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Minutes for To: Members of the Board Prom: Office of the Secretary December 16, 1963 Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement With respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. Otherwise, please initial below. If you were present at the meeting, your initials will indicate approval of the minutes. If you were not present, your initials will indicate only that you have seen the minutes. Chin. Martin Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. Mitchell Gov. Daane http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis (41 :3';/(1 Minutes of the Board of Governors of the Federal Reserve SYstem on Monday, December 16, 1963. The Board met in the Board Room 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Martin, Chairman Mills Robertson Shepardson Mitchell Mr. Sherman, Secretary Mr. Kenyon, Assistant Secretary Mr. Broida, Assistant Secretary Mr. Molony, Assistant to the Board Mr. Fauver, Assistant to the Board Mrs. Semia, Technical Assistant, Office of the Secretary Messrs. Noyes, Brill, Garfield, Holland, Williams, Dembitz, Axilrod, Bernard, Eckert, Fisher, Gehman, Keir, Osborne, Partee, Weiner, and Yager of the Division of Research and Statistics Messrs. Furth, Hersey, Sammons, Katz, Gekker, Gemmill, Goldstein, Irvine, Maroni, and Swerling of the Division of International Finance Economic review. The Division of International Finance commented °n international financial developments, following which the Division Or Research and Statistics reviewed domestic economic and financial developments. Both Divisions then responded to questions arising from their presentations. All members of the staff then withdraw except Messrs. Sherman, Molony, Fauver, Noyes, Furth, and Eckert, and Mrs. Semia, and the following entered the room: http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis /1:375 12/16/63 -2- Cardon, Legislative Counsel Hackley, General Counsel Farrell, Director, Division of Bank Operations Solomon, Director, Division of Examinations Johnson, Director, Division of Personnel Administration Connell, Controller Hexter, Assistant General Counsel Shay, Assistant General Counsel Hooff, Assistant General Counsel Daniels, Assistant Director, Division of Bank Operations Leavitt, Assistant Director, Division of Examinations Thompson, Assistant Director, Division of Examinations Sprecher, Assistant Director, Division of Personnel Administration Miss Hart, Senior Attorney, Legal Division Mr. Kakalec, Assistant to the Controller, Office of the Controller Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Ratification of actions. Actions taken by the available members r the Board at the meeting held on December 12, 1963, as recorded in the minutes of that meeting, were ratified by unanimous vote. Discount rates. The establishment without change by the Federal Ileserve Banks of Cleveland, Richmond, St. Louis, Minneapolis, Kansas CitY) and Dallas on December 12, 1963, and by the Federal Reserve Bank or Atlanta on December 13, 1963, of the rates on discounts and advances in their existing schedules was approved unanimously, with the undertlidIng that appropriate advice would be sent to those Banks. Circulated or distributed items. The following items, copies O /41101 are attached to these minutes under the respective item numbers 11144cated, were approved unanimously: Item No. tette,. 4. uo Shelby County State Bank, Shelbyville, n°18, approving an investment in bank premises. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 1 12/16/63 Item No. Letter to the Federal Reserve Bank of Chicago : Ic efMrding the retirement of preferred stock 18sued by Pinconning State Bank, Pinconning, 1.;,11:elligarl, if and when the bank is merged into 47qaes National Bank & Trust Company of Bay eltY, Bay City, Michigan. 2 tjetter to North Shore Investment Corporation, i2llet, Illinois, granting a determination exempting from all holding company affiliate requirements ,74cept those contained in section 23A of the Federal Aeserve Act. 3 Mernorandum from Mr. Noyes dated December 121 1963, arding a request from Professor Goldfeld of rrinceton University for daily data on float. N Messrs. Hooff and Thompson then withdrew from the meeting. Cash with cash agent banks (Items 5-7). There had been distributed a memorandum dated December 121 19631 from the Division °I Bank Operations attaching a draft of letter that would inform the '1*esidents of the Federal Reserve Banks that the Board concurred in ' th action taken by the Conference of Presidents on December 21 19630 111th respect to the topic, "Cash with Cash Agent Banks." The Con- tel ' ence had agreed that the question whether cash placed with a cash agent bank pre-emergency should be Bank cash or Federal Reserve Agent's "was a matter for determination by the individual Reserve Banks. ell The position, first taken by the Presidents in 1955, that cash ilt°1ied pre-emergency with cash agent banks should be regarded as issued 111°11eY as reaffirmed in December 1959. Since then, because of the growth 14 their outstanding notes, some Reserve Banks, particularly Richmond, http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 010"11`s, 12/16/63 -4- had been experiencing difficulty in meeting collateral requirements arid at the same time maintaining sufficient unpledged gold certificates to avoid a deficiency in their reserve against deposits. The Richmond had approximately $52 million collateral behind its Federal Reserve ric'tes stored at cash agent banks, which could be freed by making the ricrtes at cash agent banks part of the supply held by the Federal Reserve Agent• The collateral would then become available to back notes issued current use. Further comments in the memorandum explored the rationale for the 13°Bition heretofore held that currency stored at cash agent banks should be considered issued money and the procedures intended to be r°40yed if there should be occasion to pay out such emergency stocks. In the course of commenting in supplementation of the memorandum, it. 