The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Minutes for February 7, 1958
To:
Members of the Board
From:
Office of the Secretary
Attached is a copy of the minutes of the
s of the Federal Reserve System on
Governor
of
Board
date.
above
the
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 1/
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
6"0
1/ In accordance with Governor Shepardson's memorandum of March 8, 1957, these minutes are not being
sent to Governor Vardaman for initial.
432
Minutes of the Board of Governors of the Federal Reserve System
on Friday, February 7 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 1/
Mills 1/ Robertson
Shepardson
Mr. Carpenter, Secretary
Mr. Kenyon, Assistant Secretary
Mr. Marget, Director, Division of International
Finance
Mr. Hackley, General Counsel
Mr. Masters, Director, Division of Examinations
Mr. Horbett, Associate Director, Division of
Bank Operations
Mr. Conkling, Assistant Director, Division of
Bank Operations
Mr. Furth, Associate Adviser, Division of
International Finance
Mr. Sammons, Associate Adviser, Division of
International Finance
Mr. Solomon, Assistant General Counsel
Mr. Hexter, Assistant General Counsel
Mr. Hostrup, Assistant Director, Division of
Examinations
Items circulated to the Board.
The following items, which had
beeu circulated to the members of the Board and copies of which are
ettached
to these minutes under the respective item numbers indicated,
Vere
!REL'ayal unanimously:
Item No.
tett
-er to The Union and New Haven Trust Company, New Haven,
-04
tecticut consenting to a merger with The Ansonia National
tatk
-$ Ansonia, Connecticut, and approving the establishment
a branch in Ansonia. (For transmittal through the Federal
eserve Bank of Boston)
17-I
iii.7171;e1Tiii-at point indicated in minutes.
43
2/7/58
-2Item No.
Letter to the Federal Reserve Bank of Philadelphia approving
an extension of time within which the Lemoyne Trust Company,
-1 Pennsylvania, may establish a branch in the Borough
Lemo—Juu
Of Camp
Hill.
2
Letter to the Federal Reserve Bank of Cleveland approving an
extension of time 'within which The Union Commerce Bank,
Cleveland, Ohio, may establish a branch at 75 Public Square.
3
Letter to the Federal Reserve Bank of Kansas City ratifying
action taken by the Denver Branch in waiving a penalty incurred
bY the Englewood State Bank, Englewood, Colorado, due to a
deficiency in required reserves.
4
Letter to the Federal Reserve Bank of Dallas granting permission
to Chimney Rock National Bank of Houston, Houston, Texas, to
intain the same reserves against deposits as are required to
e maintained by banks located outside of central reserve and
reserve cities. 1/
5
Letter to the Federal Reserve Bank of Dallas approving an
i estment in bank premises by Security State Bank & Trust
r
°114PanY, Balls, Texas.
6
r
Memoranda from Messrs. Carpenter and Walter Young recommending
'
84 amendment to the Board's regulations relating to employment
lioY in order to carry out the effect of Executive Order
)
,
r,v722. (With a letter to the Chairman of the President's
Mmittee on Government Employment Policy advising of the
aMen(lment)
7, 8
t
Gold loan to Uruguay (Item No. 9).
In a memorandum dated
?ebruary 6, 19580 copies of which had been sent to the members of the
8°41'd, Mr. Marget discussed an application by Banco de la Republica
Approved by the four members of the Board present at the beginning
Of the meeting and also by Governor Mills, who joined the meeting
at the point indicated in the minutes.
2/7/58
_3_
Oriental del Uruguay for a 90-day loan on gold in the amount of
$8 million.
The Board of Directors of the Federal Reserve Bank of New York had acted
favorably
on the application, subject to the approval of the Board of
G
overnors.
While it appeared from available information that the situation
in Uruguay made this a borderline case within the terms of the Policy
Statement
on Gold Loans, Mr. Marget recommended that the loan be approved.
The attention of the Board was called to the fact that the recommendation
Of the New 'York Reserve Bank did not call for authorization to renew the
loan upon maturity.
In commenting, Mr. Marget said that although it was not proposed
t° stiPulate to the New York Bank that the loan should not be renewed, he
hoped
that renewal would not be sought, for he would not like to see the
8Ystem involved in an operation which might seem to encourage the Uruguayans
t° hold back their wool from the market.
In the event of failure to repay
the loan at maturity, he felt that the preferable course would be for the
U/IlguaYans to arrange for sale of the gold collateral, and Banco de la
RePublica had in fact assured the New York Bank that the obligation would
be c0.ncelled at maturity from the proceeds of exports or by the application
°I' 801d held in the custody of the Reserve Bank.
Following a discussion of the Uruguayan situation in relation
to the terms
of the proposed gold loan, unanimous approval was given to
4 telegram to the Federal Reserve Bank of New York in the form which had
been recommended by Mr. Marget. A copy of the telegram is attached hereto
as Item N
435
2/7/58
-4Messrs. Marget, Furth, and Sammons then withdrew from the meeting
and Messrs. Young, Director, Noyes, Adviser, and Dembitz, Research Associate,
Division of Research and Statistics, entered the room.
