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Minutes for February 17, 1958 To: Members of the Board From: Office of the Secretary Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement with respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. Otherwise, if you were present at the meeting, please initial in column A below to indicate that you approve the minutes. If you were not present, please initial in column B below to indicate that you have seen the minutes. Chm. Martin Gov. Szymczak Gov. Vardaman Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson :17 Minutes of the Board of Governors of the Federal Reserve System Oh Monday, February 17, 1958. The Board met in the Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Martin, Chairman Balderston, Vice Chairman Szymczak Vardaman Mills Shepardson Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Carpenter, Secretary Kenyon, Assistant Secretary Riefler, Assistant to the Chairman Young, Director, Division of Research and Statistics Johnson, Director, Division of Personnel Administration Hackley, General Counsel Masters, Director, Division of Examinations Shay, Legislative Counsel Farrell, Assistant Director, Division of Bank Operations Sprecher„ Assistant Director, Division of Personnel Administration Solomon, Assistant General Counsel Items circulated to the Board. The following items, which had been circulated to the members of the Board and copies of which are attached to these minutes under the respective item numbers indicated, Ilayoved unanimously: Item No. Letter to The Chase Manhattan Bank, New York, New York, 13r°ving the establishment of a branch in Bayamon, elt° Rico. (For transmittal through the Federal W"erve Bank of New York) 1 Laetter to The Chase Manhattan Bank, New York, New York, the establishment of a branch at 410 Park 11 A1,1r°ving nue• (For transmittal through the Federal Reserve ""a Of New York) 2 2 0.3k 2/17/58 -2Item No, Letter to Lincoln Rochester Trust Company, Rochester, New York, approving the establishment of a branch at Penn Yam, New York, incident to a proposed merger with The Citizens Bank of Penn Yan. (For transmittal through the Federal Reserve Bank of New York) 3 Letter to Security Trust Company of Rochester, Rochester, New York, approving the establishment of a branch in Penn New York, incident to a proposed merger with Baldwin's auk of Penn Yan. (For transmittal through the Federal Reserve Bank of New York) 14. Letter to The Toledo Trust Company, Toledo, Ohio, approving the establishment of a branch in Adams Township. (For transmittal through the Federal Reserve Bank of Cleveland) 5 Letter to Farmers and Merchants National Bank of Monticello, Monticello, Indiana, approving its application for fiduciary Powers. (For transmittal through the Federal Reserve Bank of Chicago) 6 Prior to approval of the foregoing Item No. 2, there was some discussion of the time which The Chase Manhattan Bank should be given initially to establish the branch at 410 Park Avenue. The Division of xaminations had recommended twelve months and Governor Robertson had attached to the file when it was in circulation the following note: "This is the kind of a case I would make an exception to the 12 month rule we have applied elsewhere. But the one year proviso can be extended later if we wish." During the discussion Mr. Masters stated that in approving a branch application the New York State Superintendent of Banks grants initially a period of only six months to establish the branch and Governor Mills expressed doubt whether it would be advisable for the 559 2/17/58 .3.. Board, to vary too much from the general practice it had been following, Particularly when the time for establishing a branch can be easily extended. Therefore, even though in this particular case it was clear that the building in which the branch was to have its quarters could riot be made ready within twelve months, it was agreed to approve the aPPlication on that basis, with the understanding that in the absence Of unforeseen developments a request for an extension of time would receive favorable consideration. At this point Mr. Molony, Special Assistant to the Board, entered the room. Esuest from Congressman Moss (Item No. 7). Pursuant to the Understanding at the meeting on February 130 1958, there had been distributed to the members of the Board copies of a revised draft of letter to Chairman Moss of the House Government Information Subcommittee in lesPonse to his letter of January 28, 1958, regarding the availability ' °f loaa applications for public inspection. Mr. Hackley called attention to certain questions that had been laised within the staff concerning the most recent draft, particularly ' the proposed inclusion of a reference to the fact that, in implementing °15en market policies, the Reserve Banks at times enter into repurchase eoatracts with nonbank dealers in United States Government securities. lie Said that while this sentence had been inserted in the draft in the interest of furnishing all possible information, it might be considered 11114ecessary and its inclusion could raise questions about the status of rePUrchase agreements. 