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Minutes for
To:
Members of the Board
From:
Office of the Secretary
February 15) 1962
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
(1111Y that you have seen the minutes.
Chin. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Coy. King
Gov. Mitchell
Minutes of the Board of Governors of the Federal Reserve System on
Thursday, February 15, 1962.
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
Mills 1/
Robertson
Shepardson
King
Mitchell
Mr. Sherman, Secretary
Mr. Kenyon, Assistant Secretary
Miss Carmichael, Assistant Secretary
Mr. Thomas, Adviser to the Board
Mr. Young, Adviser to the Board and Director,
Division of International Finance
Mr. Molony, Assistant to the Board
Mr. Fauver, Assistant to the Board
Mr. Hackley, General Counsel
Mr. Noyes, Director, Division of Research
and Statistics
Mr. Farrell, Director, Division of Bank Operations
Mr. Solomon, Director, Division of Examinations
Mr. O'Connell, Assistant General Counsel
Mr. Shay, Assistant General Counsel
Mr. Kiley, Assistant Director, Division of Bank
Operations
Mr. Smith, Assistant Director, Division of
Examinations
Mr. Leavitt, Assistant Director, Division of
Examinations
Mr. Stephenson, Special Assistant, Division of
Examinations
Mr. Veret, Attorney, Legal Division
Mr. Lyon, Review Examiner, Division of Examinations
Mr. Smith, Assistant Review Examiner, Division of
Examinations
Items circulated or distributed to the Board.
The following
ite148, which had been circulated or distributed to the Board and copies
o
l'hich are attached to these minutes under the respective item numbers
141-icated, were approved unanimously:
ntered meeting at point indicated in minutes.
2/15/62
-2Item No.
Letter to the Federal Reserve Bank of New York
interposing no objection to the Bank's foreign
travel program for 1962.
1
Letter to The Chase Manhattan Bank, New York,
Ilew York, approving the establishment of a
branch at 655 Hunts Point Avenue, Borough of
the Bronx.
2
Letter to The Trust Company of New Jersey, Jersey
City) New Jersey, approving the establishment of
a branch at 2117-2127 Hudson Boulevard (also
known as 181-185 Grant Avenue), provided branch
Operations now conducted at 391 Jackson Avenue
41'e discontinued simultaneously with the establishment of the new branch.
3
Letter to the Comptroller of the Currency recomend-ing favorably with respect to an application
4) organize a national bank at Wheaton, Maryland.
'
T
Letter to the Comptroller of the Currency
recommending favorably with respect to an applic4tion to organize a national bank at Watseka,
Il
linois.
5
Letter to the Comptroller of the Currency
recommending favorably with respect to an
!PPlication to organize a national bank at
zivansdale,
Iowa.
6
Letter to the Federal Reserve Bank of New York
3eg8rding operations of the Nassau County and
'
ergen County Clearing Bureaus.
7
f
elegram to the Federal Reserve Bank of San
;
rancisco noting without objection plans to
o°ntinue to lease, under purchase option,
c
;?rtain National Data Processing high-speed
-e ctronic check processing equipment.
'
Mr. Smith (Assistant Director, Division of Examinations
withdrew
and Mr. Cardon, Legislative Counsel, entered the room.
8
then
2/15/62
-3Letter to Congressman Moss
(Item No. 9).
There had been dis-
tributed under date of February 14, 1962, copies of a draft of letter
to Chairman Moss of the Special Government Information Subcommittee
of the House Committee on Government Operations in reply to his letter
°f October 23, 1961, requesting information regarding telephone
listening-in devices and telephone recording equipment in use at the
11°aDd and inquiring whether any steps were planned to conform to the
Committee's recommendation, as set forth in House Report 1215, for the
adoption of "clear, written regulations" that "advance notice must be
whenever either monitoring or recording is contemplated.
On
julY 10) 1961, the Board had replied to an earlier letter from Congressman
14°s5 on the same subject.
The proposed reply would furnish the requested information
l'earding equipment and would indicate that the monitoring of telephone
calls at the Board fell into two categories.
4
The first involved making
verbatim record of part or all of a telephone conversation.
With
respect to
this type of monitoring, the letter would state that the
8°11.1'd was issuing an instruction requiring notice to the other party
t0 the call whenever a secretary was requested to make a verbatim
l'elX/rt of all or part of a telephone conversation.
In connection with
the other type of monitoring, which occurred when a secretary was asked
t° listen in so that she might assist in handling the call or be
Provided
information that she needed to know in order to perform her
2/15/62
-4-
duties, the letter would suggest that there appeared to be no need for
issuing an instruction requiring advance notice that a secretary was
on the line, although no effort should be made to avoid disclosing that
fact.
