The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Minutes for To: Members of the Board From: Office of the Secretary January 23, 1958 Attached is a copy of the minutes.of the Board of Governors of the Federal Reserve System on the above date. It is proposed to place in the record of policy actions required to be kept under the provisions of Section 10 of the Federal Reserve Act an entry covering the item in this set of minutes commencing on the page and dealing with the subject referred to below: Page 1 Approval of discount rate of 2-3/4 per cent for any Federal Reserve Bank advising of the establishment of that rate. Should you have any question with regard to the minutes, it will be appreated 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 Irere not present, please initial in column B below to indicate that You have seen the minutes. Chin. Martin Gov. Szymczak Gov. Vardaman 1/ Gov. Mills Gov. Robertson Gov, Balderston e/c1/3 Gov. Shepardson In accordance with Governor Shepardson's memorandum of March 8, 1957, these minutes are not being sent to Governor Vardaman for initial. 266 Minutes of the Board of Governors of the Federal Reserve System on Thursday, January 23, 1958. The Board met in the Board Room at 10:00 a•ni. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Martin, Chairman Balderston, Vice Chairman Szymczak Mills Robertson Shepardson Mr. Mr. Mr. Mr. Mr. Mr. Mr. Discount rates. Carpenter, Secretary Kenyon, Assistant Secretary Thurston, Assistant to the Board Thomas, Economic Adviser to the Board Hackley, General Counsel Masters, Director, Division of Examinations Nelson, Assistant Director, Division of Examinations Chairman Martin suggested that the Secretary be aUthorized, in the event that Federal Reserve Banks other than Philadelphia Should advise subsequent to this meeting that their directors had established, a0Ject to the approval of the Board of Governors, a rate of 2-3/4 per cent °11 discounts and advances under sections 13 and 13a of the Federal Reserve Act and other rates appropriate in relation thereto, to notify such Banks tIlat the Board approved the actions taken by the respective boards of 4-I-rectors. This suggestion vas approved unanimously, Secretaryta Note: Pursuant to this authorization, the Secretary today advised the six Federal Reserve Banks mentioned below that the Board approved the rates indicated effective January 24, 1958: On discounts for and advances to member banks under sections 13 and 13a: Federal Reserve Banks of New York, Cleveland, Richmond, Chicago, St. Louis, and Kansas City - 2-3/4 per cent. 267 -2- 1/23/58 On advances to member banks under section 10(b): Federal Reserve Banks of New York, Cleveland, Richmond, Chicago, St. Louis, and Kansas City - 3-1/4 per cent. On advances to individuals, partnerships, and corporations Other than member banks under last paragraph of section 13: Richmond and Chicago - 4 per cent; St. Louis - 3-3/4 per cent; and Nev York - 3-1/2 per cent. On advances under section 13b direct to industrial and commercial businesses, including advances made in participation with financing institutions: Cleveland - a range of 3-1/2 per cent to 6 per cent, and St. Louis - a range of 3-1/4 per cent to 5-1/4 per cent. On advances under section 13b taken over from financing institutions under commitments: St. Louis - (a) rate charged borrower less commitment rate on portion on which financing institution is obligated, and (b) rate charged borrower on remaining portion. Without change, the remaining rates in the Banks' existing schedules. The Presidents of all Federal Reserve Banks and the Vice Presidents in charge of Federal Reserve Bank branches were advised by telegram of the rates approved, a press statement in the usual form concerning approval of the 2-3/4 per cent rate for the six Banks was released at 4:00 p.m. EST., and arrangements were made for publication of a notice in the Federal Register. Egorts on comments made at directors' meetings (Item No. 1). 81-lant to the understanding at the meeting on January 10, 1958, there ' P41 441 been distributed to the members of the Board a draft of letter to the Chairman of the Conference of Presidents of the Federal Reserve Banks would request that there be placed on the agenda for discussion Elt the forthcoming meeting of the Conference the question of continuing 26,' 1/23/58 -3- the arrangement suggested in the Board's letter of March 19, 1956, for giving the Board the benefit of observations at Reserve Bank directors' meetings concerning business developments. Following a brief discussion, the letter, of which a copy is attached hereto as Item No. 1, was approved unanimously. Questions raised by Congressman Patman (Items 2 and 3). At the /fleeting of the Board on January 20, 1958, there was a discussion of the Proposed answers to questions 28 and 30-44 of a list of questions on various matters which vas handed to Chairman Martin by Congressman Patman °4 August 6, 1957, at the conclusion of the Chairman's appearance before the House Banking and Currency Committee in connection with the proposed Pinancial