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Minutes for To: Members of the Board From: Office of the Secretary July 3, 1959 Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement with respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. Otherwise, if you were present at the meeting, please initial in column A below to indicate that you approve the minutes. If you were not present, please initial in column B below to indicate that you have seen the minutes. Chin. Martin Gov. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Minutes of the Board of Governors of the Federal Reserve System on Wednesday, July 8, 1959. PRESENT: Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Balderston, Vice Chairman Szymczak Mills King Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Sherman, Secretary Kenyon, Assistant Secretary Riefler, Assistant to the Chairman Thomas, Economic Adviser to the Board Marget, Director, Division of International Finance Hackley, General Counsel Farrell, Director, Division of Bank Operations Shay, Legislative Counsel Furth, Associate Adviser, Division of International Finance Nelson, Assistant Director, Division of Examinations Goodman, Assistant Director, Division of Examinations Benner, Assistant Director, Division of Examinations Daniels, Assistant Director, Division of Bank Operations Hooff, Assistant Counsel Items circulated or distributed to the Board. items, The following which had been circulated or distributed to the members of the Board and copies of which are attached to these minutes under the respective item numbers indicated, were approved unanimously: Item No. Letter to Bankers International Corporation, New York City, transmitting a final permit to commence business. 1 7/8/59 -2Item No. Letter to the Bound Brook Trust Company, Bound Brook, New Jersey, approving the establishment of a branch at West Union and Vosseller Avenues. 2 Letter to the Western Security Bank, Sandusky, Ohio, approving the establishment of a branch in the Sandusky Plaza Shopping Center. 3 Letter to the Pan American State Bank, Brownsville, Texas, approving its request for permission to exercise fiduciary powers. 4 Letter to the Comptroller of the Currency re commending approval of an application to °rganize a national bank at Chardon, Ohio. 5 Letter to the Comptroller of the Currency recommending disapproval of an application to organize a national bank at Charleston, Illinois, unless arrangements for a change in the proposed management should be made. 6 Telegram 7 to the Federal Reserve Bank of New York aPPr°ving the opening and maintenance of an account in the name of the European Investment Bank. Gold loan to Brazil. Mr. Marget referred to the discussion at the Board meeting on July 2, 1959, regarding an inquiry that had been made of the . Bank of New York by Banco do Brasil concerning Federal Reserv, the possibility of obtaining a $50 million Federal Reserve gold loan for a three-month period, with option of renewals up to one year. The following day, he said, the New York Reserve Bank, having been informed Of the Board's view that a loan on such terms would not fall within the scope of present gold loan policy and that the circumstances involved 7/8/59 -3- would not seem to warrant a deviation from that policy, sent a cable to Banco do Brasil indicating that present Federal Reserve policy limited gold loan facilities to seasonal or clearly short-run needs. The cable inquired whether the Brazilian authorities had explored the possibility of securing a gold loan from commercial bank sources. JulY 6, On Banco do Brasil cabled the New York Reserve Bank expressing interest in obtaining a short-term gold loan. Since funds were needed to meet commitments due in July, the cable indicated that the Brazilians would accept the Federal Reservets best terms until a commercial bank acc ommodation could be arranged. Mr. Marget stated that he understood the officers of the New York Reserve Bank were planning to present to the Bankts directors tomorrow a proposal for a $50 million gold loan to Brazil which would mature in two months or upon such earlier date as sufficient proceeds of a loan or loans by commercial banks in the United States became available. loan gold In granting the loan, it would be stipulated that if the were not paid at maturity the Federal Reserve would expect the collateral to be sold and the proceeds applied to the repayment of the loan. It was understood by the New York Bank that certain United States commercial banks were forming a syndicate for the purpose of granting an accommodation to Brazil but that it would not be possible to complete the negotiations within the time that the Brazilians had indicated the funds were urgently needed. 