director, Division of
Examinations
Mr. Nelson, Assistant Director, Division of
Examinations
Mr. Landry, Assistant to the Secretary
Mr. Brill, Chief, Capital Markets Section,
Division of Research and Statistics
Mrs. Ulrey, Economist, Division of Research and
Statistics
Miss Hart, Assistant Counsel
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Discount rates.
The establishment without change by the Federal
Reserve Banks of Boston and Atlanta on November 30,
1959, of the rates
on discounts and advances in their existing schedules was approved
unanimously, with the understanding that appropriate advice would be
sent to those Banks.
1/
Chairman Martin and Governor King withdrew and re-entered at point
indicated in minutes.
12/1/59
-2Items circulated or distributed to the Board.
The following
copies
items, which had been circulated or distributed to the Board and
numbers
of which are attached to these minutes under the respective item
indicated, were approved unanimously:
Item No.
Letter to The First National City Bank of New York,
New York, approving an extension of time within which
the Santos, Brazil, branch may occupy temporary quarters.
1
Letter to the Federal Reserve Bank of New York interposing no objection to a procedure proposed in lieu of
execution of Forms P-3 and P-4- by certain affiliated
companies of Financial General Corporation in connection
with its application for a voting permit.
2
Letter to Central Trust Capital Bank, Harrisburg, Pennsyl
branch
a
sh
vania, approving an extension of time to establi
in the Colonial Park Shopping Center, Lower Paxton Township.
3
ng
Letter to the Federal Reserve Bank of Cleveland approvi
the appointment of Donald C. Robinson as Assistant Federal
Reserve Agent, and of Donald J. Clink and Clarence J. Goudreau
as Alternate Assistant Federal Reserve Agents.
14-
Letter to the Federal Reserve Bank of Minneapolis approving a
proposal that Blue Shield coverage at that Bank be changed
from the standard form of contract into an Employer Liability
Agreement with the Minnesota Medical Service, Inc.
5
Letter to the Federal Reserve Bank of Dallas regarding a
question raised by the Republic National Bank of Dallas
relating to payment of a particular certificate of deposit
prior to maturity.
6
ng
Letter to the Federal Deposit Insurance Corporation regardi
for
Texas,
n,
Spearma
Bank,
State
an application of the First
from membercontinuation of deposit insurance after withdrawal
ship in the Federal Reserve System.
7
-3-
12/1/59
Item No.
Letter to the Federal Deposit Insurance Corporation
regarding an application of Lafayette Savings Bank,
Lafayette, Indiana, for continuation of deposit
insurance after withdrawal from membership in the
Federal Reserve System.
8
Letter to the Farm Credit Administration regarding
the applicability of the recent amendment to Regulation R to consolidated debentures issued by the
Central Bank for Cooperatives and the regional banks.
9
Letter to the Comptroller of the Currency recommending
unfavorably with regard to an application to organize
a national bank at Marshfield, Missouri.
10
Application of Bank Stock Corporation, Milwaukee,
Wisconsin, for a one-month extension of time within
which to become a holding company under the Bank
Holding Company Act of 1956.
11
With respect to the foregoing Item No. 11, Messrs. Solomon and
disHackley commented briefly on the joint memorandum that had been
tributed from the Examinations Division and the Legal Division under
date of November 30, 1959.
Noting that Bank Stock Corporation had been
authorized by the Board on September
3, 1959, to become a holding company
by acquiring 80 per cent or mare of the stock of Marshall and Ilsley Bank
that
and Northern Bank, both of Milwaukee, Wisconsin, Mr. Solomon said
e the
Bank Stock had asked for one additional month in which to complet
Stock,
exchange of stock, and that Mr. A. S. Puelicher, President of Bank
by
stated that it was important that the extension of time be granted
extension
Tuesday, December 1, because, among other things, without the
taken by
of time it would not be possible to take action that should be
of
Bank Stock on that date in order to comply with the Securities Act
I 1;
-4-
12/1/59
1933 administered by the Securities and Exchange Coinmission, and that
the Board's staff was aware of no change in the circumstances of this
case that would make it inappropriate for the Board to grant a one-month
extension.
Mr. Hackley added that late in October Bank Stock promised
the Antitrust Division of the Department of Justice that the exchange
of stock of the proposed holding company for stock of the two banks would
be postponed until December 2, 1959, and that this agreement made at the
request of the Department of Justice was adequate reason for the failure
to complete the exchange within the time originally specified.
He
referred to the expressed opinion of the Chicago Reserve Bank that the
Board "would be justified in granting the request of extension", that
the Board's Division of Examinations and Legal Division concurred, that
a form of order for that purpose was being prepared, and that no indication of a record vote need be carried in this order for an extension
of time, although the original application was approved by a divided
vote among the Board members.
Continental Bank and Trust Company (Item No. 12).
Referring
to a letter to the Federal Reserve Bank of San Francisco having to do
with matters covered in the report of examination of The Continental
Bank and Trust Company, Salt Lake City, Utah, as of May 25, 1959, which
had been circulated to the Board, Governor Balderston inquired whether
the legality of the stock acquisition by The Continental Bank and Trust
Company of the Paramount Life Insurance Company of Texas was being studied
-5-
12/1/59
by the staff.
He expressed the view that there should be no reference
to this matter in the Board's letter to the San Francisco Bank until
a decision had been reached, stating that he disliked having to say
as was done in the draft letter that the Board had not yet reached a
conclusion as to its future course.
Mr. Hackley replied that a long memorandum on this question
was in preparation in the Legal Division and that the study should be
available for Board consideration within the next few weeks.
It was then unanimously agreed to send a letter to the San
Francisco Reserve Bank making no reference to the Paramount Life
Insurance Company of Texas.
A copy of this letter is attached as
Item No. 12.
Payment of fees to real estate agents.
There had been circu-
lated a memorandum from the Division of Bank Operations dated November
9, 1959, regarding the payment of fees to real estate agents for obtaining
tenants in Federal Reserve Bank buildings.
This memorandum noted that
when President Allen of the Chicago Reserve Bank was at the Board
recently, he said that in about a year the Reserve Bank would have
30,000 square feet of floor space for rent and that although the former
First Vice President had established a policy that the Bank would not
pay real estate commissions, real estate brokers were now coming in and
offering to obtain tenants.
