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Minutes of actions taken by the Board of Governors of the
Neral Reserve System on Wednesday, December 17, 1952.
The Board met
ths Board Room at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Szymczak
Evans
Vardaman
Mills
Robertson
Mr.
Mr.
Mr.
Mr.
Carpenter, Secretary
Sherman, Assistant Secretary
Kenyon, Assistant Secretary
Allen, Director, Division of
Personnel Administration
the meeting
Chairman Martin referred to the understanding at
hetsra.
in connection with the Board's action relative to the suggestion
laciebY Mr. Neely, Chairman of the Federal Reserve Bank of Atlanta, that
he be
11PP0inted Deputy Chairman of the Bank for the year 1953 and that Mr.
currently Deputy Chairman, be designated as Chairman.
Chairman
k
ertill said
that in accordance with that understanding, he discussed the
414tter by telephone with Mr. Neely, who had also talked with Mr. Harris,
th4t the utter did not favor the arrangement and would prefer to have Mr.
441,
coatinue as Chairman until the expiration of his term as Class C
director
he (Mr.
on December 31, 1953, and that, if Mr. Neely continued as Chairman,
Liarris) would accept a reappointment as Deputy Chairman should it
1/ te
ered to him.
tleei
Chairman Martin suggested that in the circumstances Mr. Neely be
"as Chairman for 1953, with the understanding that he would not
811"
Aro_
W17/52
be
t
-2-
l trTointed as a Class C director at the end of his present term, and
that Mr. Harris be
reappointed as a Class C director for a three-year term
beginning January 1, 1953, and appointed as Deputy Chairman for 1953,
lth the
understanding, although with no more than an implied commitment
"he Part of the Board, that he would be designated as Chairman of the
talik
for the year 1954.
Thereupon, the Board by
unanimous vote (1) designated
Mr. Neely as Chairman and Federal
Reserve Agent at the Federal Reserve Bank of Atlanta for the year
1953 and fixed his compensation as
such on the same basis as approved
for the year 1952; and (2) reappointed
Mr. Harris as Class C director of the
Atlanta Bank for a three-year term
beginning January 1, 1953, and appointed him as Deputy Chairman for
the year 1953.
In connection with the foregoing
action, unanimous approval was given
to the sending of advices to Messrs.
Thad Holt, Howard Phillips, and E. 0.
Batson concerning the Board's action
of October 23, 1952, appointing them
as directors of the Birmingham, Jacksonville, and New Orleans branches,
respectively.
At this point Mt. Vest, General Counsel, and Mr. Sloan, Director,
134te,
1°t of Examinations, entered the room and Mr. Allen withdrew.
Before this meeting Mr. Sloan, at Governor Robertson's request, had
(Itec48
with
113
"
each member of the Board the following items:
2139
12/17/52
-3(1)
A memorandum dated December 12, 1952, from the
Division of Examinations relating to a letter of
December 4, 1952, from Mr. Wiltse, Vice President
of the Federal Reserve Bank of New York, submitting
the request of The Marine Trust Company of Western
New York, Buffalo, New York, a bank controlled by
Marine Midland Corporation, of Jersey City, New
Jersey, a holding company affiliate, for approval
of the establishment of a de novo branch in the town
of Cheektowaga, New York. The Reserve Bank recommended
approval of the request, and the Division of Examinations concurred, provided the branch was established
within six months from date of approval.
(2)
A second memorandum of the same date from the Division of Examinations relating to letters of December
3 and December 8, 1952, from Mr. Wiltse submitting
applications of The Northern New York Trust Company,
Watertown, New York, also a bank controlled by Marine
Midland Corporation, for approval of the establishment of an in-town branch in Watertown and a branch in
Massena, New York, the latter in connection with a proposed merger of the First National Bank and Trust Company of Massena, New York, into The Northern New
York Trust Company. The Reserve Bank recommended approval of the request, and the Division of Examinations concurred, provided (a) the branch in Watertown
was established within one year from the date of approval, (b) the merger with the First National Bank
and Trust Company was carried out substantially in
accordance with the merger agreement marked "Exhibit
6" accompanying the application, and (c) prior approval
for the branch in Massena was obtained from the appropriate State authorities.
There was also presented for discussion at this meeting, at the
4cillest
f
Governor Evans, a memorandum of Aovember 20, 1952, from Governor
110Ilertson,
which had been circulated among the members of the Board, concerzliri€ his
conversation on that day with Mr. Bayard F. Pope, Chairman of the
2140
12/17/52
-4-
4ar'l of Marine Midland Corporation, regarding applications for branches
al4 consolidations which banks in the Marine Midland group contemplated
subnitti
-ng to the Board for approval, including the applications referred
tcilithe above-mentioned memoranda.