'Daniels noted that the currency stored at cash agent banks by the illehinond Reserve Bank was under the dual control of two groups of cers. It was suggested that the members of one of the two groups °Tricers could be designated as representatives of the Federal Reserve 4gerit for the sole purpose of the custody of Federal Reserve notes ilt°red at cash agent banks. He added that Mr. Johnson had made the 811gResti0n that after a temporary period this arrangement might be l'IEL4ecl so that the regular Federal Reserve Agent's representatives u- be the persons having custody. In discussion Governor Mills raised the question whether the prop° Bed arrangement, ostensibly intended as a convenience, actually http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis t 12/16/63 -5- involved any fundamental relaxation inconsistent with System responsibilities for the issuance and retirement of Federal Reserve notes. Mr. Farrell responded that in operation alert exercises this lire'blem had been considered in relation to stocks of silver certificates held for emergency purposes. On the exercise assumption that certifi- cates at a Federal Reserve Bank hed become unavailable, bookkeeping entries were made transferring the silver backing from the unavailable cel'tificates to certificates theretofore held in custody. Essentially the same thing would be done in the case of Federal Reserve notes; the effect would be to transfer unavailable notes to the status of Agent's e4814 and transfer the collateral against them to the notes released by the cash agent banks. Mr. Hexter commented, incident to this matter, that in the eet:Q-Ydays of the Federal Reserve System no person connected with the (31ellating side of a Reserve Bank was permitted to be a Federal Reserve 441"erit's representative. As time went on, however, successive steps had bee,, - taken to place Federal Reserve notes substantially under the control or Pederal Reserve Bank at the time they were shipped to the Bank. Was sound procedure from the point of view of operations, but in hie °Pinion it was not in accord with the principles of section 16 of the, 4'edera1 Reserve Act. to have It would seem desirable, if it could be done, section 16 amended. If anything untoward should ever occur, it 1111/Mt be difficult to defend legally the System's seeming disregard for the Provisions of that section of the Act. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 439 12/16/63 -6- Governor Mills commented that he saw the practical need for 1:ennitting the proposed change in procedure with respect to the clasalfication of notes stored at cash agent banks, yet he was somewhat Illicomfortable about the proposal. In an emergency, he envisaged the 15essibility of starting to flood the country with what had been unissued htltes without complete observance of the collateral requirements. Mr. Farrell replied to the effect that the arrangement with the eash agent banks for the release of notes in an emergency was dependent clltbe inability of the agent banks to get in touch with the Federal Reserve Bank. The situation would be one in which the Richmond Reserve tkwt ) for example, was unable to make shipments of notes to its member barn, -". The Bank could return the notes that it ordinarily would have 8114Ped to the status of Agent's cash, and the cash agent banks would stel) in by making the shipments of cash that the Reserve Bank otherwise '401111 have made itself. In answer to a question, Mr. Daniels indicated that the total amount of notes placed with cash agent banks was around $200 r„„ --L-Llion, with the Richmond Bank having about $60 million of notes 4t4ent banks. Governor Mills commented that it appeared to him that Illtther fundamental change was being proposed for a relatively small oti After further discussion, the letter to the Federal Reserve Bank P4 -.'dents advising of Board concurrence in the action taken by the co rence of presidents was approved, Governor Mills' reservations being http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 4 12/16/63 -7- ric)ted-, with the understanding that copies would be sent to all Federal Reserve Agents. A copy of the letter to the Presidents is attached as Attached as Item No. 6 is a copy of the letter sent to the Pecleral Reserve Agent at Richmond in this connection, and attached as Item No. 7 is a copy of a telegram sent to the same party advising of " 7°1110- of the appointment of certain officers of the Bank as Federal Reserve Agent's representatives for the sole purpose of custody of l'ecieral Reserve notes stored at cash agent banks. Messrs. Noyes, Daniels, and Eckert then withdrew from the teeting. Financing of exports (Item No. emorandum dated December 6, 1963, 8). There had been distributed from Mr. Goodman regarding a request *°111 the Secretary of Commerce in connection with the report of Committee 5*-41-nancing Exports, of the White House Conference on Export Expansion. The c ommittee's report contained the comment that "The Federal Reserve 130,th,, —4 should consider extending the term applicable to bankers acceptances *°131 4 limit of 180 days to 365 days. This action, if taken, will assist 1111311tting this instrument on a parity with similar instruments in use 1114roPe and will broaden the market for this type of financing." The letter from the Secretary of Commerce stated that, since the Board had the primary responsibility for consideration of this recom- 11"Letion, he would appreciate having the Board's views and comments. Attached to the memorandum from Mr. Goodman was a draft of reply to the SetarY of Commerce. