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Minutes for
To:
February 15, 1960.
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
th respect to any of the entries in this set of
Tiflutes in the record of policy actions required to
ue maintained pursuant to section 10 of the Federal
Rrve
ese
Act.
Should you have any question with regard to
the minutes, it will be appreciated if you will advise
he Secretary's Office. Otherwise, please initial below.
)
,
t rou were present at the meeting, your initials will
41Qicate approval of the minutes. If you were not present,
t n
!
IIt.
itials will indicate only that you have seen the
I
Z
Chin. 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
Monday)
February 15, 1960.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
The Board met in the Board Room at 10:00 a.m.
Martin, Chairman
Balderston, Vice Chairman
Szymczak
Mills
Robertson
Shepardson
King
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Discount rates.
Sherman, Secretary
Hackley, General Counsel
Solomon, Director, Division of Examinations
Masters, Associate Director, Division of
Examinations
Hexter, Assistant General Counsel
Furth, Associate Adviser, Division of International Finance
Hostrup, Assistant Director, Division of
Examinations
Nelson, Assistant Director, Division of
Examinations
Goodman, Assistant Director, Division of
Examinations
Landry, Assistant to the Secretary
Hooff, Assistant Counsel
Young, Assistant Counsel
The establishment without change by the Federal
erve
Bank of Minneapolis on February 12, 1960, of the rates on dise°141t8 and
advances in its existing schedule was approved unanimously,
ltith
(-he u
nderstanding that appropriate advice would be sent to that
138.11k.
Items circulated to the Board. The following items, which had
been c
irculated to the Board and copies of which are attached to these
r14411tes
under the respective item numbers indicated, were approved unani-
tile4181Y:
2/15/60
-2Item No.
tetter to
the International Banking Corporation,
Nev York City, grantingconsent to the purchase and
holdina 1, The First National City Bank of New
'South Africa) Limited of stock of Citibank
Nominees (Proprietary) Limited.
ili'etter to
the Chemical Bank New York Trust Company,
York City, approving the relocation of a branch
Ir°m 103-02 Northern Boulevard, Borough of Queens,
co
Northern Boulevard and 93rd Street.
1
2
Letter to the
Green Lake State Bank, Green Lake, Wisc°118in, approving an investment in bank premises.
3
Letter to the
Iowa State Bank, Hull, Iowa, granting
its
request for permission to exercise fiduciary powers.
4
Letter to the
Comptroller of the Currency recommending
ravo
rablY With respect to an application of The Bank of
-Lumneito
rist, --Le, Annandale, Virginia, to convert into a
l banking association.
5
tette,. 4.
6
the Presidents of all Federal Reserve Banks
peZsmitting revised material to be included in the
Reserve Loose-Leaf Service concerning the selecb_
-"
and
i5ailks
approval of examiners of the Federal Reserve
•
tette
Yo,st_ r to the Ogdensburg Trust Company, Ogdensburg, New
a4a, r
egarding the "days of grace" allowed by the recent
IntildIllent to section 3(d) of Regulation Q, Payment of
erest
on Deposits.
International Development Association (Item No. 8).
7
There had
bee4
circulated to the members of the Board a draft letter to the Bureau
°r the
—Auget stating that the Board favored participation of the United
States
in the International Development Association and interposed no
clbjeetion to
a draft bill providing for such participation.
This letter
2/15/60
-3-.
rioted that the only provision of the bill directly affecting the Federal
Reserve System was section 6, providing that Federal Reserve Banks upon
l equest act as depositories or fiscal agents for the Association.
'
the proposed
Chairman Martin commented that the language in
letter to the effect that "the Board of Governors favors participation
°D the United States in the International Development Association" was
Possibly too strong a statement.
His preference would be to indicate
°IllY that the Board had no objection to such participation.
Agreement was expressed with this view.
Accordingly, a letter
ill the form of attached Item No. 8, was approved.
Mr. Furth then withdrew from the meeting.
permission to
International Banking Corporation--request for
establish an agency.
date
There had been circulated to the Board under
ot Fe
Examinations
bruary 4, 1960, a memorandum from the Division of
Banking Corporal'ecoramending denial of the request of the International
tion „
new
A ew York City, for permission to establish an agency in the
''
Pan A
tional Airport.
4‘41erican Airways Terminal Building at New York Interna
A,
response to the
letter to International Banking Corporation in
Iltlest contained in its letter of September 10, 1959, would indicate that
tion and
denial was on the basis that International Banking Corpora
its
three
parent, The First National City Bank of New York, already had
that other
Ilulches and one agency at the New York International Airport,
c0/1145_
maintained
"'"Ilies (American Express Company and Perera Company, Inc.)
r3.4,
.)(,'
2/15/60
rive agencies performing services at the Airport generally similar to
those contemplated by the proposed agency of International Banking
e°rPoration, and that no other United States banking institution now
had banking
facilities at the Airport.
Governor Balderston said that he was not sure that anything
/gl°kild be
accomplished by denial of this application.
On the contrary,
811ch action might amount to denying a needed service for visitors and
travel_
I's at New York's International Airport. He suggested that the
'
Teeniest be
turned back to the New York Federal Reserve Bank for further
Investigation to see whether some other New York bank desired to put
°Itrice in the proposed location at International Airport, and also
t° inquire whether the Reserve Bank believed International Banking
Corpo
ration was attempting to obtain a monopoly at the Airport. If
the
latter vas
the case, that would be one thing. If, however, denial
voula
merely be
making it difficult for travelers to get accommodation
at lion
-wanking hours, which was what seemed to be involved, he thought
the to
"cl would not be justified in denying the application.
