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;'609 ". 9/61 Minutes for To: Members of the Board From: Office Of the Secretary January 11, 1963 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. King Gov. Mitchell Minutes of the Board of Governors of the Federal Reserve System on Friday, January 11, 1963. The Board met in the Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Martin, Chairman Balderston, Vice Chairman Mills Robertson Shepardson Mx. Sherman, Secretary Mr. Kenyon, Assistant Secretary Mr. Young, Adviser to the Board and Director, Division of International Finance Mr. Molony, Assistant to the Board Mr. Cardon, Legislative Counsel Mr. Fauver, Assistant to the Board Mx. Noyes, Director, Division of Research and Statistics Mr. Koch, Associate Director, Division of Research and Statistics Mr. Brill, Adviser, Division of Research and Statistics Mr. Holland, Adviser, Division of Research and Statistics Mr. Solomon, Associate Adviser, Division of Research and Statistics Mr. Hersey, Adviser, Division of International Finance Mr. Katz, Associate Adviser, Division of International Finance Mr. Landry, Assistant to the Secretary Mr. Eckert, Chief, Banking Section, Division of Research and Statistics Mr. Yager, Chief, Government Finance Section, Division of Research and Statistics Miss Dingle, Senior Economist, Division of Research and Statistics Mr. Keir, Senior Economist, Division of Research and Statistics Mr. Reynolds, Chief, Special Studies and Operations Section, Division of International Finance Mr. Goldstein, Economist, Division of International Finance 1/11/63 -2Money market review. Mr. Yager reported on money market conditions and recent and prospective Treasury financing operations, referring in the course of his comments to a set of tables that had been distributed just prior to the meeting. Mr. Koch then commented on the situation with respect to bank reserves, the money supply, and related matters, following which Mr. Goldstein presented a report on the foreign exchange market. During discussion of the foregoing reports, question was raised as to the reason for the substantial upward revision in the average tree reserve figure for the statement week ended January 2. The Staff replies indicated that the principal reason was an underestimating °11 vault cash holdings of country banks; it was noted that difficulties °I' estimating were always greater than usual at this time of year. So far as the size of estimating errors was concerned, it was believed that the trend had been downward, and several efforts were now under l a.Y with a view to making further progress. The errors, which were 8°Metimes on the high and sometimes on the low side, were believed to be restricted usually to a daily average of around $25 million. It ' Ilas understood that the staff would provide the members of the Board with copies of an historical compilation showing the range of errors. Inquiry was made during the discussion as to whether consider' etion should be given to the possibility of not publishing a preliminary estimate of free reserves immediately following the close of each S9 1/11/63 -3- statement week and instead providing a time lag of a week before such figures were released to the press. Certain considerations were cited that might argue against such an approach, and the inquiry was not Pressed further. It was understood, however, that the problems involved in compiling the preliminary estimates would continue to receive the c°nsideration of the staff, with a view toward the further development °f procedures that might reduce the range of estimating error. Governor Balderston referred to one of the tables that had been distributed at the beginning of the meeting, showing seasonally adillsted annual rates of increase of selected monetary indicators for the month of December, the fourth quarter of 1962, and the full year. It was his impression that such compilations might be helpful to Members of the Open Market Committee, and after some discussion it Was understood that the staff would give consideration to including tabulations of this kind, at least periodically, in the documentation flIrnished to the Committee. All members of the staff then withdrew except Messrs. Sherman, ICerlY°n, Young, Fauver, and Landry, and the following entered the room: Mr. Mr. Mr. Mr. Haekley, General Counsel Solomon, Director, Division of Examinations Hooff, Assistant General Counsel Thompson, Assistant Director, Division of Examinations Discount rates. The establishment without change by the Federal Reserve Banks of New York, Cleveland, Richmond, Atlanta, St. Louis, Minneapolis, Kansas City, and Dallas on January 10, 1963, of the rates 90 1/11/63 -4- on discounts and advances in their existing schedules was approved Unanimously, with the understanding that appropriate advice would be sent to those Banks. Circulated or distributed items. The following items, copies °f 'which are attached under the respective item numbers indicated, were .94ZEIlia21 unanimously: Item No. Letter to the Presidents of all Federal Reserve Banks and Vice Presidents in charge of Branches Ilegarding revised forms FR 527 and 527a, for l'eloorting borrowings of individual member banks trom Federal Reserve Banks. 