The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Minutes for February 19, 1958 Members of the Board Prom: 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 proposed to place in the record of policy actions required to be kept under the provisions of Section 10 of the Yrederal Reserve Act an entry covering the item in this set of autes commencing on the page and dealing with the subject reerred to below: r Page 3. Reduction in member bank reserve requirements. Should you. have any question with regard to the minutes, 11i be appreOted if you will advise the Secretary's Office. nherwise, if you were present at the meeting, please initial in :,..olumn 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. it Chm. Martin ° v. ,Elzymtzak OW. Vardaman °I) Mills '40v. Robertson Balderston Gw. Shepardson ( ti2rt Minutes of the Board of Governors of the Federal Reserve System cl1Wednesday, February 19, 1958. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 Martin, Chairman 1/ Balderston, Vice Chairman Szymczak Vardaman Mills 1/ Shepardson Mr. Kenyon, Assistant Secretary Mr. Fauver, Assistant Secretary Mr. Johnson, Director, Division of Personnel Administration Mr. Hackley, General Counsel Mr. Masters, Director, Division of Examinations Mr. Sprecher, Assistant Director, Division of Personnel Administration Mr. Goodman, Assistant Director, Division of Examinations Items circulated to the Board. The following items, which had bee„ c ireulated to the members of the Board and copies of which are attached to these minutes under the respective item numbers indicated, 1" 22.12.12X21 unanimously: Item No. Letter to the Federal Reserve Bank of Chicago granting an ext_ 1 ion of time within which the Ann Arbor Bank, Ann Arbor, may establish a branch at Broadway and Plymouth tett Nev .; to Chase International Investment Corporation, New it°rIt., extending to February 10 1959, the time within which be.,174r make a further investment in Arcturus Investment & 44!loPment, Ltd. (For transmittal through the Federal Reserve Or New York) tered meeting at point indicated in minutes. 2 621 2/19/58 -2Item No. Iretter to the Chairman of the Presidents' Conference e q"sting review by the Conference of the policy covering be 8 nerits for Federal Reserve Bank employees entering military ervice; and letter to the Secretary of the Retirement System Federal Reserve BankB advising of the referral of this to the Presidents' Conference. Zratt t eltter to the Federal Reserve Bank of Philadelphia approving e aPpointment of Mr. Eastburn as officer in charge of the ;e8earch Department and approving the payment of salaries to ertain officers at rates fixed by the directors. 3& 4 5 , To Program for Directors' Day. There was a discussion of the program 'which had been distributed to the members of the Board by Mr. Fauver "ring the annual meeting with newly appointed or elected directors of Pederal Reserve Banks and branches to be held this evening and tomorrow. A f- w suggestions for changes in the arrangement of the program were agreed 111)4 and it was understood that these suggestions would be taken into "count in making the final plans. Governor Mills, who had been detained on business outside the b14111Ing, entered the room at this point. The members of the staff who h4d been in attendance withdrew and the Board met informally with Messrs. Thurs,4_ Assistant to the Board, Riefler, Assistant to the Chairman, of Economic Adviser to the Board, and Noyes, Adviser, Division Re arch and Statistics, present. At the conclusion of the informal discussion the meeting recessed reconvened in the Board Room at 2:00 p.m., at which time Chairman e 14artin) who had testified this morning before the Federal Reserve Subcommitte Or the Senate Banking and Currency Committee, also was present. From the t;22 2719/8 _3_ zta-Ir Messrs. Kenyon, Thurston, Thomas, and Noyes were present along with *A. -oars. Young, Director, Division of Research and Statistics, and Molony, vecial Assistant to the Board. Reserve requirements. At informal meetings of the Board yesterday a te-..00n and this morning consideration had been given to the question or reduction in the reserves required to be maintained by member banks 9iainst demand deposits. There were now distributed to the members of the Board copies of —lilt of press statement which would announce that the Board had reduced "erves required to be maintained against demand deposits by 1/2 of 1 cent, effective February 27, 1958, for central reserve and reserve banks and March 1, 1958, for country banks. The statement had been `15reared with the thought that it would be issued later today if the Board took action such as described therein. Governor Mills stated that he would vote in favor of the proposed racip„.