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Minutes for To: February 26, 1960. Members of the Board From: Office of the Secretary Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement 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 t, indicate approval of the minutes. If you were not presen the have you seen your initials will indicate only that minutes. Chin. Martin Gov. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Minutes of the Board of Governors of the Federal Reserve System on Friday, February 26, 1960. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Balderston, Vice Chairman Szymczak Mills Robertson Shepardson King Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Discount rates. Sherman, Secretary Hackley, General Counsel Solomon, Director, Division of Examinations Johnson, Director, Division of Personnel Administration, Connell, Controller Masters, Associate Director, Division of Examinations Chase, Assistant General Counsel Nelson, Assistant Director, Division of Examinations Landry, Assistant to the Secretary Kakalec, Assistant to the Controller The establishment without change by the Federal Reserve Banks of New York, Cleveland, Richmond, St. Louis, Kansas City, and Dallas on February 25, 1960, of the rates on discounts and advances in their existing schedules was approved unanimously, with the understanding that appropriate advice would be sent to those Banks. Items circulated to the Board. The following items, which had been circulated to the Board and copies of which are attached to these Minutes under the respective item numbers indicated, were approved Unanimously: Item No. Letter to the Federal Reserve Bank of Cleveland ePproving the payment of salary to an Assistant Vice ?resident at the rate fixed by the Board of Directors. 1 2/26/60 -2Item No. Letter to Manufacturers and Traders Trust Company, Buffalo, New York, consenting to its merger with the Bank of Blasdell, Blasdell, New York, and to the establishment of a branch incident to the merger. 2 Mr. Johnson withdrew from the meeting at this point. Budget Performance Report - 1959. There had been distributed to the members of the Board a Budget Performance Report for 1959 in which the Controller recommended that acceptance of the Report be considered to be approval of several instances of divisional overexpenditures. Following an observation from Governor Shepardson that he had no comments to make on this report, Mr. Connell stated that he hoped the Report explained to the Board's satisfaction all over and linderexpenditures by the various divisions of the Board during 1959. He noted that the largest underexpenditure related to the special study on financing 01 Small business for which $500,000 had been allowed in the budget and for which a total of only $45,000 had been spent. The second largest Underexpenditure related to the Board's payroll, and the total of all 44derexpenditures was about $775,000. With respect to the payroll item, Governor Shepardson noted that the underexpenditure reflected a condition 01 underemployment arising from the difficulty of filling positions at 4PPropriate levels. Chairman Martin observed that the presentation in the Report Igez quite clear and direct, and Governor Balderston added that he was 790 2/26/6o -3- impressed with the form of presentation which separated special projects from more routine matters in the budget, serving as an aid to the Board in appraising the cost of these special projects. Governor Shepardson then called attention to overexpenditure items, summarized in Schedule B of the report. Mr. Connell observed that there were only two overexpenditures Of any consequence: (1) that connected with the survey and report of examination procedures followed in examining the Federal Reserve Banks, conducted by Price Waterhouse, the bill for which had arrived late in January 1960, and (2) the cost of the security clearance program relating to the defense planning function. The Budget Performance Report for 1959 was then accepted, with the understanding that this included approval of overexpenditures reported therein and not previously approved. Messrs. Connell and Kakalec then withdrew from the meeting. Telephone call from Mr. Hoagland. Messrs. Hackley and Chase Ported on a telephone call from Mr. Hoagland of Denver, an attorney for Centennial Fund, Inc., who expressed disappointment at the Board's rUling of February 24, 1960, that under section 32 of the Banking Act '1933 a director of a member bank could not at the same time serve as °I 4 director of a closed-end investment company in the process of being °rganized. Mr. Hoagland felt that the Board's ruling discriminated against his client, stating that to his knowledge other bank directors I 2/26/60 had served as directors of closed-end investment trusts during their organization. Mr. Chase stated that no such cases as those referred to by Mr. Hoagland had been brought to the Board's attention, although it was entirely possible some member bank directors had also served as directors Of closed-end investment trusts while they were being organized. In any event, the Board's ruling was not affected by any omissions that might have been made in the past with respect to the application of section 32, and this was the first case of the type that the Board had ruled on. The