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis ';,'S 12/16/63 -8- The proposed reply would indicate that the recommendation of eclurtlittee 5 would be borne in mind in connection with the further and e( tinuing review of Board regulations pertaining to bankers acceptances, that the Board would be interested in receiving any views concerning .411ether the limitation of six months on the maturities of acceptances had resulted in any unmet financing needs that could not be satisfactorily hatIciled by loans or other forms of financing, and that if the members clf Committee 5 had information on the subject, it would be helpful if stleh information could be made available. In discussion, question was raised whether the reply should not be m 4°re Positive in stating that the Board saw no need for extending the ' tern, aPPlicable to bankers acceptances and in stating that such a need not come to light in connection with the recent revision of Regulation K, Corporations Engaged in Foreign Banking and Financing under the Pecie_ "al Reserve Act, and Regulation M, Foreign Branches of National texiire, On the other hand, it was observed that the intent of the in the draft letter was to elicit better-documented information, it 81,'4e, n was available, on the sources of and reasons for the recommenda- ti011 before taking a final position. It was understood that the draft letter would be reviewed by the 8taft in light of the discussion at this meeting, and a reply was 1J'4).5.11/..2,1 in such form as seemed most appropriate following the staff review. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 12/16/63 -9- Pursuant to this understanding, and following staff review of the matter, the letter of which a copy is attached as Item No. 8 was sent to the Secretary of Commerce on December 181 1963. Messrs. Hexter and Furth then withdrew from the meeting. Memorandum information for Federal budget (Items 9-10). In a letter dated November 29, 1963, the Bureau of the Budget stated that ill a recent report on "The Federal Budget as an Economic Document" the j°11it Economic Committee had recommended that the coverage of the annual hildget documents be enlarged to provide more complete information on financial transactions in which the Government or Government agencies 1484 be involved. The Bureau of the Budget had also been concerned about the exclusion from the budget of a number of activities and transactions 8.frectillg the finances of Federal agencies and instrumentalities, and acec " -ingly, proposed to include in the 1965 budget document financial (14t4 Oil a memorandum basis for several activities that had not been l'ePoIrted in the budget, including the revenues and expenditures of the liOttra Of Governors (but not of the Federal Reserve Banks). The data 1111ved would be presented for information purposes only, somewhat like the v'rmanent indefinite trust funds, to provide a more complete discictsill'e of Government agency activities. They would be in a separate "ion at the end of the usual trust fund figures, and their presentation in the budget would not affect in any manner the present procedures 141th respect to budgetary review. The data requested were, specifically, a sch "Alla of program and financing, reflecting costs and/or obligations, http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 43S:C 12/16/63 -10- Pared on the same basis as for trust funds; a personnel summary; 4 814111Tary of sources and application of funds; a statement of revenue, Nftse, and retained earnings; and a statement of financial condition. There had been distributed a draft of reply to the Budget Bureau eXPressing the Board's willingness to supply the requested information. In discussion, representatives of the Controller's Office noted that the providing of the specified information would require considerable work and that there were some technical problems involved, conWhich there would have to be consultation with the Budget Bureau. The further question related to developments over a period of time if the information presently requested was provided and the area of l'equested data should later be broadened to include information more Ilee*Y comparable in scope to that required of agencies operating under 414)/10Priated funds and usual Governmental budget procedures. The discussion also included questions on the extent of illf°rMation currently requested that would not otherwise be publicly Illeble, in the Board's annual reports or elsewhere, and explanatory " li"1"ks were made by Mr. Kakalec and Mr. Sprecher. The disposition of the Board, as indicated by the remarks of the members, was to feel that the information currently requested should be P alarnished and that any later requests for additional kinds of inrormation should be considered as and when necessary. Governor Mills stated that he was sympathetic to the position of the Budget Bureau 14 trYing to portray the finances of the Governmental establishment as http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 384 12/16/63 a Whole. -11He noted that the Bureau had been specific in excluding the Itecleral Reserve Banks from the terms of the request, and he could see 40 Objection to complying with the request. Governor Mitchell indicated that he was not sure that he would see objection even if similar formation should be requested in relation to the Federal Reserve Banks. Chairman Martin commented that he thought the Board's policy clearly 8110111d be one of not resisting requests for disclosure of its affairs illthe absence of some good reason. He saw no specific reason for isting disclosure of the information currently requested by the 4.clget Bureau. Accordingly, the letter to the Bureau of the Budget was approved 141411in1ously, subject to the incorporation of a minor editorial change. ec/PY of the letter, as sent, is attached as Item No. 9. Attached as Ite171 No. 10 is a copy of the supplementary letter sent to the Bureau Illider date of December 20, 1963. All members of the staff except Messrs. Sherman, Kenyon, and 41aver then withdrew from the meeting. Director appointment. As the result of inquiry made pursuant to the understanding at the meeting on December 9, 1963, it had been 4seertained that Lee A. DuBridge, President, California Institute of jechil°1°gY, Pasadena, California, would not be available for appointif tendered, as director of the Los Angeles Branch of the Federal ile"'e Bank of San Francisco for the two-year term beginning January 1, 1.964 • http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 4 12/16/63 frl I I( 7k r -12- After discussion it was