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Minutes for
To:
Members of the Board
From:
Office of the Secretary
January 5, 1959
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
Minutes of the Board of Governors of the Federal Reserve
System on Monday, January 5, 1959.
The Board met in the Board Room
at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Szymczak
Mills
Robertson
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, Koch, Altmann, Brill,
Eckert, Fisher, Gehman, Weir, Manookian,
Peret, and Wernick, and Miss Dingle of
the Division of Research and Statistics
Messrs. Marget, Furth, Hersey, Sammons,
Irvine, Reynolds, Westebbe, and Wood of
the Division of International Finance
Mr. Raymond Bonham Carter, Adviser, Bank of England, also was
present.
Economic review.
In introducing the review of international
developments, Mr. Marget referred to the recent announcement by the
United Kingdom and the principal western European countries of
further moves toward convertibility of their currencies.
He
suggested that although these announcements may have been treated
somewhat too spectacularly by the press, for they constituted to a
considerable extent a formalization of what had existed on a de facto
.0114.1t.
basis for some time, nevertheless they were of importance.
Other staff members of the Division of International Finance then
-2-
1/5/59
discussed the financial developments in various foreign areas from
the standpoint of their probable effect on the volume of United
States exports.
In summarizing the staff statements, Mr. Marget
observed that the recent convertibility announcements implied a
commitment on the part of the countries concerned to follow a
responsible course in monetary and fiscal affairs, without which
convertibility could not help but break down.
It would be better in
the long run, he suggested, if the United States economy were not
subjected to periodic export booms attributable to nothing more than
monetary and fiscal irresponsibility on the part of foreign countries.
For some time the principal trading partners of the United States
had been showing a high degree of responsibility in monetary and
fiscal matters and the recent moves might be regarded as an indication
of their intent to continue in the same manner.
Much would depend,
Mr. Marget commented, on the monetary and fiscal performance of the
United States.
The review of domestic economic developments by the Division
of Research and Statistics revealed further evidence of a continuing
business upswing, with leading economic indicators showing in many
instances progress to points near or beyond record high levels.
All of the members of the staff except Messrs. Sherman,
Kenyon, and Hill then withdrew and Messrs. Shay, Legislative Counsel,
and Nelson, Assistant Director, Division of Examinations, entered the
room.
Mr. Bonham Carter also withdrew at this point.
1/5/59
Ratification of actions taken in the absence of a quorum
(Items 1 through 6). The Board ratified by unanimous vote the actions
taken at meetings of the available members of the Board held on
December 19, 22, 23, 29, 30, and 31, 1958. Minutes of those meetings
are attached hereto as Items 1 through 6, inclusive.
Discount rates.
Unanimous approval was given to a telegram
to the Federal Reserve Bank of Philadelphia approving the establishment
without change by that Bank on December 31, 19582 of the rates on
discounts and advances in its existing schedule.
Governor Robertson stated that his vote for approval was
cast on the same basis as he had voted to approve the reestablishment
of existing discount rates at other Federal Reserve Banks at the
meetings on December 29, 30, and 31, 1958.
Messrs. Kenyon, Nelson, and Hill then withdrew from the
meeting and Mr. Solomon, Assistant General Counsel, entered the room.
Letter from Senator Fulbright.
Chairman Martin stated that,
Upon returning to his office, he found a letter from Senator Fulbright,
sent as Chairman of the Senate Committee on Banking and Currency on
December 23, 1958, transmitting a copy of a letter dated December 19,
1958, that Senator Fulbright had received from Senator John L.
McClellan, Chairman of the Senate Permanent Subcommittee on
Investigations. This letter had been sent over by Senator Fulbright
With the understanding that it would be held for Chairman Martin until
his return.
1/5/59
Chairman Martin then read Senator McClellan's letter, which
referred to alleged leaks of information from the Board's organization
discussed at meetings on November 4, 1358, and subsequently, and
which stated that the Subcommittee had no information concerning any
specific leaks other than the actions and reactions of the stock
market during the hours immediately preceding the announcement of
the Board's decisions with respect to such items as changes in
discount rates, changes in reserve requirements, or changes in
margin requirements.
Senator McClellan's letter went on to say that
to pursue the matter further would require much specialized knowledge
of central banking policies and procedures and that he felt this
was a matter of substance instead of procedure.
Therefore, he was
submitting the information to Senator Fulbright for whatever
consideration the latter might care to afford it.
Senator Fulbright's letter of December 230 which Chairman
Martin then read, transmitted a copy of Senator McClellan's letter
and stated he would appreciate it if Chairman Martin would analyze
the statements made in Senator McClellan's letter and give him a
detailed reply.
Chairman Martin next read a draft of reply to
Senator Fulbright which would state that the Board welcomed the
Opportunity to analyze Senator McClellan's letter and to supply
Senator Fulbright with a detailed reply, which would be forthcoming
as promptly as full consideration of the matter could be completed.
Chairman Martin stated that if the Board agreed he would
send this acknowledgment and request Messrs. Hackley and Solomon to
prepare a draft of reply, and there was agreement with this suggestion.
Thereupon the meeting adjourned.
Secretary's Notes:
Pursuant to the recommendation contained in
a memorandum dated December 31, 1_958,
from Mr. Kelleher, Director, Division of
Administrative Services, Governor Robertson,
acting in the absence of Governor Shepardson,
today approved on behalf of the Board the
appointment of Thresia S. Elting as Cafeteria
Helper in that Division on a part-time basis,
with basic annual salary at the rate of
$1,575, effective the date she assumes her
duties.
There had been received at the Board's offices
an agreement executed under date of December 31,
1958, by Chase Manhattan Overseas Corporation,
New York, New York, in accordance with the
requirements of section 25 of the Federal Reserve
Act. Accordingly, pursuant to the procedure
contemplated by Board action on December 17,
1958, there was sent today to The Chase Manhattan
Bank the letter of which a copy is attached
hereto as Item No. 7 granting permission to that
bank to invest an amount not exceeding $1,000,000
in the stock of Chase Manhattan Overseas
Corporation and granting permission to the
latter corporation to invest an amount up to its
aggregate capital and surplus in the stock of
a banking corporation to be organized under the
laws of the Union of South Africa. A copy of
the letter was sent to the Federal Reserve Bank
of New York.
Item No. 1
1/5/59
Minutes of a meeting of the available members of the Board
of Governors of the Federal Reserve System on Friday, December 19,
1958.
The Board met in the Board Room at 10:00 a.m.
PRESENT:
Mr. Szymczak, Acting Chairman
Mr. Mills
Mr. Robertson
Sherman, Secretary
Kenyon, Assistant Secretary
Fauver, Assistant Secretary
Johnson, Director, Division of
Personnel Administration
Mr. Hackley, General Counsel
Mr. Masters, Director, Division of
Examinations
Mr. Nelson, Assistant Director, Division
of Examinations
Mr.
Mr.
Mr.
Mr.
Discount rates.
Unanimous approval was given to telegrams
to the Federal Reserve Banks of New York and Philadelphia approving
the establishment without change by those Banks on December
18,
1958, of the rates on discounts and advances in their existing
schedules.
Items circulated to the Board.
The following items, which
had been circulated to the members of the Board and copies of
which are attached to these minutes under the respective item
numbers indicated, were approved unanimously:
Item No.
Letter to the Liberty Bank of Buffalo, Buffalo, New York,
approving the establishment of a branch in Cheektowaga.
(For transmittal through the Federal Reserve Bank of
New York)
M-1
-2-
12/19/58
Item No.
Letter to the Fidelity-Philadelphia Trust Company,
Philadelphia, Pennsylvania, approving an investment in
bank premises. (For transmittal through the Federal
Reserve Bank of Philadelphia)
M-2
Letter to the Columbus Bank and Trust Company, Columbus,
Georgia, approving the establishment of a branch at Benning
Drive and Victory Highway. (For transmittal through the
Federal Reserve Bank of Atlanta)
M-3
Letter to all Federal Reserve Agents relating to the
submission of reports on Federal Reserve notes.
M-4
Letter to the Federal Reserve Bank of Boston approving
the appointment of George H. Harris as Alternate Assistant
Federal Reserve Agent.
M-5
Letter to the Federal Reserve Bank of Chicago approving the M-6
payment of salaries to certain groups of non-clerical employees
at specified rates.
Appointment of directors.
With reference to the discussion
at the meeting on Wednesday, December 17, concerning the appointment
of a director at the Jacksonville Branch of the Federal Reserve Bank
of Atlanta for the unexpired portion of the term ending December 31,
1959, Mr. Fauver reported that he had attempted to get in touch
with Chairman Mitchell and, being unable to reach Mr. Mitchell,
talked with President Bryan to obtain the names of possible
appointees.
He then distributed copies of a memorandum containing
biographical information on certain persons suggested later by Mr.
Bryan after consultation with Mr. Mitchell.
He stated, however,
that both Mr. Mitchell and Mr. Bryan continued to favor the
12/19/58
-3-
appointment of Mr. Claude J. Yates, Vice President and General
Manager in charge of Florida operations of the Southern Bell
Telephone & Telegraph Company, Jacksonville, Florida.
It was their
view, he said, that Mr. Yates' affiliation with a company operating
in a number of States should not disqualify him from consideration.
They also noted that Mr. Yates was in charge of operations and not
connected with the financial side of the organization.
After some discussion, it was agreed unanimously to
request Chairman Mitchell to ascertain and advise whether Mr. Yates
would accept the appointment if tendered, with the understanding
that if he would accept, the appointment would be made.
Final tax certification for Stephens, Inc. (Item No. M-7).
There had been distributed to the Board copies of memoranda from
the Division of Examinations and from Mr. Hexter dated November 24
and December 18, 1958, respectively, recommending that a final
certification pursuant to section 1101(e)(2) of the Internal
Revenue Code of 1954 be issued with respect to Stephens, Inc.
(formerly W. R. Stephens Investment Co. Inc.), Little Rock, Arkansas.
The certification would state that to the best of the Board's
knowledge and belief this company, which formerly was a bank holding
company as defined in section 2(a) of the Bank Holding Company Act,
had ceased to be a bank holding company before the expiration of
the period specified in subparagraph (B) of section 1101(e)(2) of
the Internal Revenue Code.
12/19/58
-4-
Pursuant to the staff recommendation, it was agreed
unanimously to issue a final certification in the form submitted,
with duplicate originals to Stephens, Inc., and to the Commissioner
of Internal Revenue.
A copy of the certification is attached as
Item No.M-7.
All of the members of the staff except Mr. Johnson withdrew
from the meeting.
Carry-over of unused annual leave.
Pursuant to a request
made at the meeting on Wednesday, December 17, there had been
distributed to the Board copies of a memorandum from Mr. Johnson
dated December 18, recommending that employees of the Board be
permitted to carry over unused annual leave in unusual circumstances
into the succeeding year, subject to certain understandings.
After this meeting the Secretary was informed that the
Board had given consideration to the recommendation contained in
Mr. Johnson's memorandum but that in view of certain questions
that were raised, it was agreed to defer further consideration of
the matter until after Governor Shepardson returned to his office
in January.
The meeting then adjourned.
Secretary's Note: Acting in the absence of Governor
Shepardson, Governor Robertson today approved on
behalf of the Board the following item:
10
12/19/58
Memorandum dated December 16 1958, from Mr. Kelleher,
Director, Division of Administrative Services,
recommending that Mary K. Nantell, Cafeteria Helper
in that Division, be transferred from a part-time
basis to a full-time basis, with basic annual salary
at the rate of $2,960, effective December 22, 1958.
Telegram to the Federal Reserve Bank of Kansas City
(attached Item No. M-8) approving the appointment
of Harry William Green as an assistant examiner.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. M-1
12/19/58
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 19, 1958
Board of Directors,
Liberty Bank of Buffalo,
Buffalo, New York.
Gentlemen:
Pursuant to your request submitted through the
Federal Reserve Bank of New York, the Board of Governors
approves the establishment of a branch at 3838 Harlem Road,
unincorporated area of the Town of Cheektowaga, Erie County,
New York, by Liberty Bank of Buffalo, Buffalo, New York.
