The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
The attached set of minutes of the
meeting of the Board of Governors of the Federal
Reserve System on ally 24, 1959, which you have
previously initialed, has been amended at the
request of Governor Robertson to substitute the
last paragraph on page 9 (continuing on page 10)
for the final to paragraphs on page 9 of the
minutes as originally drafted.
Chairman Martin
Minutes for
To:
Members of the Board
From:
Office of the Secretary
July 24
199.
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
on Friday, July 24, 1959.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
The Board met in the Board Room at 10:00 a.m.
Martin, Chairman
Balderston, Vice Chairman
Szymczak
Mills
Robertson
Sherman, Secretary
Kenyon, Assistant Secretary
Thomas, Economic Adviser to the Board
Farrell, Director, Division of Bank
Operations
Mr. Solomon, Assistant General Counsel
Mr. Hexter, Assistant General Counsel
Mr. Nelson, Assistant Director, Division
of Examinations
Smith,
Assistant Director, Division
Mr.
of Examinations
Mr. Conkling, Assistant Director, Division
of Bank Operations
Mr. Thompson, Supervisory Review Examiner,
Division of Examinations
Messrs. Guth and Huning, Review Examiners,
Division of Examinations
Mr. Lyon, Federal Reserve Examiner, Division
of Examinations
Mr.
Mr.
Mr.
Mr.
Discount rates.
The establishment without change by the Federal
Reserve Banks of New York, Philadelphia, Cleveland, Richmond, Chicago,
St. 1°Ili8, and Dallas on July 23, 1959, of the rates on discounts and
advances in their existing schedules was approved unanimously, with
the
'kuderstanding that appropriate advice would be sent to those Banks.
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,
re
5Ealziflq unanimously:
7/24/59
-2Item No.
Letter to The First National Bank of Mantua,
Mantua, Ohio, approving its application for
fiduciary powers.
1
Letter to the Arkansas Valley Bank, Pueblo,
Colorado, approving an investment in bank
Premises.
2
Letter to The First Bank of Brighton, Brighton,
Colorado, granting an extension of time within
vhich to effect withdrawal from membership in
the Federal Reserve System.
Letter to the Presidents of all Federal Reserve
138114 requesting continuation of the final midmonth reports of assets and liabilities of
member banks on Form F.R. 635.
'letter to the Federal Deposit Insurance Corpo-
5
r
tion regarding the application of The Vermont
,
841k and Trust Company, Brattleboro, Vermont,
'
-c/r continuance of deposit insurance.
'Ilietter to the Chemical Corn Exchange Bank,
York City, approving the establishment
'4
1 a branch at Queens Boulevard and 64th
4(1) Rego Park, instead of at Junction Boulevard
kcd 62nd Drive.
Application of Marine Corporation.
6
The Marine Corporation,
Milvaukee, Wisconsin, had applied under section 3( )(2) of the Bank
Rol
4-ding ,
0ompany Act for prior approval of the acquisition of 80 per cent
of the
"
r1
se^-_,
3,000 voting shares of Pemaukee State Bank, Pewaukee,
Approval was recommended by the Federal Reserve Bank of
Chicago, and no objection was interposed by the Commissioner of Banks
tc)r the
State of Wisconsin.
7/24/59
-3There had been distributed to the members of the Board two
Memoranda from the Division of Examinations dated June 30, 1959, and
a memorandum from the Legal Division dated July 16, 1959.
The Division
of Examinations concluded that although a strong case for approval of
the
application on the basis of the convenience, needs, and welfare
°f the communities and areas concerned had not been made, some benefits
l elating to this factor might flow from the alliance of Pewaukee State
'
8ank with the holding company.
The Division also concluded that
consummation of the proposed transaction would not expand The Marine
Corporation's scope of operations beyond limits consistent with adequate
81111 sound banking, the public interest, and the preservation of
c°MPetition in the field of banking.
Accordingly, the Division
rec°mmended that a notice of tentative decision granting the application
be issuPd by
the Board.
The Legal Division expressed the view that agreement by the
toa,rea
•( with the conclusions of the Division of Examinations would
constitute sufficient ground for approval of the application, but
that in the absence of strong affirmative factors the Board also could
113:11-3-Y deny the application if it concluded that the public interest
14 the field of banking would be better served by the continuance of
as an independent bank.
The Legal Division pointed out that
the circumstances of the instant case were quite similar to those
ill'ic)ived in applications of New Hampshire Bankshares, Inc. and BancOhio
*-Puration which the Board approved in 1958.
7/24/59
-4At the request of the Board, Mr. Thompson made a statement
concerning the findings and conclusions of the Division of Examinations,
his comments being based on the memoranda submitted by that Division,
Nihile Mr. Hexter summarized the views expressed in the memorandum from
the
Legal Division.