In discussion the Secretary stated that an earlier draft of
reply to Chairman Moss had been circulated to all Division heads and
Other members of the senior staff.
On the basis of comments received,
the draft reply being considered at this meeting had been prepared.
During the course of the ensuing discussion, it was pointed out
that the 29 transmitter cut-off switches and two listening-in circuits
nw being used on telephones in the Board's offices were designed to
enable secretaries to be on the line during telephone conversations
/41thout transmitting room noises.
it was
by
As indicated in the draft of reply,
proposed that the two listening-in circuits would be replaced
less expensive transmitter cut-off switches.
Governor King commented that although it might be a rather
/elleral practice to ask secretaries to listen in on telephone conversations
without giving notice to the other party on the line, it was his personal
view that notice should be given whenever a secretary was asked to be
On the
line for any purpose.
On this point, statements were made by members of the staff to
the effect that it was frequently found to be helpful if a secretary
te'Yed on the line long enough to determine whether any files should be
2/15/62
Placed at the disposal of the person receiving the call or whether any
Other staff members should be asked to come to the room.
It was believed
that this tended to provide more efficient service to the party who had
Made the call.
A number of changes in the wording of the proposed letter were
then suggested and agreed upon, following which unanimous approval was
given to a letter to Chairman Moss in the form attached as Item No. 9.
It was understood that copies of the letter to Chairman Moss
/4°1-11d be distributed to the staff and that an instruction would be
issued to the effect that notice must be given to the other party on
the line whenever a secretary at the Board was requested to make a
verbatim record of part or all of a telephone conversation.
Mr. Kiley then withdrew from the meeting.
Application of First Security Corporation (Items 10 and 11).
On
February 7 1962, the Board voted to deny the application of First
Security Corporation, Salt Lake City, Utah, to acquire all of the
.vc3ting stock of Carbon Emery Bank, Price, Utah.
Pursuant to that
Eleti°11, the staff was requested to prepare drafts of an order and a
statement reflecting the Board's decision.
With a memorandum from the
Leg41 Division dated February 12, 1962, drafts of an order and a
sta
tement were distributed.
After Mr. O'Connell had referred to certain editorial changes
that were proposed to be made in the statement, the Board authorized
5'‘'.'0
2/15/62
-6-
the issuance of the order and statement in the form attached as Items
10 and 11, respectively.
Messrs. O'Connell, Lyon, and Smith (Assistant Review Examiner,
Division of Examinations) then withdrew from the meeting.
Application of Liberty Bank and Trust Company.
There had been
distributed a memoramium from the Division of Examinations dated
FebruarY 6, 1962, recommending favorably on an application of Liberty
844k and Trust Company, Buffalo, New York, for permission to merge
/lith Bank of Orchard Park, Orchard Park, New York, and to operate a
branch at the present location of Bank of Orchard Park.
At the Board's request, Mr. Leavitt made a statement concerning
the facts of the case and the reasons underlying the recommendation of
the Division of Examinations, his comments being based substantially
O
the information presented in the February 6 memorandum.
In the ensuing discussion, all members of the Board except
Governor Mitchell indicated that they would favor approval of the
1311°Posed transaction.
t143
Governor Mitchell expressed the view that the
banks should not be permitted to merge.
In his judgment, approval
°t the merger would give an impression that the Board felt that only
lEtr8e banks could operate effectively.
A community bank, he noted,
ci°es not have to be large in size to provide effective service in its
krea•
sr; 1
2/15/62
The application was then approved, Governor Mitchell dissenting.
It was understood that the Legal Division would prepare drafts of an
order and supporting statement for the Board's consideration.
Secretary's Note: When Governor Mills
entered the meeting later, he asked that
the record show that he favored approval
of the application of Liberty Bank and
Trust Company.
Messrs. Cardon, Solomon, Shay, Leavitt, Stephenson, and Veret
then withdrew from the meeting.
Annual Report table.
There had been distributed a memorandum
fr°m Messrs. Molony, Young, Thomas, and Noyes dated February 13, 1962,
recommending that Annual Report Table No. 5 on "Open Market Transactions
c'ts the Federal Reserve System" be expanded.
The table had heretofore
shalgn monthly data on sales, purchases, and redemptions for total
outright
transactions and repurchase agreements, together with net
hm es in
holdings of U. S. Government securities and bankers'
acceptances.
The expanded table would also provide similar monthly
cl4t4 for outright transactions in Government securities for the following
1114t1ritY groupings:
Bills; other issues maturing within 1 year, 1-5
Years/ 5-10 years, and over 10 years.
There being no objection, the Board approved the recommendation.
Mr. Thomas commented that consideration was also being given to
the P°ssibility of publishing statistical data that would relate Federal
Rese
rye open market operations, including operations for the account of
-8-
2/15/62
the Treasury, more directly to dealer operations.