Institutions Act of 1957. Pursuant to the understanding at that meeting, there had subsequently been sent to the members of the 80ard copies of a memorandum from Mr. Hackley dated January 21, 1958, sUbmitting revised drafts of answers to questions 30, 32, and 33. Alternative drafts of revised answers to question 44 were also submitted, °Ile of which would include a detailed listing of the provisions of the Pinancial Institutions Act specifically endorsed by the Board while the other would cite examples of the changes to be effected by the Act Ilhieh caused the Board to favor on balance the passage of the legislation. Reference also was made in the memorandum to a minor change which had bee agreed upon by the Board in considering the draft of answer to qUestion 42. 1/23/58 Mr. Hackley explained that the revised answers to questions 301 32) and 331 having to do with certain amendments to the National Bank Act contained in the Financial Institutions Act, were principally for the purpose of setting forth clearly at the beginning of the answer to question 30 that it and the following three questions involved the interpretation of laws applicable only to national banks and that administrative interpretation of such laws is ordinarily a function of the Comptroller of the Currency. With regard to question 442 Mr. Hackley mentioned a minor change in the language of the answer which was suggested by Governor Robertson at the January 20 meeting but which was inadvertently not recognized in the revised alternative answers. Governor Mills then stated that he would prefer the alternative ensver to question 44 containing the detailed listing of provisions of the Financial Institutions Act specifically. endorsed by the Board) and G°Irernor Robertson agreed with Governor Mills. He felt, Governor Ro bertson said) that the other approach might seem to belittle some of the recommendations made by the Board in connection with the Financial Institutions Act which were not mentioned. Mr. Hackley commented that the other approach also might indicate that the examples cited were the provisions which the Board considered most important. Thereupon, unanimous mroval vas given to the answers to questions 28 31, and 34-43 which were accepted at the meeting on January 20, 1958, the answers to questions 30, 320 and 33 in the revised form submitted 270 1/23/58 -5- vith Mr. Hackley's memorandum, and the alternative answer to question 44 vhich was favored by Governors Mills and Robertson, with the understanding that the minor change mentioned by Mr. Hackley at this meeting would be made. Copies of the letters sent to Chairman Spence of the House Banking and Currency Committee and to Congressman Patman transmitting the approved ansvers are attached hereto as Items 2 and 3, respectively. At this point Mr. Molony, Special Assistant to the Board, entered the room. Tele ram to Governor Harriman concerning reserve requirements il.tajla111. In a telegram dated January 21, 1958, Governor Averell lisrriman of Nev York urged action by the Board to reduce reserve require'lents for central reserve city banks in New York and Chicago to the level Prevailing for reserve city banks, since he felt that such action vas J114tified from the banking standpoint and that the credit released thereby Illortad be a valuable stimulus to business activity. He referred in this c°flnection to the fact that at his direction the Superintendent of Banks tc/r Nev York had raised this question with the President of the Federal Reserve Bank of Nev York and was assured that the matter would be given eareful consideration. (Copies of a letter dated December 20, 1957, from 8111)erintendent of Banks Mooney to President Hayes and a letter dated Ilecember 27, 1957, from Mr. Hayes to Chairman Martin had been distributed t0 the members of the Board following receipt of Mr. Hayes' letter.) 1/23/58 Prior to this meeting there had been sent to the members of the Board copies of Governor Harriman's vire and a proposed reply from Chairman Martin which 'would acknowledge the telegram on behalf of the Board and reiterate the assurance that careful consideration would continue to be given to the subject of reserve requirements of member hanks. Following a brief discussion, the proposed reply telegram, of Idlioh a copy is attached to these minutes as Item No, 4, was approved , Unanimously. Mr. Leonard then withdrew from the meeting and Mr. Young, Director, 4-vision of Research and Statistics, entered the room. Prposed merger in the Syracus, New York, area and rqt votinger_pSLUI_ts_ms r 6. In memoranda distributed to the Inenibers of the Board under dates of January 21 and January 22, 1958, z'ettloectively, the Division of Examinations discussed (a) the request of Plrat Trust and Deposit Company, Syracuse, Nev York, for prior consent 'Under the provisions of section 18(c) of the Federal Deposit Insurance Act to merge unto itself the National Bank and Trust Company of Skaneateles, Eltaneateles, New York, (b) the request of the Syracuse bank to establish blbeaaCh in Skaneateles following the merger, and (c) the application of Pirlit Securities Corporation of Syracuse for a limited permit entitling it to vote its stock of the Skaneateles bank for the purpose of taking Ileeellsary actions relating to the proposed merger. In each instance the teccmmendation of the Division was favorable. 