Mr. Goodman reviewed the history of banking facilities at Inter11Stion,,
Airport since 1952 when the Board approved establishment of
s.4 age
ricY of International Banking Corporation in the temporary terminal
g, at which time National City Bank was operating a small branch
°Pen du
ring regular banking hours. He then noted that the New York
Resc,rv
e 33ank recommended approval of the application now before the
2/15go
Board
-5-
on the grounds that there appeared to be a definite need at the
Airport for the services which the applicant would supply, particularly
it view of
the tremendous expansion that has occurred and was expected
t0 continue.
The proposed agency would be the third which the applicant
1111°41(1 operate at the New York International Airport and, although one
of these 'would be closed with the closing of the temporary terminal
bIlilding in the near future, the Reserve Bank would prefer to see this
e3cPsnding area served by competitive banking interests and would favor
841 41/Plication from a competing banking facility should one be filed.
G°0dman then commented on reported indications that First National
eitY Bank and
its subsidiary, International Banking Corporation
were
1)referred by
Port of New York Authority for the reason that they had
beall
ling to provide service at the Airport when other banks were
n°t, even
though their agencies operated at little or no profit except
1'4°1' sclvertising value.
Mr. Goodman also noted that the Reserve Bank
believed that
the services to be rendered by the proposed agency would
eerire
8. Public interest, and it took the position that a lack of competilye banking interests should not of itself be cause for prohibiting
:
.intert
atic)nal Banking Corporation from establishing a third agency,
Darti
eillarlY since the number of its agencies after the closing of the
telvo
ry
terminal building would revert to two, the number that now
'xist
2/15/60
-6Mr. OConnell, Assistant General Counsel, entered the meeting
at this
point.
Governor Mills noted that the Federal Reserve Bank of New York
/."°mmended approval of the application.
However, his leanings were
stron I
-g-4 in the direction of the recommendation of the Division of
Exe2tinations on the grounds that the operation by First National City
11941k of three branches and by International Banking Corporation, its
apriliate, of two agencies at the International Airport vas a heavy
concentration
in the area.
He drew a parallel between this situation
4na the care
exercised in alternating franchises to purveyors of certain
6ervices at regular intervals along some State turnpikes in an effort
to
4.4-evant a monopoly in the rendering of such services. He recognized
that ,
mhe banking
facilities of First National City and International
rig Corporation at the International Airport were not great money141/tars
and that the additional agency would be a convenience and render
a
"
-Lee, but this must be offset against granting an exclusive privilege. Re
doubted that much additional information would be gained
"°ut the
competitive situation from the New York Reserve Bank, and he
8liggested that
the current views of Mr. G. Russell Clark, Superintendent
Or
listks for
the State of New *York, who had approved the application in
C/ctober
1959,be requested.
G overnor
believ
Robertson agreed with this suggestion, although he
"I that the matter should be returned to the New York Reserve Bank
2/15/60
-7-
in a4Y event, directing attention to the aspects of the case causing
the Board
to doubt that the application of International Banking
Corporation should be approved and asking that the bank get in touch
with the State banking authorities.
Unanimous approval was then given to the suggestion that action
°11 the
application be deferred pending receipt of additional information
as t° the views of the New York Reserve Bank and of the Superintendent
c)f Batike
for the State of New York.
Executive officers for purposes of Regulation O.
There had been
circulated to the Board under date of February 8, 1960, a memorandum from
the Legal Division concerning the status under the Board's Regulation
0,
LOario 4_
‘,0 Executive Officers of Member Banks, of non-officer personnel
13°88easing lending authority at member banks.
4 letter
The memorandum referred to
from the Philadelphia Reserve Bank dated January 20, 1960,
ecillesting a ruling as to whether some 30 persons employed by Girard Trust
C°1141 Exchange Bank, Philadelphia, Pennsylvania, who had no officer titles
1311t
110 were authorized to make loans in limited amounts, should be classifieci
as "executive officers" for purposes of Regulation O. From the inforZatio
4 submitted, it appeared that branch managers and assistant branch
Mealage
I s of Girard had authority to make unsecured commercial loans up to
'
a
Of $5,000 and secured commercial loans up to a limit of $10,000.
41so
' -La the consumer credit department of the bank, employees listed as
sUpe-_.
"Isors or assistant supervisors in various units were authorized
2/15/60
-8-
to make
unsecured personal loans up to a limit of $5,000, and secured
Person...,
0.1. loans up to a limit of $10,000.
No detailed description of the
(ittties of the employees other than those making loans had been submitted,
41t11°11gh it might well be that other duties of a branch manager or even
an
Of
branch manager involved participation in the operations
the bank.
The memorandum also pointed out that, in previous inter-
Pretatio s
n involving the question whether an individual was an executive officer, the fact that he had. authority to lend bank funds had
been given weight by the Board and in every such case the Board had
ccnsidered him to be an executive officer whether or not he had the
title
Of an officer. However, in these previous cases other duties
Of a
- Managerial nature had been involved, such as determination of bank
or, supervision of personnel, and so on.
A decision that persons
in c
°nsumer credit departments of banks who were authorized to make
loan- not exceeding a few hundred dollars were "executive officers"
VoU1A
- cause many bank employees to become subject to the provisions of
liegulation 0,
even though they were not ordinarily considered as a part
or the bankis
operating management. The conclusion of the Legal Divi41'3/1,
however, was that an employee of a bank with authority to make
1044s in any
amount was participating to a degree in the operating
t44114ftent.
In accordance with this view, there was attached to the
1111410randum for the Board's consideration a letter to the Philadelphia
2/15/60
-9-
Reserve Bank stating that the employees in question were executive officers for the
purposes of Regulation 0.
Governor Mills observed that the 13osition taken by the Legal
nil/1810n on this question possibly overlooked
certain changes in banking
114 the Past 10
or 15 years, especially in the field of consumer credit.
