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Minutes for
To:
Members of the Board
From:
Office of the Secretary
July 27, 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
25:` 71
Minutes of the Board of Governors of the Federal Reserve System
On Thursday, July 27, 1961.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
The Board met in the Board Room at 10:00 a.m.
Martin, Chairman
Balderston, Vice Chairman
Mills
Robertson
Shepardson
King 1/
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Discount rates.
Sherman, Secretary
Kenyon, Assistant Secretary
Hackley, General Counsel
Farrell, Director, Division of Bank Operations
Solomon, Director, Division of Examinations
Harris, Coordinator of Defense Planning
Hexter, Assistant General Counsel
Hooff, Assistant General Counsel
Daniels, Assistant Director, Division of Bank
Operations
Leavitt, Assistant Director, Division of
Examinations
Landry, Assistant to the Secretary
Achor, Review Examiner, Division of Examinations
McClintock, Review Examiner, Division of
Examinations
Thompson, Review Examiner, Division of
Examinations
White, Review Examiner, Division of Examinations
The establishment without change by the Federal
Reserve Bank of Minneapolis on July 26, 1961, of the rates on discounts
44d advances in its existing schedule was approved unanimously, with the
141aerstanding that appropriate advice would be sent to that Bank.
Items circulated or distributed to the Board.
The following
Items, which had been circulated or distributed to the Board and copies
°r
hich are attached to these minutes under the respective item numbers
14dicated, were approved unanimously:
-
Withdrew from meeting at point indicated in minutes.
7/27/61
-2Item No.
Letter to Cravath, Swaine & Moore, New York, New
York, interposing no objection to the addition of
a paragraph to the public notice of proposed merger
Of Long Island Trust Company with Chemical Bank New
York Trust Company, with respect to the continued
°Peration of certain branches of Long Island Trust
Company located in Suffolk County.
1
Letter to Webster Groves Trust Company, Webster
Groves, Missouri, waiving the requirement of six
months' notice of withdrawal from membership in the
Federal Reserve System.
2
Letter to the Federal Deposit Insurance Corporation
regarding the application of Webster Groves Trust
C°mPany, Webster Groves, Missouri, for continuation
°f deposit insurance after withdrawal from memberin the Federal Reserve System.
3
Letter to Gruver State Bank, Gruver, Texas, waiving
the requirement of six months' notice of withdrawal
from membership in the Federal Reserve System.
Letter to the Comptroller of the Currency recomending favorably with respect to an application
o organize a national bank at Vernon, Connecticut,
Provided arrangements are made for satisfactory
executive management.
5
Letter to the Federal Reserve Bank of New York
14terposing no objection to the service of an
c3ff1cer of the Bank in the Office of the Under
ecretary of the Treasury for Monetary Affairs
Or a period of time.
6
Letter to the Federal Reserve Bank of Philadelphia
Proving a revision of the minimum of Grade 2 of
he employees' salary structure.
7
Z
J
Letter to the Presidents of all Federal Reserve
e llks regarding the distribution of the revised
'
`kltion of the Federal Reserve Act.
8
2539
7/27/61
-3Item No.
Letter to the Federal Reserve Bank of Chicago
approving the payment of salaries to certain
officers at rates fixed by the Board of Directors.
9
Letter to Bristol County Trust Company, Taunton,
Massachusetts, approving the establishment of a
branch in the Bay Colony Shopping Center, Town
Of Raynham.
10
Letter to Harvard Trust Company, Cambridge, Massaehusetts, approving the establishment of a branch
at 678 Massachusetts Avenue.
11
Letter to Liberty Bank & Trust Company, Buffalo,
4ew York, approving the establishment of a branch
347-349 Central Avenue, Village of Fredonia,
To
'
'- own of Pomfret.
12
Letter to Manufacturers and Traders Trust Company,
4ffalo, New York, approving the establishment of
4.branch in the Aurora Village Shopping Center,
Village of East Aurora.
13
:etter to Manufacturers Trust Company, New York,
1!New
approving the establishment of a limited
14
Letter to The Peru Trust Company, Peru, Indiana,
4PProving the establishment of a branch at Bunker
Rill Air Force Base, Miami County.
15
Letter to Bank of Reynolds, Reynolds, Indiana,
4PProving the establishment of a branch in Chalmers,
Provided the bank's common stock is increased to
tileet statutory requirements.
16
leietter to United California Bank, Los Angeles,
.e.lifornia, approving the establishment of a branch
14 Salinas, Monterey County.
17
York,
PlIrpose branch at 2086 West 5th Street, Brooklyn.
With respect to Item No.
8, Governor Shepardson noted that the
Procedure to be followed contemplated sending one copy of the revised
4
7/27/61
-4-
edition of the Federal Reserve Act to each member bank without charge.
He pointed out that a similar distribution had recently been made of
the published interpretations of the Board of Governors.
Messrs. Molony and Fauver, Assistants to the Board, and Sprecher,
Assistant Director, Division of Personnel Administration, joined the
Meeting at this point.
Application of Manufacturers Trust Company.
Copies had been
distributed of a memorandum dated July 14, 1961, from the Division of
xaminations recommending disapproval of an application by Manufacturers
Trust Company, New York City, for permission to merge with The Hanover
13aak, New York City, under the charter of the applicant and title of
Manufacturers Hanover Trust Company.
The recommendation of the Federal
Reserve Bank of New York was favorable to the proposed merger, which the
Telr York State Banking Department had approved on May 23, 1961.
There had also been distributed, under date of July 24, 1961,
e°Pies of a memorandum from the Legal Division expressing the view that
either approval or disapproval of the merger would be sustained by the
The memo-
Catir.ts
as a reasonable exercise of the Board's discretion.
randum
recommended, however, that if the Board should be inclined toward
641 adverse decision a letter be sent to the applicant indicating points
areas as to which the Board had question and affording the applicant
within a specified
641 °PPortunity to submit further views or comments
Period of time.
This would be in accordance with a procedure recommended
2511
7/27/61
_5..
by the Legal Division in its memorandum of May 26, 1961, with respect
to procedural questions relating to merger and holding company applications.
The July 24 memorandum also recommended that a copy of any
Such letter to applicant be furnished the New York Reserve Bank with
an indication that the Board would consider any further comments the
Reserve Bank might wish to offer.
The recommended procedure was endorsed in a memorandum from the
Division of Examinations dated July 25, 1961.
The Division recommended,
further, that the procedure be followed in the case of any other merger
°r holding company application (unless a public hearing had been held)
"there the Board was inclined toward an adverse decision.
At the request of the Board, Mr. Solomon reviewed the factors,
48 set forth in the July 14 memorandum, that had led the Division of
Examinations to recommend unfavorably on the merger application.
He
ccIncluded, however, with the comment that the Division concurred in
the Procedural recommendation contained in the Legal Division's memoof July 24.
Thus, should the Board be inclined not to approve
Trust inviting
the aPPlication, a letter would be sent to Manufacturers
the submission of further comments, orally if desired, before a decision
a reached.
Speaking for the Legal Division, Mr. Hackley said the application
an adverse decision
4t hand presented such a close case that although
1.1°41d probably be supported in the event of judicial review the same
2542
7/27/61
-6-
could be said for a favorable decision.
In the circumstances, he said,
the Division proposed adoption, in this and similar future cases, of
the procedure mentioned by Mr. Solomon, which would be in accordance
with recommendations in the Legal Division's memorandum of May 26, 1961,
vith respect to procedural questions relating to merger and holding
e°mPany applications.
In fact, he noted, the adoption of such a
Procedure would automatically dispose of certain other questions raised
in that memorandum.
The letter to an applicant, he pointed out, would
aot indicate that the Board might deny the application.
Rather, it would
slIggest, as specifically as possible, the points on which the Board had
questions and afford the applicant an opportunity to submit further facts
or arguments within a specified period of time.
The Reserve Bank con-
cerned would be afforded a similar opportunity.
Governor Mills said that the tone of the discussion and the
suggestion regarding an adverse decision left him with the impression
that the case was being prejudged without having been heard by the Board.
1118 avn position was that the application should be approved, for the
reasons set forth in the following statement, which he then read:
The key points for consideration in the proposed merger
are whether its effects
(1) would produce a commercial banking institution
controlling financial resources of a size and extent
that would nationally be contrary to the public
interest and the preservation of competition in the
field of banking; and
25,1
7/27/61
-7(2) would result in the concentration of commercial
banking resources under the control of what would be
the five largest commercial banks in the City of New
York that would be contrary to the public interest
and the preservation of competition in the field of
banking.
Point (1). The resulting Manufacturers Trust Company
coming out of the proposed merger would become the third bank
in size in New York City in point of deposits available for
employment. Size of deposits is not, however, the sole
criterion on which to analyze the competitive effects of the
Proposed merger. Each of the banks that is a party to the
Proposal has developed quite different customer clienteles,
the composition of which, except as to the elimination of
one alternative source of credit available to "national
type" borrowing customers, is not looked upon as having any
adverse competitive significance. The alternative avenues
of credit open to "national type" borrowing concerns assure
them adequate credit resources not only in New York City but
in other important financial centers throughout the United
States. Under these circumstances, the proposed merger would
not impair the availability of sources of credit to existing
or potential borrowers of any size. On the contrary, the
augmented capital resources that would be produced by the
merger would insure a greater availability of credit to
ial
borrowers whose financial responsibility justified substant
credit accommodation.
Combining the deposit and capital resources of the
Manufacturers Trust Company as a retail bank with those of
The Hanover Bank as a wholesale bank would, in effect, spread
and diversify the credit risks of the merged bank over a
Wider resource spectrum at the same time that a unified
control over the disposition of the total deposits of the
for
merged bank would allow them to be better brought to bear
e
wholesal
the
or
retail
the
constructive service at either
merged bank's
level in accord&nce with the varied needs of the
or a wholesale
retail
a
either
customers. Therefore, viewed at
the
improve
to
stand
would
level of operation, the proposal
time
same
the
at
service
merged bank's scope of national
that its ability to provide banking facilities and supply
banking services at the retail level would be improved
ion and
through the economies that accompany the unificat
s,
the income
resource
banking
application of a large pool of
all
of
benefit
the
to
from which penetrates and inures
25
7/27/61
-8-
choosing to make use of its services. Where, as in this case,
the problems of banking competition would be resolved through
approving the merger on the side of relative equals, adequate
competition is assured among strong banking entities located
both inside and outside of New York City.