agreed to ascertain through the Chairman Of the Bank whether Simon Ramo, Executive Vice President and Director, Thompson Ramo Wooldridge, Inc., Canoga Park, California, would accept the appointment if tendered, with the understanding that if it were found that he would accept, the appointment would be made. It was also agreed that if it developed that Mr. Ramo was not liaable, the same procedure would be followed with respect to " Althur G. Coons, President of Occidental College, Los Angeles, California. Secretary's Note: It subsequently developed that Mr. Ramo was not available for appointment, but that Mr. Coons would accept the appointment if tendered. Accordingly, a telegram was sent to Mr. Coons on January 6, 1964, advising him of his appointment for the unexpired portion of the two-year term ending December 31, 1965. Salaries at Cleveland (Item No. 11). In a letter dated i)ecember 12, 1963, Chairman Hall of the Federal Reserve Bank of Cleveland advised that the Bank's Board of Directors, at a meeting that day, had l'ecoMmended the establishment of a salary of $11-o,000 for President Hickman, 48 c°mPared with his present rate of $35,000, effective January 1, 1964, 44cl had approved the payment of salary to First Vice President Thompson 4t his current rate of $25,000 per annum for the period from January 1 t° date of retirement within the year 1964. The Board noted that the proposed increase in the salary of Pres4.., 4-uant Hickman would appear to be inconsistent with the terms of the http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis tip 12/16/63 -13- c)s-rd's letter to the Reserve Bank Chairmen of October 5, 1962, setting l's31.Ith guidelines for fixing salaries of Presidents and First Vice Presidents. These guidelines provided that adjustments might be initiated 1.1°t oftener than at three-year intervals, except that adjustments for aPpointees could be proposed at the end of two years following aPPointment. President Hickman's appointment was effective May 1, 1963, atvhich time his current salary rate was fixed. It was the view of the Board that there should be adherence to the guidelines set forth in the 1962 letter. Accordingly, unanimous 8413.1. 8 4 was given to a letter to Chairman Hall in the form attached as Ite The meeting then adjourned. Secretary's Notes: On December 13, 1963, Governor Shepardson approved on behalf of the Board a letter to the Federal Reserve Bank of Kansas City (attached Item No. 12) approving the appointment of Harry William Green as examiner. Governor Shepardson also noted on behalf of the Board on December 13, 1963, a memorandum from the Division of Examinations advising that application for retirement had been filed by Lyle B. St. John, Assistant Federal Reserve Examiner, effective at the close of business December 30, 1963. Pursuant to recommendations contained in memoranda from appropriate individuals concerned, Governor Shepardson today approved on behalf of the Board the following actions relating to the Board's staff: http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis f 43c,P.1 12/16/63 81118 -14ease-' r Milo Peterson, Economist, Division of Research and Statistics, r°111 $91370 to $10,105 per annum effective December 22, 1963. Aece of resignations LYnn M. Massel, Statistical Assistant, Division of Research and vatisties, effective at the close of business December 20, 1963. 84 s.,_ .Elizabeth C. Rose, Draftsman Trainee, Division of Research and 4.4ccistics, effective at the close of business December 31, 1963. s , tit Linda lc Snyder, Draftsman Trainee, Division of Research and latics, effective at the close of business January 3, 1964. eajvity MarY H. Wilson, Minutes Clerk, Office of the Secretary, to work Dart time for Air Force Associates. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 4388 BOARD OF GOVERNORS Item No. 1 12 /16/ 63 OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 • ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD December 16, 1963 Board of Directors, Shelby County State Bank, Shelbyville, Illinois. Gentlemen: The Board of Governors of the Federal Reserve System approves, under the provisions of Section 24A of the Federal Reserve Act, an investment, direct and indirect, in bank premises of not to exceed $3002000 by Shelby County State Bank for the Purpose of purchasing a site and erecting new banking quarters. This amount includes the entire capital stock of a wholly-owned affiliate, organized to hold title to bank premises, and the Indebtedness of the corporation incurred in securing a site. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis BOARD OF GOVERNORS Item No. 2 12/16/63 OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 ADOREISS OIFICIAL CORRESPONDENCE TO THE BOARD December 16, 1963 Mr. Leland M. Ross, Vice President, Federal Reserve Bank of Chicago, Chicago, Illinois. 60690 Dear Mr. Ross: This refers to your letter of December 3, 1963, with respect to the retirement of preferred stock issued by Pinconning State Bank, Pinconning, Michigan, if and when the bank is merged into Peoples National Bank & Trust Company of Bay City. When this preferred stock was issued in 1955, a provision was placed In. the Articles of Incorporati on providing for the prior approval of the Federal Reserve Bank of Chicago before any retirement thereof) and you have requested advice as to whether such approval IllaY be granted by the Federal Reserve Bank, and also whether the Board's approval is required by paragraph 11 of section 9, which Provides that "the capital stock of a State member bank shall not °e reduced without the prior consent of the Board." The Federal Reserve System did not request inclusion of his provision when the stock was issued, and such approval would seeM inappropriate where another Federal agency is authorized to 413Prove the merger and must, of necessity, take into consideration capital of the resulting bank. Furthermore, it is believed that the provision of section 9, above referred to, was meant to apply to reductions of capital by a State bank that is and remains 4 member of the System. Specific consent of the Board would serve purpose if a State member bank were merging into another bank. fherefore, neither permission of the Federal Reserve Bank nor of 'he Board of Governors would seem necessary or appropriate in this instance. