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41.4 e„)-4 114# Minutes of actions taken by the Board of Governors of the Federal Reserve System on Tuesday, December 161 1952. The Board met in the Board c)111.at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Martin, Chairman Szymczak Evans Vardaman Mills Robertson Mr. Mr. Mr. Mr. Carpenter, Secretary Sherman, Assistant Secretary Kenyon, Assistant Secretary Allen, Director, Division of Personnel Administration Chairman Martin said that in a telephone conversation which he had ;71th • Neel—) Chairman of the Federal Reserve Bank of Atlanta, the latter tateci.L uhat he would not wish to be reappointed to the board of directors the At Bank at the end of his current term, which expires December 3 that he would suggest the reappointment of Mr. Rufus C. Harris, 'hose term as director expires on December 31 of this year, for a three—year terin be Harris as Chairman ginning January 1, 1953, and the designation of Mr. ci Fecieral Reserve Agent for the year 1953, and that under sucA an arrangement Neely) would be agreeable to serving as Deputy Chairman for 1953 if 1`)arci s“ouid so desire. Chairman Martin said that Mr. Neely had in lci that „ 41'. Harris would continue to serve as Chairman and Federal Reserve ' kerlt in 195, , 4 and that Mr. Neely would not favor the Board's attempting obtain any that he would resign commitment from Mr. Harris at this time 12/16/52 -2- as director at the end of 1954 pursuant to the Board's policy of rotation ef Class C directors. During a discussion of Mr. Neely's proposal, Chairman Martin said that ) lf the Board should decide to follow the course suggested, he felt that 4-, 'nere would be no difficulty in working out satisfactorily with Mr. at a later date the question of his remaining on the board of the Maanta Bank that beyond December 31, 19514. However, it was made clear this , 4as his personal judgment and not a commitment that this would be so. Thereupon, the Board by unanimous vote: (1) appointed Mr. Harris as a Class C director of the Federal Reserve Bank of Atlanta for a three-year term beginning January 1, 1953; (2) designated Mr. Harris as Chairman and Federal Reserve Agent at the Bank for the year 1953 and fixed his compensation as such on the uniform basis fixed for the same position at other Federal Reserve Banks, i.e., at the same amount as the aggregate of fees payable during the same period to any other director for attendance corresponding to his at meetings of the board of directors, executive committee, and other committees of the board of directors; and (3) appointed Mr. Neely as Deputy Chairman of the Bank for the year 1953. These actions were taken subject to determination by Chairman Martin that the arrangement would be satisfactory to Mr. Harris. The discussion then turned to a further consideration of who might 'Ignated to succeed Mr. Caldwell as Chairman and Federal Reserve Agent th_ Federal Reserve Bank of Kansas City. 12/16/52 -3At the conclusion of the discussion, it was voted unanimously to request Ir. Caldwell to ascertain and advise the Board whether Mr. Raymond W. Hall, Vice President and Controller of Hall Brothers, Inc., Kansas City, Missouri, would accept, if tendered, an appointment as Class C director of the Kansas City Bank for a three-year term beginning January 1, 1953, and designation as Chairman and Federal Reserve Agent for the year 1953. The Board also voted unanimously to appoint Mr. Cecil Puckett as Deputy Chairman of the Federal Reserve Bank of Kansas City for the year 1953. In connection with the above actions, unanimous approval was given to a telegram to Mr. G. Norman Winder advising him of his reappointment as a director of the Denver Branch, pursuant to the action taken by the Board on October 23, 1952. In taking the above actions, it was understood that the request of Mr. Caldwell would not be made,and the notifications to Messrs. Puckett and Winder would not be sent, until such time as indicated by Chairman Martin. Secretary's Note: Chairman Martin having approved, telegrams were sent to Messrs. Caldwell, Puckett, and Winder on December 18, 1952. Chairman Martin referred to the discussion at the meeting of the qqrider " December 10, 1952, regarding the possible appointment of Mr. 8°11 SuPplee, Jr., President of the Atlantic Refining Company, 2124 l'g16/52 —4— Philadelphia, Pennsylvania, as Class C