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Minutes for ally 13 1959
To:
Members of the Board
From:
Office of the Secretary
Attached is a copy of the minutes of the
Board of Governors of the Federal Reserve System on
the above date.
It is not proposed to include a statement
With respect to any of the entries in this set of
minutes in the record of policy actions required to
be maintained pursuant to section 10 of the Federal
Reserve Act.
Should you have any question with regard
to the minutes, it will be appreciated if you will
advise the Secretary's Office. Otherwise, if you
were present at the meeting, please initial in
column A below to indicate that you Approve the
minutes. If you were not present, please initial
in column B below to indicate that you have seen
the minutes.
Ohm. 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 mn A
--nuaY, July 13,
PRESENT:
1959.
Mt.
Mr.
Mt.
Mr.
Mt.
Mt.
The Board met in the Board Room at 10:00 a.m-
Martin, Chairman
Balderston, Vice Chairman
Szymczak
Mills 1/
Shepatason
King 1/
Sherman, Secretary
Kenyon, Assistant Secretary
Hackley, General Counsel
Farrell, Director, Division of Bank Operations
Noyes, Adviser, Division of Research and
Statistics
Mr. Furth, Associate Adviser, Division of
International Finance
Mr. Hostrup, Assistant Director, Division of
Examinations
Mr. Nelson, Assistant Director, Division of
Examinations
Mr. Goodman, Assistant Director, Division of
Mr.
Mr.
Mr.
Mr.
Mr.
Examinations
Mr. Conkling, Assistant Director, Division of
Bank Operations
Items circulated or distributed to the Board.
items,
Board
The following
which had been circulated or distributed to the members of the
and copies of which are attached to these minutes under the
respective
item numbers indicated, were approved unanimously:
Item No.
ILietter to
The Connecticut Bank and Trust Company,
orf°rd) Connecticut, approving the establishment
a
branch in Manchester.
Letter to
Bank of America, New York, New York,
l,:alltiag permission to purchase stock of the
4\-Port De
velopment Bank, Teheran, Iran.
Letter to
The Citizens Banking Company, Sandusky,
aPproving the
establishment of a branch at
West
Perkins Avenue, Perkins Township.
t
1/
Attended morning session
only.
1
2
3
7/13/59
-2Item No.
Letter to The
Farmers State Bank, Sweetser, Indiana,
Iving the requirement of six months' notice of
withdrawal from membership in the Federal Reserve
SYstem.
ILetter to the
Milwaukee Western Bank, Milwaukee,
ilse°nsin, waiving the requirement of six months'
notice of
withdrawal from membership in the Federal
Reserve System.
!,etter to the
Borgerding Investment Company, Belgrade,
;Tu
I e(
l)
e=,granting an extension of time within which
with the provisions of section 4(a)(2) of the
Bank
Holding Company Act.
.Letter to the
Comptroller of the Currency recommending
fifavorably on an application to organize a national
"ank in
Rockville, Maryland.
j
T legram to the
Federal Reserve Bank of New York authorizing
lekrmt
Bali
ai
c)aZn and maintain an account for the Central
11
5
6
7
8
Letter.t0 the
the
Federal Reserve Bank of Chicago ratifying9
zzIfF
ss:r of a penalty for a deficiency in required
incurred by the Chicago National Bank, Chicago,
Letter t
relat. 0 the
Chairman of the Presidents' Conference
to the retail trade statistics program.
10
Prior to the taking of the indicated action on Item No. 7,
elatiliZ to an
application to organize a national bank at Rockville,
Maryland,
the 1)0ard
Governor Mills recalled that at the meeting on July 2) 1959,
decided, at his suggestion, to refer the application back to
the l'ea'eral Reserve Bank
of Richmond for further analysis. The file on
the matter
had now been recirculated to the Board, withan additional
lettezi from the
Reserve Bank included, and Governor Mills stated that
7/13/59
-3-
he wobe
agreeable to going along with the unfavorable recommendation
suggested by the
Reserve Bank and the Division of Examinations.
In his
judgment, the strongest point brought out in the supplemental information
submitted by
the Reserve Bank was that the location of the proposed bank,
in the center
of Rockville, would not be particularly suitable because
the Principal growth of the area was in the outlying shopping districts
rather than in the
city proper.