7/8/59 Mr. Marget then referred to and read a letter received this morning from Under Secretary of State Dillon supporting favora ble consider ation of a short-term gold loan to Brazil. He added that the de sirability of financial assistance also had been suggested in communications received by the United States Government from its officials stationed in Brazil. Mr. Marget pointed out that the current proposal was quite different from the origin al request. would While even the modified proposal represent a stretching of Federal Reserve gold loan policy, it was his view that in the circumstances the short-term accommodation Probably should be granted. He then asked guidance from the Board in discussing the matter further with representatives of the New York Reserve Bank. Governor Szymczak reported having had a discussion of the matter with officers of the Reserve Bank and said that they shared the Boardts reluctance with regard to making a loan of this kind. In the light of pertinent consideratio ns, however, it had been decided to present the proposed short-term loan for consideration by the directors. The letter from Mr. Dillon, Governor Szymczak pointed out, represented an indica tion that the Government would like the Federa l Reserve to g° along with such a loan in all of the circumstances. He added that he considered it desirable to include a proviso that the gold collateral would be sold if the loan had not been repaid by the maturi ty date. 7/8/59 -5Governor Mills expressed the opinion that the System was being pressured into a transaction that was unfortunate. However, developments had moved in such a manner that it seemed difficult for the Federal Reserve to refuse to grant the accommodation. Assuming that the loan Was approved, he raised the question whether it would be advisable to include a condition that the gold collateral must be sold at maturity unless the loan had been repaid from proceeds of a loan by United States commercial banks or in some other manner. The Brazilians, he noted, had been quite free to express opinions, officially or semi-officially, that had reached the press and brought criticism upon the United States. In connection with studies made by the International Monetary Fund, it had been charged that the United States was exploiting the position Of Brazil and that it was necessary to retaliate. °f a Provision Thus, the inclusion that the gold collateral must be sold might expose the United States to further criticism from Brazilian sources. In reply, Mr. Marget expressed the thought that unless the Brazilian authorities were given clearly to understand that the gold 1°1111 was strictly an interim transaction, the Federal Reserve might be faced with a loan that would remain outstanding longer than contemplated by its original terms. Chairman Martin expressed a similar view, stating that if the Federal Reserve did not indicate some firmness the Brazilians might assuAle that renewal of the loan would be possible. Governor Szymczak 7/8/59 -6- agreed, adding that he thought it important from the standpoint of the State Department as well as the parties to the transaction that the situation be clear. Otherwise, pressure might be exerted for renewals of the loan. At the conclusion of the discussion, Mr. Marget was authorized to advise the officers of the New York Reserve Bank informally that the Board would not be disposed to object to a gold loan to Brazil on the terms that the Reserve Bank's officers were now contemplating, if a loan on such terms should be authorized by the Reserve Bank directors and submitted to the Board for approval. Messrs. Marget, Furth, and Nelson then withdrew from the meeting. Payment of bonus for renewal of certificates of deposit (Item Y-922.-al In a letter dated April 24, 1959, the Federal Reserve Bank of St. Louis requested an expression of the Board's views on a question, Presented by The First National Bank of Vandalia, Vandelia, Illinois, "to whether the bank might pay a "bonus" of 1/2 per cent per annum re troactive to January 1, 1957, to holders of outstanding five-year 2-1/2 per cent certificates of deposit if the certificates were renewed at maturity. Presumably, 3 per cent would be paid on the renewed certificates and the beginning date for the retroactive payment of interest had been chosen because the maximum permissible rate of interest on time deposits was increased from 2-1/2 per cent to 3 per cent by the Board effective on that date. The memorandum noted that the question 7/8/59 -7- vas essentially whether such an arrangement should be viewed as the payment of additional interest on the matured outstanding certificates or as additional interest on the renewed certificates. In citing the arguments on both sides, the memorandum pointed out that for a number of Years the Board had given its approval to certificates of deposit 'which provided for increasing rates of interest, depending on the length Of time the deposit was in the bank concerned, if the period of notice of withdrawal was consistent with that required by Regulation Q, Payment of Interest on Deposits. Furthermore, the Board took the position in 1958 that a member bank could modify the rate of interest on outstanding cer tificates so as to pay the maximum rate of 3 per cent, provided such rate of interest was not paid for any period before January 