The Chairman then turned to the members of the Board, each of
14ho1 indicated that he would favor the issuance of a notice of tentative
(lecision approving the application.
Governor Robertson commented that in his opinion most of the
factors required to be considered by the Bank Holding Company Act
%lel* neutral but that there was sufficient indication of benefit to
the convenience, needs, and -welfare of the communities and areas
co eerned to
justify approval of the application.
Accordingly, it was understood that the Legal Division would
1)l
'
ePare for the Board's consideration drafts of a notice of tentative
sion and tentative statement granting the application of The
144114e Corporation.
At this point Mr. Riefler, Assistant to the Chairman, entered
the room,
.
4./12
4 plication of Bank Stock Corporation of Milwaukee.
Bank Stock
Corp
of Milwaukee, Milwaukee, Wisconsin, had applied, pursuant
to e
3(a)(1) of the Bank Holding Company Act, for approval of
7/24/59
-5-
action to become a bank holding company by acquiring 80 per cent or
more of the outstanding common shares of the Marshall and Ilsley Bank
and the Northern Bank, both of Milwaukee.
The Commissioner of Banks
for the State of Wisconsin indicated that he did not find grounds upon
*Lich to object to the application, and the Federal Reserve Bank of
Chicago recommended favorable consideration.
Two memoranda from the Division of Examinations had been
dilltributed to the Board under date of July 14, 1959, along with a
lnemorandum from the Legal Division dated July 22, 1959.
The Division
of 3(aminations concluded that a strong case had not been made, and
Probably could not be made, for approval of the application on the
basis of the convenience, needs, and welfare of the communities and
l'eaa concerned, but that conspimption of the transaction would not
be inconsistent with this factor. The Division also concluded that
aPproval of the application would not bring into being a bank holding
e°41Pa 1Y whose size and extent would be beyond limits consistent with
ade Vate and sound banking, the public interest, or the preservation
Of
competition in the field of banking.
The Legal Division noted that this application presented the
qUestion whether the Board should approve the formation of a new
'
4I.6 company system that would significantly affect existing interbank
competition provided a number of other sources of banking services
-6-
7/24/59
'would still be available to the public.
It was noted that in the case
Of the application of The Marine Corporation, approved by the Board
141 1958, the banks taken into the holding company system were not in
allbstantial competition with each other, whereas in this case the
creation of the new holding company system would eliminate significant
actual and potential competition between two large banks.
In the
Marine case, the third largest bank in Milwaukee proposed to affiliate
vith itself three smAll banks not in substantial competition with it,
*tile in this case the second largest bank in Milwaukee would be
joined with the fourth largest.
In addition, affiliation of the
Northern Bank with the Marshall and Ilsley Bank would destroy any
Pcsaibility of affiliation between the former and any one of certain
"all independent banks so as to develop a fourth substantial banking
rganization in the Milwaukee area.
If the application were approved,
Mill'aukee would become in practical effect a three-bank city. It was
the opinion of the Legal Division that either approval or denial of
the aPplication would be legally supportable.
At the request of the Board, Mr. Thompson summarized the
1111dinga of the Division of Examinations in the light of the five
8t4ttlIt'crY factors required to be considered in a case of this kind,
his
comments being based on the memoranda that had been distributed to
the B'oard, after which Mr. Hexter amplified the views expressed in the
emorandum from the Legal Division.
7/24/59
7'
The Chairman then turned to the members of the Board, and
Governor Mills, Who spoke first, pointed out that there was no impediment
in the laws of the State of Wisconsin to the establishment of a new
bank holding company, so the question resolved itself to one of judgment
on the part of the Board as to whether the creation of the new holding
c°rVanY would be consistent with the five factors set forth in the
Bank Holding Company Act.
He suggested that the Board's approach to
811°1 an application might be to look at the sponsoring bank as the
ntleimua of the holding company system and the expansion that would
stem therefrom if the application were approved.
In the instant case,
stIch an approach would mean starting with the Marshall and Ilsley Bank
and then considering, in the light of the five statutory factors,
'whether the covering of Northern Bank into a holding company group
14 .1d constitute an expansion incompatible with those factors, par"
tielllarlY the fifth.
The application of that kind of test produced,
in his judgment, a narrow justification for approving the creation of
the nev holding company system, which would afford desirable and
str"ger competition to the two existing holding companies. Although
in a.
sense its creation would reduce the competitive status of the
remaining independent banks within metropolitan Milwaukee, those banks
te
d
nde- to operate in areas that were self-sufficient, or at least
ilearlY enough 80 to provide business for the independent banks and to
7/214159
suggest that the creation of the new holding company
would not be
Prejudicial to their longer-term further growth.
