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Minutes for To: Members of the Board From: Office of the Secretary July 14, 1964 Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement With respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. Otherwise, please initial below. If you were present at the meeting, your initials will indicate approval of the minutes. If you were not present, your initials will indicate only that you have seen the minutes. Chm. Martin Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. Mitchell Gov. Daane 24ti3 Minutes of the Board of Governors of the Federal Reserve System on Tuesday, July 14, 1964. The Board met in the Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Martin, Chairman Balderston, Vice Chairman Robertson Shepardson Sherman, Secretary Kenyon, Assistant Secretary Molony, Assistant to the Board Cardon, Legislative Counsel Hackley, General Counsel Farrell, Director, Division of Bank Operations Mr. Kiley, Assistant Director, Division of Bank Operations Mx. Leavitt, Assistant Director, Division of Examinations Mr. Mr. Mr. Mr. Mr. Mr. Reserve deficiencies (Item No. 1). to Unanimous approval was given a letter to the Federal Reserve Bank of Boston authorizing it to 1/4111e the assessment of certain penalties incurred by Connecticut Bank 8-11a Trust Company, Hartford, Connecticut, because of deficiencies in Its required reserves. A copy of the letter is attached as Item No. 1. Changes in cash and noncash collection circulars and proposed amA, -----Tents to Regulations G and J (Items 2-4). 4 Memorandum from Mr. Hackley dated July 9, There had been distributed 1964, relating that at its rileeting on June 15, 1964, the Conference of Presidents of the Federal Reserve Banks had approved recommendations made by the Subcommittee on 0011ect10n6 and the Subcommittee of Counsel on Collections for certain 114nge5 in the cash and noncash collection circulars of the Federal Reserve Banks and certain amendments to the Board's Regulation G, Collection Or Noncash Items, and Regulation J, Check Clearing and Collection. 7/14/64 -2The noncash collection circulars would be amended to include a uniform paragraph providing for the passing of credit (subject to final Payment) for certificates of deposit, as well as bankers' acceptances, °n the maturity date for items payable in Reserve Bank or branch cities 414 one day after maturity for items payable elsewhere, provided the items were received sufficiently in advance of maturity to permit fording in time to reach the place of payment at least one day before maturity. The cash collection circulars would be amended to include a Uniform paragraph designed to protect the Reserve Banks from liability for any delay resulting from (1) their forwarding a cash item to its 6-est*ination on the basis of either the magnetically inscribed or the ilrinted routing symbol and ABA transit number of the payor bank, or, in the absence of such symbol and number, on the basis of the name of the 7P4Yor bank appearing on the item, or (2) their inscribing on the item the routing symbol and transit number of the payor bank and forwarding th°. item accordingly. The uniform paragraphs of the cash collection circulars would be amended to permit a Reserve Bank to recover or revoke credit for any ”Iate-return" item unless the Reserve Bank was instructed not to do so blr the sending bank. As to Regulations G and J, if a raised item was presented to a ' /834ee bank by a Reserve Bank located in a State in which the Uniform S, 11 ' tieo - it-0 k) 7/14/64 -3- Commercial Code was in effect, the Reserve Bank would ordinarily be held liable in any suit by the drawee bank against the Reserve Bank for the 411101Int by which the item had been raised, since a collecting bank under the Commercial Code is deemed to warrant items presented by it against material alteration. However, at present a Reserve Bank would ordinarily not be able to recover from its sending bank for the amount of its loss if the sending bank was located in a State in which the Commercial Code not in effect. It was proposed that Regulations G and J be amended a° as to provide that a Reserve Bank located in a Commercial Code State Ilould receive the same warranties and agreements from sending banks in States in which the Commercial Code was not in effect as the Reserve 11.941k was required by the Code to give to banks to which it forwarded iteMs for payment. Alsq Regulations G and J set forth the terms and conditions on member and nonmember clearing banks send cash and noncash items, l'esPectively, to the Reserve Banks. It was presumably intended that a Reserve Bank that sent items to another Reserve Bank would send them on the same terms and conditions, but this intent was not entirely clear. Pr°13°8ed amendments to the Regulations would clarify this point. It was recommended in Mr. Hackley's memorandum (1) that the Board 14113118h in the Federal Register proposed amendments to Regulations G and J ( f , or attached to the memorandum) with an invitation for comment by the 134bile and (2) that a letter in the form of a draft attached to the 7/14/64 -4- memorandum be sent to the Reserve Banks advising them of the Board's concurrence in the action