This approval is given provided the branch is established
within one year from the date of this letter and that formal approval of State authorities is effective at the time
the branch is established.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item NO. M-2
12/19/58
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 19, 1958
Board of Directors,
Fidelity-Philadelphia Trust Company,
Philadelphia 9, Pennsylvania.
Gentlemen:
Pursuant to your request submitted through the Federal
Reserve Bank of Philadelphia, the Board of Governors of the
Federal Reserve System approveslunder the provisions of Section 24A
of the Federal Reserve Act, an additional investment of not to
exceed $110,000. This is for the purpose of acquiring and imm
proving premises for use as a branch at 220-22 West Baltimore Pike,
Clifton Heights, Delaware County, Pennsylvania.
Very truly yours,
(signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, O. C.
Item No. M-3
12/19/58
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 19, 1958
Board of Directors,
Columbus Bank and Trust Company,
Columbus, Georgia.
Gentlemen:
Pursuant to your request submitted through the
Federal Reserve Bank of Atlanta, the Board of Governors
of the Federal Reserve System approves the establishment
of a branch at the northeast, intersection of Benning
Drive and Victory Highway in a suburban area to be anne::ed
to the City of Columbus, Georgia, on January 1, 1959, by
Columbus Bank and Trust Company, Columbus, Georgia, provided
the branch is established within nine months from the date
of this letter and approval of the State authorities is in
effect as of the date of the establishment of the branch.
It is understood that the operations of your
existing branch located at 1346 Broadway, Columbus, Georgia,
will be discontinued when the above branch is opened for
business.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
Item No. M-4
12/19/58
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
le
t
r
--'A *
WASHINGTON 25, D. C.
0
a•- 0
* 4,_
S-1685
ADDRESS OFFICIAL CORRESPONDENCE
.: .
TO THE BOARD
tt0kiirpAt'
December 19, 1958.
Dear Sir:
The purpose of this letter is to place in the loose-leaf service
instructions printed on the report forms and in the Accounting Manual concerning submission of periodic reports to the Board of Governors by Federal
Reserve Agents. No change is made in established procedures.
Paragraph 2 of Section 16 of the Federal Reserve Act provides
that the Federal Reserve Agent shall each day notify the Board of Governors
of all issues of Federal Reserve notes to the Federal Reserve Bank. With
respect to this provision, the Board has requested a daily statement from
the Agent on Form F.R. 5. This form provides for reporting the amounts of
notes received from the Comptroller of the Currency, issued to the Bank
(outstanding), and on hand; the amount and kind of collateral security
held; and changes therein. For the last day of the month only, the form
provides for reporting by denominations notes on hand at head offices and
branches separately.
As of each Wednesday and the last day of each month, or as of
the preceding day when Wednesday or the end of the month is a holiday, the
amounts reported against coded items on Form F.R. 5 should be telegraphed
SO as to reach the Board as early as possible on the following business day.
As of the end of each month, a report on Form F.R. 44 should be
submitted to the Board and a duplicate thereof to the Comptroller of the
Currency, Federal Reserve Issue and Redemption Division. This form provides for reporting by denomination cumulative figures for Federal Reserve
notes received from the Comptroller of the Currency, issued to the Reserve
Bank, and returned to the Comptroller for retirement, together with amounts
on hand at the end of the month.
TO ALL FEDERAL
Very truly yours.
OP
illItop
Merritt She's
Secretary.
RESERVE AGENTS
15
BOARD OF GOVERNORS
OF THE
Item No. M-5
12/19/58
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 19, 1958
Mr. Robert C. Sprague,
Federal Reserve Agent,
Federal Reserve Bank of Boston,
Boston 6, Massachusetts.
Dear Mr. Sprague:
In accordance with the request contained in your letter of
December 1, 1958, the Board of Governors approves the appointment of
Mr. George H. Harris as Alternate Assistant Federal Reserve Agent at
the Federal Reserve Bank of Boston to succeed Mr. Bernard J. Hussey.
This approval is 7iven with the understanding that Mr. Harris
will be solely responsible to the Federal Reserve Agent and the Board
of Governors for the proper performance of his duties, except that,
during the absence or disability of the Federal Reserve Agent or a
vacancy in that office, his responsibility will be to the Assistant
Federal Reserve Agent and the Board of Governors.
When not engaged Jn the performance of his duties as Alternate
Assistant Federal Reserve Agent Mr. Harris may, with the approval of the
Federal Reserve AF-ent and the President, perform such work for the Bank
as will not be inconsistent with his duties a!, Alternate
AsAstant Federal
Reserve Agent.
It will
importance of his
Reserve Agent and
Operations of the
be appreciated if Mr. Harris is fully informed of the
responsibilities as a member of the staff of the Federal
the need for maintenance of independence from the
Bank in the discharge of these responsibilities;
Mr. Harris should execute the usual Oath of Office which is to
be forwarded to
the Board of Governors. Your advice with respect to the
effective date of Mr. Harris' appointment also will be appreciated.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Jecretary.
BOARD OF GOVERNORS
OF THE
Item No. M-6
FEDERAL RESERVE SYSTEM
12/19/58
WASHINGTON 25, D. C.
ADDRESS orricIAL CORRESPONDENCE
TO THE BOARD
December 19, 1958
CONFIDENTIAL (FR)
Mr. H. J. Newman, Vice President,
Federal Reserve Bank of Chicago,
Chicago 90, Illinois.
Dear Mr. Newman:
The Board of Governors approves the payment of salary
by the Federal Reserve Bank of Chicago to the incumbents of the
positions listed below at the rates shown, effective January 19,
1959, in accordance with the request contained in your letter
December 8, 1958:
Title
Janitresses
Janitresses
(6 mos. or less)
Matrons
Annual Salary
0,39040
3,328.00
3,390.140
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
Item No. 14-7
12119/59
FINAL
CERTIFICATION
Pursuant to section 1101(e)(2) of the Internal Revenue
Code of
1954,
the Board of Governors of the Federal Reserve
System hereby certifies, to the best of its knowledge and belief,
that Stephens, Inc. (formerly W. R. Stephens Investment Company,
Inc.), Little Rock, Arkansas, which formerly was a bank holding
company as defined in section 2(a) of the Bank Holding Company Act
of 1956, has ceased to be a bank holding company before the
expiration of the period specified in subparagraph (B) of section 1101(e)(2) of the Internal Revenue Code of
1954.
Executed in Washington, D. C., pursuant to direction of
the Board of Governors of the Federal Reserve System.
SEAL
Date: December 19, 1958
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
18
Item No*
TELEGRAM
12/19/58
LEASED WIRE SERVICE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
December 19, 1958
WOOLLY - KANSAS CITY
Reurlet December 16, 1958, Board approves the appointment of
Harry William Green as an assistant examiner for the Federal
Reserve Bank of Kansas City. Please advise date upon which
appointment is made effective.
It is noted Mr. Green is indebted to Security National Bank,
Norman, Oklahoma, in the amount of :500.
Approval is given
With the understanding he will not participate in examinations
of that bank until his indebtedness has been liquidated.
(Signed) Kenneth A. Kenyon
KENYON
19
Item No. 2
1/5/59
Minutes of a meeting of the available members of the Board
of Governors of the Federal Reserve System on Monday, December 22,
1958, The Board met in the Board Room at 10:00 a.m.
PRESENT:
Mr. Szymczak, Acting Chairman
Mr. Mills
Mr. Robertson
Sherman, Secretary
Kenyon, Assistant Secretary
Fauver, Assistant Secretary
Hackley, General Counsel
Masters, Director, Division of
Examinations
Mr. Nelson, Assistant Director, Division
of Examinations
Mr. Hooff, Assistant Counsel
Mr. Gemmill, Economist, Division of
International Finance
Mr.
Mr.
Mr.
Mr.
Mr.
Discount rates.
Unanimous approval was given to a telegram
to the Federal Reserve Bank of Minneapolis approving the establishment
Without change by that Bank of December 19, 1958, of the rates on
discounts and advances in its existing schedule.
Items circulated to the Board.
The following items, which
had been circulated to the members of the Board and copies of which
are attached to these minutes under the respective item numbers
indicated, were approved unanimously:
Item No.
Letter to The West Baden National Bank, West Baden
Springs, Indiana, approving its application for
fiduciary powers. (For transmittal through the
Federal Reserve Bank of St. Louis)
M-9
2()
12/22/58
-2Item No.
Letter to the California Bank, Los Angeles, California,
interpreting the applicability of certain language
found in paragraph 7 of section 13 of the Federal
Reserve Act.
M-10
Letter to the Comptroller of the Currency recommending
unfavorably with regard to the application of Rushmore
State Bank, Rapid City, South Dakota, to convert into
a national bank. (With a copy to the Federal Reserve
Bank of Minneapolis)
M-11
Memorandum from Mr. Hooff dated December 17, 1958,
recommending the elimination from Regulation F, as it
appears in the Code of Federal Regulations, of the
Statement of Principles of Trust Institutions.
M-12
Letter to the Stockmans National Bank of Lusk, Lusk,
M-13
1:IYoming, approving its application for authority to act
in a specific fiduciary capacity. (For transmittal through
the Federal Reserve Bank of Kansas City)
Letter to the Comptroller of the Currency recommending
unfavorably with regard to an application to organize a
national bank at Huntingdon, Pennsylvania. (With copy
to the Federal Reserve Bank of Philadelphia)
With respect to the foregoing Item No. M-121 Governor Mills
recalled that some time ago a minor amendment was made to the
Statement of Principles of Trust Institutions, which is carried as
an appendix to Regulation F, but the Board decided against reprinting
the Regulation in pamphlet form pending review to determine whether
Other changes would be desirable.
He raised a question whether the
elimination of the Statement of Principles from Regulation F, as it
appears in the Code of Federal Regulations, might not be confusing
12/22/58
to users of the Code and the Federal Register who might assume that
the Statement of Principles had also been eliminated from the
appendix to Regulation
F.
Comments by Messrs. Masters and Hooff in response to the
question raised by Governor Mills indicated that the elimination of
the Statement of Principles from the Code of Federal Regulations to
be issued as of January 1,
1959, was deemed desirable because the
Code is reprinted only at infrequent intervals and the present
version tended to give the erroneous impression that the Statement
Of Principles was a part of Regulation F proper.
Mr. Masters stated
that Regulation F had not been substantially revised since 1936, the
staff realized the need for review, but the work had been deferred
because the pending Financial Institutions Act would transfer
authority over trust powers of national banks to the Comptroller of
the Currency.
Gold Loan to Argentina (Item No. M-15).
There had been
distributed to the Board copies of a memorandum from Mr. Marget,
Director, Division of International Finance, dated December 19, 1958,
recommending approval of a 90-day loan on gold to the Central Bank
or Argentina in the amount of $17,000,000 which had been authorized
by the Board of Directors of the Federal Reserve Bank of New York
subject to the approval of the Board of Governors.
Mr. Margetts
memorandum stated that in view of developments with respect to a
12/22/58
stabilization program for Argentina, he believed that the proposed
loan was consistent with System gold loan policy.
Governor Mills said that he would concur in the making of
the loan but that he would like to raise the question whether in
Principle and in spirit the loan was consistent with the statement
on gold loan policy, since it would represent an advance to the
Central Bank of Argentina arising out of a structural imbalance in
Argentina's foreign trade position rather than a loan to meet a
temporary deficit in the balance of payments which would be almost
self-liquidating once the borrowing country got back to a surplus
position.
The Argentine loan would be an advance correlated with
a considerable number of other transactions involving the United
States Treasury, the Export-Import Bank, the International Monetary
Fund, and the Development Loan Fund, all related to an attempt to
stabilize the financial position of Argentina.
While this was a
worthy cause, it was hard for him to reconcile the proposed loan
With the principles developed in the gold loan policy statement.
This was the kind of transaction undertaken with very little success
after World War I by the Bank of England, and he had some apprehension
that a loan of this kind, if it became a precedent, could involve
risks and engagement in transactions not thoroughly consistent with
central banking practices.
23
12/22/58
-5-
Governor Szymczak said he thought Governor Mills' statement
was correct.