Accordingly, Governor
Mills indicated that he would be inclined to favor approva
l of the
application.
Governor Robertson said that he viewed this as a very close
Case. Were it not for the fact that so much of the banking
business
in the Milwaukee area was now concent
rated in two holding company
sYstems, he would
feel that the application should be denied.
However,
in view of the situation prevailing in the particular area, he could
see some basis for approvi
ng the application to obtain whatever benefits
Igere to be derived from competition between three large banking
c)rgariizations
rather than two such organizations.
Governor Szymczak stated that he would favor approval of the
application,
recognizing that this was a close case.
Governor Balderston raised the question whether certain
distinctions should not be drawn between an application to establish
s new holding
company and an application to expand an existing holding
earriPanY sYstem.
While the Bank Holding Company Act did not preclude
the creation
of holding companies, it seemed to him there was a
dirre
rence between permitting extension of the scope of operati
ons of
an existing holding company and permitting the birth of a new one,
elld he had a little
more concern about an application of the latter
7/24/59
type.
-9-
The establishment of the proposed holding company in the Milwaukee
area, even though that company would be smaller than the largest holding
eftIcetv now in existence in the area, suggested that there might be set
in motion a movement that would make it difficult for those banks still
independently operated to remain in that status.
On balance, therefore,
he would be inclined to recommend against approval of the application.
Chairman Martin indicated that he would favor approval of the
application, although the case was a close one.
He recognized the
Points made by Governor Balderston, but they were not convincing to
him to the extent that he would deny the application.
The Secretary reported having been informed by Governor King
that he had reviewed both this application and that of The Marine
Corporation, previously discussed at this meeting, and would be inclined
t° feel that both applications should be approved.
The Secretary added
that to his knowledge Governor Shepardson had not expressed any views
141th regard to either application.
As a result of the remarks made by Governor Balderston,
Peel-ally those relating to the analogy he drew between this case and
"
the elimination of competition between the second and fourth largest
alltomobile producers in order to enable them (combined) to compete more
effectively
against General Motors, and in view of the fact that this
/411.41 admittedly a close and difficult case, Governor Robertson stated that
he reit more doubtful as to whether the application should be approved.
7/24/59
-10-
Accordingly, he suggested that the case be put over for a subsequent
meeting in order to allow further study.
aPproval.
This request did not meet with
Governor Robertson then stated that on further reflection he
had decided to resolve his doubts in favor of denial of the application.
There ensued further discussion of the procedure to be followed,
and it was brought out that the action today would be only to authorize
the drafting of a notice of tentative decision.
In issuing a tentative
decision in other cases, it had been the Board's practice not to indicate
'Whether there were minority view, and the final decision in the matter
Would await elapse of the requisite number of days following publication
c)f the tentative decision.
At that time consideration would be given to
Whatever comments might have been received from interested parties.
'
Accordingly) it was understood that the Legal Division would prePare for the Board's consideration a notice of tentative decision and a
te
ntative statement granting the application of Bank Stock Corporation of
l'Illyaukee.
In this connection, the view was expressed that if a notice of
tentative decision granting the application were published, the position
taken therein should not be reversed merely because of a change in the
c°naPosition of the Board at the meeting when the case came up for final
decision.
Messrs. Hexter, Thompson, Guth, Huning, and Lyon then withdrew
flsc)m the meeting, and Messrs. Noyes, Adviser, Williams, Associate Adviser,
ekerty Chief, Banking Section, and Fisher, Economist, Division of
Ilesearch and Statistics, entered the room.
-11-
7/24/59
Correspondence with Congressman Patman.
As stated at the
meeting on July 20, 1959, Congressman Patman had addressed a letter
to Chairman Martin under date of July 17, 1959, raising a series of
qUestions with respect to bank reserves.
Members of the staff had
joined in the drafting of replies to such questions and copies of the
Proposed replies were distributed at this meeting.
Information was reported from the office of the Board's
Legislative Counsel that Mr. Patman had expressed a desire to receive
the answers to his questions not later than today, apparently so that
he might have them for study prior to Chairman Martin's appearance
before the Joint Economic Committee on Monday, July 27.
It was also
reported that Mr. Patman had requested replies to as many of the
cilleations as possible if the full set of answers could not be sent to
him today, and that he had later presented a single question, related
to those found in his letter but somewhat different in form from any
Of
them.
As transcribed in the office of the Legislative Counsel, this
Particular question left some doubt as to meaning, which suggested that
the advisable course would be to transmit today to Mr. Patman the
64481/era to all of the questions contained in his letter.