Point (2). The resulting Manufacturers Trust Company,
as the third largest commercial bank in New York City, would
also be a factor in the concentration of commercial banking
resources within that group. As cited above, however, competition would exist among relative equals, all of whom, in
enjoying the economies of centralized mass operations, would
be under the necessity of placing the benefits of such
Operations at the disposal of their clienteles, both in
respect to deposit and credit conveniences and services. In
the light of recent years' developments, a wholesale bank,
such as The Hanover Bank, if denied the right to merge with
the Manufacturers Trust Company, as a retail bank, would be
left at a disadvantage that could not be readily overcome and
which would be contrary to the best interests of the New York
City financial community. For five commercial banks to
represent a large percentage of the total commercial banking
resources in New York City is not inconsistent with the size
of that community as a national and world financial center.
That fact carries particular significance in the light of
the far-flung services that these banks are called upon to
Provide, both locally, in all states of the United States,
and in foreign countries, and which make a concentration
and maneuverability of banking resources a national asset.
Capable supervision on the part of bank supervisory authorities and their demands for the exacting observance of all
statutes and regulations designed to prevent monopolistic
practices through collusion or otherwise should be counted
Upon as adequate safeguards against any abuse of the
financial privileges so largely gathered into the hands of
only five commercial banking sources.
Conclusion. The proposed merger should be approved as
being consistent with factor 5 in paragraph (c) of section 3
of the Bank Holding Company Act of 1956.
Chairman Martin said that he did not think the Board should act
°4 the application today.
Personally, he added, he was not prepared to
flr-,
4001 :.
7/27/61
-9-
vote; the nature of this case was such that he would like to hear what
the applicant had to say on a number of points.
He was not trying to
slant the matter one way or the other in approaching the question of an
oral presentation.
The question was simply whether or not such a
Presentation should be held.
Governor Mills commented that he would regard such a procedure
aS putting the Board in the position of indicating that its resources
for obtaining information through its staff, the Federal Reserve Banks,
or otherwise were not adequate.
As he saw it, this would be an indication
'inability on the part of the Board to perform the duties it was called
01
uPon to fulfill.
Chairman Martin replied that he would not agree.
The nature of
this case was such that judgment was required, and there were a number of
qtlestions that he would like to ask.
The Division of Examinations had
clone a good job in presenting the case, but judgment values might vary
e°4siderably.
After referring to some of the difficulties that he found
14 the case, the Chairman repeated that he was not prepared to act
today and said that he felt the Board should have more time to consider
the matter.
As between deferring the matter for a vote at some later
time or holding oral argument, he felt there were advantages in the latter
Procedure from the Board's point of view and also from the public relations
standpoint.
If the application should be denied, he thought it likely
that the case would go to court, and it would seem desirable to have the
/1°ard's record as complete as possible.
7/27/61
Governor Robertson said he had concluded that the procedure
recommended by the Legal Division was sound and would be appropriate in
those cases where there was an inclination to disapprove.
In cases
where it was apparent that the Board intended to approve, he felt that
the oral presentation could be foregone.
Therefore, it would seem
necessary for the Board to have some discussion of each case to determine
whether there were enough feelings of doubt to warrant inviting an oral
Presentation.
Subject to this comment, he felt that the suggested
Procedure would be desirable.
It would provide information desired by
Members of the Board before a decision was reached, and it would tend
gainst reconsideration of cases after the Board's decision had been
announced.
With respect to the instant application, Governor Robertson
said his inclination was to disapprove.
He agreed with the Division of
Examinations that there was substantial competition between the two
batiks.
If so, according to the statute it would be necessary to find
that other factors were sufficiently favorable to conclude that the
transaction would be in the public interest despite the elimination
c)f competition.
In this case, he had not been able to find those
84fficiently favorable factors.
Accordingly, he would favor providing
the interested parties an opportunity to appear before the Board.
ShoUld that course be followed, he would not indicate to the applicant
tha+
%, an unfavorable decision might be in prospect.
Instead, he would
251
7/27/61
-11-
merely indicate that there were certain points on which the Board had
questions and on which it would be glad to hear the applicant.
Mr. Hackley stated at this point, in the interest of clarification,
that the Legal Division's recommendation was not intended to suggest that
the Board would go back to the applicant for more information, for there
/las a wealth of information already at hand.
If more information was
needed in any particular case, then a public hearing might be desirable.
Rather, the Legal Division was thinking in terms of providing the
aPPlicant an opportunity to present further arguments and views that
the Board might like to have before it in exercising a judgment under
the law based on the available information. In proposing the procedure,
the Legal Division had not meant to suggest that an application would
be Prejudged in any sense.
On the contrary, the Division had in mind
that an inclination to deny might be influenced or changed as the result
°I' hearing further arguments by the applicant.
Chairman Martin then stated, also by way of clarification, that
it Vas not his view that the Board should invite an oral presentation
14 every case.
However, there were a number of cases, of which this
°4e was an example, where there were sufficient doubts as to the course
to be followed that to him, at least, an oral presentation would be
lictittable.
In this case, he would be glad to hear what the parties at
14terest had to say on several points before passing judgment.
As
he
had said before, he had no position in either direction at the moment,
25,1
7/27/61
-12-
but he had a lot of questions.
Such being the case, it seemed to him
that it would make good sense to arrange an oral presentation in order
to hear the applicant's point of view.
Governor Shepardson said that his thinking was close to that of
Chairman Martin.
On this specific case, he found himself about in the
same position as the Chairman; he had doubts on both sides of the
question.
He was hardly prepared to take a position at this time because
there were some questions on which he would like further information
in terms of the views of the parties at interest.
With the wealth of
ractual data at hand, there was no apparent need for more such data.
Rowever, on close cases where doubts existed, he thought the Board would
PUt itself in a disadvantageous position if it went ahead, possibly on
el* Split vote, and then found itself confronted with an appeal for
leconsideration or perhaps a court case.
'
If in such a case the Board
had had the benefit of an oral presentation, it might possibly have
l'solved the matter in a different way.
In order that the oral presentations might be as constructive
atld beneficial as possible, Governor Shepardson suggested developing
gllestions on which the members of the Board had doubts, so that the
1)13l1cant might be informed of them and could devote its time to dealing
th those points.
Governor King said that he could take a position on the case
today
if necessary, but that he would prefer to have a longer time for
25
7/27/61
-13-
consideration of the matter.
In general, in cases where there were
doubts he thought it would be desirable to arrange for oral presentation.
If such a presentation was to be held, he felt it would be advisable to
indicate to the parties at interest some of the points of concern,
Without going too far into the Board members' positions.
There followed further exploration of the procedure that would
he contemplated in implementation of the Legal Division's recommendation,
dUring which Mr. Hackley said the Division would have in mind affording
the applicant, in cases of the kind referred to at this meeting, an
°PPortunity to present additional views, either in writing or orally.
If the applicant requested the privilege of making an oral presentation,
it was contemplated that the presentation would be before the Board,
th the proceeding recorded and a transcript prepared.
In the course
cn his comments, Mr. Hackley brought out that another underlying reason
fclr recommending the suggested procedure was that in the event of appeal
the Board's record would be far better, in the Legal Division's opinion,
than if the opportunity for oral presentation had not been given.
Comments ensued on the extent to which it would be practicable
fc'r the Board's letter to an applicant to be specific in suggesting
13°irlts to be covered, following which Governor Mills remarked that in
his opinion an approach that would indicate a possible adverse position
*)41.d be completely wrong.
As he saw it, the letter to an applicant
Should invite its representatives to appear before the Board, if they
etr-rKw% 3
-14-
7/27/61
80 desired, and in particular to discuss certain aspects of the application, together with whatever fuller presentation the applicant might
care to make.
With reference to the application of Manufacturers Trust Company,
might be
Chairman Martin suggested that the banks proposing to merge
Tuesday,
invited to appear before the Board for oral presentation on
8sPtember
5, or Wednesday, September 6, those being dates on which it
4PPeared that all of the present members of the Board would be available,
4mi no objection to those dates was indicated.
Accordingly, it was
Understood that the banks would be invited to have their representatives
4Ppear on one of those two dates and that a draft of letter to the
the
4PPlicant bank extending such an invitation would be prepared for
130ard's consideration.
tion of
Governor Balderston referred to the recent applica
to merge with
4uPhin Deposit Trust Company, Harrisburg, Pennsylvania,
unfavorable
eamP Curtin Trust Company, on which the Board reversed its
have been
clecision following oral argument, and suggested that it would
helPful had the procedure now suggested by the Legal Division been
followed in that instance.
He noted also that the representatives of
considerable
those banks, when they appeared before the Board, spent
time
before
repeating information which was already before the Board
cleaaing with points that were of more concern.
In the Manufacturers
t r*Ust case, he suggested that the questions might be framed with
-15-
7/27/61
considerable thought to indicate points on which the Board would have
4
Particular interest at the time of the oral presentation.
He recognized
that a problem was presented in attempting to set forth such questions
Vithout indicating to an applicant that the Board was leaning in one
direction or the other, but he felt that it would be of advantage to
all concerned if the time allotted for oral presentation could be devoted
to vital points.
Other members of the Board concurred in the view that the questions
liaised with an applicant should be framed as Objectively as possible, and
It Was suggested that it would be helpful for members of the Board to
Indicate to the staff any questions that they would like to have included.
Mr. Hackley inquired whether it was understood from this discussion
that the Board accepted the procedural suggestion of the Legal Division,
ez stated in its memoranda of May 26 and July 24, 1961, for use in future
cases, and it was indicated that this was the consensus.
Mr. Hackley
noted that the adoption of this procedure would tend to resolve two other
Procedural questions raised in the Legal Division's memorandum of May 26,
to two further questions
1961) and minimize the problems involved in respect
and
Chairman Martin said that he thought the procedure was good
thet he would have no question about it.