Legal Division believed that the Board's ruling as contained in the 'tire sent to Mr. Hoagland on February 24 was correct and that a different ruling would be inconsistent with the statute. Accordingly, unless the Board wished to reconsider the matter, the Legal Division proposed to inform Mr. Hoagland that he should be guided by the ruling sent to him on February 24. Unanimous approval was given to this recommended procedure. Mr. Molony, Assistant to the Board, entered the meeting during the foregoing discussion. At this point, Messrs. Chase and Landry vithdrew, and the following members of the staff of the Division of Examinations entered the room: Mr. Mr. Mr. Mr. Mr. Mr. Mr. Benner, Assistant Director, Leavitt, Supervisory Review Examiner Troup, Supervisory Review Examiner McClintock, Review Examiner Hunter, Supervisory Review Examiner Achor, Review Examiner White, Review Examiner 2/26/60 -5Problem banks - report by the Division of Examinations. There had been circulated to the members of the Board under date of December 28, 1959, a memorandum from the Division of Examinations relating to Problem banks as uncovered in reports of examination during 1959. Members of the staff of the Division of Examinations reported on the more serious cases referred to in the memorandum, following which there vas a brief discussion of the reports. Thereupon the meeting adjourned. Secretary's Note: Governor Shepardson today approved on behalf of the Board the following items: Memorandum dated February 25, 1960, from the Division of Personnel Administration recommending that certain inoculations be made available to the Board's employees in connection with the emergency planning program, aaa that the Division of Personnel Administration be authorized to make all necessary arrangements, with the understanding that the cost of the serums would be paid for by the employees receiving them. The memorandum lloted that provision has been made in the 1960 budget for the fee to the Board's doctor for the administration of the inoculations. Letter to the Federal Reserve Bank of Cleveland (attached Item No. 3) aPproving the designation of specified persons as special assistant examiners. ;1 ,. -- ....) \ 1• \ ' ------7- Secraary k \ 6 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item NO. 1 2/26/60 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD February 261 1960. CONFIDENTIAL (FR) Ur. W. D. Fulton, President, Federal Reserve Bank of Cleveland, Cleveland 1, Ohio. Dear Mr. Fulton: The Board of Governors approves the payment of salary to the following officer of the Federal Reserve Bank of Cleveland for the period April 1 through December 31, 1960, at the rate indicated, which is the rate fixed by your Board of Directors as reported in your letter of February 11, 1960: Name Harry W. Himing Title Assistant Vice President Annual Salary. $11,500 Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C Item No. 2 2/26/60 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD February 26, 1960. Board of Directors, 14anufacturers and Traders Trust Company, Buffalo, New York. Gentlemen: Pursuant to your request submitted through the nors Federal Reserve. Bank of New York, the Board of Gover nt, conse its gives y of the Federal Reserve System hereb it under the provisions of Section 18(c) of the Federal Depos ell, ell, Blasd Blasd of Bank nsurance Act, to the merger of 4ew York, with and into Manufacturers and Traders Trust ent C°mpany, Buffalo, New York, and approves the establishm at ny Trust Compa rs Trade °f a branch by Manufacturers and 23 Lake Avenue, Blasdell, New York. T This approval is given provided: the (1) The proposed merger and establishment of the from s month six branch is effected within in lly antia subst date of this letter and r dated accordance with the Agreement of Merge December 101 1959; stock(2) Shares of stock acquired from dissenting s month three n withi of holders are disposed and n; sitio acqui from the date of authorities is in effect (3) Approval of the State d. at the time the branch is establishe Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE tet§wook*4, FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 3 2/26/60 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD February 26, 1960. Mr. Paul C. Stetzelberger, Vice President, Federal Reserve Bank of Cleveland, Cleveland 1, Ohio. Dear Mr. Stetzelberger: In accordance with the request contained in your letter of February 23, 1960, the Board approves the designation of the following named employees of your Bank as special assistant examiners for the Federal Reserve Bank of Cleveland: J. R. Aufderheide Emil E. Cedel H. Woodie Lange The Board also approves the designation of the following named employees of your Bank as special assistant examiners for the Federal Reserve Bank of Cleveland for the purpose of participating in examinations of member banks except the bank listed immediately above their names: Western Pennsylvania National Bank, McKeesport MQKoesporto Pennsvlvania Ivar Johnson Pittsburgh National Bank Pittsburgh, Pennsylvania David L. Peck G. M. Trowbridge The authorization heretofore given your Bank to designate Mr. Peck as a special assistant examiner is hereby canceled. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary.
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