2/17/58 -4After discussion of this point, agreement was expressed with a suggestion by the Chairman that the reference to repurchase agreements be omitted. There followed consideration of certain questions raised by Governor Vardaman, especially concerning whether a statement that the Federal Reserve Banks are not agencies of the Federal Government might be susceptible of misinterpretation. To clarify this, it was suggested that the words "in the sense of your inquiry" be armed. Thereupon, unanimous approval was given to a letter to Chairman 14(3s8 in the form attached as Item No. 7. At this point Mr. Thomas, Economic Adviser to the Board, entered the roc,m. question of including reference to Retirement System changes in 11.118 Annual Report. In a memorandum dated February 4, 1958, which had been circulated to the members of the Board, the Division of Personnel Adniirlistration raised the question whether textual material should be included in the Board's Annual Report for 1957 with regard to the changes the Retirement System of the Federal Reserve Banks which became efrective September 1, 1957. Following a discussion which indicated that a policy of full disclosure was favored by the Board, it was agreed unanimously that the text of the Annual Report should contain a paragraph reading as follows: During the year a number of important changes were Planile in the Retirement System of the Federal Reserve Banks which provides retirement benefits for employees St; 2/17/5B -5of the 12 Federal Reserve Banks and of the Board of Governors. The provisions of the Retirement System had been under study for many months. Initially, Industrial Relations Counselors Service, Inc., of New York was engaged by the Federal Reserve System to examine and evaluate the Retirement System in the light of other retirement programs in the cities where Federal Reserve Banks and Branches are located. On the basis of this study and a review by a special subcommittee of the Conference of Presidents, recommendations of this latter group were put into effect, after approval by the Board, on September 1, 1957. The principal changes resulted in an over-all increase in total retirement benefit allowances of about 25 per cent and provided a somewhat more liberal disability pension. The accrued liability for these benefits resulted in an 8.3 million dollar expenditure by the Federal Reserve Banks. The changes referred to did not affect employees of the Board of Governors whose retirement benefits are similar to those of the Civil Service Retirement System. Messrs. Johnson and Sprecher then withdrew from the meeting. Reserve requirements. In accordance with the unnerstanding at the Meeting last Thursday, February 13, there had been distributed to the members of the Board under that date a revised draft of memorandum trclu Mr. Thomas entitled "Program for Revision of Reserve Requirements." 14 addition, there had been distributed copies of a telegram from the ?liesident of the Federal Reserve Bank of San Francisco dated February 14, 1958, suggesting that any legislative proposal with respect to vault cash be so worded as to eliminate any question of the authority of the lloard to permit cash in transit to or from a Federal Reserve Bank to be collated as part of a member bank's required reserves. J'f'-) 2/17/58 -6After Governor Vardaman stated that he was familiar with some Of the staff material that had been distributed to the members of the Board with respect to possible reserve requirement legislation, Chairman Martin reviewed for him the development of the Board's thinking and the type of legislation which the Board had now tentatively decided to recommend to the Congress. Governor Vardaman then stated that he favored the vault cash 13r°Posal and also a broadening of the Board's discretionary power to exempt member banks from the reserve classifications into which they IgoUld otherwise fall. As between the two alternatives contained in the dl'aft legislation, he expressed a tentative preference for the first alternative since he anticipated that additional gradations of reserve lecruirements might open up a "hornet's nest" of annoyances and petitions. ' At least, he said,the Board might well experiment for a year or so before (leciding whether to ask for a further broadening of its discretionary a uthority. Chairman Martin expressed the view that it would be desirable to l14it until after the discussions later this week with the Federal Advisory ' Council and the representatives of the American Bankers Association before Making a final decision between the two alternatives. He then turned to the question of a possible differentiation between savings and other time deposits for reserve requirement purposes, as would be permitted by the most recent form of draft legislation. 