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Minutes for
To:
Members of the Board
From:
Office of the Secretary
January 10, 1958
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 1/
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
1/ In accordance with Governor Shepardson's memorandum of March 8, 1957, these minutes are not being
sent to Governor Vardaman for initial.
Minutes of the Board of Governors of the Federal Reserve System
Oil Friday, January 10, 1958.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
The Board met in the Board Room at 10:00 a.m.
Martin, Chairman
Balderston, Vice Chairman
Szymczak 1/
Mills
Robertson
Mr. Carpenter, Secretary
Mr. Kenyon, Assistant Secretary
Mr. Young, Director, Division of Research and
Statistics
Mr. Hackley, General Counsel
Mr. Masters, Director, Division of Examinations
Mr. Shay, Legislative Counsel
Mr. Farrell, Assistant Director, Division of
Bank Operations
Mr. Noyes, Adviser, Division of Research and
Statistics
Mr. Robinson, Adviser, Division of Research and
Statistics
Mr. Sammons, Associate Adviser, Division of
International Finance
Mr. Hostrup, Assistant Director, Division of
Examinations
Mr. Hooff, Assistant Counsel
Professor Emanuel T. Weiler of Purdue University, who directed
the 1957 Summer Research Training Institute which was held at the Federal
Reserve Building under the joint sponsorship of the Board and the Social
Science Research Council, also was present.
Statement by Professor Weiler.
At the request of the Board,
Professor
Weiler summarized the program of the 1957 Summer Research
Train;
4-116 Institute, which was attended by a group of 16 educators, and
eller,
.-5,cested
certain changes which he felt could be made to advantage if
811°1 a project should be undertaken again.
21
From the point of view of
Entered meeting at point indicated in minutes.
65
-2-
1/10/58
the participants, he considered that the course had been an unqualified
success, a judgment borne out by the letters of appraisal subsequently
received from those in the group.
From the point of view of the Board,
he felt that such an undertaking had a very definite value from the
Public relations standpoint because the participants, a number of whom
Undoubtedly would be influential in the academic field at some time in
the future, had now come to appreciate better the role of monetary
Policy and the caliber of the work performed by the Board's organization.
In response to questions, Mr. Weiler recommended the sponsorship of additional programs of this character but indicated that he
vaS undecided whether joint sponsorship of the undertaking by an
outside organization such as the Social Science Research Council was of
Particular benefit.
He said that over the years he had detected no
tendency on the part of academic people to suspect the Federal Reserve
Of attempting to influence their opinions through sponsoring seminars
and similar programs.
In this connection, Mr. Robinson brought out that the contribution of the Social Science Research Council to the expenses of the
Participants had been in the neighborhood of *16,000.
It was his view
that the participation of an agency such as the Council was particularly
Useful in the selection of applicants.
With regard to the optimum number of participants, Mr. Weiler
indicated that eight or nine of those in the 1957 group were definitely
of higher caliber than the others.
However, if there were enough
attractive applicants for another such program, he felt that a group
•
1/10/58
-3-
as large as 15 could be handled effectively.
In making this statement,
he recognized that it would not be feasible to conduct a course of this
kind too frequently, certainly not oftener than once each year.
The discussion concluded with comments by members of the Board
to the effect that consideration should be given to arranging additional
courses such as the one offered in 1957.
Messrs. Weiler and Robinson then withdrew from the meeting.
Items circulated to the Board.
The following items, which haA
been circulated to the members of the Board and copies of which are
attached to these minutes under the respective item numbers indicated,
were approved unanimously:
Item No.
Letter to State Bank of Pearl River, Pearl River,
New York, approving the establishment of a branch
in Blauvelt, New York. (For transmittal through
the Federal Reserve Bank of New York)
Letters to the Comptroller of the Currency and to
the First National Bank in Yonkers, Yonkers, New York,
regarding the applicability of section 22(g) of the
Federal Reserve Act and the Board's Regulation 0 to
loans made to directors who serve on the discount
committee and perform certain other functions. (With
copies to the Federal Reserve Bank of New York)
Letter to Camden Trust Company, Camden, New Jersey,
aPProving the establishment of a second branch in
Blackwood, New Jersey, and also an additional investIllent in bank premises. (For transmittal through the
Federal Reserve Bank of Philadelphia)
1
2, 3
4
1/10/58
-4Item No.
Telegram to the Federal Reserve Agent at Minneapolis
authorizing the issuance of a limited voting permit
to Montana Shares, Incorporated, Havre, Montana,
entitling it to vote the stock which it owns or
controls of The Miners National Bank of Butte, Butte,
Montana, and First State Bank of Chinook, Chinook,
Montana.
5
Letter to Greenfield State Bank, Greenfield, California,
approving the establishment of a branch in the bank's
existing quarters in Greenfield simultaneously with
removal of its head office operations from that location
to Bakersfield) California. (For transmittal through the
Federal Reserve Bank of San Francisco)
6
Letter to the Federal Reserve Bank of San Francisco
approving the appointment of Mr. Walter A. Kind as
Federal Reserve Agent's Representative at the Seattle
Branch.
7
Telegram to the Federal Reserve Bank of New York approving
a revised program for alterations to the annex building.
8
Telegram to the Federal Reserve Bank of Kansas City
advising that the Board authorization of April 27, 1956,
for the purchase of property, and leasehold thereon,
adjacent to the Oklahoma City Branch building still
stands, with a modification in the authorized total price.
9
Letter to the Federal Reserve Banks inviting them to submit
the names of persons who might be selected to attend the
1958 course of the Center for Latin American Monetary
Studies. (With the understanding that a similar invitation
vould be given to the heads of the divisions of the Board)
10
Letter to the Inter-American Council of Commerce and Productlon declining an invitation to the Board to assume membership
On the Council.
11
With reference to the application of the State Bank of Pearl
River to establish a branch in Blauvelt, New York, it was noted in
aPProving the application (Item No. 1), that Governor Robertson had had
a discussion of the matter with Deputy Comptroller of the Currency
1/1058
-5-
Jennings, who concurred, although reluctantly, that the only solution
waS to approve this application and also one of those which had been
filed by three national banks.
In reviewing the matter, Governor Robertson pointed out that
the three national banks had applied for branches in Orangeburg, New
York, which is only about 1-1/4 miles from Blauvelt, and that the
original filing dates of two of the applications preceded considerably
the date on which the application of the State Bank of Pearl River was
filed. From personal observation of the area, he doubted somewhat the
need for any branch banking office at this time, and even more the
necessity for two branches in the vicinity.
However, the New York
banking authorities, even though aware of the fact that the original
aPPlications filed by two of the national banks had been denied, approved
the State bank's application and the Federal Reserve Bank of New York
had expressed the view that the establishment of two branches in the
area would not be out of order. Therefore, even though application of
the interagency understanding which gives preference to applications
filed first would seem to mean that the applications submitted by two
of the national banks should have priority, the best compromise solution
at this point appeared to be for the Board to approve a branch for the
State Bank of Pearl River and for the Comptroller of the Currency to
aPProve the application of one of the national banks.
Discount rates.
Unanimous approval was given to telegrams to
the following Federal Reserve Banks approving the establishment without
1/10/58
Change by those Banks on the dates indicated of the rates on discounts
and advances in their existing schedules:
San Francisco
New York
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
January 8
January 9
January 9
January 9
January 9
January 9
January 9
January 9
January 9
January 9
Request from House Committee on Government Operations (Item No. 12).