There was the point raised by
Governor Mills that the Board would want to avoid the appearance of
be some questions
13rejudging an application in any way, and there might
involved along that line.
Also, there might be a number of cases where,
7/27/61
-16-
even though no disinclination to approve was indicated, the Board would
Still feel warranted in arranging an oral presentation before reaching
a decision.
Further discussion clarified that it was not the intent to
restrict the suggested procedure to precedent-making cases.
Question
then was raised whether it was contemplated that submission of additional
views would be invited, before the Board reached a decision, in cases
where one member of the Board indicated a disinclination to approve
the application.
The comments made on the point indicated that this
was not the intent, and that in cases where a majority of the Board was
Prepared to take favorable action without delay, such action would be
taken.
However, if a majority of the Board was not prepared to make
a favorable decision, either because of a disinclination to approve or
because of the existence of questions that suggested the desirability
Of obtaining further comments or views from the applicant on certain
aspects of the matter, then the procedure recommended by the Legal
i-vision would come into effect.
Inquiry was made as to consideration by the Board of the
l eMaining questions set forth in the Legal Division's memorandum of
'
14aY 26, 1961, relating to procedure in merger and holding company cases,
ancl after discussion the Chairman suggested that the Secretary keep the
katter in mind, with a view to taking up those questions when a full
13°ard was available.
7/27/61
-17Bank holding company applications (Item No. 18).
In the fall
°f 1958 the Board approved a recommendation made by the Legal Division
in a memorandum dated September 18, 1958, that "two separate memoranda
be prepared by the Division of Examinations with respect to each (bank
holding company) application, one containing a summary of the facts
reflected by the application and any additional facts that are pertinent
tO the matter, and the other memorandum containing the opinion and
l'ecommendation of the Division."
In accordance with another recommendation
Made by the Legal Division, the Board on October
9, 1958, requested the
Reserve Banks, in connection with each holding company application, to
"slibimit separately, whether in the form of a letter or memorandum, (1) a
statement setting forth the facts of the case, and (2) the views, opinions,
414 recommendations"
of the Reserve Bank.
The view was expressed in a
eMorandum dated May 18, 1961, from the Legal Division, copies of which
hell been distributed, that in the light of experience there were practical
l'essons for discontinuing the submission of separate memoranda by the
Reserve Banks and the Division of Examinations.
For those reasons, as
set forth in the memorandum, the Legal Division, after consultation with
the Division of Examinations, recommended that the practice be discontinued.
Following discussion during which Governor Mills noted that it
140Uld be incumbent upon those who prepared a single report, as proposed,
to be completely frank and not to withhold information of any kind out
°I* fear that the report might be introduced in evidence in a court
2554
7/27/61
-18-
Proceeding, the change in procedure was approved unanimously.
A copy
Of the letter sent to the Reserve Banks in this connection is attached
as Item No. 18.
With general reference to the matter of procedure in connection
Itith the handling of merger and holding company applications, various
aspects of which had been touched upon at this meeting, Governor King
made the comment at this point that as he saw the whole problem developing
he was coming more and more to the point of view that in time the Board
Ilculd have to adopt rather strict and standardized procedures, resembling
those of the judiciary, even though they might appear to give less
elliPhasis to the public relations aspect.
Otherwise, he felt that
sUbstantial difficulties might arise, and he was not sure, in fact,
that different procedures actunlly would be conducive to the maintenance
°t good public relations.
Application of Wachovia Bank and Trust Company (Item No. 19).
Itere had been distributed under date of July 201 1961, copies of a
Inemoramdlmn from the Division of Examinations recommending disapproval
Of an application by Wachovia Bank and Trust Company, Winston-Salem,
4°rth Carolina, for permission to merge the First National Bank of
111°ma8ville, Thomasville, North Carolina, into applicant and to operate
the present office of the merged bank as a branch. Submitted with the
Division memorandum was another of the same date from Mr. Leavitt
4t4ting reasons why he would favor approval of the application, which
7/27/61
-19-
vas also the recommendation of the Federal Reserve Bank of Richmond.
The reports on competitive factors that had been submitted by the
Federal Deposit Insurance Corporation and the Justice Department were
ed.verse, while the report received from the Comptroller of the Currency
vas favorable.
Mr. Solomon commented that the application at hand was not
sUsceptible of simple analysis and required a balancing of countervailing considerations.
In this connection he noted that there was
some difference of opinion within the Division, but he added that no
°Ile felt too strongly in either direction. Basically, he pointed out,
Waehovia was the largest bank in North Carolina.
There had been a
Marked trend in the State toward concentration of banking business in
the hands of Wachovia and a few other banks, and this had occurred
with the sympathy and concurrence of the State authorities.
Wachovia
held about 24 per cent of total deposits in the State, and some 37
Per cent of the deposits in the 19 counties within which it operated.
41though the bank proposed to be acquired was quite small, there were
Presented by the application problems relating to concentration of
Control and the competitive situation in the area where the smaller
bellk was located.
Wachovia did not presently have an office in Davidson
C°114tY, where the Thomasville bank was located, but it had a number of
hIls.aches in the area within a 15 to 30 mile radius and, after the merger,
11°111d have about 40 per cent of the total deposits in that area.
2%)5f
7/27/61
-20Mr. Solomon then referred to the management problem of the
Thomasville bank, which constituted the basic reason for Mr. Leavitt's
favorable recommendation on the application.
However, Mr. Solomon said,
it had seemed to him and to Mr. White that the argument was not quite
ea persuasive in this case as in some others.
For one thing, the
furtherance of the merger trend in the State would of itself make it
more difficult to obtain competent management in independent banks.
Also, the Thomasville bank's stock was awned substantially by members
Or a prominent family that should be able to find competent management
if it so desired.
As a further point, a merger of the bank with some
Other institution might be better than to add to the concentration
43-10eiBAy found in Wachovia.
Mr. Leavitt confirmed that this was regarded by all in the
/31-vision as a close case.
Different people could look at the factors
141to1ved and come to different conclusions.
Governor Mills stated that, while agreeing that this was a close
case) he was inclined toward approval of the application.
However, he
subordinate the management factor to what he regarded as the key
element, namely, the geographical situation.
As Mr. Solomon had pointed
°Ut) the move toward branch banking operations and larger commercial
ham,
—lug institutions in the State of North Carolina had been encouraged
by
those prominent in the State government who regarded it as being to
the financial benefit of the State.
Also, as he recalled it, the scope
7/27/61
-21-
and field of operations of the other large branch banking systems in
the State did not impinge too much on the area served by Wachovia.
Thus,
in a manner of speaking the question boiled down to whether Wachovia
should be allowed to fill a geographical gap where it
Was
not currently
represented and absorb a bank with which there already existed a
cormunity of financial interest through the Finch family.
Approval of
the application would regularize this existing relationship, while at
the same time there would remain alternative banking facilities of a
type adequate to serve the area.
Therefore, on close balance he would
be inclined toward approval of the application, leaving undetermined
the larger question of the point at which Wachovia might be so expanding
its size And operations as to represent an overwhelming dominance and
control of financial resources.
Governor Robertson said that he would be disinclined to approve
the application, and therefore would favor resorting to the procedure
or inviting further views and comments from the applicant, either in
whiting or orally, before the Board reached a decision.
In his opinion,
Wachovia had already gotten, through the process of mergers, into a
dominant position, and it was necessary to draw the line at some point.
14 every case, there were some factors that created doubt as to whether the
tiMe was appropriate to draw the line.
However, he would draw the line here.
Governor Shepardson agreed that it
//here to draw a line.
Was
In this case, however, he was persuagied by the
leasoning of Governor Mills and Mr. Leavitt.
'
always difficult to decide
Also, in States like
7/27/61
-22-
North Carolina, he believed it was important to develop banking resources
of such size as to take care of the industries in those areas, and he
vas aware of the contribution Wachovia had mane to the economic development of North Carolina.
this case.
On that basis, he would not draw the line in
He believed that the foregoing consideration, in addition
to those mentioned by Mr. Leavitt, outweighed the adverse factor of
the concentration that was developing.
Governor King indicated that, despite his personal philosophy,
he believed the banking philosophy of the individual States should be
given some consideration.
This philosophy, he noted, was quite different
in some States than others.
In California, for example, there was quite
8 liberal attitude toward State-wide branch banking; in other States
the opposite was true.
In North Carolina, if the people felt that the
trend was going too far, they could take legislative action.
In this
light, therefore, he would be willing to approve the instant application,
although somewhat reluctantly.
Further, it appeared that the management
situation at the Thomasville bank was unsatisfactory, and that was
8-1other consideration on the side of approval.
Mr. Hexter noted that there might be a question, from the standof the statute, if the Board followed the philosophy embodied in
the legislation of the respective States as a basis for making decisions
or
merger applications, to which Governor King responded in terms that
he did not understand it to be necessary for a Board member to go further
Ka*. Jt
7/27/61
-23-
than to cast his vote one way or the other.
In these various cases,
however, he felt that it was illuminating to know what some of the
factors were that had entered into a Board member's line of reasoning
in arriving at a judgment.
Therefore, he had outlined certain of the
thoughts that had occurred to him in the course of reaching a judgment
that he could vote to approve the application if the Board wished to
Proceed to a decision today.
Governor Balderston said that he also was inclined toward approval
of the application although, as he harl stated on other occasions, the
concentration of banking power in the hands of Wachovia was a matter
°f considerable concern to him.
In his view, the management question
was a rather irrelevant issue, because the interests controlling the
Thomasville bank apparently had the means to acquire management if they
lquited to do so
What impressed him, however, was the point that certain
64.1'eas of the country more or less remote from the large financial centers
were well served if aggressive banking institutions of size were available.
Re looked upon North Carolina as an industrialized State, and in his
°pinion a bank with deposits of *800 million was not too large an
institution to take care of the needs of such a State.
Therefore, he
/las not prepared as yet to "pull down the curtain" on Wachovia's growth.
Chairman Martin indicated that he might favor drawing the line on
Waehovia's growth and dominance at some point.
