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Minutes for To: Members of the Board From: Office of the Secretary December 16. 1957 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 prebent 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 1/ Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson 1/ In accordance with Governor Shepardson's memorandum of March 8, 1957, these minutes are not being sent to Governor Vardaman for initial. Minutes of actions taken by the Board of Governors of the Federal Reserve System on Monday, December 16, 1957. The Board met in the Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Martin, Chairman Szymczak Mills Robertson Shepardson Mr. Mr. Mr. Mr. Mr. Carpenter, Secretary Sherman, Assistant Secretary Kenyon, Assistant Secretary Riefler, Assistant to the Chairman Thomas, Economic Adviser to the Board Messrs. Young, Garfield, Noyes, Robinson and Williams, Miss Burr, and Messrs. Dembitz, Brill, Eckert, Gehman, Jones, Miller, Flechsig, Manookian, Tamagna, Wernick, and Yager of the Division of Research and Statistics Messrs. Marget, Bangs, Furth, Hersey, Reynolds, Sammons, and Wood of the Division of International Finance Economic review. The review by the Division of International Finance of economic and financial developments in leading foreign areas indicated that) with a few possible exceptions, the pattern of economic movement was not predominantly upward. On the other hand, evidence was not available at this time to indicate a general downward trend of great se verity. In leading countries except Canada the attitude of the mone- tarY authorities appeared to reflect continued emphasis on containing Inflationary pressures rather than apprehension concerning a felling °ff of demand forces. Therefore, it appeared that some of the current 3f;40 12/16/57 -2- slackening might be due to restrictive financial measures and might conceivably be reversed if and when the monetary authorities should see fit to take steps in the direction of liberalization. The domestic review by the Division of Research and Statistics revealed in general a continuation of the movement downward from earlier high levels of economic activity. All of the members of the Research and International Divisions except Mr. Young then withdrew from the meeting. I. Thomas also withdew at this point and the following members of the staff entered the room: Messrs. Leonard, Director, and Farrell, Assistant Director, 1)ivision of Bank Operations; Masters, Director, and Hostrup, Assistant Director) Division of Examinations; Hackley, General Counsel, and Shay, Assistant General Counsel; Sprecher, Assistant Director, Division of Personnel Administration; and Daniels, Assistant Controller. 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 numbers indicated, 'were aPproved unanimously: Item No. Let.ter to the Federal Reserve Bank of Atlanta approving 1 n ustments in the salary structures applicable to the 111Pl0yees of that Bank and its branches. utter to the Federal Reserve Bank of Boston regarding zther certain deposits with The New England Trust mPallY, Bost Boston, Massachusetts, may be classified as 'time deposits" under section 1(d) of Regulation D. 2 3641 12/16/57 -3Item No. Letter to First of Boston International Corporation, Boston, Massachusetts, transmitting the report of an examination made as of August 23, 1957. (With copies to the Federal Reserve Banks of Boston and New York) 3 11:?tter to The Cheboygan State Savings Bank, Cheboygan, l'Ichigan, approving the establishment of seasonal branch ,anking offices in Mackinac Island and Indian River. For transmittal through the Federal Reserve Bank of Chicago) It. Letter to the Federal Reserve Bank of Minneapolis ?Proving an investment in bank premises by Security 'auk and Trust Company of Owatonna, Owatonna, Minnesota. 5 Letter to the Federal Reserve Bank of San Francisco .sing r that under the Bank Holding Company Act of 1°) Old National Corporation, Spokane, Washington, ' 11314? retaitl its indirect interest in Old National Bank 1 1111ding Company and City Ramp Garages, Inc. 6 n etter to The Vermont Bank and Trust Company, Brattleboro, Bermont, consenting to its merger with The Windham National ttlik of Bellows Falls, Bellows Fnlls, Vermont, and approving tl establishment of two branches by the continuing insti' n, one in Bellows Falls and the other in Chester. L'z' transmittal through the Federal Reserve Bank of Boston) 7 Mr. Sprecher then withdrew from the meeting. Discount rates. the Unanimous approval was given to telegrams to following Federal Reserve Banks approving the establishment without change by those Banks on the dates indicated of the rates on discounts 'talc" advances in their existing schedules: San Francisco New York Cleveland Richmond Atlanta Chicago St. Louis Kansas City Dallas Minneapolis December December December December December December December December December December 11 12 12 12 12 12 12 12 12 13 36'4 12/16/57 Material requested by Congressman Patman (Items 8, 9, and 10). There had been distributed to the members of the Board copies of a proPosed letter to Congressman Patman in response to his letter of November 27) 1957, requesting certain additional information on the subject of member bank required reserves. Pursuant to suggestions made at this meeting, an editorial change was agreed upon in one sentence of the proposed reply, following which unanimous approval was given to a letter to Mr. Patmpn in the form attached as Item No. 8, with the understanding that a copy would be sent to Chairman Spence of the House Banking and Currency Committee. There had also been distributed to the members of the Board fts of proposed letters to Mr. Spence and Mr. Patman transmitting in' are f°rmation requested by the latter regarding the destruction of money. These questions had been submitted to Chairman Martin by Mr. Patman at the conclusion of the former's appearance before the House Banking and Currency Committee in April 1957 in connection with the proposed Financial Institutions Act of 1957. Copies of the answers to 01 but two of the questions would be sent both to