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Minutes for To: JanuarY 26. 1959 Members of the Board From: Office of the Secretary Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement with respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. Otherwise, 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. A Chin. Martin Gov. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson x1/4_ 41Z Minutes of the Board of Governors of the Federal Reserve System °n Monday, January 26, 1959. PRESENT: Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Balderston, Vice Chairman Szymczak Robertson Shepardson Mr. Mr. Mr. Mr. Mr. Mr. Sherman, Secretary Kenyon, Assistant Secretary Fauver, Assistant Secretary Thomas, Economic Adviser to the Board Molony, Special Assistant to the Board Hill, Assistant to the Secretary Messrs. Young, Noyes, Robinson, Williams, Brill, Eckert, Fisher, Gehman, Kalachek, Keir, Manookian, and Weiner, and Miss Dingle of the Division of Research and Statistics Messrs. Marget, Furth, Hersey, Sammons, Irvine, Katz, Maroni, Reynolds, and Summers of the Division of International Finance Economic review. The review by the Division of International -"ee emphasized recent trends in United States exports and imports, Ilith developments in selected foreign countries summarized especially the standpoint of the effect that such developments might have on 'teu States foreign trade. It was noted that the recent modest upturn in United States exports to Europe was being paralleled by a moderate eXIDA, "slon in industrial activity abroad. The fact that such expansion 11a8 n° more than moderate was not regarded as a matter of concern because Pld expansion would be less likely to be sustainable. The review of domestic economic developments by the Division of Re ea. ' l eh and Statistics revealed continued improvement in industrial activ. ltY in most fields, which in the aggregate had brought gross national 1/26/59 Product in the fourth quarter of 1958 to a record high in terms of dollars. In terms of physical output of goods and services, it was expected that the record high annual rate would be approached, or Perhaps surpassed, in the first quarter of this year. The review also indicated some further forward movement in prices, the existence of less excess capacity than commonly believed, and a general increase in the structure of money market rates. At the same time, the employMent and unemployment figures reflected little change from the levels tha had prevailed since early in the fourth quarter. After some discussion on the basis of the staff review, all c)i* the members of the staff except Messrs. Sherman, Kenyon, Hill, Ibung, Noyes, and Fisher withdrew and Messrs. Hackley, General Counsel, 8°1°171°n3 Assistant General Counsel, and Nelson, Assistant Director, 1).1.11sion of Examinations, entered the meeting. Items circulated to the Board. The following items, which had -" circulated to the Board and copies of which are attached to these s under the respective item numbers indicated, were approved Item No. te ttet, lik1C VJ the Union Trust Company of Maryland, or allrre, Maryland, approving the establishment 'the-,'ranoll in Timonium. (For transmittal through Fed ' Reserve Bank of Richmond) Lette, c#40 the Comptroller of the Currency recommending atch; of an application to organize a national bank IleuzLocka, Florida. (With a copy to the Federal --ve Bank of Atlanta) 1 2 1/26/59 -3Item No. Letter to The Chase Manhattan Bank, New York, New York, consenting to a proposed merger with the Clinton Trust Company, also of New York City, approving the establishment of four branches. (For transmittal through the Federal Reserve Bank or New York) 3 Letter to the Clearfield Trust Company, Clearfield, Fennsylvanial approving the establishment of a °ranch at North Second and Bridge Streets. (For transmittal through the Federal Reserve Bank of P hiladelphia) 4 etter to Wilmington Trust Company, Wilmington, Delaware, consenting to a proposed merger with The First National Bank and Trust Company of Milford, aPProving the establishment of a branch in Milford, end approving an additional investment in bank Premises. (For transmittal through the Federal Reserve Bank of Philadelphia) 5 Letter to the Bureau of the Budget commenting on a taft of a bill "To amend Section 5210 of the 77ised Statutes, as amended, relating to the nsPection by creditors and shareholders of the ' sha reholders list of a national bank." 6 With respect to the proposed establishment of a national bank N. at -Fa Locka, Florida (Item No. 2), Governor Robertson commented that there appeared to be little actua1 difference between this application and the one on which the Board recommended unfavorably in 1956 and 1957 "cePt that the present application was sponsored by the Florida Nati°nal Group. He felt that in retrospect the Board's earlier recom- rriendation may have been erroneous if, as it now appeared, the local circumstances were such as to warrant the establishment of a new bank. With respect to the application for establishment of branches incident to the proposed merger of The Chase Manhattan Bank with the 1/26/59 -4- Clinton Trust Company (Item No. 3), Mr. Nelson reviewed the factual situation at the request of the Board, following which Governor Robertson commented that this was the kind of application where it was difficult to find a basis for objection, even though the transaction would enable 4 large organization to grow even larger through merger with a relativelY amall competing institution. He noted that the merger had been approved by the State banking authorities, the Board entered the picture °1i1Y as far as the application for branches was concerned, and there seemed to be no substantial overlapping of branches. With respect to the application of the Wilmington Trust Company approval of its proposed merger with The First National Bank and Ust Company of Milford (Item No. 5), Governor Robertson drew attention t° the substantial offer being made for the shares of the Milford bank, Ilhich he said had created a situation where a number of the remaining enlaller banks in the State were entering into negotiations to sell out to the large banks in Wilmington. He noted that in the course of time this Process was likely to result in disappearance of most, if not all, or the smaller independent banks outside of the city of Wilmington. With respect to the draft bill to amend section 5210 of the Rev.; ' - 86 (1 Statutes (Item No. 6), Mr. Hackley commented that this proposal, orle cr those made by the Comptroller of the Currency in connection with the Promulgation of the Financial Institutions Act, seemed largely none°ntr -°versial and the Board had not indicated any objection to it when the ,,, ' lnancial Institutions Act was under consideration. 1/26/59 Mr. Riefler, Assistant to the Chairman, entered at this point. Request for report on S. 57. A memorandum from Er. Young dated January 23, 1959, which had been distributed to the Board, submitted a draft of letter to the Senate Committee on Banking and Currency concerning S. 57, the proposed "Housing Act of 1959n, along with an analysis of the measure. Mr. Noyes mentioned that a number of other bills in the housing ' alea had now been introduced and that the Senate Committee would like to have the Board's letter cover this whole group of bills. He felt that most of them could be incorporated by reference in a revised draft Of letter which would be distributed for consideration by the Board on Wednesday, January 28, the day on which the Committee had indicated it /11411d like to have the Board's report. The general reaction of the members of the Board toward the conand tone of the current draft of letter was favorable, and it was ------'s'--Loos_i tirictel that certain minor changes suggested at this meeting would be l'eflected in the revised draft. The meeting then adjourned. Secretary's Note: Governor Shepardson today approved on behalf of the Board the following items: Divi 4 Memoranda dated January 201 1959, from Mr. Kelleher, Director, j°n of Administrative Services, recommending increases in the basis r,' Janu- annual salaries of the following persons in that Division, effective arY 26, 1959: 418 1/26/59 Andrew Fassino, Assistant Foreman, Laborers, from $4,040 to $4,325 per annum. Lloyd F. White, Chauffeur, from $3,445 to $3,730 per annum. Rebie A. Windsor, Chauffeur, from $3,540 to $3,730 per annum. Memorandum dated January 91 1959, from Mr. Johnson, Director, Div.; -Laion of Personnel Administration, recommending that basic hospitaliza'ion and surgical coverage be extended to past and future Board retirees under the Civil Service Retirement System by including them in the esently existing hospitalization "group" consisting of retirees under i e Board Plan of the Retirement System of the Federal Reserve Banks, accordance with an agreement reached with Group Hospitalization, Inc., and Medical Service of the District of Columbia. Z Secretary BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ' Item No. 1 1/26/59 AOORE88 arriciAL CORRESPONDENCE TO THE BOAR() January 26, 1959. 7, ard of 8() Directors, tyllion Trust Company of Maryland, 'Elltimore, Maryland. ge ntlemen: Pursuant to your request submitted through the Federal ke8-4ve Bank of Richmond, the Board of Governors of the Federal c ed!ve System approves the establishment by Union Trust Company ' hoa,71and 4 of a branch on the northwest corner of York and Timonium v/esZ4 in Baltimore County, Maryland, instead of the location on the Ave side of York Road, four-tenths of a mile south of Seminary 4151148 authorized in the Board's letter of January 2, 1958. This t:1°Iral is given provided the branch is established within one year ttlIt112 the date of this letter, and approval of the State banking "0rities is effective as of the date the branch is established. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS OF THE Item No. 2 1/26/59 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS orricIAL CORRESPONDENCE TO THE BOARD January 26, 1959. Co mptroller of the Currency, Treasury Department, Washington 25, D. C. Attention mr. L. A. Jennings, Deputy Comptroller of the Currency. Dear Mr. Comptroller: Reference is made to a letter from your office dated August 22, 1958, enclosing copies of an application to organize :national bank at Opa Locka, Florida, and requesting a recomluetdation as to whether or not the application should be approved. A report of investigation of the application made by an thriner for the Federal Reserve Bank of Atlanta discloses that 45 organizers have agreed to provide a capital structure of ti00,000 for the bank instead of $275,000 shown in the applicaT4°11. This revised capital structure is believed to be adequate. Ft; aPPears that the future earnings prospects of the bank are favorable and that the management will be satisfactory. the need for the proposed bank is not too well established, be 18 reported that its future prospects are good and that it will Ac a decided convenience to a relatively large number of people. dingly, the Board of Governors recommends favorable considera' tie°1 on of the application. ex The Board's Division of Examinations will be glad to disc. "ns any aspects of this case with representatives of your 'ice if you so desire. Very truly yours, (Signed) KennethA. Kenyon Kenneth A. Kenyon, Assirtant Secretary. 