He noted, however, that the proceeds of this loan
would be used to repay dollar exchange drafts on
commercial banks,
a step deemed
necessary to the success of the stabilization program
in order that next
January and February, when Argentina's dollar
requirements were particularly heavy, the commercial banks would
meet those requirements.
It was understood that the gold loan
would be repaid from resources that would become
available if the
stabilization
efforts were successful or from the disbursements of
Other agencies involved in
the stabilization program.
He said that
Mr. Hayes had discussed the propos
ed loan with Chairman Martin
before it was considered by the New York
Board of Directors, the
loan was recommended
by the Division of International Finance, and
it was also
recommended by the United States Executive Director of
the Intern
ational Monetary Fund.
Governor Robertson noted that the telegram from the New York
Bank provided
for the loan to be renewable for a further period of
three months in the discretion
of the officers of the Reserve Bank.
After discussion of this point, agreement was expressed with
the suggestion that it be
made clear to the Reserve Bank that any
renewal would be subject to the prior approv
al of the Board of
Governors.
24
12/22/58
-6-
Thereupon, unanimous approval was given to a telegram to the
Federal Reserve Bank of New York in the form attached as Item No.
M-15.
At this point Mr. Farrell, Associate Director, Division of
Bank Operations, entered the meeting.
in_Pitt
Governor
SzYmozak said that at the suggestion of Chairman Martin, President
Fulton of the Federal Reserve Bank of Cleveland had called him on
the telephone to state that he would like to have the informal
reaction of the Board to the possible purchase of certain property
from the Pennsylvania Railroad for use by the Pittsburgh Branch.
The matter had been under consideration for a long time but only
recently had it become possible to acquire this property.
At
Governor Szymczak's suggestion, Mr. Fulton had written a letter
concerning the proposed purchase, and this letter was read by the
Secretary.
After discussion of the information presented in the letter,
!gEtEaltrl was expressed with the suggestion that the matter be referred
to the Division of Bank Operations for study in order that the Board
might have all pertinent information before it in considering what
views should be expressed to President Fulton.
..folication of First Bank Stook Corporation.
Attention was
called by the Secretary to a letter proposed to be sent to the
Commissioner of Banks for the State of Minnesota requesting views
12/22/58
-7-
and recommendations with respect to the application of First Bank
Stock Corporation, Minneapolis, Minnesota, for prior approval of the
acquisition of voting shares of the Eastern Heights State Bank of
Saint Paul, St. Paul, Minnesota.
Ordinarily, such letters are sent
administratively pursuant to authorization given by the Board but
in this case the letter referred to the fact that the applicant had
designated this as an "amended application" and had incorporated by
reference certain portions of its application dated December 30,
1957, with respect to the First Eastern Heights State Bank of Saint
Paul.
The letter stated that the present application was to be
considered a new application relating to an existing bank, as
contrasted with the previous application which related to a proposed
bank.
Mr. Hackley commented that after the Board denied the
application of First Bank Stock Corporation to acquire shares of the
proposed First Eastern Heights State Bank, a bank was established
with the Minnesota Mining and Manufacturing Company as principal
s
tockholder.
Thus, the considerations involved in the present
application were quite different from those involved in the original
application.
The developments, he pointed out, had a bearing on the
petition for court review of the Board's order filed by First Bank
Stock Corporation because it was the Board's contention that since
the new bank had actually been established the first application was
moot and the case should be dismissed.
The language contained in
the proposed letter was intended to make it clear to the State
2i1
12/22/58
-8-
Bank Commissioner that the Board regarded the present application
as a new application.
Thereupon, the sending of the letter to the State Bank
Commissioner was approved unanimously.
Matter of The Michigan Bank.
Mr. Hackley reported receipt
by the Board of
a letter from The Michigan Bank, Detroit, Michigan,
indicating that in view of the Board's letter of December 11, 1958,
the bank had decided to bring suit for declaratory judgment.
It was
also stated that Mr. Alley, Counsel for the Bank, would be in touch
With Mr. Hackley within the next few days.
Ni. Hackley said that
Mr. Alley probably would want to discuss a possible stipulation of
facts in this case.
He went on to say that he was somewhat reluctant
to agree to
any such stipulation, but on the other hand he did not
want to seem to resist too strongly if The Michigan Bank was willing
to agree
on a simple and clear statement of facts.
Mr. Hackley went on to say that this raised the question
Whether the Board would wish to consider the desirability of retaining
outside counsel to assist in connection with the case in view of
Other matters of litigation already pending.
He also mentioned in
this connection the possibility of bringing in counsel from a
Federal Reserve Bank.
After some discussion, it was understood that the Legal
Division would give
further consideration to the question of retaining
°Iltside counsel and present a recommendation to the Board.
12/22/58
_51
With regard to the stipulation, Governor Mills suggested
that it might tend to circumscribe the area within which the case
would be decided.
He pointed out that this was a case involving
many questions related to the use of preferred stock as bank capital,
and a stipulation might run the risk that the Board would not be
able to inject into the case some far-reaching philosophical
considerations.
Governor Robertson expressed the view that a stipulation
Should be consented to only on the Board's terms.
If The Michigan
Bank was willing to stipulate on the Board's terms, that would cut
dOWn the cost of
litigation, but he would not be willing to give up
anything by stipulation.
Messrs. Farrell, Hooff, and Gemmill then withdrew.
Appointment of directors.
Governor Szymczak reported
receipt of information that Mr. Whitworth Ferguson, who had been
appointed as a director of the Buffalo Branch of the Federal Reserve
Bank of New York for the three-year term beginning January 1, 1959,
was a director of a small fire insurance company.
It was understood,
however, that Mr. Ferguson was not an officer or employee of the
company or a member of the finance committee.
Mr. Sherman reported having received advice from President
Deming of the Federal Reserve Bank of Minneapolis that Mr. John D.
Stephenson
would be pleased to serve as a director of the Helena
12/22/58
-10-
Branch for the two-year term beginning January 1, 1959, but had
called attention to the fact that his law firm was serving as counsel
for two commercial banks, presumably rendering
the usual type of
legal advisory services.
Mr. Deming had expressed the view that Mr.
Stephenson would be quick to raise the question of his further
service as a director in the event of litigation involving a
conflict of interests.
The matter was discussed at some length from the standpoint
of the
questions raised through the appointment of attorneys and
Other professional men as directors of Federal Reserve
Banks and
branches.
While it was suggested that the possibility of a problem
arising might be more remote in connection with service as a director
of the Helena Branch
than in the case of service as a director of
one of the larger Federal Reserve Banks, it was also pointed out
that it seemed difficult
to make distinctions when thinking of the
Problem in terms of the principle involved.
Reference was made to
the fact
that in this case the proposed appointee already had been
contacted to ascertain whether he would be willing to accept
aPpointment, and
in the circumstances Governor Mills indicated that
he would
interpose no objection to the appointment being made,
although he felt that essentially this was the wrong decision.
It having been ascertained that Mr. Charles B. Thornton would
not be
available to serve as a director of the Los Angeles Branch of
the Federal Reserve Bank of San Francisco for the two-year term
2()
12/22/58
-11-
beginning January
1, 1959,
in accordance with the understanding at
the meeting on December 9, 1958, the Chairman of the San Francisco
Bank was requested to ascertain and advise whether Mr. John D.
Fredericks, President and General Manager, Pacific Clay Products,
Inc., Los Angeles, California, would be willing to accept the
appointment if tendered.
This inquiry disclosed that Mr. Fredericks
*would be willing to accept but that he was serving as a director of
the Title Insurance and Trust Company of Los Angeles.
It was
understood that Mr. Fredericks would be willing to resign the
directorship
if appointed as a director of the Los Angeles Bank and
if it were felt that he should do so.
Mr. Sherman said that from available information it appeared
that the bulk of the business of the company in question was that
of title insurance and that the company did not accept deposits.
In
the circumstances,
the view was expressed that there was probably no
reason to require Mr. Fredericks to resign as a director of the
mPanY. It was suggested, however, that Chairman Brawner be asked
"
to communicate with Mr. Fredericks and say that, while the Board
would not insist on his giving up the directorship in the Title
Insurance and Trust Company, Mr. Fredericks would be expected to
determine the
matter himself if any appearance of a conflict of
interests
should develop.
It was then agreed to tender the appointment as a director
of the Los Angeles Branch to Mr. Fredericks, with the understanding
30
12/22/58
-12-
that Governor Mills would talk with Chairman Brawner along the lines
suggested.
The meeting then adjourned.
31
BOARD OF GOVERNORS
0011****0
OF THE
oas4400:4;01...,.. 00
4)
% 44
fis i
0•
00
•Al),.-;. t
/A
•14.1
IILI „h.00
•
Item No. M-9
12/22/58
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
4#,
*11.
*
*{;:,;hi,KS":
•P
December 22, 1958
Board of Directors,
The West Baden National Bank,
Vest Baden Springs, Indiana.
Gentlemen:
The Board of Governors of the Federal Reserve
System has given consideration to your application for
fiduciary powers in connection with the proposed consolidation of the French Lick State Bank, French Lick, Indiana,
with your bank. The Board grants you authority, effective
if and when the propose-' consolidation is consumnated, to
act, when not in contravention of State or local law, as
trustee, executor, administrator, registrar of stocks and
bonds, guardian of estates, assignee, receiver, committee of
estates of lunatics, or in any other fiduciary capacity in
which State banks, trust companies, or other corporations
which come into competition with national banks are permitted to act under the laws of the State of Indiana. The
exercise of all such rights shall be subject to the provisions
of the Federal Reserve Act and the regulations of the Board of
Governors of the Federal Reserve System.
This letter will serve as authority for The West
Baden National Bank to exercise the fiduciary powers granted
by the Board pending the preparation of a formal certificate
in the name of The Springs Valley National 3ank with the
location stated as French Lick, Indiana, the name and place
of business to be adopted by the continuing institution after
the consolidation.
Very truly yours,
(Signed) Kennneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 14-10
FEDERAL RESERVE SYSTEM
12/22/58
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 22, 1958
California Bank,
P. 0. Box 3666, Terminal Annex,
Los Angeles 54, California.
Attention: Mr. D. D. Moorhead
Legal Department
Gentlemen:
This is in reply to your letter of December 12, 1958,
addressed to Nr. Howard H. Hackley, with respect to paragraph 7 of
section 13 of the Federal Reserve Act (12 U.S.C. 372). You inquire
Whether the proviso in that paragraph regarding "shipping documents
conveying or securing title" applies only to transactions involving
the domestic shipment of goods, or whether it applies also to transactions involvine, the importation or exportation of goods.
In the opinion of the Board, the proviso referred to
aPplies only to transactions involving the domestic shipment of
goods. This interpretation is reflected in Federal Reserve Regulation C, a copy of which is enclost.d. Section 1(a) of Regulation C
enumerates separately the three categories of commercial drafts
covered by paragraph 7 of section 13, and indicates that the requirement with respect to shipping documents is applicable only to acceptances growing out of the "shipment of goods within the United
States"--that is, domestic shipment of goods.
With respect to transactions involving the importation or
exportation of goods, you will note that footnote 1 to section 1(a)(1)
of Regulation C states that a member bank accepting a draft growing
out of an export or import transaction "will be expected to obtain
before acceptance and retain in its files satisfactory evidence,
documentary or otherwise, showing the nature of the transactions
underlying, the credit extended." This requirement, of course, is
/?.0t the same as the requirement with which you are concerned, relatnr: to shipping documents conveyin: or securing title to the goods
involved in the particular trans-,ctioa.
Very truly yours,
(Signed) Merritt Sherman
11;r1C1nr:Urej
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
Item No. M-11
12/22/58
OF THE
FEDERAL RESERVE SYSTEM
kA
WASHINGTON 25, D. C.
A
A
0
A
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 221 1'1)58
Comptroller of the Currency,
Treasury Department,
Washington 25, D. C.
Attention Mr. G. W. Garwood,
Deputy Comptroller of the Currency.
War Ml. Comptroller:
Reference is made to a letter from your office dated
October 20, 1958, enclosing copies of an application of the Rushmore
State Bank, Rapid City, South Dakota, to convert into a national
banking association and requesting a recommendation as to whether '
or not the application
should be approved.
