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FR 609 Rev, 1o/59 Minutes for To: January 6 1961 Members of the Board From: Office of the Secretary Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement with respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. Otherwise, please initial below. If you were present at the meeting, your initials will indicate approval of the minutes. If you were not present, your initials will indicate only that you have seen the minutes. Chin. Martin Gov. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Minutes of the Board of Governors of the Federal Reserve System on Friday, January 6, 1961. PRESENT: Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Szymczak Mills Robertson Shepardson Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Sherman, Secretary Kenyon, Assistant Secretary Thomas, Adviser to the Board Young, Adviser to the Board Molony, Assistant to the Board Fauver, Assistant to the Board Noyes, Director, Division of Research and Statistics Koch, Adviser, Division of Research and Statistics Landry, Assistant to the Secretary Eckert, Chief, Banking Section, Division of Research and Statistics Keir, Chief, Government Finance Section, Division of Research and Statistics Report on the money market. ments Mr. Keir reported on recent develop- in the money market, and Mr. Eckert commented on the situation with respect to bank reserves and the money supply. Following this report all members of the staff with the exception Of Messrs. Sherman, Kenyon, and Landry withdrew and the following entered the room: Mr. Hackley, General Counsel Mr. Solomon, Director, Division of Examinations Mr. Ccnkling, Assistant Director, Division of Bank Operations Mr. Nelson, Assistant Director, Division of Examinations Mr. Rudy, Special Assistant, Legal Division Mr. Leavitt, Supervisory Review Examiner, Division of Examinations 1/6/61 -2Discount rates. The establishment without change by the Federal Reserve Banks of New York, Philadelphia, Cleveland, Richmond, Chicago, St. Louis, Kansas City, Dallas, and San Francisco on January 5, 1961, of the rates on discounts and advances in their existing schedules was approved un animously, with the understanding that appropriate advice would be sent to those Banks. Item circulated to the Board. The following item, which had been circulated to the Board and a copy of which is attached to these minutes a8 Item No. 1, was approved unanimously: Letter to the Federal Reserve Bank of San Francisco authorizing it to accept publication of condition reports of California State member banks on the amended California State Banking Department form. Mr. Conkling then withdrew from the meeting. Request for disclosure of unpublished information (Items 2 and 3)., There had been circulated to the members of the Board a file containing a memorandum from the Legal Division dated December 22, 1960, regarding a requ eu-L made of the Federal Reserve Bank of St. Louis by Mr. Robert Kratky, an attorney of St. Louis, Missouri, for disclosure of certain unpublished information. the Although the Reserve Bank was inclined toward granting request, the Legal Division took the position that the information should be made the view available only upon service of a subpoena duces tecum. In of the the Division, such a procedure would reflect impartiality toward 1/6/61 -3- persons involved in pending litigation and would be more desirable than releasing the information on the basis of the attorney's request. Accordingly, there was attached to the memorandum of the Division a draft of letter to Mr. Kratky that would state the Board was not disposed to make the requested documents available except on the basis of a subpoena duces tecum served on an appropriate officer of the Federal Reserve Bank of St. Louis. Mr. Rudy reviewed the factual situation surrounding the request made by Mr. Kratky, which was that the Board authorize the Federal Reserve Bank of St. Louis to release to him copies of memoranda dated April 9 and May 25, 1951) summarizing statements made to the Reserve Bank by Mrs. Louise B. Gr supposed uenewaelder and the late president of a member bank regarding improper interference by the bank president in a transaction involving Mrs. Gruenewaelder and a Mr. E. L. Wintermann. The memoranda indicated that following discussions with Mrs. Gruenevaelder and the president of the member bank, which revealed that the facts of the matter were in dispute, the Reserve Bank concluded that no action on its part was indicated. was It the view of the Legal Division, Mr. Rudy said, that it would be difficult for the Board to sustain non-disclosure on the basis of confidentiality, should a subpoena duces tecum be served, in view of the nature of the two memoranda, which were of a narrative character. The reply to Mr. Kratky would disclose that the only files of the Bank on this subject consisted (3f the two narrative memoranda, and it was the thought of the Legal 1/6/61 -4- Division that identification of the documents to this extent might discourage the attorney in his efforts to secure the unpublished information. Thereupon, the letter to Mr. Kratky was approved unanimously. A copy is attached as Item No. 2, and a copy of the accompanying letter to the Federal Reserve Bank of St. Louis is attached as Item No. 3. Mr. Rudy then withdrew from the meeting. Report on competitive factors (St. Johns, Michigan). Distribution had been made of a draft of report to the Comptroller of the Currency on the competitive factors involved in the proposed consolidation of The St. J°hns National Bank and The State Bank of St. Johns, both of St. Johns, Michigan. The report