Although he
did not know where to draw the line between bank employees
vith
managerial responsibilities and those lacking it, he suggested
that
before approving a letter of the type proposed, it might be
well
to
obtain the
observations of the Federal Reserve Banks on this question,
ZilaCe
they would be able to draw on the
thinking of the larger banks
4.
their
Districts. He added that a large number of bank personnel
volikta
become subject to Regulation 0, were the ruling proposed in the
draftletter to be made.
In response
to a question fm in Governor Szymczak regarding the
difterence
between the proposed letter and earlier rulings, Mr. Hackley
41LIed at
tention to the wording in the draft letter to the Philadelphia
leserve
Bank which would specify that branch managers, assistant branch
.494118"sc,
redlit
supervisors
or assistant supervisors in the bank's consumer
department were considered to be participants in the
operating
41N.etentn of the
He said that the Board had ruled in individual
bank
flEles
before that branch managers and assistant managers were executive
°rficers for
the purposes of Regulation 0, but it had not applied such a
°14 a
broad basis. The Legal Division had in mind the point Governor
2/15/60
-10-
had mentioned, and for that reason had tried in the draft letter
to l
t the proposed rule to "supervisors" having authority to make
uns
ecured commercial loans up to $5,000 and certain secured loans.
14118
It
not intended to apply the rule to all employees who make personal
1°alls for a few hundred dollars. Mr. Hackley went on to say that the
PurP0
8e of Regulation 0 was to prevent self serving s
but he did not
believe
there was any need or desire to go so far as to say that every
eMPloYee who
made any loan was an executive officer.
However, to the
"tent they exercised "supervisory" functions, they could be said to
h Ie some
executive authority.
Governor Mills commented that the making of personal loans was
4 rather
perfunctory performance in most banks and he was not aware that
ballk
xaminers had reported many cases of bank officers allowing themBelves
to become overburdened by debt through their access to credit.
4e
8uggested that this subject might be taken up with the Vice Presidents
111 Che,
of examinations at the Reserve Banks at the forthcoming conference.
Governor
Robertson said that he had thought the draft letter was
IsdLecl quite satisfactorily but that he would concur in taking the matter
143 Illth the
Reserve Bank officers in charge of examinations.
He also
telt that before a ruling was issued, it should be discussed with the
Orrice
of the
Comptroller of the Currency.
T
hereupon, it was decided to defer an answer to the Philadelphia
Ile"1"11e Bank
on this question until the matter could be explored with
2/15/60
-11-
repre
sentatives of the Federal Reserve Banks at the forthcoming ConOf Examiners.
Mr. Molony, Assistant to the Board, entered the room during
the
Preceding discussion, and Messrs. Masters, Goodman, and Young 'withfrom the meeting at this point.
Meeting with Messrs. King, Tweter, and Gesell.
There had been
distributed copies of a letter dated February 11, 1960, from Mr. Gesell,
att°111eY for Firstamerica Corporation, San Francisco, California, and
California Bank,
Los Angeles, California.
The letter had been sent
t° MI.
'Solomon in response to his letter of February 10, 1960, transMittine
for Mr. Gesellts information a copy of the staff memorandum
relati4g to the meeting on Tuesday, February 9, 1960, about which Mr.
8"°M°n had reported to the Board on February 10.
Mr. Gesell's letter referred to the need of California Bank for
"diti°nal capital of $15 to $20 million immediately and approximately
1/4/ million
over the next five or six years, and it enumerated certain
8111'm°12ntable obstacles" to the raising of capital through the sale
c)t
ti°nal shares of California Bank because of the antitrust action
taken by
the Department of Justice against Firstamerica Corporation,
t°1' vhich reason
Firstamerica had instituted settlement discussions 'with
Stice
The letter concluded with the statement that Firstamerica vas
:41141
E1 to .,Alov
the Boards views on the banking aspects of the proposed
'ettleMent, but it
did not ask the Board to support any particular
2/15/60
-12-
Pcsitions taken by the parties to the litigation.
It stated, however,
that the letter had been written because the Board's staff made it
clear at the meeting on February 9 that the Board would not concern
itself 'With any aspects of this matter unless it received some official
vritten communication from Firstamerica.
Governor Mills said that the reasoning he attached to these
c°14"nta vent back primarily to the reasoning that the case, as far as
the 10
'Joard vas concerned, vas closed.
The Board had reached by majority
*vote a decision that approved Firstamericats acquisition of California
'and it followed that California Bank and First Western Bank
1.111(
eckid be
merged.
Therefore, in his judgment, the Board should refrain
fro. .
injecting
itself any further into the matter.
To do so would be
a tacit
acknowledgment that the previous decision of the Board vas in
ellscIT and that,
accordingly, in acknowledgment of that error, the Board
8171°111d accept an invitation to be a party to compromising the issue
bet/4"n the Department of Justice and Firstamerica.
On the other hand,
lt the Department of Justice on its own account should ask the Board
tc11. ecuneel on a proposal, Governor Mills felt that the Board should
counsel to the Department.
Governor Robertson said that he thought it would be rather unfair
to cal
ifornia Bank should the Board refrain from some degree of participatioll in
this matter. The Board should not enter into a compromise on
the
"-de
either of California Bank or the Department of Justice. However,
nia reaction to Mr. Gesell's letter of February 11 was that it
2/15/60
-13-
l'ould be perfectly proper and desirable to respond that, if both
Parties so requested, members of the Board's staff would sit in during
discussions of the proposed settlement, not for the purpose of partieiPating in the negotiations but in order to present facts falling
14tIlin the area of the Board's concern so that a settlement would not
be
'worked out that would be unacceptable to the Board.