A field investigation of the application has not been made
but the Federal
Reserve Bank of Minneapolis has furnished us with a
report on the application based upon the examination of the bank made
by national bank examiners as of November 3, 1958, and other data
available.
According to this report, the applicant bank has been in
. b.c problem category since 1947 and while its condition has shown
Improvement recently it is still in the borderline group. The bank's
epital structure is believed inadequate and the management cannot be
rated as satisfactory until it has demonstrated that the institution
aan be maintained in good condition. It appears that the bank is
I ulfilling some banking needs in the community and fairly profitable
operations could be realized under proper management.
However, in
view of the unfavorable history of the bank, its ownership and manageas well as the inadequate capital structure, the Board of Governors
does not feel justified in recommending approval of the application.
The Board's Division of Examinations will be glad to discuss
an
Y aspects of this case with representatives of your office if you so
Qlesire.
Very truly yours,
)
Kenneth A. Kenyon,
Assistant Secretary.
31
BOARD OF GOVERNORS
Of THE
FEDERAL RESERVE SYSTEM
Bice
Correspondence
of Gojernors
L. Hooff
Date
Subject:
Item No. M-12
12/22/58
December 17, 1958.
Elimination of "section" of
Regulation F as it appears in Code of
Tiaeiil Regulations.
The Board's Regulation F, as printed in Title 12 of the
Code of Federal ReEulations (Part 206), contains § 206.19 entitled
A Statement of Principles of Trust Institutions. This is not
section 19 of Regulation F, as it would appear to be, but is
merely a statement of the American Bankers Association contained
in the appendix to Regulation F. However, under the Federal
Register Division's procedures, this was the only way it could
be included in the codification. As this statement is not a
regulation of the Board, it probably should not have been included
in the codification.
Title 12 of the Code of Federal Regulations is being
reprinted as of January 1, 1959, and this would be an opportune time
to remove this apparent, but not actual, part of the Board's Regulation F. The attached document, prepared for transmission to the
Federal Register, would accomplish this purpose. This action does
not amount to an amendment to Regulation F, as it only requires an
editorial cliztue;t, in footnote 5 to section 6(f) as it appears in the
Code of Federal Rcgulations.
Attachment
35
BOARD OF GOVERNORS
OF THE
Item No. M-13
12/22/58
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 22, 1958
Stockmans National Bank of Lusk,
Lusk, Wyoming.
Gentlemen:
The Board of Governors of the Federal Reserve
System has given consideration to your application for
fiduciary powers and grants you authority to act, when
not in contravention of State or local law, as executor
of the estate of Christ Ruffing and in no other trust
capacity, the exercise of such authority to be subject
to the provisions of the Federal Reserve Act and the
regulations of the Board of Governors of the Federal
Reserve System.
A certificate covering such authorization is
enclosed.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
Enclosure
BOARD OF GOVERNORS
OF THE
Item No. 14-14
12/22/58
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 22, 1958
Comptroller of the Currency,
Treasury Department,
Washington 25, D. C.
Attention Mr. Hollis S. Haggard,
Chief National Bank Examiner.
Dear Mr. Comptroller:
Reference is made to a letter from your office dated
October 27, 1958, enclosing copies of an application to organize
a national bank at Huntingdon, Pennsylvania, and requesting a
recommendation as to whether or not the application should be
approved.
Information contained in a report of investigation of
the application made by a representative of the Federal Reserve
Bank of Philadelphia discloses that the proponents have agreed
t° Provide a capital structure for the bank of $350,000 instead
°f 251,250 shown in the application. On the basis of the estimated
deposit volume at the end of the third year of operation, this
Isevised capital structure would be adequate. The proposed board
°f directors and managing officer appear to be fairly satisfactory.
However, there does not appear to be a sufficient need for an
additional bank in the community at this time and considerable
1?ubt is expressed regarding the ability of the proposed institutjon to generate sufficient business to assure profitable operaIn view of these unsatisfactory factors, the Board of
uovernors does not feel justified in recommending approval of the
aPplication.
The Board's Division of Examinations will be glad to
discuss any aspects of this case with representatives of your
"floe if you 'so desire.
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. M-15
12/22/58
December 22, 1958
EXTER-NEW YORK
Your wire December 18.
Board approves granting of loan on gold
by your bank
to Banco Central de la Republica Argentina of $17,000,000
on the following
terms and conditions:
(A)
To be made up to 98 per cent of the value of gold bars set
aside in your vaults under pledge to you;
(B) To mature in three months with option to repay before maturity,
With the understanding that any renewal would be subject to the prior
approval of the Board of Governors;
(C) To be roc
ted and made within thirty days of the date on which
the Board ap
rwes the granting of such loan;
(D)
To bear 11,terest at the discount rate of your Bank in effect on
the date on
which such loan is made.
It is understood that the usual participation will be offered to the
Other Federal Reserve Banks.
(Signed) SHERMAN
Item No. 3
1/5/59
Minutes of a meeting of the available members of the Board
of Governors of the Federal Reserve System on Tuesday, December 23,
1958.
The Board met in the Board Room at 10:00 a.m.
PRESENT:
Mr. Szymczak, Acting Chairman
Mr. Mills
Mr. Robertson
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Discount rates.
Sherman, Secretary
Kenyon, Assistant Secretary
Thomas, Economic Adviser to the Board
Young, Director, Division of Research
and Statistics
Hackley, General Counsel
Masters, Director, Division of
Examinations
Shay, Legislative Counsel
Noyes, Adviser, Division of Research
and Statistics
Chase, Assistant General Counsel
Nelson, Assistant Director, Division
of Examinations
Wood, Economist, Division of Research
and Statistics
Fisher, Economist, Division of Research
and Statistics.
Unanimous approval was given to telegrams
to the
Federal Reserve Banks of Atlanta and San Francisco approving
the
establishment without change by those Banks on December 22,
19583 of the rates on discounts and advances in their existing
.9
chedules.
Items circulated to the Board.
The following items, which
had been circulated to the members of the Board and copies of which
are attached
to these minutes under the respective item numbers
indicated,
were approved unanimously:
:39
12/23/58
-2Item No.
Letter to The Connecticut Bank and Trust Company,
Hartford, Connecticut, approving the establishment
?f two branches in Manchester, Connecticut,
incident to a proposed merger with The Manchester
Trust Company. (For transmittal through the
Federal Reserve Bank of Boston)
M-16
Letter to The Union Banking & Trust Company, Du Bois,
Pennsylvania, approving the establishment of a
branch at West Long Avenue & Franklin Street.
For transmittal through the Federal Reserve Bank
of
Philadelphia)
M-17
Letter to The First National City Bank of New York,
N'w York City, consenting to the exercise of
fiduciary powers at its branches in Venezuela.
For transmittal through the Federal Reserve Bank
of New York)
M-18
With respect to the foregoing Item No. 14-181 Governor
Robertson requested that the Division of Examinations ascertain,
for his information, what functions were being performed under
similar authorizations previously granted to The First National City
Bank of New York with respect to other branches outside the
continental
United States and, a year from now, what use had been made
of the present authorization.
Mr. Nelson then withdrew from the meeting.
Housing legislation (Item No. 14-19).
The Bureau of the
Budget had requested the Board's comments, not later than today, on
a Proposed joint resolution providing interim authorization for FHA
mortgage insurance, urban renewal, and college housing, and on a
40
12/23/58
-3-
proposed bill to be cited as "The Housing Act of
1959." An analysis
Of these measures ard a suggested letter to the Budget Bureau had
been distributed to the Board with a transmittal memorandum from
Z. Young dated December 22, 1958.
While the Board's discussion touched upon a number of the
provisions of the proposed legislation, consideration was given
principally to provisions of the Housing Act of
1959 which would (1)
remove the statutory limits on the amount of insurance that may be
written by the Federal Housing Administration, and (2) raise the
maximum annual interest rates on mortgages insured under various
sections of pertinent legislation.
With respect to the maximum interest rate provisions, the
Board discussed whether it would be most appropriate to (a) adopt
a Position of neutrality, on the theory that the current proposals
went about as far as seemed practicable in the light of previously
exPressed Congressional sentiment, (b) endorse the proposals as a
steP in the direction of greater administrative authority over
housing programs such as the Board had advocated in the past, or (3)
Pl'oPose the elimination of maximum interest rate provisions from the
s
tatutes. The decision of the Board was to make the comment
considered sound in principle; namely, to cite the raising of statutory
mazimum interest rates as a step in the right direction but to suggest
that full flexibility of interest rates according to market conditions
would be preferable.
12/23/58
With respect to the provisions of the proposed legislation
which would remove the limits on FHA insurance in force, question
was raised by the Board whether it would be desirable to provide an
open-end authorization of a continuing nature.
Comments by members
of the staff in response to these questions were in terms that the
Congress had customarily provided increased insurance authorizations
as requested, that a request for increased authorization provides an
occasion for the introduction of various kinds of proposals in the
housing area, and that the appropriations process presents an
°PPortunity each year for the Congress to review the standards under
which the housing insurance program is being administered.
It was
also suggested that the standards under which insurance is granted
are as important to a sound program as dollar limitations on the
insurance authorization and that the fixing of a maximum dollar
authorization tends in the direction of setting a goal for activity
under any particular insurance program.
The Board's decision on this point was to include in the
letter to the Budget Bureau a statement that the removal of the
limitation on insurance in force might represent a step in the
direction of greater administrative authority over housing programs,
vith the observation that annual review of the standards of
administration would be provided by the appropriations process.
12/23/58
One other question raised in discussion was whether the
Board wished to express any reservations concerning the provisions
of the Housing
Act of
1959
which mould authorize the establishment
of a program of Federal debt service guaranties on taxable bonds of
private educational institutions to aid in financing housing and
related facilities.
It was understood that this proposal was being
sAonsored by the Treasury and the Budget Bureau as an alternative
to certain
less desirable programs that had been suggested.
The view
of the
Board was that the wisdom of establishing an additional program
Of Federal guaranties should be questioned, it being felt that such
an expression might lend strength to the position of those who were
s
upporting the compromise proposal only with reluctance.
At the conclusion of the discussion, unanimous approval was
given to a letter to the Bureau of the Budget in the form attached
as 1-.2_2_No.
11-19.
During the foregoing discussion the meeting recessed in order
to
permit attendance at a function arranged as part of the Board's
arinual Christmas program.
The meeting reconvened at 11:05 a.m. with
the same attendance except that Mr. Thomas was not present.
GreaterMnSavinsCenteriar. The Secretary called the Board's
attention
to a letter from Vice President Wiltse of the Federal Reserve
Bank of New York dated November 25, 1958, transmitting various pieces
of Publicity material issued by the Greater Miami Savings Center,
12/23/58
-6-
Florida, an organization engaged in the placing of funds for
customers in savings and loan associations.
The literature issued
by the
organization was regarded by Mr. Wiltse as in some respects
involving misleading advertising, and among the attachments to his
letter was a report of an informal investigation made by the Federal
Reserve Bank of Atlanta.
It was the suggestion of the Board's
Legal Division that copies of the items submitted with Mr. Wiltse's
letter be transmitted to the Federal Home Loan Bank Board and to the
Securities
and Exchange Commission as a matter of information.
No objection being seen by the Board to the proposed handling
of the matter, it was understood that the suggestion of the Legal
Division would be followed.
The meeting then adjourned.
Secretary's Note: Pursuant to the recommendation contained in a memorandum dated December
23, 1958, from Mr. Leonard, Director, Division
of Bank Operations, Governor Robertson, acting
in the absence of Governor Shepard son, today
approved on behalf of the Board an increase in
the basic annual salary of Deanna Shunk,
Statistical Clerk in that Division, from $3,590
to $3,755, effective December 28, 1958.
44:
Item No. 14-16
12/23/58
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS
orrictAL
CORRESPONDENCE
TO THE SCARP
December 23, 1958
Board of Directors,
The Connecticut Bank and Trust Company,
Hartford, Connecticut.