Mr. Spence and Mr. Pathan. With respect to question No. 1, which requested Treasury regulations regarding the verification and destruction of United States notes and silver certifieat", and question No. 12, which requested Federal Reserve audit reports 011 the cash verification and destruction operations, a single copy of the requested documents would be sent to Chairman Spence for the use of members of the Committee and the Committee's staff. The documents 12/16/57 -5- responsive to these two questions would be furnished with the understanding that, because of their nature, they would not be made a part of the printed record of the hearings. At the request of the Board, Messrs. Leonard and Farrell commented on the proposed answers and stated that after discussion 11th Mr. Cherry, Legislative Counsel, it had been decided to submit the information furnished by the respective Federal Reserve Banks in the form in which it was received from the Banks. Mr. Farrell called attention to the fact that the answer to the eleventh question comprised 4 summarization of incidents reported by various Federal Reserve Banks concerning the apparent loss or incomplete destruction of currency in the process of verification and destruction and reviewed the nature of those incidents. Mr. Leonard mentioned that the information received from the Federal Reserve Banks concerning the assignment of personnel to the verification and destruction function in some cases revealed setUal names and salaries. There followed a discussion of the reasons why it was proposed to send the documents responsive to the first and twelfth questions to Chairman Spence for the use of the Banking and Currency Committee and ite Staf—, the point being made that this had been the procedure Cug+ -omarily followed in responding to questions from Congressman Patman Ilhich involved the transmittal of documents such as examination and aUdit reports. During the discussion Mr. Farrell suggested changes in 3644 12/16/57 -6- the draft of letter to Chairman Spence, including the addition of a sentence requesting that the response to the sixteenth question, dealing with the sampling procedures used to select currency to be verified under Treasury regulations, not be made a part of the hearing record. Thereupon, unanimous approval was given to letters to Chairman Spence and Congressman Patman in the form attached as Items 9 and 10, respectively. Miss Burr reentered the room at this point and Messrs. Sherman, Leonard, u Shayl and Farrell withdrew from the meeting. Application of Wisconsin Bankshares Corporation. It was reported that pursuant to the understanding at the meeting on December 10, 1957, the Secretary had gotten in touch by telephone with Vice President Diercks of the Federal Reserve Bank of Chicago to ascertain whether the Bank wished to submit further comment in support of its favorable recoMmendation concerning the application of Wisconsin Bankshares Corporation, Milwaukee, Wisconsin, to acquire shares of the proposed Capitol National Bank of Milwaukee. After discussing the matter with President Allen, Mr. Diercks had advised that the Reserve Bank felt that its recommendation should be allowed to stand, but that the Bank 1.7°111d have no objection if the Board should decide to deny the application. In a further discussion of the application, question was raised Ilhether the Board wished to provide the applicant an opportunity to 12/16/57 -7- submit additional information in support of the application, but it was decided that this need not be done. Accordingly, it was voted Unanimously to deny the application for the reasons indicated at the Meeting on December 10, 1957. To implement this action, it was under- Stood that a statement and order would be drafted for consideration by the Board at another meeting. Messrs. Masters and Hostrup then withdrew from the meeting0 Small business financing project. Reference was made to a memorandum from Mr. Young dated December 10, 1957, copies of which haa been sent to the members of the Board, requesting authorization t° spend up to $65,000 for planning and testing work on a survey of Unincorporated enterprises as a phase of the third part of the study Of small business financing. The amount requested would provide up to $35,000 for the services of a highly qualified technician to be ealPloYed by the Bureau of the Census, clerical and stenographic ass istance, travel and sampling expenses, and the usual allowance for Census Bureau overhead. It would also provide up to $30,000 to cover flal-scale pretest of the survey. The memorandum explained that the c°rPorate phase of the third part of the small business financing l'°,1ect could probably be covered through a mail questionnaire with he cooperation of the Securities and Exchange Commission and the Fed era1 Trade Commission, but that it was too early to make any es timate of the cost. 12/16/57 -8- Following comments by Mr. Young concerning the work done thus far in developing plans for the third part of the project, Governor Shepardson pointed out that the Board's budget for 1958, as approved °11 December 10, 1957, contained no provision for the expenses of the third part of the study because it had not been possible up to that time to make any sound cost estimates. In the circumstances, it had seemed preferable to handle this matter on an item-by-item basis as estimates could be developed. Thereupon, the authorization requested in Mr. Young's memorandum was granted by unanimous vote. Mr. Daniels and Miss Burr then withdrew from the meeting and Thomas returned to the room. Request of Economic Policy Commission (Item No. 11). In a letter to Mr. Thomas dated December 4, 1957, Mr. E. Sherman Adams of he American Bankers Association stated that the Association's Economic P°110Y Commission would like authorization to publish some of the data e°4tained in analyses by the Board's staff of the Commission's reserve requirement proposal. In a memorandum dated December 9, 1957, which 484 been distributed to the members of the Board, Mr. Thomas indicated that he saw no objection to permitting the Economic Policy Commission to make use of the statistical tabulations used as a basis for the ctaff analyses. He suggested, however, that any analysis of the data 'conclusions drawn from them not be attributed to the Federal Reserve 01 "en though they corresponded to statements in the staff memoranda. With his memorandum, he submitted a draft of suggested reply to Mr. Adams. 