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Minutes for
To:
Members of the Board
From:
Office of the Secretary
January 17, 1964
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
170
Minutes of the Board of Governors of the Federal Reserve
System on Friday, January 17, 1964.
The Board met in the Board Room
at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Balderston, Vice Chairman
Mills
Robertson
Shepardson
Daane
Mr. Sherman, Secretary
Mr. Kenyon, Assistant Secretary
Mr. Young, Adviser to the Board and Director,
Division of International Finance
Mr. Noyes, Adviser to the Board
Mr. Fauver, Assistant to the Board
Mr. Brill, Director, Division of Research
and Statistics
Mr. Schwartz, Director, Division of Data
Processing
Mr. Holland, Associate Director, Division of
Research and Statistics
Mr. Koch, Associate Director, Division of
Research and Statistics
Mr. Partee, Adviser, Division of Research
and Statistics
Mr. Furth, Adviser, Division of International
Finance
Mr. Hersey, Adviser, Division of International
Finance
Mr. Katz, Associate Adviser, Division of
International Finance
Mr. Mattras, General Assistant, Office of
the Secretary
Mr. Morgan, Staff Assistant, Board Members'
Offices
Mr. Eckert, Chief, Banking Section, Division
of Research and Statistics
Mr. Yager, Chief, Government Finance Section,
Division of Research and Statistics
Mr. Axilrod, Senior Economist, Division of
Research and Statistics
Mr. Keir, Senior Economist, Division of
Research and Statistics
Mr. Goldstein, Economist, Division of
International Finance
-2-
J-/l7/6.
Money market review.
Mr. Keir reported on the current advance
after
refunding and on other aspects of the Government securities market,
Which Mr. Axilrod discussed recent developments in bank reserves and
related matters.
Mr. Goldstein then reported on foreign exchange market
developments.
of
Materials distributed and commented upon included a summary
the
monetary developments in the four weeks ended January 15, 1964;
es;
composition of commercial bank holdings of U. S. Government securiti
dealer
selected components of commercial bank loans and investments;
g in
holdings of Treasury bills in selected periods; dealer financin
selected periods; and Treasury pre-refunding experience.
by
Governor Shepardson referred to data prepared for the Board
the staff on member bank borrowings.
He noted that some of the borrowings
listed in recent reports were substantial in relation to the reserves of
the banks concerned and that some of the borrowings were continuous.
After discussion, Chairman Martin asked Mr. Holland to look into the
Matter with a view to suggesting whether any follow-up by the Board,
Other than through the examination procedure, seemed necessary.
Sherman,
All members of the staff then withdrew except Messrs.
g entered the
ICenYon, Young, Noyes, Fauver, and Mattras and the followin
:
room
Mr.
Mr.
Mr.
Mr.
Hackley, General Counsel
Solomon, Director, Division of Examinations
Johnson, Director, Division of Personnel Administration
Hexter, Assistant General Counsel
172
1/17/64
-3Mr.
Mr.
Mr.
Mr.
Mr.
Conkling, Assistant Director, Division of Bank Operations
Leavitt, Assistant Director, Division of Examinations
Thompson, Assistant Director, Division of Examinations
Bakke, Senior Attorney, Legal Division
McClelland, Assistant to the Director, Division of
Examinations
Discount rates.
The establishment without change by the Federal
Reserve Banks of New York, Philadelphia, Chicago, and San Francisco on
January 16, 1964, of the rates on discounts and advances in their existing
e
schedules was approved unanimously, with the understanding that appropriat
advice would be sent to those Banks.
Circulated or distributed items.
The following items, copies of
which are attached to these minutes under the respective item numbers
indicated, were approved unanimously:
Item No.
Letter to Pan American Bank of Miami, Miami,
Florida, granting its request for permission
to maintain reduced reserves.
Letter to The Peoples Savings Bank, Clanton,
Alabama, approving an investment in bank
Premises.
2
Letter to Financial Data Corp., Gary,
Indiana, regarding the status of the
corporation as a holding company affiliate.