Mr. Thomas pointed
Out, however, that it would be necessary to secure clearance from the
Treasury Department if Treasury figures were to be included.
On the
basis of the discussion, it was understood that the question would be
taken up by him with Mr. Roosa, Under Secretary for Monetary Affairs,
°r Mr. Daane, Deputy Under Secretary for Monetary Affairs, along with
the New York Bank, and that a specific proposal would then be brought
back to the Board for consideration.
Policy record of Federal Open Market Committee.
With a memo-
l andum dated February 14, 1962, which had been distributed, Mr. Young,
'
Secretary of the Federal Open Market Committee, submitted a revised
draft of the record of policy actions of the Committee during calendar
rsar 1961.
This record had been prepared for inclusion in the Annual
RePort of the Board of Governors pursuant to the requirements of
ssetion 10 of the Federal Reserve Act.
The memorandum noted that all
sh-es.cestions received following the distribution to the Committee of
‘elinlinary drafts of policy actions had been considered in preparing
131
the Proposed entries.
Governor Mitchell commented that upon reading the original
dl'afts of the policy action entries he had the impression that the
dissenting statements sometimes had overbalanced the majority statements
in terms of the space occupied.
While he believed that everyone who
stitered a dissent should be privileged to have his views appear in the
3 3
_9..
2/15/62
Annual Report, he did not think that dissenting views should appear to
overwhelm those of the majority.
Governor Robertson observed that others had reacted in somewhat
the same way as Governor Mitchell when the preliminary drafts of some
Of the policy action entries were distributed.
As a result, Governor
Robertson
saidl he had gone through the entries and eliminated portions
e'r some of his dissenting statements, retaining only what he considered
essential in explaining his position.
In further discussion, Governor Robertson referred to the
r°11014ing sentence in the statement covering the basis for his dissent
tram the Committee's action on December 19, 1961, to discontinue the
three
statements of operating policies that had been in effect since
1953:
"In his view the operation that the Committee had launched
in February 1961, including transactions in longer-term
securities under the special authorization, had not been
successful in raising short-term and lowering long-term
rates, and had the operation been pushed to the point
necessary to achieve these twin goals, its defects would
now be obvious."
Ile suggested the insertion of "what he understood to be" after the
oria "achieve" in the above sentence.
Mr. Sherman stated that the Federal Reserve Bank of New York
haa ..'°uggested the possibility of inserting a footnote reference after
the s
entence to which Governor Robertson referred in order to clarify
the O
bjectives of the Committee.
It was pointed out, however, that
2/15/62
-10-
those objectives had been spelled out in the entry for February 7, 1961,
and it was agreed that the change mentioned by Governor Robertson would
meet the point raised by the New York Bank.
Question was also raised with respect to whether Governor Mills
Would care to modify the phrasing of certain comments included in the
entries for July 11 and October 3, 1961.
Secretary's Note: After Governor Mills joined
the meeting, he agreed to a change in the
statement summarizing views he had expressed
at the July 11 meeting. He indicated, however,
that he would prefer to have the October 3
statement stand as written.
The policy record of the Federal Open Market Committee for the
ear 1961 was then approved for inclusion in the Annual Report of the
/3°ard of Governors.
Mr. Thomas then withdrew from the meeting.
Annual Report text.
At the Board meeting on February 14, 1962,
consideration had been given to whether there should be included in the
text of the Board's 1961 Annual Report a detailed account of the Federal
°Pen Market Committee action on December 19, 1961, in terminating the
till'ee statements of operating policies that had been adopted originally
14 1953 or whether there should be only a brief statement in the text
l'eferring to the detailed information that appeared in the Federal Open
1441'ket Committee policy record section of the Report with regard to
C°17nnlittee operating procedures, not only under the December 19 date but
141der earlier dates beginning with February 7, 1961.
2/15/62
-11Having the latter approach in mind, Mr. Molony had drafted for
the Board's consideration a brief paragraph for inclusion in the text
of the Annual Report in substitution for the detailed account of the
December 19 action.
In the course of discussion, arguments for and against the
Procedure suggested by Mr. Molony were presented.
It developed to be
the consensus that a brief statement in the text referring to the policy
record would be adequate, and Mr. Molony was authorized to revise the
Proposed paragraph in the light of certain suggestions that had been
de
Governor Mills entered the room at this point.
Report by Governor Mitchell.
Governor Mitchell reported on a
Illeeting of economists that he had attended at the Treasury Department
°n February 14, during which views on various aspects of the balance of
PaYments were presented.
At the conclusion of his report he said he
th°ught it might be desirable to invite some of the persons who had
sPoken at that meeting to visit the Board as and when opportunities
arose.