191 BOARD OF GOVERNORS OF THE Item No. FEDERAL RESERVE SYSTEM 3 1/26/59 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD January 26, 1959. 1134rd of Directors, The Chase Manhattan Bank, Ilew York 15, New York. Gentlemen : Pursuant to your request submitted through the Federal hese — iteb,"e Bank of New York, the Board of Governors of the Federal si CI*Ve System hereby gives its written consent, under the provi4 8 of Section 18(c) of the Federal Deposit Insurance Act, to the : kjer of Clinton Trust Company, New York, New York, with The Chase Bank, New York, New York, under the charter and title of 14the latter, and approves the establishment of branches by The Chase : t:iattan Bank at the present locations of Clinton Trust Company at ' Ne following addresses, all in the Borough of Manhattan, New York, Iv York: 857 330 325 625 Tenth Avenue, West 42nd Street, Spring Street, Eighth Avenue. This consent is given provided: the proposed merger is effected substantially in accordance with the Plan of Merger dated November 26, 1958; shares of stock acquired from dissenting shareholders are disposed of within six months from date of acquisition; the merger and resultant establishment of branches are accomplished within six months from the date of this letter; formal approval of State authorities is obtained. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assi.stant Secretary. BOARD OF GOVERNORS ettft0,1. OF THE Item No. 13. 1/26/59 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFiCIAL CORRESPONDENCE TO THE BOARD January 26, 1959. Board of Directors, Cl earfield Trust Company, Clearfield, Pennsylvania. Gentlemen : Pursuant to your request submitted through the Federal . Res th va.lre Bank of Philadelphia, the Board of Governors approves establishment of a branch at the corner of North Second and coIdge Streets, Clearfield, Pennsylvania, by Clearfield Trust vir"anY, Clearfield, Pennsylvania. This approval is given proc4ged the branch is established within one year from the date efothis letter and that formal approval of State authorities is *eotive at the time the branch is established. 11; Very truly yours, (Signed) Kenneth A. Kenyon • Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. `i Item No. 1/26/59 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD P4# ''ttak January 26, 1959. Board of Directors, Wilmington Trust Company, Wilmington, Delaware. G entlemen: Reserve System The Board of Governors of the Federal her 1, gives its written consent, under the provisions of e-Y Act, to the merger -"tion 18(c) of the Federal Deposit Insurance The First National Bank and Trust Company of Milford, Milford, gton, elaware, with and into Wilmington Trust Company, Wilmin of bank Jielaware, and approves the establishment by the latter d, Milfor !branch at North Walnut and Northwest Front Streets, progiven velaware, incident to the merger. This consent is vided: (a) the merger is effected substantially in accordance with the terms of the Agreement of Merger dated December 4, 1958, (b) shares of stock acquired from dissenting shareholders are disposed of within six months after date of acquisition, (c) the branch is established within six months from the date of this letter, and (d) that formal approval of State authorities is effective as at the time the branch is estnhlished. 5 RESERVE SYSTEM BOARD OF GOVERNORS OF THE FEDERAL Wilmington Trust Company The Board of Governors also approves, under the pro— ions of Section 24A of the Federal Reserve A.A., an additional 4z vestment in banking premises not to exceed $72,000. Very truly yours, (signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 6 1/26/59 WASHINGTON 25, 0. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD January 261 1959. Hu2,hes, Phillio Assistant Director for Legislative Reference, Bureau or the Budget, 1;:ashington 25, D. C. Dear hr. Hughes: This is in response to your Legislative Referral hemorandum of January 9, 1959, requesting the Board's views With respect to a draft of a bill, submitted by the Treasury Department, "To amend Section 5210 of the Revised Statutes, as amended, relating to the inspection by creditors and shareholders of the shareholders list of a national bank." 1. The proposed bill would delete from section 5210 (12 U.S.C. 62) the provision that every creditor of a national bank is entitled to inspect the list of the names and residences of all shareholders of the bank and the number of shares held by each. As pointed out in the draft of a proposed letter from the Secretary of the Treasury to the Speaker of the House of Representatives, which you enclosed, the reason for permitting creditors of a national bank to inspect the list of its shareholders disappeared with the elimination of the double liability °f national banks' shareholders. 2. In its present form, section 5210 also provides that the list of shareholders "shall be subject to the inspection all the shareholders". The proposed revision would provide at a shareholder would be entitled to inspect such list only ior a proper purpose not inimical to the interests of the bank". the opinion of the Board, it is probable that such a limitaon on the shareholders' rir:ht to inspect is implicit in the 1?resent law. However, the proposed amendment would make such ' 11"Tlitaton explicit and thereby remove any doubt that might exist rcarding this matter. (g The Board of Governors favors the enactment of the proposed bill. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, ,ecretary.
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