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Minutes for To: ally 14, 1958 Members of the Boar.' 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 mini:tea 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 Chm. Martin Gov. Szymczak Gov. Vardaman 1/ Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson 1/ In accordance with Governor Shepardson's memorandum of March 8, 1957, these minutes are not being sent to Governor Vardaman for initial. 2039 Minutes of the Board of Governors of the Federal Reserve System The Board met in the Board Room at 10:00 a.m. on Monday, July 14, 1958. PRESENT: Mr. Mr. Mr. Mr. Balderston, Vice Chairman Szymczak Mills Robertson Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Carpenter, Secretary Kenyon, Assistant Secretary Riefler, Assistant to the Chairman Thomas, Economic Adviser to the Board Young, Director, Division of Research and Statistics Johnson, Director, Division of Personnel Administration Hackley, General Counsel Goodman, Assistant Director, Division of Examinations Benner, Assistant Director, Division of Examinations 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 a roved unanimously: Item No. Letter to Depositors Trust Company, Augusta, Maine, nsenting to its absorption of the Knox County Trust 2mPanY, Rockland, Maine, and approving the establishof; branches in Rockland, Camden, Union, and /114a1haven. (For transmittal through the Federal eserve Bank of Boston) 1 Letter to the Federal Reserve Bank of Boston noting , withdrawal of an application by Bristol County 4:11.1st Company, Taunton, Massachusetts, to establish e• branch in Raynham, Massachusetts. 2 Letter to Citizens State Bank, Waterloo, Indiana, grarri-.4 riau-Vag its request for permission to exercise pea e arY powers. (For transmittal through the eral Reserve Bank of Chicago) 3 r 204n 7/14/58 -2Item No. Letters to Bank of America, New York, New York, (1) 14-, 5 authorizing the establishment of a branch in Kuala 121.11lour, Federation of Malaya, and (2) granting consent to the purchase of shares of Malaya Industrial Development Finance Limited. (For transmittal through the Federal Reserve Bank of New York) Letter to the Presidents of all Federal Reserve Banks requesting that reports of credit extended to real estate mortgage lenders as of August 13, 1958, be Obtained from weekly reporting member banks. 6 Letter to the Department of Justice regarding whether clePosits by the Federal Government in national banks create contractual relationships that require the inclusion of a nondiscrimination clause. 1./ 7 Prior to approval of the foregoing Item No. 1, Governor Robertson stated that although, on the basis of the information presented, he would have no objection to the proposed absorption of the Knox County Trust C°mPany by Depositors Trust Company, the situation in the State of Maine 8110141d be watched closely over a period of time because it could develop l'.1113idlY to the point where the banking facilities of the State were 4°minated by large rival banking organizations, as had happened in the States of Arizona and Oregon. Approval of Items 4 and 5 was preceded by a discussion during 14hich Governor Mills referred to the scope and various aspects of the °Perations of Bank of America, New York, as revealed by reports of e lination of the Edge Act corporation and its foreign branches. He 4114 there was some concern in his mind, which had not yet crystallized, h°14ever, that possibly the management of the parent bank (Bank of America 1./ e approved letter was in a form reflecting a suggestion at this meeting for elimination, as nonessential, of a reference to the nature Of the funds used to defray the expenses of the Board of Governors. 2n4' JL 7/14/58 -3- National Trust and Savings Association) might not be keeping in as close contact with the kinds of business transacted by the Edge Act subsidiary as would be desirable. Governor Mills also referred to a letter addressed to the Federal Reserve Bank of New York by the New York Clearing House Association under date of May 29, 1958, a copy of which was sent by the Reserve Bank to the 11°41'd on June 19, 1958, in which the Clearing House Association expressed c°1acern about certain features associated with the operation of an Edge Act sUbsidiary in a State different from that where its parent bank is located, and recommended amendment of both the Edge Act and the Board's Regulation K. The New York Bank had indicated in transmitting the letter that it was preparing a reply and would send the Board a copy. Following comments by Mr. Goodman in the light of the remarks 11184e by Governor Mills, it was suggested by Governor Szymczak that the /3Oard might like to have from Mt. Goodman a memorandum reviewing the sc°1De of the operations of Bank of America, New York. Agreement being expressed with this suggestion, the current 41/Plications were approved with the linderstanding that a memorandum of the kind mentioned would be submitted. Discount rates. Unanimous approval was given to a telegram to the Federal Reserve Bank of Kansas City approving the establishment Ilithout change by that Bank on July 11, 1958, of the rates on discounts 414a advances in its existing schedule. 