Policy with respect to disclosing names of registered bank holding
,222.1!all.
At the meeting of the Board yesterday there was preliminary
discussion of the policy which should be followed with respect to disclosing
the names of companies registered under the Bank Holding Company Act, either
14 response to inquiries about specific organizations or through publication
°I* a list of registered companies. Pursuant to the request made at
Yesterday's meeting, there had been sent to the members of the Board copies
°f a memorandum from Mr, Hexter dated February 6, 1958, presenting view
'with respect to the arguments against disclosure which were set forth by
the Division of Examinations in its memorandum dated February 30 1958.
Mr. Rexter's memorandum referred to the fact that the presumption is always
14 favor of disclosure unless valid reasons require secrecy, and the
r)°11ition was taken that in this case valid reasons for nondisclosure had
40t been presented.
Governor Shepardson began the discussion by referring to the
cilleetions which he raised yesterday concerning the memorandum from the
41(ision of Examinations and stated that the points which he had sought
tO
t4
develop through those questions were dealt with to his satisfaction
the memorandum from Mr. Hexter. Accordingly, he continued to feel
"a policy of disclosure would be appropriate and would not be likely
th
t° result in any harmful consequences.
436
2/7/58
-5Mr. Masters then reviewed reasons for the position taken by the
1:Ifision of Examinations, referring particularly to problems which
conceivably
could arise under a policy which initially went only so far
as to provide for a limited response to individual inquiries and also
Pursuant to a policy calling for publication of a list of registered bank
holding companies periodically.
Since Governors Szymczak and Mills had indicated yesterday that
they Would be inclined to favor a policy of nondisclosure, it was then
agreed to postpone further consideration of the matter until they had
Joined the meeting.
Later the discussion continued with Governors Szymczak and Mills
Present.
The decision reached, with Governors Szymczak and Mills dissenting,
to follow a policy of furnishing, in response to specific inquiry,
a statement as to whether a particular company had or had not registered
PUrsuant to the Bank Holding Company Act. This decision contemplated
that further information concerning a bank holding company and its affairs
"
14 11d not be furnished except with the specific authorization of the
18°a d.
It was further agreed, likewise with Governors Szymczak and Mills
a Qenting, to publish in a forthcoming issue of the Federal Reserve
Naleti
r, a list of registered bank holding companies as of December 31,
---
957, and to publish a revised list of such companies, as of year-end,
1:t1 the Federal Reserve Bulletin each year.
2/7/58
-6Repurchase agreements (Items 10 and 11).
Governor Robertson
referred to his comments at the meeting on February 5, 1958, concerning
certain developments with respect to repurchase agreements covering
United States Government securities and to the understanding at that time
that he would present a memorandum on these matters for
the Board's
consideration.
He then distributed such a memorandum, prepared under
today's date. A copy thereof is attached as Item No. 10.
Following a discussion based on the memorandum, the recommendations
contained in it
were approved unanimously, with the understanding that
the views of the Board would be transmitted informally by Governor
Robertson
to the Comptroller of the Currency. A copy of the confirming
letter sent following Governor Robertson's telephone conversation with
the Comptroller's Office, pursuant to this action, is attached as Item No. 11.
During the foregoing discussion Governor Mills joined the meeting,
48 did
Messrs. Riefler, Assistant to the Chairman, Thomas, Economic Adviser
t° the Board, Koch, Associate Adviser, Division of Research and Statistics,
414d Head, Economist in that Division, while Mr. Hostrup withdrew from the
'fleeting.
Reserve requirements. As requested at the meeting on Wednesday,
?ebruazy
5) there had been distributed to the members of the Board copies
or a memorandum
from Mr. Hackley dated February 7 submitting a draft of
1/4sible legislation on reserve requirements intended to
carry into effect
the tentative views expressed by the Board. The draft
legislation provided
438
2/7/58
-7-
for (1) counting of vault cash as part of required reserves, and (2)
b
roadening the Board's authority to permit particular banks in central
reserve or reserve cities to carry lower reserves than those generally
specified for banks in such cities.
Possible legislation were offered.
On the last point two versions of
Both would eliminate the requirement
that five members of the Board vote for permission to carry reduced
reserves, allow such permission to be granted either in individual cases
or bY
regulation, and remove the present limitation in the law relating
to eligibility for lower requirements.
The alternative versions however,
v°uld also broaden considerably the flexibility of the Board's discretion.
PUrsuant to its provisions the Board could, for example, allow a bank
in a reserve city to carry lover reserves than those specified for such
Cities but not necessarily the reserves specified for country banks.
In other words, the Board could establish several gradations in reserve
requ
irements.
Also pursuant to request made at the meeting on February 5,
there were distributed at this meeting copies of a memorandum prepared
'kr. Thomas under today's date discussing the purpose and effects of
1:5
legislation such as that drafted by the Legal Division.