„ —"lon in reserve requirements, for if it was the sense of the Board t° take such action he thought it desirable that there be no dissenting However, for reasons he had stated during the informal discussions *itch preceded this meeting, he would cast his vote reluctantly and with kritht as to the advisability of the action. There followed some discussion of the points which might be made tri favor of a unanimous vote, particularly in the event of inquiry as to the reasons underlying the action. (A',2 2/19/58 -4Chairman Martin then stated that in every important action taken -by the Board it is better for the Board to be unanimous if it call. However, he was not sure whether unanimity was vital in any such se and in this instance he felt it would depend on how strong Governor 181 feelings were on the question. Governor Mills responded that his feelings were not too strong '0,4d that he was of just as strong a belief that the action in this ce should be by unanimous vote. It then being apparent that the Board was in favor of acting Am to reduce reserve requirements against demand deposits by 1/2 of ' '4. 4" cent, effective on the dates indicated in the proposed press 'statement, consideration was given to the wording of the statement and grp -ement was reached on certain minor changes. Thereupon, it was voted unanimously to amend the Supplement to eXaation Dy Reserves of Member Banks, as follows: SUPPLEMENT TO REGULATION D ISSUED BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Effective as to member banks not in reserve and central reserve cities at opening of business on March 1, 1958, and as to member banks in reserve and central reserve cities at opening of business on February 27„ 1958. RESERVES REQUIRED TO BE MAINTAINED BY MEMBER BANKS WITH FEDERAL RESERVE BANKS 624 2/19/58 —5— Pursuant to the provisions of Section 19 of the Federal Reserve Act and section 2(a) of its Regulation DI the Board Of Governors of the Federal Reserve System hereby prescribes the following reserve balances which each member bank of the Federal Reserve System is required to maintain on deposit with the Federal Reserve Bank of its district: l• If not in a reserve or central reserve city (a) 5 per cent of its time deposits, plus (b) 11-1/2 per cent of its net demand deposits. 2. If in a reserve city (except as to any bank located in an outlying district of a reserve city or in territory added to such city by the extension of the city's corporate limits, which, by the affirmative vote of five members of the Board of Governors of the Federal Reserve System, is permitted to malntain the reserves specified in paragraph 1 above)(a) 5 per cent of its time deposits, plus (b) 17-1/2 per cent of its net demand deposits. 3. If in a central reserve city (except as to any bank located in an outlying district of a central reserve city or in territory added to such city by the extension of the city's corporate limits, which, by the affirmative vote of five members of the Board of Governors of the Federal Reserve System, is permitted to maintain the reserves specified in paragraph 1 or 2 above) (a) 5 per cent of its time deposits, plus (b) 19-1/2 per cent of its net demand deposits. The action to amend the Supplement to Regulation D was taken with the un derstanding that a press statement in the form attached as Item No. 6 11°111d be issued today at 4:30 p.m., E.S.T., for immediate release, that "of the Board's action and the text of the amended Supplement to 84111 ation D would be sent by telegram to the Presidents of all Federal Rse "re Banks and the Vice Presidents in charge of all Federal Reserve kIllt -ranches, with the request that State Bank Supervisors in the rea„ 'vective districts be advised of the Board's action, and that a notice -6be published in the Federal Register. It was also understood that Vice Chairman Balderston would get in touch with the President of each Reserve Bank by telephone to discuss matters relevant to the Boardta action. The meeting then adjourned. Secretary's Note: Pursuant to recommendations contained in memoranda from appropriate individuals concerned, Governor Shepardson approved on behalf of the Board on the dates indicated the following items affecting the Board's staff: *".." 