Pursuant to the understanding at the meeting on January
6, 1958, there
had been distributed to the members of the Board a revised draft of
letter to Chairman Dawson of the House Committee on Government Operations
furnishing certain requested information on. the activities of the Federal
Reserve System in the field of research and development.
Following a brief discussion, the letter was approved unanimously,
subject to certain minor editorial changes, with the understanding that
copies would be sent to the Federal Reserve Banks for their information.
A copy of the letter in the form sent to Chairman Dawson is attached as
Messrs. Shay, Farrell and Sammons then withdrew from the
Trieetlug
Application of the Marine Midland Corporation under section
4(a)
.11._IllpBank Holding Company Act (Item No. 13). There had been distributed
to the members of the Board copies of a memorandum from the Division of
70
1/10/58
-7-
Examinations dated January
6, 1958,
discussing the request of Marine
Midland Corporation, Buffalo, New York, for an extension for one year
from may 9, 1958) of the permissible period for retention of indirect
control through a subsidiary bank of Liberty Building Corporation, also
of Buffalo.
This application had been filed pursuant to section 4(a)
Of the Bank Holding Company Act and it was recommended by the Division
of Examinations that the request be granted.
The memorandum noted the
possibility that Marine Midland's indirect ownership of these shares
might not be subject to the divestment requirements of section 4(a)(2)
on the ground that Liberty Building Corporation was a company engaged
in liquidating assets within the meaning of the last clause of section
However, since discussion with the Legal Division had indicated
that the applicability of section 4(c)(1) to this situation might constitute a complex legal question, it was deemed advisable not to attempt at
this time to reach a decision on that point.
In a discussion of the matter, Governor Balderston referred to
the possible applicability of the last clause of section 4(c)(1) to this
situation, and Governor Robertson commented that this would involve a
Study of difficult legal questions.
Inasmuch as the situation was not
Clear, he considered it preferable to grant the requested extension of
time and thus avoid the necessity for attempting to reach a decision on
4
very close question.
Accordingly, unanimous approval was given to the letter to Marine
Midland Corporation of which a copy is attached hereto as Item No. 13,
for transmittal through the Federal Reserve Bank of New York.
1/10/58
-8Items distributed to the Board
(Items 14, 15, and 16).
There
had been sent to the members of the Board copies of (1) a joint memorandum from the Division of Examinations and the Legal Division dated
January
8, 1958, relating to the application of Wisconsin Bankshares
Corporation, Milwaukee Wisconsin, for an extension of time within which
to complete the acquisition of shares of the proposed Southgate National
Bank of Milwaukee; (2) a memorandum from the Division of Examinations
dated January
8, 1958, concerning the request of City Commerce Corporation,
Anchorage, Alaska, for a limited voting permit covering its stock of
the City National Bank of Anchorage; and (3) a memorandum from the
Division of Examinations dated January
9, 1958, concerning the request
of Oklahoma Industrial Finance Corporation, Oklahoma City, Oklahoma,
for a limited voting permit covering its stock of The Farmers National
Bank of Elk City, Elk City, Oklahoma.
Pursuant to the recommendations contained in these memoranda,
unanimous approval was given to (1) an order in the form attached as
Item No. 14 granting the request of Wisconsin Bankshares Corporation,
with the understanding that the order would be published in the Federal
Register and that copies would be sent to the appropriate parties; (2)
a telegram to the Federal Reserve Agent at San Francisco in the form
attached
as Item No. 15 authorizing the issuance of the requested
limited voting permit to City Commerce Corporation; and (3) a telegram
to the Federal Reserve Agent at Kansas City in the form attached as
Item No. 16 authorizing the issuance of the requested limited voting
Permit to Oklahoma Industrial Finance Corporation.
1/10/58
-9-
Application of H. Kempner, Galveston, Texas, for section 301
determitemNo.lerna.
H. Kempner, of Galveston, Texas, had
requested through the Federal Reserve Bank of Dallas a determination
by the Board of its status as a holding company affiliate. For reasons
developed in memoranda from the Division of Examinations and the Legal
Division dated January 7 and January 9, 19580 respectively, copies of
'which had been distributed to the members of the Board, it was recommended that the Board determine Kempner to be an organization not engaged as a business in holding the stock of, or managing or controlling,
banks.
The case, however, was regarded as a close one because, in
addition to holding a majority of the shares of The United States
Rational Bank of Galveston, Kempner also held a 24.60 per cent interest
ia a second bank, a 22 per cent interest in a third bank, and a nominal
interest in another. In favor of holding this to be a "one-bank" case
aaa granting the section 301 determination, it was brought out that
1Cempner apparently did not manage or control the policies of banks
Other than the one in Galveston, that its principal business was that
°11 a cotton merchant and exporter, that its investments in bank stock
'
lePresented only about
4 per cent of its total assets, and that in 1956
Lts income
from bank shareholdings represented only about 5 per cent of
itS gross income.
Governor Mills stated that he would be inclined to accept the
'
lecommendation of the Division of Examinations, although realizing that
this was a very close case, since granting a section 301 determination
1/10/58
-10-
would appear to be in line with decisions made by the Board in
relatively comparable situations and because he saw no real reason
for deciding otherwise.
This was the kind of problem, he suggested,
which seemed to deserve consideration by the Congress when it studied
Possible changes in the current bank holding company legislation.
Governor Robertson referred to the extent of Kempner's holdings
of bank shares, including its 24.60 per cent interest in a bank in
Alvin, Texas, in addition to majority control of the Galveston institution, and said that if it were not for the Board's current policy
Pertaining to "one-bank" cases - a policy, incidentally, which he haB
oPPosed - he thought that this case would present a substantial question.
11°14ever, it appeared to him that the situation fell squarely within the
seoPe of the present policy and consequently he would go along with
eXanting the requested determination on that basis.
Accordingly, unanimous approval was given to the letter to
Kempner, Galveston, Texas, of which a copy is attached as Item
for transmittal through the Federal Reserve Bank of Dallas.
Messrs. Masters, Hostrup, and Hooff then withdrew from the
rneeting and Mr. Miller, Chief, Government Finance Section, Division
cd' Research and Statistics, entered the room.
Request of Bank of England for information regarding certain
ae_serve activities (Item No. 18). In a letter addressed to
*. Riefler under date of December 20, 1957, Mr. L. K. O'Brien, Chief
°4Shier of the Bank of England, requested certain information about
74
1/10/58
-11-
Federal Reserve activities relating to Treasury debt operations.
The
letter indicated that the Radcliffe Committee, currently engaged in a
study of the monetary and financial structure in England, had asked
the Bank of England to explain in some detail the way in which it sought
to facilitate Government stock operations, that the Committee also had
inquired haw other countries handled such problems, and that it had
asked specifically how the United States authorities managed their conversion and new issue operations. In his letter, Mr. O'Brien also
Pointed out that any answer given to the Committee would in due course
be PUblished.
A draft of reply for Mr. Riefler's signature as Secretary
of the Federal Open Market Committee and an accompanying memorandum
14bich might be sent in response to Mr. O'Brien's request had been
distributed to the members of the Board.
Chairman Martin stated that he had suggested distribution of the
Pl'oPosed response in view of the indication that the material would be
Made public in the report of the Radcliffe Committee, following which
the members of the Board expressed the view that there would be no
°biection to furnishing information of a factual nature such as contained
14 the memorandum.
In this connection, it was noted that the memorandum
had been cleared with the Federal Reserve Bank of New York and the
Tl
'
easury Department.
Accordingly, it was understood that the letter and memorandum
/4°Uld be transmitted to Mr. O'Brien.
