Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, February 7, 1964, Volume 51, Part 2

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'9/63

Minutes for February 71 1964

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, please initial
below. If you were present at the meeting, your
initials will indicate approval of the minutes. If
you were not present, your initials will indicate
only that you have seen the minutes.

Chin. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane

411
Minutes of the Board of Governors of the Federal Reserve
SYstem on Friday, February
at

7, 1964. The Board met in the Board Room

10:00 a.m.
PRESENT:

Mr.
Mr.
Mr.
Mr.
Mr.
Mt.

Martin, Chairman
Balderston, Vice Chairman
Mills
Robertson
Shepardson
Daane
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

Sherman, Secretary
Kenyon, Assistant Secretary
Broida, Assistant Secretary
Noyes, Adviser to the Board
Brill, Director, Division of Research
and Statistics
Holland, Associate Director, Division of
Research and Statistics
Koch, Associate Director, Division of
Research and Statistics
Sammons, Adviser, Division of International
Finance
Katz, Associate Adviser, Division of
International Finance
Mattras, General Assistant Office of the
Secretary
Axilrod, Chief, Government Finance Section,
Division of Research and Statistics
Eckert, Chief, Banking Section, Division of
Research and Statistics
Keir, Chief, Capital Markets Section, Division
of Research and Statistics
Staiger, Economist, Division of Research and
Statistics
Gemmill, Economist, Division of International
Finance

Money market review.
11. p

There were distributed tables relating to

capital outflows for the years 1960-1963 and monetary developments

clUring the six-week period ended February

5, 1964.

Mr. Axilrod reported on recent developments in the Government
6ecurities market, after which Mr. Eckert discussed bank credit, bank

412
2/7/64

-2-

reserves, and related matters.

Mr. Gemmill then reported on recent

developments in the foreign exchange market.
All members of the staff then withdrew except Messrs. Sherman,
Xenyon,

Noyes, Brill, and Mattras and the following entered the room:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

Cardon, Legislative Counsel
Hackley, General Counsel
Solomon, Director, Division of Examinations
Hexter, Assistant General Counsel
O'Connell, Assistant General Counsel
Shay, Assistant General Counsel
Hooff, Assistant General Counsel
Conkling, Assistant Director, Division of Bank Operations
Goodman, Assistant Director, Division of Examinations
Hunter, Supervisory Review Examiner, Division of
Examinations
Mr. McClintock, Supervisory Review Examiner, Division of
Examinations
Mr. Achor, Review Examiner, Division of Examinations
Mr. Poundstone, Review Examiner, Division of Examinations
Discount rates.
ReServe

The establishment without change by the Federal

Banks of New York, Philadelphia, Cleveland, Richmond, St. Louis,

MinneaPolis, Kansas City, Dallas, and San Francisco on February

6, 1964,

the rates on discounts and advances in their existing schedules was

41315r°ved unanimously, with the understanding that appropriate advice
14°11341 be sent to those Banks.
Circulated items.

The following items, copies of which are

att
4e1110, to these minutes under the respective item numbers indicated,

aPproved unanimously:

413
2/7/64

-3Item No.

Letter to Manufacturers and Traders Trust
Company, Buffalo, New York, approving the
es
tablishment of a branch at the Greater
Buffalo International Airport Terminal
Building, Town of Cheektowaga.

Letter to Manufacturers Hanover Trust
C°111PanY, New York, New York, approving the
establishment of a branch at 91-20 59th
Al/enue, Elmhurst.

Letter to Manufacturers Hanover Trust
C°111PanY, New York, New York, approving the
establishment of a branch at I Wnitehall
Street,
Borough of Manhattan, for the purof conducting the operations of the
13°Se
3
ank's stock transfer department.

1.13,etter to American Trust & Savings Bank,
tibuque, Iowa, approving the establishment
°r a branch at 911-937 Locust Street.

.'
11)
.etter to Commonwealth National Bank of
.eallas, Dallas, Texas, granting its request
°r permission to maintain reduced reserves.
'

1N,etter to Fidelity Union Trust Company,
ierk, New Jersey, approving an investment
bank premises.

Report on competitive factors (Green Bay, Wisconsin).

There had

been distributed a draft of report to the Federal Deposit Insurance
Corporation on the competitive factors involved in the proposed conolidation of Peoples Trust & Savings Bank and Bank of Green Bay,
both of Green Bay, Wisconsin.
The conclusion of the report noted that more than 61 per cent
of the
deposits of individuals, partnerships, and corporations in the

-4-

2/7/64

Green Bay metropolitan area would be concentrated in the two largest
local banks if the proposed consolidation were approved.