364'12/16/57 -9- Following a brief discussion, the proposed letter was approved unanimously. A copy is attached as Item No. 11. Appointment of director at Helena Branch. At the meeting on December 9, 1957, it was decided to ascertain whether Mr. John M. Otten Of Lewistown, Montana, would be willing to accept, if tendered, appointment as a director of the Helena Branch of the Federal Reserve Bank of Minneapolis for a two year term beginning January 1, 1958, with the understanding that the appointment would be made if it were found that Mr. Otten would accept. The Secretary reported having received a telephone call from President Deming of the Minneapolis Reserve Bank, who advised that Mr. Otten was a member of the Republican Central Committee in the State (311 Montana but that he would resign the post if appointed as a director c3f the Helena Branch. It appeared that Mr. Otten had been a member of the Committee in question for about a year, but that he had not been active in that capacity. The question raised by Mr. Deming was whether the circumstances involved created any problem from the Board's standWith respect to the appointment of Mr. Otten as a branch director. In this connection, it was understood that the appointment of Mr. Otten lgould be agreeable to Chairman Perrin of the Federal Reserve Bank of Min neapolis. Following a brief discussion, it was agreed unanimously that he circumstances reported by Mr. Deming were not of such a nature as to Preclude Mr. Otten's appointment as a director of the Helena Branch. %4 12/16/57 -10- Designation of Mr. Sammons to lecture at Center for Latin American Monetary Studies Item No. 12). There had been circulated to the members of the Board a memorandum dated December 5, 1957, from Mr. Marget, Director, Division of International Finance, suggesting that the Board designate Robert L. Sammons of the staff of that Division to lecture on the Federal Reserve System at the Center for Latin American Monetary Studies in Mexico City in July 1958. The memorandum also recommended that the Board authorize a per diem in lieu of sUbsistence at the rate of $12 in connection with the proposed travel in Mexico. The recommendations contained in the memorandum were approved Unanimously, and a copy of the letter sent to the Director of the Center for Latin American Monetary Studies is attached as Item No. 12. Mission to the Sudan (Items 13 and 14). Pursuant to the reccm- Illendation contained in a memorandum from Mr. Marget dated December 12, 1957: relating to a request from the Government of the Sudan that Vice President Wheeler of the Federal Reserve Bank of San Francisco return t° that country for an estimated three or four weeks beginning in l'ebruarY or March 1958 for final discussion of the draft charter of a central bank, unanimous approval was given to the letters to the kbassador of the Sudan and to the President of the Federal Reserve 8a4k of San Francisco of which copies are attached as Items 13 and 14, respectively. 12/16/57 -11- Request from Commonwealth Bank of Australia (Item No. 15). Governor Shepardson referred to a letter addressed to Chairman Martin Wider date of December 21 1957, by the Governor of the Commonwealth 13ank of Australia requesting that a member of the Board's staff, presurnablY Mr. young, Director, Division of Research and Statistics, be allowed to visit Australia in April 1958 at the expense of the Ccamonwealth Bank to advise in connection with a flow of funds study being initiated in that country. He recalled that this matter had been the subject of earlier correspondence at which time it had been suggested that the Australians proceed with their studies and that the Board would endeavor to be of assistance when the studies had been further developed. The matter was discussed from the standpoint of Mr. Young's Ilrailability in the light of possible economic and legislative developraents, following which it was areed to advise the Commonwealth Bank that the Board could not make any definite commitment at this time but that -i+ would bear the request in mind. A copy of the letter sent 134r8uant to this action is attached as Item No. 15. Attendance at annual meetings of American Economic Association rofessional organizations. e' memorandum from Mr. Governor Shepardson referred to Young dated December 10, 1957, suggesting that ten 3Pecified members of the Division of Research and Statistics be authorized to attend at Board expense the armmal meetings of the American Ee°n°mic Association, the American Finance Association, and certain Other allied professional associations to be held concurrently in 3650 12/16/57 -12- Philadelphia, Pennsylvania, beginning Friday evening, December 27, and "cling Monday evening December 30. The memorandum also stated that a tlunther of other members of the Division staff would like to attend the meetings at their own expense and recommended that official leave be granted for that purpose. Following comments by Governor Shepardson, and upon his recomIneadation, the suggestions contained in Mr. Young's memorandum were ar ..21 .2y unanimously. The meeting then adjourned. Secretary's Notes: In accordance with the procedure approved by the Board on December 7, 1956, Governor Robertson today approved on behalf of the Board the designation of the following individuals as Federal Reserve Examiners to participate in an examination of American Overseas Finance Company: Federal Reserve Bank of Boston Daniel Aquilino Examiner Federal Reserve Bank of New York Charles B. Zaloom Harvey Fleetwood John C. Kruer Stephen T. Lederleitner Richard J. Pfleging Herman J. Drenning Allen F. Peterson Walter E. Jones Edward F. Kipfstuhl Assistant Examiner Examiner Examiner Assistant Examiner Assistant Examiner Examiner Examiner Examiner Examiner 1 