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Minutes for To: December 29, 1959 Members of the Board From: Office of the Secretary Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement 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. Chm. Martin Gov. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Minutes of the Board of Governors of the Federal Reserve System on Ttlesday, December 29, 1959. PRESENT: Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Balderston, Vice Chairman Szymczak Mills Robertson Shepardson Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Discount rates. Sherman, Secretary Thomas, Economic Adviser to the Board Molony, Assistant to the Board Fauver, Assistant to the Board Hackley, General Counsel Farrell, Director, Division of Bank Operations Solomon, Director, Division of Examinations Bass, Assistant Controller Kiley, Assistant Director, Division of Bank Operations Nelson, Assistant Director, Division of Examinations Landry, Assistant to the Secretary The establishment without change by the Federal Ileeerve Banks of Boston and Atlanta on December 28, 1959, of the rates 04 di scounts and advances in their existing schedules was approved 1111anim0usly, with the understanding that appropriate advice would be "IA to those Banks. Items circulated or distributed to the Board. &tar " The following which had been circulated or distributed to the Board and copies are attached to these minutes under the respective item nutbers Qated, were approved unanimously: Item No. tter to the Long Island Trust Company, Garden City, e tjork, approving the establishment of a branch in village of Freeport. 1 12/29/59 -2Item No. Letter to Marshall and Ilsley Bank, Milwaukee, Wisconsin, approving an extension of time to establish a branch on North Market Street. 2 Letter to the American Trust Company, San Francisco, ; ;alirornia, approving an extension of time to establish a branch in Morgan Hill. 3 Letter to the Lafayette Savings Bank, Lafayette, 4 Indiana, waiving the requirement of six months' !otice of withdrawal from membership in the Ysderal Reserve System. Letter to the Presidents of all Federal Reserve ,lanks advising of the deletion from the Loose':'est Service of a letter relating to the -tsauance of Federal Reserve exchange drafts. 5 Letter to the Chairman of the Committee on ersonnel of the Conference of Presidents vising of the designation of Edwin J. °1111son to serve as Associate of the SubeoMmittee on Personnel. 6 r Me morandum dated December 28, 1959, from the f ice Of the Controller regarding assessment 14)n the Federal Reserve Banks for six months , veginning January 1, 1960. 7 Holding Company Affiliate Status of The Polmoor Corp. (Item No. 8). Ther e had been circulated to the members of the Board a memorandum from the Di -vision of Examinations, dated December 18, 1959, recommending telr°rably on a request by The Polmoor Corporation, St. Louis, Missouri, that it be determined not to be a holding company affiliate except for the PlIrPOSCS of section 23A of the Federal Reserve Act. °r tk The issuance requested determination was deemed to fall within the policy of the t oard to make favorable determinations in all "one-bank" cases, 12/29/59 -3- except those involving extraordinary circumstances. The principal asset Of Polmoor consisted of 1,090-2/3 shares or 54.5 per cent of Arlington Heights National Bank, Arlington Heights, Illinois. Its only other ovnership of bank stock vas tvo shares, amounting to .33 of 1 per cent, °f Pine Lavn Bank and Trust Company, Pine Lawn, Missouri. It appeared that the purchase of the shares of Arlington by Polmoor was for investment purposes and that the business of the subject Corporation was that °I* constructing and selling dwellings. There was no evidence of any financing of Polmoorts real estate operations by Arlington in either the financial statements of Polmoor or the examination reports of Allington, thus indicating the existence of no circumstances of an Unusual nature. Governor Robertson referred to the decision reached by the toto,A on November 4, 19541 to make favorable determinations under section. 341 of the Banking Act of 1935 as a normal matter in all 11^ une-bank" cases, like the one under consideration, but with the 141derst8nding that a determination could be declined in any extra°I'clinarY case in which such action would seem necessary. He said that, "e vould approve the Polmoor application only because this was the 11, °ard t8 policy in "one-bank" cases, but that he disagreed with his P°1icY. He still believed, as he had stated at the November 1954 -ng referred to, that as a general rule the Board should decline to Inake favorable determinations in all "one-bank" cases unless the circumstalleee were clearly such as to make a favorable determination appropriate. 12/29/59 -4- Unanimous approval was then given to a letter to The Polmoor Corp., St. Louis, Missouri, determining that it is not a holding company affiliate except for the purposes of section 23A of the Federal Reserve Act and that it does not need a voting permit from the Board of Governors in. order to vote the bank stock that it owns. This letter is attached as 8 Item No Messrs. Bass and Nelson withdrew from the meeting at this point. Press release on 1959 income and expenses of the Federal Reserve Banks There had been distributed under date of December 28, 1959, a draft of statement for the press relating to year-end income and expenses °f the Federal Reserve Banks, with the indication that the dollar figures shown were rough estimates to be revised before release. Following a discussion, the staff was requested to prepare another draft of the statement for consideration by the Board tomorrow. At this point all of the members of the staff except Messrs. 