In discussion, it was noted that the questions asked by Mr.
?atrlan were so phrased as to be susceptible in most cases to rather
short answers, but that the replies had been drafted in such manner
48 to afford as full information as possible.
7/24/59
-12From preliminary review, no questions were raised as to the
accuracy or clarity of the proposed replies.
It was then agreed that
the members of the Board would review the draft answers at greater
length, that any comments or suggestions would be forwarded to Mr.
Thomas or Mr. Sherman, and that the answers would be sent to Congressman
Patman this afternoon.
Secretary's Note: After certain changes had
been made in the light of comments received,
the answers were sent to Congressman Patman
later in the day, with a letter of transmittal signed by Chairman Martin.
Mr. Conkling then withdrew from the meeting.
Maximum rates on time and savings deposits.
There had been
distributed to the members of the Board copies of a letter dated
jillY 21, 1959, from the Federal Reserve Bank of New York transmitting
a letter dated July 13, 1959, from the Manufacturers Trust Company,
Nelq York City, requesting increases in the maximum rates of interest
PaYable on time and savings deposits under Regulation Q, Payment of
Interest on Deposits.
The Reserve Bank's letter also enclosed a
nlemorandum submitted under date of July 14, 1959, by The Chase
9411hattan Bank, New York City, concerning the degree of stability
1)11rPorted to have been shown by that bank's foreign-owned time
cleP°aits.
The Reserve Bank recommended increases in the rates on
time deposits with maturities of 90 days and over but expressed the
7/24/59
-13-
view, as it had previously, that the
M2XiMUM
rate on savings deposits
need not be increased because the rates on other time deposits were
raised.
There had also been distributed to the Board copies of a
letter from the Michigan National Bank, Lansing, Michigan, dated
"hay 20, 1959, requesting an increase to 3-1/2 per cent, compounded
quarterly, in the maximum rate payable on savings deposits and time
certificates, and the Secretary reported at this meeting that the
Ne
York Reserve Bank had now transmitted a letter dated July 20
from The Hillside National Bank, Hillside, New Jersey, requesting an
increase to 3-1/2 per cent in the maximum savings deposit rate.
Chairman Martin stated that he had suggested the inclusion of
this topic on the agenda because of his feeling that such treatment
811°111d be accorded to communications of the nature that had been
received.
He would recommend, however, that no action be taken at
this time/ Particularly in view of the current controversy in the
Congress relating to interest rate ceilings on Treasury bonds and
United States
savings bonds.
There was no indication of disagreement with the view expressed
by the
Chairman.
Mr. Eckert then withdrew and Mr. Allison, Special Consultant
to the
Board, entered the room.
7/24/59
Facilities at cash agent banks.
There had been distributed
to the Board copies of a memorandum from Mr. Harris, Coordinator of
Defense Planning, dated July 23, 1959, reporting that the Federal
Reserve Bank of Cleveland had selected its emergency cash agent banks
arid was now ready to enter into lease agreements with such banks for
the use of vault facilities.
In order to provide appropriate protection
for the currency stored at such points, regardless of whether it was
st°red pre-attack or post-attack, it appeared that certain expenditures
1°°113-d be necessary to improve vault facilities.
the re
In most instances
quirements and estimAted expenditures were minor, but in a few
instances they involved such things as vault doors and door frames.
14 a letter dated July
13, 1959, President Fulton inquired whether the
Board had yet taken any position with respect to such expenditures or
14hether the matter would be left to the discretion of the individual
Reserve Banks.
Mr. Harris recommended that the Board provide the
?sderai Reserve Banks guidance on the subject along lines set forth
ill his memorandum.
In essence, this guidance would permit a Reserve
.4111k, in its discretion, to make necessary capital expenditures for
the
improvement of a cash agent bank's vault facilities, provided the
e°st would come within what would be considered a reasonable rent over
the
4-'Lle
of the lease if the improvements had been made by the cash
El'gellt bank.
Special cases would be brought to the Board's attention.
N.4*.
7/24/59
-15Governor Robertson commented that eight of the Reserve Banks
were in favor of pre-attack currency storage at cash agent banks, while
four were in favor of storage post-attack only.
It was his ow feeling
that the use of cash agent banks was a vital part of the defense planning
Pr°gram and that plans should be carried forward.
The Federal Reserve
Bank of Cleveland was reedy to proceed, but in some cases had found
it necessary to improve vault protective qualities.
The Bank was
Prepared to authorize the necessary funds on a basis whereby any capital
exPenditures on vault facilities would be advanced and taken into
"count in considering the rental to be paid over a ten-year period.