In his opinion, however,
this application would be an inadvisable point at which to draw the
2560
7/27/61
-24-
line, in terms of the public interest and welfare.
As he saw it, a
denial of the application would amount to hampering the development
Of the community concerned.
Accordingly, he would favor approval of
the application.
Thereupon, the application of Wachovia Bank and Trust Company
"as approved, Governor Robertson dissenting for the reasons specified
1-4 the memorandum from the Division of Examinations.
A copy of the
letter to Wachovia informing it of the Board's decision is attached as
Item No. 19.
Mr. White then withdrew from the meeting.
Application of State Bank of Albany.
There had been distributed
Under date of July 25, 1961, copies of a memorandum from the Division of
ll'caztiinations recommending approval of an application by State Bank of
411:114.Y, Albany, New York, to merge The Fort Plain National Bank, Fort
P1414, New York, with and into the applicant and to operate a branch at
the present location of the national bank.
The recommendation of the
kxleral Reserve Bank of New York was also favorable. The reports of the
ecmptroller of the Currency and the Federal Deposit Insurance Corporation
°4 the competitive factors involved in the proposed merger were favorable,
bUt the report of the Justice Department was adverse.
As stated in the memorandum of the Division of Examinations,
the basis for its recommendation that the application be approved was
48 follows:
Citf:7- K
-25-
7/27/61
ce a relatively
(1) Although the proposed merger would repla
st bank in
small country bank with a branch of the large
n of
natio
New York's Fourth Banking District, the elimi
t
banks
the competition existing between the constituen
the public
would not be particularly detrimental to
there were coninterest in the Fort Plain area, where
venient alternative banking sources;
(2)
(3)
(4)
improved banking
Area residents would seem to profit from
services and an enlarged lending base;
ion to the
The merger would offer an immediate solut
Plain
National,
Fort
in
rather severe management problem
al unsatisof
sever
sal
rever
and also the probability of a
factory trends in that bank; and
ntration of banking
The degree of increment to the conce
be nominal, and
would
ict
resources in the Fourth Distr
of
h
State Bank of
branc
a
while Fort Plain National as
its much
with
y
tivel
Albany could compete more effec
the
ved
belie
not
was
larger neighboring bank, it
bank.
that
to
ul
harmf
stronger competition would be
on, Governor Mills stated that
Following comments by Mr. Solom
ion of Examinations and would
he would accept the reasoning of the Divis
favor approval of the application.
was disinclined to approve the
Governor Robertson said that he
4PPlication.
competition between the two
The merger would eliminate
the resources of a bank
banks and provide an additional increment to
ly wiping out
that had been engaging in a merger process that was rapid
81118-11 banks in the area concerned.
As to the Fort Plain bank, the bank
and there was nothing in
examiner found that its condition was good,
the classifications to indicate otherwise.
°Perating earnings had been satisfactory.
Further, its net current
Fifty-seven per cent of the
al community, which
bellk's deposits were loaned out, in an agricultur
fIrg
or.,01
-26-
7/27/61
indicated that the bank was taking risks and serving the public.
Although the bank was understaffed at the official level, it was understandable that there was no incentive at present for the bank to seek
qualified officers in view of the offer to merge with State Bank of
Albany, which was willing to pay a substantial premium for the stock.
The directors were .said to give the bank close supervision and to be
Competent men.
In short, the Fort Plain bank appeared to be serving
the area to the best of its ability.
As to interbank competition,
there was evidence that the Albany bank was reaching over into the area
Of the smaller bank and engaging in competition with it.
The establish-
ment of a branch in Fort Plain would be more expensive, and therefore
the Albany bank was seeking to buy out the national bank.
on
Governor Robertson said he found no evidence of complaint
the part of people in the Fort Plain community regarding lack of
Pl'omptness in acting on loan applications.
It was suggested that the
to make loans, whereas
Albarky bank might install an officer with power
but that was not a strong point.
this power was now vested in three men,
Regarding the possibility of more favorable rates on loans following
the merger, if the State Bank of Albany should obtain dominance in the
charge higher rates at
Ell'ea it would be in a position where it could
some later date.
the points mentioned
Governor Shepardson observed that although
bY Governor Robertson were significant, his thinking on the application
256:1
7/27/61
-27-
was influenced by the appearance of an ultraconservative attitude on
the part of those in control of the Fort Plain bank toward reaching
out to meet the growing needs of the public for banking services.
Therefore, he felt there was justification for approval.
Governor King indicated that he would be inclined toward
he was impressed
clisaPproval, and Governor Balderston indicated that
by the reasons cited by Governor Robertson.
The fact that only 5 per
cent of the bank's earnings were diverted to officer salaries, as
4gainst 13 per cent on average for banks of comparable size, suggested
or
t° him that the Fort Plain bank had not tried too hard to attract
hold competent men.
a majority of the Board
There being indication, therefore, that
Was not inclined to approve the application at this time, it was understood,
during this meeting, that
accordance with the procedure adapted earlier
the State Bank of Albany would be afforded an opportunity to present
and that the
l'u-rther views or comments, either orally or in writing,
?ederal Reserve Bank of New York also would be invited to submit further
comments if it so desired.
Bank.
Application of United California
Copies of a memorandum
24, 1961, had been distributed
rlsom the Division of Examinations dated July
United California Bank,
recommending favorably on an application by
Los
merge The Southwest Bank,
Angeles, California, for permission to
illglelicx)d, California, into the former.
Attached to the memorandum
7/27/61
-28-
vas another from Mr. Achor dated July 21, 1961, indicating reasons why
he disagreed with the Division recommendation.
The Federal Reserve Bank
of San Francisco had recommended approval of the application.
The
rePorts of the Comptroller of the Currency and the Federal Deposit
in the proposed
Insurance Corporation on the competitive factors involved
merger were not adverse, while the Department of Justice had rendered an
ve effect.
adverse report, particularly in terms of cumulati
that there
Mr. Solomon, in reviewing the application, noted
aPParently was little direct competition between the two banks involved;
the offices of Southwest were situated for the most part in the western
southwest side of Los
half of the Adams-Inglewood economic area on the
in the Adams-Inglewood
Angeles, whereas the four offices of applicant
area were located in the eastern half.
One exception was an office of
Southwest at Western and 88th Streets, recently placed in operation,
'which was situated in the eastern half of the economic area.
All other
offices of each bank were at least two miles away from any office of
the other bank.
United California Bank had
Mr. Solomon referred to the fact that
Board's approval,
acqUired part of its present size last year, with the
First Western Bank and Trust
through the merger of California Bank and
CQMPany.
in size in the State of
While a large bank, it was fourth
California and only a poor third in the Los Angeles area.
This consider-
le recommendation
had influenced the Division in making its favorab
-29-
7/27/61
on the present application; the merger would not eliminate a great
deal of competition and it would increase the ability of the third
largest bank in the Los Angeles area to compete with the two larger
institutions.
As
indicated by the two memoranda, there
VW
some
feeling was not
difference of opinion within the Division, but the
strong on either side.
With respect to one aspect of the application,
consummated there would
namely, the fact that should the merger be
he
l'emain only one independent institution in the Inglewood area,
noted that the effect on the remaining independent bank could be debated.
le
11r. Achor felt that the bank would be in a difficult and untenab
Position.
banks for
However, the bank had been surrounded by giant
Years and might even benefit from its status as the only independent
bahk in the area.
At present, it had to share with Southwest the business
°f people who liked to deal with an independent bank.
application was
Mr. Achor noted that the area involved in the
about twenty miles from the location of the Bank of Encino, whose merger
approved.
into United California Bsnk the Board recently
ease, the bank had been in operation since
In the present
1953 in an active economic
area where over 70 banking offices were located.
It had enjoyed good
claPosit growth and earnings, and was apparently serving the community
its acquisition by
Therefore, he saw no public advantage to
Uhited California Bank.
Although, as mentioned by Mr. Solomon, competition
not intense, the new branch of
between United California and Southwest was
)
'
2'f7/27/61
-30-
the latter at Western and 88th Streets, which began operation earlier
this month, was only one mile from an existing branch of United California.
While the management of Southwest admittedly presented some problem, he
did not feel that that aspect of the matter was too significant.
Also,
while some services might be increased if the merger were consummated,
those services were now readily available in the area served by Southwest.
Governor Mills noted that competition in the area was predominantly
between the large banks, any one of which, including United California,
Presumably could establish branches in the area now served by the Southwest Bank.
In his opinion) approval of the proposed merger would not
lalsettle the existing competitive situation or increase the size of
aPPlicant disproportionately in relation to its principal competitors.
In the circumstances, he would favor approval of the application.
Although he regarded the premium that would be paid the stockholders
Of Southwest as exorbitant, he believed this was a matter for the judgment
cr United California Bank.
Governor Robertson stated that he was disinclined to approve the
Merger for the reasons presented by Mr. Achor.
Ott two points by way of emphasis.
He would comment only
First, the merger would diminish
competition for the business of those people who preferred to deal with
4 amall bank by eliminating one of the two remaining independent insti-
tIltions in the area.
Second) with respect to the substantial premium
that united California was willing to pay to acquire the stock of
',
1(74rwt.
4Ka.„)110
7/27/61
-31-
Southwest, this was an indication of the eagerness of the large California banks to expand by acquiring smaller institutions.
It did not
indicate an urge on the part of the Southwest Bank to sell.
Governor Shepardson noted that the Southwest Bank had shown
Vigorous growth.
Although some comment had been made in the memorandum
about lack of management capability, the growth record, the bank's
reasonably satisfactory condition, and the indication that it apparently
could obtain additional capital should the merger not go through all
suggested that the bank had been doing a good job.
Also, the large
Premium being offered the owners by United California exposed them to
an inordinate temptation to sell.
In summary, he found Mr. Achor's
reasoning persuasive, and he would be inclined to disapprove the application.
Governor King also commented on the large premium being offered.
He did not see that a great deal would be offered to the public by way
f additional services if the merger were consummated.
c)
The owners of
Southwest were, as he saw it, being tempted out of business, which he
thought would be unfortunate.
Therefore, he would be inclined to
disapprove the application.