of the Conference of Presidents with respect to the proposed changes in the cash and noncash collection circulars or the Reserve Banks. The letter would enclose copies of the proposed anlendments to Regulations G and J as prepared for publication in the Pederal Register. After comments by Mr. Hackley in supplementation of his memol'andum and discussion by the Board in light thereof, the recommendations In the memorandum were approved unanimously. A copy of the letter sent to the Federal Reserve Banks pursuant to this action is attached as 1.6 z No. 2. Copies of the notices sent to the Federal Register for IllIblication regarding the proposed amendments to Regulations G and J al'e attached as Items 3 and 4, respectively. Bill relating to data processing equipment. that an Mr. Cardon reported invitation had been received from Chairman McClellan of the Senate Government Operations Committee for comment by the Board on a 131'(313°8ed amendment to a bill, H. R. 5171, that would authorize the Mlinistrator of General Services to coordinate the acquisition and Iltilization of automatic data processing equipment by Federal depart- Inerits and agencies. Chairman McClellan also asked to be advised if the 11°41*(1 desired to have a representative testify at any hearings that might be , LAe.14 by the Committee. 4"t, 4t- 7/14/64 e -5The proposed amendment, understood to be sponsored by the Budget Bureau, was in the nature of a substitute for H. R. 5171, in an effort to meet objections of the Federal agencies to the provisions of the °riginal bill, which had been passed by the House. The Senate Committee 114d previously invited the Board's comments on a companion Senate bill, '1577, but Mr. Cardon, after checking with the Committee's staff, had S recommended that the request be filed without reply, and consequently n° reply was made. After explaining differences between the bill that had passed the House and the amendment currently under consideration by the Senate ecmuilittee, Mr. Cardon noted that the answer to the question of the 41)Plicability of the proposed legislation to the Board's computer operti°ns was not entirely clear. While a specific exemption might be liecluested, it was his recommendation, for reasons which he outlined, that such an exemption not be sought and that no letter be submitted to, or appearance requested before, the Senate Government Operations -"t'zee regarding the proposed amendment to H. R. 5171. After discussion, there was unanimous agreement with Mr. Cardon's recommendation. Use of Board records (Item No. 5). Mr. Sherman noted that last the Board had appointed Professor Elmus R. Wicker of Indiana 11/11, Yersity as a consultant to help review some of the earlier records or t he Board. Subsequently, Professor Wicker furnished a memorandum e(soti 7/14/64 t -6- Presenting his evaluation of such records from the standpoint of their historical interest. In the course of this review, Professor Wicker saw certain passages in the Board's minutes and other records that Irere of interest to him in connection with a manuscript that he had been preparing under a grant from the Ford Foundation. He made notes °f this material with the understanding, however, that he would make n° use in hismaruscript of material obtained exclusively from the Board's tiles or minutes without clearance from the Board. More recently Professor Wicker had submitted to the Board's Secretary a copy of his manuscript, Ilhich was entitled "Administration of U. S. Monetary Policy from World ' War I to the Banking Holiday." In this copy he had identified at a riUraber of places references that were based on his access to the Board's liecc)ras. He now presented the question whether the Board would permit 11141 to retain these references in the manuscript. mr. Molony had both reviewed the manuscript. Mr. Sherman said he It was their reaction the't it represented a scholarly, workmanlike job relating to monetary ic)licY administration during the early years of the Federal Reserve 8Ystem. In further discussion, Mr. Sherman advised that pursuant to the 4et4 on taken by the Federal Open Market Committee on May 5, 1964, the tthes of the Committee for the years 1936-1960 had been made ready transmittal to National Archives. be It was expected that they would sent to the Archives within the next few days with a transmittal 't rfe ;„: k .3 7/14/64 letter signed by Chairman Martin. The Open Market Committee authorization eXtended also to other records relating to open market operations since the formation of the Federal Reserve System, and such material was Presently being reviewed in light of the authorization. As yet, how- ever, no action had been taken by the Board with respect to transmitting to Archives or otherwise making available to the public minutes or other records of the Board outside the open market area. Asked by Governor Robertson whether it would not seem appropriate r°11 the Board to take such an action, Mr. Sherman commented that this Calne down partly to a question of mechanics. In contrast to the Open Market Committee minutes, which focused on open market operations and II°11cY, the Board's minutes covered a wide range of subject matter including, for example, discussions