1/23/58 -7Pursuant to these recommendations, unanimous approval was given to (a) a letter to First Trust and Deposit Company in the form attached hereto as Item No. 5, for transmittal through the Federal Reserve Bank of Nev York, and (b) a telegram to the Federal Reserve Agent at the Federal Reserve Bank of New York in the form attached as Item No. 6 authorizing issuance of the requested limited voting permit. Mr. Nelson then withdrew from the meeting and Mr. Riefler, Assistant to the Chairman, entered the room. Presentation for directors of Fund and Bank. Chairman Martin said he understood the International Monetary Fund and the International kult for Reconstruction and Development would appreciate it if a visualaUditory economic presentation, such as given several times in the past, evil:Li be arranged again for the directors of those institutions. Since the ulaterial had now been prepared for other purposes and was currently alrailable, it was his suggestion that a presentation be made for the krid and Bank directors on a mutually agreeable date. There was unanimous agreement vith this suggestion. Distribution of Federal Reserve Bulletin (Item No. 7). Governor ehePardson referred to the decision reached by the Board at the meeting covering °4 jalluarY 140 1958, with regard to a change in the policy dletribution of the Federal Reserve Bulletin to member banks and branches. 4e ...._ ouated that subsequently several questions had come up in this connection /thich made it seem advisable to obtain the views of the Presidents of the 273 1/23/58 -8- Federal Reserve Banks before the new policy was put into effect. These Westions were covered in a proposed letter to the Chairman of the Presidents* Conference which he read. Following a discussion, during which it was agreed that there vould be no objection to having the subject of Bulletin distribution 13°11cY brought up by Mr. Thomas at next veekts meeting of the System Research Advisory Committee and the Presidents* Conference Subcommittee on Research and Statistics, unanimous approval was given to a letter to the Chairman of the Presidents* Conference in the form attached as It Nn Examinations of foreign branches of United States banks. Q°Irernor Robertson referred to plans being made for the examination of Ibl'eign branches of domestic banks in Japan and said that the Superintendett of Banks for New York had submitted to the Division of Examinations auggested schedule for future examinations of foreign branches with the request that agreement be reached on such a schedule at this time. GII/vernor Robertson informed the Board. that he had written the State SUPerintendent yesterday to the effect that he would not want to pass Oil the matter until more information had been obtained through the t°1-thcoming examinations in Japan. The meeting then adjourned. 274 1/23/58 -9Secretary' Vote: Governor Shepardson today approved on behalf of the Board a memorandum dated January 20, 1958, from Messrs. Thomas and Young regarding plans for a dinner at a local hotel in connection v1th the meeting next 'week of the System Research Advisory Committee and the Presidents' Conference Subcommittee on Research and Statistics. A copy of the memoran dl/m is attached as Item No. 8. • BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, 0. C. Itemallo. 1 1/23/58 ADORES'S OFFICIAL CORRESPONDENCE TO THE BOAR() January 23, 1958 Mr. H. G. Leedy, Chairman, Conference of Presidents of the Federal Reserve Banks, C/'0 Federal Reserve Bank of Kansas City, Kansas City 6, Missouri. Dear Mr. Leedy: You will recall that in its letter of March 19, 1956, the Board stated that it would be helpful if it could receive Promptly advice of the comments of the directors of the Reserve Banks at their directors' meetings with respect to experiences, conversations, or observations either in their own business or Otherwise which might indicate that the current over-all economic situation was different from what the available statistics showed it to be. It was the thought of the Board that if such "straws In the wind" observations were brought out at a meeting, and if !'lleY would not otherwise come to the Board's attention promptly, the President would put them in a letter and send them along with anY additional remarks that he might have to make. Only two or three of the Reserve Banks have had occasion in recent months to continue sending these comments, which has raised the question whether the arrangement, which was undertaken as an experiment, should be continued. On the other hand, members c)f the Board have been interested in the comments that have been !eceived and believe it is helpful to have them. Question has also g!en raised whether, in view of the fact that meetings of the Federal l'Pen Market Committee are held about every three weeks and are atended by all of the Presidents, the Board could rely on the Presidents to include in their statements at these meetings any pertinent ,omments made by the directors which would be of the kind contemplated oY the existing arrangement. The Board of Governors would be glad if this matter could 13-Laced on the agenda for the forthcoming meeting of the Presidents' ' 01°flference for a discussion of whether the existing procedure or some teler arrangement would be most effective in giving the members of "o Board the benefit of this "straws in the wind" information. be p Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. 