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PR 609 Rev. 10/59 Minutes for To: January 4, 1960 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, 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. Chm. Martin Gov. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King System Minutes of the Board of Governors of the Federal Reserve on Monday, January PRESENT: 4, Mr. Mr. Mr. Mr. Mr. Mr. 1960. The Board met in the Board Room at 10:00 a.m. Balderston, Vice Chairman Szymczak Mills Robertson Shepardson King Sherman, Secretary Shay, Legislative Counsel Molony, Assistant to the Board Fauver, Assistant to the Board Hackley, General Counsel Farrell, Director, Division of Bank Operations Solomon, Director, Division of Examinations Daniels, Assistant Director, Division of Bank Operations Mr. Hostrup, Assistant Director, Division of Examinations Mr. Nelson, Assistant Director, Division of Examinations Mr. Landry, Assistant to the Secretary Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Discount rates. The establishment without change by the Federal Reserve Reserve Bank of San Francisco on December 30 and by the Federal ts and Bank of Philadelphia on December 31, 1959, of the rates on discoun the advances in their existing schedules was approved unanimously with banks. understanding that appropriate advice would be sent to those Item circulated to the Board. The following item which had been d to circulated to the members of the Board and copy of which is attache these minutes under Item No. 1, was approved unanimously: Letter to the Farmers Exchange Bank, Abingdon, Virginia, approving the establishment of a branch in the Goodson District of Washington County. l/4/60 -2Applications for limited voting permits (Items 2 3, 4, and 5). There had been distributed to the Board a memorandum from the Division of Examinations dated December 29, 1959, regarding applications for limited voting permits by Financial General Corporation, The Morris Plan Corporation, and International Equities, Inc., all of New York City, and Financial General Corporation, Washington, D. C., covering their stock in a bank or banks located in Washington, D. C., and Alexandria, Virginia. Pursuant to the favorable recommendations of the Division of Examinations and the Reserve Banks concerned, the granting of the requested voting permits was authorized by the Board. Copies of the telegrams sent to the Federal Reserve Agents at New York and Richmond pursuant to this action are attached hereto as Items 2, 3 4 and 5. Continued service of a director of the Portland Branch, Governor Mills said that Mr. Warren W. Braley, who had been reappointed for a two-year term as director of the Portland Branch of the Federal Reserve Bank of San Francisco, had called him last Wednesday to explain that he had been invited by the United States National Bank of Portland to become a director of that institution and to inquire what the Board's position was with respect to holding a duel directorship of this type. Governor Mills went on to say that he had explained to Mr. Braley that although there was no statutory prohibition against such dual directorship, it would be necessary to bring the matter to the Board for its -3- 1/4/6o opinion since some reservations were held within the Federal Reserve System as to this practice, although exceptions had been made in some instances. Mr. Fauver reported that the Board's practice was not to appoint bank directors to directorships at the Federal Reserve Banks but that there had been a few cases in which Board-appointed directors had been permitted to serve out their terms after accepting appointments as commercial bank directors. Most of these exceptions, which were rela- tively few in number, had been in cases where the dual directorship would run for only a few months, although one--the case of Mr. Tait at the Buffalo Branch--had been for 18 months. In the case of Mr. Rosenblatt, a Board-appointed director of the Salt Lake City Branch, who had been invited to become a commercial bank director shortly after reappointment as a director of the Salt Lake City Branch, the Board had taken the position that it opposed the dual service. Governor Mills then observed that he believed the Board should be consistent and should request Mr. Braley to resign from his directorship at the Portland Branch, should he accept the offer of the United States National Bank of Portland. Governor Robertson concurred, adding that he was inclined to the view that the Board should revise its regulations relating to branches of Federal Reserve Banks in order to preclude service as a branch director if a person was at the same time a director of a -4- 1/4/6o commercial bank. The Secretary indicated that the branch regulations were now being reviewed. Governor Mills' suggestion was then unanimously approved and it was agreed that he should inform Mr. Braley of the Board's decision. Messrs. Hostrup and Nelson withdrew, and Mt. Reynolds, Economist, Division of International Finance, entered the room at this point. Further consideration of