of internal administrative matters or the Board and the Federal Reserve Banks and supervisory problems 4trecting individual member banks. Accordingly, there might be some gilestion as to the appropriateness of transferring the Board's minutes tOr a period of years to National Archives in entirety. An alternative 1)1'°cedure would be for the Board to authorize some staff member with krio wledge of the content of the minutes and other Board records to permit 4eeess, at the Federal Reserve Building, to pertinent parts of such niinutes and records to parties who expressed an interest in particular stkbjects. Governor Balderston indicated that, for the moment at least, he l'r°11341 have some reservations about transferring the Board's minutes to 7/14/64 -8- National Archives in entirety. He was not sure, for one thing, that there would be the same degree of public interest as in the Open Market Committee minutes, which dealt largely with policy matters. There was 4 great deal in the Board's minutes to which access would not appear to add, much to the sum of scholarly knowledge. Mr. Sherman commented that a question of timing also was involved. The Board might want to say, for example, that its minutes and other 114Pub1ished records for the past fifteen years would not be made generally available, but that the Secretary was authorized to permit responsible 13ersons to use such records for earlier years. Governor Robertson said that at the moment he did not see that therewould be too much on the administrative side that would be of such riature as to warrant prohibiting access to Board minutes, particularly earlier dates. In view of the action that had been taken by the °Ilen Market Committee with respect to the Open Market minutes, it was hie feeling that the Board would be remiss if it did not take an action to make Board records generally available, at least for the period up to the most recent fifteen years. In general, the Board's position 8110111d be one of making its records available to people who wanted to stUdY the System. It might be desirable to segregate certain material Particular reasons, but in general he felt that the Board's posture 411°/-ild be one of making its records available. He would favor taking 44 action of that kind promptly, recognizing that it might take some 424 I Ai 7/14/64 _9 little time for the staff to complete its review of the Board's minutes and records. Mr. Sherman referred to a paper that had been prepared by Mr. Bakke of the Secretary's Office on the open market function in the early claYs of the Federal Reserve System, and he also stated that Mr. Furth Of the Division of International Finance had been reviewing some of the earlier Board minutes for evaluation of historical content. It was l'ather vital, he thought, to have competent persons review the older records to appraise how useful they would be to scholars and students. Mr. Sherman went on to say, however, that he would have no hesitancy in recommending that the Board authorize making available to interested persons its minutes covering a period up to, say, fifteen Y'ear8 prior to current date, within the judgment of the Secretary. For n11-flutes and records covering the more recent period, the Board might 14ant to know specifically what uses of such material were contemplated. It Inight want a report on persons who were requesting access to them, might want to have an understanding that materials of certain 8 would not be used without some kind of clearance. Asked by Governor Balderston whether he was recommending, in essen_e, c that Board minutes and records for a certain period be opened 411 to - scholars for use within the Federal Reserve Building, Mr. Sherman be would recommend doing that immediately. In addition, consider- tio n might be given to making excerpts from the minutes on certain 1 14?* 4:0 7/14/64 -10- subject5 and placing those excerpts in the National Archives. Representa- tives of the Archives had indicated that they would be pleased to have 811ola excerpts transferred by the Board, particularly as they related to monetary policy decisions and similar matters. It would take some time) of course, to review the minutes and make excerpts. Referring further to Governor Balderston's question, Mr. Sherman repeated he would recommend that the Board authorize giving responsible scholars access to 11°ard records if they came into the Federal Reserve Building and wanted to use them. After further discussion, Chairman Martin commented that the im mediate question before the Board was whether to permit Professor Wicker to use in his manuscript, as published, the references that he hell obtained by virtue of having had access to the Board's minutes and l'ec°1`cle• He suggested that such permission be granted, and there was 114ezirnous agreement. Chairman Martin then suggested that the Secretary be authorized, 14 his discretion, to make pertinent Board minutes and records available 4t the Federal Reserve Building to responsible persons desiring to study 1141.11°Ils aspects of the Federal Reserve System and its history, and there 1148 unanimous agreement with this suggestion. Secretary's Note: Attached as Item No. 5 is a copy of a letter dated July 17, 1964, from