3
Letter to the Federal Reserve Bank of New
York approving the retention of Dr. Herman G.
S4ndvoss in active service beyond the normal
retirement date.
14-
1/17/64
-4Item No.
Letter to the Federal Reserve Bank of New
York interposing no objection to a leave
Of absence without pay for Dionyssios
Kotsonis, Economist, Research Department,
while aiding the Bernstein Committee in the
Preparation of technical material relating to
a review of United States balance of payments statistics and concepts.
5
Letter to the Federal Reserve Bank of New
York approving the payment of salaries to
slx officers at rates fixed by the Bank's
Board of Directors.
6
Letter to the Federal Reserve Bank of
7
Xansas City approving the appointment
?f George D. Royer, Jr., as Vice President
ln charge of the Bank Examination Department
and the payment of salaries to Mr. Royer and
alx other officers at rates fixed by the Bank's
Board of Directors.
In connection with Item No.
4, there was a brief discussion at
the instance of Governor Mills concerning the fact that in this case an
employee of short service would continue to enjoy certain "fringe benefits"
(Xl the Retirement System by continuing to be retained in active service
Past normal retirement age.
The implications of such a practice, if it
became widespread, were noted.
However, it was pointed out that the
recent trend among the Reserve Banks was in the direction of retaining
the
services of physicians on a part-time consultant basis.
Reference
als° was made to the recognized quality of the medical services at the
Nel*/ York Reserve Bank.
It was mentioned that apparently some of the
agencies of the Government were following a practice where certain employees
I24
1/17/64
-5-
in good health retired and were then re-employed at a rate of compensation
that took into account their retirement allowance.
Mr. Johnson noted that
the Board's letter to the Reserve Banks of October 11, 1950, stated that
in cases of re-employment of service-retired employees for temporary
Periods, consideration should be given to the pension portion of the
retirement allowance when fixing the salary.
Report on competitive factors (Knoxville, Tennessee).
There
had been distributed a draft of report to the Federal Deposit Insurance
Corporation on the competitive factors involved in the proposed merger
Of Fidelity-Bankers Trust Company and The Tennessee Valley Bank, both
or Knoxville, Tennessee.
The report was approved unanimously for transmission to the
Corporation with the understanding that the conclusion would be revised
Slightly to read as follows:
Virtually no competition would be eliminated by the
merger of The Tennessee Valley Bank and Fidelity-Bankers
Trust Company, both of Knoxville, Tennessee, because the
services offered by each are so different in character.
The merging of these banks would permit intensified competition with Knoxville's two larger banking institutions.
There is no evidence that the proposed merger would prove
detrimental to the two smaller banks in Knox County.
Report on competitive factors (Vincennes-Bicknell, Indiana).
There had been distributed a draft of report to the Comptroller of the
Currency on the competitive factors involved in the proposed mergers of
three banks in Bicknell, Indiana; namely, The First National Bank of
175
1/17/64
-6-
Bicknell, Bicknell Trust and Savings Company, and The Citizens State
Bank, into The American National Bank of Vincennes, Vincennes, Indiana.
The report was approved unanimously for transmission to the
Comptroller.
The conclusion read as follows:
Consummation of the proposed mergers would eliminate
the modest degree of competition existing between The
American National Bank of Vincennes and the Bicknell
Banks, and the considerable degree of existing competition
among the three banks in Bicknell. It would also increase
the geographical coverage of and the concentration of
deposits in Knox County's largest bank. Alternative
banking sources would be reduced from six to three in
Knox County and from three to one in the town of Bicknell.
The effects on banking competition in the town of
Bicknell and Knox County, Indiana, are clearly adverse.
Governor Shepardson commented that he would go along with the
conclusion on the basis that the number of alternative banking sources
In Knox County would be reduced from six to three if the proposed mergers
were consummated and that the Vincennes bank was the dominant institution
in the County. (It would hold over 60 per cent of bank deposits in the
C°untY if the mergers were consummated.)