1, 1957. The question now presented had been discussed at an interagency conference attended by representatives of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Board of Governors, at which time the representatives of the Corporation were of the opinion that a bonus should be considered part of the inducement for renewal of the certificate and, therefore, part of the interest which -would be Paid on the renewed certificate. However, a representative of the ComPtroller considered that the bonus related only to the time the 11445ney had been on deposit and brought out that, when added to the interest paid for such time, the total would not exceed the maximum 13ermtasible rate. A majority of those in the Board's Legal Division 7/8/59 -8- who had considered the matter were disposed toward the position favored by the Federal Deposit Insurance Corporation and suggested by the Reserve Bank in submitting the matter; namely, that the proposed bonus should be regarded as compensation for the renewed deposit. the Submitted with memorandum were alternative drafts of a letter to the St. Louis Reserve Bank. One draft would take the position that the bonus would have to be added to the stated rate in determining whether the renewed deposit complied with Regulation (II while the alternate draft would take the opposite position. Following introductory comments by Messrs. Hackley and Hooff, Governor Mills indicated that he would be inclined slightly toward the minority view that existed within the Legal Division. Where the Board had, in earlier instances, allowed variations in the rate of interest Payable on a certificate of deposit to be credited over the life of the ce rtificate, he did not see why a member bank should not be permitted, if it so desired, to make a retroactive payment of interest on such a cer tificate. There followed further explanation regarding the earlier rulings of the Board referred to by Governor Mills, after which Mr. Benner stated that the Division of Examinations would favor the minority view. lie suggested that in circumstances where there was not clearly a v iolation of the Boardts regulations, it might be said that the inclination should be against interfering with a bank's manner of doing 7/8/59 business In this case, he felt a rather arbitrary decision would be involved in saying that the proposed bonus actually represented interest Paid on the renewed certificate of deposit. Governor King reported having been advised by Governor Shepardson that the latter would be inclined to support the majority view within the Legal Division, Governor Shepardson had noted that the retroactive Payment of interest would be made only to the holders of certificates who renewed them at maturity. If, on the other hand, the retroactive payment were offered to all certificate holders on a uniform basis, Governor Shepardson felt that he would be prepared to go along with the minority view. On this point, Mr. Hackley recalled that the Board had taken the position in the past that there vas no objection to a bank's discriminating between depositors as to the rate of interest, provided the bank did not pay to any depositor more than the maximum permissible rate. As previously indicated, the Board also had taken the position that there was nothing in its regulations to prevent a member bank from adjusting the rate of interest within the maximum limitations of R egulation Q. Governor Szymczak and Chairman Martin then indicated that they 'would be inclined toward the minority view and the alternative draft °f letter expressing that position. Governor Balderston agreed, stating that such an opinion would not give the member bank an unfair competitive 7/8/59 -10- advantage in attracting new depositors but would help the bank to resist the inducements of other institutions to take away its present customers. In further discussion, a minor change in the draft of letter was suggested by Governor King and the elimination of a paragraph from that letter was agreed to on the grounds that it was unnecessary. The view vas expressed by Mr. Hackley that the sending of such a letter need not be contingent upon further discussion with the Federal Deposit Insurance Corporation, particularly since no strong expressions on the matter had been made at staff level. Accordingly, subject to the modifications agreed upon at this meeting, approval was given to the draft of letter to the Federal Reserve Bank of St. Louis taking the position that the proposed bonus would not have to be added to the stated rate of interest in determining whether the renewed certificate of deposit would comply with Regulation Q 4 coPY of the approved letter is attached as Item No. 8, and copies were sent to all Federal Reserve Banks as a matter of information. Messrs. Banner, Goodman, and Hooff then withdrew from the meeting. 