Governor Balderston stated that he favored building up United
California as a strong competitor to the largest bank in the State, but
that he would Prefer to see the growth come by way of newly established
branches.
In this instance, he was impressed by the large premium and
-32-
7/27/61
8.1so by the fact that the merger would leave only one independent bank
in the Inglewood area.
Further, it appeared that the effect of the merger
'would be to diminish potential competition, particularly since Southwest
had now opened a branch just one mile from one of the offices of United
California.
Accordingly, he would be disinclined to approve.
Chairman Martin commented that with due respect to United
California, in this instance it appeared that it was reaching out to
take over the smaller bank.
In the absence of a clear showing that
the transaction would be in the public interest, he felt that this kind
clf venture should be discouraged.
Therefore, he would be disinclined
to approve.
There followed a discussion of the procedure to be followed in
circumstances of this kind, in the light of the procedural policy adopted
earlier at this meeting, and at the conclusion of the discussion it was
agreed that the adopted policy should be followed.
This, it was under-
etood,would call for inviting the applicant bank to submit additional
/rievs or comments, either orally or in writing, and also inviting the
San Francisco Reserve Bank to submit further comments in support of its
favorable recommendation if it so desired.
as did
Governor King withdrew from the meeting at this point,
14essrs. Hooff, Leavitt, Achor, McClintock, and Thompson.
Indemnification of cash agent banks (Item No. 20).
Under date
July 25, 1961, distribution had been made of a memorandum from Messrs.
tjarliels and Harris discussing the extent and method of indemnification of
7/27/61
-33-
Cash agent banks and transmitting alternative drafts of a letter to the
Chairman of the Presidents' Conference for possible use should the Board
decide (1) to concur in the action of the Conference at its meeting on
June 19, 1961, or (2) to concur, but with certain qualifications.
The
action referred to constituted approval of recommendations: (1) to amend
the present Bank Agency Agreement to cover complete exculpation and
indemnification of cash agent banks, and (2) to reject two proposals for
to provide
Purchased insurance, thus permitting the Loss Sharing Agreement
for the risks involved.
The recommendations, approved by majority vote
Of the presidents' Conference, had been made in a joint report of the
tee
Insurance Committee of the Federal Reserve Banks and the Subcommit
of Counsel on Emergency Operations.
As noted in the July 25 memorandum,
the action of the Presidents was discussed at the joint meeting of the
Board and the Presidents on June 20, 1961, at which time it was understood the Board would take the matter under consideration.
of
The Presidents' Conference had concluded that the purchase
insurance would involve an unreasonable and unjustifiable expenditure;
the rates appeared to be disproportionate to the risks involved and
the insurance itself, as applied to a postattack situation, might be of
qUestionable value.
After discussion in the memorandum of the recom-
aleadation to eliminate the "breach of contract and negligence" exception
the Bank Agency
*az the liability and indemnification provisions in
Agreement, the conclusion was reached that the only significant new
9r-
7/27/61
-34-
risk to be assumed by concurring in the recommendation was the risk of
loss resulting from the failure of an agent bank to maintain its
customary security measures.
The view was expressed in the memorandum
that if the Board was of the opinion that this risk was insignificant
from a practical point of view, it might wish to consider the first
alternative draft letter to the Chairman of the Presidents' Conference.
On the other hand, should the Board be of the opinion that an agent bank
should not be relieved from liability for failure to maintain its
ellatamary security measures in the protection of the Reserve Banks'
currency, it might wish to consider the second alternative draft letter.
Asked by the Chairman for his comments, Mr. Daniels said that
ailice the cost of insurance of currency stored with cash agents would
be Prohibitive, the issue basically resolved itself dawn to the question
whether to exculpate and indemnify agent banks completely or provide a
qUalified exculpation.
In his opinion, should a qualified exculpation
be decided upon, the whole question was likely to be reopened.
Fa.rrell concurred in this comment.
Mr.
A qualified exculpation, he under-
Stood, probably would cause the cash agent banks to be subject to higher
illsUrance rates, whereas the basic philosophy of the cash agent bank
151%ogram was to hold the agent banks harmless from any loss and relieve
theM from any cost.
Mr. Harris said he could not conscientiously recommend exculpation
°I* cash agent banks without at least holding them responsible for exercising
25'
7/27/61
-35-
due care with respect to the property of the Reserve Banks held on their
Premises.
However, he would be willing to go as far as indicated in the
second alternative draft of letter.
He understood that insurance rates
on the kind of risk the agent banks would have to assume under such a
Stipulation were not high.
It was not apparent to him why, if the Reserve
Banks were to rent vault space from agent banks, they should be treated
differently from other users of such space.
Governor Mills indicated that he would agree that the responsibility
referred to by Mr. Harris was the least that should be assumed by an agent
bank.
It would not impose a serious cost upon them, or a cost out of line
'pith the distinction involved in being chosen as an agent bank.
He felt
that a distinction could be made between preattack and postattack situations.
Since postattack conditions were likely to be chaotic, he would be inclined
to hold the agent banks harmless for anything that might occur, but so
tar as the preattack situation was concerned, he felt that the general
Principles of the law of bailment should apply.
Governor Robertson expressed the view that complete exculpation
t cash agent banks would be against public policy, and that the position
t4ken. in the second alternative draft of letter represented a reasonable
411Proach.
Should any agent bank object, it would be incumbent upon the
Reserve Bank concerned to find another agent bank, and in this he did
4°t contemplate any great difficulty.
fltr- 1.•be)-34
/
itik) I(
-36-
7/27/61
Governor Mills then called for further explanation of the second
alternative draft of letter, following which he indicated that he was
not completely satisfied with the position taken therein.
He asked
Whether the matter could not be deferred in order that the Legal Division
might investigate the law of bailment and see whether the language of
the letter would contract an agent bank out of liability that it would
be compelled to accept in any ordinary course of business.
intended, he would dissent from the proposed letter.
If that was
It was his under-
standing that banks generally were willing to accept the responsibility
involved in acting as cash agent banks and that only a few had complained.
If there were scattered complaints, it should be possible for the Reserve
8anks to approach other banks that would be willing to accept the offer
to serve in a cash agent capacity.
Mr. Harris commented that the primary interest was in assuring
that the property of the Reserve Banks would be adequately protected.
This involved the question of negligence, a word that was rather nebulous.
After consideration, however, it appeared that the only thing that would
result in hazard to a Reserve Bank's property would be negligence in the
sense of failing to exercise or maintain customary security measures.
In the case of supervised banks, the Reserve Banks were in a position to
klic)w what the customary security measures were; the cash agent banks were
selected on the basis that they had adequate security measures, and the
intent of the proposed letter was simply to hold them liable for
Maintaining those precautions.
2 7;
7/27/61
-37Governor Mills noted that one group of Presidents had. taken
exception to the acceptance by the majority of the recommendation that
cash agent banks be completely exculpated. He said that he shared the
view of the minority, feeling that adoption of the majority position could
sUbiect the Reserve Banks to severe criticism.
Mr. Harris replied that this was why he had felt that the cash
agent banks should be held responsible for maintenance of the customary
security measures.
Governor Robertson inquired of Mr. Harris whether
he felt that the minority group of Presidents would be likely to go
434ng with such a provision, and Mr. Harris expressed the view that they
Probably would.
He was satisfied in his own mind, he said, that this
//oUld not put the problem back in its original posture.
Governor
Robertson said that, as he saw it, the adoption of the letter proposed
by
Itr• Harris would in effect constitute going along with the minority
€1101,1/3 of Presidents.
This was a way of preserving everything that was
actually needed, and he felt that the solution would be acceptable to
the Presidents' Conference. Mr. Farrell expressed some doubt, however,
that the proposed letter would be agreeable to the majority of the
Presidents, although it might be agreeable to the minority.
He again
referred to the basic philosophy that the cash agent bank program should
llot cost the agent banks anything.
Chairman Martin inquired as to the urgency of the matter, and
Governor Robertson and Mr. Harris replied in terms that the Chicago
rt
4,0
7/27/61
-38-
Reserve Bank was anxious to proceed with its cash agent bank program while
the Cleveland Reserve Bank was anxious to resolve questions that had
been raised by some of its cash agent banks.
the second
Chairman Martin then inquired of Mr. Harris whether
that he felt was
alternative draft letter accomplished everything
tive.
Ilecessary, and the latter replied in the affirma
opposed to a
Governor Shepardson stated that he would be
thought would be difficult
complete exculpation of agent banks, which he
to defend in any public debate.
This had led him to think back to the
basic problem of the storage of currency pre-emergency.
He recalled
about the storage
that at times in the past there had been discussion
01' currency at places such as Fort Riley, Kansas, and the OCDM Classified
Location.
question whether the use of such
Accordingly, he raised the
the best
sites, plus the 36 Federal Reserve offices, might not provide
solution.
desirable at some time to
Mr. Harris agreed that it might be
l'eview current plans.
However, the accepted Governmental policy,
contemplated the decentrali°Iliginally approved by President Eisenhower,
possible, and this involved the
Zation of currency to the maximum extent
cash agent bsnk program.
Accordingly, he would like to see Reserve Banks
go ahead, under this policy, with the plans heretofore approved.
It
4PPeared that at present the use of cash agent banks might be limited
nd Districts.
laligelY to the Chicago and Clevela
Nevertheless, he would
4
2‘)I
7/27/61
-39-
consider it desirable to foster the programs of those Banks; if this
were not done, other Reserve Banks might lose the sense of urgency and
necessity for decentralization in their Districts.
Governor Balderston commented that in the event of an attack it
znight be assumed that all forms of communication would be disrupted,
and when they were reestablished one could not count on obtaining access
to stocks of currency unless they were reasonably close.
He felt that
the current plan ought to be promoted, and he would favor sending the
second alternative draft of letter.
If the Presidents could not make
headway under those terms, they would undoubtedly come back to the Board.
Governor Shepardson said that he would not object to the alternative
aPProach if it was felt that it would accomplish the job.
As he had said
before, however, he would be opposed to complete exculpation.
ly critical
Chairman Martin commented that this was a particular
Point in defense planning activities.
delayed.