563 2/17/58 Governor Vardaman stated that personally he would not be inclined to ask for authority to distinguish between savings and other time deposits because he did not think the problem was important enough to warrant the annoyances which would result from making a differentiation. However, this was a relatively unimportant part of the whole picture and he would go along with the majority of the Board. Mr. Thomas then made a statement at the request of the Board on the composition and volume of time deposits, following which Governor Mills stated that as he studied the proposal more closely the only significant advantage he saw in it was to distinguish further between time deposits and bona fide savings deposits, which he had a strong conviction should be placed in a special and preferred category. However, to put a higher reserve requirement on time deposits of the character controlled by latemationAl institutions and large corporations would seen in a sense to be telling the depository bank that it did not have the wisdom to marshal its resources in such a way as to be prepared to meet its dePosit withdrawals at some future date. The total of such deposits, ags.inst the total of bank deposits and even the total of time and savings clellosits, was not large. That being the case, to single out a certain l'elatively minor type of deposit for special treatment seemed to raise a qUestion. a user of time Governor Mills said he agreed with Mr. Thomas that clePosits can so arrange the flow of maturities as to have a certain portion 564_ -8- 2/17/58 Of his funds mature each month, thus making the time deposits somewhat akin to demand deposits. Nevertheless, at the inception there would have to be an interval of 90 days or six months, or whatever period was agreed upon. Thus, the depository bank would have advance notice and warning to prepare itself to meet those deposits at the time of their w ithdrawal. Beyond those considerations, moreover, there was a further thought which had persusned him, Governor Mills said, that the use of time deposits by foreign institutions, large corporations, and other depositors in a very real sense lends support to Federal Reserve monetary and credit policy. In a period of three years there had been two examples Of that type of support, the first being when the yield on Treasury bills rose to a point where time deposits were no longer attractive and the tUnds on time deposit then moved into Treasury bills. The deposit losses calse at a time when the System was following a restrictive credit policy and consequently served to strengthen the effectiveness of that policy. At Present, however, the opposite condition prevailed, the rate on time clePosits being above the yield on bills. Thus, funds were attracted to time deposits and offered a basis for some measure of credit expansion. there Governor Szymczak said that in principle he agreed that Iras a difference between savings and other time deposits. In terms of strategy, however, he felt that in discussions with the Federal Advisory C°Unoil and the American Bankers Association the Board might be prepared C, 2/17/58 -9- to Pull back, if necessary, on the proposal to differentiate between such deposits for reserve requirement purposes. Following further discussion, Chairman Martin inquired of Governor Vardaman whether the general approach to legislation now being considered by the Board was satisfactory to him, and Governor Vardaman responded that it was highly satisfactory. As to differentiating between savings and other time deposits, he felt that it might not be a bad idea to offer the proposal in discussion for trading purposes. However, he felt that 1114c1I trouble and confusion might result from making a distinction between those types of deposits; in other words, the trouble created might outIgaigh the benefits gained. Mr. Masters then referred to the use of trust department funds on 4 time basis, resulting from a decision by the Board in 1949 which permits a bank to transfer from a demand to a time open account basis funds lihich would normally be held on demand deposit for tryst funds, if the barik makes an advance determination that the funds will not be needed fOr 4 30-day period. He said that the problem which had arisen was lalbgelY one of definition and that there had been a tendency for some ballks, particularly in large centers, to transfer to a time basis all mc/IlaY in the trust department. The amount of funds so transferred had lacreased very substantially since 1949, and this practice was extremely difficult for the examiners to police. One means of approaching the Problem would be to have a different reserve requirement ratio against b 2/17/58 -10- other time deposits, while another way would be to withdraw the 1949 authorization. Mr. Hackley called attention to the difficult administrative Problems involved in attempting to distinguish between classes of deposits under certain circumstances and then went on to comment further regarding the problem to which Mr. Masters had referred. With regard to procedure, Governor Balderston expressed doubt whether the Board should propose changes in the law on which it did not feel strongly. It was important, he suggested, to keep the Board's legislative proposal as simple as possible in order to facilitate its 4ccsPtance by the Congress and others. AS to maximum permissible reserve requirements, however, he would be willing to compromise quite readlaY on the current requirements as statutory maxima. He would be inclined not to put forward a proposal to make a distinction between Savings and other time deposits. To do so would indicate that the Board vas seriously pressing for such a distinction, and retreat would create the appearance that the initial proposal was not made in sincerity. It Might be explained, he suggested, that the Board preferred to retain the Present range for time deposits because the 2 per cent provision in the ABA proposal would force the Board to distinguish between savings 4nd other time deposits despite the added difficulties for the commercial h4nke• Thus, the