12/16/57 -13Governor Shepardson today approved on behalf of the Board the letter to Dr. Frederic D. Chapman concerning physical examinations in 1958 for employees of the Board's cafeteria of which a copy is attached as Item No. 16. Governor Shepardson also approved today of the Board the following recombehalf on mendations contained in a memorandum from the Division of Personnel Administration dated December 16, 1957: that, in line with the action taken with respect to Government employees generally pursuant to an Executive Order, all employees of the Board be excused from work for one-half day on December 24, 1957, and one-half day on December 31, 1957, without charge to annual leave; that similar arrangements be made for employees having hours other than the regular hours of duty; that the cafeteria and staff dining rooms be closed on December 24 and December 31; and that the snack bar be closed after 8:40 a.m. on both days. Pursuant to recommendations contained in memoranda from appropriate individuals concerned, Governor Shepardson also approved today on behalf of the Board the following items affecting the Board's staff: APPointment be.„1111trrY W. Huning as Review Examiner, Division of Examinations, with c annual salary at the rate of4')8,215, effective the date he assumes duties, and with the understanding that the Board would reimburse for expenses of moving his family from Cleveland, Ohio, to Washington. Ace eptance of resignations Walter F. Norris, Clerk, Office of the Secretary, effective December 13, 1957. Helen Patricia Sampsell, Clerk-Stenographer, Division of Research Statistics, effective December 20, 1957. Kathleen Edwards, Clerk-Stenographer, Division of Bank Operations, -Ifective December 12, 1957. 12/16/57 Pursuant to information contained in a memorandum from Mr. Thomas, Economic Adviser to the Board, dated December 11, 1957, Governor Shepardson today approved acceptance by Mr. Thomas of invitations to participate in programs at the Graduate School of New York University on February 15, 1958, and at the University of Rochester on February 17, 1958. Secretary's Notes: At the meeting on November 5, 1957, the Board appointed certain persons as directors of Federal Reserve Banks and branches for terms beginning January 1, 1958, designated certain persons as Chairmen and Federal Reserve Agents at various Federal Reserve Banks for the year 1958, and appointed certain persons as Deputy Chairmen for the year 1958. These actions were taken with the understanding that in each case the appointment or designation was made subject to a check by Chairman Martin with the Chairman of the Federal Reserve Bank concerned and that announcement of the appointments would not be made by the Board until such time as the check had been completed. Subsequently, Dr. James R. Killian, Jr., who had been appointed Deputy Chairman for the Boston Federal Reserve Bank for the year 1958, tendered his resignation as a Class C director and Dr. Frank J. Welch, whose reappointment as a Class C director of the Federal Reserve Bank of Cleveland was contemplated by the Board's action, advised that he could not accept the appointment. Chairman Martin having informed the Secretary that he had completed his check regarding the remaining appointments and designations contemplated by the Board's action, telegrams to the individuAls concerned were sent on December 10, 11, and 12, 1957. At the meeting on December 9, 1957, it was voted to ascertain whether Dr. Aubrey J. Brown, Head of the Department of Agricultural Economics, University of Kentucky, Lexington, Kentucky, would accept, if tendered, appointment as a Class C director of the Federal Reserve Bank of 12/16/57 -15Cleveland for the three-year term beginning January 1, 1958, with the understanding that the appointment would be made if it were ascertained that Dr. Brown would accept. Advice to such effect having been received, a telegram notifying Dr. Brown of his appointment was sent on December 12, 1957. At the meeting on December 9, 1957, it was also voted to ascertain whether Mr. Lamar Fleming, Jr.,* would accept appointment, if tendered, as a Class C director of the Federal Reserve Bank of Dallas for the unexpired portion of the term ending December 31, 1958; whether Mr. Daniel M. Dalrymple would accept appointment, if tendered, as a director of the Buffalo Branch, Federal Reserve Bank of New York, for the three-year term beginning January 1, 1958; whether Mr. Frank A. Godchaux, III, would accept appointment, if tendered, as a director of the New Orleans Branch, Federal Reserve Bank of Atlanta, for the three-year term beginning January 1, 1958; and whether Mr. George Hubert Aull would accept appointment, if tendered, as a director of the Charlotte Branch, Federal Reserve Bank of Richmond, for the three-year term beginning January 1, 1958, with the understanding that the appointments would be made if the individuals would accept. Advice having been received in each case that the proposed appointee would accept the appointment if tendered, telegrams notifying of the appointments were sent on December 13, 1957. Pursuant to the action taken by the Board on December 9 and 10, 1957, with respect to remanding to the Hearing Examiner the applications of First New York Corporation and others under the Bank Holding Company Act, there was sent to the United States Civil Service Commission on December 1957, the letter of which a copy is at Item No, 17. Seer * In the case of Mr. Fleming reference should have been to meeting on November 27, 1957. BOARD OF GOVERNORS oaato,. ;4 44/11° C44, OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. O. C. Item No. 1 12/16/57 AOORESS OFTICIAL CORRESPONDENCE TO THE 00ARO ,te December 16, 1957 CONFIDENTIAL CF.R.) L. M. Clark, First Vice President, Federal Reserve Bank of Atlanta, Atlanta ,s .3 Georgia. pear Mr. Clarks Reference is made to your letters of November 8 and November 26, 1957 4.1 Which your Bank requests the approval of upward adjustments """ in the salary structures applicable to the employees of your Bank and 4Le branches. The Board approves the follading minimum and maximum