Governor Shepardson expressed agreement with this approach,
bserving that it would be most unfortunate should a compromise settleMet be
arrived at which received court approval only to be followed
Board objection to any application filed subsequent to and growing
°Ilt °f* the settlement.
cltrred.
Governors Balderston, Szymczak, and King con-
Chairman Martin suggested that if this was agreeable Mr. Solo111°11 nlight
prepare a draft of letter along these lines and bring it back
tc)r the
Board's consideration.
Governor Mills said that this would amount to a direction to
s
cac/mon to address a letter to Firstamerica Corporation or their
legni
--L. representative which, in effect, would do what he was fearful of
E144(1°I)Jecting to.
Without reference to the Department of Justice what-
, the Board would be injecting itself into a case which the Board
had p
revi°1181y decided. If the Board should go in that direction,
*Itch
overnor Mills felt would be wrong the better course in his
2/15/60
°Pirli°r1 'would be to transmit the Gesell letter to the Department of
Justice advising Mr. Gesell of that fact and then let nature take its
course.
Chairman Martin then said that one procedure would be to inform
the Department of Justice that the Board was in receipt of the Gesell
letter and
that it was proposing to answer it along the lines indicated,
and to
ask whether Justice had any objection.
Governor Mills responded that he had been much disturbed by
the 16
xpoardts recent decision to make applications under the Bank Holding
ec)rnPanY Act available to Justice which, in his judgment, surrendered
the )3
(3a1"cits legal position to the Department of Justice in contravention
°1* the
arid
lel
di.
statutory responsibility that the Board was required to fulfill,
so merely on the grounds that the Department of Justice had paral-
atIthority in the Bank Holding Company field.
In his opinion, under
this Procedure the Board would not be carrying out the duties that had
be" imposed upon it.
If the Congress wished to Change this reTcrsi-
Y, or if the Board wished to recommend that the Congress alter the
r
"
. 45ibility of the Board, that was one thing; but the Board now had
a
c-e4r direction as to what it was supposed to do in administering its
2.espo
nsibilities under the Clayton Act with respect to competition among
beziks
'and more particularly in the administration of the Bank Holding
C'llatlY Act.
Governor Szymczak commented that the capital position of Calirorzlia
Bank
indicated that at some point in the future the Board would be
2/15/60
-15-
required to get
into the picture, although strictly speaking it was
not
direct1y involved in the settlement proposal made by Firstamerica
to the
Justice Department.
Governor Robertson said that, as he saw it, the Board was already
in the
picture. Its January 1959 decision in the Firstamerica case
or
a quasi-judicial act and that decision stood. In addition,
the Board vas
directly concerned from the bank supervisory point of
viev 'with developments regarding a member bank.
The Board should be in
a 13°Bition
to help both the Justice Department and California Bank in
this matter,
and he believed this could be done by having staff members
°r the Board
indicate to these parties the areas of the Board's interest.
reed with Governor Mills that the Board should avoid dealing with
°ne of the parties to these negotiations, but he noted that the
t
118i—ca Department was already in touch with California Bank. Therefore,
he
that the Board could inform Justice of the response it planned
to
send Mr.
Gesell and that, if requested to do so by both parties, it
Vas
prepared to discuss matters that might have a bearing on decisions
the 130ard
ld have to make, if a proposal regarding the member bank
c4Ile before It for action.
1,-Lackley
Mr, ,
l'elplY to RI,.
14terested
expressed concern that, should the Board fail to
Gesell's letter, he might assume that the Board was not
ithe financial condition of a member bank.
In order to
Ir°11. a basis for such an impression, he suggested that the Board could
4" a
letter of reply to Mr. Gesell stating that the Board would not
2/15/6o
attempt
In
-16to compromise between Firstamerica and the Justice Department
this matter but, since the Board had a direct interest in the finan-
cial soundness of California Bank, it would, at the request of Justice,
be vtlling for the staff to render technical assistance at future disellssiOns to be held between Justice and California.
letter
A copy of this
could be sent to Justice.
During farther discussion of the procedure to be followed by
the Board in replying to Mr. Gesell, Mr. Solomon raised the question
rilether it would be fair to California Bank at this stage of their
with Justice to send a copy of Mr. Gesell'a letter and
the 13(3ard*s proposed reply thereto to the Justice Department, and
G(Ilielll°r Robertson replied that Mr. Gesell should be informed by tele-
Phorle
b
eforehand what the Board had in mind.
Governor Mills commented that the Board was dealing with a lawyer
1/110,-tts pleading
a case. There had been no request from Firstamerica
O
California Bank so far as he knew indicating that the bank was short
or "Pital.
or the
His instinct told him that Mr. Gesell was making a puppet
pederal Reserve on figures that had been drawn to indicate that
c ertain
capital vas necessary to place this bank in proper position.
Mr. Solomon noted that in the course of the meeting on February 9
14
the
Board building, Mr. King, President of California Bank, had said
are
undercapitalized", and that President Mangels of the Federal
gerve
Bank of San Francisco had reported that California Bank was
2/1-5/60
-17-
curren+1
----Y under examination and probably would show an undercapitalized
ecndition.
Recognizing that as a lawyer Mr. Gesell was a skillful
tactician, Mr. Solomon said that his impression was that the February 11
letter vas an
attempt to set up an estoppel against the Boardts insist0n
additional capital for California Bank.
Chairman Martin then suggested that the staff prepare a draft
Of
letter along the lines suggested at this meeting for consideration
bY the
Board, and there was agreement with this suggestion.
Application by BancOhio Corporation relative to The Hilliard
138.nk
Billiards
Ohio (Items 9 and 10).