There was general agreement with this suggestion, and Chairman
Mk'tin asked Governor Mitchell to prepare for Mr. Noyes a list of those
might be invited.
The meeting then adjourned.
Secretary's Note: Pursuant to recommendations contained in memoranda from
appropriate individuals concerned, Governor
Shepardson today approved on behalf of the
Board the following actions relating to the
Board's staff:
1,1
2/15/62
-12-
TET2p_fer
Carol Judith Sullivan, from the position of Clerk-Stenographer in
the Division of Personnel Administration to the position of Stenographer
the Division of Examinations, with no change in her basic annual
83417 at the rate of $4,040, effective February 18, 1962.
Acceptance of resignations
Philip T. Allen, Economist, Division of Research
effective at the close of business February 250 1962.
Statistics,
Nancy M. Krause, Statistical Clerk, Division of Research and
S
°tatistics,
effective at the close of business March 2, 1962.
0,04114*
44.104#4
BOARD OF GOVERNORS
OF THE.
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No. 1
2/15/62
AOORE8S OFFICIAL CORRESPONDENCE
TO THE BOARD
February 15, 1962
1,4Ire
red
rresidents Hayes,
Federal Reserve Bank
(If New York,
N
'
4 ew rc)rk 45, New York*
Dear Mr,
Hayes:
Your letter of January 26 and the accompanying
17:°
;
arldulll outlining a foreign travel program for 1962 for
ederal Reserve Bank of New York has been brought to the
Zlotention of the Board of Governors, which has no objection
trithe Plans as presented* It is understood that the proposed
m
'ItPS
are subject to change as to country and timing, if
timstances make such changes desirable.
Sincerely yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No. 2
2/15/62
ADDRESS arrocim. CORRESPONDENCE
TO THE BOARD
a
February 15, 1962
Board of Directors,
The Chase Manhattan Bank,
New York, New York*
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by The Chase Manhattan
Bank, New York, New York, of a branch at 655 Hunts Point
Avenue, Borough of the Bronx, New York, New York, pronded the branch is established within one year from
vie date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 3
2/15/62
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
February 15, 1962
Board of Directors,
The Trust Company of New Jersey,
Jersey City, New Jersey.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch by The
Trust Company of New Jersey, Jersey City, New Jersey, at
2117-2127 Hudson Boulevard (also known as 181-185 Grant
Avenue), Jersey City, New Jersey, provided the branch is
established within one year from the date of this letter.
It is understood that operations at the branch located
at 391 Jackson Avenue, Jersey City, will be discontinued
8imu1taneously with the opening of the branch at 2117-2127
Hudson Boulevard, Jersey City, New Jersey.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 4
2/15/62
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
AODRE88 OFFICIAL CORRESPONDENCE
TO THE I30,,RO
February 15, 1962
Comptroller of the Currency,
Treasury Department,
Washington 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 June 21, 1961, enclosing copies of an application to
organize a national bank at Wheaton, Maryland, and requesting
a recommendation as to whether or not the application should
be approved.
The Board, upon reviewing all available information,
found all factors usually considered in applications of this
nature to be favorable. Accordingly, the Board of Governors
recommends favorable consideration of the proposal.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
co_ 44.
BOARD OF GOVERNORS
OF THE
4
4
9
V°
FEDERAL RESERVE SYSTEM
Item No, 5
2/15/62
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
February 15, 1962
Comptroller of
the Currency,
?easury Department,
washington 25, D. C.
Attention:
Mr. W. M. Taylor,
Deputy Comptroller of the Currency.
Dear %,
nr, Comptroller:
Reference is made to a letter from your office dated
Noveml,
a nn+'uer 20, 1961 enclosing copies of an application to organize
bank at Watseka, Illinois, and requesting a recommenda'un as to whether or not the application should be
approved.
inforta,. The Board of Governors, upon reviewing all available
ot t,, laon, found all factors usually considered in applications
reco"le nature to be favorable. Accordingly, the Board of Governors
rnmends favorable consideration of the proposal.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 6
FEDERAL RESERVE SYSTEM
2/15/62
WASHINGTON 25. D. C.
ADDRESS
arriciAL. CORRESPONDENCE
TO THE 1313ARD
February 15, 1962
C0111Ptroller of the Currency,
Treasury
Department,
wa
shington 25, D. C.
Attention: Mr. W. M. Taylor,
Deputy Comptroller of the Currency.
Dear Mn.
Comptroller:
Reference is made to a letter from your office dated
No7
ember 9, 1961, enclosing copies of an application to organize a
nal bank at Evansdale, Iowa, and requesting a recommendation
6ID 'whether or
not the application should be approved.
n
A report of investigation of the application made by an
--.L.Lner for the Federal Reserve Bank of Chicago indicated that a
c
aeaPital
0
structure of $250,000 is to be provided rather than $200,000
riginally proposed. The proposed $250,000 appears adequate and
-L other
factors usually considered in applications of this nature
eatisfactory. Accordingly, the Board of Governors recommends
%arable consideration of the proposal.