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis , Item No. 3 12/16/63 BOARD OF GOVERNORS 0.16. q ... OF THE FEDERAL RESERVE SYSTEM i*.• WASHINGTON, D. C. 20551 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD December 16, 1963 No " 4 F. Schuetz, Secretary, 501 .:th Shore Investment Corporation, j 54 West Jefferson Street, °list minois. Deb,. Ix. Schuetzt This refers to the request contained in a letter dated Oe tor "Lust 11, 1963, submitted to the Federal Reserve Bank of Chicago, 4 4 determination by the Board of Governors of the Federal Reserve 81 as to the status of North Shore Investment Corporation rPorationn), as a holding company affiliate. 4 From the information presented, the Board understands that (srationos present activities are confined to holding 15,086 4429 per cent) of the 30,000 outstanding shares of stock of The krt National Bank of Danville, Danville, Illinois; and it does or, directly or indirectly, own or control any stock of, or manage clantrol, any other banking institution. In view of these facts the Board has determined that Corporation the ,is not engaged, directly or indirectly, as a business in holding BeAri!wock of, or managing or controlling banks, banking associations, otZT3 banks, or trust companies within the meaning of section 2(c) 40t7,7 Banking Act of 1933 (12 U.S.C. 221a); and, accordingly, it is teemed to be a holding company affiliate except for the purposes ot ' perrasiaction 23A of the Federal Reserve Act and does not need a voting 144 t from the Board of Governors in order to vote the bank stock (111 it owns . Co If, however, the facts should at any time indicate that Nw:!_ltion might be deemed to be so engaged, this matter should NiZos submitted to the Board. The Board reserves the right to ' 4-nd this determination and make further determination of this http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 4391 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM W. F. Schuetz -2- at any time on the basis of the then existing facts. Should ::43-vities of or acquisitions by Corporation, particularly in bank it°5001cs even though not constituting control, result in its attaining o oNsition whereby the Board may deem desirable a determination that Wtration is engaged as a business in the holding of bank stock, 0 5 managing or controlling of banks, the determination herein may be rescinded. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Item 12/16/63 MEMORANDUM December 12, 1963. TO: Board of Governors 110: Guy E. Noyes SUBJECT: Goldfeld Request for Daily Data on Float. This Division has received from Professor Goldfeld of Princeton University a request that we make available to him daily d4ta on Federal Reserve float covering the postwar period. The data could be readily supplied, since they have been summarized on few large work cards which could be photostated. We recommend that this request be approved. Professor Goldfeld states that he is interested in applying the technique of spectral analysis to the prediction of float. This 18 One of the more recent developments in advanced statistical Me thodology for isolating and measuring various types of repetitive Patterns in time series data. Since float has been one of the most troublesome factors to deal with in preparing our reserve projections, nY advance in understanding of float behavior resulting from this research would be of immediate practical value to the System. Accordingly, we feel that we should encourage Professor Goldfeld to UrId ertake this project and make the necessary data available. So far as we are aware, the only occasion on which daily f/I!)at information has been provided to outside users was in response t° the recent request of Mr. Ccx of the ABA. The Wednesday figure, Or course, is regularly available in the weekly condition statement , f the Federal Reserve Banks. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Item 111.3Y1'3 12/16/63 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 28. D. C. ACORES' OFFICIAL CORRESPONDENCE TO THE BOARD December 16, 1963. ear sir: ts on At the meeting of the Conference of Presiden of matter the cember 2, 1963, the Conference agreed that should y mergenc ether cash placed with a cash agent bank pre-e deterfor matter Rank cash or Federal Reserve Agent cash is a "'Illation by the individual Reserve Banks. De n which This action amends the position previously taken, ts Presiden reiterated at the joint meeting of the Board and the 1°In December 15, 1959, that currency stored at cash agent banks °uld be Bank cash rather than Agent's cash. was . ce The Board concurs in the action taken by the Conferen a n to residents on December 2, and it will have no objectio Re p_ rye Bank's taking whatever steps are necessary to transfer u!deral Reserve notes stored at cash agent banks to the status of 1:3iseued currency held by the Federal Reserve Agent. Such action nould make available an equivalent amount of collateral to secure tes issued for current use. Of p Reserve A copy of this letter is being sent to the Federal -, at your Bank. Very truly yours, Merritt Sheman, Secretary. 1° THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 4:191 Item No. 6 12/16/63 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. okooRces orrociAL CORRESPONDENCE TO THE SOAR() December 16, 1963. ; 11,1'. Edwin Hyde, 4ederai Reserve Agent, *p i! d 1.41. Reserve Bank of Richmond, 'eniriond, Virginia 23213. bearmr. Hyde: Enclosed is a copy of the Board's letter of this date to the P48id dents ent of your Bank concurring in the action of the Conference of Presiat e °n December 2, 1963, with respect to the classification of money stored ash agent banks. The letter states that the Board will interpose no objection to a Ilese;ve Bank's taking the steps necessary to change the status of Federal 14 thve notes stored at cash agent banks to unissued money by placing them alleu e custody of the Federal Reserve Agent. This would free an equivalent 11st of collateral, which could then be used as backing for notes issued for , -urren.