In response to a question raised by Governor Balderston about
distributing
copies of the draft legislation to the Presidents of the
?ederal
the
Reserve Banks, Chairman Martin said that he would like to review
'whole matter over the weekend and have a further discussion at the
43
2/7/58
-8-
meeting of the Board next Monday.
Then, if it developed that the Board
remained favorable to the submission of legislation of this kind to the
C
ongress, he would distribute the draft legislation to the Presidents
immediately with a view to discussion at the joint meeting of the Board
and the
Presidents on Tuesday.
There followed a series of comments, in response to a question
asked by Governor Shepardson„ relating to whether a decision to make a
recommendation in line with the alternative draft legislation would tend
to diminish the prospect of obtaining favorable Congressional action.
The substance of the view expressed was to the effect that the alternative
1311213°8a' might create some apprehension because of the greater degree of
discretionary authority which would be vested in the Board. At the same
tittle, there vas a tendency to agree with Governor Shepardson that, other
things being equal, the alternative version might be deemed preferable
8Ince it would ease the problems of transition to lover levels of reserve
requ
irements.
In this connection, Mr. Horbett observed that the establishment
r
additional gradations of reserve requirements, as would be permissible
114der the alternative version, would not appear to be consistent with
4 deaire
to move in the direction of uniformity of reserve requirements.
l'hie led to a discussion of whether uniformity was in fact favored as
841 eventual objective and, at the request of the Chairman, Mr. Thomas
4Ummarized various arguments which could be made against such an objective.
440
2/7/58
-9-
Mro Solomon then suggested that part of the difficulty encountered in
debating this aspect of the problem might be merely a matter of
terminology.
lie Pointed out that uniformity could be defined as providing the same
treatment under the same circumstances but that difficulty arose in
attempting to establish the meaning of "the same circumstances."
Chairman Martin agreed with Mr. Solomon, stating that he found
it
difficult to justify a system of reserve requirements based on
geographical
distinctions and that the elimination of such a basis was
'what to him carried the meaning of moving in the direction of uniformity.
At this point Governor Szymczak joined the meeting.
The discussion continued with a statement by Governor Balderston
e°11cerning a plan devised by Mr. Dembitz which would in effect enable
e°1111tr7 banks, without additional legislation, to count up to 40 per cent
Of vault cash
as a part of their required reserves. Agreement was expressed
with the view
of Governor Balderston that it would not be desirable to
take use of
such a device, particularly since this would tend to ignore
the legislative history which clearly indicated Congressional intent
age.inst counting vault cash as a part of required reserves.
Further discussion, at the instance of Governor Szymczak, related
t° Yhether tying other legislative recommendations to a vault cash proposal
14'113.4 militate against obtalrirg legislation at this session of the
C r,
glsees. While, as Governor Szymczak pointed out, vault cash legislation
Mlle some action by the Board to reduce reserve requirements under existing
441
2/7/58
-10-
authority probably would remove much of the current pressure from the
banking profession, Governor Shepardson expressed the view that, with
a great deal of study having been devoted by the System over a long
Period in an effort to arrive at an improved reserve requirement formula,
it vould seem unfortunate for the Board now to go to the Congress with
11°tbing more than a vault cash proposal.
At the conclusion of this discussion, Chairman Martin repeated
the statement which he had made at an earlier Meeting that the Board
shoUld go to the Congress with what it considered the best possible
Plan*
AS he understood it, at this point it was the view of the Board
that the best procedure would be to present a recommendation such as
dl'afted by the Legal Division, with the explanation that in this way
the Board would be in a position to move almost the entire distance,
"monetary policy permitted, toward the reserve requirement levels
Pl'oPosed by the American Bankers Association.
Certain suggestions then were made for possible rephrasing of
the draft legislation submitted by the Legal Division and it was understood
"a revised draft reflecting these suggestions would be distributed
th
1)11-°r to further consideration of reserve requirements by the Board at
the
meeting next Monday.
All of the members of the staff except Messrs. Carpenter and
IVO
then withdrew from the meeting.
4
2/7/58
-11Salaries of President and First Vice President at Philadelphia
..tiT,:ym No. 12).
Chairman Martin referred to a letter received under
date of February 6, 1958,
from the Federal Reserve Bank of Philadelphia
advising that the Bankts Board of Directors had fixed, subject to the
aPProval of the Board of Governors, salaries for Mr. Bopp as President
elld for Mr. Hilkert as First Vice President at the annual rates of $300000
and $22,500,
respectively, for the period from March 1, 1958, through
De
cember 310 19580
Since these were the salary rates which had been agreed upon
1"c/rmally between the Bank and the Board, it was voted unanimously to
"
rise the Reserve Bank that the Board approved the rates fixed by the
111°4rd of Directors.
A copy of the letter sent to the Reserve Bank
141rsuent to this action is attached to these minutes as Item No. 12.
