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Minutes for
To:
Members of the Board
From:
Office of the Secretary
July 19, 1961
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. King
6
Minutes of the Board of Governors of the Federal Reserve System on
%dnesday, July 19, 1961.
PRESENT:
Mr.
Mr.
Mr.
Mr.
The Board met in the Board Room at 10:00 a.m.
Balderston, Vice Chairman
Mills
Robertson
Shepardson
Sherman, Secretary
Kenyon, Assistant Secretary
Hackley, General Counsel
Solomon, Director, Division of
Examinations
Mr. Hooff, Assistant General Counsel
Mr. Sammons, Adviser, Division of
International Finance
Mr. Goodman, Assistant Director, Division
of Examinations
Ns. Leavitt, Assistant Director, Division
of Examinations
Mrs. Semia, Technical Assistant, Office of
the Secretary
Mr.
Mr.
Mr.
Mr.
_____circulated or distributed to the Board.
The following
which had been circulated or distributed to the Board and copies
ole/Ilaich are attached to these minutes under the respective item numbers
1114cated, were approved unanimously:
Item No.
tette
to Chase Manhattan Overseas Corporation, New
1.044, New York, noting with approval a change in the
'
ce
tion of its head office.
1
Lett
. er to the Federal Reserve Bank of New York
2
liegkr
Rea.„4.ding a communication from the Federal Reserve
lie/7-4°n8 Committee for Northern New Jersey of the
or Jersey Bankers Association relating to periods
se:ace in connection with payment of interest on
S1 5s deposits. (With the understanding that the
starlee of the Board's letter would be sent to all
,
Pe,u
-"al Reserve Banks for their information.)
Ni
7/19/61
Item No.
letter to the Federal Reserve Bank of Richmond
interposing
no objection to an agreement under
ich microfilm records of the International
velopment Association would be stored at
the
Bank.
3
letter to The Peoples National Bank of Conway,
14.
t
C°1114V, South Carolina, approving its application for fiduciary powers.
letter to Attala National Bank of Kosciusko,
5
ractusko, Mississippi, approving its application
'tIr a specific fiduciary power.
letter to the Comptroller of the Currency recomr16411g favorably with respect to an application
t
,
/3rg8.nize a national bank at Bedford, Virginia.
etter to the Comptroller of the Currency recommending
l44avorably
6
7
with respect to an application to organize
national bank at Vienna, Virginia.
tetter to
.v„
The Chase Manhattan Bank, New York, New
!rk, approving the establishment of a branch in
8
Letter to The Colonial Bank and Trust Company,
Itiat
or erbury, Connecticut, approving the establishment
a branch in the Town of Wolcott.
9
t
ter to Bank of Idaho, Boise, Idaho, approving
establishment of a branch on Fairview Avenue
the intersection of Cole Road.
10
lel er to win Falls Bank & Trust Company, Twin
13 e Idaho, approving the establishment of a
-"ch in the Lynwood Shopping Center.
11
tetter to
re
the Presidents of all Federal Reserve Banks
8"rcling amendment of the circulars and operating
ers of the Banks relating to collection of cash
ems.
12
4
7/19/61
-3Mr. Goodman then withdrew from the meeting.
Deport on competitive factors (Baltimore-Glen Burnie, Maryland).
There had been distributed a draft of report to the Comptroller of the
Cull'encY on the competitive factors involved in the proposed consolidation
°r county
Trust Company of Maryland, Glen Burnie, Maryland, with Baltimore
National Bank, Baltimore, Maryland.
The conclusion in the report read as follows:
The two banks do not appear to be competitive to an
important degree. In Prince Georges County, there should
result some increase in competition for Suburban Trust
Company, Hyattsville, Maryland, and the Washington, D. C.
banks presently serving the area.
The proposed consolidation would enhance, by a substantial dollar volume and by increased geographic
representation, the position of Baltimore National,
already the largest bank in the State.
Governor Mills stated that he would approve since the Board's
responsibility in the matter was limited to reporting on the competitive
et°rs involved.
'
re
If the merger itself were before the Board for decision,
he 'would perhaps want to scrutinize the proposal more closely. The resulting
bIllilk lrould have about 16 per cent of the commercial bank deposits in the
atate, which would not seem unduly large, but on the other hand Baltimore
114tional would appear to dominate certain areas of the State where it would
*tedla representation if the merger were consummated.
Governor Robertson expressed disagreement with the last paragraph
or the
Division memorandum submitting the report to the Board, which stated
21130
7/19/61
that
"The net effect of the proposed consolidation should not be adverse
to competition."