Chairman Martin to the Archivist of the United States transmitting the minutes of the Federal Open Market Committee for the years 1936-1960 and commenting on other materials being studied with a view to their transmittal to National Archives. * 7/14/64 -11Paper on open market operations. Mr. Sherman recalled that some time ago the Board had authorized him to make available to Mr. Robert Sehremp, a member of the staff of Congressman Patman, Chairman of the Rouse Banking and Currency Committee, and to Mr. Schremp's associate, Mr. Harvey Geist, Board records relating to open market operations of the Federal Reserve Banks during the period of the 1920 1 8 and earlier. Re said that yesterday afternoon Mr. Schremp advised that there had be n prepared, on the basis of this study, a document that would not be a Committee report but rather a kind of staff memorandum. Mr. Schremp nted to talk with members of the Board's staff about the paper, stating that he wanted to be accurate and give a correct impression. The Board's ste.ff would, of course, be careful to avoid taking any steps that might sUggest approval of the paper by the Board. Dinners for System personnel. At the instance of Governor R°bertson, there was a brief discussion of the practice of Federal ReR -erve Banks in arranging dinners for representatives of other Reserve 4.fl4 on such occasions as the holding of meetings of System committees aa14. subcommittees. The discussion went to the question of the benefits or 8 ' 4on a practice, particularly when considered in light of the fact tha4. t, Reserve Bank officers and employees traveling on official business °1114 claim reimbursement for their own expenses. The possibility was Ilegested of writing a letter to the Federal Reserve Banks setting forth 811idelines in this regard, but the view was expressed it might be difficult 3 /1 7714/64 -12- to handle the subject effectively in a formal communication. The alternative suggestion was made that the subject be discussed by the Board. with the Presidents of the Federal Reserve Banks at some time when the Presidents were in Washington, and there was general agreement that such a procedure would be preferable. The meeting then adjourned. Secretary's Notes: A letter was sent today to Bank of America National Trust and Savings Association, San Francisco, California, acknowledging receipt of notice of its intent to establish a branch in Calcutta, India. Attached as Item No. 6 is a copy of a letter sent today over the signature of Chairman Martin to Senator Bible concerning a suggestion that the use of coin as collateral for bank loans be prohibited. Governor Shepardson today approved on behalf of the Board the following items: No. Letter to the Federal Reserve Bank of San Francisco (attached Item approving the appointment of Edward A. Nicolaus, III, as assistant ''4111iner. Memoranda recommending the following actions relating to the Board's atafr: Li A n'ta C. Smith as Editorial Clerk, Division of Research and Statistics, enZu basic annual salary at the rate of 0:4,690, effective the date of ' l anee upon duty. Re ""'---Z_2"'enllyment following maternity leave on Nancy H. Teeters, Economist, Division of Research and Statistics, erra ' half-time basis, with basic annual salary at the rate of $4,765, ective July 20, 1964. 7/14/64 -13- .§.1.1.Ey increases, effective July 19t_1964 Eva Louise Jarvis, Minutes Clerk, Office of the Secretary, from $3,88o to $3,985 per annum. W. Sutton Potter, Senior Attorney, Legal Division, from $10,310 $10,640 per annum. James A. McIntosh, Technical Assistant, Division of Bank Operations, cl'a $9,980 to $10,310 per annum. fl ' . Anna S. Courtney, Supervisor, Recording and Stenographic Section, 413-v1sion of Examinations, from $7,160 to $7,355 per annum. Jerry B. Riley, Senior Federal Reserve Examiner, Division of .c44a.l1inations, from $11,725 to $12,110 per annum. Louis William Zidek, Senior Federal Reserve Examiner, Division of ?4Mminations, from $11,725 to $12,110 per annum. Garland R. Gaines, Mail Clerk, Division of Administrative Services, .em $4,145 to $4,405 per annum. r Wilbert J. Hart, Supply Clerk, Division of Administrative Services, ii°111 $3,305 to $3,620 per annum. rrn ,t&net E. Innocenti, Statistical Clerk, Division of Data Processing, -m q)q,355 to $4,495 per annum. r Darrell Pepper, Chart Machine Operator, Division of Data Processing, rem $4,215 to $4,355 per annum. to engage in outside activity ,Frederic Solomon, Director, Division of Examinations, to lecture ue'llk capital at the School of Banking, University of Wisconsin, lson, Wisconsin, for one day in August 1964, while on annual leave. Acceptance of resignation 1564. Andrew R. Hricko, Senior Attorney, Legal Division, effective July At 12116. Secre at 21, Item No. BOARD OF GOVERNORS y/14/64 OF THE FEDERAL RESERVE SYSTEM WASHINGTON, O. C. 20551 ADDRESS OFFICIAL CORRESPONDENCE TO THE B OAR D July 14, 1964. E. 0. Latham, Pirst Vice President, Pederal Reserve Bank of Boston, Boston, Massachusetts. 