Mr. Allen had reported further that the
chairman of the board of directors, Mr. Frail, believed that in the long
12/1/59
-6-
run it paid to let the real estate brokers find tenants and that the
Bank was disposed to do so unless there was some objection. The memorandum also carried the information that the Division of Bank Operations
had not been able to determine that the Board of Governors had taken a
position on this particular point but there was at least one case in
which a Reserve Bank paid a fee for obtaining a tenant, namely, the
San Francisco Reserve Bank, which in 1951 paid a fee to a real estate
agent for obtaining the Federal Bureau of Investigation as a tenant to
occupy most of the rental space in the Seattle Branch building on a
five-year lease basis.
According to the memorandum, the Division of
Bank Operations saw no objection to the Chicago Reserve Bank's proposal
and pointed out that unless the Board felt differently no action was
necessary on its part.
Governor Mills observed that he thought the employment of real
estate agents in this connection by Reserve Banks should be a matter of
last resort and that so far as he knew Federal Reserve Bank space was
much sought after by prospective tenants, making it unnecessary for the
Reserve Banks to enlist the services of agents.
He observed further
that the employment of agents by the Reserve Banks would possibly open
them to the criticism that they were making no effort on their own to
secure tenants for vacant space in Reserve Bank buildings.
Mr. Farrell said that apparently it was a matter of opinion as
to whether in the long run it paid to hire real estate brokers in this
12/1/59
-7-
connection, and he added that the information pertaining to the San
Francisco Reserve Bank had been brought out in the examination report
of the Bank without comment and that the Bank had made no further
report to the Board on this question.
At this point the Chairman and Governor King withdrew from the
meeting.
In response to a comment from Governor Robertson that he agreed
with Governor Mills and that by and large it was best to avoid the use
of real estate agents except in essential cases, Mr. Farrell remarked
that the decision hinged on the desirability of relieving Reserve Banks
of troublesome details in an area which did not concern their regular
banking functions; and Governor Robertson replied that it was important
to avoid giving the impression to the public that the Federal Reserve
Banks were engaged in a commercial activity concerning what was essentially temporary extra office space.
Were the Board involved rather
than the Reserve Banks, he added, it would certainly not be appropriate
to use rental agents unless absolutely forced to.
Expressing agreement with the views of Governors Robertson and
Mills, Governor Shepardson said that he would have thought the Reserve
Banks would have difficulty in screening applicants rather than being
forced to employ the services of an agent to secure applications to
rent their spare office space.
12/1/59
-8Governor Balderston recalled that during a recent conversation
between President Allen and himself in his (Governor Balderston's) office,
President Allen had said that it was his personal preference not to hire
a real estate broker and that he preferred to have officers of the Chicago
Reserve Bank lease the space and that when he had asked Governor Balderston's
opinion on this question he had been given a comment similar to that of
Governors Robertson and Mills. Governor Balderston went on to say that
Mr. Prall had pressed the point that the Chicago Reserve Bank could make
a better deal through using the services of a broker than not, and he
referred to the extreme situation at the Louisville Branch whase 21,000
square feet of usable space was currently vacant.
Speaking to the last point, Mr. Farrell said that the Board's
letter of June 12, 1953, (F.R.L.S. No. 3188.1) regarding the leasing
of unused space in new Federal Reserve Bank buildings or additions
pending need of such space for bank operations had pointed out that
the Reserve Banks were not necessarily expected to rent their excess
space.
A discussion then ensued concerning the form which a letter to
the Reserve Banks might take on this question, during which Mr. Hexter,
Assistant General Counsel, entered the room and Mr. Fauver withdrew.
It was then decided that the Division of Bank Operation3should
prepare for later consideration by the Board a draft of letter to be
sent to all Federal Reserve Banks indicating that while each situation
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12/1/59
should be decided on its own merits, the Board was of the opinion that
in general it would be preferable for the Reserve Banks to obtain their
awn tenants, rather than to employ the services of real estate brokers.
Messrs. Farrell and Daniels withdrew from the meeting at this
point.
New reporting form for unregulated lenders extending stock
market credit (Item No. 13). There had been distributed a memorandum
dated November 25, 1959, from Mr. Young. This memorandum, which indicated that the initial reporting form for unregulated lenders extending
stock market credit (approved by the Board on September 8, 1959) had
been approved by the Budget Bureau with minor modifications in the
wording and format, was accompanied by a draft announcement of the
adoption of F.R. 728 for inclusion in the Federal Register, a draft
press release, and a sample copy of the reporting form as approved by
the Budget Bureau.
Mr. Brill commented briefly on the memorandum, referring to
the interest which the Securities and Exchange Commission had in this
matter and to the fact that Mr. Bloch of the Securities and Exchange
the day
Commission staff had requested that the Commission be informed
y
before a public announcement was made in order to provide opportunit
to give its regional offices sufficient advance notice.
Governor Mills asked whether the definition of unregulated
lenders was intended to include corporations who advance
credit on the
12/1/59
-10-
basis of repurchase agreements and buy-backs or whether it was intended
to obtain information on these practices at a later point, noting that
corporations might not consider this sort of activity as lending and
that it was an area that should be covered.
Mr. Young replied that the reporting form would cover listed
stocks subject to Regulations T and U, but that so far as credit advanced
by corporations on the basis of Government securities was concerned,
these would have to be reached through another program.
He noted that
the statistics required in such an additional program would have to be
obtained partly from dealers in Government securities and partly from
a strengthened program of securing reports from holders of Government
securities which the Treasury would conduct.
The Chairman and Governor King re-entered the room at this
point.
Mr. Brill responded negatively to a question from Governor
Balderston as to whether there would be a question on the proposed
form covering lending arrangements on registered stock but noted
that comparable information was currently being collected from banks
making such loans and that additional information of this kind would
be obtained from brokers.
Messrs. Solomon and Hackley observed that there was a legal
sanction that the Board could impose in order to stimulate responses
to the survey, not only under the Securities Exchange Act, but also
under the recent amendment to Regulation T, effective June 15, 1959.