salaries the respective grades of the two structures effective January 1, f°r 1958. Grade 1 2 Atlanta-BirminghamNew Orleans Maximum Animum $2,100 2,280 $2,820 3,060 3,300 3 2,1.460 4 2,700 3,660 5 6 7 8 3,000 3,360 3,780 41200 14,020 14,560 9 lo 11 12 13 14 15 16 4,700 5,200 50800 6,400 71000 moo 81400 9,200 5,100 5,700 6,300 7l000 7,800 8,600 91500 10,400 11,300 12,400 Jacksonville-Nashville Maximum Minimum $2,100 2,160 2,280 2,460 2,700 3l000 3,360 3,780 14,260 14,800 5,1400 6,000 6,600 70200 7,900 81600 $2,820 2:940 3,060 3,300 3,660 4,020 4,500 5,l0o 5,760 6,500 7,300 8,100 8,900 9,700 10,700 11,60o Mr. L. M. Clark - 2- The Board approves the payment of salaries to the employees, Other than officers, within the limits specified for the grades in which the positions of the respective employees are classified. It is understood that all employees whose salaries are below the minimum Of their grades as a result of the structure inDrease will be brought within the appropriate ranges by April 1, 1958. The Board understands that provision has been made in the 958 budget to cover the cost of increases arising from these changes 411 salary structures. 1 Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary. ,t)06 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 2 12/16/57 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD December 16, 1957 O. A. Schlaikjer, Vice President and General Counsel, Pederal Reserve Bank of Boston, Boston, Massachusetts. near Mr. Schlaikjer: This refers to your letter of November 20, 1957, concerning uhether deposits with The New England Trust Company, Boston, Massachusetts, h Public Life Insurance Company, Clayton, Missouri, pursuant to a by p t-e Posed "Time Deposit Open Account Agreement," might be properly classif?j0, :sea as "time deposits" under the definition of "time deposits, open 4ccount" in section 1(d) of Regulation D. Portions of the agreement are not entirely clear. This is rectally true of the last paragraph thereof, which is discussed below.o Assuming however, as you seem to suggest, that the last clause 111 the next to the last sentence of the first paragraph of the agree' erit merely refers to the exception in the next preceding sentence of ILIch paragraph, there appears to be nothing in such paragraph, including lir Provision for successive thirty-day maturities, that would conflict th 4, the regulation or otherwise be inconsistent with the section 1(d) of regulati0n. esn Z So far as the last paragraph of the agreement is concerned, rurPose and intent seem to be only to serve advance notice that Pa - rt or all of the funds deposited under the agreement may be with' d;arl Pursuant to any one of the successive thirty-day stated maturity Periods provided for by the first paragraph of the agreement. This ems to be your view, also. its n On the basis of the foregoing, deposits pursuant to the Prono_ de,r agreement would seem to be properly classifiable as "time °8its" under Regulation D. However, you may wish to discuss the 4, plae ca?er further with the member bank with a view to possible clarifii " of the agreement. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 3 12/16/57 WASHINGTON 25, ID. C. AODRC99 CIFFICtAL CORRESPONDENCE TO THE BOARD December 16, 1957 REGISTERED MAIL Mrs Lloyd D. Brace, Chairman of the Board of Directors, First of Boston International Corporation, e/0 The First National Bank of Boston, Boston 6, Massachusetts. Dear Mr. Brace: There are enclosed two copies of the report of examination rirst of Boston International Corporation, Boston, Massachusetts, noln as of August 23, 1957, by examiners for the Board of Governors Ole Federal Reserve System. The second copy of the report is for the information and files of Mr. Joseph E. Nilsson, Executive Vice ' resident in charge of the New York Office of the Corporation. The examiner has listed on page 18 of the report certain vueiness accounts of United States nationals residing abroad .1211 do not appear to conform to the requirements of Section 6(b)(3) fo Itegulation K. After the report has been presented to the directors their consideration, please advise the Board of Governors regard;4_1g the actions taken or contemplated in order to eliminate such ecounts or to bring them into conformity with Regulation K. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary. ....usures 2. BOARD OF GOVERNORS evtt****4 .44400e 4 tt• OF THE )•-• 3 A s1 X* . 44 * ' FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 12/16/57 ADDRESS CiFfiCiAL CORRESPONDENCE TO THE BOARD 0,1ktatstr,,* December 16 1957 Board of Directors, tile Cheboygan State Savings Bank, C heboygan, Michigan. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Chicago, the Board of Governors of the Federal Reserve System approves the establishment of a f seasc)nsl branch banking office in Mackinac Island, Michigan, ! °111. June first to October first, inclusive, each year, and :seasonal branch banking office in Indian River, Michigan, *trftl June first to September fifteenth, .inclusive, each year, !f?vided the approval of the State authorities is effective :t!lle the seasonal branches are in operation. In the case of 1.4"'Es seasonal branch banking office in Mackinac Island, approval I's conditioned upon an increase in the capital stock of your t . rIstitution to $150,000, prior to June 1, 1958 to comply with atatutory requirements. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary. 3E559 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 5 12/i6/57 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD December 16, 1957 Mr. R. G. McConnell, Vice President, Federal Reserve Bank of Minneapolis, Minneapolis 2, Minnesota. Dear Mr. McConnell: Reference is made to your letter of November 19, submitting the request of the Security Bank and Trust tdompany of Owatonna, Owatonna, Minnesota, for approval under ection 24k of the Federal Reserve Act of an investment in ?aak premises for the purpose of remodeling its present bank111g quarters. You state that the president of the bank requested approval for an expenditure of $200,000, the estimated amount to be expended prior to increasing capital from $150,000 t° $300,000. As the total cost of the proposed building program 11 exceed the capital stock at the time the program was initiated, 4t is necessary to obtain approval of the entire amount to be xP d during the building or remodeling program, in this case 9264,000, notwithstanding the fact that the bank's capital stock maY be increased while such building program is in progress to an amount which will exceed the total investment in hank premises. n :ende After consideration of the information available, the ,,oard n of Governors approves an investment of approximately t2_64,000 by the Security Bank and Trust Company of Owatonna for "le Purpose of remodeling its banking premises. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, ID. C. Item No. 6 12/16/57 AIDDHLS, fliCIAL CORRESPONDENCE ,0 THU BOARD December 16, 1957 Mr* E. R. Millard, Vice President, Federal Reserve Bank of San Francisco, San Francisco 20, California. Dear Mr. Millard: Thia refers to the October 10, 1957, application of Old National Corporation, a bank holding company, for a ruling by the Board as to whether the indirect ownership or control by the Corporation of shares of stock of two nonbanking organizations, Old National Bank Building Company and City Ramp Garage, Inc., is 4cerni3t from the divestment requirements of the Bank Holding Company ,tet of 1956. It is understood that, through its banking subsidiary, The Old National Bank of Spokane, Old National Corporation indirectly / Wrip 4‘ LAJ-2/3 per cent of the shares of Old National Bank Building n "A3mPanY, a nonbanking organization, and that the latter company °14118 50 per cent of the capital stock of City Ramp Garage, Inc. As you know, section 4(c)(4) of the Act exempts from 6 Prohibitions of section 4 "shares which are of the kinds and 'lints eligible for investment by national banking associations der the provisions of section 5136 of the Revised Statutes.fl ,,l this connection, it is assumed that the Comptroller of the cr s;.:17ancY regards the investment by The Old National Bank of ane in Old National Bank Building Company and the bank's e' ,4..,direct investment in City Ramp Garage, Inc., as investments kTrmissible under section 24A of the Federal Reserve Act. In iLi Board,s ;e opinion, shares held or acquired in accordance with the Federal Reserve Act are exempt from the of "24A heeti qohibitions of section 4 of the Bank Holding Company Act by collue of the above-quoted provision of section 4(c)(4). AcOld National Corporation may retain its indirect int n„arest in Old National Bank Building Company and City Ramp age, Inc. ' 2 r 36CA. Mr. E. R. Mil ard of this It will be appreciated if you will transmit the substance tter to Old National Corporation. Very truly yours, (Signed) S. R. Carpenter S. It. Carpenter, Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 7 12/16/57 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD December 16, 1957 Board of Directors, The Vermont Bank and Trust Company, Brattleboro, Vermont. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Boston, the Board of Governors of the Federal Reserve System hereby gives its consent, under the provisions of ection 18(c) of the Federal Deposit Insurance Act, to the merger 5 The Windham National Bank of Bellows Falls, Bellows Falls, y.ermont, with and into The Vermont Bank and Trust Company, Brattleboro, v ermont, and approves the establishment of two branches by the sur! lying institutionr one to be located in Bellows Falls, Vermont, and uhe other in Chester, Vermont, at the present location of the main ?race of the national bank and its branch, provided (1) the merger : .38 effected substantially in accordance with the agreement between ' 41e parties dated November 12, 1957,(2) the merger and establishment of the branches are effected within six months from the date °f this letter, (3) shares of dissenting stockholders, which may ue acquired by the surviving institution, are disposed of within V-4 months after the merger is effected, and (4) formal approval .13 obtained from the State authorities. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary. ,13(31 : 1c;, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON Item No. 8 12/16/57 OFFICE OF THE CHAIRMAN December 16, 1957. The Honorable Wright Patman, House of Representatives, Washington 25, D. C. Dear Mr. Pathan: This is in response to your letter of November 27 requesting additional information on the subject of member hank required reserves. The questions are answered below in the order appearing in your letter. (1) The estimate given in my letter of November 22 of the amount of reduction in required reserves against demand dePosits of member banks if the requirements were reduced from Present rates to 10 per cent assumed no change in the present requirement of 5 per cent on time deposits. You now ask whether that is a reasonable assumption. The request in your letter of November 13 was understood to relate only to reserves against demand deposit, and the assumption in my reply had no significance other than to make it clear that the estimate given did relate only to deTand deposits and was thus responsive to the crlestion raised. 13 am, of course, not in a position to say what may or may not ' ' ? done in the way of changes in reserve requirements against elther time or demand deposits. (2) If reserve requirements against net demand deP"its were reduced by one percentage point at reserve city and 2°untrY banks, $381 million reserves would be released at reerve city banks and $359 million at country banks, or a total of nr/40 million. (3) If reserves required aainst net demand deposits Irere maintained at 20 per cent for central reserve city banks .?