In accordance with the under-
tariclillg reached at the meeting on February 2, 1960, there had been
t.d under date of February 10, 1960, a proposed Notice of Tentati
v- De ision that would deny an application by BancOhio Corporation
to a_
'4141re shares of stock of The Hilliard Bank, Billiards, Ohio, along
Irith a Tentative Statement, which would be attached to and made a part
°t the Notice,
setting forth the reasons why the Board proposed to deny
the a
Pplication.
There had also been distributed a proposed press state-
re
garding this action and, under date of February 11, an alternative
$311
Tentative Statement.
15/4ring the ensuing discussion, suggestions were made regarding
a riliniber Of minor changes in the alternative draft of Tentative Statement.
At the co
nclusion of the discussion, unanimous approval was given to
the Notice of
Tentative Decision, which would be published in the Federal
2/15/60
Register, stating that the Board proposed to deny BancOhio Corporatthnla application relating to the proposed acquisition of The Hilliard
Bank, to an accompanying Tentative Statement, and to a press statement
regarding this action for release at 4:00 p.m., E.S.T., February 15,
19631*
Copies of the Notice and the Tentative Statement are attached
as xi.—:47a1L2_and 10
-----------
respectively.
2
Answers to questions submitted by Senator Robertson.
Chairman
-411 indicated that pursuant to the understanding reached at the meetltg on
concernFebruary 10, 1960, the draft of replies to the 22 questions
1118 money and banking submitted by Senator Robertson, Chairman of the
Senate Banking and Currency Committee, with a letter dated February
6,
1960, had
been prepared. In his opinion, the answers were now in a form
811it
able for transmittal to Chairman Robertson, and he suggested that
the
u'embers of the Board send any additional suggestions they had to
Yog
as soon as possible in order that the replies could be trans-
114-tted.
- up Senator Robertson later today or in any case by tomorrow
nio
rtlincr
°°. No objection was indicated to the procedure suggested by the
hairman.
Secretary's Note: Pursuant to this understanding, the replies were transmitted by
Chairman Martin to Senator Robertson under
date of February 15, 1960.
The meeting then adjourned.
2/15/60
-19Secretary's Note: Pursuant to the recommendations contained in memoranda from appropriate
individuals concerned, Governor Shepardson
today approved on behalf of the Board increases
in the basic annual salaries of the following
persons on the Board's staff, effective February 21, 1960:
Catherine B. Davian, Secretary, Division of Research and Statistics, from $5,240 to $5,390 per annum.
Anne T. Roberson, Secretary, Division of International Finance,
from $4,640 to $4,790 per annum.
George G. Noory, Analyst, Division of Bank Operations, from $4,980
to $5,130 per annum.
11ell Carpenter, Statistical Clerk, Division of Bank Operations,
from $3,755 to $3,850 per annum.
rank C. Guth, Jr., Review-Examiner, Division of Examinations,
!
from $10,130 to $10,370 per annum.
Warren J. McClelland, Supervisory Review, Examiner, Division of
Examinations, from $12,315 to $12,555 per annum.
Secretary
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No. 1
2/15/60
A0011[1111 orriciaL CORRESPONOCNCIE
TO TM( 110ARO
February 15, 1960.
Itternational
Banking Corporation,
IS,T5 Wall
Street,
"el/ York 15„
New York.
Ge
ntaemen:
tranarni Reference is made to your letter of January 13, 1960,
otth„, tted through the Federal Reserve Bank of New York, advising
ot
N acquisition by your subsidiary, The First National City Bank
:
-714 Y°rk
(South Africa) Limited, of one of the two issued and
et
A
the a'44Ulng
shares of Citibank Nominees (Proprietary) Limited, for
that:1142f a (South African), approximately US$2.80. It is noted
ltivoivè;°11gh
'"1
an oversight resulting from the insignificant amount
of Gove;g:nr Corporation did not obtain the consent of the Board
Prior to the acquisition by the South African bank.
111N „ In accordance with your request and on the basis of the
4e-1'11'4'a-on
(80111:.
i'11rchasesubmitted, the Board of Governors grants its consent to
and holding by The First National City Bank of New York
iLtrich
a,
AN'rica) Limited of one share of stock, par value U. (South
-"i each, of Citibank Nominees (Proprietary) Limited.
ConarlY 't is understood that it is not contemplated the Nominee
."41Y acIi"4--u- issue any further shares of its capital nor engage in
441 th -nies other than to facilitate the transfer of securities
th
so?
1ection of income therefrom for account of customers of
African bank.
overn
It will be appreciated if you will furnish the Board of
,
e, through the Federal Reserve Bank of New York, with copies
i°1% th-c3r
,
Ilarter or articles of association or other authorizing
q the nt and
f the Nominee Company, together with a list
officers
by.-law8 o
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
fit 1
BOARD OF GOVERNORS
4400004.4
44
OF THE
4 14,
'
C14;,
\
gk:
FEDERAL RESERVE SYSTEM
Item No. 2
2/15/60
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
4,4%4
'.41441.
'
February 15, 1960.
Board of Directors,
Chemical Bank New York
Trust Company,
New York, New York.
G
entlemen:
Pursuant to your request submitted through the
Fed
-eral Reserve Bank of New York, the Board of Governors
I PProves the relocation of your branch at 103-02 Northern
I
rulevard, Corona, Borough of Queens, New York, New York,
a. new location at the northeast corner of Northern
a
B0
and 93rd Street, Jackson Heights, Borough of
reens, New York, New York. This approval is given
vr°vided the change in location is effected within one
Year from the date of this letter. It is understood that
°Aerations of the branch at the present location will be
.Lsoontinued simultaneously with the opening of the branch
aG the new
location.
r
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
6t
BOARD OF GOVERNORS
OF THE
Item No. 3
FEDERAL RESERVE SYSTEM
2/15/60
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
Ntt
TO THE HOARD
February 15, 1960.