Salaries for officers at New, York Bank (Item No. 13).
Unanimous
°val was given to a letter to the Federal Reserve Bank of New York,
Ilhieh had been
circulated to the members of the Board and a copy of Which
is attached as
Item No. 13, approving the payment of salary at rates
fIXed by the Bankts directors to five officers of the Bank, including
thr
- officers whose titles had been changed, one newly appointed officer,
E" °Ile officer whose salary at the end of last year had not been previously
sa
insted.
Luncheon for President Williams.
It was agreed unanimously, at
the_ 8,.
tAggestion of Chairman Martin, that a luncheon should be arranged in
the Boardes dining rooms on February 110 1958, for Mr. Williams, retiring
2/7/58
-12-
President of the Federal Reserve Bank of Philadelphia, and that invitations
should be extended to the Presidents of the Reserve Banks, staff members
accompanying them to the meetings next week of the Federal Open Market
Committee and the Conference of Presidents, and the members of the Board's
official
staff.
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 items affecting
the Board's staff:
increases
9
Eleanor J. Pratt, from $3,500 to $3,670 per annum, effective February
A) 1958 with a change in title from Statistical Clerk to Statistical
s4. 1
k.ant, Division of Research and Statistics.
Raymond L Collier y from $8,61i.5 to $8,990 per annum, effective
ch.''arY 9, 1958, with a change in title from Technical Assistant to
ler, Current Series Section, Division of Bank Operations.
Lee W. Langham, from $8,000 to s8,990 per annum, effective February
19581 with a change in title from Technical Assistant to Chief, Call
port Section, Division of Bank Operations.
homas G. Cook, Guard, Division of Administrative Services, from
ilb40 to $3,725 per annum, effective February 23, 1958.
crt, Gail Roberts, from the position of Clerk-Stenographer in the Division
tlyPersonnel Administration to the position of Clerk-Stenographer in the
at izion of Research and Statistics, with no change in her basic salary
the rate of 33,1415 per annum, effective February 9, 1958.
444
2/7/58
-13911.1.PaY
Deanna Shunk, Statistical Clerk, Division of Bank Operations, for
the period February 17 - June 130
1958
.
1.
12I1..aa4E retirement
J. E. Horbett, Associate Director, Division of Bank Operations,
e
ffecttve March 1, 19580
445
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 1
2/7/58
WASHINGTON 25. D. C.
ADDRESS
orricsikt.
CORRES•ONOENEC
TO THE SOAR°
vast•
-40000
February 7, 1958
Board of Directors,
The Union and New Haven Trust Company,
New Haven, Connecticut.
Gentlemen:
Pursuant to your request submitted through the Federal
Reserve Bank of Boston, the Board of Governors of the Federal
Reserve System hereby gives its consent, under the provisions of
Section 18(c) of the Federal Deposit Insurance Act, to the merger
of The Ansonia National Bank, Ansonia, Connecticut, with and into
The Union and New Haven Trust Company, New Haven, Connecticut,
and approves the establishment of a branch by the surviving institution at the present location of The Ansonia National Bank,
provided (1) the merger is effected substantially in accordance
with the agreement between the parties dated December 18,
1957)
(2) the merger and establishment of the branch are effected
within six months from the date of this letter, and (3) shares
or dissenting stockholders which may be acquired by the surviving
institution, are disposed of within six months after acquisition.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Assistant Secretary.
446
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No. 2
2/7/58
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
February 7, 1958
Mr. E. C. Hill, Vice President,
Federal Reserve Bank of Philadelphia,
Philadelphia 1, Pennsylvania.
Dear Mr. Hill:
Reference is made to your letter of January 27, 1958,
regarding an extension of time in which the Lemoyne Trust Company,
Lemoyne, Pennsylvania, may establish a branch in the Borough of
Camp Hill, Cumberland County, Pennsylvania.
On May 1, 1957, the Board approved the establishment of
this branch at 3025 Market Street, provided that it was established
within one year. According to the information submitted, the building which the branch was to occupy at 3025 Market Street is not in
condition for substantial alterations and an alternative site for
the branch has been obtained 100 feet west of 3025 Market Street.
The Trust Company has advised that construction of branch quarters
at the alternative site is to start immediately but may not be camPlated until September 1, 1958.
The Board of Governors concurs in your recommendation and
extends to September 1, 1958, the time within which the Lemoyne
Trust Company may establish a branch at a location 100 feet west
of 3025 Market Street, south side of Market Street, Camp Hill,
Cumberland
County, Pennsylvania.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
V4c
/
%.
h
it
4'
*
410
go
FEDERAL RESERVE SYSTEM
1 ry
Item No. 3
2/7/58
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE,
0%.
TO THE BOARD
VotkwSV
February 7, 1958
Mr, Paul
C. Stetzelberger,
Vice
President,
Federal Reserve Bank of Cleveland,
Cleveland 1,
Ohio.
bear Mr.