director of the Federal Reserve ''arik of Philadelphia for a three-year term beginning January 1, 1953, and read data regarding Mr. Supplee which had been prepared by the Division of Personnel Administration. During a discussion which ensued, Governor Evans suggested the desirability of appointing a person from outside the Philadelphia area to Pr°11ide better geographical representation of the district on the board of the Phi ladelphia Bank. In making this suggestion, Governor Evans stated that he had no objection to Mr. Supplee personally and that he would be tu appointing Mr. Supplee and selecting a person outside the Phia area to succeed Mr. C. Canby Balderston, whose term expires 4cetab_ r 31, l953, and who would be ineligible for reappointment under the P°1icY of rotation of Class C directors. At the conclusion of the discussion, it was agreed that Governor Robertson, at the time of his visit to Philadelphia on Thursday of this week, would discuss the matter with Mr. Whittier and Mr. Meinel, Chairman and Chairman-designate, respectively, of the Philadelphia Reserve Bank and report back to the Board. C • hairman Martin referred to a telegram of December 1.5, 1952, from g, Chairman of the Federal Reserve Bank of Chicago, stating that •10 er M. Jarvis had declined to serve as Class C director of the Bank for the reason that he did not wish to dispose of certain 12/16/52 bank stock whi ch he owned. There was a brief discussion of who might be appointed in place Of re Jarvis but no conclusion was reached. Further consideration was then given to the appointment of di- r'ectors f Federal Reserve Bank branches for terms beginning January 1, 1953. Mr. Allen stated that pursuant to a request by Governor Evans, he had checked with the Department of Agriculture with respect to Mr. ttglas M. Moorhead, a farmer, of North East, Pennsylvania, whose apPelintruent as director of the Pittsburgh Branch for a three-year term begin*, "1 g January 1, 1953, was recommended in his memorandum to the Board Of v '0VerrIber 25, v.6 bank 1952, and that the reports were favorable. Mr. Allen said understood that Mr. Moorhead would be willing to sever his commercial u-L illiations other than the holding of stock in order to qualify as a r• • -rector, -4 but that his membership on the school board of Harbor bl'arlah (-1; hip, Pennsylvania, might raise some question from the standpoint of the 130_ 91ard ts resolution of December 23, 1915, regarding the holding of polit lcal or public office, depending on the facts relating to the nature Of the Office. Thereupon, it was voted unanimously to appoint Mr. Moorhead as director of the Pittsburgh Branch 12/16/52 -6— for a three-year term beginning January 1, 1953, provided it was ascertained that Mr. Moorhead's membership on the school board would not be inconsistent with the Board's resolution of December 23, 1915, and provided Mr. Brainard, Chairman of the Federal Reserve Bank of Cleveland, ascertained and advised the Board that Mr. Moorhead would accept the appointment if tendered. Secretary's Note: Mr. Gidney, President of the Federal Reserve Bank of Cleveland advised the Board by telegram of December 18 that Mr. Moorhead did not accept reappointment to the school board. It was also voted unanimously to appoint the following as directors of the Federal Reserve Bank branches indicated for three-year terms each beginning January 1, 1953, provided the Chairmen of the respective Reserve Banks first ascertained and advised the Board that the appointments would be accepted if tendered: Name M. Taylor, Vice President, Inte rnational Bedding Company, 411_ ia ltimore, Maryland st Moench, President, Tennessee Tufting Company, 4e1.11, 4ashvi11e, Tennessee Y Banks, Farmer, Clarkedale, Arkansas Federal Reserve Bank Branch Baltimore Nashville Memphis Chairman Martin stated that he had had a discussion by telephone Itith Caldwell, Chairman of the Federal Reserve Bank of Kansas City, re- arcitri Branch g the matter of who might be appointed to the board of the Omaha 2127 12/16/52 -7- for the two-year term beginning January 1, 1953, and that Mr. Ellsworth lose r, P resident of The United States National Bank of Omaha, who is a ' of the Omaha Branch, subsequently called him to suggest two irect°1 Persons. Mr. Allen said that, in response to requests by the Board, Mr. Fred s. Wallace, Board appointee on the Omaha Branch board whose term (1)ire5 December 31, 1952, had suggested three persons and Mr. Fred W. Cheyenne, President of The Stock Growers National Bank of Cheyenne, 4Yoming, who is also an Omaha Branch director, had suggested four persons. 