was approved unanimously, with the conclusion stated as follows: The proposed consolidation will have a negligible effect Upon the competitive situation of banks outside St. Johns; however, since the two institutions involved are the only banks in St. Johns and the principal competitors of each other, the lessening of competition in St. Johns will be substantial. The proposal will give resulting bank a monopoly in both St. Johns and its primary trade area. Retail trade statistics program (Item No. 4). Mr. Sherman referred to the meeting on December 19, 1960, at which the Board approved a letter to the Chairman of the Presidents' Conference expressing concurrence in the action of the Presidents with respect to the retail trade statistics Program. Since that time, he said, it had been agreed to extend from 1/6/61 January 31 to March 31, 1961, the effective date of the discontinuance of certain department store reports, as proposed in the October 28, 1960, progress report of the Committee of Five. A member of that committee raPresenting the trade planned to inform the National Retail Merchants Association on January 11, 1961, during its annual convention, of the steps taken to date in connection with the department store statistics program, and it was thought desirable that there should be simultaneous release of an official statement from the System. A draft of such a statement had now been prepared. While the decision to terminate certain reports might appear to be a rather minor thing, Mr. Sherman said, he believed it did represent an important step toward developing better information on department store and retail trade. It was constructive from the standpoint of the Federal Reserve, and in accord with what the Board, the Budget Bureau, and the Census Bureau wanted. He went on to say that at the present stage of the Program:8 development there was no significant issue between the System, the trade, the Bureau of the Census, and the Bureau of the Budget. Whether any such issue would develop later as the Federal Reserve pulled rurther away from the collection of department store statistics would depend largely on how the program unfolded. At least, however, the trade 17as now more aware of the need for improved retail trade data. Further- m°re, the representatives of the System had reason to feel that the steps 1/6/61 -6- taken thus far fitted in with the program contemplated by the Commerce Department and the Budget Bureau. The question of future responsibility for the various parts of the retail trade statistics program had not been discussed too much, because that might only have raised an issue at this time. Secretaryts Note: Attached as Item No. 4 is a copy of the press statement that was released on January 11, 1961. The meeting then adjourned. Secretaryts Note: Pursuant to recommendations contained in memoranda from appropriate individuals concerned, Governor Shepardson today approved on behalf of the Board increases in the basic annual salaries of the following persons on the Boardts staff, effective January 8, 1961: NaMa and title Basic annual salary To From Division Board Memberst Offices Athens J. Messick, Secretary $ 6,545 $ 6,710 13,250 7,820 11,935 5,1490 13,510 8,080 12,195 5,655 6,600 6,765 6,345 1,750 3,500 6,675 1,803 3,605 Research and Statistics jkallles W. Ford, Economist : Mary Jane Harrington, Economist PranCiS R. Pawley, Economist Anita E. Perrin, Secretary Personnel Administration Charles Wallace Wood, Personnel Assistant Administrative Services t!rY E. Dorsey, Senior Printing Technician '"reala D. Elting, Cafeteria Helper (part-time) arland R. Gaines, Messenger V\-A - Secretary - BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 1 1/6/61 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD January 61 1()61 M. E. H. Galvin, Vice President, Federal Reserve Bank of San Francisco, San Francisco 20, California. Dear Mr. Galvin: This refers to your letter of December 6, 1960, and its enclosures, regarding proposed changes in the California State Banking Department report form which has been accepted, in accordance with the Boardts letter of February 28, 1952, in lieu of requiring publication on Federal Reserve Form F.R. 105e-1. The proposed change, as outlined in your letter, in the footnote in the assets schedule which eliminates reference to other real estate, and the change of the footnote reference to "Bank Premises" rather than to "Other assets," will not affect the form f°r publication purposes inasmuch as no State bank in California ha8 an investment indirectly representing other real estate. In the circumstances, and in view of your recommendation, the Board authorizes your Bank to accept, until further notice, the Publication of condition reports of California State member banks on the amended California State form. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS ..,otitn:r elo Gopi:;`, 4'.ct 4' 1 qv :$ tggill "It OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 2 1/6/61 ADDRESS OFFICIAL CORRESPONDENCE *a TO THE BOARD 0 t1 kVA * 4444** January 6, 1961 Robert Kratky, Esq., Attorney at Law, Suite 1301 International Building, 722 Chestnut Street, St. Louis 1, Missouri. Dear Sir: This refers to your letter of December 5, 1960, stating that You have been retained as counsel to represent Mrs. Louise B. ,.!1:11enewaelder in the cases of Louise B. Gruenewaelder v. Edward L. .ntermann et al, number 5760-E, pending in the Circuit Court of , he City of St. Louis, and of E. L. Wintermann v. Louise B. ;kfruenewaelder, number 212,961, pending in the Circuit Court of ot. Louis County, Missouri. V You explain that both cases arise out of a transaction lich occurred on January 30, 1951, in the Mutual Bank and Trust , °mPanY of St. Louis, and that according to your information, the ' ransaction was the subject of an examination and memorandum or .x:eport by Federal Reserve Bank officers during March and April of -L951. You point out that in your opinion the memorandum or report 5 the examiner's findings is vitally important to the conduct of ,t,phe above litigation and request the Board, under Title 12, 114,1art 261.2(c)(1) of the Code of Federal Regulations, to authorize r° officers of the Federal Reserve Bank of St. Louis to release You a copy of such memorandum or report. T The Board is advised that the documents to which you refer ! re unpublished information consisting of two narrative memoranda, ne from Messrs. Kroner and Dunne to Mr. Peterson dated April 9, 1951, ; oncerning an "Interview with Mrs. Louise B. Gruenewaelder, 6917 unhing, University City, Mo., April 4" and a memorandum from B. Kline to the Files dated May 250 1951, on the subject Iransactions between Mrs. Louise B. Gruenewaelder and Mutual Bank and Trust Company". The Board is not disposed to make the documents 42 Robert Kra ky, Esq. available except on the basis of a subpoena deuces tecum served on an appropriate officer of the Federal Reserve Bank of St. Louis. In the event you feel disposed to so proceed, Vice President Marvin Bennett of the Reserve Bank would be an appropriate individual Upon whom service could be made. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. 43 BOARD OF GOVERNORS OF THE Item No. 1/6/61 FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD **4 4411. Rol 000*** January 6, 1961 Mr. Delos C. Johns, President, Federal Reserve Bank of St. Louis, St. Louis 66, Missouri. Dear Mr. Johns: Enclosed is a letter replying to the request of Attorney RObert Kratky for unpublished information, which you are requested to transmit to Mr. Kratky. In accordance with your recommendation, the information is being made available to Mr. Kratky. It was felt that the requirement of a subpoena deuces tecum tor production of the documents would reflect the Board's impartiality, :!00ward the litigants, and would be more desirable than releasing the I nformation on the basis of an informal request. General Counsel Dunne of your Bank, in a telephone conversation, furnished the name of Vice President Bennett as !! appropriate individual upon whom service could be made, should ' 1r..Kratky decide to pursue the matter to its conclusion. You are !!dvlsed that pursuant to section 9 of its Rules of Organization the z5o3.rd authorizes Mr. Bennett, or other appropriate officer, to aPPear and produce the information requested and testify in connection therewith. Very truly yours, (Signed) lerritt Sherman Merritt Sherman, Secretary. Enclosure 44 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 1/6/61 4 Statement for the Press For release at 11:00 a.m., E.S.T., January 11, 1961 January 11, 1961 A committee representing the department store industry, the Bureau of the Budget, and the Federal Reserve System, stressed the need for improved statistics on retail trade, including department store data, in a joint statement issued today. The committee, comprising two depart- ment store executives, two officials of the Federal Reserve System, and c'ne official of the Bureau of the Budget, which has responsibility for statistical standards, has been meeting since I,:ay 1960 for the purpose of discussing Federal Reserve department store statistics and their relation to -11 improved program for over-all data on retail trade. In reporting on its progress, the "Committee of Five" indicated that agreement had been reached that the Federal Reserve would continue for the present to publish the department store statistics that have been available through the System's regular press releases. Certain supple- ment. --arY reports of relatively limited interest that have been available °IllY to reporting stores will, by joint agreement, be discontinued as of arch 31, 1961, except as some may be prepared for the stores on a cost basis. The Committee was unanimous in its view of the necessity for better statistical coverage of retail distribution, of which the departStore statistics are an important element. The Committee stated it —2— endorses and will support a request expected to be made by the Bureau of the Census for funds to carry out such expansion of trade data. Need for revision of department store statistics, which have been compiled by the Federal Reserve since 1919, has been widely recognized for some time. This need arises in part from changes that have occurred in the structure of the retail industry and in its depart— ment store segment. It also reflects a need for more adequate data on Sales for various commodity groups than are presently available. Department stores that now participate in the Federal Reserve Pr°gram are being notified directly by the Reserve Bank to which they l'sPc)rt as to the specific series that will no longer be compiled after /lareh 31 of this year. Each Reserve Bank, however, upon request by reporting department stores, may undertake to continue temporarily addi— tional series that have been issued on a restricted basis in the past, subject to reimbursement to cover the costs of these compilations for the Stores. The Committee will continue to meet for the purpose of dealing with Problems that may arise during the coming months with the goal of sPeeding the development of the present department store reports to a more userla statistical reporting system covering retail distribution.
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