Board of Directors,
Green Lake State Bank,
Green Lake, Wisconsin.
Gentlemen:
Pursuant to your request submitted through
the Federal Reserve Bank of Chicago, the Board of
Governors of the Federal Reserve System approves,
under the provisions of Section 24A of the Federal
Reserve Act, an additional investment in bank prem3 by Green Lake State Bank of not to exceed
"
072,000 for the Purpose of constructing a new bank
building
1
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
t
BOARD OF GOVERNORS
oitittio*4
44`' 01401,44
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No. 4
2/15/60
AOOFIESS OFFICIAL COPIRCIPONOCNCE
TO THE •OARO
February 15, 1960.
Board of
Directors,
Iowa State
Bank,
R411)
Geritlemen
:
This refers to your request for permission, under
aPPlicab
provisions of your condition of membership numbered
vo exercise fiduciary
powers.
14itted) Following consideration of the information subthe Board of Governors of the Federal Reserve System
;
TIlts Permission to Iowa State Bank to exercise the fiduciary
corere now or hereafter authorized by its articles of inPoration
and the laws of the State of Iowa.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
604
BOARD OF GOVERNORS
OF THE
Item No. 5
FEDERAL RESERVE SYSTEM
2/15/60
WASHINGTON 215, D. C.
ADDRESS
orriciAL
CORRESPONDENOt
TO THE •DARD
February 15, 1960.
aomptroller of the
Currency,
Treasury Department,
W
ashington 25, D. C.
Attention Mr. W. M. Taylor,
Deputy Comptroller of the Currency.
Dear Mr. Comptroller:
Reference is made to a letter from your office dated
t
i rar 18, 1959, enclosing copies of an application of The
na4, of Annandale, Annandale, Virginia, to convert into a
"4-onal banking association and requesting a recommendation
to whether or not the application should be approved.
by an
A report of investigation of the application made
dia examiner for the Federal Reserve Bank of Richmond
hisi
'
.
C oses favorable findings with respect to the financial
me4;
°rY of the bank, earnings prospects, character of manageinv:' and services to the community. At the time of the
was-atigation it was reported that the bank's capital structure
be somewhat low but it is understood that this situation will
4cecor1ected through the sale of additional capital stock.
apaldingly, the Board of Governors recommends approval of the
b
cation to convert The Bank of Annandale into a national
ellidalg association.
The Board's Division of Examinations will be glad to
discuo
orri:s a4Y aspects of this case with representatives of your
YOU so desire.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 6
2/15/60
WASHINGTON 25. D. C.
ADDRESS OFFiCIAL CORRESPCINDENCE
TO THE BOARD
February 15, 1960.
Dear
sir:
The Board has completed a review and revision of certain
letters in the
Federal Reserve Loose-Leaf Service directly or
4;
4.4 ect4
n the
related to the selection and approval of examiners in
enrY of
Federal Reserve Banks. In the revision, obsolete referthe" and unnecessary introductory comments have been eliminated and
and remaining
content of the letters has been correlated, clarified,
exPanded to enhance its usefulness.
the Pr?In the course of the review, the necessity for continuing
Practice of issuing to examiners commissions which expire
tion e end of each calendar year was questioned, and, after considerato e °f the matter, the Board now approves the issuance of commissions
ernpiocailainers subject to surrender and cancellation only upon change of
goa_,YMent status or termination of employment. In addition, the
ar/47 has
added the requirement that a photograph of the appointee be
'`xed to the
commission certificate.
revisi
The following ten enclosures embrace the area of review and
to th °11 and each is believed to be self-explanatory without reference
Reeere f°regoing comments. The enclosures will appear in the Federal
ve Lapse
-Leaf Service with a date-reference to this letter, and
.irely all the usil and "X" letters parenthetically
refegieTeTt:t
S-1729-a
Designations of examiners in the employ of
the Federal Reserve Ban15and the Board of
Governors of the Federal Reserve System.
(This enclosure supersedes a minor portion of the
Board's letter of August 25, 1939, S-178,
FRLS #9181, and its letter of September 21, 1933,
FRLS #9182.)
S-1729-b
Qualifications and appointment of examiners
in the employ of Bank Examination Departments
of the Federal Reserve Banks.
t;
-2-
(This enclosure supersedes a major portion of the
Board's letter of August 25, 1939, 5-1780 FRLS
#9181.)
S-1729-c
Employment and qualifications of trust
examiners.
(This enclosure supersedes the Board's letters of
August 31, 1933, X-7576, FRLS #9185, and November
17, 1933, X-7688, FRLS #9186.)
S-1729-d
Form of commissions issued to examiners in
the employ of Federal Reserve Banks.
(This enclosure supersedes the Board's letter of
December 29, 1938, 5-139, FRLS #9187.)
S-1729-e
Examinations by assistant examiners.
(This enclosure supersedes the Board's letter of
April 26, 1938, 5-90, FRLS #9184.)
S-1729-f
Approval by Board of persons designated to
assist in examinations of State member banks.
(This enclosure supersedes a minor portion of the
Board's letter of August 25, 1939, 5-178, FRLS
#9181, and its letter of April 3, 1937, X-9858,
FRLS #9183.)
S-1729-g
Use of examiners in the employ of other Federal Reserve Banks.
(This enclosure supersedes the Board's letter of
February 3, 1944, S-729-a, FRLS #9188.)
S-1729-h
Status of examiners returning from military
service.
(This enclosure supersedes the Board's letter of
November 16, 1945, S-883-a, FRLS #9189.)