He would not like to see any plans
Governor mills had raised a good point, but he (Chairman Martin)
felt that the System would be negligent if it did not push forward with
the decentralized storage of currency.
to the Chairman
Thereupon, the second alternative draft of letter
the Presidents' Conference was approved, Governor Mills dissenting for
the reasons he had stated, with the understanding that the draft would
be changed slightly before the letter was sent in order to make it clear
that the Board would not concur in a complete exculpation of cash agent
batik
B. A copy of the letter, as sent, is attached as Item No. 20.
257
-4o-
7/27/61
Messrs. Farrell, Solomon, Harris, Hexter, and Daniels then
Withdrew from the meeting.
Service deemed in the public interest.
Section 5A of the Rules
and Regulations of the Retirement System of the Federal Reserve Banks
Provides special benefits for members for periods of military service
aad for periods of service for not more than five years for a purpose
deemed in the public interest.
The section further stipulates that the
full cost of such benefits shall be provided by special payments made
bY the respective employing Banks and that the Board of Trustees of the
to all
Retirement System shall have the power to grant such benefits
Members under general rules of uniform application set forth in
resolutions adopted by the Board of Trustees and approved by the Board
°I" Governors of the Federal Reserve System.
Resolutions covering benefits
to be provided for members of the Bank Plan entering military service
Were adopted by the Board of Trustees on June 17, 1959, and in a letter
dated June 3/ 1960, the Board of Governors approved those resolutions.
Rowever, no resolutions had been adopted covering the benefits to be
ued upon entry into
Provided for members whose employment was discontin
service for not more than five years for a purpose deemed in the public
interest.
the provisions of section
Therefore, in order to comply with
5A, the Board of Trustees of the Retirement System at a meeting held on
benefits.
"Tune 21, 1961, adopted resolutions covering such
,
4.,1 7)
-41-
7/27/61
A memorandum from the Division of Personnel Administration
of Governors approve
dated July 25, 1961, recommending that the Board
the resolutions had been distributed.
The memorandum noted that the
as they were in effect
Rules and Regulations of the Retirement System,
section 9 that:
before March 1955, contained a provision in
contrary notwith"Anything herein contained to the
have the power to
standing, the Board of Trustees shall
yee retired by any
emplo
any
to
grant a retirement allowance
additional benefit,
Employing Bank or to grant a special
first having obtained
provided that the Employing Bank after
of the Federal Reserve
the approval of the Board of Governors
System the amount required
System, shall pay to the Retirement
ance or benefit."
to cover the full cost of any such allow
Federal Reserve Banks to
Under this provision it was possible for the
s under special conditions
Provide retirement allowances for individual
cability.
which were not necessarily of uniform appli
The Internal
provisions of this section as
Revenue Service raised objections to the
it felt that such broad discretion in the granting of additional benefits
tax purposes.
Illight disqualify the Retirement System for
In order to
ce, the foregoing
Meet the objections of the Internal Revenue Servi
a new section 5A, as follows,
Paragraph of section 9 was eliminated and
1955:
14as added to the Rules and Regulations in
by an Employing Bank is
"Any member whose employment
military service, or into
discontinued upon his entry into
the public interest for not
service for a purpose deemed in
ed substantially the same
more than five years, may be grant
been entitled to receive
retirement allowance he would have
the Employing Bank
if he had remained in the employ of
or other governmental
during the period of such military
the salary he was
ve
recei
to
service and had continued
_L.2_
7/27/61
"receiving at the time of such discontinuation of employment,
provided that the Employing Bank shall pay to the Retirement
System the amount required to cover the full cost of any such
the
retirement allowance. The Board of Trustees shall have
l
under
genera rules
power to grant such retirement allowances
in resoforth
of uniform application to all members, set
the Board of
lutions heretofore or hereafter adopted by
of the Federal
Trustees and approved by the Board of Governors
Reserve System."
of the staff of
Because of the recent resignation of a member
a Federal Reserve Bank to accept a Presidential appointment, the
of section 5A in respect
desirability of implementing the provisions
interest" became apparent.
to "service for a purpose deemed in the public
formulated by the Retirement ComProposed resolutions, as originally
constituted "a purpose deemed
Mittee, did not indicate or define what
Un the public interest", nor did they indicate by whom such determination
should be made.
the Retirement System
The Executive Committee of
subsequently considered the resolutions and in the interest of uniform
Trustees that additional wording
application recommended to the Board of
determining whether a
be added to show that the responsibility for
the public interest would be
Particular service was deemed to be in
the Board of Governors.
Placed jointly upon the employing Bank and
The
the Executive Committee and
Board of Trustees adopted the suggestion of
aPPropriate wording was added.
However, at the time of the Trustee's
fleeting a question was raised concerning the effect of the resolutions
ent Bryan
0r1 the tax status of the Retirement System, and later Presid
an of the Retirement Committee
wrote a letter on this point to the Chairm
expressing his reservations.
57)
-43-
7/27/61
Among the items attached to the memorandum from the Division of
Personnel Administration was a memorandum from Mr. Hackley to Governor
Mills dated June 51 19611 discussing the problem of determining what
vould constitute a service "deemed in the public interest" for the purpose
of granting additional benefits under section 5A of the Rules and
Regulations.
After presenting several possible alternatives, the memo-
randum expressed the view that a provision placing the responsibility
for determination jointly upon the employing Reserve Bank and the Board
Of Governors probably would provide a sufficient element of certainty
to save the resolutions from objection on the ground that the door would
be left open for nonuniform treatment.
The memorandum indicated that
"service for a purpose
one possible alternative would be a definition of
with a
deemed in the public interest" that would cover only service
specifically requested
dePartment or agency of the Federal Government
by such department or agency.
Although such an alternative would be
l'estrictive, it might be regarded as consistent with the original concept
that the special retirement benefits would be accorded only to persons
entering military service or a comparable service that would be in the
national interest.
which had been distributed
In a memorandum dated July 26, 1961,
Prior to this meeting) Mr. Hackley indicated how the alternative approach
last mentioned above might be accomplished by changing one of the
lesolutions adopted by the Board of Trustees on June 211 1961.
'
The
-44-
7/27/61
son that in
memorandum also discussed a suggestion by Governor Shepard
,
cases of public service, as contrasted with military service the employee
be required to pay his proportionate share of contributions covering his
Period of absence from the Reserve Bank.
It was indicated in the memo-
be changed if such an
randum how it was felt that the resolutions might
approach should be deemed desirable.
r noted that perhaps the
In commenting on the matter, Mr. Spreche
e for a purpose deemed in the
Principal question was how to define "servic
Public interest".
pointed out that the resolutions,
In this connection, he
in the form adopted by the Board of Trustees, would provide a common
nation in the few public service
denominator concept in that a determi
to be made jointly by
cases likely to arise under section 5A would have
the employing Reserve Bank and the Board of Governors. Mr. Sprecher
had been made by Governor
expressed the opinion that a suggestion such as
without making changes in
Shepardson could not be properly implemented
section 5A itself.
would be appropriate to try
He doubted whether it
section of the regulations
to wipe away by resolution the terms of a
that the Board had approved. With further reference to the point raised
by
certain benefits that would be
Governor Shepardson, he described
Reserve Bank to go into
lost to an individual leaving the service of a
Government service.
studied the matter he would be
Governor Mills said that having
favorable to the approval of the resolutions as adopted by the Board
2581
7/27/61
Of Trustees.
However, if no objection was seen from a legal standpoint,
he would also favor transmitting tc the Federal Reserve Banks an S-letter
ting
that would provide guidelines in achieving uniformity by indica
willing to consider
generally the types of service that the Board would be
as service "deemed in the public interest".
of the proposed
Mr. Sprecher expressed agreement with the idea
objection.
letter, and Mr. Hackley indicated that he saw no
s of the Board
Chairman Martin then inquired whether the member
son indicated
were prepared to approve the resolutions, and Governor Robert
that he was not.
Bank and going
First, an individual leaving a Reserve
automatically under the
to work for the Federal Government would come
Civil Service Retirement System.
However, the resolutions provided that
provided by an employing
40 additional retirement allowance which might be
service should be paid
Reserve Bank with respect to a period of public
retirement allowance or
to a member if "he shall be paid any other
allowance....by reason of his
PaYMent in the nature of a retirement
e".
eMPloyment during such period of public servic
Second, the resolutions
Reserve Bank and going to work in
Provided that an individual leaving a
n
a service deemed in the public interest could, in certai circumstances,
period of public service
have his retirement contributions covering his
even if he never returned
Psid on his behalf by the employing Reserve Bank
to the service of the Bank.
Governor Robertson expressed the view that
and going to work
44 individual leaving the service of a Reserve Bank
fli.;"ete
7/27/61
for the Federal Government should properly make a sacrifice, in the same
manner as other persons going into Federal service frequently make such
a sacrifice.
As far as military service was concerned, he had no question,
but he noted that many entering military service are drafted.
As to
service with the Federal Government, Governor Robertson felt that a
Person leaving a Reserve Bank for such service should take the same
retirement benefits as others in the Federal service.
He also noted that
Operations under the provisions of the resolutions would not necessarily
achieve uniformity, because there might be some cases that the Reserve
Banks would not choose to present to the Board of Governors.
In this
respect, he felt that President Bryan had raised a good question regarding
Possible endangerment to the tax status of the Federal Reserve Retirement
SYstem, and that a clearance should be obtained, if possible, from the
Internal Revenue Service.
There followed discussion, in the light of the second of the
two questions raised by Governor Robertson, regarding the proper con3truct10n of the pertinent portions of the resolutions, and it was
agreed that the question should be remanded to the staff for further
study and report to the Board.
Governor Balderston then suggested that the staff also be requested
to prepare for the Board's consideration a draft of S-letter to the
Federal Reserve Banks of the kind referred to previously by Governor
Mills, and it was agreed that such a draft should be prepared.
7/27/61
Governor Mills inquired whether it would be agreeable to
Governor Robertson, who was leaving on vacation, and to Governor Shepardson
to approve the resolutions and the S-letter approach, subject to the
Board's being satisfied, following staff study, regarding the second
Of the two questions previously raised by Governor Robertson.