27(.1 BOARD OF GOVERNORS OF THE Item No. 2 1/23/58 FEDERAL RESERVE SYSTEM WASHINGTON . OFFICE OF HE CHAIRMAN January 23 1958. The Honorable Brent Spence, Chairman, Banking and Currency Committee, House of Representatives, Washington, D. C. Dear Mr. Chairman: Enclosed are answers to questions 28 and 30-44 of the list of questions that was submitted to me by Congressman Patman at the conclusion of my appearance before the House Committee on Banking and Currency last August in connection with the Financial Institutions Act of 1957. The reply to question 29 was transmitted on November 12, 1957, and the answers to 19 questions contained in a separate list (Destruction of Money) were transmitted on December 16, 1957. we hope that answers to questions 1-27 Will be ready for transmission shortly. Sincerely yours, (Signed) Wm. MCC. Martin, Jr. McC. Martin, Jr. Enclosures BOARD OF GOVERNORS -Whiz OF THE ft• `,; Item No. 3 FEDERAL RESERVE SYSTEM 1/23/58 WASHINGTON OFFICE OF THE CHAIRMAN '.: : . "1 4141,10 1*11'N January 23, 1958. The Honorable Wright Patman, House of Representatives, Washington, D. C. Dear Mr. Patman: Enclosed is a copy of a letter being sent today to Chairman Spence transmitting answers to questions 28 and 30-4 of the list of questions that you submitted to me in August at the conclusion of my appearance before the House Banking and Currency Committee at the hearings on the Financial Institutions Act of 1957. As indicated in the letter to Chairman Spence, the reply to question 29 was transmitted on November 12, 1957, and the answers to 19 questions contained in a separate list (Destruction of Money) were transmitted on December 161 1957. we hope that the answers to questions 1-27 will be ready for transmission shortly. Sincerely yours, (Signed) WIT6 Me. Martin, Jr. McC. Martin, Jr. Enclosures. 278 Item No. 4 TELEGRAM 1/23/58 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON January 23, 1958 The Honorable Averell Harriman Governor of Nev York AlbanY Nev York. On behalf of the Board of Governors I wish to acknowledge your telegram of January 21, 1958, and to reiterate the assurance that careful consideration will continue to be given to the subject of reserve requirements of member banks. (Signed) Wm. McC. Martin, Jr. Wm. McC. Martin, Jr. 279 BOARD OF GOVERNORS y, ) OF THE FEDERAL RESERVE SYSTEM • * WASHINGTON 25. D. C. Item No. 5 1/23/58 ADORES'S orriciAL CORRESPONDENCE TO THE HOARD 14ft/t 4: 44444* January 23, 1958 Board of Directors, First Trust and Deposit Company, Syracuse 1, New York. Gentlemen: Pursuant to your request submitted through the rs Federal Reserve Bank of New York, the Board of Governo of ons provisi hereby gives its written consent, under the the to Act, Section 18(c) of the Federal Deposit Insurance merger of National Bank and Trust Company of Skaneateles, Skaneateles, New York, into First Trust and Deposit Company, S_Yracuse, New York, and approves the establishment of a , of ?.ranch of the continuing bank in the present location d provide National Bank and Trust Company of Skaneateles, nce accorda the transaction is effected substantially in with the Agreement of Merger dated December 16, 1957, and the merger and establishment of the branch are accomplished Prior to April 1, 1958. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary. Item No. 6 TELEGRAM LEASED WIRE SERVICE 1/23/58 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON January 23, 1958 BI2atriaTH - NEVI YOIE Xie,c-111 A. First Securities Corporation of Syracuse, Syracuse, New York. B. National Bank and Trust Company of Skaneateles, Skaneateles, New York. C. None. D. 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 of such bank and to act thereat upon slch matters of a routine nature as are ordinarily acted upon at the annual meetings Of such bank, and (2) to take any. actions which may be necessary to effect the merger of such bank into Tirst Trust and Deposit Company, Syracuse, New York. SID;;•LIAN ttatik - 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 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, (S-964). BOARD OF GOVERNORS „teal:do*, . qmv : 7e F THE FEDERAL RESERVE SYSTEM 4 * WASHINGTON 25. D. C. Item No. 7 1/23/58 ADDRESS OrriCIAL COAREf;PONtIENCC TO THE BOARO January 24, 1958 Mr. H. G. Leedy, Chairman, Conference of Presidents of the Federal Reserve Banks, C/O Federal Reserve Bank of Kansas City, Kansas City 6, Missouri. Dear Mr. Le0y: In 1939 the Board of Governors began sending the Federal