Item No. 18.
Copies are attached hereto under
1/10/58
-12Additional items circulated to the Board (Items 19 and 20).
The following additional items, which had been circulated to the members
cr the Board and copies of which are attached hereto under the respective
Item numbers indicated, were approved unanimously:
Item No.
19
Letter to the Federal Reserve Bank of Chicago
aPproving the payment of salary to Mr. W. G.
Rickel as Assistant Cashier assigned to the
Detroit Branch.
Letter to the Federal Reserve Bank of Kansas City
aPProving the payment of salary to Mr. George H.
Clay as Vice President, General Counsel and
Secretary
of the Bank.
Views euressed at directors' meetings.
Governor Balderston
l'eferred to the Board's letter of March 16, 1956, to the Chairmen of
the Federal Reserve Banks expressing its interest in receiving summaries
er views stated at meetings of the boards of directors of the respective
8aaks concerning economic conditions.
He pointed out that there had
never been full participation of the Reserve Banks in response to this
letter and that at the present time only two of the Banks continued to
alkmit information of this kind. The question which he raised, therefore,
/4a8 whether the material was of sufficient interest to the Board to warrant
ticing steps in the direction of encouraging the Reserve Banks to follow
the practice.
This question led to comments by Chairman Martin concerning a
recent informal conversation with the Chairman of a Federal Reserve Bank
96
1/10/58
-13-
which indicated some feeling on the latter's part that a practice of
this kind might tend to inhibit free expression of opinions at directors'
meetings because some of the views represented little more than personal
reactions to business developments of the moment and the directors might
not like to have such expressions formalized.
In further discussion, the suggestion was made that the frequency
°f the Federal Open Market Committee meetings afforded an opportunity
for the Presidents
of the Federal Reserve Banks to summarize developments in the respective districts and that these reports apparently
t°ok into account observations at the meetings of the boards of directors.
At the same time, there appeared to be some feeling among the members
of
the Board that a certain amount of benefit could be derived from receiving
directors'
comments on a regular basis.
Accordingly, several possible
Courses Were mentioned which the Board might follow if it desired to
stimulate the flow of such comments, including periodic acknowledgment
Of the incoming
reports and a procedure whereby remarks would not be
at
tributed to individual directors.
Following further discussion of the matter, during which Governor
SzYMczak joined the meeting, Chairman Martin suggested that in the light
c't the questions which heA been raised it might be desirable to have a
'ilseussion of the subject at the next joint meeting of the Board and
the Conference of Presidents of the Federal Reserve Banks.
1/10/58
-14There was unanimous agreement with Chairman Martin's suggestion
and it was understood that steps would be taken to have this matter
included on the agenda for the next joint meeting.
The meeting then adjourned.
Secretary's Notes: It having been ascertained,
pursuant to action taken by the Board on
January 8, 1958) that Mr. William R. Mathews
would accept appointment, if tendered, as a
director of the El Paso Branch, Federal Reserve
Bank of Dallas, for the unexpired portion of
the term ending December 31, 1960, and that
Mr. Selden Sheffield would accept appointment,
if tendered, as a director of the Birmingham
Branch, Federal Reserve Bank of Atlanta, likewise for the unexpired portion of the term
ending December 31, 1960, telegrams notifying
Messrs. Mathews and Sheffield of their appointments were sent today.
Governor Mills, acting in the absence of Governor
Shepardson
'today approved on behalf of the Board
memoranda from appropriate individunls concerned
recommending certain actions affecting the Board's
staff, as follows:
4
1104,-,
,.
Paul Wolf Kuznets as Economist, Division of Research and Statistics,
"lth basic annual salary at the rate of 5,440, effective the date he
assumes his duties.
SELlarY increase
"DIA
Acce
X
Mary Jane Harrington, Economist, Division of Research and Statistics,
6,250 to ef6)390 per annum, effective January 12, 1958.
ptance of resignation
Clinton R. Dow, jr., Assistant Federal Reserve Examiner, Division of
/lations, effective January 26, 1958.
78
1/10/58
15Governor Balderston, acting in the
absence of Governor Shepardson, today
approved on behalf of the Board the
following items:
Letter to the Federal Reserve Bank of New York approving the
alaxintment of George M. Yeager as assistant examiner. A copy of the
letter is attached as Item No. 21.
Letter to the Federal Reserve Bank of San Francisco approving
the designation of 14 persons as special assistant examiners. A copy
of the letter is attached as Item No. 22.
retary
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
Item No. 1
1/10/58
ADORESS orriCIAL conREsPONOENCE
To THE EIDAtro
January 10, 1958
Board of Directors,
State Bank of Pearl River,
Pearl River, 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 by the State Bank of Pearl River, Pearl River,
New York, on the southeast corner of the intersection of
11°isen Road and Erie Street, in the unincorporated Village
of Blauvelt, Town of Orangetown, New York, provided the
branch is established within six months from the date of
tbie letter and approval of the State authorities is in
effect as of the date the branch is established.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Assistant Secretary.
s
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No. 2
1/10/58
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
January 10, 1958
The Honorable
"
,11 le Comptroller of the Currency,
nashington
25, D. C.
It dear Mr.
Comptroller:
Enclosed are a copy of a letter dated August 16, 1957, from
the•
the First National Bank in Yonkers, Yonkers, New York,
and a copy of
oard's reply of this date, involving in part the question as to
13sther directors of member banks who are members of the bank's discount
LmIllittee are "executive officers" within the meaning of section 22(g)
the Federal
Reserve Act and Regulation 0 of the Board of Governors.
The
question arises as a result of criticism by the national bank examiner
.)40 sUbstantial loans made to each of three directors
of the Yonkers bank.
will note that the Board considers that the term "executive officer"
not include a director who is a member of the executive or discount
uoirrnittee, unless he also is an officer of the bank.
7
i
However, the letter from the Yonkers bank raises another question,
ttilb*-4
tic,g
v-Ln section 22(g) and Regulation 0, which was not referred to speci0_ allY by your bank examiner. The three directors in question who serve
the executive
committee perform certain other functions for the bank:
th: i3 "Chairman of the Examining Committee," one is "Director-in-Charge of
a_ Safe Deposit Department," and one is "Secretary of the
Board of Directors
a;:u Director-in-Charge of Real Estate." Each of these directors receives
anon •i
as
salary for these latter services, but the Board has no information
1a0,t1 exact duties they perform. The fact that they receive annual
as 411-ss suggests that their duties, functions and responsibilities are such
1-11d ordinarily be performed by officers of the bank and not by the
e4r:ect0r8 in their capacities as directors. If this is correct, and the
cee are such as involve participation in the operating management of the
110 , then the directors could be executive officers
even though they have
official
titles.
In view of the above it is necessary that the Board have as complete
ttito
!Illation as is possible regarding the duties of these directors when serve bank in the capacities indicated.
It would be appreciated if at the
ikro examination of the bank you would secure for the Board's use all pertinent
Illlatien bearing on this question, including the following: a description
The Comptroller of the Currency
-2-
the functions and responsibilities of the three directors; how much
3.me each spends on these duties; the extent to which each has responsi,
ilitY for the direction and supervision of bank personnel; and the exLent to which other directors also have such special duties (indicating
compensation therefor, if any).
t
tnolosures
BOARD OF GOVERNORS
otill***4
OF THE
:
e0121-1"1#
W•
* 'ft
70 -*
FEDERAL RESERVE SYSTEM
Item No. 3
1/10/58
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
J,
*
VtN
43041,tip}e
TO THE BOARD
January 10, 1958
Mr. Joseph P. Finnegan,
Chairman of the Board,
First National Bank in Yonkers,
Yonkers, New York.