The guidance proposed by Mr. Harris would mean that a Reserve Bank
14ou1d have to come back to the Board if, in any instance, a matter
c°uld not be handled on that basis.
Governor Robertson then described certain minor changes in
the
Proposed paragraphs of guidance that had been suggested by Mr.
?arrell and expressed agreement with those changes.
He noted that
both Mr.
Harris and Mr. Allison were in favor of allowing the Reserve
13a4lic8 to proceed in the manner outlined in the memorandum.
Mr. Smith commented that an alternative would be to request
a
en
"
ca n
agent bank to spend the funds necessary to improve its vault
racilities and then recoup such expenditures under the lease agreement
vith the Federal Reserve Bank over a period of time.
Under that
alternative,
there would be no vault improvement expenditures on the
boolca
Of the Federal Reserve Banks to give rise to possible questions.
7/24/59
Governor Mills indicated that he also had in mind some of the
qualms expressed by Mr. Smith.
He then inquired whether the Board's
Legal Division should not have an opportunity to review the form of
lease agreements between Reserve Banks and cash agent banks, for he
felt the Board should know beyond any question of a doubt that the
leases 'were consistent with the responsibilities of the System relating
tO the expenditure of Reserve Bank funds and at least be satisfied
that the terms of the lease were such as to offset during the life
thereof any expenditures made in improving the protective qualities
°f vault facilities at cash agent banks.
the
He also had in mind that
cash agent banks were selected for the convenience of the System
atd that it
might be necessary to prove to any other commercial bank
InakIng inquiry that the selection represented the appropriate choice.
Raying chosen a cash agent bank, the Reserve Bank would in a sense be
illIfesting its funds for the benefit of such bank by improving its
vault facilities, for this would inure to the benefit of the bank over
a Period of time.
Therefore, the System might be on rather tenuous
ound in attempting to relate the expenditures for improvements to
the life of the lease, and the procedure might expose the System to
ellticism on the part of various parties, including banks not selected
48 cash agent banks.
;97
7/24/59
There ensued discussion of the processes through which the
selection of cash agent banks had been made, after Which Governor
Robertson inquired of Governor Mills Whether it would satisfy the
latter's point if there were included in the letter of guidance to
the Reserve Bank an additional item specifying that the form of lease
/4itIJ cash agent banks should be submitted to the Board for review
before
being entered into.
Governor Mills responded that he felt
sPecimen forms of lease agreement should be available for review so
that the Board might see exactly what the Reserve Bank proposed to
do,
Question then was raised whether there should be discussion
°f the matter with the Conference of Presidents of the Federal Reserve
184114. Governor Robertson indicated that although the Presidents
heretofore had given attention to the problem of storage of cash at
cash agent banks, he would have no objection if the Board felt it
desirable for the matter under consideration to be taken up with the
residents when they were in Washington next Tuesday, July 28.
Governor Mills then called upon Mr. Solomon for a statement
Ilith regard to the legal aspects of the problem, and the latter stated
that he felt an advance of funds by a Reserve Bank for the improvement
"facilities
at a cash agent bank could be justified and supported
legally) pursuant to an understanding that the lease agreement would
7/24/59
-18-
take into account the cost of such improvements.
There would, of course,
remain the
possible problem of public relations, and question might be
raised as to why a cash agent bank should not itself provide adequate
vault facilities.
Governor Robertson commented that the whole area of emergency
Planning was one involving public relations problems and that there
were differing views with regard to the need for such planning.
It
seemed to him, however, that the use of cash agent banks was an essential
Part of the defense planning mechanism and that the System must take
the
chance of possible criticism.
Personally, he would be willing to
trY to Justify such expenditures as might be necessary, for he felt
that the storage of emergency supplies of currency was an essential
element of the emergency plans of the System.
Speaking of the defense planning program in more general terms,
ellairoan Martin noted that the System appeared to have no alternative
.4) 14"ing ahead vigorously in the light of the position taken by the
Pl'esident of the United States.
Governor Mills again commented that the problem he had primarily
14 Mind vas the possibility of rivalry within the banking system and
Re8s1"va Bank expenditures for improvements at selected banks being
"
biact to
adverse comment.
Ilad been
He then referred to the difficulty that
experienced in obtaining legislation to permit the construction,
at Pederal
Reserve expense, of a vault at Fort Riley, Kansas, for the
—16e of emergency supplies of currency.
7/24/59
On the latter point Mr. Farrell explained the grounds on which
the Treasury felt that there had been elements of misunderstanding with
regard to the proposed legislation.
He understood that the Treasury was
endeavoring to clarify the matter with the hope that the necessary legislation might yet be obtained.
Governor Balderston inquired of Governor Mills whether the latter
saw objection in principle to entering into leases for space at cash agent
banks.