S-1729-i
Status of examiner owning bank stock.
(This enclosure supersedes a portion of S-1571-a,
enclosed with Board's letter of August 15, 1955,
FRLS #9190.)
Pk)!
S-1729-j Status of examiner related to bank officer.
(This enclosure supersedes a portion of S-1571-a,
enclosed with Board's letter of August 15, 1955,
FRLS #9190.)
Very truly yours,
Merritt
Seer
Znclosures 10
TBE PRESIDENTS OF ALL rt,WERAL RESERVE BANKS
re,
BOARD OF GOVERNORS
OF THE
Item No. 7
2/15/60
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
February 15, 1960.
Ar
'Lair S. O'Neil, President,
°
0!01
.,ensb
ur
g Trust Company,
'
ensourg, New York.
ear Mr.
O'Neil:
to
This refers to your letter of February 2, 1960 with respect
grace" allowed by the recent amendment to section 3(d) of
3n Q for paying interest on savings deposits.
Reguir
:
41.4 °4
a bank h Your suggestion that an additional day be allowed following
the,
has heretofore been considered by the Board. However,
rechaverilliar7 purpose of the amendment was to provide uniformity and
mliche confusion, while allowing the customer reasonable time within
korlth.to make a deposit and receive interest thereon for the entire
.q cal Therefore,
the provision was changed to permit the same number
.?ndar days each month. It should be noted that the total effect
eteht'
eralizing one since in most months this will permit seven or
ade °Ilsiness days. The Board believes that this allows a customer
thf4(illa e
montin each month to make a deposit and receive interest for
„5 re m
h,
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
109
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
Item No. 8
2/15/60
ADDRESS arriciAL CORRESPONDENCE
To THE BOARD
February 15, 1960
Mil. Phillip S. Hughes,
Assistant
Director for
Legislative Reference,
Bureau of the Budget, Room 253,
13ceoutive Office Building,
Washington 25, D. C.
Dear Mr. Hughes:
This is in response to your communication of February
4 19K
,-0, regarding a draft bill to provide for the participation
-- 611e United States in the International Development Association.
affects
the ve, The only provision of the bill which directly
ueral Reserve System is section 6 which provides that
orwitral Reserve Banks, upon request, shall act as depositories
scal agents for the Association. The Board has no objec-n to this provision.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
f; 0
BOARD OF GOVERNORS
OF THE
Item No.
2/15/60
FEDERAL RESERVE SYSTEM
NOTICE OF TENTATIVE DECISION ON APPLICATION FOR PRIOR
APPROVAL OF ACQUISITION BY A BANK HOLDING COMPANY
OF VOTING SHARES OF A BANK
Notice is hereby given that, pursuant to section 3(a)
Of the Bank
Holding Company Act of 1956, BancOhio Corporation,
Caltribue, Ohio, a
bank holding company, has applied for the
toarA I
s prior approval of the acquisition of a minimum of
80
cent of the voting shares of The Hilliard Bank, Hilliards,
Ohio.
Information relied upon by the Board in making its tentati,ft
1/41eoi510n is s
arized in the Board's Tentative Statement of
thi8A.'d.te,
which is attached hereto and made a part hereof, and
vhich
J-s available for inspection at the Office of the Board's
4cTst
417, at all Federal Reserve Banks, and at the Office of the
Pede
ral
Register.
The record in this proceeding to date consists of the
111)11eaticn, the Board's letter to the office of the Superintendent
Of /3
anks for
the State of Ohio inviting the Superintendent's views
41aci r_
'
commendations
on the application, the reply of the First
1:1eNty -up
p
t
erintendent, this Notice of Tentative Decision, and the
act8 set forth
in the Board's Tentative Statement.
toarci pr
For the reasons set forth in the Tentative Statement, the
°Pcses to deny the application.
9
611
-2-
Notice is further given that any interested person may,
not later
than fifteen (15) days after the publication of this
notice
in the Federal Register, file with the Board in writing
anY comments upon or objections to the Board's proposed action.
001"un1cations should be addressed to the Secretary, Board of
Governors of the Federal Reserve System, Washington 250 D. C.
Following expiration of the said l5-day period, the
13°8'1'd's Tentative Decision will be made final by order to that
efra„
unless for good cause shown other action is deemed appro1511-ate by the
Board.
Dated at Washington, D. C., this 15th day of February, 1960.
BY order of the Board of Governors.
/s/ Merritt Sherman
Merritt Sherman,
Secretary.
Git)
BOARD OF GOVERNORS
OF THE
Item No. 10
2/15/60
FEDERAL RESERVE SYSTEM
APPLICATION BY BANCOHIO CORPORATION, COLUMBUS, OHIO,
FOR PRIOR APPROVAL OF ACQUISITION OF VOTING SHARES
OF THE HILLIARD BANK, HILLIARD; OHIO
TENTATIVE STATEMENT
BancOhio Corporation, Columbus, Ohio ("BancOhiol or
"APPlicant"),
a bank holding company as defined in section 2(a)(1)
°f the Act,
has applied, pursuant to section 3(a)(2) of the Bank
Holding
ComPany Act of 1956 ("the Act"), for the Board's prior
Oval of the acquisition of a minimum of 80 per cent of the
1,000 outstanding shares of The Hilliard
Bank, Hilliards, Ohio.
Views and recommendations of Superintendent of Banks.
.-
required by section 3(b) of the Act, the Board
forwarded notice
Of the
application to the office of the Superintendent of Banks
44
the State of
Ohio. The First Deputy Superintendent replied,
interpo,
,_ g
pazno objection and recommending approval.