However, since that statement did not appear in the
Port that would go to the Comptroller of the Currency, he would vote
to
aPprove the report.
Baltimore National, he noted, competed for
llous kinds of business throughout the State of Maryland.
'
Ire
If there
1184 no significant competition between Baltimore National and County
he felt that it was probably- because of an interrelationship
e istinig at the management level; in his opinion there was at least
13°tent1al competition between the two banks.
Moreover, a move by
Ileltimore National into the areas served by County Trust would be
likely to have the effect of causing banks in those areas to seek to
illerge with other banks in Baltimore.
Such a series of mergers could
eventually result in a situation similar to those in California and
North
Carolina, which he felt would be undesirable.
Although the merger
tilight increase competition for the existing banks in certain areas, this
Ir°111c1 be in the nature of competition between a giant and a midget.
If
the actual merger decision were before the Board, he would want to make
rel7 careful and complete analysis.
'
However, so far as a report on
-flyr
-retitive factors was concerned, the wording of the proposed report
445. conclusion might be sufficient to point up the problems he had
rilentned.
In response to an inquiry from Governor Balderston as to the
1)1'°beb1e effects of the merger on the mall bank in Glen Burnie now
-5-
7/19/61
comPeting with County Trust, response was made that that bank might be
able to retain its business about as well if the merger were consummated,
1)articu1arly since it was already competing with an institution of subsize.
It had been found in a number of cases that small
llulePendent banks could operate successfully in competition with branches
Of large banks, depending on the capacity of their management.
Apparently,
8°14e segment of bank customers preferred to deal with a smaller independent
bank
After further discussion the report to the Comptroller of the
C1117rency was approved unanimously.
port on coplpetitive factors (Ebensburg-Cressonl Pennsylvania)
there had
been distributed a draft of report to the Comptroller of the
C1117rencY on the competitive factors involved in the proposed purchase of
488ets and assumption of liabilities of The First National Bank of Cresson,
elsessOny Pennsylvania, by The First National Bank of Ebensburg, Ebensburg,
1')4118Ylvania.
After a discussion during which certain changes were suggested in
the
wording of the conclusion, the report was approved unanimously in a
t°114
in which the conclusion read as follows:
The proposed purchase of assets and assumption of
.
liabilities of The First National Bank of Cresson by The
First Nationsl Bank of Ebensburg would unite two affiliated
corporate entities. Following the proposed transaction, the
aPPlicant should be able to compete more effectively with
the two banks in the area which are presently larger than
the purchasing bank; however, the small banks in the area
would be subject to increased competition.
7/19/61
-6orb on co
etitive factors
Wilson-Micro
North Carolina .
There had been distributed a draft of report to the Federal Deposit
Insurance Corporation on the competitive factors involved in the promerger of The Citizens Bank, Micro, North Carolina, into Branch
Banking and Trust Company, Wilson, North Carolina.
The conclusion of
the proposed report read as follows:
The proposed merger represents some additional concentration of banking resources in the State within the State's
five largest banks. While the competitive position of the
continuing bank would be strengthened slightly, the proposed
merger of The Citizens Bank, Micro, North Carolina, into
Branch Banking and Trust Company, Wilson, North Carolina,
would not appear to be adverse to banking competition in
the area.
After a brief discussion the report was approved unanimously.
alatlialtaR_State Department.
Mr. Sammons reported that the
bivision of International Finance had received an informal inquiry from
:64°tricial of the Department of State as to whether the Board, through
the Federal Reserve Bank of New York, would be willing to assist the
4q)extment in determining 'what, if any, bank accounts were held in the
iltlited States by the Government of Katanga, a unit within the Republic
Of the Congo.
During discussion, question was raised whether it would be
illP1'°Priate for a Federal Reserve Bank to act on behalf of the Department
°r State
Of
in seeking such information from commercial banks in the absence
statutory authorization.
It was brought out that at times in the past
7/19/61
-7-
"Vs of American investments abroad and foreign funds held in the
United States had been made by the Treasury Department under authority
Of the Trading with the Enemy Act, but that there had not been such a
siThreY for some time.
The view was expressed that it might not be
84visab1e to throw the burden of the request upon the Treasury in
liel/lYing to the State Department.
Accordingly, after further discussion it was agreed that the
stat.1 response to the State Department official Should be in terms that
it l'Tould not appear appropriate for the System to undertake to obtain
the desired information.
The meeting then adjourned.