With regard to the application of The Marine Trust Company of
14estern
New York to establish a branch in Cheektowaga, a community ad-
j"4111g the city of Buffalo, Governor Robertson said that while at first
he
vas 4
I
nClined
8
to favor denying the application in view of the applicant
extensive operations in the Buffalo area, he would recommend ap-
151sc)val because of (1) an apparent need for banking facilities in the large
Bitty,4
Ag center where the branch was to be located, (2) the population of
18,000
reported to be within the trade area of the proposed branch, (3)
the f
act that nearby branches of other banks would provide competition,
a/14 (4) the
conclusion of the New York Reserve Bank and the State banking
1.11thort+4
sm.Les
that the facilities to be furnished by the branch were needed.
Governor Robertson then discussed the branch applications submitted
bY
'le Northern New York Trust Company and recommended their approval.
4 41
.4.80 l'eferred to other applications which Mr. Pope had indicated would
be w_
'toriaitted by banks in the Marine Midland group in the near future.
Mr. Vest stated that of the three branch applications, only the
or
by the Buffalo bank seemed questionable.
the
However, in view
fact that the application was for the establishment of a de novo
12/17/52
_5-
branch and since there would be no substantial lessening of competition
illthe event
the branch should be established, he thought it would be
6'11'1'7i-cult to find grounds for denying the application.
11
Be noted that in
the Board approved the take-over of the Bank of Hamburgh, Hamburg,
11Y°1111. by The Marine Trust Company of Western New York and the estab118411ent of a branch in that
town.
In reply to a question by Governor Szymczak, Mr. Vest said that
tIle" aPPlications appeared to involve no technical question with respect
t°Be
7 of the Clayton Act except possibly in connection with the
"
1
take
--°ver of the national bank in Massena, in which case there would be
8.4 illstantaneous holding of stock by Marine Midland Corporation prior to
the
establishment of the branch in Massena. He added, however, that the
ci1ze atio,
" of a tendency toward monopoly might well be involved on a broad
4161.6 4
411 anY case where a bank in a holding company group wishes to esa. branch, because of the extension of the number of banking offi-
Governor Robertson stated that he failed to see any serious move-
expansion on the part of the Marine Midland group at this
When the subject was under discussion earlier in the year, GovNor
Robertson said, he gained the impression that the banks in the
At
mi
'-ght be thinking in terms of expansion and in the circumstances
ellggested a survey of the group by the Federal Reserve Bank of New York.
'
7)1 A
12/17/52
-6-
aetheh discussed the scope of that survey and stated that it would tend
toalappur-c__,
approval of the three applications before the Board.
Governor Robertson also said that he asked the New York Reserve
t° discuss the whole Marine Midland situation with the New York State
S11
4erilltendent of
Banks and told the Bank to feel free to have its representatives
disclose the facts in their possession provided they made it clear
that the Board was not committed to any program.
It developed, he said,
that the State banking authorities favored the three branches.
Governor Robertson added that the three applications before the
'1'441.ti had been reviewed by Mr. Chase, Assistant Solicitor, who favored
el3Proval.
Re also mentioned that the Manufacturers and Traders Trust Company,
falo, had filed an application for a branch in North Tonawanda, New
r
'/ghich would afford competition to the local branch of The Marine
441it
°111PaAV of Western New York.
the meeting
Governor Robertson then reviewed the discussion at
of the
Board on November 20 prior to his conversation with Mr. Pope,
tEtt
48 that it was on the basis of that discussion that he told Mr.
r013e that +1,
the
uiol Board would consider any application by a bank in
,
14e
N4
'idland group on its own merits.
4plaic
approving the
G
overnor Evans said that he would vote against
atl°ns because, as he had stated at the meeting of the Board on
"?,143
12/17/52
-7-
11°veraber 20, 1952, and at other times, he thought the Board should defer
action on any
after
applications by banks in the Marine Midland group until
the courts had rendered a final decision in the Clayton Act pro-
ceeding against Transamerica Corporation.
That decision, he felt, would
1Dr°71cle the Board a better criterion by which to define a tendency toward
/c4101)01y.