Gentlemen:
Pursuant to your request submitted through the Federal
Reserve Bank of Boston, the Board of Governors approves the
establishment of a branch at 893 Main Street, and a branch at
15 North Main Street, both in Manchester, Connecticut, by The
Connecticut Bank and Trust Company, in connection with the
proposed merger of The Connecticut Bank and Trust Company and
The Manchester Trust Company, Manchester, Connecticut. This
approval is given provided (a) the merger is effected substantially
in accordance with consolidation agreement dated November 17,
1958, (b) any stock acquired from dissenting shareholders is
disposed of within six months from date of acquisition, (c) the
branches are established within six months from the date of this
letter, and (d) approval of the State authorities is in effect
at the time the branches are established.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
45
BOARD OF GOVERNORS
OF THE
Item No. M-17
12/23/58
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 23, 1958
Board of Directors,
The Union Banking & Trust Company
Of Du Bois, Pennsylvania,
Du Bois, Pennsylvania.
Gentlemen:
Pursuant to your request submitted through the
Federal Reserve Bank of Philadelphia, the Board of Governors
TProves the establishment of a branch at the corner of West
tr ?lIC Avenue and Franklin Street, Du Bois, Pennsylvania, by
t,fle Union Banking & Trust Company of Du Bois, Pennsylvania,
Bois, Pennsylvania. This approval is given provided the
branch is established within one year from the date of this
letter and that formal approval of State authorities is
effective at the time the branch is established.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
46
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
N "7 \t"'1," : —
Item NO. M-18
12/23/58
WASHINGTON 25, D. C.
ADORESS OFFICIAL CORRESPONDENCE
4
)
.cP
TO THE BOARD
'400400
December 230 1958
The First National City Bank of New York,
55 Wall Street,
New York 15, New York.
Gentlemen:
In accordance with your request and on the basis of
the information furnished with your letter of November 14, 1958,
transmitted,through the Federal Reserve Bank
of New York, the
Board of Governors grants its consent to the exercise by
The
First National City Bank of New York, New York, New York, at its
branches located in Venezuela, of any of the fiduciary powers
heretofore granted it by the Board of Governors pursuant to
Section 11(k) of the Federal Resrve Act. This consent is
granted on the condition that the exercise of such powers in
Venezuela is not in contravention
of the local law and that
ln
exercising such powers at its Venezuelan branches the bank
Sall comply in all respects with the applicable provisions of
the Federal Reserve Act and the Regulations of the Board of
G
overnors.
Very truly yours,
(signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
A7
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 14-19
12/23/58
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 23, 1958.
Mr. Phillip S. Hughes,
Assistant Director for Legislative
Reference
Bureau of the Budget,
Washington 25, D. C.
Dear Mr. Hughes:
The Bureau of the Budget has asked for the Board's views on
the proposed joint resolution, "To provide interim authorization for
home mortgage insurance, urban renewal, and college housing," and the
draft legislation, "The Housing Act of 1959." Many of the provisions
Of this proposed bill are substantially the same as those in "The
Housing Act of 1958," which failed to pass. The Board expressed its
views on a draft of that bill to the Budget Bureau in its letter of
February 12, 1958, and to the Senate Committee on Banking and Currency
on April 2, 1958,
The Board in 1958, as well as in 1957 and 1956, commented
that housing and related legislation was becoming more and more
complex, and apparently in need of more and more frequent modification.
For example, Chairman Martin testified before the Housing Subcommittee
of the Senate Banking and Currency Committee on May 13, 1958, on a
number of bills, one of which (S. 3399) was substantially the same
(except for deletion of a section on mortgage co-insurance) as the
earlier Budget Bureau draft. At that hearing, Chairman Martin said:
Consideration of all these measures raises the question whether the laws relating to the Federal Government's
activities in real estate, mortgage finance, housing, and
urban renewal need to be so written as to require amendment
so frequently as they have in recent years, or in as great
detail as appears in S. 3399. It is possible that more
general legislation, flexibly administered, might be more
effective, not only in implementing established policy, but
also in providing a framework within which the desirability
of changes in policy could be judged.
The Board has no objection to the increase in mortgage insurance authority for the Federal Housing Administration that would be
Mr. Phillip S. Hughes
-2-
provided by the proposed joint resolution.
Concerning the urban renewal and college housing programs in
b?th the joint resolution and the draft bill, the Board has reservations about programs that, once approved, proceed without any
correlation with economic and fiscal conditions. Perhaps means should
be investigated for insuring that planning will be carried on in an
orderly fashion while retaining discretion over timing of the physical
work and disbursement of grants.
The draft bill omits reference to detailed provisions concerning low-rent public housing, or to a proposed mortgage co-insurance
program, which were included in last year's bill. The current draft,
however, contains provisions (not included before) calling for removal
?f statutory limits on the amount of insurance which may be written by
Federal Housing Administration. It would also authorize the Federal
t
National Mortgage Association to invest in obligations of agencies of
he United 3tates Government, and to purchase any mortgages offered to
it by the
Housing and Home Finance Agency or any of its constituent
units.
The Bo :'d
- would like to re-emphasize the desirability of more
§?neral administrative authority over housing programs. Removal of the
limits on FHA insurance in force may represent a step in this direction,
e sPecially since the appropriations process gives an opportunity
annually for Congress to review, the standards under which the program is
icoarried on. The proposal to permit transfer of mortgages to the FNMA
HITA or its constituent units may also be a step in this same
c ir,
?-ction; such a provision might permit centralization of authority for
cl?clsions about how mortgages owned by the Federal Government should be
ll
quidated.
The raising of maximum'annual interest rates on insured
mortgages under certain sections of the bill may also be a step in the
right direction, but the Board believes that full flexibility of interest
rates according to market conditions would be preferable. 1.:ortgage
reduces investment risk to lenders, and experience suggests
nat market forces would set a lower rate on insured than on uninsured
that
mortgages if flexibility were available.
The Board questions the desirability of section 203 which would
broaden the investment powers of the Federal National Mortgage Associati°n. Authorizing the FNMA to purchase obligations of the Federal land
aanke (to take an example mentioned in the 31-page section-by-section
4,111alYsis furnished by HHFA) would amount to providing FNE.P; assistance to
'fle land banks. What policy is to be followed if, at a time when FNMA
49
Mr. Phillip S. Hughes
_3_
owns land bank bonds, the Association needs funds for mortgage
and market conditions are unsuitable to sale of the bonds? It
seem that the Association should not be placed in the position
to resolve such conflicting policies but should continue
to be
in its investment powers as at
present.
purchase,
would
of having
limited
Also open to question is the proposal to set up a new program
Of Federal debt service guaranties on taxable bonds of private
educational institutions to aid in financing housing and related facilities.
While the aggregate amount of guaranteed bonds outstanding at any one
"!eime would be limited initially to $100 million, the wisdom of establish411g yet another program involving Federal guaranties seems debatable.
Sincerely yours,
(Signed) Mwrritt Sherman
Merritt Sherman,
Secretary.
50
Item No. 4
1/5/59
Minutes of a meeting of the available members of the Board
Of Governors of the Federal Reserve System on Monday, December 29,
1958. The meeting was held in the Board Room at 10:00 a.m.
PRESENT:
Mr. Szymczak, Acting Chairman
Mr. Mills
Mr. Robertson
Sherman, Secretary
Kenyon, Assistant Secretary
Hackley, General Counsel
Masters, Director, Division of
Examinations
Mr. Solomon, Assistant General Counsel
Mr. Nelson, Assistant Director, Division
of Examinations
Mr.
Mr.
Mr.
Mr.
Items circulated to the Board.
The following items, which
had been
circulated to the members of the Board and copies of which
are
attached to these minutes under the respective item numbers
Indicated, were approved unanimously:
Item No.
Latter to the Comptroller of the Currency
re
commending favorably with respect to an
application to organize a national bank at Lakeside
Center, Colorado.
(With a copy to the Federal
Reserve Bank of Kansas City)
Letters to the chairmen of four committees of the
residents, Conference designating members of the
ft,rd la staff to serve as associates on various
oUocommjttees.
Letter to Chemical International Finance, Ltd.,
.NLev York, New York, transmitting a final permit
40
'
commence business as a corporation organized
I;T_der section
25(a) of the Federal Reserve Act.
;or transmittal through the Federal Reserve
4°"k Of New York)
M-20
M-21 - M-24
M-25
51
12/29/58
-2-
Messrs. Masters and Nelson
Discount rates.
then withdrew from the meeting.
After some discussion of the current discount
rate level, the Board approved unanimously telegrams to the following
Federal Reserve Banks approving the establishment without change by
those Banks on
the dates indicated of the rates on discounts and
advances in their existing schedules:
St. Louis
Cleveland
Richmond
Chicago
Kansas City
Dallas
December
December
December
December
December
December
23
24
24
24
24
26
With respect to his vote, Governor Robertson made the following
s
tatement:
I wish to vote for the approval of the discount rates
submitted by six of the Federal Reserve Banks today, but
I.would like to have the record clearly show that I do so
With great reluctance and only because the situation is
si.ich that it would be impossible to put through a "determination" of a higher rate of discount at this time. In
my opinion, the economic situation prevailing is such as
to warrant and call for an increase in the discount rate
at the present time.
To delay acting to increase the discount rate means
that there would be delay for a considerable period of
time, in view of the Treasury's financing which is scheduled
to be announced on January 8, 1959. This would mean no
action until the latter part of January or the first part
Of February, which may be later than desirable in view of
the course of economic events.
Failure to act now coupled with an action to increase
the rate after the Treasury financing seems to me to be
1Infair to the Treasury Department as well as to the
:
Individuals who purchase the securities that will be issued
12/29/58
during the early part of January, at whatever rates are
fixed by the Treasury, since market rates will be altered
by a discount rate action shortly thereafter and hence
cause a decline in the prices of the new securities.
In view, however, of the many procedural difficulties
that would be encountered in attempting to obtain approval
Of a different course of action than that now before the
Board and the need for prompt decision on the question
Presented, I have voted to approve those rates.
Construction project. Mr. Sherman referred to the action
taken by
the Board on December 17, 1958, authorizing the execution
Of a
contract with the architectural firm of Harbeson Hough Livingston
&Larson, Philadelphia, Pennsylvania, for the preparation of preliminary
studies and sketches of a shelter on the Board's property on the north
Side of "C" Street. He said that the contract was now ready for
eXecution on
behalf of the Board and that the estimated cost of the
Work to be
performed by the architects, stated in the agreement as
a Percentage of the total cost of construction and completion of
the
shelter, had been placed at $37,500 rather than the $25,000
mentioned at
the December 17 meeting.
Governor Robertson stated that the estimated construction
cost was
attributable to plans, with which Governor Shepardson was
temi
liar,that envisaged the possibility of providing garage space.
It was then indicated that there would be no objection to
eXecution of
the contract on behalf of the Board.
The meeting then adjourned.
Secretary's Note: Pursuant to the recommendation contained in a memorandum dated December 23,
53
12/29/58
1958, from the Division of Personnel
Administration, Governor Robertson,
acting in the absence of Governor
Shepardson, authorized on behalf of the
Board on December 24, 1958, the showing
of a cancer film to all women employees of
the Board on January 22, 1959, and the
showing of another film at a later date.
It was understood that an invitation to
attend these showings would be extended
also to the wives of men on the Board's
staff.
BOARD OF GOVERNORS
„otttlfIttrz„,_
top,4..44
ee,,t
OF THE
Item NO. M-20
12/29/58
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
)
TO THE SOARO
41. mt;0
00'1°
'004**0
4
%
December 29, 1958
C
omptroller of the Currency,
Treasury Department,
Washington 25, D.
C.
Attention Mr. W. M. Taylor,
Deputy Comptroller of the Currency.
Lear Mr, Comptroller:
Reference is made to a letter from your office dated
October 1, 1958, enclosing copies of an application to organize
!national
bank at Lakeside Center, Colorado, and requesting a
recommendation as to whether or
not the application should be
approved.
the
Infol.vttion contained in a report of investigation of
a
of r PPlication mde by an examiner for the Federal Reserve Bank
ansas City discloses generally satisfactory findings with
'
nesPect to the
factors usually considered in connection with such
IJP"als, except as to the adequacy of the proposed capital
;
structure. In the opinion of our informant, the proposed capital
liructure
of the bank should be increased from $300,000, as outiii the application, to at least $400,000. The Board of
itev
!
rnors recommends approval of the application provided arrangere made for a capital structure satisfactory to your office.