-11-
12/1/59
The initial reporting form for unregulated lenders extending stock
market credit (F.R. 728) was then unanimously approved, with the understanding that an announcement of the adoption of F.R. 728 for inclusion
in the Federal Register and a press release should be worked out by Mr.
Molony in cooperation with the Legal Division, and with the further understanding that the Securities Exchange Commission should be given advance
information of the Board's decision, along with pertinent documents.
A
copy of the letter sent on December 11, 1959, to the Presidents of ell
Federal Reserve Banks transmitting the form and press statement is
attached as Item No. 13.
Organization of a national bank at Mountain Grove, Missouri (Item
224_1/11.
There had been distributed a memorandum from Mr. Solomon dated
on
November 20, 1959, recommending favorably with respect to the organizati
of a national bank at Mountain Grove, Missouri, concerning which Governor
King had expressed certain reservations at the Board meeting of November
19 when this case was first considered.
Mr. Solomon's memorandum disclosed
that following the discussion at the meeting on November 19, he had talked
by telephone with Mr. Kroner, Vice President of the Federal Reserve Bank
of St. Louis, and told him that the Board was inclined to question whether
the community could reasonably support two banks and that the Board would
appreciate having the benefit of his reconsideration of this particular
aspect of the application.
The memorandum vent on to say that subsequently
Mr. Kroner reported a discussion with the supervising examiner of the
the
Federal Deposit Insurance Corporation, who took the position that
12/1/59
existing bank was not doing a good job, stating further that the capital
Position of the existing bank appeared to be somewhat low and that the
bank had not been receptive to suggestions for improvement.
Governor King commented that the additional information contained
in Mr. Solomon's memorandum of November 20 threw new light on the situation,
that he had not been aware that the Federal Deposit Insurance Corporation
had criticized the existing bank in Mountain Grove, and that he consequently withdrew his objection to approving the application for the
national bank charter at Mountain Grove, Missouri.
Unanimous approval was then given to a letter to the Comptroller of
the Currency (attached Item No. 14) informing him that the Board recommended
approval of the application in question, provided the management and investment in fixed assets are resolved to the satisfaction of his office.
Messrs. Nelson and Hostrup then withdrew from the meeting.
Proposed amendment to Regulation U.
There had been distributed
memoranda from Miss Hart dated October 23 and November 4, 1959, regarding
a proposed interpretation and possible amendment of the definition of
"carrying" under Regulation U, Loans by Banks for the Purpose of Purchasing
or Carrying Registered Stocks, as well as an undated memorandum from Mr.
Hackley on the same subject.
By way of leading up to a discussion of her memoranda, Miss Hart
noted that the language of section 221.3(b)(1) of Regulation U provided
a loophole which the Board had not dealt with in detail.
This section
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12/1/59
reads in part, "A loan made to a borrower when he has owned a stock
registered on a national securities exchange free of any lien for a
a loan
continuous period of as much as one year need not be treated as
for the purpose of 'carrying' that stock unless this loan is for the
Purpose of reducing or retiring indebtedness incurred to purchase that
stock."
The phrase, "reducing or retiring indebtedness incurred to
said
Purchase that stock", embodied the loophole to which she referred,
bank
Miss Hart; and she gave an example of a person with t$10,000 in the
who planned to build a cottage with this money but who bought the stock
and then borrowed on the basis of the stock to build the cottage.
She
noted that this provided a loophole permitting escape from the margin
reducing or
requirement since the loan was not made for the purpose of
retiring indebtedness incurred to purchase the stock.
She then referred
to reports from officers of Reserve Banks and banks generally that an
were
unknown number of customers were following this procedure and
accounts
thereby avoiding the imposition of margin requirements on their
and that when consideration was being given to amending the Regulation
e.
last spring it had seemed desirable to the staff to close this loophol
The Board had adopted a revised definition of "carrying" in the amendin a
ments that became effective June 15, 1959) but this had resulted
.
number of questions as to its correct interpretation and meaning
Con-
interpretation of the
sequently, the staff had worked out a comprehensive
circulated to all
"carrying" provision of Regulation U which had been
12/1/59
-14-
Reserve Banks on August 5, 1959; and revisions were then made in
the interpretation along lines suggested by these responses.
Miss Hart recalled that the New York Reserve Bank, knowing
that the New York Clearing House Association had prepared "working
Principles" which it proposed to make available for use by banks
unless the Board objected, had shown the draft interpretation to the
Clearing House representatives who had requested permission to make
an oral presentation to the Board of their views of this interpretation, and this had been done on September 11, 1959.
Following this
Presentation by the New York Clearing House Association, the Board
instructed the staff to reconsider the interpretation of the "carrying"
of Regulation Ur, including in its
.
provision
-section 221.3(b)(1)1
[
reconsideration comments on the presentation of the New York Clearing
Rouse Association and preparation of a new draft interpretation
of the "carrying" provision.
Meanwhile a memorandum of the views of
the lending officers of the New York Clearing House banks having been
received October 5, 1959, the staff had revised its draft interpretation
which was presented in the memorandum of October 23, 1959, now before
the Board.
Miss Hart added that this draft was the product of a working
group comprising representatives of the Legal Division, Division of
Examinations, and Division of Research and Statistics.
She went on to
say that several of the most vigorous Objections to earlier drafts raised
by the Clearing House and by the New York and Boston Reserve Banks had
been met by (1) substituting for the "third party pledgor" principle the
caution to lending officers against permitting evasion of the regulation
12/1/59
-15-
by the use of such a device, (2) eliminating from the scope of
section 221.3(b)(1) all loans made before June 151 19591 and (3)
inserting a "proportionate" principle.
She noted that this "pro-
portionate" principle made it plain that when a borrower diverted cash
needed for other purposes to the purchase of registered stock and then
borrowed on stock collateral to meet the other purposes no more of his
stock asset need be "sterilized" (to borrow a Clearing House term)
than Would be required to collateralize a loan in the amount of the
diverted cash.
As for the objections to the original draft interpre-
tation of the "carrying" provision of Regulation Ur by the New York
Clearing House Association, she observed that these were largely met
by
Providing three exceptions, one relating to the length of time the
borrower had v./Ilea the stock free and clear and the others to the
Purposes for which he was borrowing.