02106 near Mr. Latham: This refers to your letters of June 25 and July 2 regarding the Penalties totaling $2,183.10 incurred by the Connecticut Bank and Trust Company, Hartford, Connecticut, on' deficiencies in its ,,eclnired reserves for the computation periods ended February 19, 'arch 4, April 1, April 15, and May 13, 1964. It is noted that (1) these deficiencies resulted from an correct treatment of certificates of deposit in the computation 4 c net demand deposits which caused understatement of the latter; ) although the bank began to purchase certificates of deposit in nuarY 1964 and the incorrect treatment occurred in nine reserve ale3ri°ds, deficiencies resulted in only the five periods listed taTIe; (3) the bank has previously had an excellent record in mainfling its required reserves; and (4) penalties totaling $1,408 u n be waived by your Bank--$149.84 (for the period ended February 19) orflder the provision of Paragraph E, and $1,258.16 (comprised of part he penalties incurred for the periods ended March 4, April 15, and IlaY 13) under the provision of Paragraph C of the Board's in'lictions (S-1123; FRLS #6120). L In the circumstances the Board authorizes your Bank to waiv _ for e the assessment of the remaining penalties totaling $775.10 the periods ended March 4, April 1, April 15, and May 13, 1964. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. 2.4';; ; ; 1 BOARD OF GOVERNORS Item No. 2 7/14/64 OF THE FEDERAL RESERVE SYSTEM S-1919 WASHINGTON, D. C. 20551 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD July 14, 1964. bear sir: The Board of Governors concurs in the actions taken by the Con ference of Presidents at its meeting on June 15, 1964, approving rtecommendations contained in the Joint Report of the Subcommittee on i'lellections and the Subcommittee of Counsel on Collections, dated 12 22. 1964, with respect to changes in the operating circulars or -Ltern of the Federal Reserve Banks relating to the collection of cash end noncash items and proposed amendments to the Board's Regulations G and J. Accordingly, it is understood that the following changes will in the noncash and cash operating circulars or letters of the ceerve Banks: be a. made Of collection. 1. Operating circulars or letters relating to the nuncaah items will include the following uniform paragraph: _ "Credit for bankers' acceptances and certificates of deposit will be given, subject to payment in actually and finally collected funds, in accordance with the following schedule, if received by us sufficiently in advance to Permit forwarding in time to reach the place of payment at least one day before maturity: Place Payable Federal Reserve Bank or Branch cities Elsewhere Credit Available On maturity date 1 day after maturity." thi c 8 connection, it is suggested that those Reserve Banks whose operate irculara or letters now contain specific provisions regarding the whether the oeZing of credit for bankers' acceptances may wish to consider or circulars such in changes Iniform paragraph will require other : let Bank's Reserve York ere. For example, paragraph 24 of the New -2- S-1919 Operating Circular No. 8, which now refers to the giving of credit for may the proceeds of bankers' acceptances and due and past due coupons, need to be expanded to refer also to the giving of credit for the Proceeds of certificates of deposit. Of 2. Operating letters and circulars relating to the collection cash items will include a uniform paragraph reading as follows: "The depositor of each cash item which is sent to this Bank for handling hereunder and every prior collecting bank agree with respect to such item that: n(1) this Bank may handle and forward such item hereunder to any bank whose name or designation appears on the item as the bank by, at, or through which the item is payable, whether such name or designation is written or made by means of any magnetically-inscribed routing symbol and ABA transit number, or by means of any routing symbol and ABA transit number not magnetically inscribed, or by any other means; "(2) if the item does not bear any routing symbol and ABA transit number, this Bank may inscribe on the item in magnetic ink, or otherwise write thereon, the routing symbol, the ABA transit number, or both, of the bank by, at or through which the item is payable, and handle and forward the item accordingly. "The depositor of such item and each such collecting bank hereby are given notice and recognize that the efficient operation of the Federal Reserve collection system makes impracticable the ility assumption by the Federal Reserve Banks of any responsib for delay resulting from action taken by this Bank, as stated in (1) and (2) above; and they hereby assume any and all risk of loss arising from any such delay and agree that the handling of such item in accordance herewith shall constitute the exercise of ordinary care by this Bank." It is Itch_ understood that this paragraph will be included under the heading sx eck Standardization, Sorting, Routing, and Mechanized Processing, an Pension of the present heading "Check Standardization." and 3. The uniform paragraphs in the operating circulars lett„ of cash n collectio the to relating Banks ite cre of the Federal Reserve se Ins which deal with the return of unpaid items will be revised to read follows: Of "Each bank returning cash items for credit or refund represents that such items are returned within the time allowed by paragraph (d) of Section 210.5 of Regulation J; * psences here and on next page to paragraph (d) of Section 210.5 eCulation J should have read paragraph 'M. -3_ S-1919 and this Bank may recover or revoke any refund, deduction or credit made, allowed or given by it for any item returned after the time allowed by Regulation J uuless we are instructed not to do so by our sending bank, but any such recovery or revocation shall be without prejudice to the rights and obligations of the returning and sending banks, as between themselves, in respect of the item or any settlement or credit therefor. A bank may, however, return to us without entry a cash item which it has failed to return in time, with ci request that we ask our sending bank to make refund therefor, in which event we shall make refund to the returning bank and charge our sending bank only if the latter specifically authorizes us to do so. * * * * * "The attention of sending banks is called to our 'Instructions to collecting and remitting banks' to the effect that (a) each bank returning cash items for credit or refund represents that such items are retuned within the time allowed by Paragraph (d) of Section 210.5 of Regulation J, ard (b) that this Bank may recover or revoke any refund, deduction or credit made, allowed or given by it for any item returned after the time allowed by Regulation J unless we are instructed not to do so by our sending bank, but any such recovery or revocation shall be without prejudice to the rights and obligations of the returning and sending banks, as between themselves, in respect Of the item or any settlenent or credit therefor. We do not undertake to examine all returned cash items to confirm that such items are returned ,ithin the time permitted under the Provisions of paragraph (d) of Section 210.5 of Regulation J." The Board is publishing in the Federal Register notices of ersed amendments to Regulation G and Reulation J in the form recomtPlat on ," bY the Subcommittr-e on Collections aad the Subcommittee of Counsel no.yollections and appro7ed by the Conference of Presidents, with certain 11Zuh stanf.ive changes in style. Copies of such notices as prepared for 4nulioatior in the Federal Register a re enclosed. It will be noted that n th. :comments with respect to the proposed amendments must be submitted to 194Pedera1 Reserve Banks in time to be received not later than August 17, , Very truly yours, (A ,4 triClOSUre8 Merritt Sherman, Secretary. Timlen, Secretary, Conference of Presidents, c/o FRBank of New York 1° Tilt PRESIDENTS OF ALL FEDERAL RESERVE BANKS Item No. 3 7/14/64 NOTICE FEDERAL RESERVE SYSTEM [12 CFR Part 207] [Reg. 0 COLLECTION OF NONCASH ITEMS Terms of Collection The Board of Governors of the Federal Reserve System is "naidering certain amendments to paragraphs (a) and (b) of S 207.3, regarding the terms under which Federal Reserve Banks will collect Ifteash items. The purposes of these amendments are (1) to provide that Padc-Tal Re3erve Banks, as collecting banks, shall receive the same Ilarranties from sending banks located in jurisdictions in which the Uniform Commercial Code is not in effect as Federal Reserve Banks located in jurisdictions in which the Code is in effect give to banks to which they forward noncash items, and (2) to make it clear that a PeOaral Reserve Bank which sends items to another Federal Reserve 4nk makes the same warranties and agreements as are made by a member Or nonmember bank which sends such items to a Federal Reserve Bank. The proposed amendments would revise paragraphs (a) and (b) Of $ 207.3 to read as follows: / 2073. .Terms of collection. (a) Agreement of sendin-, bank. Each member and nonmember clearing bank and each Federal Reserve bank which sends noncash items 2481 -2to a Federal Reserve bank for collection shall by such action be deemed: (1) to authorize the Federal Reserve banks to handle such items subject to the terms and conditions of this part; (2) to warrant its own authority to give the Federal Reserve banks such authority; (3) to agree to indemnify any Federal Reserve bank for any loss or "Pense sustained (including but not limited to attorneys' fees and "Penses of litigation) resulting from the failure of such sending bank to have such authority, or resulting from such Federal Reserve bankis guaranty of prior endorsements, resulting from any action taken by the Federal Reserve bank within the scope of its authority for the PnrPose of collecting such noncash items, or resulting from any and 811 warranties given by the Federal Reserve bank, in respect of such items, under the law of any State applicable to the Federal Reserve bank as a collecting bauk; (4) to guarantee all prior eneorserm.nts on 81101 items whether or not a specific guaranty is incorporated in an endorsement of the sending bank; and (5) to warrant to the Federal 118e.etve bank, in respect of such items, all such matters and things 48 the Federal Reserve bank shall warrant in respect thereof under the 44 of any State applicable to the Federal Reserve bank as a collecting blink; provided, that nothing herein contained shall, or shall be deemed to, constitute a limitation upon the effect of any warranty by 84°1 sending bank arising under the law