Governor Evans also pointed out that there had been placed in the
08.1%r1
8
files a memorandum prepared by Messrs. Hodge, General Counsel of
„
xederal Reserve Bank of Chicago, and Shay, Assistant Counsel for the
4e.1,4
the
under date of December 13, 1951, which contained the opinion that
gl'°uP banking system controlled by Marine Midland Corporation appeared
to
ullstitute a violation of section
'
7 of the Clayton Act.
with the memorandum
Governor Robertson stated that he was familiar
l'eferred to but, as he had stated at the meeting of the Board on November
the
western-central
Memorandum created the impression that the 18
c311/Ities
Of New York State in which the Marine Midland group has its
4e'vlest concentration
the counties
are contiguous whereas several of
are in fact separated from others.
Thereupon, the following letters
were approved, for transmittal through
the Federal Reserve Bank of New York,
Governor Evans voting "no" for the reason which he had stated:
2144
12/17/52
-8-
Letter to the Board of Directors, The Marine Trust Company of
Western New York, Buffalo, New York
"Pursuant to the request submitted through the
Federal Reserve Bank of New York, the Board of Governors of the Federal Reserve System approves the establishment and operation of a branch by The Marine Trust
C°mPany of Western New York in the Thruway Super Plaza,
Town of Cheektowaga, New York, provided the branch is
established within six months from the date of this
l
etter."
Letter to the Board of Directors, The Northern New York Trust Company,
Watertown New York
"The Board of Governors approves the establishment
!nd operation of branches at 556 State Street, Watertown,
New York, and in Massena, New York, by The Northern New
.York Trust
Company, provided (a) the branch in Watertown
;"1/ established within one year from the date of this letter,
‘1)) the merger with the First National Bank and Trust Comlil!l4Y of Massena is effected substantially in accordance
.'-th the terms of the merger agreement, Exhibit 6, which
;
your letter of December 4, 1952, addressed to
1
the Board of Governors, and (c) prior approval for the
78tablishment of the Massena branch is obtained from the
c"PPropriate State authorities."
At this point Mr. Sloan withdrew from the meeting.
Before this meeting there had been sent to the members of the
President of the
e°Pies of a draft of letter to Mr. Knoke, Vice
PeaAir....
11 Reserve Bank of New York, reading as follows:
'
"With reference to your letter of December 11, 1952,
he Board
into
approves the proposal that your Bank enter
nal
Internatio
s eix-months' agreement with the Bank for
Tettlements to make short-term loans to it, against U. S.
the monthly
efeaeurY bills, for the purpose of facilitating
by
Union
Payments
thttlements conducted for the European
agent.
e Bank for International Settlements as its
2145
12/17/52
-9-
"It is understood that outstanding advances under
the agreement would not exceed $50 million at any one
any such advance to be made on or before July 31,
953 on the promissory note of the Bank for International
Settlements, to mature not later than 7 days after the
date thereof, to bear interest for its duration at the
rate in effect at your Bank on the date of such advance
'with respect to advances made to other than member banks,
to be secured by U. S. Treasury bills in face amount not
less than the amount of such advance.
"It is understood that participation in such agreeMent and in such advances made pursuant thereto will be
offered to the other Federal Reserve Benks. It is further
Illaderstood that any such agreement with the Bank for Interlaational Settlements would be cancellable at your option."
The draft of letter was accompanied by a memorandum dated December
15,
952) from Mr. Marget, Director of the Division of International Finance,
reek,
4118 as follows:
"The Federal Reserve Bank of New York is requesting
Board
make
approval of an arrangement under which it would
against
Short-term advances, not to exceed $50 million,
S. Treasury bills to the Bank for International Settlements.
The BIS, which acts as agent for the European Payments Union,
!otIld in turn make advances to the EPU for the purpose of
racilitating its monthly settlement operations.
"Under present conditions the BIS finds it necessary, in
car,,•
to arrange
+1, 4.Jallg out the monthly settlements for the EPU,
the
cover
;"e EFU investments so that sufficient funds to
before
days
,!quired out-payments are available at least two
1e month's in-payments are received. The result has been:
3.
;4
L) a sacrifice in the rate since Treasury bills of short
6turities generally yield a lower rate than those for full
daYs; (2) frequent unemployment for substantial amounts
4e8 where the necessary short-term maturities were not
a"
:
i vailable; and (3) considerable trouble to the New York Bank
attempting to execute orders, often in substantial amounts,
r Purchases of scarce maturities.
"The proposed arrangement, by providing two day advances
'en necessary, is intended to reduce these disadvantages.