It
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
F.
BOARD OF GOVERNORS
otz
4,04yol
OF THE
, %
ottl" 1 Ts4
4'
41
to
2t
Item No. 7
FEDERAL RESERVE SYSTEM
2/15/62
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
04t
04404
February 15, 1962.
Mr, Marcus A. Harris, Vice President,
Federal Reserve Bank of New York,
New York 45, New York.
D11 Mr. Harris:
This will acknowledge receipt of your letter dated
February 2, 1962, concerning the 1961 operations of the Nassau
County and Bergen County clearing bureaus.
It is noted that the Federal Reserve Bank of New York
believes that the two clearing bureaus continue to provide an
efficient service and that no change in the basic arrangements
with these bureaus is warranted at this time. It is also noted
that the bureaus are studying the feasibility of utilizing
electronic equipment for processing checks. The Board would
ePpreciate being advised should this program or the electronic
21,lieck program at the Reserve Bank make it desirable to revise
"
agreement with respect to participation in the costs of
the bureaus.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
••
s.11)
Item No. 8
TELEGRAM
LEASED WIRE SERVICE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
February 15, 1962.
Swan.San Francisco
Board has noted without objection rental of check
ecalection equipment referred to in your letter February 7, 1962.
(Signed) Merritt Sherman
Sherman
2/15/62
08,3
44trtItt
btri
517,
i„
BOARD OF GOVERNORS
OF THE
Item No.
2/15/62
FEDERAL RESERVE SYSTEM
WASHINGTON
OFFICE OF THE CHAIRMAN
February 15, 1962.
TPs Honorable John E. Moss, Chairman,
'Pecial Government Information Subcommittee
of the Committee on Government Operations,
)E1218, George Washington Inn,
"shington, D. C.
r
Dear Mr.
Moss:
This refers to your letter of October 23, 1961, transmiteb.a copy of House Report 1215 relating to the survey by the
,
3
lal Subcommittee on Government Information of the House Corntree on Government Operations to determine the extent to which
oPhone monitoring and recording are practiced in the Federal
"rnment.
in
1:ti.t(3,
Your letter:
glad to furnish the following information requested
b!utber of transmitter cutoff switches in use at Board
4nnual cost of transmitter cutoff switches 1960-61
29
$37.80
Number of listening-in circuits in use at Board
Annual cost of listening-in circuits 1960-61
2
$18.00
Telephone recording equipment purchased or leased
by Board
None
As you know, the transmitter cut-off switches give less
Privac
Y and may result in somewhat less satisfactory transmission
of
evec°nversation than the more costly listening-in circuits. Bowen , since the needs of the offices having listening-in circuits
:
nie;be served
adequately by transmitter cutoff switches, arrangeare being made to install th,e more economical equipment.
The report furnished with your letter has been read with
inter
arr, rest, and careful consideration has been given to the conclusions
mmmendations included in it. It is noted that the House Comwritten
"clear,
of
adoption
the
urges
Operations
ee cm Government
ittee
nupill,ations" that "advance notice must be given" whenever either
tcTing or recording is contemplated.
9
The
Honorable John E. Moss
-2-
As indicated in the Boardts letter of July 10, 19612
rePlying to your letter of June 23, 1961, no monitorin is done by
g
°tar telephone operators, no
recording devices are used to monitor
21ephone calls, and no occasion has arisen that would suggest the
ncessity for the Board to issue regulations covering the monitoring
telephone calls, other than the request contained in your letter
of October
23.
The occasions on which there may be monitoring of telePhone calls
at the Board fall into two categories. One of these,
Which is
relatively rare, occurs when a secretary is asked to make
Iverbatim
record of part or all of a telephone conversation. The
''''°ard believes that in every such instance there should be clear
acTsi?uncement of
that fact prior to the making of the record. Speannouncement ordinarily has been given in any such case and,
tor"
is assure
that this will be a consistent practice, the Board is
c,;;Iing an instruction requiring notice to the other party to the
never a secretary is to be requested to make a verbatim
record of part
or all of the conversation.