2042 _14.. 7/14/58 AU of the members of the staff except Kr. Johnson then withdraw from the meeting. Officer salaries at Philadelphia Bank (Item No. 8). There had been circulated to the members of the Board a file relating to the request Of the Federal Reserve Bank of Philadelphia for approval of the payment of salaries to Messrs. Catanach, Barrie, and Vergari, officers of the Bank, at rates fixed by the Board of Directors. The Secretary's Office was later informed that during the executive 8essi0n the request of the Bank was approved. A copy of the letter sent to the Bank pursuant to this action is attached as Item No. 8. The meeting then adjourned. Assistant Secretary. 2043 BOARD OF GOVERNORS OF THE Item No. 1 7/14/58 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD July 14, 1958 Board of Directors, Depositors Trust Company, Augusta, Maine. Ge ntlemen: Pursuant to your request submitted through the Federal Reserve Bank of Boston, the Board of Governors hereby gives its itten consent, under the provisions of Section 18(c) of the oe,.deral Deposit Insurance Act, to the absorption by the purchase assets of the Knox County Trust Company, Rockland, Maine, by Depositors Trust Company, Augusta, Maine, and approves the .Tstablishment by the latter bank of a branch in each of the fol— °wing locations: Rockland, Camden, Union, and Vinalhaven, Maine, , !'91rided (1) the absorption is effected substantially in accordance " ftth the agreement dated June 91 19581 between the two banks, (2) (.mal approval of the appropriate State authorities is obtained, ',:ect)) the absorption and the establishment of the branches are ef.. ' 40 ed within six months from the date of -this letter, and (4) co securities or stocks are acquired from the Knox County Trust mPanY which are ineligible for purchase by a member bank. r Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 2 7/14/58 WASHINGTON 25. D. C. ADDRESS OFFICIAL gORRESPONOENCE TO THE SCARE/ Jay 14, 1958 Mr. B. F. Groot, Vice President, Federal Reserve Bank of Boston, Boston 6, Massachusetts. Dear Mr. Groot: Reference is made to your letter of June 30, 1958, withdrawing the application of Bristol County Trust Company, Taunton, Massachusetts; for permission to establish a branch in Raynham, Massachusetts, on U. S. Route No. 44 near the junction of the Fall River Expressway. In accordance with your letter, the application is considered as withdrawn and our files have been marked accordingly. It is not in accordance with established practice to return the application as requested by you. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. 2045 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 3 7/14/58 orricim. COMIRCOPONOiNeg TO THE SOAR() July 14, 1958 Board of Directors, Citizens State Bank, Waterloo, Indiana. Gentlemen: This refers to your request for permission, under applicable provisions of your condition of membership numbered 1, to exercise fiduciary powers. Following consideration of the information submitted, the Board of Governors of the Federal Reserve System grants permission to the Citizens State Bank to exercise the fiduciary powers now or hereafter authorized under the terms of its Articles of Incorporation and the laws of the State of Indiana. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 4 7/14/58 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO TI-4E SOARD July 15, 1958 Bank of America, 40 Wall Street, New York, New York. G entlemen: The Board of Governors of the Federal Reserve System authorizes Bank of America, New York, New York, pursuant to the 131rovisions of Section 25(a) of the Federal Reserve Act and the Fc'ardls Regulation K, to establish a branch in Kuala Lumpur, ederation of Wlaya, and to operate and maintain such branch 8ubject to the provisions of such Section and regulation; upon condition that, unless the branch is actually established and °Pened for business on or before July 1, 1959, all rights graated hereby shall be deemed to have been abandoned and the thority hereby granted shall automatically terminate on such te. The authorization is made with the understanding that 0'''4e. aPProval of the appropriate Malayan authorities will be atned prior to the establishment of the branch. r j Please advise the Board of Governors in writing, thr ()ugh the Federal Reserve Bank of New York, (1) when the i.ejablishment of the branch has been approved by the author0,'" in Malaya, and (2) when the branch is established and ' l ened for business, furnishing information as to the exact b°cation of the branch. It is understood that no change will ,ade 111 1„rei, in the location of the branch after establishment out the prior approval of the Board of Governors. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. 2047 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 5 7/14/58 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD Jay 15, 1958 Mr. Russell G. Smith, Executive Vice President, Pank of America, 40 Wall Street, New York, New York. Ipear Mr. Smith: In accordance with the request contained in your letter , 3Tt June 5, 1958, transmitted through the Federal Reserve Bank of 1i York, and on the basis of the information furnished, the Board re Governors grants its consent to your bank to purchase within one oLar from the date of this letter, and to hold, 1,500 ordinary shares the Malaya Industrial Development Finance Limited, Kuala Lumpur, '11R•laZra, for M$150,000„ (equivalent to approximately US$50,000). 4 It is understood that, so long as Bank of America awns in the Malayan corporation, the Malayan corporation will not iZslage in issuing, underwriting, selling or distributing securities he United States; and will not engage in the general business cr selling goods, wares, merchandise, or commodities in th e2 United 3tates or transact any business in the United States bAcept such as would be incidental to its international or foreign 48iness. It is also understood that Bank of America will dispose its holdings of stock in the Malayan corporation as promptly as i 4 4-acticable in the event that the operations of the Malayan corpora8; (3n should at any time be inconsistent with these understandings, Acction 25(a) of the Federal Reserve Act, or regulations thereunder. " Prdinply, the Board's consent to purchase and hold stock in the Posed Malayan corporation is granted with such understandings. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. 2149 BOARD OF GOVERNORS 4041***r# Item No. 6 7/1W8 OF THE 1:$1 40t; 4it FEDERAL RESERVE SYSTEM office copies only WASHINGTON 25. D. C. ADDRE1113 OFFICIAL conREMPONOCNCIC TO THE BOARD July 14, 1958 Sir: It will be appreciated if your Bank will obtain reports of 41t extended to real estate mortgage lenders as of August 13, 1958, m weekly reporting member banks in your District in accordance with „ktr attached form. The coverage and content will be the same as in 112 August 1955, 1956 and 1957 surveys; other surveys have omitted the triks that reported less than a million in ,loans and commitments at Preceding August surveys and the memorandum items on FHA and VA Please Pl • - mail or telegraph the District survey figures forall and sub—items in the report, 1.a through 4.e, inclusive, to 14ch the Board's offices by Monday, August 25; the reports of the ividual banks need not be forwarded. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. T° THZ PR.ESIDENTS OF ALL FIDEMAL RESIMVE BANKS 2049 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 7 7/34/58 WASHINGTON 25. D. C. ADDRESS OFFJCIAL CORRESPONDENCE TO THE BOARD July 14, 1958 Mr. Malcolm R. Wilkey, Assistant Attorney General, Office of Legal Counsel, Department of Justice, Washington 25, D. C. Dear Mr. Wilkey: This is in reply to your letter of June 26 with respect to the question vhether deposits by the Federal GoveiLment in national banks create contractual relationships that require the inclusion of a nondiscrimination Clause in accordance with Executive Order 1°479, as amended. It is believed that the subject of deposits of Government funds in national banks is principally- within the jurisdiction of the Treasury Department. In this connection attention is directed to Section 5153 of the Revised Statutes and the Act of September 3, 1954 (12 U.S C. 90, 265), which relate to the designation of national banks and Insured banks as depositaries of public money and financial agents of the Government. The Board of Governors of the Federal heserve System does not maintain deposits in national banks. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. 2051) BOARD OF GOVERNORS ottint4,4 4°,05Moop% OF THE FEDERAL RESERVE SYSTEM 4, No. 8 7/14/58 Item WASHINGTON 25. D. C. a 1 15 s„'1 ADDRESS OFFICIAL CORRESPONDENCE TO THE SOARD 4,440** July 14, 1958 Mr. Karl R. Bopp, President, Federal Reserve Bank of Philadelphia, 125 Cuestnut Street, Philadelphia 1, Pennsylvania. Dear Mr. .90130t The Board of Govt.:I-saws approves paymkInt of salaries to tne fo1lowin7 officers of the Federal Reserve Bank of Philadelphia at their new titles for the period Au:Tust 1, 1958 through December 31, 195a, at the rates indicated, which are the rates fixed by your board of Directors as reported in your letter dated June 20 199.3: Name James V. Vergari Wallace Cltanach Hugh Barre • T1t1e Vice President and Ca...hier, Vice President Asst. Vice PresAdelt lery truly yours, (Signed) S. R. Carpenter 6. R. Jarneni-,er, 6ecre!. .,ary. Annual 'oat,try 15,000 1:3,Jjj
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