Board would not advance the idea as something it wanted. He was concerned, Governor Balderston said, that the Board not 8et Up straw arm to be knocked down during the discussions. Instead, he 567 2/17/58 -11- felt that the Board should propose in discussion what it intended to introduce and then fight for it. He favored the simplest possible kind Of bill) and such a bill would not leave much room for compromise. Governor Szymczak indicated that he agreed with much of what Governor Balderston had said. However, he suggested that the same Philosophy which flavored the first part of the tentative legislative Proposal carried on through to the question of savings and other time deposits. He agreed that at some point it might be necessary for the 80ard to simplify its legislative proposal if it wanted to obtain legislation, and in this connection he expressed doubt that it would be Possible to get legislation except on vault cash at this session of the Congress. In substance, he felt that the Board should express its Philosophy on the subject and then see where the matter went from there. The discussion then reverted to the question 'whether to give the Memorandum from Mr. Thomas, perhaps with the portion on savings and time clePosits deleted, to the members of the Federal Advisory Council and the representatives of the American Bankers Association prior to the Oeetings with those groups. Governor Mills asked, along these lines, whether the Board wished to make a proposal at the time of those discussions or to say that it had stIldied the ABA proposal and had concluded that this (its awn tentative Ple-n) was what might be done. To make a proposal might insiicate to the bankers that the Board had solidified its thinking and had tied itself 568 -12- 2/17/58 'without question to a certain formula. With these thoughts in mind, he said, he had mnde a few tentative changes in the memorandum from It% Thomas which would modify the presentation a little. Chairman Martin commented that the Board must be careful to Make it clear that, although it was consulting with the two groups, its tentative thinking was along the lines which would be spelled out for them. He then referred again to the necessity for moving forward within the next two or three weeks if the Board hoped to obtain any legislation at this session of the Congress. Governor Vardaman commented on the extent and effects of publicity in support of the ABA proposal. He then said that in meeting with the Colincil and the ABA representatives he would make it clear that the 'oard could not accept the ABA plan and that, subject to being convinced to the contrary, legislation along the lines which had been drafted was 'What the Board intended to present to the Congress. He did not favor giving any papers to either group unless the Chairman wished to present a brief summary statement in written form. as Chairman Martin then stated that the various views expressed t° approach seemed to differ only in degree. It seemed clear that the 130ard should extend every courtesy to the Council and the ABA group, that they should be given every opportunity to express their views, and that the Board should make clear that, subject to last minute changes, legislation along the lines under consideration represented its conclusions writing, on the subject. On the question whether to distribute anything in 2/17/58 -13- he saw some merit in not following such a course. In any event, he said, the decision could be made after the meetings. Following some further discussion, agreement was expressed on this point. The Chairman then returned to the problem of timing and stated that, although some time must be given for discussion and presentation views, it seemed necessary to submit some legislative recommenaPtion to the Congress by the fifteenth of March at the latest. Perhaps, he suggested, a decision on the time to be allowed for consideration and alibmission of comments should not be made until after the meetings this 'week, for the Board might want to change its proposals in the light of views stated at those meetings. Governor Shepardson suggested that to a certain degree, at least, the Board was vulnerable for not having pursued the matter of reserve requirement legislation more aggressively. In the present circumstances, ha thought that the Council and ABA should be given a reasonable time to comment. In discussion or in subsequent comments, he pointed out, they come up with suggestions that the Board would want to accept. Then the Board would be in a position to make a final decision quickly. With regard to the draft legislation, Governor Shepardson said the diffithat he hmi had some discussion with Governor Robertson about cUlties that might be created and the objections that might be raised by the inclusion of language which would state that "either in individual 57( 2/17/58 cases or under regulations" the Board could permit a member bank to maintain layer reserves than otherwise required. At the joint meeting 'with the Presidents of the Reserve Banks, he recalled, there was some comment to the effect that action in individunl cases might lead to severe administrative problems. Also, at the beginning, there might be strong 010Jection8 to such a proposal on the ground that the Board would be given a very free hand. Governor Robertson, he said, had proposed