7
12/17/52
-10-
"A precedent for advances against Treasury bills to
foreign institutions exists in the case of a loan to Iran
ePProved by the New York Bank on September 9; 1943, under
the provisions of the last paragraph of Section 13 of the
Federal Reserve Act.
"The proposed arrangement with the BIS would have a
duration of six months but would be cancellable at the opof the New York Bank. Each advance would be for no
1"ger than seven days and would bear interest at the rate
in effect on the date of the advance for advances on government securities to borrowers other than member banks
(at Present 2-1/2 per cent per annum). The outstanding
advances would not exceed $0 million at any one time.
Participation in the arrangement would be offered to the
Other Federal Reserve Banks.
"I recommend approval of this proposed arrangement."
Governor Szymczak, in discussing the matter, stated that the
kopn.d. agreement between the New York Bank and the Bank for International
Settlements had been the subject of conversations between Mr. Vest and
141
T• iebout, Assistant General Counsel for the Reserve Bank, and between
tk
"s
of the Division of International Finance and the Reserve Bank,
•
e
tba.t h
-e had reviewed the proposed arrangement, and that he recommended
its
PDroval by the Board.
Mr. Vest said that some question might possibly be raised whether
1°a48 °f the kind proposed were contemplated by the last paragraph of section
13 of the Federal Reserve Act. After noting that the Bank for Interla.t1())35l Settlements was a corporation, he said that although the provision
il• t° the law by the Banking Act of 1933 obviously was intended to permit
t4etellsion of credit to domestic borrowers in a period of depression, a
141/of the type
proposed was technically not beyond the scope of the law.
w17/52
-11-
Vest added that although the paragraph of the Act in question contained
4°13Pecif1c limitations, the Board, of course, had the power under section
14 tn
approve or refuse to approve any proposed loan of this type according
t0 its
Judgment as to the merit of the arrangement.
During a discussion of the proposed agreement, Governor Vardaman
Lt
q that he would vote against its approval, even though it might be
'able to enter into such an agreement, because loans of this type
:
11101q,,
vuslY were not envisaged by the Congress at the time the last para°7e/l)h of section 13 of the Act was included and, in the circumstances,
he fel
t the
Board would be not warranted in approving the advancing of
Nit
flder that authority except to a domestic borrower.
Other members of the Board felt that the Board had the authority
'ae law to approve the agreement if it so desired, that it was
"tole to maintain good relations with the Bank for International Settle'and that it would be of advantage to the New York Reserve Bank in
its 0
1)ercttion of the System Open Market Account to have the Bank for Inter441 Settlements place its orders for Treasury bills with the Reserve
the manner contemplated under the proposed arrangement.
Thereupon, the letter to Mr. Knoke
was approved in the form set forth above,
Governor Vardaman voting "no" for the reasons which he had stated.
At this
point Mr. Vest withdrew from the meeting.
12/17/52
-12-
There was a discussion, at the instance of Governor VardAmnn, of
he
Procedures followed in the preparation of the minutes of the Board for
l'ec°rdtrIg the attendance of members of the Board and for distinguishing
bet"en actions taken at a meeting of the Board and those approved upon
circ
ulation.
At the conclusion of the discussion, the Secretary was requested to
consider what changes in the minutes
would be appropriate in the light of
the views expressed at this meeting.
Governor Robertson referred to the practice followed by the
4EtrA
" in the past, pursuant to the requirement of the seventh paragraph
Of se
etion 21 of the Federal Reserve Act, of addressing a letter each
ree'la to the Director of the Division of Examinations, directing that at
least
°Ile examination of each of the twelve Federal Reserve Banks be made
_
48 the ensuing calendar year. He suggested that the annual letters
'
be cl{
sooritinued and that continuing instructions be issued for examinatio48
°f the Federal Reserve Banks.
In accordance with Governor
Robertson's suggestion, the Board,
by unanimous vote, ordered that, pending further action, the Director of
the Division of Examinations be authorized and directed to make at least
one examination of each of the twelve
Federal Reserve Banks each calendar
year and to institute and conduct such
I
it;ct
12/17/52
-13examinations at such time or times during the year as seemed advisable in his
judgment.
Before this meeting there had been circulated among the members of
tile Board a draft of letter to Mr. Gilbody, Assistant Cashier of the FedReserve Bank of Boston, reading as follows:
"This refers to your letters of December 9, regarding
the Penalties of $283.05 incurred by the B. M. C. Durfee
Trust Company, Fall River, Massachusetts, and of $37.1
Incurred by the First National Bank of Thompsonville,
Connecticut, on deficiencies in their reserves for the
Period ended November 30, 1952.