Secretary's Note: Governor Shepardson today
approved on behalf of the Board a memorandum
dated July 17, 1961, from Mr. Solomon, Director
of the Division of Examinations, requesting
permission to deliver a lecture on bank capital
at the School of Banking at the University of
Wisconsin, Madison, Wisconsin, during the
August 1961 session, it being understood
that the lecture would be delivered while
Mr. Solomon was on annual leave and that he
would be permitted to accept compensation for
the lecture.
Secretary
21:Vi
BOARD OF GOVERNORS
44*****4
eaoCtil Cop *t
('
OF THE
1,t,
FEDERAL RESERVE SYSTEM
Item No. 1
7/19/61
WASHINGTON 25. D. C.
'01
4
4%04
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
sto`k Wit$
tt***
July 19, 1961
Chase Manhattan Overseas Corporation,
1 Chase Manhattan Plaza,
New York 5, New York.
Gentlemen:
This will acknowledge your letter of July 7,
1961, transmitted through the Federal Reserve Bank of
New York, advising that, in connection with the moving
of the Head Office of The Chase Manhattan Bank to 1 Chase
Manhattan Plaza, New York, the Head Office of Chase
Manhattan Overseas Corporation was also moved from 18 Pine
Street to 1 Chase Manhattan Plaza, New York 5, New York.
The Board has noted with approval this change'
in location of the Head Office of your Corporation. The
location of the Head Office may not be changed from its
present address without the prior approval of the Board
of Governors.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
2113,1
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM Item No. 2
WASHINGTON 25, D. C.
7/19/61
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 19, 1961
il.,11r• Howard D. Crosse, Vice President,
„ederal Reserve Bank of New York,
New York
45, New 1.c)ri0
I)ear Mr.
Crosse:
This refers to your letter of June 13, 1961, with respect
ue
of the Federal Reserve Relations Committee for
murthern New
Jersey of the New Jersey Bankers Association, that the
17ard reconsider its previous decisions and permit an option on the
i„„t of member banks to allow days of grace for the payment of
11;:c'ierest on savings deposits either (a) on a monthly basis, as prothe October 1, 1959, amendment to Regulation Q; or (p) on
rilee same basis as formerly authorized under the July 1, 1952, amendto the Regulation.
to
The effect of this proposal would be to permit member banks
that
on
compute interest on a quarterly or semiannual basis, rather than
alla monthly basis, to meet the competition of savings banks which
qua°W grace periods of 10 business days during the first month of a
pa„fterlY or semiannual interest period. For example, it would permit
da'clent of interest for a full month on deposits made through the 17th
of July of this year.
The original purpose of such so-called "grace periods" was
to
the 'Ow a customer, who cannot make a deposit on the exact day of
:
he leek in which the month commences, a reasonable time within which
Iliti;ay make the deposit and receive interest for the entire month.
ade thi8 Purpose in mind, the present provision seems entirely
leacsTate, as it allows 10 calendar days which will always provide at
5 business days within which the deposit may be made.
Actually, days of grace for the receipt of savings deposits
1 Mit th
'
13Perm.14.
--e bank to pay interest on Money not on deposit or, in effect,
„Li interest to exceed the maximum rate permitted by Regulation Q
Lne time the money is on deposit. Such days are not allowed for
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Nr. Howard D. Crosse
the Purpose of enabling banks to compete with other types of savings
11_,,Istitutions and there would appear to be no justification for permit411-1C days of grace to exceed a reasonable time consistent with their
PurPose.
The Board has again carefully considered this matter in the
competition commercial
of your letter.
- and is not unmindful of the
'J ai*
the Board conHowever,
t, 8 are subjected to by other institutions.
flues to feel that an amendment of the kind suggested would not be
kl
esirable
Very truly yours,
(signed.) Merritt Sherman
Merritt Sherman,
Secretary.
2436
4.4
BOARD OF GOVERNORS
oottort,,
WOol.f
ts.1
OF THE
FEDERAL RESERVE SYSTEM Item No. 3
7/19/61
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 191 1961
Mr. Edward A. Wayne, President,
Federal Reserve Bank of Richmond,
Richmond 13, Virginia.
Dear Mr. Wayne:
This refers to your letter of July 12 concerning
a request by the International Development Association for
an agreement under which microfilm records of the Association mould be stored at the Federal Reserve Bank of Richmond.
Since there is statutory authority for the proposed
agreement and since it is acceptable to your Bank, the Board
sees no reason to object to it.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary
r#.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 4
7/19/61
WASHINGTON 25, D. C.