Governor Mills replied in the negative, adding that he thought the
Board should go into the matter fully since this was a sensitive area
havi4E
to do with member bank relations and exposure to possible criticism.
At the conclusion of the discussion, it was agreed that the
1118.tter of procedure with respect to the leasing of vault facilities at
eash agent banks would be discussed with the Presidents of the Federal
Reserve Banks at a meeting of the Board and the Presidents next Tuesday,
t.Tilly 28.
Messrs. Smith and Allison then withdrew from the meeting.
Housing legislation.
The Senate Banking and Currency Committee
had.
asked for the Board's views on S. 2378, a bill "to extend and amend
lawg
- relating to the provision and improvement of housing and the renewal
Of
larb
a4 communities, and for other purposes." This bill reportedly had
been
introduced in
an effort to compromise differences between the Congress
arld
.th
Executive which led to the recent Presidential veto of the omnibus
7/24/59
-20-
housing bill, S. 57.
The Administrator of the Housing and Home Finance
AgencY yesterday testified before the Housing Subcorrunittee of the Senate
13anking and Currency Committee that most of the provisions of S. 2378
Would be acceptable to the Administration and that others, while undesirable, would be acceptable in a compromise measure.
There had been
di
stributed to the Board, with a memorandum from Mr. Young, Director,
Division of Research and Statistics, dated July 23, 1959, an analysis
Of S. 2378 compared with S. 57 and a draft of possible reply to the
Senate Banking and Currency Committee.
In commenting on the matter, Mr. Williams noted that Chairman
144rt1n was scheduled to testify before the Housing Subcommittee next
Wednesday
July 29, regarding S. 57.
He said the Subcommittee reportedly
/4s4 upset about the language used in the Presidential veto message,
1341'ticularly that portion relating to the inflationary consequences
f the
enactment of such legislation.
In general, Mr. Williams said,
t appeared that S. 2378 would represent a definite improvement, in
e°111Parison to S. 57, in terms of inflationary consequences.
On the
0ther
hand, it was not clear on economic grounds why there was a need
or
further stimulus to housing at this particular time.
In the draft
letter to
the Banking and Currency Committee, the staff had endeavored
to
nt up certain phases of the proposed legislation that seemed
poi
eeessive.
However, the staff would like guidance from the Board as
7/24/59
to Whether
whether the general position should be one of strong opposition to
'
S 2378 or a position of going along with legislation that was of a
compromise nature.
In further discussion, it was suggested that Chairman Martin
Ilaight be subjected to close questioning from the Subcommittee on Housing
vith regard to his views on the inflationary consequences of proposed
h°118ing legislation.
Governor Mills then raised the question whether it would be
advisable, in
reporting on S. 2378, to confine the Board's comments
rather strictly to the provisions of the
bill and avoid expressions on
Ithilosophical considerations.
On this point Mr. Fisher commented that the proposed letter had
been developed in large
measure from letters sent by the Board to the
iltireau of the Budget earlier this year with regard to various phases of
h°11eing legislation.
He also noted that the provisions of the housing
'411 were complex
and that confusion as to their effects appeared to
elciet even among experts in the field.
Mr. Fisher then mentioned a
814ggeeti0n by Mr. Shay, Legislative Counsel, that the Board might wish
to cier_
a report on S. 2378 until after the testimony by the Chairman
tlet Wednesday before the Housing Subcommittee.
In this connection it
"
If stated
that a draft of testimony to be given by Chairman Martin
be available to the members of the Board early next week.
7/24/59
-22At the conclusion of the discussion, it was agreed to defer
flarther consideration of the report on S. 2378 until after the Chairman's
appearance next Wednesday before the Housing Subcommittee.
All of the members of the staff except Messrs. Sherman and
Farrell then withdrew from the meeting.
Verification and destruction of currency.
Governor Balderston
referred to
consideration given on recent occasions to problems in the
area of the verification and destruction of United States currency at
Federal
meeting
Reserve Banks and particularly to the discussion at the joint
of the Board and the Reserve Bank Presidents on June 16, 1959,
W• hiCb time it
or
was stated that the Presidents had designated the members
the Committee on Fiscal Agency Operations (Messrs. Leach, Fulton, and
Mengels) to
represent the Conference in Treasury-Federal Reserve meetings
relati
-ng to aspects of this subject.
Governor Balderston inquired whether
it 1• :1111c1 not be appropriate for the Board to designate its representative
toparticipate in those conferences.
After discussion, Governor Robertson was designated as the member
of the Board to
serve in this capacity.
A pointment at Atlanta Reserve Bank
(Item No. 7).