However, he doubted the economic
feasibility of three banks continuing to operate in a small and declining
c°Mmunity such as Bicknell.
Other members of the Board noted that grounds might remain to warrant
413Proval of the mergers despite adverse competitive effects.
Since the
el3()I't being rendered by the Board was on competitive factors only, they felt
that the conclusion was warranted.
-7-
1/17/64
The meeting then adjourned.
Secretary's Notes: Later in the day the Secretary
was informed by Governor Shepardson that the action
taken on January 13, 1964, accepting the resignation
of Karl E. Bakke, Senior Attorney in the Legal
Division,as of the close of business January 18,
1964, had been rescinded.
Pursuant to recommendations contained in memoranda
from appropriate individuals concerned, Governor
Shepardson today approved on behalf of the Board
the following actions relating to the Board's
staff:
Establishment of additional positions
Two additional economist positions in the Business Conditions
Section of the Division of Research and Statistics, as recommended
111 memoranda from that Division dated December 27, 1963, and
January 7, 1964.
...,krtplaLET"ILE
Statistics,
Franklin V. Walker as Economist, Division of Research and
date of
the
effective
$11,725,
of
rate
14th basic annual salary at the
e
ntrance upon duty.
, Anne C. Sencindiver, to work in the Economic Graphics Section of the
uivision of Data Processing on a temporary contractual basis, with
cozpensation at the rate of $24.00 per day, effective to June 30, 1964.
Division
Bruna Watts, to work in the Economic Graphics Section of the
ion
compensat
with
basis,
al
contractu
temporary
°I. Data Processing on a
1964.
30,
June
to
effective
at the rate of $16.00 per day,
Sal
increases
Ne.me and title
effective January 19, 1964
Division
Basic annual salary
To
From
Office of the Secretary
MarY H. Wilson, Minutes Clerk
$ 4,090
$
4,355
-8-
1/17/64
Name and title
Division
Basic annual salary
To
From
Legal
Gertrude E. Booth, Secretary
5,585
$ 5,760
12,110
12,495
14,065
14,515
7,720
7,950
5,760
10,970
6,770
11,300
6,965
3,880
4,215
$
Examinations
Travis J. Johnson, Senior Federal Reserve
Examiner
John T. McClintock, Supervisory Review
Examiner
Linwood N. Tyndall, Assistant Federal Reserve
Examiner
Bank Operations
il!rY P. Barlow, Statistical Assistant
!
;rrY M. Durkan, Technical Assistant
."arle E. Randour, Supervisor, Reserve-Member
Banks Statement Unit
5,935
International Finance
CYnthia Lea Young, Clerk
Administrative Services
Lorraine
T. Hirz, Secretary
MarY M. McDowell, Editorial Assistant
4,85o
5,010
5,810
6,285
SeCrt
Item No. 1
1/17/64
BOARD OF GOVERNORS
OF THE
R
•
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS orricim.
CORRESPONDENCE
TO TI-4E BOARD
January 17, 1964
Board of Directors,
Pan American Bank of Miami,
Miami, Florida.
Gentlemen:
With reference to your request submitted through the Federal
the
Reserve Bank of Atlanta, the Board of Governors, acting under
permission
grants
Act,
Reserve
Federal
the
of
19
Provisions of Section
to the Pan American Bank of Miami to maintain the same reserves against
deposits as are required to be maintained by nonreserve city banks,
beginning
effective with the first biweekly reserve computation period
letter.
after the date of this
Your attention is called to the fact that such permission
is subject to revocation by the Board of Governors.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
179
BOARD OF" GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, 0. C. 2051:11
Item No. 2
1/17/64
ACIOACIIII OFFICIAL COPIRICIPPONDICNCIE
TO THC 1110ARO
January 171 1964
Board of Directors,
The Peoples Savings Bank,
Clanton, Alabama.