4a11131e, Following discussion, it was agreed that data on the several persons suggested for appointment to the board of the Omaha Branch should be submitted to Governor Robertson for review and recommendation to the Board. There was a discussion of who might be appointed as director of the Charlotte Branch to succeed Mr. W. A. L. Sibley, whose term expires December 31, 1_952, and it was agreed that Chairman Martin should check with Mr. McCormick, Chairman of the Federal Reserve Bank of Richmond, concerning Mr. M. C. Stone, Treasurer and General Manager of the Pacelot Manufacturing Company, Spartanburg, South Carolina, whose name was suggested to Chairman Martin by Mr. Sibley. MI'. Allen stated that a letter had been received from Mr. Lyle ts ia lie 3 Class C director of the Federal Reserve Bank of Kansas City, r>8 12/16/52 —8— suggesting two persons who might be appointed to the board of the (jklall°rna City Branch, and that he would prepare data for the Board concerning them. Chairman Martin said that he had not yet received word from Mr. Parten, Chairman of the Federal Reserve Bank of Dallas, in response to r equest of Mr. Parten for the names of persons who might be appointed t0the board of the El Paso Branch, one for a three-year term beginning 41111a17 1, 1953, and the other for the unexpired portion of the term encling December 31, 1953. There was a brief discussion of possible appointments to the boards of the Los Angeles, Portland, and Salt Lake City branches and it Was agreed that Governor Mills should review the situation and make recommendations to the Board. At this point Messrs. Vest, General Counsel, and Sloan, Director, °11 of Examinations, entered the room and Mr. Allen withdrew. Reference was made to the discussion with Mr. Williams, President arlci Hill, Vice President, of the Federal Reserve Bank of Philadelphia, at the meeting of the Board on December 9, 1952, regarding a possible ap11eat.o„ , 1-- uY Land Title Bank and Trust Company, of Philadelphia Pennsylby 'f°r membership in the Federal Reserve System, and the comments made ss I s. Williams and Hill were reviewed for the benefit of Governors ' 21"( 12/16/52 -9Zak and Mills, who were not present at the December 9 meeting. During a discussion, Governor Szymczak said that if Land Title Bank and Trust Company were admitted to membership without the PlaCjH "g of restrictions on its title operations, it would appear that as a Matter of equity the Board would have to act to remove any restrictions "aad been imposed as conditions of membership in connection with the a 4s1on of other banks in Pennsylvania which conducted title operations • Pl'i°r to joining the System. The other members of the Board indicated agreement with the view N)rer, °sed by Governor Szymczak. It was pointed out, however, that most oP the banks in question probably would have forfeited their title powers the date of their admission to membership by reason of failure to 114 them for one year, as provided by the State banking code. Governor Mills inquired whether the passage of bank holding company -u-Lon requiring the divestment of nonbanking enterprises by bank holdwould have any effect on a bank operating a title business '°11gh a subsidiary, and Governor Robertson replied that while it would 3 the Board's support of holding company legislation requiring the di- l'estMent of nonbanking interests would seem to be inconsistent in principle -t3 allowing a member bank to continue a nonbanking function such as 4 title 4 441surance business. 41V0 12/1.6/52 —10— Governor Mills remarked that certain national banks are per— Rlitted to act as agents for insurance companies, and Governor Robertson replied that in conducting title operations a bank acts as principal rather than as agent. Following further discussion, Governor Mills said that, leaving 4ide the question of the other ten nonmember banks in the Third Federal Rese, e District which conduct title operations, either directly or through sltbsid. . laries or affiliates, and which might possibly apply for membership, he t11(lught and Trust that it might be reasonable to admit Land Title Bank Cc'mPanY but the title business, require it to create