"It is noted, in the case of the B. M. C. Durfee
Trust company, that the deficiency resulted partly from
!clerical error and partly from a misunderstanding as to
he amount of funds needed on the last business day of the
,leriod to make up the deficiency; that the bank is revisits internal reserve procedure for the purpose of pre1,!nt1ng a repetition of such mistakes; and that it has not
'
51 a reserve deficiency in the past two years.
"In the case of the First National Bank of Thompsonv
it is noted that the deficiency was the result of a
u_qeUnderstanding of one of the employees in figuring the
!
ollected and uncollected balances, and that the bank has
1°t had a reserve deficiency since its organization in
.Une 1949.
"In the above circumstances the Board authorizes your
ellk to waive the assessment of the penalties in these cases."
Governor Robertson raised the question whether the Reserve Banks
11°t be given authority to waive penalties of this nature without
01A8.4._
‹ling the
approval of the Board, and it was stated that, pursuant to
IlIlaerstanding
at the meeting on November 13, 1952, the staff was
Nviev
itlE the outstanding instructions to the Reserve Banks and would
114/3ellt
e recommendation to the Board.
12/17/52
-14Thereupon, the letter was approved
unanimously.
Before this meeting there had been circulated among the members
Of
Board a draft of letter to Mr. Crosse, Assistant Vice President
°tthe
Federal Reserve Bank of New York, reading ac follows:
"Reference is made to your letter of November 25,
1952/ submitting for consideration of the Board a proposal
of the Chemical Bank & Trust Company, New York, New York,
to remove its branch office, now located at Fifth Avenue
and 29th Street in New York City, to a new location at
Pifth Avenue and 34th Street in New York City.
"On the basis of the facts submitted the Board conin your opinion that the proposed change in location
d°es not constitute the establishment of a branch within
he meaning of Section 9 of the Federal Reserve Act, and,
6herefore, the Board's approval is not required."
Approved unanimously.
Governor Mills referred to a memorandum submitted to him under
4te
Of December 15, 1952, by Mr. Young, Director of the Division of ReeEtrell
and Statistics, regarding plans for attendance of the following
tattbe
113 of the staff of the Division at the annual meetings of certain
Drore
esional associations, including the American Economic Association,
the
"loan Statistical Association, the Econometric Society, and the
Azteri
eat Finance Association, to be held later this year in Chicago,
Ralph A. Young, Director
Albert R. Koch, Chief, Banking Section
Homer Jones, Chief, Consumer Credit and
Finances Section
12/17/52
-15Arthur Broida, Economist
Donald Miller, Economist
Sylvia Edelson, Economist
John Frechtling, Economist
John Culbertson, Economist
Governor Mills recommended that the Board approve the attendance
"he Persons listed.
Approved unanimously.
Before this meeting there had been placed in circulation among
te
nielzbers of the Board a draft of letter to Mr. Morrison, Vice President
or
Pederal Reserve Bank of Cleveland, reading as follows:
"In view of the circumstances described in your
letter of November 24, 1952, the Board of Governors
aPProves the payment of $4,394, by the Federal Reserve
Bank of Cleveland to the Federal Reserve Retirement
SYstem for the benefit of Mrs. Elizabeth C. Kemp."
Mr. Morrison's letter of November 24 stated that the Reserve Bank's
ging committee had recommended the contribution to the Retirement System
°11 the
of
benefit of Mrs. Kemp.
Subsequently, Mr. Morrison advised by tele-
December 11 that the Bank's directors at their meeting that morning
1184 aPProved
the contribution.
Governor Robertson raised the question whether the Board should
Drove t,
ie contribution since Mrs. Kemp was leaving the Reserve Bank volunta
.
,1
In a discussion of that point, it was brought out that according
the ci
-4eveland Bank, Mrs. Kemp, although in poor health, would be unable
1° reti
re on disability because of the stringent requirements for proving
12/17/52
total and permanent disability and that the Bank felt the payment of the
.81 t
into the Retirement System would represent a saving because a personnel
140h1em of considerable magnitude would be involved if she continued in her
(1141ft at the Bank.
Thereupon, the letter was
approved unanimously.
At this point all of the members of the staff withdrew and the
toard
ent into executive session.
The Chairman thereafter informed
the Secretary that during the executive
session it was decided that a member of
the Board contemplating travel on official business would not be required to
submit a request for authorization covering the travel and that paragraph eight
of the Board's travel regulations should
be amended accordingly.