Stetzelberger:
Reference is made to your letter of January 29, 1958,
re
garding the request of The Union Commerce Bank, Cleveland, Ohio,
tor
pub,an extension of time in which to establish a branch at 75
Square, Cleveland, Ohio.
It is noted that some difficulties have arisen in obtai
t3,4 141 Possession of the quarters which the bank had leased for
11-0
.3 branch and
that a settlement of the matter is expected within
grenort time.
You state that the Superintendent of Banks has
anted an extension of his approval to July 16, 1958. •
In view of these circumstances, the Board concurs in
Z
la:
c L re
commendation and extends to July 16, 1958, the time within
sch n The Union Commerce Bank may establish a branch at 75 Public
0i7re, under the authorization contained in the Board's letter
itugust 12,
1957.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Assistant Secretary.
448
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
1 {}
.,,
,
WASHINGTON 25. O. C.
f'
;
I
4
Item No.
4
0/58
...";...*
ADDRESS OPFICIAL CORRESPONDENCE
,:t,ic.'
istalt klitte:
TO THE BOARD
February 70 1958
14,1% IlenrY 0. Koppang,
cirst Vice
President,
Reserve Bank of Kansas City,
4Ase8 City 6, Missouri.
ear Mr. Koppang:
This refers to your letter of January 29 and enclosure, regarding
clericient reserve penalty of $65.89 incurred by the Englewood State Bank,
ood, Colorado, for the semi-monthly period ended January 31, 1957,
eh Was erroneously waived by the Denver Branch.
It is noted that the deficiency was attributable to the fact
a.1
atayne subject bank had been excluding the deposits of the Treasury Tax
lies oan Account from its gross demand deposits; that when the Federal
N:ve Branch of Denver discovered the discrepancy and requested amended
Vgh rts) it was discovered that the deficiency in reserves amounted to
000 with a penalty thereon of $65.89 for the period ending January 31,
instead of a deficiency of $256,000 involving a penalty of $35.07
visi the Denver Branch had waived under paragraph C of the waiver pro011 February 20, 1957; and that the Denver Branch waived the penb4t4,'or the larger amount under paragraph E of the waiver provisions,
4/14'his was done in error since the subject bank had a penalty waived
r this paragraph within the previous two years.
vr
In the circumstances, the Board ratifies the action taken by the
Branch in waiving the penalty, amounting to $65.89.
Very truly yours,
(Signed)
Merritt
Sherman
Merritt Sherman,
Assistant Secretary.
44f
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 5
2/7/58
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
'0,;itfttO
444,1*0
February 7, 1958
Mr. L. G. Pondrom, Vice President,
1F
. ederal Reserve Bank of Dallas,
'
411a8 13, Texas.
ne4r Mr. Pondrom:
The Board of Governors of the Federal Reserve System has
ecnsidered the recommendation of the Management Committee of your Bank
contained in your letter of January
31, 1958, and, pursuant to the
Yisions of Section 19 of the Federal Reserve Act, grants permission
Rock National Bank of Houston, Houston, Texas, to maintain
t11
0
same reserves against deposits as are required to be maintained by
bank
:
tlks outside central reserve and reserve cities, effective as of the
8 it
opens for business.
r
4
Please advise the bank of the Board's action in this matter,
caul
ng attention to the fact that such permission is subject to revo'
-"In by the Board of Governors of the Federal Reserve System.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Assistant Secretary.
450
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 6
2/7/58
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
February 7, 1958
Mr. L. G. Pondrom, Vice President,
Federal Reserve Bank of Dallas,
Dallas 2, Texas.
Dear Mr. Pondrom:
Reference is made to your letter of January 20, 1958,
1.ecommending that the Board approve, under Section 24A of the
:Federal Reserve Act, an investment by Security State Bank & Trust
uomPany, Rails, Texas, in bank premises in excess of the capital
stock of the bank.
After consideration of the information submitted, the
Board of Governors concurs in your recommendation and approves
1,e investment by Security State Bank and Trust Company of
t',1,
*
.-5,000 for the purpose of constructing new banking quarters,
n3
nlch amount includes a66,434 expended up to January 15, 1958,
.1.0r building and fixtures, $22,700 for temporary banking quarters,
414 $25,000 required to complete the program.
It is understood that upon completion of the program,
the carr
ing values of bank premises and furniture and fixtures
are to be
reduced to $100,000 and 00,000, respectively. It is
"Qted the bank plans to depreciate fixed assets on a regular basis.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Assistant Secretary.
451
BOARD OF GOVERNORS
Item No. 7
Or THE
2/7/58
FEDERAL RESERVE SYSTEM
ce Correspondence
Members of the Board
S R
Ca
ente
Dee
January 30, 1958
Subject: Nondiscriminatory Employment
Policy of the Government
As Employment Policy Officer, I concur in the recommendation of the Legal Division for revision of the Board's regulations
relating to employment policy to carry out the effect of Executive
Order 10722.