Statutory factors. - Section 3(c) of the Act requires
the b
4.40ard to take into consideration the following
five factors:
the
financial history and condition of the holding company and
concerned; (2) their prospects
, (3) the character of their
trlaria.„
6111ent; (4) the convenience, needs, and welfare of the communities
and area concerned, and (5) whether or not the effect of the
-2acn 4
-0-"-son would be to expand the size or extent of the bank
holding company system involved beyond limits consistent with
adequate and sound banking, the public interest, and the preservation of competition in the field of banking.
Discussion. - BancOhio owns a large majority of the
stock 01
,
each of 22 commercial banks in Ohio, with aggregate
deposits of approximately $611 million at June 10,
1959.
In
Iraniclin County, in which The Hilliard Bank is located, BancOhio
controls three banks with 25 offices, holding total deposits of
$4o8 million
as of June 10, 1959.
The village of Hilliards, located approximately 12 miles
northwest of downtown Columbus, has one bank, The Hilliard Bank,
cl a present population estimated by Applicant to be over 4,200.
The,
,
r•-mary
service area of The Hilliard Bank contains about
6° square miles, within which the village of Hilliards and porti°ns of the townships of Norwich, Brown, and Washington are
1°Cated.
There are no other banking offices in The Hilliard Bank's
PillarY service area. It is apparent that a major portion of the
Ba.me t
s business is concentrated within a radius of three to four
of its location.
The financial history and condition and the prospects of
both Bano0hio
and The Hilliard Bank are satisfactory.
ill'allaement is also satisfactory.
The record reflects that The
Rilliard Bank's
management is sound.
BancOhio's
The Bank's growth has not
)14
-3been
commensurate with the population growth within the area
desir,uated
-as the Bank's primary service area.
However, it
aPPears that the basic banking needs of the primary service
area are being satisfied.
Applicant states that "a substantial-
Umber of the population in the Hilliards area are employed
in Columbus ...[and] . . . probably are utilizing facilities
Of
banks, savings and loan associations .
. which are con-
venient to their place of employment or their commuting routes."
In addition,
there are within about eight miles of The Hilliard
Banks in neighboring Madison County: two banking offices not
Part
of BancOhio's system and, in the village of Dublin, Franklin
e°1-111tY, about 6-1/2 miles from The Hilliard Bank, a branch of a
13ancOhio bank established in August
1959.
While it is probable that, if the present application
Xle
approved, BancOhio could offer more complete and convenient
ban4.4
--'ng service than that now provided by The Hilliard Bank,
ther_
ls no reason to believe the sane goal could not be achieved
tillcier the Bank's
present management, although perhaps not as
readilY as under the proposed plan.
The Hilliard Bank appears
tlnencially able to command vigorous and experienced management
Ilith°11t acquisition of control of the Bank by BancOhio. Further,
4ciltice and assistance relative to improved banking services and
tech,,
"'clues are available through The Hilliard Bank's bank correPond,„
,ncs in Columbus.
-4An additional judgment required of the Board by
section 3(c) of the Act is whether the proposed acquisition
would be consistent with the public interest and the preservation
01 banking competition. BancOhiols 22 commercial banks,
located in 20 counties in Ohio, control approximately 42 per
cant Of all
commercial bank deposits in those counties. Three
°f these
banks are located in Franklin County, the situs of
The
Hilliard Bank. As of June 10, 1959, the aggregate deposits
cn these
three BancOhio banks were $408 million, constituting
51•5 per cent of the total deposits of all commercial banks in
that County.
The Ohio National Bank, Columbus, which is BancOhiols
Pilnoipal subsidiary, is 'larger than the next two largest banks
in that
city combined. BancOhiols banks hold nearly one-half
Of
the
deposits of the offices located in the area best described
48 the "northwest quadrant" of Franklin County, which contains
the 1,
uanking offices in downtown Columbus. In the whole of
Pranklin County,
and in the northwest quadrant of that County,
the APplicant's banks operate more
offices than all other banks
e0111hined.
Apart from the dominant position held by BancOhio within
la
County and to a lesser degree in its 20-county area, fur-
the,
'question as
8ister,4.
to whether the proposed acquisition would be con-
With the public interest and preservation of competition
because existing and potential competition would be
eliminated by BancOhiols acquisition of The Hilliard Bank.
APPlicant asserts that "no competitor will be eliminated by the
acquisition", but this conclusion is not supported by the evidence before the Board.
There would be eliminated the competition
Presently offered by BancOhio's Franklin County banking offices
for about 18 per cent
of The Hilliard Bank's IPC (individuals',
Partnerships,
and corporations') deposits originating outside
°f the Bankls
primary service area but wjthin Franklin County.
Nrther, BancOhio offices located in the previously mentioned
'northwest quadrant" of Franklin County derive from The Hilliard
Is primary service area IPC deposits equal in amount to
b°14 24 per cent of the total of such deposits held by the
latter Bank.
Competition for these deposits would be eliminated.
Moreover, in view of the continued population growth
that illaY reasonably be expected in the Hilliards area, it is
the
rd' judgment that the proposed acquisition would tend
Boa's
t° reduce
potential banking competition.
While the point urged
bY A
Pplicant - that "the acquisition would increase its resources
leas
than 1/2 of 1%" - is accurate, a more realistic measurement
Of
the
Probable
the
above
the area
jIzzi
impact of the proposed expansion is gained from
analysis of its probable effect upon competition in
primarily concerned.
Conclusion. - On the basis of the foregoing, it is the
Tflent
of
the Board that the extent to which the convenience of
the are
a concerned would probably be served and otherwise benefited
-6the proposed acquisition is outweighed by the probable adverse
effect of the acquisition upon the preservation of competition
within the area and, to that extent, upon the public interest.
Under such circumstances, it is the Board's judgment that the
aPplication should be denied.
@FedFRASER