Dear Mr. Finnegan:
This refers to your letters of August 16, 1957, and of
November 22, 1957, in which you have raised a question concerning the
aPPlicability of the provisions of section 22(g) of the Federal Reserve
Act and Regulation 0 of the Board of Governors to loans made to directors of member banks who are acting at the time of the loan as members
of the discount committee.
Section 22(g) was added by the Banking Act of 1933, and the
legislative history of that Act indicates clearly that the term "executive
4
officer" as used in that section was not intended by Congress to
The Board has followed
_clude a director of a member bank as such.
t 8
1 legislative intent in promulgating Regulation 0 and in its inter'
"
Pretation. Accordingly, the term "executive officer" does not include
a director who may be a member of the executive or discount committee,
ilnleee, of course, he also is an officer of the bank.
Your letter, however, raises still another question, involving
22(g) and Regulation 0, which was not referred to specifically
"etion
by the
bank examiner. 'While your directors are not considered to be
necutive officers because of membership on the discount committee, they
nght be so considered because of their other services and duties which
:uf.Y involve participation in the operating management of the bank otherWise than in the capacity of directors. The Board's delay in replying
Your inquiry, which it sincerely regrets, has been due primarily to
tr necessity for giving this particular question most careful considera'°11, and you will be promptly advised when a decision has been reached
respect to it.
Very truly yours,
(Signed) S. R. Carpenter
S. R. Carpenter,
Secretary.
BOARD OF GOVERNORS
4000,11),II
I'It
.4
OF THE
FEDERAL RESERVE SYSTEM
1
twV,
Item No. 4
1/10/58
WASHINGTON 25. D. C.
ADDRESS OrriCIAL CORRESPONDENCE
TO THE BOARD
January 10, 1958
Board of Directors,
Camden Trust Company,
Camden, New Jersey.
Gentlemen:
Pursuant to your request submitted through the Federal
Reserve Bank of Philadelphia, the Board of Governors of the
Federal Reserve System approves the establishment of a branch at
the southwest corner of East Church Road and Pennsylvania Avenue,
Jersey,
Blackwood, New Jersey, by Camden Trust Company, Camden, New
date
the
from
months
six
Provided the branch is established within
Of this letter.
The Board of Governors also apkoves, under the proYisions of Section 24A of the Federal Reserve Act, the additional
Investment in banking premises of not to exceed 05,000, to provide
for the establishment of the branch.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Assistant Secretary.
TELEGRAM
Item No.
LEASED WIRE SERVICE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
5
1/10/58
January 10, 1958
PERRIN - MINNEAPOLIS
KECEA
A.
Montana Shares, Incorporated, Havre, Montana.
B. The Miners National Bank of Butte, Butte, Montana.
First State Bank of Chinook, Chinook, Montana.
C. None.
At any time prior to April 1, 1958 (1) to elect directors of such
banks at the annual meetings of shareholders, or any adjournments
thereof, and to act thereat upon such matters of a routine nature
as are ordinarily acted upon at the annlIel meetings of such banks,
and (2) to authorize the appropriation of funds out of the current
earnings of such banks to be set aside in accordance with rulings
of the Bureau of Internal Revenue as a "Deferred Compensation
Profit Sharing Plan" for the qualified employees of such banks.
(Signed) Merritt Sherman
SHERMAN
KECEA - The Board authorizes the issuance of a limited voting permit,
under the provisions of section 5144 of the Revised Statutes of
the United States, to the holding company affiliate named below
after the letter "A", entitling such organization to vote the stock
nich it owns or controls of the bank(s) named below after the letter
B", subject to the condition(s) stated below after the letter "C".
The permit authorized hereunder is limited to the period of time and
the purposes stated after the letter "B". Please proceed in accordance with the instructions contained in the Board's letter of March 10,
1947, (5-964).
BOARD OF GOVERNORS
OF THE
Item No. 6
FEDERAL RESERVE SYSTEM
1/1058
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
January 101 1958
Board of Directors,
Greenfield State Bank,
Greenfield, Califormia.
Gentlemen:
Pursuant to your reque5t submitteri through the
/2E'deral Reserve Bank of San Francisco, the Board of Governors
aPPrcves the establishment or a branch in the bank's existing
T:larters in Greenfield, California, by Greenfield .:.tate 13.!Ank,
:?..multaneously wlith removal or jts held orre operations from
Lnat location to 1530 Truxton Avenue, Bakersfield, California,
Provided the branch is established 13, April 5, 195T.
Very truly .-your,
(Signed) Merritt Sherman
Merritt Cherman,
Assistant Secretary.
86
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No. 7
1/10/58
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
January 10, 1958
le Ho Brawner, Chairman,
Federal Reserve Bank of San Francisco,
San Francisco 201 California.
Dear Mr. Brawner:
In accordance with the request contained in your letter of
DeA"-1
11..70er 24, 1957, the Board of Governors approves the appointment of
Za. Vklter A. Kind as Federal Reserve Agent's Representative at the
rttle Branch, effective January 11 1958, to succeed Mr* Francis K.
tarimme
This approval is given with the understanding that Mr. Kind
Will 1_
of G„,lue solely responsible to the Federal Reserve Agent and the Board
(44,4"vernors for the proper performance of his duties, except that,
va 'flg the absence or disability of the Federal Reserve Agent or a
denCY in that office, his responsibility will he to the Assistant
pee
eral Reserve Agent and the Board of Governors.
When not engaged in the performance of his duties as Federal
cierve Agent's Representative Mr. Kind may, with the approval of the
%3
traeral Reserve Agent and the Vice President in charge of the Seattle
wi,flich, perform such work for the Branch as will not be inconsistent
'41 his duties as Federal Reserve Agent's Representative.
It will be appreciated if Mr. Kind is fully informed of the
1,11ellrtarloe of his responsibilities as a member of the staff of the
fr 'al Reserve Agent and the need for maintenance of independence
°In the operations of the Bank in the discharge of these responsitittles.
It is noted from your letter that, upon the approval of the
l!Vntment of Mr* Kind by the Board of Governors, he will execute the
oath of office which will be forwarded to the Board of Governors.
Your letter states that a large portion of the Federal Reserve
Agent t a
Board
ekuro - cash at the Seattle Branch is under the seal of the
for
procedure,
a
outline
you
and
auditors
'ners and the Head Office
BOARD OF GOV R
0 S OF THE FEDERAL RESERVE SYSTEM
Mr. Brawner
!etaining the Board's seal until the examin
ers make their next visit.
The proced
ure outlined is agreeable to the Division of Examin
ations and
Your thoughtfulne
ss in this regard is appreciated.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Assistant Secretary.
TELEGRAM
it
LEASED WIRE SERVICE
No, 8
SYSTEM//58
110
BOARD OF GOVERNORS OF THE FEDERAL RESERVE
,WASHINGTON
January 10, 1958
Kimball - New York
Board approves the revised program for alterations to
the annex building and will interpose no objection to
the expenditure of approximately $296,000 for the
improvements as described in your letter of December 20,
1957.