The Board vill recall that Section 7--paragraph
Dissemination of Information--of its regulations adopted July 25,
1955, provides that "Information concerning the Board's nondiscrimination policy and procedures shall be brought to the attention of
all officers and employees at least annually." In conformity vith
this provision, I should like to inform the Board that when the
regulations were initially adopted a copy of said regulations was
transmitted to the head of each division of the staff with the instruction that they be brought to the attention of each employee
in the division. Again in August 1956, the division heads vere
directed to circulate a copy of the regulations to the personnel
in their divisions.
After a decision is made on the change recommended by
the Legal Division, in conformity with Section 7 (D), I plan to
bring the revised regulations to the attention of each member of
the Board's staff again by sending a copy to each division head
for circulation to the employees in his division.
This would be further demonstration of the fact that the
Board is in full accord with the spirit and purposes of the Executive Order 10590 issued by the President on January 18, 1955.
el 52
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
e Correspondence
Board of Governors
Walter H. Youn
Item No. 8
2/7/58
Date January 20, 1958.
Subject:
Nondiscriminatory Employment
Policy of the Government.
On January 19, 1955, the President issued Executive Order 10590
creating the "President's Committee on Government Employment Policy" which
was to have certain responsibility with respect to Government employment
practices improperly based on considerations of race, color, religion, or
national origin. This committee on March 31, 1955, adopted regulations
an procedures
which applied to all departments and agencies in the executive branch of the Federal Government wherever located and to all positions
in the departments and agencies whether or not in the competitive service.
The Board, although recognizing that the executive order and the
!:!gulations apparently were not legally applicable to it, determined that
it
should follow procedures which would make it clear that the Board was in
.;1111 accord with the spirit and purposes of the order. Accordingly, regulations and
procedures were adopted by the Board which conformed substantially
to the
pertinent provisions of the Committee's regulations, and copies were
Igrar.ismitted
on July 25, 1955 to the Chairman of the President's Committee.
In its letter of transmittal, the Board included the following paragraph:
"The Board is in full accord with the spirit and purpose
of both the Executive Order and the regulations of your Committee irrespective of any question regarding the applicability
of the order to the Board of Governors under the provisions of
law governing its operations."
The Board is now in receipt of a communication dated November 26,
1957
( from the President's Committee wherein reference is made to Executive
Order 10722 dated
August 5, 1957, which amends Executive Order 10590 by
IflEt„king certain changes in the membership of the President's Committee. The
'urrnittee has, therefore, found it necessary to adopt an amendment to its
earlier regulations in order to make them conform with the Executive Order
10722. At the same time, however, the Committee has adopted two other
clarifying
amendments. Of these three amendments, only one would indicate
ca. need for amending the Board's regulations.
Section 4(F) of the Board's present regulations, which corresponds
section IX(F) of the original regulations of the President's Committee,
2
1 41d give a complainant the right to have his case referred to the President/E
`;1)111mittee following an investigation and hearing, if held, and following
ndings of fact and a recommendation of proposed resolution of the case by
to
4
Board of Governors
-2-
the Board's Employment Policy Officer. The
President's Committee has
amended section IX(F) of its regulations to make
clear that in these
circumstances the Employme
nt Policy Officer may refer the case to the
Committee for an advisory opinion but must at that time advise the
complainant that he is taking such action.
In order that the Board's regulations may conform substantially
with the regulations of the President's Committe
e, it is recommended that
section 4(F) be amended to read as follows:
(Language of the present regulation which has been changed is indicated
by brackets and cancellation, and the revised form of the language is
indicated by underscoring.)
"Following the investigation and hearing, if held, findings
of fact [and-a-pi4aoNmemdati-on-oll-pliepose4-p4fEiGIution-ef-th4
eiase-shall-be-macle-by-tha-mpleyment-PolIey-4cfleep-and-prasent94-te-the-Peard-e-Goven.nors-an4-to-h€4-eoRplainanty-at
whleh-time-he-shall-be-adviq,e4] shall 6e maisle by the Employment
?ollily Officer who nov (1) refer the case to the Committee for
an_adiLagrI_2Dinipn and :inf'orm the cemniainant of srls findinrs
of fact and of such rQfnyml.; oy (2) mnke a recommendation
-9.1LaTlased resolution of the case to the Board of Governors,
and, inform the complainant of such Proposed resolution and his
linqinEs of fact and advise him at that time that he may have
his case referred to the President's Committee on Government
Employment Policy. If the complaincnt does not request referral of the case to the Committee, final decision thereon shall
be made by the Board of Governors and furnished to him."
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
q,
WASHINGTON 25, D. C.
Lk
AOOFIESS OFFICIAL
To
coacurePoNocNcc
nit BOARD
February 7, 1958
Mr. Archibald J. Carey, Jr., Chairman,
The President's Committee on Government
Employment Policy,
Washington 25, D. C.