She added that the final draft
of the working group represented simplification and liberalization of
the "carrying" amendment, which contained only three principles relating
to (1) whether or not loans made after June 151 19591 were for the
Purpose of carrying registered stock; (2) whether they were for emergency
or seasonal purposes; and (3) whether the holding periods of stock could
be "tacked" together to fulfill the one year presumption rule of section
Mr. Thomas withdrew from the meeting at this point.
12/1/59
-16-
Miss Hart concluded by noting that there were certain other
Principles which had been omitted from the latest draft amendment to
Regulation U, such as that concerned with the third party pledgor
situation or the combining of all purpose loans secured by stock at
one bank to a single borrower.
So far as her memorandum of November
4, 1959, was concerned she observed that it merely attached a draft
of a possible alternative to the draft interpretation on "carrying"
Which was submitted to the Board with the memorandum of October 231
1959.
Mr. Hackley commented that while he did not disagree with the
sUbstance of the "principles" recommended by the staff group as
attached to Miss Hart's memorandum of November 4, 1959, he had come
to the conclusion as indicated in his memorandum distributed the day
before to the Board, that it might be preferable to incorporate these
Principles in a proposed revision of the regulatory definition of
"carrying", which might be published in the Federal Register for
comment.
He continued by noting that, as a matter of procedure, it
seemed somewhat inappropriate for the Board to ask for comments regarding its interpretation of its awn regulation, but that it was
entirely appropriate to ask for comments on a proposed amendment to
the Regulation.
Furthermore, in his opinion the suggested "principles"
went beyond interpretation:
it seemed to him that they were in effect
amendments to the definition adopted in June 1959 and that they would
12/1/59
-17-
be regarded as such in any event if they were published in the Federal
Register.
Consequently, it would be more logical to publish them in
the form of an amendment to the regulation.
He concluded by noting
that if the suggested approach had any merit, there was attached to
his memorandum for consideration a draft of a possible revision of
the regulatory definition that would incorporate the "proportionate"
Principle, make it clear that the "old loans" ruling had been reversed,
and by means of a footnote include the "tacking" principle. In publishing
aAY proposed definition for comment, he said, it would be possible to
include in the preliminary explanatory statement of purpose examples
illustrating the application of the revised definition.
Governor Shepardson asked whether it was necessary at this late
stage to submit the proposed amendment to Regulation U for comment,
considering the lengthy review given to the question and the fact, as
he understood it, that the staff had greatly simplified its interpretation.
Mr. Hackley replied that the difficulty with this suggested
approach was that only the New York Clearing House Association had been
given an opportunity to comment on the Board's proposed interpretation
of Regulation U, and it was a fair presumption that there would have
been comments from banks in other cities had they been given a similar
opportunity.
-18-
12/1/59
The Secretary observed that representatives of the New York
Clearing House Association, following their meeting with the Board on
September 11 and submission of an additional memorandum on October 51
had requested an opportunity to study any new draft of interpretation
before it was adopted in order to make known to the Board administrative and other problems that such an interpretation might present
to the banks.
He also noted that when President Allen of the Chicago
Reserve Bank had called the Board to request that he be permitted to
show the original proposed interpretation to member banks in the Chicago
district, he (President Allen) had been informed that the Board did not
wish to circulate the interpretation more widely than had been done
Pending changes in it.
As a result, President Allen was under the
impression that member banks in Chicago would be given a chance to
look at a new draft of interpretation prior to its adoption.
Governor Mills indicated that he had a different philosophy with
regard to the approach to be adopted to this question from what presumably was entailed in the Legal Division's treatment of the question,
since he judged from Miss Hart's discussion that complexities arising
from the refined interpretation of Regulation U resulted from a desire
to catch every possible case of avoidance.
He felt that both the Board
and the Reserve Banks should be guided by a "rule of reason" in their
examination of banks extending this type of credit in order to create
a reasonable flexibility in the administration of the law.
He said
12/1/59
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that to split a loan collateraled by registered securities into two
or three different parts and to ask the lending officer of a bank to
inject into the thinking of a borrower his interpretation of the
borrawer's intentions would produce embarrassments reacting unfavorably on the standing of the Board and would open it to the accusation
that it had passed a Draconic regulation.
He suggested that the Board
might let nature take its course, and should flagrant cases of avoidance
of the Regulation by member banks be brought to the Board's attention,
a philosophy of administration could be developed without the detail
involved in the interpretations submitted to the Board for its consideration.
Chairman Martin then asked what objections might be raised to
Publication for comment of Mr. Hackley's proposed amendment to Regulation U.
Governor Mills referred again to the memorandum prepared by
lending officers of members of the New York Clearing House Association
under date of October 5, 1959, which, in his opinion, posed the problem
that would fall on commercial lonnks and lending officers of those banks
if they were required to attempt to follow any requirement such as the
proposed interpretation of the definition of "carrying."
In some ways,
he said, it was almost impossible to see haw banks could apply this
interpretation.
With respect to Chairman Martin's specific question,
it was Governor Mills' view that perhaps the best thing would be to do
12/1/59
nothing at this point.
He reiterated the view that there was not a
great deal of evasion of the objectives of Regulation U and certainly
not enough to warrant inquiries of the sort implied in the proposed
interpretation into the practices followed, by commercial banks and their
customers.
Governor Robertson commented that he felt the staff had made a
real contribution to better understanding of the problems involved in
administering Regulation U.
On the question whether anything should
be issued at the present time, Governor Robertson said that in his
Opinion it would be unfair not to put out something in the near future
in view of the fact that questions were being raised regarding the
interpretation of the June 15 amendment, and particularly since a
proposed interpretation had gotten some circulation outside the
Federal Reserve System.
Commercial banks were in a position, he
noted, where they did not wish to run the risk of violating a regulation that had the force of law.
The New York Clearing House repre-
sentatives obviously had attempted to present some of the problems of
the banks both in their meeting with the Board on September 11 and in
their subsequent memorandum to the Board.
In Governor Robertson's
opinion, the wisest course would be to follow the suggestion that Mr.