In connection with Item No. 9, relating to the waiver of a
Penalty incurred by the Chicago National Bank, Chicago, Illinois, on
account of a deficiency in its required reserves, Governor King stated
since the meeting
on July 10, 1959, he had been in touch with President
411en of the Federal Reserve Bank of Chicago, who expressed agreement
With the
thought that the member bank, if not aware of the circumstances
urr°11nding the error of the Reserve Bank in waiving the penalty without
btedning Board approval, should be advised as to what had transpired.
After
checking with the staff of the Reserve Bank, Mr. Allen found that
the member
bank was conversant with the waiver rules, and the member
bank had
been notified as to the mistake made inadvertently by the
Reserve Bank.
Governor King
In view of the information furnished by Mr. Allen,
said that he would be satisfied with the sending of
the
Proposed letter to the Reserve Bank ratifying the waiver of the
Penalty.
7/13/59
The meeting then recessed and reconvened in the Board Room
at 5:00 p.m. with Chairman Martin and Governors Balderston, Szymczak,
and
Shepardson in attendance.
Mr. Sherman, Secretary, and Mr. Molony,
Special Assistant to the Board,vere also present.
At Chairman Martin's request, there were distributed copies
of a
letter dated July 13, 1959, from The Honorable Richard M. Simpson,
a member
of the Ways and Means Committee of the House of Representatives,
which had
been delivered to Chairman Martin's office at 4:05 p.m. this
afternoon.
The letter from Mr. Simpson stated that he was writing as
the rn-1
-'
-"a-Lng
Republican member of the Committee on 'Jays and Means at the
direction of his fellow Republicans and that he would appreciate receiving
from Ch
alrman Martin at his earliest possible convenience a letter setting
forth
evaluation of proposed legislation by the Committee on Ways
ana Means
Federal
pertaining to interest rate ceilings on securities of the
Government, particularly as to the proposal that had been
cliseusseci in executive session that the legislation should express
the sense
of
r Congress with respect to Federal Reserve policy in
monetary
affairs-
Ch
airman Martin noted that a copy of Mr. Simpson's letter had
als° been sent to
Secretary of the Treasury Anderson. He added that
he h
attempted
to reach Secretary Anderson by telephone to discuss
the matt r
e with him but had been unable to do so, and he had decided
7/13/59
-5-
that the best
procedure would be to get copies of the letter into the
hands of the members of the Board immediately in order that they might
be
thinking of the procedure that would be most desirable in dealing
'with Mr.
Simpson's request.
There followed a brief discussion of the letter, at the
e°nclusion of which
it was understood that copies would be distributed
to
Governor Mills and King, who were out of the building at the time
f this
session, and that there would be further discussion of the
letter at the
meeting of the Board tomorrow morning.
Thereupon the meeting adjourned.
Secretary's Notes: Governor Shepardson today
approved on behalf of the Board the following
items affecting the Board's staff:
intment
ana Levon H. Garabedian as General Assistant in the Division of Research
with basic
the
' annual salary at the rate of $4,790, effective
mA.I.e of entrance upon
duty.
ItaT41.2.
.
11
9.aLtaZ
1
A.
Division, for a period of
thr-Rallie
a months Desmond, Secretary in the Legal
beginning the close of business July 11, 1959.
Acce
,
t
ance of
resignation
Paul
&tab
Smith, Economist, Division of Research and Statistics, effective
Governor Shepardson also approved today on
behalf of the Board a letter to the Federal
Reserve Bank of New York (attached Item No. 11)
approving the appointments of Charles H. CiUbal
Donald D. Kittell, and George J. Williamson as
assistant examiners.
7/13/59
-6In the light of information contained in a memorandum
from the Division of Research and Statistics dated
July 9, 1959, Governor Shepardson today authorized
attendance by members of the staff of that Division
at sessions of the Merrill Center for Economics,
Southampton, Long Island, New York, as follows:
Mr. Robinson, Adviser
Mr. Noyes, Adviser
July 13-July 24, 1959
July 27-August 7, 1959
It was understood that actual necessary travel expenses,
including such expenses incurred on weekends away from
the Center, and reimbursement on a mileage basis if a
private automobile was used, would be paid by the Board
in accordance with the Board's travel regulations, but
that reimbursement for weekend expenses away from the
Center would not exceed the cost of transportation
charges from Southampton to Washington, D. C., and
return.