Governor Robertson replied that this would take care of the
Particular question.
However, there was still his other point, about
keeping an individnA1 who entered the service of the Federal Government
from making a sacrifice by holding available to him the benefits of the
Federal Reserve Retirement System.
This approach had started with the
concept of military service, but gradually it was being broadened.
He
felt that there should be limits.
Mr. Hackley expressed agreement in principle with Governor
Robertson.
He noted that the original concept extended to military
service and other service essential in the national interest, rather
than to just any type of Government service.
It was his feeling that
Probably the ideal solution would be to incorporate definitive language
ln the resolutions themselves.
Even if limitations were stated in an
S-letter, there could still be a lack of uniformity, as Governor Robertson
had pointed out, because the Reserve Banks might not present certain cases
to the Board of Governors.
A possible compromise was that in a single
S-letter the Board might, in addition to advising of its concurrence in
the resolutions, include a statement of its interpretation of service
2584
-48-
7/27/61
deemed in the public interest so that the two things would be set forth
together.
Governor Mills pointed out that there would probably be only
rare occasions when the provisions of section 5A and the implementing
resolutions relating to service deemed in the public interest would come
into play.
Generally, an individual would be placed on leave of absence
"without pay from his Reserve Bank, and section 5A would come into effect
1341Y where an individual was compelled to resign his position with the
employing Bank.
Nevertheless, those cases, though rare, were likely
to be important when they occurred.
Governor Robertson suggested that the staff study extend also
to the question he had raised regarding the possibility of dual benefits
Under the Federal Reserve and Civil Service Retirement Systems.
He then
stated that, having expressed his views, he would have no objection if
the Board wished to act on the matter at any time.
The discussion concluded with the understanding that the staff
would look into the questions that had been raised at this meeting prior
to further consideration of the subject by the Board.
The meeting then adjourned.
Secretary
2585
BOARD OF GOVERNORS
440itti
11
OF THE
W Cy!41:
FEDERAL RESERVE SYSTEM
'0;
WASHINGTON 25. D. C.
St 4
412:
II
Item No. 1
7/27/61
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
W,V;iteA{1.47::PA*
July 27, 1961
Cravath, Swaine & Moore,
15 Broad Street,
New York 5, New York.
Dear Sirs:
This refers to your letter of July 20, 1961,
requesting Board approval of the paragraph you propose to
add to the public notice of proposed merger of Long Island
Trust Company with Chemical Bank New York Trust Company,
with respect to the continued operation of certain branches
of Long Island Trust Company located in Suffolk County.
The proposed paragraph appears to be consistent
with the purpose of the statute in providing the public
with information as to the effect of the merger on existing
banking locations. Therefore, the Board has no objection
to the paragraph you have presented for consideration.
Very truly yours,
(Signed) Merritt Sherman
•
Merritt Sherman,
Secretary.
25S
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
Item No. 2
7/27/61
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
".„4tvast
July 271 1961
Board of Directors,
Webster Groves Trust Company,
Webster Groves, Missouri.
Gentlemen:
The Federal Reserve Bank of St. Louis has forwarded to
the Board of Governors your resolution dated May 12, 1961, signifYing your intention to withdraw from membership in the Federal
Reserve System and your letter dated June 26, 1961, requesting
Walver of the six months' notice of such withdrawal and setting
forth the reason for withdrawal.
In accordance with your request, the Board of Governors
waives the requirement of six months' notice of withdrawal. Upon
surrender to the Federal Reserve Bank of St. Louis
of the Federal
Reserve Bank stock issued to your institution such stock will be
canceled and appropriate refund will be made thereon. Under the
evisions of Section 10(c) of the Board's Regulation H your
nstitution may accomplish termination of its membership at any
rtilme within eight months from the date the notice of intention to with
'raw from membership was given.
r
It is requested that the certificate of membership be
returned to the Federal Reserve Bank of St. Louis.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 3
7/27/61
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 27, 1961
The Honorable Erie Cooke,
Chairman,
Federal Deposit Insurance Corporation,
Washington 25, D. C.
Dear Mr. Cocke:
Reference is made to your letter of July 5, 1961,
concerning the application of Webster Groves Trust Company,
Webster Groves, Missouri, 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,
'.ssistant Secretary.
CIL-()to
Kw& )(3.1.1
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, 13. C.
Item No. 4
7/27/61
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
Jay 27, 1961
Board of Directors,
Gruver State Bank,
Gruver, Texas.
Gentlemen:
The Federal Reserve Bank of Dallas has forwarded to the
Board of Governors your resolution dated May 25, 1961, signifying
Your intention to withdraw from membership in the Federal Reserve
SYstem,and your letter dated June 29, 1961, requesting waiver of the
six months' notice of such withdrawal and setting forth the reason
for withdrawal.
In accordance with your request, the Board of Governors
Waives the requirement of six months' notice of withdrawal. Upon
surrender to the Federal Reserve Bank of Dallas of the Federal
Reserve Bank stock issued to your institution such stock will be
canceled and appropriate refund will be made thereon. Under the
Provisions of Section 10(c) of the Board's Regulation H your institution may accomplish termination of its membership at any time within
eight months from the date the notice of intention to withdraw from
membership was given.
It is requested that the certificate of membership be returned to the Federal Reserve Bank of Dallas.
Attention is invited to the fact that if your bank is
desirous of continuing deposit insurance after withdrawal from
Membership in the Federal Reserve System it will be necessary that
aPPlication be made to the Federal Deposit Insurance Corporation.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
ifjr:Q(1
II
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No.
5
7/27/61
WASHINGTON 25. D. C.
ADDRIC•• OFFICIAL CORFICIRPONOCHCC
TO THC •OARD
July 27, 1961
Comptroller of the Currency,
Treasury Department,
Washington 25, D. C.
Attention:
Mr. G. W. Garwood,
Deputy Comptroller of the Currency.
Dear Mr. Comptroller:
Reference is made to a letter from your office dated
January 19, 1961, enclosing copies of an application to organize
a national bank at Vernon, Connecticut, and requesting a recommendation as to whether or not the application should be
approved.
A report of investigation of the application made by
an examiner for the Federal Reserve Bank of Boston indicates
favorable findings with respect to proposed capital, earnings,
and need for the institution. The directors are a competent
group of businessmen and management would appear satisfactory
if a qualified executive officer is employed. Accordingly, the
Board of Governors recommends favorable consideration of the
application provided arrangements for executive management of
the bank are made which would be satisfactory to your office.
Very truly yours,
(signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
.7
259()
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No.
6
7/27/61
WASHINGTON 26, D. C.
ADORCIII OfflOIAL
OORRCIIIPONOCNOIC
TO TM& 00ARO
July 27, 1961
Confidential (FR)
Mr. Thomas M. Timlen, Jr.,
Secretary,
Federal Reserve Bank of New York,
New York
45, New York.
Dear Mr. Timleni
This refers to your letter of July 24, 1961, advising the
Board that at the request of Mr. Robert V. Roosa, the
services of
Mr. Merlyn N. Trued, Manager, Foreign Department, are being
made
available to the Under Secretary of the Treasury for Monetary
Affairs.
It is noted that Mr. Trued has been granted a leave of absence
with pay commencing on or about August 1,
1961, and terminating
on or about December 31,
1961.
It is also noted that Messrs. MacLaury and Sternlight
will oonclude their tours of duty on July 28 with
the Under Secretary
Of the Treas
ury.
The Board interposes no objection to Mr. Truedls serving
in the Office of the Under Secretary of the Treas
ury for this period
in the manner as outlined in your letter.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No.
7
7/27/61
WASHINGTON 25. O. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 27, 1961
CONFIDENT/AL (FR)
Mr. Richard G. Wilgus,
Vice President and Secretary,
Federal Reserve Bank
of Philadelphia,
Philadelphia 1, Pennsylvania.
Dear Mr, Wilgus:
The Board of Governors approves a revision of the
employees' salary structure of the Federal Reserve Bank of
Philadelphia, effective immediately, to the extent of
establishing the minimum limit of Grade 2 at $2,400 in
accordance with the action of your Board of Directors as
reported in your letter of July 20, 1961.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
t
BOARD OF GOVERNORS
OF THE
Item No. 8
7/27/61
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 27, 1961,
4al,
sioll a
The 1956 edition of The Federal Reserve Act is in process of revior w rld it is expected that printed copies will be available before the end
Year, The revised edition will contain all amendments to the Act
-s-Lated statutes
through May 1, 1961. It is planned to print 1,000 loosee stthe
number of paper -bound copies has not been determined,
o
.
The
-ae distribution policy to be followed for the revision will be as
Initially, one paper-bound copy will be sent, without charge,
by each Reserve Bank to each member bank in its district;
Additional copies for member banks and copies for the public
will be available at a charge of $1,25 each; and
Upon request copies will be furnished without charge to
members of Congress, Government departments and agencies
(domestic and foreign), central banks, libraries of educational institutions, public libraries, and the press.
NT-u
According to information furnished in June 1961; the number of paper),
', col:AE=-9 of
the 1956 edition of the Act in supply at the Federal Reserve
a to 4.'„ien
exceeded 3,600, In order, that an accurate determination may be made
L'ae
of paper-bound copies of the new edition to be printed, it
4-be a
;;'11k. 1,/il,PPreciated if you will wire the Board the number of such copies your
'
rleb ,t-L require, bearing
in mind the distribution and sale contemplated by
c)j-leY
ab
conslst ovo outlined, It is requested that you limit your order to a minient with Your anticipated needs over the next two years.
In a]dition D10,-e
copies your Bank
„
.
the number of le,ce-leaf
IN staff, - -or replacement of sets now held by officers,and otherothermembers of
Binders will not be furnished for any loose-eaf sets,
l's.41.1ir.
444E
*
y
::erritt Therm
3eeretary.
--1
.1.2DVS OF
ALL FEDERAL RESERVE BANKS
-7
'
BOARD OF GOVERNORS
OF THE
Item No. 9
FEDERAL RESERVE SYSTEM
7/27/61
WASHINGTON 25, D. C.