4441221-1P. Advance of sick leave to Margaret Dalton, Charwoman, Division of l' ..;;irlistrative Services, for a six-veek period beginning February 25, '1"..1122-12 110%ointment of John W. Nicholson as Assistant Federal Reserve 444aminer rEtte „F. Division of Examinations with basic annual salary at the 1.4 1080, effective the date he assumes his duties. Assistant Secre ry 626 BOARD OF GOVERNORS OF THE Item No. 1 2/19/58 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE SOARO February 19, 1958 1 I'' 11. R. Diercks, Vice President, ! 'ederal Reserve Bank of Chicago, Chicago 90, Illinois. bear Mr. Diercks: 1958, Reference is made to your letter of February 6, , Michigan t* submit ing the request of the Ann Arbor Bank, Ann Arbor, ro the at branch ijan extension of time within which to establish a m7'arsection of Broadway and Plymouth Road cut-off in Ann Arbor, chigan construction In view of delays encountered in commencing the branch building, due to an apparent controversy regarding the facilities for allocation of costs of the installation of sewer 16 area, which controversy has now been resolved, the Board con1959, in your favorable recommendation and extends to March 6, abovethe time within which the Ann Arbor Bank may establish the mtie cribed branch, as originally approved in the Board's letter of ies is effectirch 6, 1957, provided approval of the State authorit Ire as of the date the branch is established. ' 4 Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary. BOARD OF GOVERNORS OF THE tfit tol,„ -ap Item No. 2 2/19/58 FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO TI-4E BOARD February 191 1958 Robert H. Craft, President, 'Chase International Investment Corporation, Pine Street, New York 5, New York. lear Hr. Craft: Reference is made to your letter of January 17, 1958, smitted through the Federal Reserve Bank of New York, regarding Lne Board's letter of February 21, 1957, granting consent and aPproval, for the purposes of Sections 9(c), 9(d)(2), and 10(a) er Regulation K,to your corporation to make a further investment in 4, Arcturus Investment &Development, Ltd., Montreal, Canada, in (whether stock or obligations) up to an amount which, with existing investment, will not exceed US$7,500,000, subject to ne same conditions as stated in the attachment to the Board's 4ettor of December 29, 1954, authorizing the initial investment fl Arcturus and the further understanding, among others, that Ch shall be made within one year from the date of the investment _ Board's letter of February 21, 2957. tr i In accordance with your request and on the basis of the ,p,tformation furnished in your letter, the Board extends to eertlary 1, 1959 the time within which such investment may be made. In this connection, reference is made to Mr. Rockhill's letter of December 16, 1957, advisim: that on December 2, 1957, ,0.7.211, . r corporation made a loan to Arcturus in the principal amount ' c US$375,000, on a demand basis. It was indicated that your i?rPoration did not believe that this demand loan constituted an nestment within the meaning of the Board's letter of February 211 In the view of the Board, it is felt that any loan to , ltl: i cturus should be regarded as an investment within the meaning such letter and that any such loan or investment shall be Ilbject to the various terms, conditions, and understandings BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM 628 h.. Robert H. Craft - 2- stated in the Board's letter of February 21, 1957, as modified 'above as to the time within which such investment shall be made, and the attachment to the Board's letter of December 29, 1954. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary. 629 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 3 2/19/58 WASHINGTON 25, D. C. ADDRESS OrVICIAL CORRESPONDENCE TO THE BOARD February 19, 1958 Mr. J. A. Erickson, Chairman, C onference of Presidents, Federal Reserve Bank of Boston, Boston 6, Massachusetts. Dear Mr. Erickson: The Board of Governors is considering a recommendation of Committee of the Retirement System of the Federal serve Banks requesting approval of the attached resolution adopted the Executive Committee in November 1957. This resolution con— .?erns the benefits provided employees entering military service and te being amended in order to conform with the provisions of the es and Regulations of the Retirement System as amended September 1, 'LY57 the As the consideration of this resolution affects the Board's letter of October 25, 1948, and its attachment covering the "Policy !