(Signed) S. R. Carpenter
Carpenter
89
TELEGRAM
LEASED WIRE
Item No. 9
SERVICE
1/10/58
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
=miry 10, 1958
Kansas City
Reurlet December
27,
1957, Board authorization of
APril
-- 27, 1956 for purchase of property, and leasehold thereon,
adjac nt to Oklahoma City Branch building still stands. Board
has no
objection to your proceeding under that authorization
vith the understanding that, because of the $25,000 reduction)in
the Price for the leasehold reported in your letter, the total
1/1140 for the property and the leasehold will not exceed
450°,000 instead of the price of $525,000 referred to in the
4111 27, 1956 telegram.
(Signed) S. R. Carpenter
CARPENTER.
Item No. 10
1/10/58
BOARD OF GOVERNORS
,t4{011114.4
OF THE
0
FEDERAL RESERVE SYSTEM
'
0
7,4557 (On office
copies only)
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
owp***
January 13, 1958.
Dear sir:
This is in further reference to the Chairman's letter of
An 41
,v1i-L-L 30, 1957, regarding possible participation of System personnel
:
01 the training courses given by the Center for Latin American MonotarY Studies in Mexico City.
As you may know, Mr. Walter Sedwitz of the staff of the
Fociera
1 Reserve Bank of New York participated in the 1957 sessions.
1? the basis of the attached summary of his report and other informa',:lon available to the Board, it appears that participation in the
given by the Center would be advantageous to the participant,
to
Iso the System, and to the Center.
2
The Board has therefore approved in principle such particiation on the part of qualified personnel of the System, and invites
,°1111-nations for possible cnndidates for the 1958 program, which will
held from Monday, May 5 to Friday, August 29. Nominees should
ta
:v? a sufficient command of the Spanish language to be able to par-effectively in the program of the Center, which is conducted
p4111?st entirely in Spanish. They should, of course, also be in a
3-tion to profit from the courses involved, the general nature of
which vas outlined in the attachment to the Chairman's letter of April
30,
1957. The Board believes that the number of participants in any
a-lc",Year should not be more than two, if there should be more than two
P.LIcants, final selection would be made by the Board. It is underStood,
of course, that the salary and necessary travel and maintenance
iapenees of any candidate selected would be borne by the employing
tlk, or by the Board if a member of the Board's staff is selected.
l
than
Nominations for the 1958 course should be sutmitted not later
January 31, 1958. Each one should be accompanied by a brief
of the candidate's training and experience.
Very truly yours,
/://
Attachment
Th,THE
PRESIDENT OF ALL
rIDER&L RESFRVE BANKS
S. R. Carpen er,
Secretary.
(11
BOARD OF GOVERNORS
OF THE
Item No. 11
1/10/58
FEDERAL RESERVE SYSTEM
WASHINGTON
OFFICE OF THE CHAIRMAN
January 10, 1958
AIR MAIL
Mr. Carlos One Cotelo,
General Secretary,
Inter-American Council of
Commerce and Production,
Misiones 1400
Montevideo, Uruguay.
Dear Sir:
Thank you very much for your letter of December
inviting the Federal Reserve System to become a
cooperating member of the Inter-American Council of Commerce
and Production..
19, 1957,
The Board of Governors has noted with interest
the aims and purposes of your organization. However, it is
not the policy of the Board to accept formal memberships of
the kind indicated. For this reason, I regret to inform
YOU that it will not be possible to take advantage of your
kind invitation.
Sincerely yo
WM. McC. Martin, Jr.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
Item No. 12
1/10/58
OFFICE OF THE CHAIRMAN
January 10, 1958.
The Honorable William L. Dawson,
Chairman,
Committee on Government Operations,
1501 House Office Building,
Washington 25, D. C.
°ear Mr. Dawson:
This is in reply to your letter of November 27 in which you
!equest certain information with respect to the Federal Reserve
°Ystem's activities in the field of research and development.
The Board is pleased to supply you with any information on
.3Yetemis research program that will be helpful to your Committee.
78 will be apparent from the following replies, however, it is diffiuult in some instances to relate the types of research activity in
'whieh the System is engaged to specific questions contained in your
-Letter.
the
A
1. With a very few exceptions, the activities of the
Federal Reserve System which come within the scope of this
inquiry are in the field of economic research. For the
Purposes of this reply we will consider as "basic research"
projects and efforts which are directed toward a better
Understanding of the nature and functioning of the economic
eystem, and particularly the financial system. "Applied research" will include the collection of statistical and other
economic intelligence bearing on current developments and
the interpretive application of such information, within the
framework of generally tested theory, to the formulation of
credit and monetary policy. In this connection you may be
interested in the attached copy of an address which I delivered before a meeting of the Life Insurance Association on
December 11, entitled "Basic Research and Financial Processes"
(Exhibit A).
With two exceptions, which will be particularly noted,
our activities do not comprehend what would ordinarily be
meant by the terms "development" and "applications engineering."
2. The Federal Reserve System is made up of the offices
Of the Board of Governors in Washington, the twelve Federal
Reserve Banks, and twenty-four branches. Among the staff
93
The Honorable William L. Dawson
-2-
divisions which support and advise the Board of Governors
in Washington are a Division of Research and Statistics, a
Division of International Finance, and a Division of Bank
Operations, all of which engage in research activity to a
greater or lesser extent. All of these Divisions are concerned with both basic and applied research, but the work
of the Division of Bank Operations, which involves primarily
the collection and processing of statistical data on the
banking system, is predominantly applied research. However,
the members of the staff of this Division participate from
time to time in projects that may properly be described as
basic research.
Each of the twelve Federal Reserve Banks has a
Research Department, which is generally headed by a vice
President in charge of research. This group is directly
responsible to the president and directors of the Federal
Reserve Bank. However, its services are also available to
the Board and, in fact, the research activity in the System
as a whole is coordinated through the Board's Division of
Research and Statistics and a System Research Advisory
Committee. Little or no research activity is carried out
at Federal Reserve Bank branches.
Copies of organization charts showing the organization of the Board's Divisions of Research and Statistics,
International Finance, and Bank Operations are attached,
together with an organization chart of a typical Federal
Reserve Bank research department, and a diagram showing
the principal research committees in the System (Exhibit B).
3. The Federal Reserve System, primarily, although
not exclusively, through the Board's offices in Washington,
maintains close relationships with almost all of the Federal
agencies concerned with economic research. Most of these
agencies utilize all or part of the data collected by the
Federal Reserve System and the System, in turn, utilizes
economic intelligence which they collect. Representatives
of the System serve on various interagency committees,
Particularly those concerned with problems related to the
collection and analysis of statistical data which are established from time to time by the Bureau of the Budget and other
departments and agencies of the Government. These arrangements are frequently informal in character and can best be
described as representing close day to day working relationships. Among the departments and agencies with which the .
The Honorable William L. Dawson
-3-
Board's staff works most closely are the Council of Economic
Advisers, Bureau of the Budget, Department of Commerce
(especially the Bureau of the Census and the Office of
Business Economics), the Housing and Home Finance Agency,
Department of Agriculture, Department of Labor (especially
the Bureau of Labor Statistics), Department
of State
(especially the Bureau of Economic Affairs), the Department
of the Treasury, and the Federal Deposi
t Insurance Corporation.
No "influence, direction or control" is exerted
cover the Federal Reserve System's activities by these
relationships in the sense we understand these terms to be used
in your letter. Of course, our activi
ties are importantly
influenced by the work of other Government agencies, in that
we learn from their work and we advise
and otherwise cooperate,
Where requested, in their efforts. Pains are taken not to
duplicate work that is being carried out elsewhere. But there
is no direction or control of the Federal Reserve System
's
research activities, except that which is exercised by the
Bureau of the Budget with respect to the collection of statistical data under the authority of the Federal Reports Act
of 1942.