121122222..of structure on New Orleans Branch building site. (Item Nr, At the meeting on June 26, 1959, consideration was given tO the proposal of the Federal Reserve Bank of Atlanta to demolish the Sevage and Water Building located on the recently acquired New Orleans 7/8/59 -11- Branch building site, and question was raised whether it was clear from the record that advantageous or profitable use could not be made of the building. Accordingly, Governor King was requested to make appropriate inquiry regarding this point. Governor King reported that he had discussed the matter with President Bryan, Mr. Shaw, Vice President in charge of the New Orleans Branch, and one of the New Orleans Branch directors. He was advised during these conversations that the Reserve Bank had made an effort through a real estate broker to find tenants for the Sewage and Water Building but was unsuccessful in finding anyone who would like to lease more than a few rooms. The building vas not air-conditioned and the plumbing was reported to be in bad condition. Mr. Bryan expressed agreement with the suggestion that it would be advisable to have a complete file on the matter prepared for the records of the Board and the Bank, such file to include the recommendations of the Bank's architects. In concluding his report, Governor King said he was now satisfied that it would be appropriate for the Board to interpose no objection to the demolition of the Sewage and Water Building. Accordingly, unanimous approval was given to the telegram to the Federal Reserve Bank of Atlanta of which a copy is attached as Item N it being understood that the file referred to by Governor king 'would be prepared by Mr. Bryan to complete the record. 7/8/59 -12Retention of tax counsel by Chicago Bank (Item No. 10). At the meeting on June 26 1959, the Board gave consideration to the request contained in a letter from President Allen of the Federal Reserve Bank of Chicago dated June 12, 1959, that the Board approve payment by the Bank of a fee of $101000 to the law firm of Holt and Kearney for legal services in connection with efforts to secure a reasonable tax assessment on the Bank's real properties for the 1959-1962 tax period. In vieli of questions raised at that time, it was decided to defer action on the matter pending discussion with Mr. Allen. Governor Balderston stated that Mr. Allen, in a conversation yesterday, advised that both he and Reserve Bank Chairman Frail had gone into the matter thoroughly and had satisfied themselves that the retention of tax counsel wasP appropriate. Three commercial banks in Chicago had been contacted, and it was found that they also followed the practice. The law firm proposed to be retained had been checked into and was found to be highly regarded. Consequently, Messrs. Prall and Allen had reached the conclusion that it was appropriate to take the position that the handling of tax assessment matters in Chicago called for specialized knowledge and required the retention of approPriately qualified tax counsel. In this connection, Mr. Allen noted that the problem was magnified at this time because of assessment questions that would flaw from the current head office building 7/8/59 -13- program. The practice of retaining tax counsel had been followed by the Reserve Bank over a period of 16 years, during which the Bank had Paid approximately $32,000 for legal services and had saved approximately $250,000 through the reduction of assessments. although Accordingly, Messrs. Pr 11 and Allen disliked the custom that had grown IV in Chicago with respect to the negotiation of assessments, the Practice of employing special counsel to deal with such matters was followed by banks and other firms in the community and they concluded that the retention of tax counsel by the Reserve Bank was justifiable. Governor Balderston reported also having been advised by Mr. Allen that, in addition to employing tax counsel for work in connection With the quadrennial tax assessments, the Reserve Bank had been paying ---ar-LY a modest fee of around $200 per year to outside counsel for ealjn With tax assessment problems arising on an annual basis. Because of the small payments involved, it had not been necessary to s ' ecure Board approval under the provisions of the Board's letter of March 41 1940 (S-206), but the principle involved appeared to be the serae. It was Mr. Allen's view that this retention of counsel annually t de, . aq-i- With technical matters required specialized knowledge and was Juatifiable. On the basis of Governor Balderston's report, it was the -Luvus view of the Board that the payment of a fee for legal services 7/8/59 -14- in connection with the qualirennial tax assessment, as requested in Mr. Allen's letter of June 12, 1959, should be approved. A copy of the letter sent to the Reserve Bank pursuant to this action is attached as Item No. 10. Messrs. Riefler and Daniels then withdrew from the meeting. Legislation on reserve requirements. As mentioned at the Board meeting on July 2, 1959, the House of Representatives approved on the previous day the bill on member bank reserve requirements reported by the Banking and Currency Committee, subject to an amendment that 'would set a range of 10 to 22 per