The following additional actions were taken by the Board:
Minutes of actions taken by the Board of Governors of the Federal
rve
System on December 16, 1952, were approved unanimously.
Memorandum dated December
4,
1952, from Mr. Marget, Director,
°II of International Finance, recommending the appointment of Jean
e'llet Connors as Clerk in that Divislon, on a temporary indefinite
bae
) With
ke
or
Eirter
basic salary at the rate of $2,830 per annum, effective
the date upon which she enters upon the performance of her duties
h4ving passed the usual physical examination and subject to the
12/17/52
-17-
completion of a satisfactory employment investigation.
Approved unanimously.
Memorandum dated December 12, 1952, from Mr. Young, Director,
sion of Research and Statistics
recommending the appointment
Of
Ante C. Sencindiver as Draftsman in that Division, on a per diem
hezi.
with compensation at the rate of $17 per diem when actually
erc'Yed, taeed uIon an eight-hour working day, effective as of the
okvi
11Pon which she enters upon the performance of her duties after
11
-e5 Passed the usual physical examination and until December 31,
1953.
Approved unanimously.
Memoranda recommending that the basic annual salaries of the
)11c1/4111E employees be increased in the amounts indicated effective
heeciber 21,
1952:
Salary Increase
To
From
Name and Title
Memoranda from Mr. Carpenter,
Secretary of the Board
Helen E. Cook,
Review Classifier
Cora Lee Hatch,
Review Classifier
$3,655
$3,785
3,655
3,785
4,455
4080
Memorandum from Mr. Young, Director,
Division of Research and Statistics
11/20/52
Edwin J. Swindler,
Economist
12/17/52
tate of
Memorandum
Salary Increase
From
To
Name and Title
Memorandum from Mr. Sloan, Director,
Division of Examinations
Nancy L. Sinnott,
Secretary
11/13/52
$3,910
$4,035
Memorandum from Mr. Leonard, Director,
Division of Bank Operations
11/18/52
John J. Hart,
Technical Assistant
Frank J. Callahan,
Clerk
Alice C. Fry,
Clerk-Typist
Eleanor I. Klein,
Statistical Clerk
6,140
61340
4,035
4,160
3,255
3,335
3,255
3,335
Memorandum from Mr. Horbett, Assistant Director,
Division of Bank Operations
12/12/52
Mary Frances Gifford,
Statistical Clerk
2,950
3,175
Memorandum from Mr. Bethea, Director,
Division of Administrative Services
11/20/52
Elsie N. Carrick,
Assistant Supervisor,
Stenographic Section
Jean Startup,
Stenographer
Wesley B. Collins,
Mail Clerk
Henry A. Bates,
Messenger
3,785
3,910
3,335
3,415
3,150
3,230
2,632
2,712
Memorandum from Mr. Kelleher, Assistant Director,
Division of Administrative Services
12/10/52
Thomas V. Kopfman,
Photographer (Offset)
Approved unanimously.
3,415
3,795
12/17/52
-19-
Letter to Mr. Latham, Vice President, Federal Reserve Bank of
13013t011) reading as follows:
"In accordance with the request contained in your
letter of December 3, 1952, the Board approves the designation of the following individuals as special assistant
examiners for the Federal Reserve Bank of Boston for the
8Pecific purpose of rendering assistance in the examineof Depositors Trust Company, Augusta, Maine; The
Merrill Trust Company, Bangor, Maine; The HartfordTrust Company, Hartford, Connecticut; IndusTrust Company, Providence, Rhode Island; and Rhode
"
land Hospital Trust Company) Providence, Rhode Island.
Walter W. Unger
"James F. Broderick) Jr.
Thomas G. Maguire
Siegfried Risch
William Munday
Herbert G. Josselyn
"Appropriate notations have been made in our records
Of the names to be deleted from the list of special assist-
1t examiners."
Approved unanimously.
Letter to Mr. Patterson, Vice President and General Counsel,
Fetier
Reserve Bank of Atlanta, reading as follows:
"Reference is made to your letter of November 21, 1952,
'which you indicate that it is deemed essential, under your
BieUritY Piles Program as planned, to designate someone at the
v,I1Mingham Branch to act as Assistant Federal Reserve Agent in
:
1 1 event the Federal Reserve Agent and the Assistant Federal
le:erve Agent at the Head Office are unable to act. From your
ter, it appears that such appointment is based on your presa'
procedure under which the Federal Reserve Agent's RepresentpA!" at a Branch acts only on the instructions of the Assistant
'1-eral Reserve Agent in Atlanta.
to 4:While an appointment of this nature would not conform
to he 1.11311ai practice, the Board of Governors will be pleased
Re consider the appointment of an additional Assistant Federal
"I've Agent to be located at the Birmingham Branch."