Reserve Bulletin free to each domestic branch of a member bank, the business of which in the opinion of the Federal Reserve Bank, was sufficiently important to justify the Board in making a copy available to the managing officer except that not more than 50 copies would be sent to any one member bank. Last year one of the Reserve Banks suggested that the 50-copy limitation be removed. The Board of Governors agrees that the limitation is arbitrary but would hesitate to eliminate it altogether for the reasons that (1) the existing and proposed arrangements discriminate against the large banks that have no branches, (2) it is difficult O justify such large expenditures under the proposed arrangement it could amount to $3,000 of out-of-pocket costs for a single member bank) for the benefit of branch banks or of a single member bank With a substantial number of branches when there is no satisfactory indication that the additional copies are effectively used, and (3) there is no satisfactory measure of either the need for or the use made of the free copies. To meet these objections it has been suggested that the Present policy of furnishing free Bulletins to branches be discontinued and that the Board announce that after a stated date any illember bank which desires to receive copies of the Bulletin, in ddition to the one copy that is sent without charge to all member °anks, may obtain such additional copies at an annual subscription Price of $2. It would be appreciated if the Presidents would disuss this proposal at the next Presidents' Conference and give the toard the benefit of their views. It is understood that Federal Reserve Banks in some inIltances pay the cost of subscriptions to the Bulletin which are 'hen sent free of charge to banks. It has been suggested that a FIGARO OF UOVE NORS OF THE FEDERAL RESERVE FlYSTEM H. G. LeedY bank officer will be more likely to read the Bulletin if a charge Is made than he will if, without cost, it drops on his desk with all of the other material that today is bidding for his attention. Therefore, the Board would like the advice of the Presidents as to what extent, if the policy is adopted of charging $2 for additional subscriptions received from member banks, the Reserve Banks would feel obligated to furnish free copies to member or nonmember banks in their respective districts. A third question with respect to the Bulletin is whether it and other System publications should continue to be sent to former directors of the Federal Reserve Banks when requested. As you know under the present arrangement, directors who are interested in receiving the Bulletin and the Chart Book have had to pay for them. 11.)-e Board believes that there may be adequate justification for furnishing System publications free to former directors who desire to receive them and the Board would like very much to have the Presidents' views. Very truly yours, i'S. R. Carpenter, Secretary. BOARD OF GOVERNORS F THE FEDERAL RESERVE SYSTEM ce Correspondence to ' p ---11g33g4Jid of Governors Item No. 8 1/23/58 Date January 20, 1958. Subject: Dinner for System Research and Mr. Young Advisory Committee. the Board's memorandum of In accordance with the provisions of in connection with the dinner November 10, 1949, it is planned to have a Research Advisory System forthcoming meeting on January 28-29 of the Conference Committee Presidents' Committee and the Subcommittee of the evening, Tuesday on be on Research and Statistics. The dinner will January 28, at the Shoreham Hotel. persons to attend: We would like to invite the following Bank 176-aon New York Philadelphia Cleveland Richmond Atlanta Chicago St. LOW-8 Minneapolis Kansas City Dallas San Francisco Name W.—Ellis Mr. Roosa Mr. Bopp Mr. Hostetler Messrs. Storrs and MacDonald Messrs. Taylor and Atkinson Messrs. Mitchell and Holland Mr. Abbott Mr. Parsons Mr. Tow Mr. Rice Messrs. Wheeler and Einzig Board MT.—Riefler Mr. Thomas Mr. Leonard Mr. Horbett Mr. Carpenter Mr. Thurston Mr. Young Mr. Garfield Mr. Noyes Mr. Williams Mr. Robinson Miss Burr Mr. Dembitz Mr. Koch Mr. Eckert Mr. Miller Mr. Brill Mr. Gehman Mr. Weiner Mr. Jones Mr. Trueblood Mr. Sigel Mr. Thompson Mr. Margot Mr. Furth Mr. Sammons Mr. Hersey invited to attend. In addition, all members of the Board will be the dinner, the list has In order to minimize the expense of staff who are directly con— been limited to the members of the Board's Although final arrangements have cerned with System research activities. less than the not been completed, the coat of the dinner should average November 10, 1949, pro— of -0 per person autnorized by the Board's action the neighbor— in cost total rbly about $8.00 per person attending with the hood of $400. 9 attending is still tentative; The list of Reserve Bank personnel may be madk,_when we substitutions several persons may be added or some staff, the number Board's the hear finally from the Banks. With respect to substitutions in the few a listed is the maximum; however, there may be than the person ons different the head of a division feels that a listed should attend.
@FedFRASER