of any State applicable to euch sending bank as a collecting bank. -3(b). Federal Reserve bank as agent. A Federal Reserve bank will act °n1Y as agent of the bank from which it receives such noncash items and will assume no liability except for its own negligence, its guaranty "Prior endorsements and its warranties under the law of any State 4PPlicable to it as a collecting bank. This notice is published pursuant to section 4 of the Administrative 40cedure Act and § 262.1 of the Rules of Procedure of the Board of °°Iiernors of the Federal Reserve System (12 CFR Part 262). The proposed amendments are authorized under the authority cited at 12 CFR Part 207. To aid in consideration of this matter, the Board will be glad to tecelva from interested persons any relevant data, views, or arguments. Althnugh such material may be sent directly to the Board, it is preferable that it be sent to the Federal Reserve Bank of the appropriate district, which will forward it to the Board for consideration. All such material hould be submitted in writing to be received not later than August 17, 1964. Dated at Washington, D. C., this 14th day of July, 1964. BOARD OF GOVERNORS GI? THE FEDERAL RESERVE SYSTEM 1 (Signed) (UAL) Merritt Sherman Merritt Sherman, Secretary. NOTICE Item No. 4 7/14/64 FEDERAL RESERVE SYSTEM [12 CFR Part 210] [Reg. J] CHECK CLEARING AND COLLECTION Terms of Collection The Board of Governors of the Federal Reserve System is considering certain amendments to § 210.5, regarding the terms under which checks and other cash items are collected by the Federal Reserve Banks. The purposes of these amendments are (1) to provide that Federal Reserve Banks, as collecting banks, shall receive the same warranties 415Ilm sending banks located in jurisdictions in which the Uniform eutamercial Code is not in effect as Federal Reserve Banks located in Jurisdictions in which the Code is in effect give to banks to which they lervard checks, and (2) to make it clear that a Federal Reserve Bank Ightch sends checks to another Federal Reserve Bank makes the same Iletanties and agreements as are made by a member or nonmember bank sends checks to a Federal Reserve Bank. The proposed amendments would designate the presently undesignated "Paragraph of § 210.5 as paragraph (a), redesignate the present 14 Witraft., e4sPhs,(a) through (i) of that section as paragraphs (b) through (j)$ respectively, and revise the presently undesignated first 134"greph and paragraph (a) of such section to read as follows: -2210.5 - Terms of collection. (a) The Board of Governors of the Federal Reserve System hereby authorizes the Federal Reserve banks to handle such checks subject to the following terms and conditions; and each member and nonmember clearing bank and each Federal Reserve bank which sends checks to a Federal Reserve bank for deposit cr collection shall by such action be deemed: (1) to authorize the Federal Reserve banks to handle such checks subject to the following terms and conditions; (2) to warrant OWn authority to give the Federal Reserve banks such authority; (3) to agree to indemnify any Federal Reserve bank for any loss or ' expense sustained (including but not limited to attorneys' fees and "Penses cf litigation) resulting from the failure of such sending 13411k to have such authority, or resulting from such Federal Reserve bank is guaranty oi prior endorsements, resulting from any action taken by the Federal Reserve bank within the scope of its authority for the PutPcse of collecting such checks, or resulting from any and all lierranties by the Federal Reserve bank, in respect of such checks, ' "der the law of any State applicable to the Federal Reserve bank as 4 collecting bank; (4) to guarantee all prior endorsements on such hecks whether or not a specific guaranty is incorporated in an endorse- of the sending bank; and (5) to warrant to the Federal Reserve bank, in respect of such checks, all such matters and things as the Fed eral Reserve bank shall warrant in respect thereof under the law Of any State applicable to the Federal Reserve bank as a collecting e)1S* 3ben; be deemed provided, that nothing herein contained shall, or shell . to, constitute a limitation upon the effect of any warranty by such sending bank arising under the law of any State applicable to such sendieEt bank as a collecting bank. from (b) A Federal Reserve bank will act only as agent of the bank 14hich it receives such checks and will assume no liability except for its c3144 negligence, its guaranty of prior endorsements and its warranties "der the law of any State applicable to it as a collecting bank. Thia notice is published pursuant to section 4 of the Administrative Ptecedure Act and § 262.1 of the Rules of Procedure of the Board of GovQttors of the Federal Reserve System (12 CFR Part 262). The proposed ftenciments are authorized under the authority cited at 12 CFR Pert 210. To aid in consideration of this matter, the Board will be glad to tecelve from interested persons any relevant data, views, or arguments. Alth°ugh such material may be sent directly to the Board, it is preferable that it be sent to the Federal Reserve Bank of the appropriate district, 141lich will forward it to the Board for consideration. All such material 114111d be submitted in writing to be received not later than August 17, 1964. Dated at Washington, D. C., this 14th day of July, 1964. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM (Signed) (SEAL) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 5 7/14/64 WASHINGTON OFFICE OF THE CHAIRMAN July 17, 1964. Dr. Wayne C. Grover, Archivist of the United States, National Archives Building, W ashington, D. C. 20408 Dear Dr. Grover: The Board of Governors of the Federal Reserve System and Open Market Committee have authorized the transfer from th Board to the custody of the Archivist of the United States of re minutes of meetings ofthe Federal Open Market Committee from date of its organization in March 1936 to the end of the year 196 . m Certain other records relating to operations in the open rket that were carried on by the Federal Reserve from its forma"in 1914 until establishment of the Federal Open Market Committee 41 1936 pursuant to the Banking Act of 1935 were included in the tit horization. The records to be transferred under this authoriza_!-°n are to be available to interested persons without restriction er than the normal restrictions that the National Archives would lace on such materials to assure their preservation and proper ha on the j ! The body of records being transferred at this time consist S of 28 volumes containing the original signed copies of the 4 4-nutea of the meetings of (1) the Federal Open Market Committee °14 March 1936 to the end of 1960 and (2) its Executive Committee March 1936 until June 1955 when it was abolished. The total Umber of typed pages of these minutes approximates 8700. 7 4 Additional materials relating to System operations in the a, °Pen market, as well as to Board matters outside the open market ea, are now being reviewed. It is expected that a considerable unt of such material having value for historical and scholarly re : b srch will be transferred from the Board to the Archivist of the ot ted States within the next few months. A detailed description th°se additional records will be furnished at the time the curre, review is completed. 2489 Or. Wayne C. Grover The Board believes that the official records pertaining to policy decisions and operations of this country's central banking system should be available over the course of time to interested persons for studies of monetary policy or of other aspects of Federal Reserve history on which they may throw light. Such materials should Provide an important new source of information for persons wishing to study the Federal Reserve System, and it seems especially appropriate that those for the years referred to in this letter should be made available either through the National Archives or here at the Board for public use in this the year of the fiftieth anniversary of the Federal Reserve System. Sincerely yours, Wm. McC. Martin, Jr. -‘04.00 ..... ..;390ECOv4.. BOARD OF GOVERNORS Item No. 7/14/64 OF THE FEDERAL RESERVE SYSTEM WASHINGTON OFFICE OF THE CHAIRMAN July 14, 1964. The Honorable Alan Bible, United States Senate, Was hington, D. C. 20510. tear Senator Bible: This is in further reply to your letter of May 27, 1964, concerning the advisability of prohibiting the use of coin as collatere' th, for bank loans. As indicated in my letter of June 12, .6 48 question was scheduled for discussion by the Conference of : residents of the Federal Reserve Banks. These discussions have ;11:4 taken place, and, after considering the views expressed by the deesidents, I doubt that such a prohibition would be effective in aling with the coin shortage. We have no evidence that bank loans of this type are being all made in any volume that is significant in terms of the overr, "in shortage. Prohibiting such loans might result only in 47eort to alternative sources of financing or to bank loans in 11°ther form. Presumably, many persons with sufficient means to ftsage in dealings of this type on any significant scale could of ilieh other types of collateral or could borrow on the strength - their financial statements without collateral. 4 thOne alternative suggestion that has considerable merit, in a Board's judgment, is S. 2950, introduced by Senator Robertson, to mi_authorize the Mint to keep the 1964 mintage date on all newly rel.l ed coins until adequate supplies of coin are available. The only t1:1 solution, of course, is to increase coin production as substanlY and rapidly as possible. Sincerely yours, (Signed) Wm. McC. Martin, Jr. Wm. McC. Martin, Jr. 6 Item No. 7 7/14/64 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, O. C. 20551 ADDRESS OffICIAL CORRESPONDENCE TO THE BOARD July 14, 1964 Mr. E. H. Galvin, Vice President, Federal Reserve Bank of San Francisco, San Francisco, California. 94120 Dear Mr. Galvin: In accordance with the request contained in Mr. Cavan's letter of July 6, 1964, the Board approves the appointment of Edward A. Nicolaus, III, as an assistant examiner for the Federal Reserve Bank of San Francisco, effective today. Please furnish a photograph of Mr. Nicolaus. Very truly yours, (Signed) Elizabeth L Carmichael Elisabeth L. Carmichael, Assistant Secretary.
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