SeCiet
BOARD OF GOVERNORS
OF THE
Item No. 1
7/13/59
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 13, 1959
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
?proves the establishment of a branch by The Connecticut
oank and Trust Company, in the Manchester Shopping Parkade
J1 West Niddle
Turnpike between Broad and Adams Streets,
ster, Connecticut, provided the branch is established
4tilin one year
from the date of this letter and approval
,r the State
authorities
is effective as of the date the
anch is
established.
Irche
Very Lruly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
4,40
9Oil 40k;
:
40 74.:
%
I
44-t,
v
tA *
.*
OF THE
.
Item No. 2
7/13/59
FEDERAL RESERVE SYSTEM
A*
*
*
o
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 13, 1959
Mr, Tom B.
Coughran,
Executive Vice President,
Pank of
40 waia America,
Street,
New York,
New York.
Dear Mr.
Cough:
In accordance with the request contained in your letter of
Illaroh 2
York 7, 1959, transmitted through the Federal Reserve Bank of New
Governors
.,,, 'arid on the basis of the information furnished, the Board of
grants its onsent to your bank to purchase within one year
the ,).t of
this letter, and to hold, 550 shares, par value
hIals
00
each, of the capital stock of Export Development Bank,
Teheran,
an, Iran
'at an approximate cost of US$750,000. It is noted that,
afte
chanr
the 21
1:7
3 .:crli purchase, the bank will be reorganized and its name
ged
toP
Bank of Iran.
ill theIt is understood that, so long as Bank of America owns stock
Iranian bank, the Iranian bank will not engage in issuing,
uncle
and l'writ
vill ing3
n
selling or distributing securities in the United States;
°t engage in the general business of buying or selling goods,
wares 3
me
44Y businrchandise 1 or commodities in the United States or transact
to its
vss in the United States except such as would be incidental
Bank int
ernational or foreign business. It is also understood that
bank c't America
will dispose of its holdings of stock in the Iranian
the il,:n
i r°111Pt1Y as practicable in the event that the operations of
underst
--;:an
,,, bank should at any time be inconsistent with these
tions 4,
7u-Lngs, Section 25(a) of the Federal Reserve Act, or regulahold
,:uereunder. Accordingly, the Board's consent to purchase and
oc,ock in the
Iranian bank is granted with such understandings.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 3
7/13/59
WASHINGTON 25, D. C.
ADDRESS OrFICIAL CORRESPONDENCE
TO THE SOAR°
July 131 1959
Board of Directors,
The Citizens
Banking Company,
Sandusky, Ohio,
Gentlemen:
Pursuant to your request submitted through the
Federal Reserve Bank of Cleveland, the Board of Governors
of the
Federal Reserve System approves the establishment
_bY The Citizens
Banking Company of a branch at 702 West
Perkins Avenue in Perkins Township, Erie County, Ohio,
provided the branch is established within one year from
et date of this
letter, and approval of the State banking
horities is effective as of the date the branch is est
ablished.
Z
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 4
FEDERAL RESERVE SYSTEM
WASHINGTON
7/13/59
25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 13, 1959
Board of
The FameDirectors,
rs State Bank,
Sweetser, Indiana.
Ge
ntlemen:
Chicago has forwarded
to the
the"Boal.rrildeoFfeGtrv:-!-Z:e7oUrBrettoef of June 27, 1959, and
tentioompanying copy of a resolution signifying your insvs4....on to
withdraw from membership in the Federal Reserve
.sting waiver of the six months' notice of
11:
1
17111e
8411cijle:4,
GovernorsIn accordance with your request, the Board of
waives the requirement of six months' notice of
chi;,,al'al. Upon surrender, to the Federal Reserve Bank of
insi":T°, of the Federal Reserve Bank stock issued to your
rei,1',ution such stock will be cancelled and appropriate
sec:
t:417 will be
made thereon. Under the provisions of
ti °n 1°(c) of the Board's Regulation H, as amended effecve
4__.September
1, 1952, your institution may accomplish
i;ZInation of its membership at any time within eight months
:
:
lale
s dj
..
t
.ii nthe notice of intention to withdraw from membership t
It is requested that the certificate of membership
be sent
_
se
to the
Federal Reserve Bank of Chicago.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
4014**,1.4
e
teif
kV"'
A'
OF THE
441
7/13/59
WASHINGTON 25. D. C.