a subsidiary to carry on thus Putting the trust company on a comparable basis with certain major %Ibe r bank competitors. With respect to the other nonmember banks, he 13°14te d out that, should they apply for membership, they would be sub— ec'tt a critical membership examination, one which would be more severe than 1/1 the normal case by reason of their title operations, so that the adzis automatically 81°n of Land Title Bank and Trust Company would not °Pen that this "e door to the other institutions. Governor Mills said Presented for by this was accounted some shift in his previous thinking and that his furthereflection on the safe guards that were available to the SYstom 4 - -Q1 dealing with the group of institutions involved and the fact that the related to a situation appeared to be peculiar to one State and t4, 12/16/52 -11— 1Iiishing number of banks. In response to questions by.Governor Robertson, Governor Mills sLa4t,ed that if Land Title Bank and Trust Company were admitted, he felt that the Board should require the establishment of a subsidiary company to cal_ on the title business because the acceptance of the trust company, elre"rith that condition, would represent a deviation from the Board's gener,, "4 Position against the combination of banking and nonbanking functions ahd becaUSG the Board probably would want to follow the precedent estab- in that case in the case of other trust companies conducting a title Should they apply for membership. He said that the soundness of the t.1 -0 business seemed to be favorably resolved by the record of inStitut. which revealed 1"s conducting such operations over a long period, rio simst membership, the Board antial losses, and that if, as a condition of ed the establishment of a separate company to conduct the title ee, any liability would reach through that company to the parent batk °IllY to the extent of the stock ownership. Governor Mills also said that h e would favor making this exception only in the case of the title prevailing in " IL business and only because of the unique situation T,‘ 94rticular area. c41 ksit operation He remarked that in a certain sense the maintenance of safe --e insurance business might be likened to the facilities. 12/16/52 -12Chairman Martin then stated that after considering the arguments for —, '°1 against changing the policy adopted by the Board in 1935 when the g'4'ation Of membership previously was raised by Land Title Bank and Trust Pan (thou known as The Real Estate-Land Title and Trust Company), it seemed t-o him that looking at the matter purely from the standpoint of the Principle involved, adherence to the previous position was indicated, tltthat as a practical matter he leaned toward a favorable reply to the triet business seemed not to c°mPanY since the risk involved in the title be ve rY groat, the Federal Reserve Bank of Philadelphia favored admission r the trust company, the Pennsylvania statutes permitted only a limited of banks to conduct title operations, and the number of banks inwould continue to decrease by reason of the operation of the State 44. situations like this, Chairman Martin also expressed the view that in 16ard should consider the merits of the particular problem in the light 8tat e law and instance, he pointed out, other pertinent factors. In this the soundness of the nonbanking operation was evident, which raised a questorl whether the Board should object to the bank's coming into the System °.lelY other nonbecause of this one factor. He went on to say that the trkibr operations posed somewhat of a problem but which conduct title thatl according to Messrs. Williams and Hill, there was no indication of banks gtio .t1'100 12/16/52 -13— interest in membership on their part at present and even if they should all become members of the System, they would still be a small and gradu- 417 diminishing group of banks, which made it seem doubtful whether adheren ce by the Board to a principle, even though sound, mould be warranted. Governor Robertson, in further comments, said it must be kept in that Land Title Bank and Trust Company was contemplating a merger with d la, 'ger national bank and, should that merger be consummated, it would ProbablY attract more title business. Therefore, the Board in a sense mould be ai,. 