sa- stituting "in accordance with formula prescribed under regulations of the Board." After some discussion of this point, agreement was reached on c hanging the wording of the draft legislation to say, at the place in question, that a member bank could maintain such lower reserve balances It es the Board of Governors might permit under regulations of the Board." Governor Shepardson then observed that a majority of the Board ePPeared to favor the second alternative form of draft legislation (as Pliesented by the Legal Division). Accordingly, he suggested showing the second alternative first, with the understanding that the other alternative IlcUld be something that the Board could fall back upon in discussion if necessary. After it was agreed to make this change, Governor Shepardson said that the savings and other time deposit suggestion seemed to him to have some merit but that he would be inclined to omit it from the draft legislation and then bring the suggestion into the discussion if the °ccasion should arise. 2/17/58 -15With reference to the suggestion on the vault cash proposal made ta the telegram from President Mangels, the view was expressed that the Board could prescribe by regulation that cash in transit to or from a Reserve Bank was to be included in the cash which a member bank could count as a part of its required reserves. There being agreement with this view, Chairman Martin requested Mr. Hackley to call Mr. Mangels on the telephone and discuss the matter With him. There followed comments by Mr. Molony on the kind of statement Which might accompany a draft of proposed legislation to the Congress and the possibility of adapting the memorandum from Mr. Thomas for that PlArPose. Additional items which had been circulated to the Board (Items 8 The following additional items, which had been circulated to the MeMbers of the Board and copies of which are attached as Items 8 and 9, lespeetively, were approved unanimously: ' Letter to the Federal Reserve Bank of New York approving the payment of salary to Messrs. Coombs and Smedley as Assistant Vice Presidents. Letter to the Federal Reserve Bank of Philadelphia approving a supplemental agreement to a contract between the Bank and President Williams. The meeting then adjourned. 572 2/17/58 Secretary's Note: Pursuant to the recommendations contained in memoranda from appropriate individuals concerned, Governor Shepardson approved on behalf of the Board on February 14, 1958, the following items affecting the Board's staff: bIT.21 !821alt.2 ..... Grace Stewart as Clerk in the Division of International Finance, w3-th basic annual salary at the rate of $3,4150 effective the date she assumes her duties. of Bank Operations, , Evelyn P. Walsh as Statistical Clerk, Division 0 rate of $3,515, the at salary a 24. temporary basis, with basic annual . duties ftective the date she assumes her Traasfer and salary increase Anne Townes Roberson from the position of Stenographer in the Legal ational .vision to the position of Secretary in the Division of Intern to $3,670 from salary annual (!ce, with an increase in her basic 4,n6 Y3)0050 effective February 23, 1958. g Governor Shepardson today approved on behalf of the Board a memorandum from the Division of Examinations dated February 14, 1958, recommending that the annual Conference of Representatives of Bank Examination Departments of the Federal Reserve Banks be held in Washington March 31-April 2, 1958, and that a dinner for selected invitees be held at a local hotel on March 31 at a cost not to exceed $8.75 per person. Pursuant to the recommendation contained in a on memorandum from Mr. Johnson, Director, Divisi 17, ry Februa dated on, strati Admini of Personnel 19580 Governor Shepardson also approved today on behalf of the Board an advance of sick leave to M. Callie Wickline, Nurse in that Division, covering the period February 7-14, 19 Se etary BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 1 2/17/58 WASHINGTON 25, D. C. ADOWE!:31:i OFFICIAL CORRESPONDENCE TO THE BOARD February 17, 1958. The Chase Manhattan Bank, Eighteen Pine Street, New York 15, New York. Gentlemen: The Board of Governors of the Federal Reserve System authorizes The Chase Manhattan Bank, New York, New York, pursuant to the provisions of Section 25 of the Federal Reserve Act, to establish a branch at the intersection of Highway #2 and Comerio Avenue (State highway #167) in the municipality of Bayamon, Puerto Rico, and to operate and maintain such branch subject to the Provisions of such Section; upon condition that, unless the branch is actually established and opened for business on or before February 1, 1959, all rights granted hereby shall be deemed to have been abandoned, and the authority hereby granted shall automatically terminate On such date. furnished Secretary of Puerto authority It has been noted from the photographic copy of a letter dated November 5, 1957, from Acting of the Treasury Rodriguez of the Commonwealth Rico that permission has been granted by that to establish a branch in Bayamon. It is understood, of course, that no change will be made in the location of such branch without the Prior approval of the Board of Governors. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. 571 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 2 2/17/58 ADDRESS OFFICIAL COORREBPONOENCE TO THE BOARD February 17, 1958. Board of Directors, The Chase Manhattan Bank, New York 15, New York. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of New York, the Board of Governors Of the Federal Reserve System approves the establishment of a branch of The Chase Manhattan Bank, New York, New York, at 410 Park Avenue, New York, provided the branch is established within twelve months from the date of this letter. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 3 2/17/58 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD February 17, 1958. Board of Directors, Lincoln Rochester Trust Company, Rochester 3, New York. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of New York, the Board of Governors Of the Federal Reserve System approves the establishme nt of a branch at 140 Main Street, Penn Yan, New York, by Lincoln Rochester Trust Company, Rochester, New York, incident to the proposed merger of The Citizens Bank of Penn Yan, New York, with and into Lincoln Rochester Trust Company, provided (a) the merger is effected substantially in accordance with the merger agreement dated December 12, 1957, submitted through the Federal Reserve Bank of New York, and (b) the merger and establishment of the branch is accomplished within six months from.the date of this letter. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. 576 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 4 2/17/58 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD/ -444k-00* February 17, 1958. Board of Directors, Security Trust Company of Rochester, Rochester 4, New York. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of New York, the Board of Governors of the Federal Reserve System approves the establishment of a branch at 127 Main Street, Penn Yan, New York, by Security Trust Company of Rochester, Rochester, New York, incident to the proposed merger of Baldwin's Bank of Penn Yan, Penn Yan, New York, with and into Security Trust Company of Rochester, provided (a) the merger is effected substantially in accordance with the merger agreement dated December 11, 1957, submitted through the Federal Reserve Bank of New York, and (b) the merger and establishment of the branch is accomplished within six months from the date of this letter. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 5 2/17/58 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD February 17, 1958. Board of Directors, The Toledo Trust Company, Toledo, Ohio. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Cleveland, the Board of Governors of the Federal Reserve System approves the establishment Of a branch in the vicinity of the intersect ion of Glanzman and Byrne Roads, Adams Township, Lucas Opunty„ Ohio, by The Toledo Trust Company, Toledo, Ohio, provided the branch is established within one year from the date of this letter, and the approval of the State authorities is in effect as of the date the branch is established. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item no. 6 2/17/58 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD February 17, 1958. Board of Directors, Farmers and Merchants National Bank of Monticello, Monticello, Indiana. Gentlemen: The Board of Governors of the Federal Reserve System has given consideration to your application for fiduciary powers and grants you authority to act, when not in contravention of State or local law, as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver, committee of estates of lunatics, or in any other fiduciary capacity In which State banks, trust companies or other corporations which come into competition with national banks are permitted to act under the laws of the State of Indiana, the exercise of all such rights to be subject to the provisions of section 11(k) of the Federal Reserve Act and Regulation F of the Board of Governors of the Federal Reserve System. A formal certificate indicating the fiduciary Powers which the Farmers and Merchants National Bank of Monticello is now authorized to exercise will be forwarded to You in due course. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No. FEDERAL RESERVE SYSTEM 7 2/17/58 WASHINGTON OFFICE OF THE CHAIRMAN February 18, 1958 The Honorable John E. Moss, Chairman) Government Information Subcommittee, ,ommittee on Government Operations, Rouse of Representatives, Washington 25, D. C. F Dear Mr. moss: This refers to your letter of January 28, 1958, regarding the ability for public inspection of loan applications filed with rederal agencies and departments. make The Board of Governors of the Federal Reserve System does not anY loans and, accordingly, does not receive any loan applications. The Federal Reserve Banks do, of course, make loans and receive spP-I Lications. While they are subject to supervision by the Board of rvernors, the Reserve Banks are not agencies or departments of the lederal Government in the sense of your inquiry; and it vould appear eref°re that loans made by the Reserve Banks do not come within the 8, of your letter. However, the following information is submitted 1 .Pe -8411ing the lending operations of the Federal Reserve Banks. The lending activities of the Federal Reserve Banks consist tally ally of extensions of credit to member banks of the Federal inenti le Rea System, and such credits are normally made for temporary periods t enable member banks to adjust their reserve positions. For your