1 Letter to The Buckeye Corporation, New York, New York, and Massachusetts Mohair Plush Company, 111c., New York, New York granting determinations e.%empting them from all holding company affiliate equirements except for the purposes of section 23A °f the Federal Reserve Act. 2 Latte r to the Presidents of all Federal Reserve 13anks advising of the Board's consent to the opening and Illaintenance by the New York Reserve Bank of an account wIth the Bank of Sweden payable in foreign currency. 3 Mr. Young then withdrew from the meeting. Retirement System of the Federal Reserve Banks. The Secretary reported that in accordance with the understanding at yesterday's ' fleeting, he had talked with Professor Dan M. McGill of the Wharton 8chool of Finance, University of Pennsylvania, who had submitted to the Board under date of December 5, 1962, a report on the mortality °'/Id- interest assumptions for the Retirement System of the Federal 91 1/11/63 -5- Reserve Banks in accordance with instructions given him in September 1962. Professor McGill had indicated willingness to meet with the Board on Thursday, January 24, on which date it appeared that all Of the members of the Board would be present. After discussion, it was decided to schedule the meeting with Professor McGill at 9:30 a.m. on January 24. The meeting then adjourned. Secretary's Note: Governor Shepardson today approved on behalf of the Board the following items: Memorandum from the Division of Administrative Services recornniending increase in the basic annual salary of Lorraine Hirz from $4,390 to $4,725, with a change in title from Clerk-Stenographer to Secretary in that Division, effective upon assuming her new duties. Letter to the Federal Reserve Bank of Boston (attached Item No.4) aPproving the appointment of Robert V. Clapp and William S. Wallace as examiners. Letter to the Federal Reserve Bank of Chicago regarding arrangeIllents for the assignment to the Board's Division of Examinations of Robert J. Hochstatter, Examiner for that Bank, for a period of four Or five weeks beginning February 4, 1963, with the understanding that during his assignment in Washington, Mx. Hochstatter would be designated 4s Federal Reserve Examiner and that the Reserve Bank would absorb his salary and travel expenses. Secretary Item No.1 1/11/63 BOARD OF GOVERNORS 9? OF THE FEDERAL RESERVE SYSTEM S-1855 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD January 11, 1963. near sir: Enclosed are sample copies of revised forms FR 527 and 527a ! c'r reporting borrowings of individual member banks from the Federal rces erve Banks. A supply is being shipped to each Reserve Bank and efrch• The forms have been revised because of the discontinuance, ective July 28, 1962, of the central reserve city classification. ' Separate reports of borrowings by reserve city banks and by con n'tltry banks should be mailed to the Board's Division of Bank ercrations promptly after the close of each weekly and biweekly reserve : . 11Putation period. A form FR 527 should be submitted even though stere are no borrowings to report for the period, In such a circumance, it would not be necessary to include the form FR 527a. J The fundamental purpose of obtaining these reports on in • . d ividual bank borrowing is to facilitate study of the impact and :fectiveness of current credit and discount policies, and thus to er in the discharge of System responsibilities in the monetary and fid doedit field. The reports identify borrowing banks by name, but they ao 11°t provide the Board with an adequate basis for qualitative foalYsis of individual Federal Reserve Bank actions on applications ' discount accommodation, and no such qualitative analyses are col ntemplated. This letter supersedes that of January 25, 1960 (S-1723, P. 11- L.S, #3949.4). Very truly yours, -Merritt S' ern Secretary. 41elosures r°17 flE PRESIDENTS OF ALL FEDERAL RESERVE BANKS AND 'ICE PRESIDENTS IN CHARGE OF BRANCHES 93 Item No.2 1/11/63 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD January 11, 1963 Mr. George A. Horvath, President, The Buckeye Corporation, 16 East 34th Street, New York 16, New York. Mr. George A. Horvath, Treasurer, Massachusetts Mohair Plush Company, Inc., 16 East 34th Street, New York 16, New York. Dear Mr. Horvath: This refers to your letters of January 3 and January 4, to the Federal Reserve Bank of New York, requesting determinations by the Board of Governors of the Federal Reserve System as to the future status of Massachusetts Mohair Plush Company, Inc. and of The Buckeye Corporation as holding company affiliates. 