Gentlemen:
The Board of Governors of the Federal Reserve System
approves, under the provisions of Section 24A of the Federal
Reserve Act, an investment in bank premises, direct and indirect, by The Peoples Savings Bank, Clanton, Alabama, of
$265,000. This approval includes $125,000, for the cost of
the land which amount is presently reflected in the assets of
the bank.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
ISO
Item No. 3
1/17/64
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
January 17, 1964
Mr. James M. McNamara, Treasurer,
Financial Data Corp.,
569 BroadwaY,
Gary, Indiana.
Dear Mr. McNamara:
This refers to the request contained in a letter dated
December 26, 1963, submitted to the Federal Reserve Bank of Chicago,
for a determination by the Board of Governors of the Federal Reserve
System as to the status of Financial Data Corp. ("Corporation"), as
a
holding company affiliate°
From the information'presented„ the Board understands that
Corporation is engaged in the business of electronic data processing
service, operating two service bureaus, despite the fact that it is
Primarily a holding company. Corporation owns 45,200 of the 90,000
shares Of stock (50.22%) of Bank .df Indiana, Gary, Indiana ("Bank");
and it does not, directly or indirectly., own or control any stock of,
Or manage ,or,contro(10 any other banking institutions.
The Board understands that Corporation came into being on
Pe},
.
,ruary 1, 1963, as a result of a merger between Lakeside Corporation
(111%
-akesideo) and Nationwide Tabulating Corporation. Corporation, be"I-4g the continuing entity, acquired all of the assets of the merged
ccmPanies including the shares of Bank formerly held by Lakeside.
On January 11, 1962, the Board determined that Lakeside
0
°I1Doration, Gary, Indiana ("Lakeside"), was not engaged, directly
(31
'indirectly, as a business in holding the stock of, or managing or
controlling, banks, banking associations, savings banks, or trust
p,mpanies within the meaning of section 2(c) of the Banking Act of
i733; and, accordingly, the Corporation was not deemed to be a holdpng company affiliate except for the purposes of section 23A of the
eral Reserve Act. Such determination was with respect to Lakecle l s owning over 50 per cent of the shares of stock of Gary Trust
-gd Savings Bank, Gary, Indiana ("Gary Trust").
X
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Mr. Jamas M. McNamara
-2-
On November 12, 1962, Gary Trust and Lake County State Bank,
East Gary ("Lake County Bank"), merged under the charter of the former
and title of Bank of Indiana, Gary ("Bank of Indiana"). Although upon
consummation of the merger the interest of Lakeside in the resulting
bank represented less than majority control because of an increase in
caPital stock, Lakeside had voted more than 50 per cent of the number
Of shares voted at the prior election of directors of Gary Trust,
thereby preserving Lakeside's status as a holding company affiliate
in the interim between the merger and its acquisition of a majority
interest in Bank of Indiana. Thus, at the time of the merger between
Lakeside and Financial Data Corp., the Board's section 301 determination of January 11, 1962, was still in effect.
Section 234(d), Title 25, Burn's Annotated Statutes of
' Indianal provides that where two corporations (other than banks) merge,
such single corporation shall thereupon and thereafter possess all
rights, privileges, immunities, powers, and franchises as well of a
Public as of a private nature of each of the corporations so merged
or consolidated." Accordingly, Financial Data Corp., as the succeedentity to Lakeside and Nationwide, acquired the right to the
!action 301 determination granted Lakeside, and no redetermination
18 necessary.
If, however, the facts should at any time indicate that
°1100rat10n might be deemed to be engaged, directly or indirectly,
s a. business in holding the stock of, or managing or controlling,
exiks, banking associations, savings banks, or trust companies, this
,V!tter should again be submitted to the Board. The Board reserves
tr right to rescind this determination and make further determina'
t On of this matter at any time on the basis of the then existing
..,!(Its, including additional acquisitions of bank stocks even though
4'ut constituting control.
t
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
Item No.