Approved unanimously.
12/17/52
Letter to Mr. Shepard, Chairman and Federal Reserve Agent, Federal
Ileserve Bank of Minneapolis, reading as follows:
"In accordance with the request contained in your
lettere
of December 2, 1952, the Board of Governors apProves the appointment of Christopher E. Bjork as Alternate Assistant Federal Reserve Agent at his present salary
Of $5,700 per annum, to succeed Mr. John Johnson.
"This approval is given with the understanding that
Mr. Bjork will be placed upon the Federal Reserve Agent's
Pay roll and will be solely responsible to him or, during
a vacancy in the office of the Agent, to the Assistant Federal Reserve Agent, and to the Board of Governors, for the
ProPer performance of his duties. When not engaged in the
Performance of his duties as Alternate Assistant Federal
Ileaerve Agent he may, with the approval of the Federal Reserve Agent, or during a vacancy in the office of the Federal Reserve Agent, of the Assistant Federal Reserve Agent,
and the President, perform such work for the Bank as will
,
1,1,0t be inconsistent with his duties as Alternate Assistant
xederal Reserve Agent.
"Mr. Bjork should execute the usual oath of office which
''uould be forwarded to the Board of Governors together with
adVice of the effective date of his appointment."
Approved unanimously.
Letter to Mr. Kimball, Vice President, Federal Reserve Bank of
11141
reading as follows:
"Reference is made to your letter of November 2), 1952,
14hieh you advised that it appears expenses for your Eead
aM Buffalo Branch will exceed the 1952 budget esti414tee in the amounts indicated.
are "The Board accepts the revised figures as submitted
aPPropriate notations are being made In the Board's
'ecords.”
i
Approved unanimously.
12/17/52
Letter to the Board of Directors, The Richland Trust Company,
Mansfield, Ohio, reading as follows:
"Pursuant to your request submitted through the
Federal Reserve Bank of Cleveland, the Board of Gover,
rx3rs approves the establishment and operation of a
oranch in Butler, Ohio, by The Richland Trust Company
1"revided that such branch is established within six
months after the date of this letter.
"It is understood that it is your intention to
!hcrease the capital of the trust company by not less
ham $100,000 through the sale of additional stock with:
:
n one year. The Board feels that this increase in capita] funds in very desirable."
Approved unanimously, for
transmittal through the Federal
Reserve Bank of Cleveland.
Letter to the Board of Directors, Somerset Trust Company, Somerset,
Ylvania, reading as follows:
e
"Pursuant to a request submitted through the Fedai Reserve Bank of Cleveland, the Board of Governors
,
f the Federal Reserve System hereby gives its written
eent under the provisions of Section 18(c) of the
,ederal Deposit Insurance Act to the absorption by the
;?merset Trust Company, Somerset, Pennsylvania, of The
_;r8t National Bank of Somerset, Somerset, Pennsylvania,
:41thout an
increase in your surplus to an amount which
y,
1. -1 equal the aggregate surplus of the two banks in1,(417ed in the proposed absorption, provided that prior
State
E:intal approval is obtained from the appropriate
absorption
lerities, and provided further that the
.
a effected substantially in accordance with the plan
'8
submitted."
J
r
Approved unanimously, for
transmittal through the Federal
Reserve Bank of Cleveland, with
a letter to the Reserve Bank containing the following paragraph:
21SS
12/17/52
-22-
"It is noted from the last report of examination of
the Somerset Trust Company, that it held 48 shares of stock
Of The First National Bank. It is assumed that arrangements
"will be made for disposition of this stock in order to comply
With the applicable provisions of law."
Letter to Mr. Armistead, Vice President, Federal Reserve Bank of
Rielnactd, reading as follows:
"In view of the reconmendation contained in your letter
°f November 28, 1952, the Board of Governors extends until
October 30, 1953, the time within which the Wachovia Bank
ad Trust Company, Winston-Salem, North Carolina, may estableh a branch at the intersection of Patterson and Glenn
venues, Winston-Salem, North Carolina."
'
V
Approved unanimously.