The other and more frequent, although by no means common,
of "monitoring" occurs when a secretary is asked to be on the
so that she may provide any necessary or relevant material that
'
be .14 assist in handling
the call expeditiously, or so that she may
th lnformed of the nature of the conversation without repetition by
ef;Principal of things she needs to know to perform her duties most
faiT:ivelY. This type of secretarial assistance is believed to be
arid'? widespread and understood in both private and public business,
exce°oviously no secretary at the Board would engage in the practice
stanI"
c31 upon specific request or on the basis of an express underof ing with her principal. The Board looks upon this second type
:
till Lonitoring"
as a means to greater efficiency in the use of the
of both principal and secretary.
case
anno—c In addition to issuing the instruction requiring clear
eiret
7 ement of the making of a verbatim record, the Board also is
helxi lating this letter among the members of the staff. This is
in order to make certain that a secretary is to remain
line only for the purpose of, assisting in the handling of
e
to
or in keeping the secretary informed of things she needs
1119.4-°w in connection with her work, and that no effort is to be
the I:° avoid disclosing to anyone that the secretary may be on
4.-Lne for this
purpose.
or the done
Sincerely yours,
(Signed) Wm. McC. Martin, Jr.
Wm. McC. Martin, Jr.
Item No. 10
2/15/62
UNITED STATES OF AMERICA
BEFORE THE EOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
44.1
Via
eft
-----------------
In the Matter of
the Application of
PlItST SECURITY
CORPORATION
prior approval of acquisition of
!
)
-3. the voting
stock of Carbon
tiliery Bank,
Price, Utah.
11.
.1.1111
••1*
ORDER DENYING APPLICATION UNDER
BANK HOLDING COMPANY ACT
WHEREAS, there has come before the Board of Governors, pursuant
to
ecticn 3(a)(2) of the Bank Holding Company Act of 1956 (12 USC 1842)
arid section
4(a)(2) of Federal Reserve Regulation Y (12 CFR 222.4(a)
(2)) an aPplication on behalf of First Security Corporation, Salt Lake
°it:Y.3 Utah, for
the Boardis prior approval of the acquisition of all
the voting stock of Carbon Emery Bank, Price, Utah; a Notice of Receipt
or
ADPlication has been published in the Federal Register on September 27,
1961 (4
\-u Federal Register 9098), which provided an opportunity for subOf comments and views regarding the proposed acquisition; and
the
tiinle for filing such comments and views has expired and no such
e°41ents or
views have been filed;
588
IT IS HEREBY ORDER:D, for the reasons set forth in the
8aardis Statement of this date, that said application be and hereby
13 denied.
Dated at Washington, D. C. this 15th day of February, 1962.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and
Governors Balderston, Hills, Robertson,
Shepardson, and King.
Absent and not voting:
Governor Ilitchell.
(Signed Merritt Sherman
Plerriit Sherman,
Secretary.
(Sta)
Item No. 11
2/15/62
BOARD OF GOVERNCRS
OF
THE
FEDERAL RESERVE SYSTEM
APPLICATION BY FIRST SECURITY CCRPCRATION FOR
APPROVAL OF THE ACOUISITICN OF ALL THE VOTING STOCK
OF CARBON DERY BANK, PRICE, UTAH
STATETTNT
First Security Corporation, Salt Lake City, Utah ("Applicant"),
a bank holding company, has applied, pursuant to section 3(a)(2) of the
41*Holding Company Act of 1956 ("the Act"), for the Boardts prior
41°17a1 of the acquisition of all the voting stock of Carbon Emery Bank,
?ice, Utah
(”Bank").
Views and recommendations of supervisory authority,. - Pursuant
t° 8eotion 3(h)
of the Act the Bank Commissioner of the State of Utah
Waa asked for his views and recommendations. He interposed no objection
t°aPproyal of the application.
Statutory factors. - Section 3(c) of the Act requires the Board
to take .
Into consideration the following five factors: (1) the financial
histor,
J and Condition of the holding company and bank concerned; (2) their
1°sPects; (3) the character of their management; (4) the convenience,
lieeds, and
welfare of the cormunities and the area concerned; and
(5) /0,
'Lether or not
the effect of the acquisition would be to expand the
12'e c31" eXtent of the bank holding company system involved beyond limits
e°11iatent with adequate and sound banking, the public interest, and
the
Ill
'
esQrvation of competition in the field of banking.
5S0
-2Discussion. - The Applicant, a bank holding company with its
Pl'incipal office in Salt Lake City, Utah, awns a majority of the stock
ef five banks, one each in Idaho and wiyoming, and three in Utah.
The
Utah banks are First Security Bank of Utah, N. A., Ogden, First Security
State
Bank, Salt Lake City, and Sanpete Valley Bank, fount Pleasant. At
june 30, 1961, Applicant's banks operated 77 of the three States' total
clf 293 banking offices and held 5l8 million of the
IlePesits held by all banks in the three States.