press release on 1959 income and expenses of the Federal Reserve Banks. Pursuant to the understanding reached at the Board meeting on December 30, 1959, the Secretary had dispatched a telegram to all Reserve Bank Presidents on that date quoting a draft of statement regarding Reserve Bank earnings during 1959 and noting that it was expected to release this statement to the press on Wednesday, January 6, 1960 with the dollar amounts shown to be revised before release. Governor Szymczak commented that he had received telephone calls from Presidents Erickson and Allen of the Boston and Chicago Reserve Banks and from Mr. Treiber, First Vice President of the New York Reserve Bank, last Thursday in response to this telegram, and that President Erickson had suggested that the statement include some reference to the part played by the Reserve Banks in the action taken, as well as historical background information. Mr. Treiber leaned in 1/4/6c -5- that direction but did not feel strongly about the matter, and Mr. Allen was satisfied with the present statement. A discussion followed during which Mr. Hackley referred to his memorandum dated January 4, 1960, in which he had put in writing his previous oral opinion that the Board had full authority to require the Reserve Banks to discontinue contingency reserves and to make payments to the Treasury. Governor Robertson said that he felt the press release should not be so worded as to give the impression that the Reserve Banks were responsible for the decision that had been reached in this matter, although he had no objection to indicating they had considered the matter. It was then decided to revise the statement quoted to the Reserve Bank Presidents in the Board's telegram of December 30, 1959, to indicate that the Board's decision on this question had been reached after consultation with the Reserve Banks. Messrs. Shay, Molony, Fauver, Hackley, Farrell, Solomon, and Daniels then withdrew from the meeting. Attendance by Mr. Maroni at a conference in Montevideo, Uruguay. Mr. Reynolds reported that Mr. Marget, Director of the Division of International Finance, had received a telephone call from the United States Department of State this past week-end -6- 1/4/6o inquiring if the Board wished to send a representative to the InterGovernmental Conference for the Establishment of a Latin American Free Trade Area which would convene in Montevideo, Uruguay, on January 11, 1960 and would last for two weeks. He said the Department of State would see to it that the Board received an invitation, if it desired one, and that due to the inability of Mr. Marget to attend Mr. Yves Maroni would be the logical person for the Board to designate, if an invitation were received. He added that the seven Latin American countries directly involved in the proposed free trade area would be represented by representatives of their central banks, that central banks of other Latin American countries had been invited to send observers, that the Economic Commission for Latin America and the International Monetary Fund had been requested to provide technical assistance during the course of the meeting, and that Mr. Maroni would serve as an observer only, should his attendance be approved by the Board. A discussion followed during which it was brought out that the official position taken by the United States Government on the question of payments arrangements appropriate for the new Latin American Free Trade Area was that it approved of the technical paper on this question prepared by the Monetary Fund. Unanimous approval was then given to Mr. Marget's recommendation that Mr. Maroni be authorized to attend the Inter-Governmental Conference _7_ for the Establishment of a Latin-American Free Trade Area to be held in Montevideo, Uruguay, beginning on Monday, January 11, 1960 and continuing for two weeks, with the understanding that Mr. Maroni's attendance was approved subject to receipt of a formal invitation and with the further understanding that the Board would pay his travel expenses in accordance with the provision in the Board's Travel Regulations relating to foreign travel. The meeting then adjourned. Secretary's Notes: On December 31, 1959, Governor Shepardson approved on behalf of the Board the following action affecting the Board's staff: Transfer and salary increase Athens J. Messick, from the position of Secretary in the Division of Research and Statistics to the position of Secretary in the Board Members' Offices, with an increase in her basic annual salary from $5,880 to $6,070, effective January 1, 1960. Governor Shepardson also noted on behalf of the Board that the application of the following employee for retirement had been approved: Angelina M. Ferguson, Charwoman, Division of Administrative Services, effective at the close of business December 31, 1959. After consideration of a memorandum dated January 4, 1960, from the Office of the Controller, Governor Shepardson today approved on behalf of the Board the payment of a 'bill in the amount of $500 submitted by Price Waterhouse & Co. for