1963, From the information submitted the Board understands that Massachusetts Mohair Plush Company, Inc., a personal holding company, and its subsidiary companies are engaged in various enterprises, including real estate, industrial, television, and motion picture activities; that The Buckeye Corporation will become a holding company affiliate if and when it acquires a majority of the outstanding shares of stock of Miami National Bank, Miami, Florida; that Massachusetts Mohair Plush Company, Inc. will also become a holding company affiliate by reason of the fact that it owns or controls over 60 per cent of the outstanding shares of The Buckeye Corporation; and that these Companies will not, directly or indirectly, own or control any stock of, or manage or control, any other banking institution. In view of these facts, the Board has determined that Massachusetts Mohair Plush Company, Inc. and The Buckeye Corporation will not be engaged, directly or indirectly, as a business in holding the stock of, or managing or controlling, banks, banking associations, savings banks, or trust companies within the meaning of section 2(c) Of the Banking Act of 1933 (12 U.S.C. 221a); and, accordingly, such Companies will not be deemed to be holding company affiliates except BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Mr. George A. Horvath -2- ror the purposes of section 23A of the Federal Reserve Act and will not 11,0ed voting permits from the Board of Governors in order to vote the , uank stock which they propose to acquire. that If, however, the facts should at any time indicate tion Corpora Massachusetts Mohair Plush Company, Inc. and The Buckeye d submitte be again might be deemed to be so engaged, this matter should nadetermi these to the Board. The Board reserves the right to rescind time on the it_ions and make further determinations of this matter at any acquisifuture rsis of the then existing facts. Particularly, should g a attainin their by or activities of such Companies result in such that ations determin Position whereby the Board may deem desirable or stock, bank of holding Companies are engaged as businesses in the granted herein ations determin the managing or controlling of banks, the 'nay be rescinded. Very truly yours, (signed) Merritt Sherman Merritt Sherman, Secretary. Item No.3 1/11/63 95 BOARD OF GOVERNORS S-1854 OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD January 11, 1963. 44r* Sir 4 . Pursuant to section 214.5(a) of Regulation N, the Board has consented, this date, to the opening and maintenance by the Federal Reserve Bank of Y"k of an account payable in foreign currency with the Bank of Sweden. As a result of this action and previous actions of the Board, the Pede,. able'al Reserve Bank of New York is now authorized to maintain accounts pay in foreign currency with the foreign banks designated below. Austrian National Bank Bank for International S ttlements Bank of Canada Bank of England Bank of France Bank of Italy Bank of Sweden German Federal Bank National Bank of Belgium Netherlands Bank • Societe Nationale de Credit a l'Industrie Swiss National Bank 41Atio All such accounts are subject to the provisions of section 5 of RegN, as amended effective February 13 1962. This letter supersedes the Board's Letter of October 3, 1962. Very truly yours, Merritt She an, Secretary. 1)1'?RESIDENTS OF ALL FEDERAL RESERVE BANKS Item No.4 1/11/63 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD January 14, 1963 AIR MAIL CONFIDENTIAL - FR 4. Luther M. Hoyle, Jr., Vice President, Federal Reserve Bank of Boston, Boston 6, Massachusetts. Dear Mr. Hoyle: In accordance with the requests contained in your letters of January 41 19631 the Board approves the appointment of Robert V. Clapp and William S. Wallace, at present assistant examiners, as examiners for the Federal Reserve Bank of Boston. ?lease advise the salary rates and the effective dates of the appointments. It is noted that Messrs. Clapp and Wallace are indebted to local, non-member, co-operative banks. Accordingly, the Board's approval of their appointments is given with the understanding that tsither Mr. Clapp nor Mr. Wallace will participate in any examination Of the bank to which he now is indebted until such indebtedness has been liquidated. Very truly yours, (signed) Elizabeth L. Carmichael) Elizabeth L. Carmichael, Assistant Secretary.
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