As the result
°f e• al'lier informal discussions with the Board, the Federal Reserve Bank
Atinn+
in a letter dated July 10,
1959, requested approval of the
7/24/59
-23-
aPPointment, effective August 11 19591 of Lewis M. Clark as First Vice
President of the Bank for the unexpired portion of the five-year term
'which began March 1, 1956, and the payment of salary to Mr. Clark at
the rate of $121142.48 per annum for the period August 1 through
December
31, 1959. This letter had been circulated to the members
Of the
Board with a memorandum from the Division of Personnel Administration dated July 15/
approval of the request and
1959/ recommending
submitting
a draft of proposed letter to the Federal Reserve Bank of
Atlanta. The memorandum pointed out that Mr. Clark reached age 65 on
JulY 141 1959, that he had elected to retire effective August 11 1959,
1314 that he had now agreed to continue on duty through December 31,
1959. The salary fixed for Mr. Clark by the Board of Directors would
l'ePresent the difference between the pension portion of his retirement
alloweaace and his current salary of $251000 per year.
After discussion, unanimous approval was given to the proposed
IlePlY to the Federal Reserve Bask of Atlanta, a copy of which is attached
48 Item No. 7.
The meeting then adjourned.
Secretary's Notes: Governor Robertson, in
the absence of Governor Shepardson, today
approved on behalf of the Board the following
items:
7/24/59
4-
Memorandum dated July 23, 1959, from Mr. Marget, Director, Division
of International Finance, recommending an increase in the annual salary
Of Henry W. Goldstein, Economist in that Division, from 4;6,435 to $7,0301
effective
July 26, 1959.
Letter to the Federal Reserve Bank of Atlanta (attached Item No. 8)
approving the designation of J. W. Moore as special assistant examiner.
(4,)}
, ./v. ,‘. .„, . . . ,c,„.
Secretary
BOARD OF GOVERNORS
44,011}ri,4
4
*
*
gq*
OF THE
,g0i7*4
Item No. 1
7/24/59
4
0
0.
*
%
*1
1 r1:,
,
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
440,
ADDRESS OFFICIAL CORRESPONDENCE
1
TO THE BOARD
h44. UtOttz'
''
***{,
'
14
0*
'
444,
-
July 24, 1!,5')
Board of Directors,
The First National Bank of Mantua,
Mantua, Ohio.
Gentlemen:
The Board of Governors of the Federal Reserve System
has given consideration to your application for fiduciary
Powers in connection with the proposed consolidation of The
First Savings Bank and Trust Company, Ravenna, Ohio, with your
bank and grants The First National Bank of Mantua, Mantua,
°hi°, authority, effective if and when the proposed consolidation is consummated, to act, when not in contravention of
State or local law, as trustee, executor, administrator,
l'egistrar of stocks and bonds, guardian of estates, assignee,
receiver, and committee of estates of lunatics and in any
Other fiduciary capacity in which State banks, trust companies, or other corporations which come into competition with
n‘ational
banks are permitted to act under the laws of the
State in which the national bank is located. 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.
Upon receipt of advice from the Comptroller of the
,
,
CurrencY that the consolidation has been consummated, a formal
'!Itificate setting forth the new title and location of your
rnk and indicating the fiduciary powers which it is authorized
to
exercise will be issued.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 2
7/24/59
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OrriCtAL CORRESPONDENCE
TO THE BOARD
July 24) 1959
Board of Directors,
Arkansas Valley Bank,
Pueblo, Colorado.
Gentlemen:
Pursuant to your request submitted through
the Federal Reserve Bank of Kansas City, the Board
of Governors of the Federal Reserve System, approves,
under the provisions of Section 24A of the Federal
Reserve Act, an investment in bank premises, direct
and indirect, by Arkansas Valley Bank, of not to
exceed 40010000 for the purchase of present banking
quarters and certain additions thereto, including an
adjacent building and parking lots.
It is understood that the pr gram is to be
financed through the organization of a whony owned
affiliate with capital of ::1;150,000 and a mortoze to
outside sources not exceeding 250,1000.
Very truly yourS,
(Sired) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
.00tts} 4,4
.44'OW COI,*0
4
41o.L._
OF THE
.7,
r
FEDERAL RESERVE SYSTEM
Item No.
7/24/59
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
0,,
040
P
July 24, 1959
Board of Directors,
The First Bank of Brighton,
Brighton, Colorado.
Gentlemen:
Pursuant to your request submitted through
the Federal Reserve Bank of Kansas City, the Board
c't Governors of the Federal Reserve System extends
until September 17, 1959, the time within which The
!trst Bank of Brighton may accomplish termination of
Its membership in the Federal Reserve System, under
the original authorization contained in the Board's
letter dated October 16, 1958.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
4
•
4
BOARD OF GOVERNORS
OF THE
Item No. 4
FEDERAL RESERVE SYSTEM
4
.)