services rendered with respect to the Reserve Bank 1/4/60 -8capital accounts, pursuant to the Board's authorization of December 7, 1959, with the understanding that this action also constituted approval of an overexpenditure of $500 in the All Other Account of the 1959 budget of the Board Members' Offices. Pursuant to the recommendation contained in a memorandum dated December 16, 1959, Governor Shepardson today approved on behalf of the Board the appointment of Viola E. Heflin as Charwoman in the Division of Administrative Services, with basic annual salary at the rate of $2,960, effective today. Secretary's Note: Pursuant to action taken at the Board meeting on December 23, 1959, telegrams were sent today to the Presidents of all Federal Reserve Banks except Atlanta and Dallas and special telegrams to the Presidents of these two Banks, fixing the interest rates on Federal Reserve notes for the month of December, 1959. These telegrams are attached as Items 6, 7, and 8. BOARD OF GOVERNORS OF THE Item No. 1 1/4/60 FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD January 4, 1960 Board of Directors, Farmers Exchange Bank, Abingdon, Virginia. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Richmond, the Board of Governors of the Federal Reserve System approves the establishment of a branch by the Farmers Exchange Bank, Abingdon, Virginia, in the Goodson District of Washington County, Virginia, on U. S. Highway 11, two-tenths of a mile northeast of the corporate limits of Bristol, Virginia, provided the branch is established within one year from the date of this letter. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. TELEGRAM LEASED WIRE SERVICE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON Item No. 2 1/4/60 January 4, 1960 REED - NEW YORK KECEA A. Financial General Corporation, New York, New. York. B. The First National Bank of Washington, Washington, D. C. Alexandria National Bank, Alexandria, Virginia. C. None, D. At any time prior to April 1, 1960, at the annual meetings of shareholders of such banks, or any adjournments thereof (1) to elect directors and to act thereat upon such matters of a routine nature as are ordinarily acted upon at the annual meetings of such banks; and (2) to vote on a recapitalization program for the Alexandria National Bank, provided that all actions taken with respect to such program are in accordance with plans satisfactory to the Comptroller of the Currency STOP. Similar limited voting permit authorized for Financial General Corporation, Washington, D. C., with respect to Alexandria National Bank, to be issued by the Federal Reserve Agent at Richmond. Please forward copies of permits issued by your Bank to Financial General Corporation (New York), The Morris Plan Corporation, and International Equities, Inc., to the Richmond Reserve Bank. (Signed) Merritt Sherman SHERMAN LEGRAM TE LEASED WIRE SERVICE EM BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYST WASHINGTON Item No. 3 1/4/60 January 4, 1960 REED - NEW YORK KECEA A. The Morris Plan Corporation, New York, New York. B. The First National Bank of Washington, Washington, D. C. Alexandria National Bank, Alexandria, Virginia. C. None. al meetings of D. At any time prior to April 1, 1960, at the annu ents thereof (1) to shareholders of such banks, or any adjournm matters of a elect directors and to act thereat upon such upon at the annual routine nature as are ordinarily acted on a recapitalization meetings of such banks; and (2) to vote , provided that all program for the Alexandria National Bank ram are in accordance actions taken with respect to such prog ler of the Currency. with plans satisfactory to the Comptrol (Signed) Merritt Sherman SHEREkN Definition of KECEA: ance of a limited voting permit, The Board authorizes the issu of the Revised Statutes under the provisions of section 5144 ing company affiliate named of the United States, to the hold entitling such organization to below after the letter controls of the bank(s) named vote the stock which it owns or ect to the condition(s) stated below after the letter "B", subj it authorized hereunder below after the letter "C". The perm and the purposes stated after is limited to the period of time accordance with the instructhe letter "D". Please proceed in er of March 10, 1947, (S-964). tions contained in the Board's lett r, " 11 ' LEGRAM TE LEASED WIRE SERVICE Item No. E SYSTEM BOARD OF GOVERNORS OF THE FEDERAL RESERV WASHINGTON L. 1/4/60 January 14, 1960 REED - NEW YORK KECEA A. International Equities, Inc., New York, New York. B. The First National Bank of Washington, Washington, D. C. C. None. D.,. At any time prior to April 1, 1960, at the annual meeting of eof, to shareholders of such bank, or any adjournments ther of a elect directors and to act thereat upon such matters the annual routine nature as are ordinarily acted upon at meeting of such bank. (Signed) Merritt Sherman SHEREAN Definition of KECEA: permit, issuance of a limited voting Statutes The Board authorizes the sed section 5144 of the Revi under the provisions of e