cent, rather than 10 to 20 per cent, on reserve requirements of reserve city banks. In view Of adoption of this amendment by the House and inclusion in the bill aPproved by the Senate of a provision having to do with reserves of holding company affiliates, not found in the House bill, the two bills were to go to conference. Chairman Martin reported a request from Chairman Robertson Of the Senate Banking and Currency Committee for an expression as to h°w vigorously the Board felt about the amendment to the House bill. It was his own view, Chairman Martin said, that the amendment did not make + 0 -0 much difference one way or the other. Accordingly, he felt 5 the B°8-rd' position might be that it believed the bill originally introduced at its request was appropriate, that it would prefer a rfla4imum reserve requirement of 20 per cent for reserve city banks, 7/8/59 -15- but that changes had been made in the bill originally introduced, including elimination of the central reserve city classification, and the Board was not disposed to feel that the fixing of a maximum requirement of 22 per cent rather than 20 per cent for reserve city banks made too much difference. It was Chairman Martin's view that it would be preferable to express this position orally unless a request should be received for a written statement. After discussion, it was agreed unanimously that it would be appropriate for Chairman Martin to advise Senator Robertson along the lines that he (Chairman Martin) had indicated. _Itstilv±1:21_22LEE112/2=2.E.I2. Chairman Martin referred to the decision at the Board meeting on June 23, the 1959, to accede to request of Congressman Patman that copies of the examination rePorts of the Federal Reserve Banks for the year 1958 be made available for his review, and to the letter sent to Mr. Patman thereafter indicating that the reports would be transmitted to the House Banking and Currency Committee. The Board's action contemplated that the reports would not be sent until copies thereof hari been obtained for the Board's files from the respective Reserve Banks. Such copies had 'now been received and the reports of examinations had been made readY for transmittal to the Banking and Currency Committee, with a covering letter. 7/8/59 -16In commenting on the matter, Chairman Martin noted that reports of examination of the Reserve Banks for years prior to 1958 had been transmitted to the Banking and Currency Committee with letters exPressiaz the understanding that the contents would be held in confidence. However, this understanding had not been adhered to by Congressman Patman. On this account, and for other reasons that he mentioned, Chairman Martin said that he was deferring the actual transmittal of the 1958 examination rePorts, No disagreement was expressed with the position taken by Chairman Martin. Board and Reserve Bank budgets. Mr. Farrell reported that a letter to the Federal Reserve Banks concerning preparation and submission Of the 1960 budgets was being drafted for the Board's consideration and that this letter would call for continuation of the practice instituted last year whereby the respective Presidents had informal discussion with a committee of Board members regarding plans for the year 1959. He indicated that the letter would come before the Board for consideration on or about July 15 and that it would seem appropriate to hold the discussions with the individual Presidents during the month of August and in early September. Such a schedule would permit the Reserve Banks to have available expense infolumtion for the first half of 1959 to serve as a basis for 1960 estimates. In the light of Mr. Farrell's comments, and after consideration (pf Board members' schedules and related matters, Governors Balderston, 7/8/59 -17- Mills, and King were designated as the committee of the Board to hold the aforementioned discussions with the Reserve Bank Presidents and, after submission and staff analysis of the respective budgets, to submit recommendations for the Board's consideration. It was agreed that the preparation of the Board's budget for 1960 would be under the direction of Governor Shepardson, who would have discussions with the heads of the respective divisions and then submit recommendations to the Board. All of the members of the staff except Mr. Sherman then withdrew from the meeting. Governor Szymczak referred to the recent informal discussion by the Board of Mr.Noyes' memorandum to Governor Shepardson dated June 2, 1959, in which Mr. Noyes reviewed several telephone calls and meetings that he and other staff members had had with Mr. Sergei Bogomolov of the Economic Staff of the Russian Embassy. Governor Szymczak stated that, in accordance with the request of the Board, he hni3 attempted to talk with Under Secretary of State Douglas Dillon for the purpose Qf as furnishing of whether the State Department had views as to the information to Mr. Bogomolov rearding gold movements and economic developments in the United States. In Mr. Dillon's absence, he had talked with