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Minutes for July 16, 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. 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 oa Thursday, July 16, PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. 1959. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Balderston, Vice Chairman Szymczak Mills Shepardson King Mr. Mr. Mr. Mr. Mr. Sherman, Secretary Kenyon, Assistant Secretary Hackley, General Counsel Farrell, Director, Division of Bank Operations Smith, Assistant Director, Division of Examinations Standardization of check size and format (Item No. 1). Cl4ted June 23, A letter 1959, from an officer of the Union County Trust Company, J-1-zabeth, New Jersey, enclosed an editorial from the American Banker JUne 17, 1959, which suggested in effect that the Federal Reserve esteblish regulations placing banks and bank customers on notice that, beecluse of the mechanization of check handling, checks not standardized Etat() size and format would be subject to a certain penalty or discrimillation. The author of the letter agreed with the suggestion and requested e()nzaents on the matter. Copies of the letter had been distributed to the al°ng with a draft of possible reply which would refer to the numerous Droblems yet to be resolved in processing checks with electronic equipment IT°123-cl suggest that any program to compel standardization of checks 11-ght be premature. In discussion, attention was drawn to that portion of the proposed -' 40u-ming a possible program to compel banks and their customers to 7/16/59 -2- standardize checks and it was brought out that the authority of the Board to issue regulations such as contemplated by the editorial was not clear. After consideration of this point, it was decided to strike the portion of the letter that might serve to raise the question of the Board's authority, and unanimous approval then was given to a letter in the form attached as Item No. 1. In response to a question, Mr. Farrell stated that problems of cheekstandardization were among those under active consideration by the Federal Reserve Banksin connection with mechanized check handling arld that an early joint meeting of System representatives with representatives of the American Bankers Association was in prospect. Budgets of the Reserve Banks for 1960 (Item No. 2). to the understsnaing at the meeting on July (listributed • Pursuant 8, 1959, there had been to the Board copies of a memorandum from Mr. Farrell dated jIllY 14/ 1959, submitting an outline of procedures recommended in e°11flection with handling the analysis and consideration of the budgets °r the Federal Reserve Banks for 1960. The proposed procedures reflected °I.11Y illinor differences from those followed in connection with the 1959 blba---+ a s* Also submitted with the memorandum was a draft of letter to the rresidents of the Federal Reserve Banks suggesting that informal diseu . sslon with each President of the significant aspects of contemplated blIdget proposals be held again this year and that such discussions be f)i • 7/16/59 -3- scheduled in the month of August or in early September, perhaps in conjunction with visits by the Presidents to Washington on other business. matters The letter would request a reply indicating the that each President would consider it appropriate to discuss, as well on. 48 an indication of preference with regard to the time of the discussi e It being brought out that the members of the Board committe bring (Governors Balderston, Mills, and King) should have latitude to by the Presidents, 1110 at their discretion matters other than those raised agreement was reached on a minor change in the proposed letter to the Presidents that would serve to leave open such an opportunity. Presidents Unanimous approval then was given to a letter to the °r the the Reserve Banks in the form attached as Item No. 2, along with Reserve l'econimended procedures for analysis and consideration of the 1960 budgets. Mr. Farrell then withdrew from the meeting. Appointment of Reserve Bank branch directors. 141'. Sherman, distributed under date of July 14, A memorandum from 1959, contained biographical of 111t°rmation with respect to Howard E. Whitaker, Chairman of the Board Meaa Corporation, Dayton, Ohio, who had been suggested for consideration tO fi li an existing vacancy on the Board of Directors of the Cincinnati trare.l. `LI of the Federal Reserve Bank of Cleveland. After discussion, it was agreed unanimously to request the Chairman °r the C would accept leveland Reserve Bank to ascertain whether Mr. Whitaker 7/16/59 aPpointment, if tendered, as a director of the Cincinnati Branch for the unexpired portion of the term ending December 31, 1959, with the Understanding that if he would accept, the appointment would be made. Secretary's Note: It having been ascertained that Mr. Whitaker would accept the appointment if tendered, a telegram advising him of his appointment was sent on July 20, 1959. A memorandum from Mr. Sherman dated July 9, 1959, which had teen distributed to the Board, contained biographical information with l'esPect to Dr. Robert W. French, Vice President of Tulane University, 14ho had been suggested for appointment to fill an existing vacancy on the B Ballk of Directors of the New Orleans Branch of the Federal Reserve of Atlanta. After discussion, it was agreed to request the Chairman of the Atiant „ Bank to ascertain whether Dr. French would accept appointment, it te ndered, as a director of the New Orleans Branch for the unexpired 1)°rti°r1 of the term ending December 31, 1961, and to confirm that Dr. '1'ellela did not hold any political or public office that would make his 413Pointment inconsistent with the resolution adopted by the Board on 1)eeember 23, 1915. Secretary's Note: In view of information received from the Atlanta Reserve Bank in response to the Board's inquiry concerning Dr. French, the matter of his possible appointment was considered further at the meeting on July 20, 1959, with the result Indicated in the minutes of that meeting. 