-11d were reduced for reserve city banks and country banks to a sevel that would bring them into line with the 13-10-7 ratios "L pPecified as minimum statutory requirements, the requirements r reserve city banks be 15.38 per cent and for country uanks 10.77 per cent. On this basis, 098 million of reserves w°uld be released at reserve city banks and ;,P4.42 million at The Honorable WrightPatman country banks, or a total of $1,440 million. These estimates have been computed on the percentages given above. In actual Practice, however, changes in reserve requirements in the past have usually been in whole or half percentage points rather than decimals. I have had the attached table prepared, showing some of the foregoing computations and also the effect on required reserves of decreasing (or increasing) requirements by one per cent against net demand deposits and one per cent against time deposits, which may be useful to you in estimating other combinations of changes in required reserves. This table is based on rinal figures for the second half of October; these later f_igures differ by relatively small amounts from those for the rirst half of October which were the basis of my November 22 letter. Sincerely yours, Wm. McC. Martin, Jr. Enclosure t BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON Item No. 9 12/16/57 OFFICE OF THE CHAIRMAN December 16, 1957 The Honorable Brent Spence, Chairman, Banking and Currency Committee, House of Representatives, Washington, D. C. Dear Mr. Chairman: Enclosed is a copy of a list of questions relating to the d estruction of money that were submitted to me by Congressman Patman at the conclusion of my appearance before the House Committee on Banking and Currency last August in connection with the Financial Institutions Act of 1957. Also enclosed is a set of the replies to these questions, along with a copy of a letter being sent today to * Patman transmitting to him a separate set occepting for the attachments to the replies to questions 1 and 12. In the case of the attachments to questions 1 and 12, only one copy is being alshed - that being sent to you - and it is assumed that this 111 be available for the use of any member of your Committee or it Staff* Most of the information requested by Mr. Patman had to be btaind e from the individual Reserve Banks; in such instances the ePlies submitted are in the form furnished by the Banks. ;! I should like to call your attention to the statement made in connection with Mr. Patman's request concerning these and other ,Ilelitions that he submitted to me, in which he indicated that the Iluastions and replies thereto would be included in the printed record the hearings. Question number 1 relating to 9destruction of money" quests Treasury regulations regarding the verification and destruc'n of United States notes and silver certificates, and question :"Iber 12 requests copies of all Federal Reserve audit reports on e cash verification and destruction operations. For the reasons ridicated in the responses to those questions, the data are being , 1rnished for your Coronitteo's information but with the understanding 2at of their nature thoy uill not be made a part of the nted record. Question 16 concerns the sampling procedures used to l b:ect the currency to be verified under Treasury regulations, and cause of the nature of this information, it is likewise requested Q r -J V The Honorable Brent Spence that the replies to this question not be made a part of the printed record,. Sincerely yours, s. Cir M. Wm. McC. Martin, Jr. Enclosures BOARD OF GOVERNORS OF THE Item No. 10 12/16/57 FEDERAL RESERVE SYSTEM WASHINGTON OFFICE OF THE CHAIRMAN December 16, 1957 The Honorable Wright Patman, !Rouse of Representatives, washington, D. C. Dear Mr. Patman: Enclosed is a copy of a letter being sent today to Chairman SPence transmitting the questions that you submitted to me in August !tt the hearings on the Financial Institutions Act of 1957 concerning destruction of money, along with a set of the replies that have 'Gen prepared to these questions. It will be noted that the attachT!nte to the replies to questions 1 and 12 are included only with ne Bet being addressed to Chairman Spence, it being assumed that 4.&lee will be available for the use of all members of the House Bank4 g and Currency Committee and its staff. You will also note that "nese attachments to questions 1 and 12 are being supplied with the understanding that because of their nature they will not be made a eart of the printed record. Question 16 concerns the sampling proP used to select the currency to be verified under Treasury 1?gulations, and because of the nature of this information, it is a 4 kewi8e requested that the replies to this question not be made ' : yart of the printed record. Z Sincerely yours, 6V,t Wm. McC. 1artin4 Jr. 1.1elosure BOARD OF GOVERNORS OF THE ff FEDERAL RESERVE SYSTEM r .) ; \\ I Item No. 11 12/16/57 WASHINGTON 25. O. C. ADDRESS OFFICIAL CORRESPONDENCE t, TO THE BOARD • n.** December 16, 1957 Mr. E. Sherman Adams, Deputy Manager, The American Bankers Association, 12 East 36th Street, New York 160 New York. Dear Sherman: In reply to the request in your letter of December 4, the Board of Governors would have no objection to your publishing data from the statistical tabulations included in our memoranda of August 9 and September 6, 1957, presenting the results of the testing of the A.B.A. reserve proposals. While the Board maybe mentioned as the source °f any of the figures that may be published, the Board would request that any statements or conclusions that you 'nay publish in describing or analyzing these data not be attributed to the Federal Reserve, even though they correspond to statements in the memoranda. Comment in the Temoranda regarding individual cases should Pot ID,' pubiiehed. We trust that this arrangement will serve your PuzPoses. Sincerely S. R. arpent r Se etary. )., 36rq tocrta:c•rtoc. BOARD OF GOVERNORS OF THE Item No. 12 12/16/57 FEDERAL RESERVE SYSTEM ‘'t I I 'Is 4) ,o11' zitagsfr,P .,* WASHINGTON OFFICE OF' THE CHAIRMAN December 16, 1957 AIR MAIL Mr. Javier Marquez, Director, Center for Latin American Monetary Studies, San Juan de Letran #2, Piso 32, Mexico 1, D. F. Dear Mr. Marquez: This is in further reply to your letter of October 16 requesting that we send a lecturer from the Federal Reserve Board to MLA during the week beginning July 14, 1958. We are pleased to continue this form of cooperation with the Center and Mr. Sammons has been designated to give the lectures again this year. Sincerely yours, (Signed) Wm. McC. Martin, Jr. Wm. McC. Martin, Jr. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 13 12/16/57 ALORES5 OrrICIAL CORRESPONOENCE TO THIL BOARD 74t °ti, . 40*' December 16, 1957 Excellency Ibrahim Anis, Ambassador of Sudan, 2230 Massachusetts Avenue, N. W., Washington, D. C. MY dear Mr. Ambassador: This letter is in reply to your letter of December 12, 1 57, in which you indicated that your Government would like to 2 voa the services of Mr. Oliver Wheeler, Vice President of the deral Reserve Bank of San Francisco, for an additional period °f aPproximately 3 to 4 weeks, beginning about the first of March. The Board has no objection to Mr. Wheeler's participati °r1 in the program. It is understood that he will be in Ithington on Tuesday, December 17, and that he is planning to 'sellas specific arrangements with you at that time. Very t y yours, later, R. Ca Secretary. 36'1. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 14 12/16/57 ADDRESS OFFICIAL CORRESPONOENCE TO THE BOARD December 16, 1957 ADIAIL Mr. H. N. Mangels, President, Federal Reserve Bank of San Francisco, San Francisco 20, California. Dear Mr. Mangels: This letter is in reply to your letters of October 16 and December 10 regarding a proposed leave of absence without ?lY for a period not to exceed 2 months for Mr. Oliver Wheeler s J441 order to enable him to return to the Sudan for final discusOn the draft charter of the proposed Central Bank. The Board considered this proposal and interposes no °I)J iect' on to the leave of absence or to Mr. Wheeler's participa4.. vI°11 in the program contemplated by the leave. Very,ti'ulr / • // S. R. Carp Secreta ter, (3r 'C ,0.1P90,4, Item No. 15 12/16/57 BOARD OF GOVERNORS t;4 O.- THE: FEDERAL RESERVE SYSTEM WABHINOTON 4,4* :4442.VA40,.1 4,4*. OFFICE OF THE CHAIRMAN December 17, 1957 AIR MAIL The Honorable H. C. Coombs, Governor, C lrbimonwealth Bank of Australia, ifYdney, New South Wales, Australia. Dear Governor Coombs: We had certainly hoped that by this time we could give more definite answer to your suggestion, referred to again in Your letter of December 2, 1957, that a member of the Boardia staff go to Australia to assist in the problem of flow of funds 84a-48es. It now develops, however, that our program over the text several months is such that we must again suggest that a irm commitment be pushed into the future for at least three or r_our months. A number of matters have arisen which cast some cloubt whether Mr. Young or any other appropriate member of the taff could be spared in April. For that reason, the Board would ike to defer a definite reply as to timing until some time in sarlY March when we will write you again as to likely dates. 4 I In the meantime, we would suggest that the memorandum to in the second paragraph of your letter be sent on as 500n as it is ready so that our staff will have as much time as Possible for its study. referred 'hien our The Board has noted with interest your suggestion that staff member visits Australia, he plan to stay for a 0d of three months. The Board will have this possibility ' 14 mind "then it is in a position to fix the timing of the visit. With every wish for a happy holiday season, I am, Sincerely yours, (Signed) Wm. McC. Martin, Jr. Wm. McC. Martin, Jr. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM .% Item No. 16 12/16/57 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE December 16 BOARD 1957 Dr. Frederic D. Chapman. 1150 Connecticut Avenue, IL. Washington 6, D. (C.. Dear Dr. Chapman: The annual physical examination for each employee in the cafeteria of the Board of Governors of the Federal Reserve System will be continued during 1958 on the same basis as set forth in our letter to you on December 22, 1953. I have been advised by the Division of Personnel Administration that these arrangements have worked out eatisfaotorily, and also that the fee of $100 for the calendar Year 1958 is agreeable with you. The number of examinations to be conducted will be substantially the same as in previous Years. It is understood that the examinations will begin on February 26, 1958, and will be conducted in the Board's Health Service Department every Wednesday morning from 10:30 until 11:30 until all cafeteria employees are examined. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 17 12/16/57 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD December 13, 1957 United States Civil Service Commission, W ashington 25, D. C. Attention Mr. Wilson Matthews, Administrative Officer, Hearing Examiner Program G entlemen: Reference is made to (1) the approval given by the Civil Service Commission in a letter dated December 11, 1956, for the loan of the services of Hearing Examiner Charles W. Schneider, on a e_imbursable basis, from the National Labor Relations Board to the ruard of Governors, for the period and on the terms set forth in uorrespondence exchanged between the two latter offices, copies of ich were forwarded to you by letter of December 10, 1956, and (2) aPproval given by the Civil Service Commission in a letter dated ! u ne 27, 1957, for the extension of such loan of the services of Charles W. Schneider to December 31, 1957. I n It now appears that Mr. Schneider's services will be re2Aired for an additional period of time. It is difficult at this time to Predict the precise additional time which will be required, but it la believed that an additional period of six months would reasonably e°7er such need. The Board of Governors has requested the National Labor Re1A4 -%.ions Board to extend Mr. Schneider's detail for an additional ' triad of six months beginning January 1, 1958, on the same basis as original detail, and that Board has agreed to such an extension. 1-ee of the letters exchanged between the Board of Governors and the N:14. 3, -L -uonal Labor Relations Board in this connection are enclosed. For the reasons herein stated, your approval of the extension tor 2iX months of Mr. Schneider's detail will be appreciated. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary.
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