Hackley had made of issuing for comment a proposed amendment to the
regulation, thus giving interested parties an opportunity to make their
-21-
12/1/59
views known to the Board.
He also suggested that some explanation of
the purpose of the amendment should accompany its publication.
After Mr. Hackley stated that it was assumed a notice of publication in the Federal Register would include an appropriate statement of
the reasons for the amendment and of its objectives, Chairman Martin
commented that the Board had gotten into a procedural tangle in this
matter.
He thought it probably had made a mistake in changing the
definition of carrying or in starting the interpretation procedure
with respect to that amendment to the regulation.
The problem now,
however, was how to extricate the Board from its position in the best
way possible from the public relations standpoint.
This was no reflection
on the staff, he said, but to the extent it was a reflection on anybody,
it was on the Board.
In his judgment, the simplest thing to do probably
would be to follow Mr. Hackley's suggestion and to publish a proposed
amendment to the regulation so that all interested persons would have
an opportunity to study and comment on the proposal.
The Chairman said
he agreed with the general approach that Governor Mills had indicated,
but he did not know how the Board could get out of the present tangle
without doing something.
A good many of the responsible members of
the financial community were critical of what the Board had done in
this matter, and if it did nothing to move out of its present position
it would lose more of its standing with individuals in New York and
12/1/59
-22-
elsewhere who had devoted a good deal of time and thought to the
Practical operating problems and who, in his opinion, honestly wanted
to be helpful.
Governor Shepardson referred to Chairman Martin's earlier comment
that perhaps the Board had made a mistake in tackling the definition of
carrying in the first place.
He recalled that at a recent discussion of
this matter he had made the comment that the Board seemed to be trying
to build a net to catch minnows instead of fish that amounted to something.
If the Board had made a mistake on this question, he wondered
whether there was any more difficulty in reversing itself completely
than there would be in trying to keep modifying its position to something workable.
At Chairman Martin's suggestion, Mr. Hackley commented on this
point, stating that it would be possible for the Board to go back to
the previous definition of carrying and to rely entirely on the banks
to apply that definition through use of a purpose statement.
Mr. Hackley
noted that the amendment that had become effective June 15 grew out of
an attempt to eliminate what were recognized as legitimate methods of
avoidance of the regulation.
It was not known how much actual avoidance
occurred, and the question came down to a matter of Board policy.
The
question was whether the complications that had arisen out of the recent
amendment outweighed the advantages that that amendment was designed to
produce.
12/1/59
-23Governor King said that perhaps the best hope was that this
regulation would have the kind of effect a policeman is supposed to
have when he stands on the corner--that most persons would be deterred
from violating the law or regulation.
There would be a few who would
try to avoid the regulation, but he was inclined to agree with the
general position indicated by Governor Wils on the amount of evasion.
As to what should be done, Governor King said that he would not object
to a complete retreat from the definition of carrying that became
effective June 15, but he would go along with a proposal to publish
for comment an amendment along the lines that Mr. Hackley had suggested.
Governor King added that he would not approve the issuance of an interpretation such as had been suggested, since he believed a matter of this
importance should be handled by an amendment to the regulation rather
than by a ruling of the Board.
Chairman Martin said that he thought complete reversal of the
Board's June 15 amendment might have fairly logical implications.
However, the Board did not want to do anything that might encourage
violations or evasions of the regulation and a complete retreat from
the June 15 amendment could lead to that view.
A good many people had
been studying the changes in the regulation that became effective in
June, and this had had a psychological effect. The Chairman said he
did not think the Board should lose the benefit of that effect, and
-24-
12/1/59
on the whole, he believed that the approach suggested by Mt. Hackley
of publishing a proposed amendment to the regulation was perhaps as
good a move as any.
This would give everybody concerned a chance to
think about the matter and to comment on difficulties they might anticipate.
Governor Balderston stated that he felt there had been a heavy
flaw of credit into the stock market prior to the amendments to the
regulation last spring that caused the Board to have reason to question
whether the regulation was sufficiently effective.
The net gain since
the amendments were adopted, in his opinion, had come in the discussions
that had arisen out of those amendments.
He would now put into the
Federal Register a notice regarding Mr. Hackley's proposed amendment
to the definition of carrying, with the thought that such a notice
would bring about further discussion. It seemed to him better to
rely Upon the bankers to do what they believed to be reasonable under
a clear and simple definition of carrying, rather than to carry the
matter into great detail.
He concurred in the "little fish" philosophy
expounded by Governor Shepardson, and he would vote to approve the
suggestion made by Mr. Hackley.
Chairman Martin then suggested that Mr. Hackley be authorized
to review his proposed amendment to the regulation with the members of
the staff, with the understanding that if he wished to bring the matter
back to the Board before submission of the proposed amendment for publication in the Federal Register he was at liberty to do so.
Governor
12/1/59
-25-
Mills suggested that it would be desirable for any revision made in
the proposed amendment to come to the Board's attention before publication, and there was general agreement with this suggestion.
Accordingly,
Mr. Hackley was requested to review the proposed amendment in whatever
manner seemed desirable and to submit it for the consideration of the
Board.
All of the members of the staff excepting Messrs. Sherman and
Fauver then withdrew from the meeting, and Mr. Johnson, Director, Division
of Personnel Administration, entered the room.
Appointment of director.
Governor Shepardson said that, pursuant
to the Board's action on October 14, 1959, he had ascertained through
Deputy Chairman Russell of the Federal Reserve Bank of Chicago that
Mr. James H. Hilton, President of Iowa State University, would accept
appointment as a Class C director of that Bank for the three year term
beginning January 1, 1960.
It would now be in order, therefore, to
take the usual formal steps for completing the appointment.
Salaries of officers at St. Louis Bank (Item No. 15).
Chairman
Martin and Governor King reported on a telephone conversation this
morning with President Johns of the St. Louis Bank regarding his
proposals for salaries for three officers at the Memphis Branch,
pursuant to the understanding at the meeting on November 30, 1959.
At the conclusion of the report, unanimous approval was given to a
12/1/59
-26-
letter to Mr. Johns, a copy of which is attached as Item No. 15,
approving payment of salaries to Messrs. DeVos, Vice President and
Manager; Monaghan, Cashier; and Breen, Assistant Cashier, for the
period December 1, 1959 through December 31, 1959.