-L use. Itese— It is understood that the currency stored at cash agent banks by Your 13 has been.ank is under the dual control of two groups of officers, and it could be officers of lesi.-uggested that the members of one of the groups sole the purfor Agent Reserve bnated Pose as representatives of the Federal agent banks. cash at stored notes The 1,(11 the custody of Federal Reserve "oard has no objection to this arrangement. Please advise the Board by telegram of the names of the persons midit„ted for this special purpose. Also, please obtain from the General ' 401ad -r of the Bank a written statement that in his opinion no conflict Nix. e xist between their regular jobs and their special responsibilities as fur4i:!Pre8entatives. Except for Item 4, the information requested to be " is pr ed the Board with respect to appointees of the Federal Reserve Agent, read;ded in the Board's letter of March 20, 1957 (F.R.L.S. #3161), is alte f. ile at the Board. The Item 4 information may be submitted at a Istei. Z !1PPoin Very truly yours, (Signed) Merritt Sherman http://fraser.stlouisfed.org etairc Federal Reserve Bank of St. Louis Merritt Sherman, Secretary. Item No. 12/16/63 TELEGRAM WIRE LEASED SERVICE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM ' WASHINGTON DECEMBER 18, 1963. 434/1 HYDE, FEDERAL RESERVE AGENT - RICHMOND REFERRING YOUR TELEGRAM TODAY AND BOARD'S LETTER TO YOU °PDECEKBER 16, 1963, BOARD APPROVES APPOINTMENT EFFECTIVE TODAY AS P4)0AL RESERVE AGENT'S REPRESENTATIVES FOR THE SOLE PURPOSE OF CUSTODY OF FEDERAL RESERVE NOTES STORED AT CASH AGENT BANKS THE 17°1414/WING OFFICERS OF THE FEDERAL RESERVE BANK OF RICHMOND: HEAD OFFICE J. GORDON DICKERSON, JR., VICE PRESIDENT WILLIAM B. HARRISON, III, ASSISTANT VICE PRESIDENT JOSEPH F. VIVERETTE, ASSISTANT VICE PRESIDENT J. LANDER ALLIN, JR., ASSISTANT CASHIER JOHN E. FRIEND, ASSISTANT CASHIER ARTHUR V. MYERS, JR., ASSISTANT CASHIER BALTIMORE E. RIGGS JONES, JR., ASSISTANT CASHIER ADOLPH C. WIENERT, ASSISTANT CASHIER CHARLOTTE St HOPE A. LIGON, CASHIER FRED C. KRUEGER, JR., ASSISTANT CASHIER IT IS NOTED THAT WRITTEN STATEMENT OF GENERAL AUDITOR, 11414 INFORMATION, AND OATH OF OFFICE WILL BE FORWARDED. (SIGNED) MERRITT SHERMAN SHERMAN. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 3(2b5 7 139 Item No. 8 12/16/63 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON OFFICE OF THE CHAIRMAN December 18, 1963. The Honorable Luther H. Hodges, Se cretary of Commerce, Was hington, D. C. 20230. bear Mr. Secretary: Your letter of November 20, 1963, states that you following up on the measures taken by Labor, Industry, appropriate Government agencies on the recommendations corporated in the report enclosed of the White House Conference on Export Expansion on September 17 and 18, 1963. were Your letter stated: "The report of Committee 5--Financing Exports--included, among other recommendations, the following: . .The Federal Reserve Board should consider extending the term applicable to bankers' acceptances from a limit of 180 days to 365 days. • "The Committee further commented that such action would assist in putting this instrument on a parity with similar instruments in use in Europe and broaden the market for this type of financing."" You commented that, since the Board of Governors has the , tile„vrimary responsibility for the consideration of this recomp4uation, you would appreciate views and comments for incoration in your forthcoming report. In recent months, the matter of bankers' acceptances has had co i nsiderable attention by the Board and its staff in connection L2 the revision of Regulation M, "Foreign Branches of National Ile:;"," revised effective August 1, 1963, and Regulation K, lindrPorations Doing Foreign Banking or Other Foreign Financing 196e r the Federal Reserve Act," revised effective September 1, 3 111.11. Regulation C, "Acceptance by Member Banks of Drafts or ttm 8 °f Exchange," has also been under active study for some hY the Board's staff for purposes of revision. Other Regulaof the Board also include provisions relating to bankers' ae cePktances. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 439? The Honorable Luther H. Hodges -2- The recent revisions of Regulation M and Regulation K, referred to above, do not contain any limitations on the maturities of acceptances issued respectively by foreign branches of ;ational banks or corporations doing foreign banking under the ederal Reserve Act. Regulation C, like section 13 of the Federal Reserve Act (12 U.S.C., sec. 372) on which it is based, Contains a six months limit on maturity of acceptances. In conwith the review and possible revision of Regulation C, che Board would be interested in receiving any views as to 'tether the limitation has resulted in any unmet financing needs hat could not be satisfactorily handled by loans or other forms °f financing; and if the members of Committee 5 have information on the subject it would be helpful if it could be made available to the Board. Sincerely yours, Wm. McC. Martin, Jr. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 439 Item No. BOARD OF GOVERNORS o. OF THE • '0 ..... 9 12/16/63 ..... • 0Vth. ' "ry . ' ' orr e 7u.1 • FEDERAL RESERVE SYSTEM WASH INC3TON lj[11 4'0 _1(<,.• .