ADDRESS
orriciAL
CORRESPONDENCE
TO THE BOARD
July 19, 1961
i)oard of Directors,
The Peoples National Bank of Conway,
Conway, South Carolina.
Gentlemen:
The Board of Governors of the Federal iceserve System
has given consideration to your application for fiduciary
Powers and grants The Peoples National Bank of Conway authority
to act, when not in contravention of State or local law, as
trustee, executor, administrator, registrar of stocks and bonds,
guardian of estates, assignee, receiver, committee of estates
of lunatics, or in any other fiduciary capacity in which State
banks, trust companies, or other corporations which come into
competition with national banks are permitted to act under the
laws of the State of South Carolina. The exercise of such
rights shall be subject to the provisions of Section 11(k) of
the Federal Reserve Act and Regulation F of the Board of
Governors of the Federal Reserve System.
A formal certificate indicating the fiduciary powers
that your bank is now authorized to e:7.3rcise will be forwarded
in due course.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
24:
BOARD OF GOVERNORS
44403000t,*04
iat
o4#
OF THE
FEDERAL RESERVE SYSTEM
'
WASHINGTON 25. D. C.
Item No. 5
7/19/61
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 19, 1961
board of Directors,
Attala National Bank of Kosciusko,
Kosciusko, Mississippi.
Gerltlamen
:
The Board of Governors of the Federal Reserve System has
en consideration to your application for a specific fiduciary power
grants Attala National Bank of Kosciusko authority to act, when
or ,in contravention of State or local law, as registrar and trustee
13.1f_nds under a seventy thousand dollar ($70,000) bond issue of the
4w4Y Baptist Church of Kosciusko, Mississippi. The exercise of
Quo,
t„" -rights shrill be subject to the provisions of Section 11(k) of
Federal Reserve Act and Regulation F of the Board of Governors of
the
"
5 Federal Reserve System.
Zt
A certificate covering such authorization is enclosed.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
41.cloaure
2440
BOARD OF GOVERNORS
oatiot,
aa4 0%44
OF THE
0.
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No. 6
7/19/61
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 19, 1961
Comptroller of the Currency,
Treasury Department,
Washington 25, D. C.
Attention:
Mr. W. M. Taylor,
Deputy Comptroller of the Currency.
Dear Mr. Comptroller:
Reference is made to a letter from your office
dated March 22, 1961, enclosing copies of an application
t° organize a national bank at Bedford, Virginia, and requesting a recommendation as to whether or not the application should be approved.
A report of investigation of the application
by an examiner for the Federal Reserve Bank of
Itlehmond indicates generally favorable findings with
l'esPect to each of the factors usually considered in applications of this nature. Accordingly, the Board of Governors
'
l ecommends favorable consideration of the proposal.
T,tle
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
2441
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No.
7
7/19/61
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRLBPONDENCE
TO TI-4E
BOARD
July 19, 1961
Comptroller of the Currency,
Treasury Department,
Washington 25, D. C.
Attention:
Mr. W. M. Taylor,
Deputy Comptroller of the Currency.
Dear Mr. Comptroller:
Reference is made to a letter from your office
dated February 16, 1961, enclosing copies of an application
to organize a national bank at Vienna, Virginia, and requesting a recommendation as to whether or not the application
should be approved.
A report of investigation of the application made
bv an
examiner for the Federal Reserve Bank of Richmond in.
._loates
generally favorable findings with respect to each of
Lhe factors usually considered in applications of this nature.
A tordingly, the Board of Governors recommends favorable
c
consideration of the proposal.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
Aj .174
R. A.
BOARD OF GOVERNORS
tOtele;N,
3e441.0
0*
4:1?
‘
" *
*
a:zi
4111A
*
44
*
C.,
OF THE
FEDERAL RESERVE SYSTEM
Item No. 8
7/19/61
WASHINGTON 25, D. C.
ADDRESS OrriCiAL CORREspoNDENCE
TO THE BOARD
41.§tst
.
July 19, 1961
Board of Directors,
The Chase Manhattan Bank,
New York, New York.
Gentlemen:
Pursuant to your request submitted through the
Federal Reserve Bank of New York, the Board of Governors
of the Federal Reserve System approves the establishment
by The Chase Manhattan Bank, New York, New York, of a
branch at 365 South Oyster Bay Road, Plainview, Nassau
County, New York, provided the branch is established
Within six months from the date of this letter.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
01**,14,4
44OP Sok:4o
444
OF THE
-
FEDERAL RESERVE SYSTEM
Item No.