The Board's Division of Examinations will be glad to
as any aspects of this case with representatives of your
°f1-ice if you so
desire.
discia
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No. M-21
12/29/58
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS orrICIAL CORRESPONDENCE
TO TNE HOARD
444
4044**
December 29, 1958
Mr. Alfred Hayes, Chairman,
SPecial Committee on Emergency Operations,
c/o Federal Reserve Bank of New York,
New York 45, New York.
Dear Mr. Hayes:
Mr. Leonard's forthcoming retirement necessitates
some changes in the assignments of members of the Board's
Staff who
have been designated to serve as associates on subcommittees of the Conference of Presidents. Accordingly,
the Board has made the following designations of associates
cn the four subcommittees of the Special Committee on
Emergency Operations:
Subcommittee on General Arrangements for Emergency
Operations-Mr, Farrell, who will become Director of the
Division of Bank Operations on January 1
Subcommittee on Treasury Operations-Mr. Farrell
Subcommittee on Emergency Cash Operations-Mr. Kiley, who will become Assistant Director of
the Division of Bank Operations on January 1
Subcommittee on Emergency Check Operations-Should it be desired to have a member of the Board's
staff serve as associate on this Subcommittee,
the Board suggests Mr. Farrell who has already been
designated to serve as Associate on the Subcommittee
on Collections.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
OF THE
*4'-s4t4eki gOlit;°
Item No. M-22
12/29/58
FEDERAL RESERVE SYSTEM
•
;14V
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
**4,4
, 41, Not
4***
TO THE BOARD
December 29, 1958
Mr. W. D. Fulton, Chairman,
Committee on Miscellaneous Operations,
c/0 Federal Reserve Bank of Cleveland,
Cleveland 1, Ohio.
Dear Mr. Fulton:
Mr. Leonard's forthcoming retirement necessitates
some changes in the assignments of members of the Board's
otaff who have been designated to serve as associates on subaammittoes of the Conference of Presidents. Accordingly, the
board has made the following designations of associates on
subcommittees
of the Committee on Miscellaneous Operations:
Subcommittee on Electronics-Mr. Farrell, who will became Director of the
Division of Bank Operations on January 1, to
servc In place of Mr. Leonard
Subcommittee on Cash, Leased Wire and Sundry Operations-Mr. Kiley, who will become Assistant Director of the
Division of Bank Operations on January 1, to serve
in place of Mr. Farrell
Subcommittee on Machine and Tabulating Equipment-Mr. Kiley to serve in place of Mr. Farrell
Insurance Committee of the Federal Reserve Banks-Mr. Daniels, Assistant Director of the Division of
Bank Operations, to serve in place of Mr. Leonard
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
OF THE
Item No. M-23
12/29/58
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS orrictAL CORRESPOND
TO THE BOARD
December 29, 1958
Mr. Hugh Leach, Chairman,
Committee on Fiscal Agency Operations,
C/O Federal
Reserve Bank of Richmond,
Richmond 13, Virginia.
Dear Mr. Leach:
Mr. Leonard's forthcoming retirement necessitates
some changes in the assignments of members of the Board's
staff who have been designated to serve as associates on subc
ommittees of the Conference of Presidents. Accordingly,
the Board has
designated Mr. Kiley, who will become Assistant
D irector
of tho Division of Bank Operations on January 1, to
serve in place of Mr. Farrell as Associate on the Subcommittee
on Fiscal Agency Operations.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
CC
58
BOARD OF GOVERNORS
Item No. M-24
12/29/58
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
;
44r,rtitt
TO THE BOARD
''040
December 29, 1958
Mr. H. N. Mangels, Chairman,
Committee on Collections and Accounting,
C/o Federal
Reserve Bank of San Francisco,
San Francisco 20, California.
Dear Mr. Mangels:
Mr. Leonard's forthcoming retirement necessitates
some changes in the assignments of members of the Board's
st8ff who have been desimated to serve as associates on sub7
1 iommittees
of the Conference of Presidents. Accordingly, the
2ard has desimAted Mr. Farrel), who will become Director of
'fle Division of Bank Operations on January 1, to serve in place
°f Mr. Leonard 6S Associate on the Subcommittee on Collections;
an2d Mr. Daniels, Assistant Director of the Division of Bank
.
iperations, to serve in place of Mr. Farrell as Associate on
the S
ubcommittee on Accounting.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. M-25
12/29/58
WASHINGTON 25, 0. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE 'BOARD
December 290 1958
Chemical International Finance, Ltd.,
165 Broadway,
New York 15, New York.
Gentlemen:
The Board of Governors has received a certificate
Of the
President, Secretary, and three directors of Chemical
International Finance, Ltd., dated December 9, 1958, certifying
the information required by Section 3(c) of Regulation K as
Prerequisite to the issuance of a final permit to commence
business.
There is enclosed herewith a final permit of the
Board of
Governors granting to Chemical International Finance,
Ltd., authority to commence business as a corporation organized
under the provisions of Section 25(a) of the Federal Reserve
Act.
Upon completion of the organization of the Corporation,
it would be appreciated if you would furnish the Board of Governors
with a copy of the by-laws of the Corporation.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman)
Secretary.
EllelOsure
60
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
December 291 1958
MIEREAS, the Board of Governors of the Federal Reserve
System on the sixth day of October, Nineteen Hundred and Fifty
Eight, approved the Articles of Association and Organization
C?rtificate of Chemical International Finance, Ltd. in accordance
vath the terms of section 25(a) of the Federal Reserve Act; and
WHEREAS by satisfactory evidence presented to the Board
of Governors of the Federal Reserve System it appears that Chemical
International Finance, Ltd. has complied with all of the provisions
of the statutes of the United States required to be complied with
before a corporation shall be authorized to commence business as
a corporation organized under section 25(a) of the Federal Reserve
Act;
NO, THEREFORE, it is hereby certified that Chemical
International Finance, Ltd. is authorized to commence business as
corporation organized and operating under the provisions of
section 25(a) of the Federal Reserve Act and the regulations of
the Board of Governors of the Federal Reserve System issued in
accordance therewith.
IN WITNESS WHEREOF I have hereunto set my hand and
caused the seal of the Board of Governors of the Federal Reserve
sYstein to be affixed on the day and year first above written.
(Signed) Merritt Sherman
Merritt Sherman,
'Secretary.
61
Item No.
1/5/59
Minutes of a meeting of the available members of the Board of
Governors of the Federal Reserve System on Tuesday, December 30, 1958.
The meeting was held in the Board Room at 10:15 a.m.
PRESENT: Mr. Szymczak, Acting Chairman
Mr. Mills
Mr. Robertson
Sherman, Secretary
Kenyon, Assistant Secretary
Hackley, General Counsel
Farrell, Associate Director, Division
of Bank Operations
Mr. Solomon, Assistant General Counsel
Mr. 01Connell, Assistant General Counsel
Mr. Nelson, Assistant Director, Division of
Examinations
Mr.
Mr.
Mr.
Mr.
Discount rates.
Unanimous approval was given to telegrams to
the Federal Reserve Banks of Boston, Atlanta, and Minneapolis approving
the e
stablishment without change by those Banks on December 29, 1958,
Of the
rates on discounts and advances in their existing schedules.
Governor Robertson stated that he voted to approve the rates on the
same basis as
he had voted yesterday with respect to reestablishment
°t the
existing discount rates of certain other Federal Reserve Banks.
Item circulated to the Board.
The following item, which had
been circulated to the members of the Board and a copy of which is
attached to these minutes under the respective
item number indicated,
-PEE.9„
a
ved.. unanimously:
Item No.
Letter to the
Elliott State Bank, Jacksonville, Illinois,
aPProving
an investment in bank premises. (For transmittal
through the Federal Reserve Bank of St. Louis)
M-26
5
62
12/30/58
-2-
Handling of litigation (Item No. M-27). Pursuant to the
understanding
at the meeting on December 22, 1958, there had been
distributed copies of a memorandum from Mr. Hackley dated December 24,
1958, relating to the question whether outside counsel should be
retained to assist the Legal Division in the handling of litigation
expected to be instituted by The Michigan Bank, Detroit, Michigan.
For reasons
stated in the memorandum, it was recommended that any such
litigation be
handled by the Legal Division in cooperation with the
Department of Justice and the United States Attorney's office, without
sli1Plo7ment of outside counsel, but that there be explored with President
Allen of the Federal Reserve Bank of Chicago the possibility of utilizing
the
services of Mr. Gordon W. Lamphere, Assistant General Counsel at the
Detroit Branch, on a basis whereby-Mr. Lamphere would work on the matter
at
his own office and would not be expected to devote all of his time
to the
Mr.
case or to come to Washington for any considerable period. If
Lamphere should not be available, it was recommended that steps be
taken to determine whether Mr. John J. Clarke, Assistant General Counsel
the Federal Reserve Bank of New York, might be available on a similar
basis.
at
At the Board's request, Mr. Hackley reviewed the reasons set
forth in the
memorandum which had led to the recommendation made therein.
In this
connection he stated that the United States Attorney's office
had indicated that it would prefer to handle oral presentation of the
ease in court, this being in accordance with their general practice.
12/30/58
.3..
Governor Robertson then commented in support of the
re
commendation and outlined his views as to the circumstances under
Which retention of outside counsel would be appropriate.
It was his
thought that the question of retaining outside counsel should be considered on a case-by-case basis in the light of all pertinent factors,
i
ncluding the workload of the Legal Division and the availability of
assistance from the Reserve Banks.
There being unanimous agreement with Mr. Hackley's recommendan, it was understood that Governor Szymczak would discuss by telephone
with President Allen the possibility of making Mr. Lamphere available
on the basis
indicated.
Secretary's Note: After the Board meeting,
Governor Szymczak called President Allen on
the telephone and agreement was reached with
respect to the services of Mr. Lamphere. Attached hereto as Item No. M-27 is a copy of
the letter subsequently sent to Mr. Allen.
Maintenance of reserve balances.
that he
Governor Robertson reported
had received this morning a telephone call from President Irons
of the
Federal Reserve Bank of Dallas, who said that the Texas Bank and
Trust
CompaAY of Dallas was suggesting to its correspondent country
banks that they have their directors adopt resolution authorizing
a
the
Texas Bank and Trust Company
to take over control of their reserve balance with the Federal Reserve Bank.
been received by the Dallas Bank.
Two such resolutions had already
They directed the Reserve Bank to
Provide the Texas Bank and Trust Company with daily reports of the
64
12/30/58
reserve balance and authorized the Texas Bank and Trust Company to
transfer any excess reserves to its own account, or vice versa, and
to furnish the Reserve Bank daily reports on the deposits of the
corresponde
nt bank.
After commenting on the implications of such an arrangement,
Governor Robertson said that he was reporting the telephone call as
4
matter of information and that the problem deserved careful exploration.
Possible acquisition of property by Pittsburgh Branch (Item
At the meeting on December 22, 1958, there was preliminary
discussion of a letter dated December 19, 1958, from President Fulton
Of the
Federal Reserve Bank of Cleveland to Governor Szymczak concerning possible acquisition by the Pittsburgh Branch from the
Pennsylvania Railroad of real estate adjoining the property of the
Branch.
The Division of Bank Operations was requested to look into
the matter
further before any views were expressed by the Board.
PlIrsuant to that
request, there had been distributed to the Board a
memorandum from Mr. Farrell dated December 24, 1958, discussing
develoPments in the matter. A copy of the memorandum is attached as
28
Following oomments by Mr. Farrell based on the information
ecIniainsd in his memorandum, it was agreed that no action on the part
Of the
Board was called for at this time.
Call for reports of condition.
The Secretary reported that a
letter dated
December 29, 1958, had been received from the Deputy
12/30/58
Comptroller of the Currency advising that a call would be made upon all
national banks on January 2,
1959, for
reports of condition as of the
Close of business December 31 1958; and that in accordance with the
usual practice a telegram had been sent to the Federal Reserve Banks
r
equesting that a similar call be made upon State member banks.
The sending of the telegram was ratified by unanimous vote.
The meeting then adjourned.