Dear Mr. Carey:
This is in response to your communication of November 26,
1957, with which you enclosed a revision of the Committee's regulations
and procedures and you request a copy of any changes made in the regulations of the various agencies to conform with the changes made in the
Committee's regulations.
The Board, in its letter of July 25, 1955, furnished you with
three copies of the regulations and procedures which the Board has prescribed in the light of Executive Order 10590. After reviewing the amendments which you have made to your regulations, the Board has found that
the only conforming amendment needed in its regulations is to amend
section 4(F). Accordingly, that section has been amended to read as
follows:
"Following the investigation and hearing, if held, findings
of fact shall be made by the Employment Policy Officer who may
(1) refer the case to the Committee for an advisory opinion and
inform the complainant of his findings of fact and of such referral; or (2) make a recommendation of proposed resolution of
the case to the Board of Governors and inform the complainant of
such proposed resolution and his findings of fact, and advise
him at that time that he may have his case referred to the President's Committee on Government Employment Policy. If the complainant does not request referral of the case to the Committee,
final decision thereon shall be made by the Board of Governors
and furnished to him."
Sincerely yours,
(Signed) Wm. McC. Martin, Jr.
McC. Martin, Jr.
455
Item No 9
TELEGRAM
2/V58
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
LEASED WIRE SERVICE
WASHINGTON
February 70 1958
ErrER - NEW YORK
Your wire February 6. Board approves the granting of a loan
011 gold by your Bank to Banco de la Republica Oriental del Uruguay
or $8
million on the following terms and conditions:
(A) To be made up to 98 per cent of the value of gold bars
8 aside in your vaults under 'pledge to you;
"
(B) To run for three months with option to repay before
Maturity;
(C) To bear interest from the date it is made until paid at
the
discount rate of your Bank in effect on the date on which such
loan is
made;
(D) To be made on or before February 28, 1958.
It is understood that the usual participation in any such loan
/1111 be offered to the other Federal Reserve Banks.
(Signed) S. R. Carpenter
CARPENTER
Item No. 10
2/7/58
February 7, 1958
Memorandum:
To
Board of Governors
From
Governor Robertson
Some months ago the Comptroller of the Currency and the Board of
Governors took the position that repurchase agreements entered into by
member banks covering U. S. government securities were in fact loans and
subject to the applicable statutory limitations on loans to any one
borrower. Shortly thereafter the limitation on such transactions involving
U. S. government securities having a maturity of less than eighteen months
vas fixed by the Comptroller at 75% of the bank's capital and surplus in
addition to the basic 25% prescribed by exception 8 of section 5200 of
the Revised Statutes.
At the time the position was taken it was recognized that the
limitations so fixed might not be appropriate. The Comptroller of the
Currency is nov considering raising the maximum limitations and has
cloluested the Board's views. The three points raised by the Comptroller
kreported to the Board on Wednesday, February 5th), and my comments
vith respect to each, are as follow':
(1) That the legislative history of the Financial Institutions
Act be expanded to indicate that the deletion of the words "in the form
°f notes" from exception 8 of R. S. is not intended to be determinative
as to whether any particular transactions are loans or investments.
Comment: This has been done, and there is no further action to
be taken by the Board.
(2) The Comptroller proposes to remove entirely the limitations
°n obligations (including repurchase agreements and similar transactions)
?ollateraled by (or covering) U. S. government securities maturing within
tvo Years, while retaining the 25% limitation on those involving longer
ma
turities.
Comment: It is recommended that the Board should not affirmatively
:c3neur in this proposed change, since we have not had an opportunity to
tudY the problem sufficiently to know whether it is preferable to the
isting limitation or other alternatives. However, I suggest that the
_°ard interpose no objection, in view of the relatively risk-free nature
these transactions; although the Board should suggest the retention
y the existing eighteen-month dividing line, rather than the proposed
"
u 0-year. (Mr. Jennings has stated that no reasons had been given for
r
-2moving from eighteen months to two years, and I know of none which would
make the move either necessary or appropriate. He indicated that the
Comptroller would concur in the continued use of the eighteen-month
dividing line.)
(3) The Comptroller also proposes, while holding to the belief
that these transactions are loans, to permit any bank to show this
Portion of its loans separately in call reports of condition. He is
considering permitting banks to use either of two alternatives: (1) to
interline or show as a footnote the amount of such obligations; or
(2) to show the amount of such obligations as a separate item, at any
Place in the report.
Comment: Since the supervisory authorities consider that all
transactions of this type are loans, they should insist on their being
so reported. I therefore recommend that the Board concur in the
Comptrollerla first alternative - that is, to permit banks to show by
144Y of interlineation, footnote, or expansion of the present Loan item,
the amount of its loans that are represented by transactions of this
type, but oppose the use of a separate item at any spot in the report
the bank might select. The latter practice could be misleading, in
that it could be used to give the impression that such obligations
were not loans.
The precise instructions to banks regarding the reporting of such
loans may be negotiated by the Division of Bank Operations with representatives of the other bank supervisory agencies and, if necessary, submitted
to the Board at a later date.