3-11g the growth of volume of bank—conducted title business in a way ' nich the Pennsylvania legislature apparently did not visualize in passing the 1933 banking code. Messrs. Vest Following further discussion, it was understood that arxi, an would make a review to ascertain what member banks had been re- kred ) as a condition of membership, to restrict their title business and 11114t ; cf. 4---,on it would appear that the Board should take in those cases should membership without comparable 444 Titie Bank and Trust ComPanY be admitted to restrictions. At this point Messrs. Vest and Sloan withdrew and the following additto hal actions were taken by the Board: Federal Minutes of actions taken by the Board of Governors of the SYstem on December 15, 1952, were approved unanimously. , 12/16/52 -14Telegram to Mr. John C. Baker, President, Ohio University, Athens, Ohio, prepared in accordance with action taken by the Board onDe cember 9, 1952, and reading as follows: . "Board of Governors of Federal Reserve System has appointed you Director of Cincinnati Branch of Federal Reserve ' dank of Cleveland for unexpired portion of term ending De!ember 31, 1954, and will be pleased to have your acceptance uY collect telegram. "It is understood that you are not a director of a bank !!nd do not hold public or political office. Should your situin these respects change during the tenure of your ap: 110intment, it will be appreciated if you will advise the Chairof the Board of Directors of the Federal Reserve Bank of leveland Approved unanimously. Letter to 441is , reading Mr. Dearmont, Chairman, Federal Reserve Bank of St. as follows: ad "Reference is made to your letter of December ll) 1952, frifising that your directors have dismissed Olin J. Attebery s Om the office of First Vice President of the Federal Realeirve Bank of St. Louis effective the end of December, 1952, (I have appointed Mr. Frederick L. Deming as his successor. pre_, 'The Board of Governors approves the appointment of Mr. Re uerick L. Deming as First Vice President of the Federal ba.”rve Bank of St. Louis effective January 1, 1953, for the iklahoe of the five-year term commencing March 1, 1951. The of Governors also approves the payment of salary to Mr. 1C3der1ck L. Deming as First Vico President at the rate of th '°°° Per annum for the period beginning January 1, 1953, r°4g4 May 31, 1953." Approved unanimously. *)-1 3rAw 12/16/52 -15- Letter to the Comptroller of the Currency, Treasury- Department, n• c* of the Currency) (Attention: Mr. L. A. Jennings, Deputy Comptroller reading as follows: "Reference is made to your letter of October 28, 1952, closing a photostatic copy of an application to convert u.Lenville Bank, Scotia, New York, into a national banking association and requesting a recommendation as to whether °r not the application should be approved or disapproved. "In the light of information contained in a report °n the application obtained from the Federal Reserve Bank set°I' New York, and after careful consideration of the factors forth in your letter, the Board of Governors recommends Lanat the application of the Glenville Bank to convert into i national bank be approved. It is understood that the bank i s Planning to enlarge its banking quarters which will result n a substantial increase in its investment in fixed assets. the volume e°ver, there appears to be an upward trend in bank -L b In the circumstances we would expect the to usiness. equal least its capital structure by an amount at d 1,0 the continue cost of enlarging its banking quarters if it as a State member bank. dis"The Board's Division of Examinations will be glad to of°Iss any aspects of this case with representatives of your and bring to the Board's attention any matter which you 1 should be given further consideration." " ';, Approved unanimously. Letter to The Honorable, The Comptroller of the Currency, TreasItry Partment, Washington, D. C., reading as follows: request"This refers to our letter of August 15, 1952, sheets 00 45,000,0 t op hat a supplemental order for printing June ending year rederal Reserve notes during the fiscal . Printing and g Engravin it ,1953, be placed with the Bureau of this of sheets trs,-Ls respectfully requested that 110,000 be allocated to notes of the Federal Reserve Bank of anta, as shown below: A 41.) A.,‘. " 36. 12/16/52 16"Denomination Mr— $100 Number of sheets 515%000 Amount 433,000,000 55l000 Approved unanimously. 66,000,000"
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