Secretary's Notes: Governor Robertson, acting
in the absence of Governor Shepardson, today
approved on behalf of the Board a telegram to
the Federal Reserve Bank of Minneapolis
(attached Item No. M-29) approving the designation of John P. Olin as special examiner, a
telegram to the Federal Reserve Bank of San
Francisco (attached Item No. M-30) approving
the appointment of James D. Moddelmog as
assistant examiner, and a telegram to the
Federal Reserve Bank of Dallas (attached
Item No. M-31) approving the appointment of
Leon W. Cowan as examiner.
Governor Robertson also approved today
on behalf of the Board the following items:
T).
14_,.
Memorandum dated December 23, 1958, from Mr. Kelleher, Director,
on of Administrative Services, recommending the appointment of
_cuter
Henderson as Operator, Tabulating Equipment, in that Division,
un a trainee
basis, with basic annual salary at the rate of $3,255,
effective the date he assumes his duties.
Memoranda dated December 16, 1958, from Mr. Young, Director,
Dr. ;',-Lun of Research and Statistics, recommending the reappointment of
31 'arrY Ernst and Mrs. Gertrude Weiss as Consultants until December
pe;1959, on a contractual basis with compensation at the rate of $50
aut cYl.Y for each day worked for the Board, either in Washington or
a side the
city and, in accordance with the Board's travel regulations,
diem
in
lieu of subsistence for the amount of time spent in a
travel
status in connection with their assignments, and transportation.
12/30/53
-6-
It was understood that for purposes of travel, headquarters for Professor
Ernst would be either his home or place of business and headquarters for
Mrs. Weiss would be her home.
Memoranda from appropriate individuals concerned recommending
increases in the basic annual salaries of the following employees on the
Board's staff, effective January 11, 1959:
Name &lid title
Division
Basic annual salary
To
From
Research and Statistics
Virginia Johns, Secretary
Paul W. Kuznets, Economist
Anita E. Perrin, Secretary
$ 4,490
5,985
4,790
$ 4,64o
11,835
6,435
12,075
6,585
5,090
5,21+0
7,990
8,230
1,717
8,810
1,765
3,530
3,530
3,055
3,530
3,530
5,949
3,530
9,050
3,435
3,530
6,135
4,940
Examinations
Jerome T.
Kelley, Senior Federal Reserve Examiner
rancis J. McGarvey, Assistant Federal Reserve
Examiner
Patr.
lcia McShane, Training Assistant
Personnel Administration
John C.
Brennan, Personnel Assistant
Administrative Services
Ruth E.
Ellis, Cafeteria Helper (part-tima)
Valeria Faina, Charwoman
AnCelina Ferguson, Charwoman
Garland Gaines, Messenger
Catherine Gallagher, Charwoman
Lettie E. Reddick, Charwoman
Ralph Sherrod,
Photographer (Offset)
Geraldine Venable, Cafeteria Helper
Etvis H. 7ilson, Chief, Automatic Data
P
rocessing and Telegraph Section
Lela
Wilson, Cafeteria Helper
3,435
3,435
2,960
3,435
3,435
5,658
3,435
BOARD OF GOVERNORS
OF THE
Item No. 14-26
FEDERAL RESERVE SYSTEM
12/30/58
WASHINGTON 25. D. C.
ADDRESS cirriciAL CORRESPONDENCE
TO THE BOARD
December 30, 1958
Board of Directors,
Elliott State Bank,
Jacksonville,
Illinois.
Gentleilen:
Pursuant to your request submitted through the
Federal Reserve Bank of St. Louis, the Board of Governors
approves an additional investment in bank premises by the
Elliott State Bank, Jacksonville, Illinois, of an amount
not to exceed
f6140,000 for the purpose of constructing a
new building and
remodeling its present quarters. It is
noted that amounts in excess of 050,000 allocated to
existing facilities and :150,000 to be established as book
value for the entire capital stock of the Elliott Safe
Deposit Company are to be eliminated by direct charge off.
It is
further noted that the 300,000 loan to the Elliott
Safe Deposit Company to be obtained from sources other than
the bank,
which funds are part of and not in addition to the
$640,000 approved, is to be amortized over a period of 16
Years by moneys
received under the leaseback arrangement
With the bank.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
aolzitter**
BOARD OF GOVERNORS
:}0,1,100 001,44%4
OF THE
44-
Item No. M-27
12/30/58
FEDERAL RESERVE SYSTEM
*
WASHINGTON 25, D. C.
ADDRESS
t.
40,,,,411.matt."
orrscIAL
CORRESPONDENCE
TO THE BOARD
04o***
December 30, 1958
Mr. Carl
E. Allen, President,
Federal Reserve Bank of
Chicago,
Chicago 90, Illinois.
pear Mr.
Allen:
This is to confirm arrangements made pursuant to
Gover,,
1Qe0 1.4'Jr Szymczak's telephone conversation with you on December 30,
at theunder which Mr. Gordon W. Lamphere, Assistant General Counsel
Detroit Branch of your Bank, will assist the Board's Legal
-sion in connection with the handling of
litigation expected to
Detlnstituted shortly against the Board by The Michigan Bank,
/'0it, Michigan.
bell
A8 in past cases in
which the services of Federal Reserve
:Zdattorneys
have been made available to the Board, it is underMr. L that' while the Board will not reimburse your Bank for
04,_
amphere's salary, it will effect reimbursement for travel and
it7°Ilt-of-pocket expenses, if any, that may be incurred by him
onnection with his work on this matter.
availab., Your cooperation in making Hr. Lamphere's assistance
le is greatly appreciated.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
69
BOARD OF GOVERNORS
0.
Item No. NI-28
THE
FEDERAL RESERVE SYSTEM
'iCe
Date
C°rICeSPOnderiCe
Board of Governors
1'
John R. Farrell
12/30/58
December 24, 1993•
Subject:Possible acquisition of additional
property by Pittsburgh.
This refers to President Fulton's lett er of December 19 to
Governor Szyraczaak concerning possible action by the Pittsburgh Branch
to.
ad aequire from the Pennsylvania Railroad fifty feet of property
joining the t'ittsburgh Branch property.
In a telephone conversation this afternoon, Mr. Fulton
_asked me to
request the Board to withhold for the time being any
Xurther consideration of the matters mentioned in his December 19
letter. The reasons for this development are set forth below.
It will be recalled that Ni. Fulton's letter mentioned
tt
hat,
ao
utt9
h 70Po
:
ennsylvania Railroad had offered the Pittsburgh Branch
square feet of the property now occupied by the , Greyhound
s s Station for
a price of :.i;435,000, or slightly les%3 than .,̀/-15 Per
foot. Following the brief discussion of Hr. iulton's letter
at a
_a
recent Board meeting, we learned from Mr. Knott or the General
Services Administration that the Pennsylvania Railroad had offered
sSi the remaining part of the Bus Station property (about. 42,000
s(cluare feet) for ,i',1,462,000, which is a little less than
a
luare foot. Mr. I(nott said that GSA had not accepted the offer,
arid
would not do so pending, study of an appraisal which is being
flade for
them. Mr. Knott added that he would be glad to let us know
of the
results of this appraisal.
learn„I called Mr. Fulton today to inform him of what we had
-Lrom GSA, and to ask if acquisition of the adjoining property
w
'
to -u. result in further alterations to the Pittsburgh building in order
,Permit trucks to enter the building directly from the property
i
whch
might be acquired.
During this conversation Mr. Fulton said that-were
1. No further alterations to the Branch building
contemplated if the adjoining property is acquired.
2. He was aware of the offer to GSA.
L
3.
He does not, consider the offer prir•.e of :'''1135,000
iagp,ling".
60 be ant, but, rather a "beginning poin
4. He was not aware when he wrote his uccember 19
letter to Governor
SzlImczak that, Fir. Van Buskirk had already
had Wile conversations about the matter with Chairman Martin.
5. The Cleveland Directors would want to Live the
matter much more
consideration before submitting any
ProPosal to the Board.
70
TELEGRAM
LEASED WIRE SERVICE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
Item No. 1.4.12/30/58
December 30, 1958
DEMING .... MINNEAPOLIS
Rsurlet December 18, 1958, Board approves designation of John P. Olin
48 a special examiner for the Federal Reserve Bank of Minneapolis.
(Signed) Kenneth A. Kenyon
KENYON
71
TELEGRAM
LEASED WIRE SERVICE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
December 30) 1958
SWAN
NCISCO
Reurlet December 16, 1958, Board approves appointment of J mes D.
Moddelmog as an assistant examiner for the Fede
1 Reserve Bank
of San
Francisco.
(Signed.) Kenneth A. Kenyon
KENTON
Item No. M12/30/58
72
TELEGRAM
LEASED WIRE
Item No. -31
seRvice
12/30/53
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
December 30, 1958
PONDROM - DALLAS
Rellrlet December 23, 1958, Board approves appointment of Leon W.
C°14an as an examiner for the Federal Reserve Bank of Dallas
effective December 15 1958.
(Signed) Kenneth A. Kenyon
KENYON
73
Item No. 6
1/5/59
Minutes of a meeting of the available members of the Board
Of Governors
of the Federal Reserve System on Wednesday, December 31,
1958. The meeting was held in the Board Room at 10:00 a.m.
PRESENT:
Mr. Szymczak, Acting Chairman
Mr. Mills
Mr. Robertson
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
piscount rates.
the
Sherman, Secretary
Kenyon, Assistant Secretary
Hackley, General Counsel
Masters, Director, Division of Examinations
Solomon, Assistant General Counsel
Nelson, Assistant Director, Division of
Examinations
Unanimous approval was given to telegrams to
Federal Reserve Banks of New York and St. Louis approving the
esta
blishment without change by those Banks on December 30, 1958, of
the rates on
discount and advances in their existing schedules.
G"srnor Robertson stated that he voted to approve these rates on the
same basis as he
had voted on December 29 and 30 with respect to reesta
blishment of the existing discount rates of other Federal Reserve
Banks.
Items circulated or distributed to the Board.
The following
items, which had been circulated or distributed to the members
of the
8"rd and copies
of which are attached to these minutes under the
l'ssPective item numbers indicated, were approved unanimously:
Item No.
Letter to
the Federal Reserve Bank of Chicago
regarding the status of Riley Company,
Inc.,
under the
Bank Holding Company Act.
6.32
71
12/31/58
Item No.
Letter to the Ritzville State Bank, Ritzvi
lle,
Washington, approving an investment in bank
premises. (For transmittal through the Federal
Reserve Bank of San Francisco)
Letter to the Comptroller of the Currency recom-
nlending approval of an application to organize a
n
M-33
M-34
ational bank at Boaumont, Texas. (With a copy
to the Federa
l Reserve Bank of Dallas)
Tlfrtter to the Worcester County Trust Compan
y,M-35
orcester, Massachusetts, approving the application
'e4r
the fiduciary powers submitted by it on behalf of
Worcester County National Bank. (For transmittal through
the Federal Reserve Bank of Boston)
In response to a question by Governor Robertson, Mr. Masters
stated that the Worces
ter County Trust Company reportedly was converting
a national bank principally because of dissatisfact
ion with the
°Perations
of the Massachusetts State Banking Department. It was
understood that the bank desired to complete the conversion prior to
the e
ffective date of legislation which would give the State Bank
seioner authority to disapprove conversions of banks from State
t° national
charters.
Matter of St. Joseph Agency Inc. (Item No. M-36). Pursuant to
the recommendation contained in a memorandum from Mr. Solomo
n dated
December 29, 1958, which had
been distributed, it was agreed unanimously
to
Pursuant to the provisions of section 4(a) of the Bank Holding
e"PanY Act, an additional extension of time to and including May
5, 1959,
f°1
'the retention by St. Joseph Agency Inc., South Bend, Indiana, of
its
general casualty insurance busine
ss. A copy of the letter sent to the
holding company pursuant to this action is attached as Item No.
14-36.
12/31/58
.3.
In connection with this matter, Mr. Hackley pointed out
that there
were pending before the Board requests for interpretations
from St.