named liat affi the holding company of the United States, to to tion niza orga entitling such below after the letter named (s) bank the of owns or controls vote the stock which it stated oubject to the condition(s) below after the letter "B", hereunder . The permit authorized below after the letter "C" stated after of time and the purposes instrucIs limited to the period proceed in accordance with the the letter "D". Please , (S-964) 1947 d's letter of March 10, tions contained in the Boar TELEGRAM LEASED WIRE SERVICE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON Item No. 5 1/4/60 DECKER — RICHMOND KECEA A. Financial General Corporation, Washington, D. C. B. Alexandria National Bank, Alexandria, Virginia. C. None. D. At any time prior to April 1, 1960, at the annual meeting of to shareholders of such bank, or any adjournment 3 thereof (1) elect directors and to act thereat upon such matters of a routine nature as are ordinarily acted upon at the annual meeting of such bank; and (2) to vote on a recapitalization such program, provided that all actions taken with respect to the program are in accordance with plans satisfactory to Comptroller of the Currency STOP. Similar limited voting New York, permits authorized for Financial General Corporation, New York, New York, and The Morris Plan Corporation, New York, to be issued by the Federal Reserve Agent at New York. Please al forward copy of permit issued by your Bank to Financi Bank. General Corporation (D. C.), to the New York Reserve 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 "A", entitling such organization to vote the stock which it owns or controls of the bank(s) named below after the letter "8", 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) Item No. 6 1/4/60 TELEGRAM LEASED WIRE SERVICE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON January 4, 1960. TO TRU PRESIMNTS OF AL FEWRAL RESERVE BANKS EXCEPT ATLANTA AND DALLAS Board established under authority of fourth paracraph of Section 16 of Federal Reserve Act rate of ALL per cent per annum interust for month of December on $ (2) daily average of outstanding Federal Reserve notes of your Dank in exoeso of gold certificates pledged with Agent as collateral eeourity. Interest payment of $ (3) should be credited to Treasurer's General Account no Miscellaneous Receipts, account symbol anU1 title "201631 Deposits of earnings, Federal Reserve ;:lstem (colleotions under Sootion 16 of FedQral )Querve Act, an amended)" on January 4. 19600 (Signed) Merritt Sherman ShPrmn (2) (3) 139gton 26.5186602116 a,156,725,589 ,26,052,580.78 New Yerk 22.'364156098 4,064,913,764 77,286,693.62 PhilndelPhi* 29.71364160)9 1,172,01.11) 29,592,047.28 ClPvelund 17.4208352392 1,712,447,106 25,348,622.26 Richmond 20.2674638559 1.5091604,/160 25,985,519.83 Chicago 21.9091739537 1456,221784 64,312,706.51 St. Louis 25.9774193729 667,611,610 19,142,126.85 Minneapolis 27.1778895939 440,778.695 10,174,314.41 Kansas City 17.8497670892 851,848,652 12,914,090.44 San Franeisco 180690284352 1,630,125,78) 25,459,433.17 NOTE: Totals on office copies only Add - separate wire 1,165,8)2,525 12.4986951942 Atlanta 579,710,600 Dallas 20.7613558467 18,608,423,689 12,375.697.17 10,221,297.80 3A865,00.12 Item NO. 7 1/4/60 EGRAM TEL LEASED WIRE SERVICE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON January 4, 1960. Bryan.Atlanta paragraph of Board established under authority of fourth 86951942 per cent Section 16 of Federal Reserve Aot rate of 12.49 5,832,525 daily per annum interest for month of December on $1,16 or your Dan average of outstanding Federal Reserve notes of gold certificates pledzed.with in exceso Agent as collateral security. crodited to Treasurersa Interest payment of $12.375,697.17 should be account symbol and titlo General Account as Miscellaneous Receipts, m (co1lection3, "201631 Deposits of earnings, Federal Reserve ::iyoto amond,30" on January 4, 19604 under Section 16 of Federal Reserve Act, as to bring Surplus up to Payment determined after dcductinz “331,697.43 100 per cent of subscribed capital stock. Shormau (f id) Vorritt Shorman Item No. 8 1/4/60 AM TELEGR LEASED WIRE SERVICE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON January 4 1960. Irons.Dallas Board established under authority of fourth paragraph of Section 3.6 ofFederal Reserve Act rate of 20.7(1,558467 per cent per annum interest for month of December on $579,710,600 daily average of outstandins Federal Reserve notes of your sank in excons of gold certificates pledged with /tont an collateral cocurity. Interest payment of $10.221.997.80 should be credited to Treasurer's General Account au AiscollaTwoun Receipts, account symbol and title "2016)1 Deposits of earnings, Federal Reserve System (collections under Section 16 of Federal Reserve Act, ao amended)" on January 4, 1960. Paymont'dotermincd nfter deductin 111,20,600.64 (includin a total Of $800,000 deducted fro; Octar and November earnins) to bring surpluu up to 100 por cent of uubscribed capital st.ock. Sherman
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