2 billion total
In September 1961, the
13(pard approved Applicant's acquisition of Sanpete Valley Bank, fount
Pleasant, Utah, which operates one office and at June 30, 1961, held
deposits of 0.7 million. Applicant's largest banking subsidiary, First
Secu tY Bank of Utah, is the largest bank in the State of Utah. Applicantls
These
second largest bankin: subsidiary is the largest bank in Idaho.
banks held deposits at June 30, 1961, of '303.5 million and
:1199
million, respectively. Its banking subsidiary in Uyoming had
total
5 million at June 30, 1961.
deposits of approximately )
Bank is located in the city of Price, 100 miles southeast of
Salt Lake city; the 1960 population of Price was 6,800. Bank's primary
aerv
'ee area (the area from which approximately 75 per cent of its total
der,
y-its
originate) encompasses Carbon County and adjoining Emery County,
the t
140 counties forming a natural economic and trade area. The 1960
P°Pulatien of Carbon County was approximately 21,000 and that of Emery
NI/ItY about
bank in the State with
5,500* Bank is the ninth largest
total
dePcsits of 10.8 million at June 30, 1961. At the same date,
591
the '
4-,
40
other banks located in Carbon County, First National Bank of
Price in Price, and Helper State Bank about 7 miles northwest of Price
Helper, had total deposits of„s4.5 and
34
million, respectively.
Bankrecently has been authorized to establish a branch at Sunnyside in
41130n County, which would give Bank two of the county's four banking
°ffices,
The financial history and condition of both Applicant and Bank
are satisfactory and their prospects favorable.
The past history of Applicant's operation reflects capable
and
management. Bank's financial history and condition, its
l'()1/t11 record, and its favorable earnings record justify the conclusion
that
its Present management is satisfactory. Applicant asserts that
Bar
.
ls faced
with a problem in regard to management succession and
eltirillitY that would be relieved by approval of this application. Hcwever A
11Pplicant has not shown any effort on the part of Bank's officers
or
t-tirectors to assure management succession other than through a proSale of Bank.
Bank's oprat-Ing earnings, as well as its capital
13(liti"., appear sufficient to enable it to offer reasonably attractive
e°1'1Pensation and other benefits so as to draw competent management and
he reasonably assured of its continuity.
In respect to the convenience, needs, and welfare of the
eotIrral_. .
"2-ties and the area concerned, it appears thet Bank, together with
the
l'Irst National
Bank of Price and the Helper State Bank, is providing
%at
e and satisfactory service. In this connection, Applicant states
-4that
under its ownership Bank would be able to offer trust department
services, could take care of all deserving borrowers without resorting
to help from
outside financial institutions, and could, in particular,
better meet the
demands of prospective borrowers in the field of conslInler credit and home financing. In brief, Applicant asserts that it
wellid render
banking services substantially equivalent to those offered
5 r1 the larger
centers in which its present banking subsidiaries now
OPerate.
Applicant's ability to furnish services within Carbon and
Eker-rn
-ounties comparable to services it offers in larger and perhaps
ec°11°Inically different areas would, of course, benefit anyone who actually
had
need of such services. However, it has not been shown either that
there
ilsts an unserved demand for the additional services that a sub-
cl117 of Applicant miiht offer or that the banking services that are
'
l'
4(114red cannot be provided adequately by Bank and its two competitors
in carbon County.
In connection with Applicant's statement that loans in the
Carbo
n-Lmery area would receive its particular attention, especially con'installment and home financin
ens appear pertinent.
haa
loans, the follouins facts and con-
Bank has stated that within the past year it
not
issued to any other banks participations in loans. There is no
eviden
ee °f a presently unserved area demand for consumer installment
1.1(1
I1.Orre
• financin
loans; and it is noted that a comparatively small per-
eenta
ge of Bank's total loans outstandinE; is of these types and that
+0.
-5a relatively
low ratio of total loans to deposits is reflected in the
M21-shed statements of Bank and its two competitors.
Should the
demand for these or other types of loans increase, a prospective develop"not readil-r to be anticipated from any circumstances set forth in
rile
the application, there is nothing to suggest that the increased demand
cannot be met
suitabl:,r by Bank and its coppetitors, either directly or
through participation of correspondent banks.
Ath respect to the fifth factor enumerated in section 3(c) of
the Act, for the reasons hereafter discussed it is the Board's judgment
that
'Ile acquisition of Bank would expand Applicant's system beyond
limit
3
consistent with adequate and sound banking, the public interest
and the
Preservation of banking competition.
As of December 31, 1960, Applicant controlled two banks in
litah
operating 43 banking offices in 16 of the 29 counties in the State,
haw„
total resources of '348 million and total deposits of :,?31.4 million.
ties,
'
totals represented, respectively, 36 per cent of the banking offices
the
-vaLe) 32 per cent of the total resources, and 31 per cent of the
total
"Posits of all banks in the State. The recent acquisition of
SanPete
valley Bank increased Applicant's subsidiary banking offices to
44 ancl ,
tile counties within which it operated to 17. These 44 banking
Ot&co5
eitori
held, at June 30, 1961, ',,;318 million of deposits. With the acqui-
_
°f
Bank, Applicant's
45
banking offices (excluding the proposed
nnyn.A
-3.ze office) would represent
41.5 per cent of the banking offices
in 18
°I the State's twenty-nine counties, 4 of the twenty-nine having
-6II° banking offices. Using June 30, 1961 figures as a basis, these
45 banking
offices, representing 37 per cent of the State's total banking offices, would hold 34 per cent of the total deposits of all Utah
banks.