In discussion,

question was raised as to whether such a degree of concentration, in an
area such as Green Bay, should be construed as adverse from a competitive
standpoint.

There was a general feeling that, while there might be some

difference of opinion as to the significance of this degree of concentration,
the statement was factual and should remain in the conclusion.
It was also noted that, as stated in the body of the report,
the resulting nonmember insured bank would be a subsidiary of The
Marine Corporation, Milwaukee.

However, Board approval of the trans-

action would not be required under the provisions of the Bank Holding
C°MPanY Act, and the Board had decided recently against recommending
to the Congress an amendment to the Act that would subject transactions
of this kind to Board approval.

It was felt that in the circumstances

40 reference to the holding company relationship in the conclusion of
the

report was warranted.
The report was then approved unanimously for transmission to

the

Corporation.

The conclusion read as follows:

The proposed consolidation of Peoples Trust & Savings
Bank, Green Bay, Wisconsin, and Bank of Green Bay, Green
Bay, Wisconsin, would eliminate substantial existing
competition and would reduce the number of banking alternatives in the downtown area from three to two. More than
61 per cent of deposits of individuals, partnerships and
corporations in the Green Bay metropolitan area would be
concentrated in the two largest local institutions. The
competitive effects of this proposed consolidation are
adverse.

415
2/7/64

-5Messrs. McClintock, Achor, and Hunter then withdrew from the

meeting and Mr. Molony, Assistant to the Board, entered the room.
Request of Chairman Fascell.

There had been distributed for

Preliminary discussion a draft of letter prepared by the Legal Division
in response to a letter dated February 3, 1964, from Chairman Fascell
the Legal and Monetary Affairs Subcommittee of the House Committee

°n Government Operations regarding conflicting interpretations of the
T3oard and the Comptroller of the Currency and related matters.

The

letter from Chairman Fascell asked for comments on the extent to which
there had been differences in interpretations of statutes and duplication
ct regulation between the two agencies, how the operations of the agencies
had been affected, how the supervised banks had been affected, efforts
that had been made to prevent such differences and duplications, and
lileans for preventing disparate actions by the agencies.
The draft letter summarized the areas where the Comptroller's
recent rulings differed from those of the Board, including the
Comptroller's ruling on the authority of national banks to maintain
84viags deposits for corporations.

The letter outlined the reasons

tcT the Board's positions and expressed the view that prompt action
should be taken to put an end to the present state of affairs in which
-As striving to comply with Federal law were faced with contradictory
/'Illings by Federal supervisory agencies.

It expressed the Board's

c°11tinued willingness to participate in any efforts that would hold

416
2/7/64

-6-

Pr°mise of achieving a reasonable solution of present conflicts without
d°ing violence to the apparent intent of Congress as reflected in applicable statutory provisions.
Mr. Hackley commented on the draft letter and mentioned some
alternative changes that the Board might wish to consider.

In con-

with the Comptroller's ruling on corporate savings deposits,
•

Hackley noted that on January 21, 1964, the Comptroller had sent a

letter to all national banks enclosing a copy of the ruling, a copy of
4 letter

to Senator Robertson, and a memorandum of his Legal Department

14 suPPort of his position.

Copies of these documents, along with a

eoPY of a revised edition of the analytical memorandum prepared by the
1/°arill S Legal Division, could be enclosed with the letter to Chairman
PaScell
.

It was the consensus that the draft letter was basically an
sPPropriate presentation of the issues involved.

There followed a

lellgthY discussion, however, of various questions of wording and
eillPhasis, and a number of editorial and other changes were suggested.

Mere was general agreement that copies of the items referred to by
141
' Rackley should be enclosed with the letter.
It was then agreed that the draft letter would be revised along the
litles indicated for further consideration at another meeting of the Board.
At this point all members of the staff except Mr. Sherman withdrew
l'oM the meeting.

41:
2/7/64

-7Luncheon.

Pursuant to a recommendation from Mt. Young, Adviser

to the Board and Director, Division of International Finance, in a
flxemorandum dated February 5, 1964, the Board approved payment of the
cost of a small luncheon at the Cosmos Club on Saturday, February

1964, for Mr. Lucius Thompson-McCausland of the Bank of England and
Mr. David Hubback of the British Treasury.
The meeting then adjourned.
Secretary's Note: Governor Shepardson today
approved on behalf of the Board the following
items:
m

Memorandum from the Division of Administrative Services recoming an increase in the basic annual salary of James T. Jones from
TJOD20 to $3,8301 with a change in title from Messenger to Mail Clerk
'
44 that Division, effective upon assuming his new duties.