4,1
'
Item No. 5
FEDERAL RESERVE SYSTEM
t
X*
41
4
z
'4:10
ADDRESS OFFICIAL CORRESPONDENCE
{1,,
41 W.Tt
4
TO THE BOARD
July 13, 1959
Board of
Directors,
Milwaukee Western Bank,
Nilwaukss, .Nisconsin.
Gentlemen:
The Federal Reserve Bank of Chicago has forwarded
Board of Governors your letter of June 26, 1959, and
tent4ccompanying copy of a resolution signifying your into withdraw from membership in the Federal Reserve
"'vein and requestingwaiver of the six monthst notice of
such
withdrawal.
the aie
tO,
In
Governoraccordance
with your request, the Board of
waives the requirement of six months! notice of
r
n
raWal. Upon surrender, to the Federal Reserve Bank of
insZago, of the Federal Reserve Bank stock issued to your
re itution,
such stock will be cancelled and appropriate
sect.d will be made thereon. Under the provisions of
.°11 10(c) of the Board's Regulation HI as amended effectiv2
;
1 1, 1952, your institution may accomplish
t_:/(iligttlb:
months
;
him the date its membership at any time within eight
the notice of intention to withdraw from memberP was given,
be
sentIt is requested that the certificate of
mebrshipto
the Federal Reserve Bank of Chicago.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 6
FEDERAL RESERVE SYSTEM
7/13/59
WASHINGTON 25, D. C,
ADDRESS OFFICIAL CORRESPONDENCE
TO THE EiCIARD
July 13, 1959
Mr, Fred
J. Hughes, Attorney,
210 St.
Mary's
Building,
St,
Cloud, Minnesota.
Dear Mr.
Hughes:
This refers to an application, submitted by you
of the Borgerding Investment Company, Belgrade,
minn
wi#,?"ta, for an extension to May 1, 1960, of the period
0,'"In which the Company must comply with the provisions
section 4(a)(2)
of the Bank Holding Company Act of 1956.
ort beha
In accordance with the provisions of section 4(a)
of
Suci;":,±ct, the Board has granted the requested extension.
is also effective with respect to the period
Of i —
time
"e specified in section 1101(e)(2)(B) of the Internal
Revenue
C°de of 1954, as amended by section 10(a) of the
nolding Company Act.
Very truly yours,
(S ;ned) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
0
4
Item No. 7
FEDERAL RESERVE SYSTEM
7/13/59
WASHINGTON 25, D. C.
4
*
ADDRESS OFFICIAL CORRESPONDENCE
0,
ttlMt"oe
404c00-
TO THE ULIARD
July 13, 1959
Comptroller of the
Currency,
ileasurY Department,
-11abington 25, D. c.
Attention
Mr. W. M. Taylor,
Deputy Comptroller of the Currency.
Dear Mr.
Comptroller:
1958 e
Reference is made to a letter from your office dated August 1,
copies of an application to organize a national bank at
113ek;117eitng
Cl
40t the
--ryland, and requesting a recommendation as to whether or
aPplication should be approved.
iter to
A report of investigation of the application made by. an exameapitalr the
Federal Reserve Bank of Richmond indicates that the proposed
1101
structure
tl
and future earnings prospects would be satisfactory.
prop
:,the need
e
for the bank has not been clearly established and
'1"-nagement arrangements are not very satisfactory. While the
Propose(
side art directors are reported to be capable businessmen, a majority rethe
a'!'rvice s!",c1(11 of the area and lack banking experience. Moreover,Accorda qualified executive officer has not been secured.
aPProval“e Hoard of Governors does not feel justified in recommending
'
of the
application.
ally as
(>,4The 11°ard's Division of Examinations will be glad to discuss
clesirePs of this case with representatives of your office if you so
'
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
TELEGRAM
BOARD OF GOVERNORS
OF THE
Item No.