4. There are a wide variety of contacts between the
Federal Reserve System and nongovernmental groups and individuals
Which arise in the normal course of our research activities.
For example, in assembling the Federa
l Reserve Board's Index
of Industrial Production, we draw upon many nongovernmental as
well as governmental sources. The System also collects, on
R voluntary
basis, consumer credit and department store statistics and has continuing contact with individuals and groups
in these specialized areas related to the maintenance of these
statistical
series. We naturally have a wide variety of continuing relationships with commercial banks stemming from our
research activities as well as our supervisory responsibilities.
The collection and analysis of economic intelligence are frequently discussed with the Federal Advisory Council, representatives
of the American Bankers Association, the various
State bank associations, and subcommittee
s of these and other
°rganizations. Our research personnel also discusses matters
2f mutual interest with technicians in privat corporations
e
and
linancial institutions with similar interests.
From time to time in connection with specific basic
research undert
akings or applied research efforts, the System
95
The Honorable
William L. Davson
has employed consultants--generally distinguished academic
scholars. On occasion we have also entered into contracts
with private organizations for the performance of specific
research services. The longest term relationship of this
kind is with the Survey Research Center of the University of
Michigan which has conducted a survey of consumer finances
for the Board each year since 1947.
The Reserve Banks, through their own planning departments or operating officers, follow. developments in the
fields of systems and bank equipment of various kinds and
their adaptability to the efficient operations of the Reserve
Banks. This work, however, is part of regular operations and
la not considered as coming within the field of "development"
and "applications engineering" as referred to in your letter.
The two activities, referred to earlier, Which might
be considered as developmental or engineering application
Programs, are arrangements with the Stanford Research Institute and with Battelle Memorial Institute. For some years,
the System has been interested in the development of a machine
to sort and count paper currency, and from time to time has
called upon the Battelle Memorial Institute for assistance in
this connection. The first contract, executed in March 1953
and completed early in 1954, provided for an evaluation by
Battelle of proposals made by two manufacturing concerns for
the development of a machine to count and sort paper currency
°f the $1 denomination. It was subsequently decided that the
120Beibility of electronically or automatically determining
genuineness of paper currency should be explored further
oefore proceeding with negotiations with a manufacturing conbefore
cern for the development of the paper currency sorting and
counting machine, and in July 1955 Battelle was authorized to
114"ke a preliminary study along these lines. In the light of
he conclusions of the preliminary study, a contract was
entered into with Battelle in May 1956 for further research
On one of
the methods disclosed in the prA.iminery study for
?sting the genuineness of paper currency. This contract was
°114Pleted in June 1957, and the economic feasibility of the
'
Pl'oiect is now under consideration.
Early last year it was decided that outside advice
811°uld be sought by the Federal Reserve Panks in the matter
Of
m_ mechanization of their check handling operations, and in
u'Y 1957 a contract vus entered into with the Stanford Re:
earth Institute for such advisory servidez. The contract,
or)
The Honorable William L. Dawson
Which was regarded as the first of several that might be required to carry the program to a conclusion, contemplated that
the principal activities of Stanford Research Institute would
be (a) a fact finding study of the check handling operations
and problems of the Federal Reserve Banks, (b) consideration
of the scientific and economic feasibility of developing equipment to meet the requirements of the banks, and (c) a determination of the steps to be taken in the subsequent phases of the
research program. This contract was completed in October and
in November a second contract was entered into with Stanford
Research Institute providing for further study of certain
aspects of check handling problems and for the preparation of
Operational performance specifications covering equipment to
meet the needs of the Federal Reserve Banks. It is contemplated that this contract will be completed about March 1,
1958.
5. As is apparent from the answer to the question above,
we maintain very wide informal relationships with other research
organizations but we do relatively little in the way of direct
contracting. The specific projects which have been carried out
through private contractors, educational institutions, etc., in
the last ten years are listed in Exhibit C.
In general, for our purposes it is preferable to carry
out both basic and applied research activities with regular
full-time employees. The type of research and development contracts used by the defense establishment on weapons development
would not be applicable to the type of work in which we are
engaged. For certain specific types of research and to meet
unusually heavy demands, however, it has been necessary and
desirable from time to time to enter into outside contractual
arrangements. This is particularly true of projects which
require field survey work. Our experience with private contractors for this type of work has been highly satisfactory.
6. The major basic and applied research projects carried
out by the Federal Reserve System since 1950 are listed in
Exhibit D.
7. There have been no important changes in the organization structure of the research function in the Federal Reserve System
since 1950. The number of persons employed on this work has
97
The Honorable William L. Dawson
increased as additional effort has been directed toward improvement of our knowledge and understanding of the economic and
monetary processes, but the basic lines of responsibility and
authority are the same. The number of persons employed in
research activity was approximately 600 in 1950, while at the
end of 1957 it is estimated to be 750.
Sincerely yours,
1614 McC. Martin, Jr.
BOARD OF GOVERNORS
40.4*ft
OF THE
FEDERAL RESERVE SYSTEM
Item No. 13
1/10/58
WASHINGTON 25. D. C.
AooREss orricsAL
4
0
CORAESPONOENCE
TO THE BOARD
January 10, 1958
,11r• Edward C. Gruen, Vice President,
riarine Midland Corporation,
Marine Trust Building,
Buffalo 5, New York.
ear Mr. Gruen:
This refers to Marine Midland Corporation's application, pursuant to section 4(a) of the Bank Holding Company
,J,,t.ret of 1956, for an extension of the period, for one year from
j
g!
st 9, 1958, within which it may retain its indirect control,
'wough The Marine Trust Company of Western New York, the
owner thereof, of 5,027 shares of the Liberty Building
Cm*Poration.
In accordance with the provisions of section 4(a)
'
ct the Act, the Board has granted the requested extension.
Very truly yours,
(Signed) S. R. Carpenter
S. R. Carpenter,
Secretary.
•
99
BOARD OF GOVERNORS
Item No. 14
1/10/58
OF THE
FEDERAL RESERVE SYSTEM
11.1 the Matter of the Applicati
on of
1:118consin Bankshares Corporation for
4PProval of
Acquisition of Voting Shares
!
„
c) Southgate National Bank of Milwaukee,
rulwaukee,
Wisconsin.
ORDER EXTENDING TIME FOR COAPLETION OF ACQUISITION
The above matter having come before the Board on the application of
h„ cnsin Bankshares Corporation, Milwaukee, Wisconsin, filed pursuant to the
ions of section 3(a)(2) of the Bank Holding Company Act of 1956, for
0;:r approval of acquisition by Wisconsin Bankshares Corporation of direct
8!Ilship of 2,950 shares of a total of 3,000 voting shares of the proposed
eivIlgate National Bank of Milwaukee, Milwaukee, Wisconsin, and it appearing
s47 due consideration thereof in the light of the factors enumerated in
eflotl°n
3(c) of the Bank Holding Company Act of 1956 that such application
uld be
granted,
And such application having been granted pursuant to Order of the
dated
October 9, 1957, provided the acquisition be completed within
the
"months from the date of the Board's Order,
IT IS HEREBY ORDERED, That the time within which such acquisition
completed is extended to April 9, 1958.
This 10th day of January, 1958.
By order of the Board of Governors.
. R. 'arpenter,
S cretary.
TELEGRAM
LEASED WIRE SERVICE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
Item No. 15
1/10/58
January 10, 1958
BRAWNER - SAN FRANCISCO
ICECEA
A.
las
C.