BOARD OF GOVERNORS
4
1/3.7/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
ADDRESS orriciAL CORRESPONDENCE
TO THE BOARD
January 7,
CONFIDENTIAL (FR)
Mr. Alfred Hayes, President,
Federal Reserve Bank of New York,
New York, New York 10045.
Dear Mr. Hayes:
In view of the circumstances set forth in your
letter of January 2, 1964, the Board of Governors approves
the retention of Herman G. Sandvoss, M.D., in active service beyond normal retirement date, March 1, 1964, to his
”taint of age 70, unless terminated earlier at the
dlscretion of the Bank, with the understanding that his
salary will be administered within the special salary
range applicable to the Medical Director.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
1964
4 (,-.)
t Jti
Item No. 5
BOARD OF GOVERNORS
1/17/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20501
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
January 17, 1964
Mr. Thomas M. Timlen, Jr., Secretary,
Federal Reserve Bank of New York,
New York, New York. 10045.
Dear Mr. Timlen:
With reference to your letter of December 20, 1963,
the Board of Governors will interpose no objection to a leave
of absence, without pay, for a period of four months commencing on or about January 6, 1964, to Mr. Dionyssios Kotsonis,
Economist, Research Department, while aiding the uBernstein
Committee', in the preparation of technical material relating
to a review of United States balance-of-payments statistics
and concepts.
It is understood the Bureau of the Budget will
compensate Mr. Kotsonis and reimburse him for travel and
out-of-pocket expense:
Very truly yours,
(Signed) Merritt Sherthan
Merritt Sherman,
Secretary.
E*7_
Item No. 6
BOARD OF GOVERNORS
1/17/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE ISOARD
January 17, 1964
ee4IDENTIAL (FR)
kr,1 A
Alfred Hayes, President,
eral Reserve Bank of New York,
'elt York,
New'York 10045.
be
a kir.
'
Hayes:
ilk
The Board of Governors has approved the payment of salary, at rates
tor .et,
,1111, to the following officers of the Federal Reserve Bank of New York
"0 Period January 2 through December 31, 1964:
Annual
Name
Title
Salary
Peter
Fousek
Peter D.
4obert G.Sternlight
Link
pt,G•eralci
Beach
1,.
ehaz*d A. Debs
H. Oltman
Assistant
Assistant
Adviser
Manager
Assistant
Assistant
Vice President
Vice President
Counsel
Counsel
$201000
.20,000
22,000
13,000
12,500
12,000
The rates approved by the Board are those fixed by your Board of
as reported in your letter of January 3, 1964.
r
The Board has noted the change in duties for Messrs. Meek, Thoman,
and Rushmore; and pending special service retirements of Mr.
Davis and Mr. Lewis.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
.....
Of Gov,;
, ie •
*
o
Item No. 7
1/17/64
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
January 17) 1964
e° IDENTIAL
(FR)
1 1!°Ter A. Scott, Chairman,
F
L'aJ- Reserve Bank of Kansas City,
"
3as City, Missouri 64106.
144 Mr. Scott:
't°Yer
The Board of Governors approves the appointment of George D.
ur. as Vice President in charge of the Bank Examination Departthe Federal Reserve Bank of Kansas City, effective March 1, 1964.
ty.01.1r
Board also approves the payment of salaries to the officerssank
ioank listed below, from effective dates shown through December 31,
Dorte
'
clat rates indicated, which are those fixed by your Directors, as rein your letter of January 9, 1964.
,964
Title
''‘eorge A. Royer, Jr
wiikinson
ti
't411
eY
iN N. J. Andrews
7141.3 Blair
smith
'4Ycl J Mathews
°441,zi .
16 white
Vice President
Chief Examiner
Cashier
Assistant Vice Pres.
Assistant Cashier
Assistant Cashier
Assistant Cashier
Annual
Salary
Effective
Date
$17,000
151000
12,000
13,000
11,000
11,500
10,000
March 1
March 1
Jan. 9
Jan. 9
Jan. 9
Jan. 9
Jan. 9
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
@FedFRASER