Joseph Agency, Inc., and St. Joseph Bank and Trust Company
/411101 Presented troublesome questions and had a close relationship
to certain
other pending cases involving requests for determinations
under section 4(0(6) of the Bank Holding Company Act.
after
Therefore,
discussion with Governor Mills regarding questions he had
raised following
distribution of a memorandum on the St. Joseph
matter,
, the Legal Division had concluded that it would be inadvisable
t° act upon those
requests until the Board had before it the section
4(c)(6) cases
referred to, which it now appeared might be around the
middle of February.
He added the comment that in view of the ex-
Of time that had now been granted, St. Joseph Agency would
not be
injured in any way by deferral of action upon its request for
interPretation.
AP lication of Northwest Bancorporation.
. Governor Robertson
had Put in circulation to the other members of the Board a copy of a
letter from Mr. Ben
DuBois, Secretary of the Independent Bankers
As8°°iati0n, to President Deming of the Federal
Reserve Bank of
kilineaNlis, expressing certain views with regard to the application
Of No
Bancorporation to acquire shares of The First National
at
'
Eveleth, Minnesota. A tentative decision indicating favorable
actiOn on this application had been issued by the Board.
Mr. Hackley stated that another copy of the letter from Mr.
S had
been transmitted to the Board's offices by the Federal
12/31/58
"14"'
Reserve Bank of Minneapolis and was under consideration in connection with the preparation of a draft of final decision on the
aPPlication of Northwest Bancorporation.
The purpose of the comments made by Mr. DuBois was discussed
bl
'
ieflY, and uncertainty was indicated as to whether the letter was
intended as a formal protest with respect to the tentative decision.
• “ackley said the staff had in mind that in any event the language
Of the draft of final decision would indicate that consideration had
been
given to comments received following issuance of the tentative
decision.
The meeting then adjourned.
Secre
BOARD OF GOVERNORS
OF THE
Item No. M-32
12/31/58
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 31, 1958
"
!'1 4,
Dicrcks, Vico President,
2cderal Reserve Bank of: Chico,
Chicago 20, Illinois.
Dear Lr. Diercks:
Reference is made to your letter of December h, 1958, regardC presunt status of ailey CorApany, Inc., East Chicago, Indiana,
ruijstereu ander the Gank Holding Company 4.ct of 12e,)6 because of
u'd c;Triership of 92 per cent of the outstanding voting shores of The
llOfl
National rank of Indiana Harbor at East Ghica-u and Ii a First,
\lational Bank in East Chicaio, both of East Chicago; Indiana.
It is understood from your letter thlt the two bnIlLs mentioned
consolidated as of the close of business 1:ovembor 28, 1958, under
charter of The First I;ational Bank in 1!,ast Chicago and under the
th le of iirst i!atonal Bank of East Chicago, Indiana. It is assumed
ailey Company not only does not now own 25 per cent or more of the
4 n• '?nr, shares of two or more balks, but that it does not directly or
-"014'.ulrectly own, control, or hold with power to vote 25 per cent or more
t":'1 the votin shares of any bank holding company or control in any manner
ction of a majority of the directors of each of two or more banks,
cretlele
o .lat trust-es do not hold for the benefit of the shareholders of the
Co
PanY 25 per cent or more of the voting shares of each of two or more
.
• .or a banl,
holding copipany, and that the Company has not become a
•
2 t,csor to any company falling within the definitions set forth in
on 2(a) of 1.tegulation Y.
abo-vc,
On the basis of this assumption and its understanding of the
3 ,,tated above, the 13oard is of the opinion that.itiley Company
111,3
nolo ceased to be 'A blnk holding company within the moaning of the Dank
in 'inEL; Company Act of 1956. 6ince the company is not now a bank holdcc"PanY, it will not be necessary for it to file any annual report.
It will be apprecit,ted if you will Advise Riley Company, inc.
3f thQ substance of this letter.
Very truly yours,
(Signed) Merritt Sherman
iierritt 6herxan,
Secretary.
BOARD OF GOVERNORS
OF THE
Item No. M-33
12/31/58
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 31, 1958
Board of Directors,
Ritzville State Bank,
Ritzville, Washington.
Gentlemen:
Pursuant to your request submitted through the
Federal Reserve Bank of San Francisco, the Board of Governors
of the Federal Reserve System approves, under the provisions
of Section 24A of the Federal Reserve Act, an additional
investment in bank premises, including the cost of land and
building, of not to exceed :60,000 by Ritzville State Bank,
Ritzville, Washington, for the purpose of expanding and remodeling present banking quarters.
It is noted that plans are being formulated to
increase the capital stock of the bank either by declaration
Of a stock dividend, or through the sale of additional shares
or cash, or both, to an amount at least equal to the bank's
investment in banking premises.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
73
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
0
4
WASHINGTON 25, D. C.
0
0
0
0
Item No. M12/31/58
ADORES'S OFFICIAL CORRESPONDENCE
TO THE BOARD
**,
4Ltnest
December 31, 1958
C
omptroller of the Currency,
Treasury Department,
Washington
25, D. C.
Attention Mr. Hollis S. Haggard,
Chief National Bank Examiner.
tglar Mr. Comptrollers
Reference is made to a letter from your office dated
August 20, 1957, enclosing copies of an application to organize
national bank at Beaumont, Texas, and requesting a recommendai°11 as to whether or not the application should be approved.
Information contained in a report of investigation of
the
m, application made by an examiner for the Federal Reserve Bank
Dallas indicates satisfactory findings with respect to the
Ioposed capital structure of the bank, its earnings prospects,
J.rand
management. It is reported that although the need for the
11
,:°Posed bank is not too well established it would provide greater
8,41venienee to a large number of people, would be able to develop
aricient business to operate profitably, and would not seriously
n_rect the existing neighborhood bank. Accordingly, the Board of
'4\)vernore recommends favorable consideration of the application.
The Board's Division of Examinations will be glad to
cuss any aspects of this case with representatives of your
orrice if you so
desire.
dia
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. fVz,ou,
Assistant Secretary.
8()
BOARD OF GOVERNORS
OF THE
4N
ed°4411.
FEDERAL RESERVE SYSTEM
4 1
Item No. M-35
12/31/58
4 fp
4
WASHINGTON 25. D. C.
:*
*
Vitd1
4*.k
01
4
4
0
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
.Wel
**h41
.
'
144011'11
"
December 31, 1958
Board of Directors,
Worcester County Trust Company,
Worcester, Massachusetts.
Gentlemen:
The Board of Governors of the Federal Reserve System
has given consideration to the application for permission to
exercise fiduciary powers made by you on behalf of Worcester
County National Bank, Worcester, Massachusetts, the national
bank into which Worcester County Trust Company, Worcester,
Massachusetts, is to be converted, and grants such national bank
Comptroller
authority, effective if and when it is authorized by the
contrain
not
of the Currency to commence business, to act, when
rator,
administ
,
vention of State or local law, as trustee, executor
,
assignee
registrar of stocks and bonds, guardian of estates,
receiver, committee of estates of lunatics, or in any other
liduciary capacity in which State banks, trust companies, or
Other corporations which come into competition with national
b_anks are permitted to act under the laws of the State of
.1 ssachusetts. The exercise of such rights shall be subject to
1a
Act and
provisions of Section 11(k) of the Federal Reserve
Reserve
Federal
I•egulation F of the Board of Governors of the
'
SYstem.
Upon receipt of advice from the Comptroller of the
Currency that Worcester County National Bank has been authorized
t° commence business, a formal certificate indicating the trust
P°I'lers which the bank is authorized to exercise will be issued.
Very truly yours,
(signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
•
rd
12/31/58
OF THE
V00. k't,
4 ,
s
Item 11o. N-36
BOARD OF GOVERNORS
04,4
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
December 31, 1958.
Mr. Paul M. I.,-41ar, President,
St. Joseph Agency, Inc.,
St. Joseph Bank Building,
South Bend 10 Indiana.
Dear Mr. LaMar:
This refers to the applications of St. Joseph Agency,
Inc. and St. Joseph Bank and Trust Company, relating to the
O peration of a general casualty insurance business, and to your
Corporationts
letter under date of December 23, 1958, requesting
a further extension of time within which St. Joseph Agency, Inc.
may retain its general casualty insurance business.
Pursuant to the provisions of section 4(a) of the
Bank Holding Company Act of 1956, the Board hereby grants an
a
dditional extension of time to and including Fay 5, 1959 for the
r
:etention
by St. Joseph Agency, Inc. of its general casualty
insurance business.
Very truly yours,
(signed) Merritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 7
1/5/59
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
January 5, 1959
The Chase Manhattan Bank,
Eighteen Pine Street,
New York 15, New York.
Gentlemen:
This refers to the application of your bank for permisci°n of the Board of Governors, underthe provisions of Section 25
of the Federal Reserve Act, to acquire and hold stock in "Chase
Manhattan Overseas Corporation," New York, New York (referred to
as Overseas Corporation), a corporation organized to engage principally in international or foreign banking through the agency,
,
Ownership, or control of local institutions in foreign countries.
Reference is also made to the agreement dated December 31, 19q'
executed by Overseas Corporation in accordance with the requirements of Section 25 of the Federal Reserve Act, by which such
Forporation
agrees to restrict its operations and conduct its
business in the manner set forth therein.
After consideration of such application and agreement,
,D-,oard of Governors of the Federal Reserve System approves the
Plication and grants permission to The Chase Manhattan Bank,
ew York, New York, subject to all of the provisions of Section 25
the Federal Reserve Act, to invest an amount not exceeding
v1,000,000 in the stock of Overseas Corporation.
the
?
Upon the completion of the organization of Overseas
?, rporation, it is requested that the Board of Governors be fur-'sbed with copies of the charter and by-laws of the corporation.
The Board of Governors also grants permission for Overseas
Corp
oration to invest an amount up to its aggregate capital and
Pll's in the stock of a banking corporation to be organized under
bl e laws of the Union of Smith Africa and to be located in JohannesUnion of South Africa, such stock to be acquired within one
Jear from the date
of this letter.
Zr
It is understood that the name of the corporation will
be IPT,
the Chase Manhattan Bank (South Africa) Ltd.", subject to the
approval of
the South African authorities, and that all of the stock
1 be owned by OverseLs Corporation except as the laws of the
BOARD
OF GOVERNORS
The Chase Manhattan Bank
OF THE FEDERAL RESERVE SYSTEM
- 2
Union of South Africa may require directors to have qualifying
shares °
The Board's consent to the proposed investment is granted
subject to the following conditions:
(1)
That Overseas Corporation shall not hold any stock in
the South African bank if the South African bank at
any time fails to restrict its activities to those
permissible to a corporation in which Overseas Corpora-.
tion, with the consent of the Board of Governors, may
purchase and hold stock under its agreement entered
into under Section 25 of the Federal Reserve Act or
under Regulation K, or if the South African bank, except with the consent of the Board of Governors,
establishes any branch or agency or takes any action
or undertakes any operation in the Union of South Africa
or elsewhere which at that time is not permissible to
Overseas Corporation without such consent;
(2)
That when required by the Board of Governors, Overseas
Corporation will cause the south African bank to permit examiners appointed by the Board of Governors to
examine the South African bank and to furnish the Board
of Governors with such reports as it may require from
time to time; and
(3)
That Overseas Corporation will be expected to dispose
of the stock of the South African bank as promptly as
practicable in the event that operations of the South
African bank should at any time be inconsistent with
the provisions of the agreement of Overseas Corporation
under Section 25 of the Federal Reserve Act or Regulation K or of the terms of this letter.
Upon the completion of the organization of the proposed
Soutv,
- African bank it is requested that the Board of Governors be
furni
„
shed with copies of the articles of association and brlaws of
.:11? institution. Please advise the Board of Governors, through the
federal Reserve Bank of New York, when the bank is established and
°Pened for business furnishing information as to the exact location
or the bank.
In connection with the request for confirmation of the
/,7!_w that Section 25 would not preclude an investment by Overseas
(
‘_14Toration in a
minority interest in the shares of a foreign bankorganization and the request that the Board of Governors grant
UOARO OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
The Chase Manhattan Bank
-3-
Prior approval to Overseas Corporation to make investments in
excess of 15 per cent of its capital and surplus, the Board of
Governors will consider future investments of Overseas Corporation
upon receipt of individual applications for permission to make
such investments.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
@FedFRASER