Memorandum dated January 29, 1964, from the Division of Research
Statistics recommending that a supplement to the Board's Flow of
2
,4(18 Accounts, to include data for specified years for all sector
;!cl- transaction categories listed in the memorandum, be published;
ti"lat 2,000 copies be printed at an estimated cost of $1,900; that
the new supplement be made available upon request without charge; and
„at approval of this publication constitute approval of any resultant
;ierexpenditure in the Printing and Binding Account of the 1964 budget
the Division of Administrative Services.

Secretary

418
BOARD OF GOVERNORS

Item No. 1
2/7/64

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

February

7, 1964

Board of Directors,
Manufacturers and Traders Trust Company,
Buffalo, New York.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch at the
Greater Buffalo International Airport Terminal Building,
Genesee Street near Cayuga Road, Town of Cheektowaga,
Erie County, New York, by Manufacturers and Traders
Trust Company, provided the branch is established within six months from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael

Elizabeth L. Carmichael,
Assistant Secretary.

(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
Of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
Of November 9, 1962 (S-1846), should be followed.)

419
Item No. 2
2/7/64

BOARD OF GOVERNORS
OF THE

•

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL. CORRESPONDENCE
TO THE BOARD

February

7 1964

Board of Directors,
Manufacturers Hanover Trust
Company,
New York, New York.
Gentlemen:
The Board of Governors of the Federal Reserve System
aPProves the establishment of a branch at 91-20 59th Avenue,
1111hurst, Queens County, New York, by Manufacturers Hanover
Trust Company, provided the branch is established within six
months from the date of this letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)

4O
BOARD OF GOVERNORS

Item No.

2/7/64

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS orriciAL. CORRESPONDENCE
TO THE BOARD

February 7, 1964

Board of Directors,
Manufacturers Hanover Trust
Company,
New York, New York.
Gentlemen:
The Board of Governors of the Federal Reserve System
aPproves the establishment of a branch at 1 Whitehall Street,
Borough of Manhattan, New York, New York, by Manufacturers
Hanover Trust Company, for the limited purpose of conducting
the operations of your stock transfer department, provided the
branch is established within six months from the date of this
letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.

421
Item No. 14.

BOARD OF GOVERNORS

2/7/64

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
AOORIESI5 OFFICIAL COAREISPONCICHCC
TO THE BOARD

February 7, 1964

Board of Directors,
American Trust & Savings
Bank,
Dubuque, Iowa.
Gentlemen:
The Board of Governors of the Federal Reserve
SYstem approves the establishment by American Trust &
Savings Bank, Dubuque, Iowa, of an in-town branch (parking
lot office) at 911-937 Locust Street, provided the branch
is established within one year from the date of this
letter.
Very truly yours,
(Signed) Elizabeth L. Carmichael

Elizabeth L. Carmichael,
Assistant Secretary.

422
BOARD OF GOVERNORS

Item No.

OF THE

2/7/64

FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

February

7, 1964

(
:
1 )exd of
Directors,
'otatnwealth National Bank
Or
1i

Dallas,
Dallas)

Texas.

GEttlemen:
Ite
With reference to your request submitted through the Federal
13rc
e Bank of Dallas, the Board of Governors, acting under the
to4*Isi°ns of Section 19 of the Federal Reserve Act, grants permission
Ete.edr,e Commonwealth National Bank of Dallas to maintain the same reserves
1) 1C8t deposits as are required to be maintained by nonreserve city
8) effective as of the date it opens for business.
t

Slap

Your attention is called to the fact that such permission
deet to revocation by the Board of Governors.
Very Truly yours,

(Signed) Merritt Sherman
Merritt Sherman,
Secretary.

423
BOARD OF GOVERNORS

Item No.

2/7/64

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS orricim. CORRESPONDENCE
TO THE BOARD

February 7, 1964

Board of Directors,
Pidelity Union Trust Company,
Newark, New Jersey.
Gentlemen:
The Board of Governors of the Federal Reserve System
approves, pursuant to Section 24A of the Federal Reserve Act,
an additional investment of $400,000 in bank premises by
Fidelity Union Trust Company, for additions contemplated during
1964.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.

Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, February 7, 1964, Volume 51, Part 2

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