Messrs. Sherman, Fauver,and Johnson then withdrew and the
Board went into executive session.
Following the meeting, Governor Shepardson informed the
Secretary that during the executive session the Board: (1) noted
the request of Winfield W. Riefler for retirement effective December
31, 1959; (2) appointed Ralph A. Young Adviser to the Board, with no
Change in salary, effective January 1, 1960; (3) appointed Guy E.
Noyes Director, Division of Research and Statistics, at an annual salary
rate of $18,000, effective January 1, 1960; and (4) changed the title
Of Woodlief Thomas from Economic Adviser to the Board to Adviser to
the Board, effective January 1, 1960.
The meeting then adjourned.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 1
12/1/59
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 12 1959.
The First National City Bank of New York,
55 Wall Street,
New York 15, New York,
Gentlemen:
In view of the request contained in your letter of
October 26, 1959, transmitted through the Federal Reserve
Bank of New York, and on the basis of the information fur—
nished, the Board of Governors extends to December 31, 1960,
the time within which your Santos, Brazil, branch may occupy
temporary qmrters, as approved by the Board on July 16,
1957, at Rua 15 de Novembro No. 1762 pending completion of
construction of new and larger quarters at the permanent
branch site, at Rua 15 de Novembro No. 119.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
00.4tritr,}44.
64
,
4.z3.4
441Y*
OF THE
C144,,?{I.
`tiz
z
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ftP4
'
"0A
Item No. 2
12/1/59
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 1, 1959.
Mr. Howard D. Crosse,
Assistant Vice President,
Federal Reserve Bank of New York,
New York 45, New York,
Dear Mr. Crosse:
This refers to your letter of October 14, 1959, with respect
to the execution of Forms p-3 and 13-4 (exhibits L and N) by certain
affiliated companies of Financial General Corporation in connection
With an application by such corporation for a voting permit.
It appears that Financial General Corporation has requested
permission to obtain an "agreement, consent and approval" by each
affiliated company to permit examinations and audits by the Federal
Reserve System and authority for all State and Federal authorities
to furnish the Federal Reserve System with reports or any other information which may be contained in their files and records in lieu
Of having each affiliated company execute individual Forms P-3 and
There would seem to be no serious objection to following
this procedure provided clause (1) of the proposed letter is changed
to include agreement to furnish reports of condition. This clause
covers the agreement usually contained in Form p-3 and should include
both submission to examinations and furnishing reports of condition.
Also, the caption "consent" for the execution by the affiliated
company should be omitted entirely or should be changed to follow the
terms of the letter, namely, "agreement, consent and approval", and
a place for date of execution and the corporate seal should be added.
If a letter of explanation, such as that proposed, is sent
bY the Corporation to each affiliated company, it is not apparent that
Mr. Howard D. Crosse
-2
burdensome
Obtaining the "agreement, consent and approval" would be less
P44 by
and
P-3
or cause less misunderstanding than execution of Forms
al
substanti
e
the individual companies. However, it would constitut
no
and
n
regulatio
compliance with the requirements of the Board's
objection will be raised to following this procedure.
Very truly yours,
(Signed). i,.erfitt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
40
OF THE
Cie GOP'4
,
FEDERAL RESERVE SYSTEM
-19>
WASHINGTON 25. D. C.
Item No. 3
12/1/59
ADDRESS OFFICIAL CORRESPONDENCE
TO THE SOARD
December 1, 1959.
Board of Directors,
Central Trust Capital Bank,
Harrisburg, Pennsylvania.
Gentlemen:
Pursuant to your request submitted through the
Federal Reserve Bank of Philadelphia, the
Board of Governors
has approved an exten
sion of time until December 23, 1960,
111 which Central Trust Capit
al Bank may establish a branch
In the Colonial Park
Shopping Center, Jonestown Road and
Colonial Road, Lower Paxton Township, Dauph
in County,
Pennsylvania. The establishment of this branch WAS
authorized in a letter dated December 23, 1957.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD
OF
GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
Item No. 4
12/1/59
ADORIE811 OFFICIAL CORREUPONDENCI
TO THIC SOARD
December 1, 1959.
Mr. Arthur B. Van Buskirk,
Chairman of the Board and
Federal Reserve Agent,
Federal Reserve Bank of Cleveland,
Cleveland 1, Ohio*
Dear Mr. Van Buskirk:
In accordance with the request contained in your letter of
November 12, 1959, the Board of Governors approves the appointments of
Mr. Donald C. Robinson as Assistant Federal Reserve Agent, and of
Messrs. Donald J. Clink and Clarence J. Goudreau as Alternate Assistant
1. edera1 Reserve
Agents. It is understood that Mr. Goudreau is being
relieved of his present position of Assistant Federal Reserve Agent
because of his uncertain health.
This approval is given with the understanding that these
appointees will be solely responsible to the Federal Reserve Agent
and the Board of Governors for the proper performance
of their duties,
except that, during the absence or disability of the Federal Reserve
k:ent, or a vacancy in that office, the Assistant Federal Reserve Agent
Will be responsible solely to the Board of Governors and the Alternate
Assistant Federal Reserve Agents will be responsible to the Assistant
Iederal Reserve Agent and the Board of Governors.
When not engaged in the performance of their duties as
Assistant and Alternate Assistant Federal Reserve Agents, respectively,
the appointees may, with the approval
of the Federal Reserve Agent and
the President, perform such work
for the Bank as will not be incon—
sistent with their duties as Assistant and Alternate Assistant Federal
Reserve Agents.
It will be appreciated if these new appointees are fully
informed of the importance of their responsibilities as members of the
Staff of
the Federal Reserve Agent and the need for maintenance of
independence from the operations of the Bank in the discharge of these
responsibilities.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Mr, Arthur B. Van Buskirk
— 2
It is assumed that Messrs. Robinson, Clink, and Goudreau
will execute the usual Oath of Office, which will be forwarded to the
Board of Governors along with the notification of the effective dates
of their appointments.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
0%
t.4
WASHINGTON 25, D. C.