8herma1 and Fauver withdrew from the meeting. Appointment of director. Governor Balderston reported that Chairman Perrin of the Federal Reserve Bank of Minneapolis had called him on the telephone to report that Mr. Robert S. MacFarlane was unable t° accept appointment as a Class C director of the Minneapolis Bank. T (Mr. uohn Cowles earlier had indicated that he would be unable to accept.) Governor Balderston said that Mr. Perrin now suggested the 114me of John M. Musser, Vice President, Weyerhauser Lumber Company, Minnesota, as a possible appointee. After discussion, it -5- 12/29/59 unanimously that the usual steps should be taken to ascertain 'Whether Mr. Musser was eligible and would accept appointment as Class C director of the Federal Reserve Bank of Minneapolis if tendered and that, if he would accept, the appointment should be made. Mr. Fauver then withdrew from the meeting. Request from President Allen. Governor Szymczak stated that he had received a telephone call from President Allen of the Federal Reserve Bank of Chicago who expressed the view that it might be desirable for him to inform the President of the Federal Advisory Council, Mr. Homer J. Livingston, of the Board's decision to pay to the Treasury 100 per cent Of Reserve Bank earnings after expenses and after payment of dividends to member banks, on the grounds that Mr. Livingston might hear of this decision otherwise through his conversations with Treasury officials. The matter was discussed, at the conclusion of which it was understood that President Allen would be informed that the Board felt it undesirable to aPPrise Mr. Livingston of the Board's decision prior to its public a4nouncement. Thereupon the meeting adjourned. Secretary's Note: Governor Shepardson today approved on behalf of the Board the arrangement by Mr. Fauver, Assistant to the Board, for luncheon visits by bankers groups and others to the Board's offices during the that period January 21 - April 5, 1960, it being noted luncheon dates were not yet firm for two of these groups. , Secr-etkry et, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM a WASHINGTON 25. D. C. 0 Item No. 1 12/29/59 ADORES,. OFFICIAL CORRE•PONOENCE TO THE 1110ARD December 29,1959. . Board of Directors, Long Island Trust Company, Garden City, New York. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of New York, the Board of Governors approves the establishment of a branch on the north side of Atlantic Avenue, 115 feet west of the intersection of Atlantic Avenue and South Grave Street, incorporated Village of Freeport, Town of Hempstead, Nassau County, New York, by Long Island Trust Company. This approval is given provided the branch is established within six months from the date of this letter. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. r BOARD OF GOVERNORS 004tt tt 1101, OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 2 12/29/59 ADDRESS OFFICIAL CORPRItSPONOICNCE TO THIC •OARO ,kinst t44*** December 29, Board of Directors, Marshall and Ilsley Bank, Milwaukee, Wisconsin. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Chicago, the Board of Governors of the Federal Reserve System extends until May 28, 1960, the time within which Marshall and Ilsley Bank may establish a branch on North Market Street between Mason and Wells Streets, Milwaukee, Wisconsin, under the authorization contained in the Board's letter dated July 29, 1959. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. 1959. BOARD OF GOVERNORS OF THE Item No. 3 FEDERAL RESERVE SYSTEM 12/29/59 WASHINGTON 25, 0. C. ADORES! OffICIAL COMRCEPONOENCE TO THE 11110ARO December 29, 1959. Board of Directors, American Trust Company, San Francisco, California. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of San Francisco, the Board of Governors extends to September 1, 1960, the time within Which, American Trust Company may establish a branch in Morgan Hill, California. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, ,Assistant Secretary. BOARD OF GOVERNORS 440***4 OF THE 040y% Item No. 4 FEDERAL RESERVE SYSTEM 12/29/59 WASHINGTON 25. D. C. ADORICIIII arriciAL CORRICIIPONDENCE TO THIC !BOARD December 29, 1959. Board of Directors, Lafayette Savings Bank, Lafayette, Indiana. Gentlemen', has forwarded The Federal Reserve Bank of Chicago the to the Board of Governors your letter, together with fying signi 1.959, accompanying resolution dated November 9, al your intention to withdraw from membership in the Feder s' six month Reserve System and requesting waiver of the . notice of such withdrawal Board of In accordance with your request, the s' notice of Governors waives the requirement of six month al Reserve Bank of withdrawal. Upon surrender to. the Feder issued to your Chicago of the Federal Reserve Bank stock led and appropriate institution, such stock will be cance sions of Section refund will be made thereon. Under the provi n may actutio 10(c) of the Board's Regulation H your insti within time any complish termination of its membership at withto tion eight months from the date the notice of inten draw from membership was given. e of membership It is requested that the certificat be returned to the Federal Reserve Bank of Chicago. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 5 12/29/59 ADDRESS OFFICIAL CORRESPONDENCE TO THE HOARD December 29, 1959. Dear Sir: Among the items of information reported to the Board after the meeting of the Conference of Presidents held on : aune 15, 1959, was a statement that the Conference had approved elimination of Federal Reserve exchange drafts, such recoml !endation having been made to the Presidents' Conference by its ' Ilb committee on Collections in a report dated May 19, 1959. The Board understands that since that time all Federal erve Banks have notified their member banks that Federal 4Les" rve exchange drafts are no longer being issued. Accordingly, 'fle Board's letter of January 23, 1948, S-1013, containing raj instructions on this subject is obsolete and will be delet eted as Item No. 4462 of the Federal Reserve Loose Leaf Service. b Very truly yours, 1 dir (-3 --' Merritt Secre OF ALL FEDERAL RESERVE VMS an, BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. C 12/29/59 WASHINGTON 25, D. C. 4 0 ADORE011 orriciAL CORRESPOND TO THE BOARD December 291 1959. Mr. Malcolm Bryan, Chairman, Committee on Personnel, Conference of Presidents, c/o Federal Reserve Bank of Atlanta, Atlanta 3, Georgia. Dear Mr. Bryan: • Pursuant to the discussion at the joint meeting of the Board and the Presidents on December 151 1959, the Board has designated Edwin J. Johnson, Director of the Division of Personnel yiministration, to serve as Associate of the Subcommittee on eersonnel of the Conference of Presidents. Very truly yours, (Signed) Merritt Shermon Merritt Sherman, Secretary. cc:Mr. Dunne NOE Item No. 7 12/29/59 BOARD OF GOVERNORS OF THE O Rice FEDERAL RESERVE SYSTEM Correspondence Dee December 28, 1959. Subject: Assessment for six months rto beginning January 1, 19600 ItIolimendation It is recommended that the Board's action of December 17, approving an assessment upon the Federal Reserve Banks of two hundred thirty-two thousandths of one per cent (.00232) of the Banks' paid-in capital and surplus to cover estimated Board expenses for the first half of 1960, be amended so as to provide for an assessment rate of two hundred sixty-five thousandths of one per cent (.00265). 221ment The assessment of two hundred thirty-two thousandths of one per cent (.00232) which the Board approved on December 17 was based upon estimated capital and surplus of the Federal Reserve Banks of ::,)1,330,222,000, 4 as of December 31, 1959. Action taken by the Board on December 18, which reduced surplus of the Federal Reserve Banks to two-hundred per cent of Paid-in capital, reduces the base upon which the assessment is computed to $1,164,756,000. It is, therefore, necessary to increase the assessment rate to two hundred sixty-five thousandths of one per cent (.00265) in order to produce the necessary funds. The revised rate will produce a total of $3,086,603, as compared to the ,086,115 which the previously approved rate would have amounted toe Approximately $3,089,500 is needed for estimated expenses of the Board for the first six months of 1960. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 8 12/29/59 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE SOARD December 29, 1959. The Polmoor Corp., St, Louis, Missouri. Ge ntlemen: This refers to the application of The Polmoor Corp. for a Permit to vote the stock which it owns of Arlington Heights National Ba nk, Arlington Heights, Illinois. This application was enclosed nth a letter of November 26, 1958 from Mr. J. T. Dodds to the Federal Iteserve Bank of St. Louis. The Board understands that The Polmoor Corp. was organized Pllmarily for the purpose of dealing in real estate with broad corporate in that field and power to buy, sell, hold, or otherwise deal in the stock of any other corporation; that The Polmoor Corp. is presently 11111 the business of constructing and selling dwellings and the general ejestment in corporate stocks; that The Polmoor Corp. owns over 50 per f . of the outstanding shares of stock of Arlington Heights National 104 Ba"4 and less than 1 per cent of the outstanding shares of stock of Lawn Bank and Trust Company, Pine Lawn, Missouri; and that The Lizoor Corp. does not, directly or indirectly, awn or control any of any other banking institution and does not manage or control -Ny banking institution other than Arlington Heights National Bank. In view of these facts, the Board has determined that The ?°1moo 1101, r Corp. is not engaged, directly or indirectly, as a business in as, 111g the stock of, or managing or controlling, banks, banking vciations, savings banks, or trust companies within the meaning of : th u foil owing provisions of section 2(c) of the Banking Act of 1933: Notwithstanding the foregoitig, the term 'holding company affiliate' shall not include (except for the purpose Of section 23A of the Federal Reserve Act, as amended) any corporation all of the stock of which is owned by the United States, or any organization which is determined by the Board . The Polmoor Corp, of Governors of the Federal Reserve System not to be engaged, g the stock of, directly or indirectly, as a business in holdin ations, associ g bankin or managing or controlling, banks, savings banks, or trust companies.* to be a holeing Accordingly, The Polmoor Corp. is not deemed of the Federal 23k n sectio of !ftloany affiliate except for the purposes of Governors Board the from permit meserve Act and does not need a voting owns. in order to vote the bank stock which it differ from those If, however, the facts should at any time set out above to an extent which would indicate that The Polmoor Corp, !light be deemed to be so engaged, this matter should again be submitted ‘g) the Board. The Board reserves the right to rescind this determination tuld make a further 'determination of this matter at any time on the basis of the then existing facts. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary.
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