fg;4Ior ati0n, there is enclosed a copy of the Board's Regulation A re1 ding Federal Reserve Bank advances and discounts. The Reserve Banks sj aUthorized, subject to certain strict limitations, to make loans and ummitments to provide working capital to industrial or commercial busi1e ; s„!eea; but for many years such credits have represented only a very 111 portion of the loans made by the Reserve Banks. The only loans m;7 se e by the Reserve Banks to public organizations are occasional loans ured by gold made to foreign central banks or official international ! bA --Iktng organizations. Consistent with the usual banking practice of treating relations bet veen a bank and its customer as confidential, the Reserve Banks do 40t make th available for public inspection loan applications received by nor do they make public the fact that a specific loan has been '".411,11ted or denied. For the same reasons, it has not been the practice The Honorable John E. 088 to furnish information regarding specific loan applications to members c't Congress or Congressional committees. As far as inspection of applications is concerned, an loans are handled alike without regard to the nature of the borrower. While, as above indicated, information as to specific loans is regarded as confidential, extensive information is published with re8Pact to the volume and nature of the lending operations of the Fed.. !ral Reserve Banks. A statement showing in detail the assets and liabilities of each of the twelve Federal Reserve Banks is published nekly pursuant to section 11(a) of the Federal Reserve Act. In addi:lW, information as to the operations of the Reserve Banks is published In monthly issues of the Federal Reserve Bulletin and in the Board's n448,1 report to Congress. A copy of the latest weekly statement shoving '"a condition of the Federal Reserve Banks is enclosed for your information. Sincerely yours, (Signed) Wm. McC. Martin, Jr. Wm. McC. Martin, Jr. Enclosures. 581 BOARD OF GOVERNORS OF THE Item No. 8 FEDERAL RESERVE SYSTEM 2/17/58 WASHINGTON 25. D. C. ADDRESS orFiciAt. CORRESPONDENCE To THE BOARD February 17, 1958 CO1l1JENT1AL (FR) 142". Alfred Hayes, President, Federal Reserve Bank of New York, New York 45, New York. Dear Mr. Hayes: The Board of Governors approves payment of salaries to Charles A. Coombs and Frederick L. Smedley as Assistant Vice Presidents of the Federal Reserve Bank of New York, for the period January 1, 1958 throuh Lecember 31, 1958, at the rates of 41,18,000 and $16,000 per annum, respectively. While the 1958 rates indicated are the same as those approved for Messrs. Coombs and Smedley as reported in the Board's letter, dated December 13, 1957, to Mr. Bierwirth, the previous approval was in their former capacities as Managers. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 9 2/17/58 WASHINGTON 25, D. C. ADORESS OFFICIAL CORRESPONDENCE TO THE SOAR() February 170 1958 Mr. Henderson Supple°, Jr., Chairman, Federal Reserve Bank of Philadelphia, Philadelphia 1, Pennsylvania. Dear Mr. Supplee: This refers to Mr. Wilgus' letter of February 6, 1958, enclosing a resolution of your Board of Directors and two copies of a supplemental agreement dated February 60 1958, between your Bank and President Williams covering Special payments to President Williams after his retirement. The Board of Governors approves the supplemental agreement to the original contract between the Federal Reserve Bank of Philadelphia and President Williams dated January 11, 1951, and the Secretary of the Board has affixed his signature at the place indicated in the supplemental agreement. The two executed copies are returned herewith. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. Enclosures. This Suppl(zaental Agreement made and entered into this 6th day of F ebruary, 1958, by and between ALFRE'D H. WILLIAAS (hereinafter called Williams) and Fa&RAL RESERVE BANK OF PHILADELPHIA (hereinafter called Bank); WiLEREAS, the parties hereto entered into an agreement dated January 11, 1951, and because of changes in economic conditions, salary adjustments, and retireIkent provisions, now desire to change the amount of $10,000. stated in Paragraph 2 ot said agreement; NOW THEREFORiL THIS AGJULI\LIIT WITNESSETH, That tha parties hereto, inteineling to be legally bound hereby mutually agree as follows: 1. - Paragraph 2 of said agreement of January 11, 1951, is hereby amended cc that the amount of $10,000 per annum stated in Paragraph 2 of said agreement is charkged to $12,500 per annum. 2. » Said agreement of January 11, 1951, shall remain in full fore° and effect in all other respects. IN WITNESS WHEREOF, Williams has hereunto set his hand and seal and Bank 1148 caused these presents to be executed by its proper corporate officers and its corporate seal to by hereunto affixed. (Signed) Alfred H. Williams Alfred S. Williams (SEAL) FiZERAL RESERVE BANK OF PHILADELPHIA By (Signed) H. Supplee, Jr. --77ffirlan of 13eard of Directori (SEAL) Attest Si d Richard G. Wilgus oeorotary The foregoing agreement has been approved by the Board of Governors of the Pecleral Reserve System and, in witness thereof, the seal of the said Board is attached and its Secretary has affixed his signature. (Signed) S. R. Carpenter Secretary (SEAL) ,,1! 11!_raary 17 . 195 8 --------tbatt;)
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