Item No. 5
12/1/59
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 1, 1959.
Mr. Frederick L. Deming, President,
Federal Reserve Bank of Minneapolis,
Minneapolis 21 Minnesota.
Dear Mr. Deming:
In accordance with the request contained in your
letter of NoveMber 91 1959, the Board of Governors approves
the proposal that Blue Shield coverage be changed from the
standard form of contract into an Employer Liability Agreement with the Minnesota Medical Service, Inc.
This approval is given with the understanding that
the proposed self-insurance program will not result in the
Bank's absorption on the average of more than two-thirds of
total cost of such coverage.
It is noted that the contemplated cost of this
coverage to the Bank is about $130400 per year.
Very truly yours,
(Signed) iierritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
*
WASHINGTON 25. D. C.
Item No. 6
12/1/59
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
O't#
{T,Alt,KO*4
4444I 1*
December 1, 1959.
Hr. L. G. Pondrom, Vice President,
Federal Reserve Bank of Dallas,
Dallas 2, Texas.
Dear Mr. Pondrom:
This refers to your letter of November 13, 1959, presenting
the question whether the Republic National Bank may pay a time certificate
of deposit, issued September 15, 1959, to Mr. Twyman H. Dew, prior to
its maturity, February 15, 1961, in accordance with section 4(d) of
Regulation Q.
It is understood that Mr. Dew accepted this certificate as
a means to recover the amount of a debt owed him, represented by a
note due February 15, 1961, and that since the inception of such debt,
he has encountered a serious financial emergency occasioned by his
wife's illness and loss of income which has forced him to borrow to
meet current living expenses and pay medical bills. Accordingly, it is
Mr. Dew's position that this situation has resulted in an emergency,
and he has requested the bank to pay the certificate before maturity.
In the circumstances, the Board will not object to the payment of the certificate of deposit prior to its maturity, provided, of
course, that all the requirements of the regulation are met. Since a
national bank is involved, a copy of this letter is being furnished the
Comptroller of the Currency.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 7
12/1/59
WASHINGTON 215, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 1, 1959.
The Honorable Jesse P. Wolcott,
Chairman,
Federal Deposit Insurance Corporation,
Washington 25, D. C.
Dear Mr. Wolcott:
Reference is made to your letter of November 17, 1959,
concerning the application of the First State Bank, Spearman,
Texas, for continuance of deposit insurance after withdrawal
from membership in the Federal Reserve System.
No corrective programs have been urged upon the bank
or agreed to by it which, in the opinion of the Board of Governors,
lt would be considered desirable to incorporate as conditions to
the continuance of deposit insurance.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
*-`
:sr
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
*0
4
,
Item No. 8
12/1/59
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
*
*t
,
tr4itl WO
**‘4
000**4*
December 1, 1959.
The Honorable Jesse P. Wolcott, Chairman,
Federal Deposit Insurance Corporation,
Washington 25, D. C.
Dear Mr. Wolcott:
Reference is made to your letter of November 17,
1959, concerning the desire of Lafayette Savings Bank,
Lafayette, Indiana, to continue as an insured bank following
its withdrawal from membership.
No corrective programs have been urged upon the
bank that, in the opinion of the Board of Governors, it
would be desirable to incorporate as conditions of admitting
the bank to membership in the Corporation as a nonmember of
the Federal Reserve System.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
A
BOARD OF GOVERNORS
e:itttt
c Gokt
OF THE
Item No. 9
12/1/59
FEDERAL RESERVE SYSTEM
r
WASHINGTON 25, O. C.
4 Va
4
ADDRESS OFFICIAL. CORRESPONDENCE
.de!i?
TO THE BOARD
tt 4*14.
'
December 1, 1959.
The Honorable
Glenn E. Heitz,
Acting Governor,
Farm Credit
Administration,
Washing,. 25, D. C.
Dear Governor
Heitz:
of NoveMbeThis is to thank you for your letter to Chairman Martin
r 10, 1959, regarding the recent amendment to the Board's
R which appeared in the Federal Register on October 30,
t95?. Although the amendment refers to obligat
ions of the Central
?a114 for Cooperatives and
not to the regional banks for cooperatives,
Ihe Board agrees
with you that consolidated debentures issued jointly
and several
ly by the Central Bank and the 12 regional banks for
cooperatives
are embraced within the exception provided by the
,ftedment, since the Central Bank, as well as each regional bank,
ls i
ndividually liable for such debentures.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
4 fi
.A
t
Li
BOARD OF GOVERNORS
OF THE
Item No. 10
12/1/59
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
AOORC1511 °maim. CORRCIIIPONDIENdi
TO THC BOARD
December 1, 1959.
Comptroller of the Currency,
Treasury Department,
Washington 25, D. C.
Attention Mr. G. W. Garwood,
Deputy Comptroller of the Currency.
Dear Mr. Comptroller:
Reference is made to a letter from your office dated
August 25,
1959, enclosing copies of an application to organize a
national bank at Marshfield, Missouri, and requesting a recommendation
as to whether or not the application should be approved.
Information contained in a report of investigation made by
an examiner
for the Federal Reserve Bank of St. Louis indicates that the
proposed capital structure would be adeqUate in relation to the anticipated
volume and character of business. The prospects for earnings are fair
a:nd.the proposed board of directors would seem to be satisfactory. While
aeflnIte arrangements had not been made for executive management, it is
!assumed that this matter could be resolved favorably. However, on the
basis of the information available it appears that the existing bank in
Marshfield is meeting the banking needs of the community and there is not
Sufficient need for an additional bank in the area at this time.
Accordingly, the Board of Governors does not feel justified in recommending
approval of the application.
The Board's Division of .Examinations will be glad to discuss any
aspects of this case with representatives of your office if you so desire.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
UNITED STATES OF AMERICA
Item No. 11
12/1/59
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON: D. C.