7/16/59 -5Following informal discussion of a me.tter that had arisen in connection with the forthcoming Treasury refunding operation, the members Of the staff withdrew and the Board went into executive session. Changes in Board's staff. The Secretary later was informed by Governor Shepardson that during the executive session the Board agreed to accede to a request from Elliott Thurston, Assistant to the Board, that he be relieved of his duties, effective July 31, 1959, with a view to arranging for retirement upon the expiration of his unused leave. It was understood that Mr. Thurston's services would be available to the Board at intervals between August 1, 1959, and the ctItte that his actunl retirement became effective. Governor Shepardson also informed the Secretary that the Board 11841 130 aTkala .T1 Charles Molony to succeed Mr. Thurston as Assistant to the effective August 1, 1959, with annual salary at the rate of $17,500. The meeting then adjourned. Secretary's Notes: 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 Board's staff, effective July 26, 1959: 17ae and title Division Basic annil$41 salary To From Office of the Secretary E. Pilger, Supervisor, Administrative, -uoject, and FOMC Files $6,735 $6,885 7/16/59 -6- increases, effective July 26 1959 (continued) Name and title Division Basic annual salary From To Research and Statistics Stephen H. Axilrod, Economist Stephen P. Taylor, Economist Charles A. Yager, Economist ' is Cortland G. Peret, Economist 10,130 10,130 10,130 7,750 $10,370 10,370 10,370 7,990 4,940 5,090 Examinations Oda R. Johnson, Secretary Governor Shepardson also approved today on behalf of the Board the following items affecting the Board's staff: Anna S. Courtney, from the position of Secretary to the position of virrvisor, Recording and Stenographic Section, Division of Examinations, er,, p " an increase in her basic annual salary from $5,390 to $5,580, ' ective July 26, 1959. the Evelyn W. Edwards from the position of Secretary, Legal Division, to her Position of Secretary, Division of Examinations, with an increase in helsic annual salary from $5,390 to $5,580, effective August 1, 1959. Frances S. Bender, from Secretary (Budget Position #8) to Secretary sea,!!t Position #99) in the Division of Examinations, without change in -4-"Y, effective August 1, 1959. Accept ance of resignation NancY R. Porter, Supervisor, Recording and Stenographic Section, is on of Examinations, effective July 24, 1959. BOARD OF GOVERNORS OF THE Item No. 1 7/16/59 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD July 16, 1959. John V. Nostrand, Vice President, union County Trust Company, 142 , B-goad Street, tLizabeth L1., New Jersey. tlear Mr. Nostrand: This is in reply to your letter of June 23, addressed to Cha reetrnian Martin, in which you concur with theories outlined in the , e11_,t editorial appearing in the American Banker, entitled "Check st, -41uardization for Automation". As you probably know, the mechanization of check handling lth the help of vith electronic equipment is still in an experimental stage, are janY serious problems yet to be overcome. The problems involved 4e4,..eing pursued by a number of organizations, and a Federal Reserve COMMittee is actively studying the differing systems offered by Aener of manufacturers to sort and account for checks electronically. the Federal Reserve Banks do not have any of this equipment, ot-ico-LY because their operating requirements are different from those pilso,nmercial banks. However, arrangements are now under way for five installations at different Federal Reserve Banks. the rn_ Lack of standardization of check size and format is one of Y problems involved in plans to process checks with electronic PoittiiInt. As you may know, the American Bankers Association has ap48e1,e't a committee to work toward check standardization, and a Federal It IP committee has been authorized to work with the ABA committee. yet known what plan of action these committees will follow. Thank you for giving the Board your comments on this problem. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 2 7/16/59 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD July 17, 1959. bear This Peters to the Boards letter of August 6, 1958s in which to - suggested that it would be helpful if there were an opportunity eort'sc''uss informally with each President the significant aspects of It wll'Jlated budget proposals before the budgets were put in final form. requested at that time that prior to these discussions a letter upmitted outlining the matters to be discussed. The Board suggests that the informal discussions be held this Ye tiori tne month of August or in early Septembers perhaps in conjuncN,Irith visits by the Presidents to Washington on other business. ' t llne may depend to some extent upon the budget schedule of your Bank. In this light the Board woull appreciate your sending a letter; ac You are able to do so, indicating the matters you wish to dis% as well as your preference with regard to the time for the discus- Very truly yourss Merritt Secre man,,
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