.)
4o
4
0 43
WASHINGTON 25. D. C.
ADDRESS orr......, CORRESPONDENCE
TO THE BOARD
July 24, 1959.
Dear Sir:
eDitInents The Board's letter of September 25, 1958 (S-1669) requested
a41 1. °n the continued need for final mid-month reports of assets
-Liabilities
of member banks on form F.R. 635.
On the basis of the replies received and the needs of the
or these statistics here, it is felt that further experience
rAid eeesary before complete reliance is placed on the preliminary
4r;lonth reports.
Six of the Reserve Bank replies stated that
118z;dznth tabulations would be continued, regardless of 3oard
figures. Only two felt preliminary figures were now
etre eintly accurate to eliminate the final tabulations. In the
corti sL'ances, final mid-month reports on form F.1 635 should be
nued at
least for the present.
tleer
re •
The Board has requested its Division of Bank Operations to
Irlevr
th
COrtin . e matter again early in 1960, together with a review of the
heads ulng need for final end-of-month reports, and to notify the
°I research at the Reserve Banks of any chances in reporting
Procedure.
, .
Very tru1V yours,
=
__ t
(>
t
he man,
Eerrit
Seceet-Ary.
IDENTS OF ALL FEDERLL RESERVE DANKS.
*Ai
71
A ,,A C k....t/
BOARD OF GOVERNORS
OF THE
Item No.
FEDERAL RESERVE SYSTEM
5
7/24/59
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE SOARS
July 24,
1959
The Honorable Jesse P. Wolcott, Chairman,
Federal Deposit Insurance Corporation,
Washington 25, D. C.
Dear Mr. Wolcott:
Reference is made to your letter of July 8, 1959,
concerning the application of The Vermont Bank And Trust
Company, Brattleboro, Vermont, for continuance of deposit
insurance after withdrawal from membership in the Federal
Reserve System.
No corrective programs which the Board of
Governors believes should be incorporated as conditions
to the continuance of deposit insurance have been urged
upon or agreed to by the bank.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
'
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 6
WASHINGTON 25, D. C.
7/24/59
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 24, 1959
Board of Directors,
Chemical Corn Exchange Bank,
New York, New York.
Gentlemen:
The Board of Governors approves the estab318hment of a branch by Chemical Corn Exchange Bank on the
northwest corner of Queens Boulevard and 64th Road, Rego
Park, New York, instead of on the southeast corner of
Junction Boulevard and 62nd Drive, Rego Park, New York,
an approved by the Board on January 15, 1959. This approval in given provided the branch is established by
January 15, 1961, and formal approval of State authorities is effective at the time the branch is estanshed.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOAPC) OF GOVERNORS
OF THE
Item No.
FEDERAL RESERVE SYSTEM
7/24/59
WASHINGTON
OFFICE OF THE CHAIRMAN
July
24, 1959.
CWIDENT1A, 010
Mr. Malcolm Bryan, President,
Federal Reserve Dank of Atlanta,
Atlanta 3, Georgia.
Dear Mr. Bryan:
The Board or Governors approves the appointment of
;sv. Luis M. Clark as First Vice l
-resident of the Federal
RenHrve Dunk of All tot
errective AutruA 10 1959, for the
'11110,xpired portion of th rive-year term which bevan
March 1,
()V, an
requested in vour Jotter of July 10.
The Board nlso approves the payment of saL,ry to
Clark at the rate of 312,1)42.48 per annum, the
rate
li-4'd 14 your Board of Directors, from AuruA 1 throtwh
-''°""Jor 31, 1959. It is under:,tood that Mr. Cla0.
hae
'"rt!ed to remain on duty for thiL, five-month
period.
r
Si ncerel y yours,
(Signed) Wm. McC. Martin, Jr.
Wm. ficG. Martin, Jr0
f‘*ii
BOARD OF GOVERNORS
401.0;t,4,400
e
OF THE
vl%
41
1
Item No. 8
FEDERAL RESERVE SYSTEM
7/24/59
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
4440*-
July 24, 1959.
Mr. Geo. W. Sheffer, Jr., Chief Examiner,
Federal Reserve Bank of Atlanta,
Atlanta 3)
Georgia.
Dear Mr. Sheffer:
In accordance with the request contained in your
let+
—er of July 211 1959, the Board approves the designation
(
,-1,,f
Moore as a special assistant examiner for the
ri?deral Reserve Bank of Atlanta for the purpose of parI
'leiPating in examinations of State member banks only.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
@FedFRASER