• •.....' OFFICE OF THE CHAIRMAN December 16, 1963 The Honorable Kermit Gordon, D irector, Bureau of the Budget, Wa shington, D. C. 20503 Dear Mr. Gordon: Your letter of November 29, 1963, in which you request the Board's assistance in supplying certain memorandum data regardtig inclusion financial activities of the Board of Governors for the 1965 Federal Budget, has been considered by the Board. The Board will be glad to assist in improving the information regarding financial transactions in which the GovernIl_lent or Government agencies may be involved by providing your uffice with data regarding its operations. As you know, the Board °f Governors of the Federal Reserve System does not operate on Propriated funds but rather on funds derived from assessments evied upon the Federal Reserve Banks. The Federal Reserve Act Provides in section 10 that such funds "shall not be construed to Board has not .e Government funds or appropriated monies." The of the Budget Bureau the to ln the past supplied detailed data n is informatio such as except zegarding its financial operations ' Congress. the to made available in its Annual Report ? involved in your request Your letter states that the data informational purposes for budget w°uld be presented in the Federal usual trust fund the of end 13 1Y, in a separate section at the : would not affect budget the in on and that their presentati to respect budgetary with rn any manner the present procedures the is to provide Board for problem seview. On this basis, the only your in a manner letter in described tnmarY schedules of the type the Government's to Federal addition h'at would constitute a useful uudget document. budget know that the Board's At the outset I should let you the schedules we would that and year is the calendar year, http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 4399 The Honorable Kermit Gordon -2- 3e able 11964, to supply would be for calendar years 1962, 1963, and We believe, however, that for the purpose described in Your letter these will be representative of financial transactions of the type you desire to present. Members of our staff will be lad to work with representatives of the Bureau in providing meaningful information of the kind described in your letter. Sincerely yours, (Signed) Wm. McC. Martin, Jr. Wm. McC. Martin, Jr. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Item No. 10 12/16/63 BOARD OF GOVERNORS ',pelf col:4. OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD December 20, 1963. The Honorable Kermit Gordon, Director, Bureau of the Budget, Washington, D. C. 20503. Dear Mr. Gordon: Supplementing Chairman Martin's letter of December 16, 1963, the following schedules for 1962, 1963, and 1964, which have been prepared on the calendar year basis, are enclosed for use in making a presentation on a memorandum basis of data on the financial operations of the Board of Governors in a separate section of the 1965 Federal budget d ocument. 1. 2. 3. 4. 5. 6. Salaries and Expenses by object classification Program and Financing Personnel Summary Revenue, Expense, and Retained Earnings Summary of Sources and Application of Funds Balance Sheet There is also enclosed a brief summary statement of the basic legislation under which the Board operates, its program, and the financing of the Board. Members of the Board's staff have worked with representatives of the Bureau in developing the above statements, and it is understood that they contain the type of data desired for the report referred to in your letter of November 29. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. 4-closure. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 4401 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM 'BASIC LEGISLATION -- The Federal Reserve System operates under the provisions of the Act of December 23, 1913, known as the Federal Reserve Act (38 Stat. 251), as amended. PROGRAM -- To carry out its responsibilities under the Act, the Board determines general monetary, credit, and operating Policies for the System as a whole and formulates the rules and regulations necessary to carry out the purposes of the Federal Reserve Act. The Board's principal duties consist of exerting an influence over credit conditions and supervising the Federal Reserve Banks and member banks. 3. FIN&NCING -- Under the provisions of section 10 of the Federal !eserve Act, the Board of Governors levies upon the Federal 4eserve Banks, in proportion to their capital and surplus, an assessment sufficient to pay its estimated expenses. The Board, under the Act, determines And prescribes the manner in which its 0bligation6 are incurred and its expenses paid. Funds derived from the assessments are deposited in the Federal Reserve Bank cif Richmond, and the Act provides that such funds "shall not be !onstrued to be Government funds or appropriated moneys." No uovernment appropriation is required to support operations of the Board. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis BOARD OF GOValNORS OF THE FEDERAL RESERVE SYSTEM SALARIES AND EXPENSES Object Classification (in thousands of dollars) 19 62 actual 19 63 estimate 1964 estimate 11 Personnel compensation: ••• 4,462 4,786 5,3143 Positions other than permanent •••••••••. 13 16 16 Other personnel compensation • • 40 56 62 • • o • )4,515 4,858 5,421 12 Personnel benefits . • • • • • • • • • • • • • • • 658 660 791 13 Benefits of former personnel .• • • • • • 0 • • • • 1 35 28 • • •••••• 356 326 330 • • • • • • •• •• 5 5 6 .• • • • • • • 433 504 590 • •.• • • • • • • • • • 287 367 397 Other services •..• . • .• • • • • • • • • • • • 289 239 329 Services of other agencies • • • • • • • • • • • • 225 294 413 26 Supplies and materials • • • • • ••• • • • • • • • 75 88 99 31 Equipment. • •..• • • •.• • • • • • • • • • • • 32 io6 //o 42 Insurance 2 2 4 Permanent positions . • Type size: S paint. 22 picas .• • • • • • Total personnel compensation Transportation of things .. • 23 Rent, communications, and utilities 24 Printing and reproduction 25 Total oh7igations http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 9 0 0 • 0 • • •• * • 21 Travel and transportation of persons 22 * 6,878 7,1'84 8,148 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Program and Financing (in thousands of dollars) 19 19 62 actual 63 estimate a 64est1mate Program by activities: 940 922 1,080 1,916 2,158 2,573 3. Federal Reserve and Member Bank Functions • • • • • 1,349 1,345 1,412 4. Staff Services •••.••••••••••••.• 1,960 2,298 2,499 5 Defense • • 53 65 64 6. Employee Retirement and Insurance Benefits • • • • 660 696 820 Total program costs, funded — obligations • • • • 6,878 7,484 8,448 337 168 307 6,655 7,573 8,240 • 54 50 Si • • • 6,709 7,623 8,291 307 ... 