°r Uniform Treatment of Employees of the Federal Reserve Banks 4,:ntering Service in the Armed Forces of the United States under the elective : Service Act of 1948," and as it is apparent that other r nges are necessary in this policy to bring it up to date, it is equested that the Conference of Presidents consider this subject. For the information of the Conference there are attached .T1Dies of the Board's letter of October 25, 1948, and a letter from "ne Secretary of the Retirement System of November 18, 1957. any It would be the intention of the Board to delay taking by subject this of :,o_tion on the resolution pending consideration e Conference of Presidents. Very truly yours, , Kenneth A. Kenyon, Assistant Secretary. Attachments. 630 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, 0. C. Item No. 4 2/19/58 ADDRESS OFFICIAL CORRESPEINDENCE TO THE BOARD February 191 1958 tr , ‘b valerie R. Frank, Secretary, qelarement System of the Federal ,t,serVt Banks, N .41 fteserve Bank of New York, . II3ric 45, New York. 111' Mrs. Frank: This refers to your letter of November 18, 1957, in which you athrt "the Board that the Retirement Committee at its meeting of October 14, beldics Voted to amend the resolution adopted May 7, 1951, with respect to the theefits provided employees entering military service in order to conform with 8. .Provisions of the Rules and Regulations of the Retirement System as amended gPtember 1, 1957. As the proposed amendments to the resolution also affect provisions the '" 01141,_ letter of October 25, 1948, with respect to the "Policy for m Treatment of Employees of the Federal Reserve Banks Entering Service :Armed Forces of the United States under the Selective Service Act of 1948 it seems desirable that this matter be referred to the Conference of te,Xents for their review and recommendations before further consideration e given to the proposed amendment to the resolution. Z It is the Board's understanding that a delay in consideration of this „ resolution will not be detrimental to the operations of the Retirement -'em as they concern military benefits. The Board will give prompt attention to further consideration of hoe esolution as soon as the recommendations of the Conference of Presidents been received. the Very truly yours, Kenneth A. Kenyon, Assistant Secretary. 631 BOARD OF GOVERNORS OF THE vi t* 4, Item No. 5 FEDERAL RESERVE SYSTEM 2/19/58 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE 4 ,:4LIKVOV o44**** TO THE BOARD February 19, 1958. CONFIDENTIAL (FR) Mr. Henderson Supplee, Jr., Chairman, Federal Reserve Bank of Philadelphia, Philadelphia 1, Pennsylvania. Dear Mr. Supplee: The Board of Governors approves the appointment of Mr. David P. Eastburn as the Officer in charge of the Research Department at the Federal Reserve Bank of Philadelphia, with the title of Vice President, effective March 1, 1958, in accordance with the action taken by the Board of Directors as reported in Mr. Williams, letter of February 6, 1956. The Board of Governors also approves the payment of salaries to the following officers of the Federal Reserve Bank of Philadelphia for the period March 1, 1958 through December 31, 1958, at the rates indicated. Annual Salary Title Name David P. Eastburn Murdoch K. Goodwin John R. Bunting William A. James, Jr. Evan B. Alderfer Clay J. Anderson James V. Vergari Vice President Vice President, General Counsel, and Asst. Secy. Business Economist Personnel Officer Economic Adviser Economic Adviser Vice President Very truly yours, Kenneth A. Kenyon, Assistant Secretary. $14,000 15,000 10,500 9,000 14,000 14,000 18,000 632 Item No, 6 2/19/58 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Statement for the Press For immediate release February 19, 1958. The Board of Governors has reduced by 1/2 of 1 per cent reserves required to be maintained by member banks of the Federal Reserve System against demand deposits. This action will release about $500 million from present required reserves. For central reserve city banks the reduction from 20 per cent t° 19-1/2 per cent of net demand deposits will release about $125 million Of reserves. At reserve city banks, the reduction from 18 per cent to 17-1/2 per cent will release about $195 million, and at country banks the change from 12 per cent to 11-1/2 per cent will release approximately $180 million. For central reserve city and reserve city banks, the effective date for the new requirements is February 27, 1958, and for country banks, March 1, 1958.
@FedFRASER