Within the area comprising Carbon County and the
6
counties
"nticuous to it, Applicant's subsidiaries operate 9 of the 24 banking
qfices. On the basis of June 15, 1960 deposit figures (the latest date
f°r Ilhieh deposits b
counties are available) these 9 offices held
36 Per cent of the deposits of individuals, partnerships and corporations
N200
deposits") in the seven-county area. This percentage would be inereaR.A
to
45
by the acquisition of Bank.
Applicant controls no banking offices in the Carbon-Emery area.
The nearest office controlled by Applicant and accessible by principal
highI
laIrs is about 70 miles northwest of Price. Other of its subsidiaries'
Offic
es accessible by major highways are from 75 to 115 miles from Price.
The
distances involved, when considered in the light of the geographical
charac
teristics of the area, sup ort the conclusion that coE?etition beeen
Applicant's present banking subsidiaries and Bonk is relatively
insiallificant. Not insignificant, however, in the Board's judgment,
/olo,
'
4-ct be the
impact of the acquisition on the remaining banks in the
area
concerned and, inevitably, upon those doing business with the banks,
More broadly, upon the general bankin:, structure.
If Bank were to be acquired, Applicant's predominant position
thi
the State, and ithin the particular areas therein earlier dis-
aed, llould be extended to and magnified within Carbon and Emery Counties,
Bank t e primary service area. Bank aheady is the largest of the three
banks located in Carbon County and servinL: the two-county area. It is
the ninth largest bank in the State, and the only bank in the State with
head of ice south of Salt Lake City with total deposits at June 30, 1961,
excess of ";10 million.
At the same date, it held 50 per cent of the
11'0 deposits,
Si per cent of the total deposits and
44 per
cent of the
1°ans and discounts held by the three banks located in Carbon County.
AS earlier
noted, approval has been given for Bank to establish an
a4ditional office at Sunnyside in Carbon County. Applicant proposes to
°Perate Bank
and its branch at Sunnyside as offices of First Security
13ank of Utah. Approval of this application, followed by merger of Bank
First Security Bank of Utah,would thus immediately enable Applicant,
°Perlating through offices of a subsidiary bank with total deposits in
exces
8
°f 300 million, to compete against the two remaining unit banks
Cart
14
0n County, one with $6.5 million of deposits, the other with
roalio_n.
The proposed affiliation would also reduce by one the
11101ber of
alternative sources of correspondent banking services available
t° these
two remain4ng banks since, as a practical matter, they would
411°14 referr-'Er
— , correspondent business to a Salt Lake City bank that
la
e°1143eted directly
with them in Carbon County.
Approval and consumma-
tl°11 of the pr000sed acquisition would reduce to seven the nonholding
e°14allY banks in the State having deposits in encess of $10 million and,
5'-r11111taneously, would increase the control by the Statels two bank hold1/1
g c°11Panies, combined, to approximately 46 per cent of the offices and
51 .'cr
n cent
of the de3osits of all banks in the State. Applicant would
'41ell be oporat-inL; in all but seven of the 3-tate's 25 counties having
bar111-111J.: offices.
In view of the proportion of the total banicnj resources of the
,
i
IL'ate and of the areas therein narticularly pertinent to this application
tilt —
presently concentrated under Applicant's control, and despite
the
fact that acquisition of Bank would not result in a substantial perincreasr in the total resource size of Applicant's system, it is
iudr. erlt of the Board that introduction of Applicant's systcm into
the c
alt°11-irer'r area uould result in a (ileree of dolljnnce that Lodld
r the future colpetitive ability and LTowth potential of the
area,
l'eldaining banks.
The ins171-ificant increase in benefits to the
c°11-11Initics and area concerned that may be anticipated from Ap;plicant's
°:)eratf_on of Bank
is insufliciont to outweigh the adverse consequences
to the ban,4s
concerned and to the public that are inherent in the proposal.
1.coordingly, virjng the relevant facts in the ljTht of the
uu? ocs of the Act anP the factors enuncreteC in section 3(o), it
ls thp
JuctIment of the Board that the proposed acquisition uould not be
c()risstellt 'Tith the statutory objectives and the public interest end tiet
the
aDDlication shoul: be denied.
.'e°1'llarY 15) 1962.
@FedFRASER