City Commerce Corporation, Anchorage, Alaska.
City National Bank of Anchorage, Anchorage, Alaska.
Prior to the issuance of limited voting permit authorized herein,
City Commerce Corporation shall execute and deliver in duplicate
to Reserve Bank an application for a voting permit on Form P-1,
together with Exhibits A, C, M, and O.
At any time prior to April 1, 1958, at the annual meeting of
shareholders of such bank, or any adjournments thereof, (1) to
elect directors and act thereat upon such matters of a routine
nature as are ordinarily acted upon at the annual meetings of
such bank, and (2) to amend the bylaws of such bank to provide
for directors' fees and the exercise of trust powers, provided
that all actions taken in connection therewith shall be satisfactory to the Comptroller of the Currency. STOP. The approval
cf actions taken by the Board of Directors in 1957, and the
consideration of the President's and Auditor's reports are
considered matters of a routine nature. Please advise applicant
that permission to vote to provide in the bylaws for the exercise
Of trust powers by such bank is not to be construed as constittlting Board approval of permission to exercise such powers.
(Signed) Merritt Sherman
SHERMAN
-2-
Ii
Definition of KECEA:
The Board authorizes the issuance of a limited voting permit,
under the provisions of section 5144 of the Revised Statutes
of the United States, to the holding company affiliate named
below after the letter "g0 entitling such organization to
vote the stock which it owns or controls of the bank(s) named
below after the letter "B", subject to the condition(s) stated
below after the letter "C". The permit authorized hereunder
is limited to the period of time and the purposes stated after
the letter "D". Please proceed in accordance with the instructions contained in the Board's letter of March 100 1947, (S-964).
TELEGRAM
Item No. 16
LEASED WIRE SERVICE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM 1/10/58
WASHINGTON
January 10, 1958
KAlISAL; CITY
s'n
40
13
,
C.
Oklahoma Industrial Finance Corporation, Oklahoma City, Oklahoma.
The Farmers National Bank of Elk City, Elk City, Oklahoma.
Prior to issuance of limited votinil; permit authorized herein,
applicant shall eLcutc and deliver to you in duplicate an
application for a voting permit Form P-1 uith Exhibits A, G,
14 and O.
' At any tiv.e ,prior to Aril 1, 198 at the annual meeting of
Shareholdersof such bank, or any adjournments thereof, (1) to
elect directors of such bank and to act thereat upon such
ilatters of a routine nature as are ordinarily acted upon at the
annual meetin
of such bank, (2) to increase the capital stock
of such bank, chance the par value of such stock from .:;100 to
Per share, and take all necessary action. in connection thereand (3) to declare a special cash divideiitJ of :)155,0001
Provided that all actions taken with respect to items (2) and
(3) shall be satisfactory to the Comptroller of the Currency.
3T01. Limited voting oermit requested by Oklahoma Tndu:itrial
Pi-nance
Corporation for its subsidiary, Credit Liervice Loans,
Inee, is not necessary because it is not a holding company
affiliate of Farmers Kational Bank of 1,1k City.
Jetting the
nizaber of directors is considered to be a routine matter.
(Signed) Merritt Sherman
6(3
Ill
Definition of KECEA:
The Board authorizes the issuance of a limited voting permit,
under the provisions of section 5144 of the Revised Statutes
of the United States, to the holding company affiliate named
below after the letter "AP, entitling such organization to
vote the stock which it owns or controls of the bank(s) named
below after the letter "B", subject to the condition(s) stated
below after the letter "C". The permit authorized hereunder
is limited to the period of time and the purposes stated after
the letter "D". Please proceed in accordance with the instructions contained in the Board's letter of March 10, 1947, (5-964).
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No. 17
1/10/58
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
January 10, 1958
M*. KemPner,
Galveston
Te.-xas. '
Gentlemen:
This refers to your letter of April 11, 1957, addressed to
G. Pondrem, Vice President of the Federal Reserve Bank of Dallas,
leSting a determination by the Board of Governors of the Federal
Ile'
serve System as to the status of H. Kempner, Galveston, Texas, as
a ho
iclinf; company affiliate.
14r, L.
From the infomation subLiitted, the Board understands that
the *
ex Principal
business of 1-1. Kempner is tilat of a cotton merchant and
P°1-ter; that investments in bank stocks, representin apprmiJ,ately
Per0;en:t
cent
of total assets, consist of the ownership of over CO per
t
ve
n
outstanding shares of stock of The United States Natioal
.0arik of
sten, Galveston, Texas, over 24-1/2 per cent of the
fl shares of stock of Alvin State Bank, Alvin, Texas, 22 per
Cent °I.
para
the outstanding shares of stock of First National Bank,
EtharMad, Arkansas, and less than 1/2 of 1 per cent of the outstanding
thates of stock of San An7elo National Bank, San Angelo, Texas; and
Kempner does not own or control, directly or indirectly, any
y.,%nk
licstock and does not manage or control, directly or indirectly,
zveston. institution other than The United States National Bank of
z
II, Ice
In view of these facts the Board has determined that
holdimPner is not engared, directly or indirectly, as. a business in
the stock of, or manarinv or controllinv, banks, banking
q7lations, savinrs banks, or trust companies within the meaning
II. xection 2(c) of the Banking Act of 1933, as amended; and, accordingly,
the emPner is not deemed to be a holding company affiliate except for
neeelne'ses of section 23A of thc Federal Reserve Act, and does not
barik a citjnr• permit from the Board of Governors in order to vote the
s'°°k* Which it owns.
BOARD
H.
Kempner
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
-2-
If, however, tne facts should at any time differ from those
et out above
to an extent which would indicate that H. Kempner mifht
be deemed to be
so engaged, this matter should again be submitted to
.he Board.
The Board reserves the right to rescind this determination
and make a
further determination of this matter at any time on the
basis
of the then existing facts. -
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Assistant Secretary.
105
if)6
BOARD OF GOVERNORS
OF THE
Item No. 18
1/10/58
FEDERAL RESERVE SYSTEM
WASHINGTON
OFFICE OF THE CHAIRMAN
January10, 1958.
Ur. L. K. O'Brien,
Chief Cashier,
Bank of England
London, England.
Dear O'Brien:
I hope the attached memorandum, which
was prepared in response to your letter of December 20, 1957, meets your needs. If not, please
let me know what points require further amplification.
It is qiite clear that our activities
relating to Treasury debt operations differ in a
great many respects from yours. I am not at all
sure, therefore, that this memorandum will really
cover all the points necessary. I understand that
the substance may be made public in the Commission
Report.
Very sincerely yours,
Winfield'W. Riefler, Secretary,
Federal Open Market Committee.
Enclosure.
FEDERAL RESERVE ACTIVITIES
RELATING TO TREASURY DEBT OPERATIONS
Techniques of debt management in the New York market differ in
lnarW respects from those used in London. In this respect it is important
to distinguish between the functions of the Federal Reserve Bank of
New York as custodian and manager of the Federal Reserve System's Open
Market Account and the activities of the Federal Reserve Bank of New York
as fiscal agent for the United states Treasury in the Treasury's manageMent of its several trust funds.
In general, the Federal Reserve Act
does not
permit the Federal Reserve Banks to lend directly to the Treasury
or to buy securities directly from the Treasury.
U. S. Government securi-
ties held by the System must be acquired in the open market, unless they
are received
in exchange for maturing issues.
The only exception to the
general rule is the provision in the Federal Reserve Act which permits the
8Y8tem to extend accommodation to the Treasury up to a maximum of 0
billion.