- - --------------- °In the Matter of the Application of'
'BANK STOCK CORPORATION OF MILWAUKEE°
c
Pursuant to section 3(a)(1) of the /
'Bank Holding Company Act of 1956
- - ----------------ORDER MINDING TIME WITHIN WHICH TO
131 COME A BANK HOLDING COMPANY
There having come before the Board of Governors, pursuant
to section 3(a)(1) of the Bank Holding Company Act of 1956 (12 U.S.C,
1842) and section 4(a)(1) of the Boardls Regulation Y (12 CFR
application by Bank 6tock Corporation of Milwaukee
for the Board's approval of action whereby Applicant would beccme a
bank holding company through the acquisition of 80 per cent or more
of the outstanding voting shares of Marshall and Ilsley Bank and
Northern Bank, both of which are located in Milwaukee; a Notice of
Tentative Decision referring to a Tentative Statement on said application having been published in the Federal Register on August 11,
19591 said Notice having provided interested persons an opportunity,
before issuance of the Board's order, to file objections or comments
Upon the facts stated and the reasons indicated in the Tentative
Statement; and the time for filing such objections and comments having
expired and no objections or comments having been filed;
And said application having been granted by order of the
Board dated September
3
1959, with a proviso that said acquisition
be completed within three months from that date;
And Bank Stock Corporation of Milwaukee having applied to
the Board for a one-month extension of the period prescribed in said
proviso
and it appearing that such an extension would not be
inconsistent with the public interest;
IT IS HEREBY ORDERED, that the time In which said acquisition may be completed is extended to January 4, 1960.
Dated at Washington, D
Co this 1st day of December, 1959.
By order of the Board of Governors.
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
(SEAL)
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 12
12/1/59
WASHINGTON 25, D. C.
ADDRESS
orriciAL
CORRESPONDENCE
TO THE BOARD
December 1, 1959.
Mr. E. R. Millard, Vice President,
Federal Reserve Bank of San Francisco,
San Francisco 20, California.
Dear Mr. Millard:
This will acknowledge your letter of November 4, 1959,
respecting the reply of The Continental Bank and Trust Company,
Salt Lake City Utah, to the examination report as of May 25,
1959.
The Board concurs in your view that the Bank's comments
about the Enid B. Cosgriff loan are evasive and without substance.
There would appear to be no relationship between this loan or the
facts appurtenant to itand the cKpital adequacy proceeding. It
is assumed that you will renew your request that loans to members
of the Cosgriff family should be on an adequately secured basis
or, if unsectired, supported by a satisfactory financial statement
and with a definite liquidation program. This recommendation was'
Pert of the Board's letter of July 29, 1959.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 13
12/1/59
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE .
TO THE. BOARD
December 11,
1959.
Dear Sir:
The Board of Governors has approved a new statistical
reporting requirement under which all lenders, except banks and
brokers, who extend credit to finance the purchasing or carrying
of registered
stock will be required to supply certain information
on their
assets and liabilities. These reports are requested
pursuant to section
221.3(j) of Regulation U, as amended effective
Ju
.
.1.ne is, 1959. A standard form (FR 728) has been developed which
;;Ltgible respondents must use in filing the required information.
"lis form, a copy of which is enclosed, has been approved by the
Budget Bureau.
It is contemplated that a press statement will be issued
by the
Board, probably for release on Tuesday, December 15, 1959,
announcing the new requirement and advising that reporting forms
re available at
Federal Reserve Banks. A draft of the press release
and a sample
form are enclosed. An initial supply of forms is being
nailed under separate
cover. If additional copies of the form are
lneeded, Reserve Banks
should duplicate them directly.
Forms completed by respondents are to be returned by them
to the
Reserve Banks, who in turn should forward the forms to the
Board of
Governors.
Very truly ,you
`.,
Herritt Sherman,
Secretary.!
E
nclosures
TO TUE
PRESIDENTS OF ALL FEDERAL RLSERVE, BAAS
BOARD OF GOVERNORS
OF THE
ecloaq__40v *0
et U' '''--,•'
R
ictli
il
*
.*
*
*
*
*4
14"t& giSt
WASHINGTON 25, D. C.
0
0
41
*4
*4.04,0
Item No. 14
12/1/59
FEDERAL RESERVE SYSTEM
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
0
December 1, 1959
Comptroller of the Currency,
Treasury Department,
Washington 25, D. C.
Attention Mr. L. A. Jennings,
Deputy Comptroller of the Currency.
Dear Mr. Comptroller:
Reference is made to a letter from your office dated
August 3,
1959, enclosing copies of an application to organize a
national bank at Mountain Grove, Missouri, and requesting a
r
ecommendation as to whether or not the application should be
approved.
A report of investigation of the application made by an
examiner for the Federal Reserve Bank of St. Louis discloses generally
favorable findings with respect to the proposed capital structure,
flture earnings prospects, and needs of the community. This report
disclosed some question as to the adequacy of the banking quarters to
b? leased and
while the proponents indicated that some consideration
Ifught be given to the
construction of quarters, no final decision had
?leen reached as to the investment to be made in fixed assets. From the
"formation available, the organizers and board of directors are well
regarded locally but there is some question as to the qualifications of
the proposed
executive officer to supply the desired management. After
"nsidering all of the information available, the Board of Governors
Fecommends approval of the application to organize a national bank at
Mountain Grove, Missouri, provided the management and investment in fixed
assets are resolved to the satisfaction of your office.
The Board's Division of Examinations will be glad to discuss
any aspects of this case with representatives of your office if you so
desire.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No.
FEDERAL RESERVE SYSTEM
15
12/1/59
WASHINGTON 25, D. C.
ADDRESS
orriciAt. COONRIESPONOCNCIE
TO TN( •OARO
got...**
December 1
1959
CONFIDENTIAL (FR)
Mr. Delos C. Johns, President,
Federal Reserve Bank of St. Louis,
St. Louis 66, Missouri.
Dear Mr. Johns:
The Board of Governors approves the payment of salaries
to the following officers of the Federal Reserve Bank of St. Louis
assigned to the Memphis Branch, for the period December 1 through
December 31, 1959, at the rates indicated, which are the rates
fixed by your Board of Directors as reported in your letter of
November 12, 1959:
Name
E. Francis DeVos
Benjamin B. Monaghan
John Francis Breen, Jr.
Annual
,Salary
Title
Vice President and Manager
Cashier
Assistant Cashier
$15,000
10,000
8,500
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
@FedFRASER