9
7/19/61
WASHINGTON 25, D. C.
ADDRESS OPPICIAL CORRESPONDENCE
TO THE BOARD
July 19, 1961
Board of Directors,
The Colonial Bank and
Trust Company,
Waterbury, Connecticut.
Gentlemen:
Pursuant to your request submitted through the
Federal Reserve Bank of Boston, the Board of Governors
of the Federal Reserve System approves the establishment
of a branch in the vicinity of the intersection of Wolcott
Road, Mad River Road, and Center Street, Town of Wolcott,
New Haven County, Connecticut, by The Colonial Bank and.
Trust Company, provided the branch is established within
one year from the date of this letter.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
2444
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 10
7/19/61
WASHINGTON 25, O. C.
ADDRESS orriciAL CORRESPOND
TO THE BOARD
July 19, 1961
Board of Directors,
Bank of Idaho,
Boise, Idaho.
Gentlemen:
Pursuant to your request submitted through the
Federal Reserve Bank of San Francisco, the Board of Govern()
or the Federal Reserve System approves the establishment
°f an in-town branch at approximately 7500 Fairview Avenue
near the intersection of Cole Road, by Bank of Idaho,
Provided the branch is established within one year from,
the date of this letter.
Very triüy yours,
igned) Kenneth A. Kenyon
Kenneth A. Kenyon
Assistant Secretary.
DE
BOARD OF GOVERNORS
00'00114
OF THE
te C010
**
FEDERAL RESERVE SYSTEM
Item No. 11
7/19/61
WASHINGTON 25, 0. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
*0,5twu.se
4400,*
July 19, 1961
Board of Directors,
Twin Falls Bank & Trust Company,
Twin Falls, Idaho.
Gentlemen:
Pursuant to your request. submitted through the
Federal Reserve Bank of San Francisco, the Board of Governors
of the Federal Reserve System approves the establishment
Of an in-town branch in the Lynwood Shopping Center at
aPProximately 576 Blue Lakes Boulevard, by Twin Falls
Bank &Trust Company, provided the branch is established
within six months from the date of this letter.
Very truly yours,
(Signed) Kenneth A. Kenyon
• Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
4410,
4**4
t,t‘
it
4
S-1800
OF THE
40fr 4,4.4
41%
FEDERAL RESERVE SYSTEM Item No. 12
6*
WASHINGTON 25, D. C.
7/19/61
ADDRESS OFFICIAL CORRESPONDENCE
4
4
0
TO THE BOARD
July 19, 1961.
near Sir:
The Board of Governors concurs in the action taken by the
4
° :erence
11
of Presidents at its meeting on June 19, 1961, approving
001?Thmendations contained in the Joint Report of the Subcommittee on
hections
il-L
and the Subcommittee of Counsel on Collections, dated
R„e 2, 1961, that the circulars and operating letters of Federal
erve Banks relating to collection of cash items be amended as
.°1101,7s.
1, Insertion under the heading "Items which will be
accepted as cash items" of a new uniform paragraph
reading substantially as follows:
We may receive cash items pre-encoded as to
transit number-routing symbol and as to
amount in magnetic ink in E-13B type and we
may so encode cash items received by us.
2,
Revision of the uniform paragraph entitled
"Endorsements" to read as follows:
All cash items sent to us, or to another
Federal Reserve Bank direct for our account, should
be endorsed without restriction to the order of the
Federal Reserve Bank to which sent, or endorsed to
the order of any bank, banker,or trust company, or
endorsed with equivalent words or abbreviations
thereof. Cash items will be accepted by us, and by
other Federal Reserve Banks, only upon the understanding and condition that all prior endorsements
are guaranteed by the sending bank. There should be
incorporated in the endorsement of the sending bank
the phrase, "All prior endorsements guaranteed" which
244.4S-1800
-2may be abbreviated as, for example, "P.E.G." in
conformity with the AEA uniform transit instructions,
or "Pr. Ends. Gtd," The act of sending or delivering a cash item to us or to another Federal Reserve
Bank will, however, be deemed and understood to
constitute a guaranty of all prior endorsements on
lich item, whether or not an express guaranty is
Incorporated in the sending bank's endorsement.
The endorsement of the sending bank should be dated
and should show the American Bankers Association
transit number of the sending bank in prominent
type on both sides.
Very truly yours,
Merritt
erma
SecrAary.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
@FedFRASER