It is understood that this facility is to be used for purely
temporary accommodations. It has not been used, in fact, since 195h.
As to the System's operations managed by the New York Reserve
tank, intervention in the Government securities market during periods of
Tr'easury refunding has been minimized following the Treasury-Federal
Ileserve Accord in 1951, and particularly since 1953.
In early 1953 the
ecieral Open Market Committee adopted policies which provided that:
(a) Operations for the System Account should be confined
to the short end of the market; that
(b) Intervention in the Government securities market wati
solely to effectuate tilt; (Moctiv,!s of credit and
monetary policy and nut to support any pattern of
prices and yields in that market; and that
108
-2
(c)
The System during periods of Treasury financing would
refrain from purchasing:
1.
Any maturing issues for which an exchange is
being offered,
2. Dhen-issued securities, and
3. Outstanding issues of comparable maturity
to those being offered for exchange.
In the past five years, therefore, the effects of Federal Reserve operations in the open market have been registered primarily in the
SYstem's portfolio of bills, while its holdings of bonds, certificates,
and notes have changed mainly through the exchange of maturing issues
fcsr newly offered shortest-dated Treasury securities.
During refunding
Peri°ds, operations for the System Account, designed to maintain a stable
situatLon in the money market, have been almost wholly transacted through
bills or repurchase agreements.
The only exception was in November 1955
When the
Federal Reserve purchased in the market
167 million 'when-issued'
securities--i.a., obtained newly offered securities in addition to those
Previ°12s1,y held in the System Account.
This purchase amounted to less than
3 Per cent of public holdings of maturing issues.
You may wish to contact the Treasury directly for a more authoritat;
4-Iie comment on their activities.
It is our understanding that the invest-
practices of the Treasury for its accounts are governed by various
4tatalto_ y
r provisions. In general, the prime criteria established by these
14'°Irieion5 involve a maximization of returns consistent with prudent investIllerit Practice; in such cases investments must be limited to issues which
Pr°1ride Yields above stated statutory minimums.
At times these investment
Prat
tices are consistent with purchases of "rights" and "when-issued"
1 9
3
securities durirq; refunding periods so that
l arket as support purchases have been meue.
SONO
purchases regarded by the
As noted below, however,
these purchases have been relatively small in recent years. 6tich transact:lens in marketable U. S. Government securities are executed by the
federal Reserve Bank of New York acting as fiscal agent for the Treasury.
13eealls0 of their proximity and knowledge of the money and securities
rkets, New York Federal Reserve Bank officials regalarly give the
TreastlrY advice and counsel on all technical considerations surrounding
each Treasury financing operation.
It should be noted that over 80 per cent of Trust Fund holdings
al'e
in nonmarketable special Treasury issues and that usually Treasury
accounts hold less than one per cent of maturing marketable issues.
In
reeent years, Treasury investment accounts have purchased marketable U. S.
G°1rernment securities usually in relatively small amounts during Treasury
refilliclinC periods. On only two occasions, in November 1955 and in May 1957,
have .
investment account purchases been substantial. Even in these instances,
3110,
'
Purchases were less than 5 per cent and 10 per cent, respectively, of
io holdings of the maturing issues.
Since Treasury Trust accounts have
r'eatlY increased their holdings of U. S. Government securities in recent
Year
8, such purchases have not necessarily been sold off to the public at
later time
but have become a permanent investment.
tirne
8
The Treasury some-
allots a portion of newly offered issues for subscription by its own
4ee°1111ts
In the event that a particalar Treasury exchange refunding opera" 13 not well received by the market, there may be a net cash pay-out
no
—4—
bY the Treasury on the• waturity date. It will be apparent from the fore
going that there is no mechanism available either to the Treasury or to
the Federal Reserve System to prevent fully such a development. In such
cases, to the extent that the Treasury's cash balances need replenishing,
this must be done by other means
in the market.
January 10, 1958
Winfield W. Riefler
generally through borrowing new cash
BOARD OF GOVERNORS
,,4011,1*4
OF THE
Item No. 19
FEDERAL RESERVE SYSTEM
1/10/58
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONOENCE
TO THE BOARD
January 10, 1958
CONFIDENTIAL (FR)
Mre Bert R. Frail, Chairman,
Federal Reserve Bank of Chicago,
Chicago 90, Illinois.
Dear Mr. Prall:
The Board of Governors approves the payment of
salary to Mr. W. G. Rickel as Assistant Cashier, Federal
Reserve Bank of Chicago, Detroit Branch, for the period
January 1, 1958 through December 31, 1958, at the rate of
$9,500 per annum, which is the rate fixed by your Board
of Directors as reported in Mr. Harrisr letter of
December 26, 19570
Very truly yours,
(Sijncd)
R. Carpenter
S. R. Carpenter,
Secretary.
BOARD OF GOVERNORS
e,0CI qt4;:k,
OF THE
Item No. 20
1/10/58
FEDERAL RESERVE SYSTEM
al
04,
ago
A*
*
0
WASHINGTON 25. D. C.
AODRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
:
**(Ilk kkrttPti
44004.0*
January 10, 1958
CONFIDENTIAL
(Fal
Mr. Raymond W. Hall, Chairman,
Federal Reserve Bank of Kansas City,
Kansas City 6, Missouri.
Dear Mr. Hall:
The Board of Governors approves the payment of
salary to Mr. George H. Clay as Vice President, General Counsel,
and Secretary of the Federal Reserve Bank of Kansas City for the
Period February 1, 1958 through December 31, 1958, at the rate
of $22,000 per annum, which is the rate fixed by the Board of
Directors as reported in your letter
of December 27, 1957.
The Board will interpose no objection to Mr. Clay
continuing as a director of Trans World Airlines for a period
not to exceed one year from the effective date of his employment.
Very truly yours,
(Signed) S. R. Carpenter
S. R. Carpenter,
Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 21
1/10/58
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
4440**
January 10) 1958
Z. R. B. Wiltsel Vice President)
Federal Reserve Bank of New York)
New York
45: New York.
Dear Mr. Wiltse:
In accordance with the request contained in
Your letter of January 7) 1958) the Board approves the
aPpointment of George M. Yeager as an assistant examiner
for the Federal Reserve Bank of New York. Please advise
as to the date on which the appointment is made effective.
Very truly yours)
(Signed) Merritt Sherman
Merritt Sherman
Assistant Secretary.
114
BOARD OF GOVERNORS
OF THE
Item No. 22
1/10/58
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
January 10, 1958
1,1.1 r. R. H. Morrill, Vice President,
Federal Reserve Bank of San Francisco,
San Francisco 20, California.
Dear Mr. Morrill:
In accordance with the request contained in your
letter of December 31, 19570 the Board approves the desigtlation of the following named individuals as special
assistant examiners for the Federal Reserve Bank of San
Francisco for the purpose of participating in examinations
Of State member banks only:
R. B.
T. E.
R. L.
R. E.
J. R.
Cook
Hopkins
Levine
Prosser
Smolley
D.
A.
D.
W.
H. Childs
Tinucci
F. Lee
C. Swanfelt
E.
V.
R.
H.
J.
R.
E.
E.
G.
F.
Liggett
Zeuske
Bremer
Helms
Leyman
Appropriate notations have been made in our
record of the names to be deleted from the list of special
!!ssistant examiners and the name of W. W. Taylor, Jr. has
ren changed on our records to W. W. Taylor, the designation
being eliminated.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Assistant Secretary.
@FedFRASER