FEDERAL RESERVE SYSTEM
7/13/59
LEASED WIRE SERVICE
WASHINGTON
July 13,
1959
SA NFORD - NEW
YORK
YOur Aire July 9.
Board approves the opening and maintenance of
arl account
on your books in the name of the Bank Negara Tanah
1414Yu (Central Bank
of Valaya) subject to the usual terms and
ccInditions upon which your Bank maintains accounts for foreign
central banks
and governments.
It IS
understood that you will in due course offer participation
ih this
account to the other Federal Reserve Banks.
(Signed) Merritt Sherman
BERMAN
8
BOARD OF GOVERNORS
OF THE
Item No. 9
7/13/59
FEDERAL RESERVE SYSTEM
WASHINGTON 25, O. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 13, 1959
Mr. Laurence
H. Jones, Cashier,
Federal Reserve
Bank of Chicago,
Chicago 90, Illinois.
Dear
11-.
Jones:
This refers to your letter of June 29, regarding
a y.
•
,,,venalty
A
u-k q)
Chicag
499.68 incurred by the Chicago National Bank,
Illinois, on a deficiency of 2.4 per cent in its
ired reserves
for
the weekly computation period ended
BimftlarY 18, 1959, which was inadvertently waived by your
•under the
provisions of Paragraph E of the instructions
the
Board's letter S-1123 (F.R.L.S. 6120).
gr
It is noted that your Bank subsequently discovered
that 4.1.,
'"e 'waiver of a penalty of $20.86 under Paragraph E for
:
s
I
' - period
14ce this ended July 30, 1958, had not been entered, and
waiver was less than two years prior, the latter
veger Igas improper; that you consider the bank to have a
f0171,°°d reserve record; and that in the computation period
ct,„--'-ag the February
deficiency of $5y9,000, it carried
vwrage excess
reserves of $867,000.
as to the In order that there may be no question in the future
oard ratifies the waiving of the
9968 peaction taken,
nalty by your 11=13.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
q4
o,
BOARD OF GOVERF,\JORS
til %If 4
OF THE
0
Item No. 10
7/13/59
FEDERAL RESERVE SYSTEM
a
a
4
4
WASHINGTON 25, D. C.
ADDRESEI OFFICIAL CORREBPONOCNCE
TO THE HOARD
July 13, 1959
Mr. Delos
C. Johns, Chairman,
Co
nference of Presidents,
c/o Federal
Reserve Bank of St. Louis,
St. Louis
66, Missouri,
Dear Mr.
Johns:
As was indicated at the joint meeting of the Board
and the
Presidents on April 14, 1959, the Board has given
frther
consideration to the retail trade statistics program on
e basis of
the views expressed by the Presidents. In this
!°11nection, it
has also taken into account the thoughts exa
Pressed
uy Mr. Bryan in a subsequent letter to Mr. Young, which
appear toy
closely with the report made by the CornResearch and Statistics to the Presidents' Conference
4, Its last meeting
(see item 7-f of the topics for considerathe joint meeting on June 16, 1959).
this tim It was the Board's view that it would be desirable at
to
e to move forward vigorously with a program designed
st_7-!Aminate such parts of
the present program as are not
4
4_!astica
lly reliable or are of little or no practical value
the System
itself. Accordingly, the Board instructed
enceI°ung to proceed in cooperation with the Presidents' Conferthe and the
System Research Advisory Committee with a view to
acco
mplishment of this objective.
When this has been accomplished, the Board will be prePared to
reconsider other possible alternatives.
Sincerely yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 11
7/13/59
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 131 1959
Mr. R. B. Wilts
e, Vice President,
Federal Reserve Bank of New York,
New York 45, New York.
Dear Mr. Wiltse:
In accordance with the request contained
in your letter of
July 8, 1959, the Board approves
tIle
appointment of Charles H. Ciliba, Donald D.
Kittell, and George J. Williamson as assistant examiners for the Federal Reser
ve Bank of New York.
Please advise as
to the dates on which the appointare made effective.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
@FedFRASER