AooRras arriciAL
CORRESPONDENCE
TO THE BOARD
July 27, 1961
CONFIDENTIAL (FR)
Mr. Carl E. Allen, President,
Federal Reserve Bank of Chicago,
Chicago 90, Illinois.
The Board of Governors approves the payment of salaries
tO the
following officers of the Federal Reserve Bank of Chicago
or the
period September 1 through December 310 1961, at the rates
r
.3.ndicated, which are the rates fixed by the Board of Directors as
ePorted in your letter of July 20, 1961:
Name
Title
Richard A. Moffatt
Vice President
Daniel M. Doyle
Assistant Cashier
Annual
Salary
$14,000
10,000
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 10
7/27/61
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
At:ow:Elm arriciAL
CORRESPONOCNCE
TO THE BOARD
July 27, 1961
Board of Directors,
Bristol County Trust Company,
Taunton, Massachusetts.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment of
a branch in the Bay Colony Shopping Center, in
the vicinity of the intersection of State Route
24 and U. S. Highway 44, Town of haynham,
Massachusetts, by Bristol County Trust Company,
provided the branch is established within two
years from the date of this letter.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
2595
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D.C.
Item No. 11
7/27/61
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 27, 1961
Board of Directors,
Harvard Trust Company,
Cambridge, Massachusetts.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of an in-town branch
at 678 Massachusetts Avenue, Central Square, by Harvard
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.
2.5
BOARD OF GOVERNORS
30iotto*4
OF THE
`1
.0%
Item NO. 12
7/27/61
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
),T
AOORIC011
0
ititAtlatv,"
4Att***
°mow.CONINCOPONOCNCIL
TO TN( SOANO
uly 27, 1961
Board of Directors,
Liberty Bank & Trust Company,
Buffalo, New York.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment of a
branch by Liberty Bank & Trust Company, Buffalo,
New York, at 347-349 Central Avenue, Village of
Fredonia, Town of Pomfret, New York, 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.
1-"r*
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
Item No. 13
7/27/61
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARO
July 271 1961
Board of Directors,
Manufacturers and Traders Trust Company,
Buffalo, New York.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch by
Manufacturers and Traders Trust Company, Buffalo, New
York, in the Aurora Village Shopping Center, Village
of East Aurora, New York, 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 Senretary.
25.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
Item No. 14
7/27/61
ADORES* OrFICIAL CONNIMPONOENCE
TO THE BOARD
July 27, 1961
Board of Directors,
Manufacturers Trust Company,
New York, New York.
Gentlemen:
The Board of Governors of the Federal Reserve System approves
the establishment of a limited purpose branch by Manufacturers Trust
Company, New York, New York, at 2086 West 5th Street, Brooklyn, New
York, provided the branch is established. within six months from the
date of this letter.
It is understood that the banking operations conducted at
this office will be limited to the functions of the Personal Loan
Department of the bank's Marlboro Office located at 201-203 Avenue U
Brooklyn, and will not include the performance of any other functions
Involving contact with the public such as, but not limited to, the
.acceptance of deposits, the paying of checks, or making other types of
-Loans.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
P4.1%
BOARD OF GOVERNORS
44tvt4***4.
OF THE
FEDERAL RESERVE SYSTEM
4
N
WASHINGTON 25. D. C.
441 \
Item No. 15
7/27/61
ADDRESS OFFICIAL CORRESPONOENCE
TO THE BOARD
*6
44. mist
"
ott.
'
4 ittort0.**
'
July 27, 1961
Board of Directors,
The Peru Trust Company,
Peru, Indiana.
Gentlemen;
Pursuant to your request submitted through the
Bank of Chicago, the Board of Governors of
Reserve
Federal
the Federal Reserve System approves the establishment of a
branch at the Bunker Hill Air Force Base, Niami County,
Indiana, by The Peru Trust Company, provided the branch is
established within six months from the date of this letter.
It is understood that the branch will replace
a facility now operated at the air base by the bank under
U. S. Treasury Department authorization.
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. 16
7/27/61
ADDRESS orriciAL CORRESPONDENCE
TO THE SOARD
July 27, 1961
Board of Directors,
Bank of Reynolds,
Reynolds, Indiana.
Gentlemen:
Pursuant to your request submitted through
the Federal Reserve Bank of Chicago, the Board of
Governors of the Federal Reserve System approves the
establishment of a branch in Chalmers, Indiana, by
Bank of Reynolds, provided the bank's common stock is
increased to not less than $100,000 to meet statutory
requirements, and the branch is established within nine
months from the date of this letter.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
2Gi
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No. 17
7/27/61
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 27, 1961
Board of Directors,
United California Bank,
Los Angeles, California.
Gentlemen:
The Board of Governors of the Federal Reserve
the establishment of a branch in the
approves
System
area of Salinas, Monterey County,
business
downtown
by United California Bank, 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.
2G02
BOARD OF GOVERNORS
04
010.
S-1801
OF THE
0401,*
FEDERAL RESERVE SYSTEM
.*
*
0
WASHINGTON 25. O. C.
*
Item No. 18
7/27/61
ADDRESS orriciAL CORRESPONDENCE
TO THE BOARD
P
:
July 28, 1961.
Dear sir:
In the Board's letter of October 9, 1958 (S-1674,
S. #9342), it was requested that, in connection with bank
holding company applications, the Reserve Banks submit separately,
whether in the form of a letter or memorandum, (1) a statement
forth the facts of the case, and (2) the views, opinions,
and recommendation of the Reserve Bank,
In the light of experience, the Board is now of the view
the, the
theoretical advantages of such separate letters or memoida are offset by practical disadvantages. Accordingly, in
clinection with future bank holding company applications, your
411c's factual analysis and views, opinions, and recommendation
:
4Y be incorporated in a single letter or memorandum, The Board's
;
1-etter of October 97 1958; is hereby rescinded.
Very truly yours,
,
Kenneth A, Kenyon,
Assistant Secretary.
To
PRESIDENTS OF ALL FEDERAL RESERVE BANKS
BOARD OF GOVERNORS
OF THE
Item NO. 19
7/27/61
FEDERAL RESERVE SYSTEM
WASHINGTON 25. O. C.
ADOPHEll• OrrICIAL COREIESPONOCINCE
TO THE •OAMO
July 27, 1961.
Board of Directors,
Wachovia Bank and Trust Company,
Winston-Salem, North Carolina.
Gentlemen:
The Board of Governors of the Federal Reserve System,
after consideration of all the factors set forth in section 18(c)
to the
of the Federal Deposit Insurance Act, hereby consents
lle, North
lle,
Thomasvi
Thomasvi
of
merger of First National Bank
Salem,
WinstonCompany,
Trust
and
Carolina, and Wachovia Bank
the
public
in
be
to
ion
transact
the
North Carolina, as it finds
n of
operatio
the
approves
also
s
interest. The Board of Governor
lle,
Street,
Thomasvi
Salem
10
at
a branch by the continuing bank
North Carolina.
This approval is given provided (1) the proposed merger
of this letter and
is effected within six months from the date
t and Plan of Merger
Agreemen
the
substantially in accordance with
banks on March 3.41
two
the
of
s
director
adopted by the boards of
ng shareholders
dissenti
from
acquired
1961, and (2) shares of stock
ion.
acquisit
of
months
are disposed of within six
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. 20
7/27/61
ADDRESS orriciAL
CORREOPONOCHCC
TO THE SOAR°
July 27, 1961.
Mr. Malcolm Bryan, Chairman)
Conference of Presidents of the
Federal Reserve Banks,
Federal Reserve Bank of Atlanta,
Atlanta 3, Georgia.
Dear Mr. Bryan:
At the joint meeting of the Board of Governors with the
Presidents of the Federal Reserve Banks on June 20, 1961, there was
a discussion of the action of the Conference of Presidents in approving the recommendations of the Joint Report of the Insurance Committee
of the Federal Reserve Banks and the Subcommittee of Counsel on
Emergency Operations, dated May 26) 1961.
The Board concurs with the finding that the cost of providing
for complete indemnification and exculpation of Cash Agent Banks
through the purchase of insurance by the Federal Reserve Banks under
either of the two proposals obtained would be unwarranted. The Board
is of the opinion that new and additional risks to be assumed as the
result of waiver of liability for breach of contract and negligence
and for which there are no other remedies are insignificant except
for liability resulting from the failure of the Agent to maintain its
customary security measures in the protection of the Principal's
Property. Accordingly, the Board does not concur in complete exculpation, but it does concur in the action of the Presidents' Conference
subject to the above qualification. The exculpatory and indemnity
provisions of the Bank Agency Agreement, when amended, should read
substantially as follows:
The Agent shall not be liable hereunder for any act
done or omitted to be done pursuant hereto except for its
5Wn breach of, or negligence in carrying out, or failing
to carry out the provisions hereof and the directions and
instructions of the Principal given pursuant heret27
failure to maintain its customary security measures in the
protection of the Principal's property insofar as possible
under the conditions then existing.
Mr. Malcolm Bryan
-2-
The Principal agrees to indemnify and hold the Agent
and its officers, employees and agents harmless from and
against all loss, costs, damages and expenses seasonably
and properlg arising out of or in connection with acting
as Agent of the Principal hereunder or out of any action
taken by the Agent pursuant hereto unless due to the Agent's
51,7n negligence or breach of the provisions hereof failure
to maintain its customary security measures in the protection
of the Principal's property insofar as possible under the
conditions then existing.
The Board is of the opinion that Section 2(A)(8) of the
Loss Sharing Agreement, which provides for losses resulting from
Banks, is broad
indemnity provisions in contracts with Cash Agent
as losses
well
as
rgency
pre-eme
enough to include losses arising
a Cash Agent
at
y
currenc
ngly,
Accordi
during a national emergency.
the Loss
under
covered
ically
automat
or cash depot bank would be
nt, and
Agency
Bank
the
Agreeme
of
n
Sharing Agreement upon revisio
cally
nt
specifi
Agreeme
Sharing
Loss
the
no revision or amendment of
of
curpre-emergency
storage
such
from
referring to risks arising
rency is necessary.
A copy of this letter is being sent to each Reserve Bank
President.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
@FedFRASER