Letter to the Board of Directors, Union Bank of Michigan, Grand
R4Aicl
8, Michigan, reading as follows:
"Pursuant to your request submitted through the FedReserve Bank of Chicago, the Board of Governors gives
a Prior consent to the Union Bank of Michigan, Grand Rapids,
h Vligan, to retire $100,000 five per cent preferred stock
be'd by local interests, provided the common stock of the
111k is increased from $500,000 to $600,000 by declaration
4
8. 20 per cent dividend payable in common stock, and fur1 1* Provided that the directors forego the payment of the
:
118'1 $75,000 cash dividend in January 1953."
g
Approved unanimously, for
transmittal through the Federal
Reserve Bank of Chicago.
Letter to Mr. Gilbert, President, Federal Reserve Bank of Dallas,
re4sai
as follows:
v1
"Your letter of November 25, 1952, regarding the problem
determining the adequacy or inadequacy of bank capital has
59
12/17/52
-23-
"been read with great interest. It certainly would be
desirable, as you indicate, if the areas of agreement
could be enlarged on this difficult question on which
there are so many different points of view.
"The Board also feels that it is important to avoid
Placing undue emphasis upon particular aspects of capital
adequacy especially those which happen to be readily susceptible to simple mathematical presentation and computation. For example, capital ratios, as such, are valuable
fOX' screening purposes only. They are not determinants,
in anY sense of the word, of the adequacy or inadequacy
the capital structure of a given institution. It would
Ds Unfortunate, indeed, if the public were to attempt to
classify banks in accordance with any arithmetical forTula because no such formula can give proper weight either
0 the quality of management or to the quality of assets.
"For several months the Board has been conducting,
thr
, °ugh its staff, a searching analysis of various apProaches to the bank capital problem, with the view of
..aining more light on the subject. This study soon
4.11 have progressed to the point where at least tenta:
ive conclusions with supporting analytical material can
us submitted to the Federal Reserve Banks for their consi
deration and comments.
"The Board hopes that the composite judgment and exrisnce of the Federal Reserve System, when brought to
b
!
w ar on the problem through this preliminary study together
,'-th such further consideration as may be desirable, may
vl'ovide the basis for an improved screening procedure which
,e° 11 be used by the Board, chiefly for internal operating
Poses, and which some of the Reserve ThInks might wish
e, adopt in SOMB of its aspects for their own internal
'Psrations.
"The Board is convinced that, although mathematical
e aods of analyzing bank capital can be improved, it is
.
oesible to develop any formula which eliminates the need
4°r the exercise of sound judgment in determining the ade118"°Y of capital of any given bank. For this reason, and
rjeause of the danger of any formula in this field being
t 13Under6tood or inflexibly applied, the Board is inclined
'
i° doubt the advisability of conducting a study of the sub• et with commercial banks or members of the general public.
2
t
2160
12/17/52
"However, it is hoped that the preliminary study currently
Underway at the Board may help to give a clearer picture
Of both the possibilities and the limitations inherent in
the Problem and in various approaches to its solution.
"The Board wishes to express its appreciation of your
interest and suggestions in this matter, and it hopes that
further progress can soon be made toward clarifying some
°f the phases of this difficult problem."
Approved unanimously.
Letter to the Comptroller of the Currency, Treasury Department,
WEle hi
4tc11, D. C., reading as follows:
is made to your letter of October 15, 1952,
"Reference
.
enci
,osi-a photostatic copy of an application to organize
8: national bank at Pompano Beach, Florida, under the title
First National Bank of Pompano Beach, and requesting a
:ecommendation as to whether or not the application should
(
;
be
ePProved.
"A special representative of the Federal Reserve Bank
°f Atlanta has made a personal investigation of this appliti°n. In the light of the information contained in this
?Pert and after careful consideration of the factors set
Itorth in your letter, the Board of Governors has concluded
t t although the earnings prospects of this proposed instiilltion are not completely satisfactory, and although there
fs at least a doubt as to whether the needs of the community
r additional banking facilities are sufficiently great to
rrant the establishment of a new bank, it recommends approval
Ihe application in view of the desirability of providing
ie7ing competition in this community. In other words, the
v-111 recognizes that the facts in this situation present a
:
thrY close question which it has resolved on the basis of
e competitive factor in making its recommendation to you.
"The Board desires that you be informed that it or its
4
21
-25tePr sentatives
ll be glad to discuss any aspects of this
case with you or representatives of your office, if you so
dtsire."
Approved unanimously, with
a copy to the Federal Reserve
Bank of Atlanta.
@FedFRASER