It may even be appropriate eventually to include in such an
interlineation or footnote short-term securities and loans other than
those represented by repurchase agreements, but this is a matter to be
developed through further consideration by the supervisory authorities.
BOARD OF GOVERNORS
.40,
4t1 4.1.
45,%,
19 12,01,,N
OF THE
Item No. 11
2/7/58
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
February
7, 1958
The Honorable Ray M. Gidney,
Comptroller of the Currency,
W
ashington 25, D. C.
Dear Mr..Gidney:
This letter refers to the matters with respect to repurchase
!freements covering United States Government securities that were
soussed over the telephone by your Office with Governor Robertson.
There are only two points remaining on which the views of the Board
nre desired, and this letter is to confirm the information given to
Your
Office by Governor Robertson over the telephone today with respect to them.
One of the questions is whether you should remove entirely
!he limitations prescribed by R.S. 5200(8) on obligations (including
'
epurchase agreements and similar transactions) collateraled by (or
.etr°vering) United States Government securities maturing within two
'lears, while retaining the 25 per cent limitation on those involving
fhger maturities. The Board has not had an opportunity to study
l'nis proposal sufficiently to know whether it would be preferable
:
0 the existing limitation or to other possible alternatives. Howover, the Board would interpose no objection to the change in view
the relatively risk-free nature of these transactions but would
Zilliggest the retention of the existing 18-months dividing line rather
an tvo years. The Board makes this suggestion because it knows of
"0 reasons for a move to two years.
The other point is the proposal that, while holding to the
bei4
'-ef that repurchase transactions are loans, the Federal supervisory
a
dricies permit banks to show them separately in call reports of conh. It is the understanding of the Board that you are consider"as possible alternative courses) permitting national banks to
0̀4. interline or show as a footnote the amount of such obligations,
r (2) show such amount as a separate item at any place in the report.
Since these transactions are regarded as loans, it is the
of the Board that they should be reported as such. Therefore,
e Board would concur in your first alternative; i.e., to permit
"Its to show the amount of such loans by way of interlineation,
c
45
The Honorable Ray M. Gidney
footnote, or expansion of the present "Loans" item. The Board would
be opposed
to the other alternative because it could be misleading
in that it could be used to give the impression that these obligations are not loans.
It is the Board's understanding that when your decisions
are made on the two points referred to above, the precise instructions to banks regarding the reporting of such loans will be worked
out by the bank supervisory agencies.
Very truly yours,
(Signed) S. R. Carpenter
S. R. Carpenter,
Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 12
2/7/58
FEDERAL RESERVE SYSTEM
WASHINGTON
OFFICE OF THE CHAIRMAN
February 10, 1958
CONFIDENTIAL (FR)
Mr. Henderson Supplee, Jr., Chairman
Federal Reserve Bank of Philadelphia,
Philadelphia 1, Pennsylvania.
Dear Henderson:
The Board of Governors approves the payment
Of salaries to Mr. Bopp as President and to Mr. Hilkert
as First Vice President of the Federal Reserve Bank of
Philadelphia, for the period March 1, 1958 through
December 31, 1958, at the rates of $30,000 and $22,500
Per annum, respectively, which are the rates fixed by
the Board of Directors as reported in Mr. Williams'
letter of February 6, 1958.
Sincerely yours,
(Signed) Wm. McC. Martin, Jr.
Wm. McC. Martin, Jr.
cat
Mr. Alfred H. Williams
41i1
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
Item No. 13
2/7/58
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
February 7, 1958
14i, John E. Bierwirth, Chairman,
Federal Reserve Bank of New York,
New York IS, New York.
Dear Mr. Bierwirth:
The Board of Governors approves the payment
to the following officers of the Federal Reserve Bank
for the period and at the rates indicated. The rates
ae those fixed by your Board of Directors as reported
letter of January 17, 1958:
Name
of salaries
of New York
are the same
in Mr. Treiber's
Title
Annual
Salary
POr the
period January 16, 1958 through December 311 1958 Thomas 0. Waage
William H. Braun, Jr.
Carl H. Madden
Robert W. Stone
$18,000
Assistant Vice President
14,250
Counsel
Asst.
Secretary and
11,500
Secretary
Manager and Asst.
11,500
Manager
Por the
period January 1, 1958 through December 31, 1958 A. Chester Walton
13,750
Manager
The Board finds it difficult to agree that your Bank was
111-1441,Y conservative in its approach to officers' salaries for 19580
.
8 IIITntioned in Mr. Treiber's letter, in view of the increases granted
i4,0
et 44 of 57 officers. It is believed that increases in the salaries
ot officers should continue to be made only after careful consideration
.k individual differences in ability and performance and that account
oUld be taken of the undesirability of increasing salaries of an
cessive proportion of officers at one time.
Z
Very truly yours,
(Signed) S. R. Carpenter
S. R. Carpenter,
Secretary.
@FedFRASER