150 1. Administrative and Advisory • • • • • • • • • • • • Type size: S point. 22 picas 2. Economic Research and Statistics . • . Planning • .• • • • • • • al 0 • • • • 0 • • • • 0 0 FinancinK: Unobligated balance brought forward ..• • • • • • • iJ Income from: Assessments against Federal Reserve Banks Sale of publications and miscellaneous • Total income . • 0 • 0 0 • 9 • • oo • • • • • 0 Unobligated balance carried forward ...•..• •.• http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Total financing .... 168 6,878 1 I 1 7,484 6;448 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SisTEM Personnel Summary 19 19 63 estimate " 64estimate 651 674 676 6 6 6 Average number of all employees 602 613 618 Employees in permanent positions, end of year boo 615 625 5 6 7.1 7.1 7.1 6,950 62970 7,220 17,959 17,850 20,583 6,110 6,076 6,258 Total number of permanent positions Full-Time equivalent of other positions Type size: 8 point. 22 picas 62 actual Employees in other positions, end of year Average GS grade (equivalent) Average GS salary (equivalent) 6 Other positions: Average salary, Official Staff Average salary, Wage Board http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM RevenueExDenseand Retained Earnings (in thousands of dollars) 1962 actual CXCCI time fur all 3-column bull Type size: S point, 22 picas 1963 estimate 19 64 estimate Boardts operating program (less cafeteria operations) Revenue . 0 0 • • • •0•00• • • • • • • • • • • Expense ..•••••••••••••••••••• •• 0 6,615 6,734 7,530 7,339 8,197 8,299 Excess of operating revenue over expense or expense over revenue (-) • • •00• • • • •0• u9 191 102 Nonoperatina income or loss (-): Cafeteria Operations .••••••••••••••• • • • • Revenue . Expense . • • • • • • • • •.• • • • • • • • • • • • • 914 144 93 11.15 94 11:9 So - 52 - 55 Net nonoperating loss .......... 0 • • • • • . • Excess of total revenue over expense or expense over revenue (-) .........• • • • • • 169 139 157 Analysis of retained earninv: Retained earnings, start of year .... • 0 ••• • • Net change after expenses, current year . • • • • • • • • 337 .... 169 168 + 139 307 157 • • •• • • •• • •• • 168 307 150 Retained earnings, end of year http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Summary of Sources and Application of Funds (in thousands of dollars) STA 1962 actual 6,878 7,484 - 170 28 Gross expenditures ....... 0•••••••••• 6,708 7,512 Revenues and other receipts (from program and financing) • 6,709 7,623 Obligations (from program and financing) • • • • • • • • • Increase (-) or decrease in gross unpaid obligations Type size: 8 point. 22 picas 1963 *Aimee • 0 0 Increase (-) or decrease in accounts receivable and inventories • •.• • •0•000 • .• 0 0 00••• Applicable receipts • • • • • • • • • • •.•.• • , "7. 824142 6 6,703 - Net change in cash http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis • 19 64eAimata 5 71624 112. 152 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Balance Sheet (in thousands of dollars) 162 r4u Tyr .size: =pie. 1964 estimate Assets: Cash in bank • • • • • • • • • • • • • • •••• • • 0 Accounts receivable and travel advances .• • • • • • • Stockroom and cafeteria inventories, at cost • • • • • Land and improvements, at cost .• • • • • • • • • • • Building, at cost ... • • • • • • • •.• • • • • • • •• Furniture and equipment, at cost • • • • 737 12 21 793 4,063 666 849 10 22 793 4,063 732 697 11 22 793 4,063 767 Total assets .• • • S• • • • • • • • • • • • • • 6,292 6,469 6,353 Liabilities and fund balances: Liabilities: Accounts payable and accrued expenses • • •. Nithheld taxes payable •.• • • • • • • • • • • • • • I9:s. 1963 estimate actual 0 •• 1 383 214 602 ... • Z I 346 228 380 200 574 580 2 q Fund balances: Retained earnings .• • • •.• • • • • • • • • • • • Invested capital .••••••••••••••••• Total liabilities and fund balances http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 168 307 150 5,522 5,588 5,623 5,690 5,895 5,773 6,292 6,4.69 6,353 Item No. 11 12/16/63 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON OFFICE OF THE CHAIRMAN December 18, 1963 NIPIDENTIAL (FR) Mr.j .ose.et r B. Hall, Chairman, ' ral Reserve Bank of Cleveland, -4-eve1and, Ohio. 44101. plci )3ear Joe: The Board of Governors has considered the salary proposals esident Hickman and First Vice President Thompson as recommended .71311/` letter of December 12. tor b tri The proposed increase for President Hickman would be incon8isten+ w with the Board's letter of October 5, 1962, setting forth 441nes for fixing salaries of Presidents and First Vice Presidents e, Provi than 'ng that meritorious adjustments may be initiated not oftener be at three-year intervals, except that for new appointees they may app'oir°Pcsed at the end of two years following appointment. Mr. Hickman's "anent was effective May 1, 1963, at which time his current salary - /las fixed. saa Accordingly, the Board of Governors approves the payment of 4r*Y t Mr. Hickman as President for the period January 1 through fiX04, 1 er 31 1964, at his current rate of $35,000 per annum, if so -if your Board of Directors. The Board of Governors approves the payment of salary to ,rh (ThiPson as First Vice President for the period January 1 to date 1:`t reti Per a Milent within the year 196/4, at his current rate of $25,000 rt nurn, as requested in your letter. Sincerely yours, (Signed) Bill Wm. McC. Martin, Jr. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis 440” Item No. 12 12/16/63 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD December 13, 1963 - edeL' ral F. Mills, Vice President, n 4 Reserve Bank of Kansas City, i(vinsas City, Missouri 64106. Dear Mr. Mills: In accordance with the request contained in your letter h_ c 1417 ember 6, 1963, the Board approves the appointment of Harry for "al Green, at present an assistant examiner, as an examiner 1964the Federal Reserve Bank of Kansas City, effective January 1, Please advise the salary rate. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. http://fraser.stlouisfed.org Federal Reserve Bank of St. Louis
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