Mr. Robert P. Terrill, Special Assistant to Under Secretary Dillon (for Communist Economic Affairs) on June 24, 7/8/59 -18- who said that he did not know whether the State Department had a policy on matters of this kind but that he doubted it. On July 2, Governor Szymczak said, Mr. William Turpin of the State Department, who identified himself as an international economist in the Office of the Soviet Union Affairs, called on the telephone to say that the State Department could not encourage or discourage giving out or not giving out of information as requested by people from the Soviet Union Embassy. Mr. Turpin commented, however, that while he was in the Soviet Union not so long ago he attempted to obtain certain information regarding that country and the response to his inquiry was that he should put his questions in writing. Mr. Turpin indicated that this was done but that he received no answers to his questions. His th°11ght, therefore, was that at some time the State Department should discuss with the Soviet Union the subject of reciprocal exchanges of information. A summary of his conversations with Messrs. Terrill and TurPin Was contained in a memorandum dated July 2 that Governor Szymczak sent to each member of the Board. Governor Szymczak commented that the essence of the discussions With Messrs. Terrill and Turpin seemed to be that there was no position in the State Department that would preclude giving representatives of the Russian Embassy information that would be given to any other person making inquiry, and that there was no reason to cease seeing or talking With re presentatives from the Embassy along the lines that had been describerq by Mr. Noyes. On the other hand, Governor Szymczak gathered 7/8/59 -19- that it would be appropriate to "drag our feet" on giving anything other than routine published information so long as information regarding the Soviet Union was not available to any great extent on a reciprocal basis, Partly because so little information on that country is available through published sources. Thereupon the meeting adjourned. Secretary's Notes: On July 7, 1959, Governor Shepardson approved on behalf of the Board the following actions affecting the Board's staff that had been recommended in memoranda from appropriate individuals concerned: Merit 'alarY increases Name and titl effective July 12, 1959 Division Basic annual salary To From Secretary's Office Marjorie Eaton, Secretary Mary Jane Reiss, Clerk Jane C. Charuhas, Records Clerk 5,580 4,490 3,755 c'; 5,73o 4,640 3,850 Legal D°11ald W. Farrell, Legal Assistant Patricia D. Kevilly, Stenographer 6,735 3,850 6,885 3,945 12,770 13,070 11,355 9,890 8,570 8,330 7,750 7,750 7,510 11,595 10,130 8,810 8,570 7,990 7,990 7,750 5,730 5,280 4,980 4,640 4,190 5,83o 5,430 5,130 4,790 4,340 Research and Statistics Mona E. Dingle, Chief, Consumer Credit and Finances Section Peter M. Keir, Chief, Government Finance Section Stephen H. DorothY S. Axilrod, Economist Projector, Economist Helmut F. Wendel, Economist James C. Byrnes, Economist Richard C. Pickering, Economist Helen R. Grunwell, Chief Draftsman, Economic Illustrating Unit Athens J. Messick, Secretary Rose C. Cassedy, Research Assistant Natalie C. Strader, Research Assistant Virginia Johns, Secretary Eleanor J. Pratt, Research Assistant 7/8/59 -20- Merit salary increases Name and title effective July 12 1959 continued) Division Basic annual salary To From International Finance Frederick R. Dahl, Economist Samuel I. Katz, Chief, British Commonwealth, Sc andinavia, and Near East Section Marcia G. Patz, Secretary Betty B. Taylor, Secretary '1', 8,330 8,570 13,070 4,490 4,790 13,370 4,640 4,940 5,240 3,850 8,570 8,810 11,355 7,030 7,030 7,270 7,030 6,585 5,390 3,945 8,810 9,050 11,595 7,270 7,270 7,510 7,270 6,735 5,280 4,640 5,14-30 4,790 5,580 4,190 3,945 5,730 4,340 4,040 8,570 3,850 8,810 3,945 Examinations M. Patricia McShane, Training Assistant Patricia D'AMbrosio, Stenographer Robert P. Achor, Review Examiner John M. Poundstone, Federal Reserve Examiner Wilson D. Dougal, Senior Federal Reserve Examiner John P. Donovan, Federal Reserve Examiner Michael W. Flynn, Federal Reserve Examiner il:TerrY B. Riley, Federal Reserve Examiner Ir-iTlis W. Zidek, Federal Reserve Examiner 1/ J.IPcGarvey, Assistant Federal Reserve Examiner A l:Indet Harris, Jr., Assistant Federal Reserve ' Examiner Thomas G. Young,' Assistant Federal Reserve Examiner Bank Operations Evelyn -ryan, Supervisor, Member Bank Statement Unit Kathryn A. Jackson, Statistical Clerk Mary Pat ricia Barlow, Statistical Clerk Personnel Aaministration "Tune E. Ayers, Administrative Assistant Judith J. Sherbine, Clerk-Stenographer 1/ Title change from Assistant Federal Reserve Examiner to Federal Reeserve Examiner effective July 12, 1959. 7/8/59 -21- Merit sal increases effective July 12 1959 (continued) Division Basic From salary To Administrative Services Davis H. Wilson, Chief, Automatic Data Processing and Telegraph Section John C. s Laborer Simmon1 Blanche E. Peacock, Charwoman Charles E. Evans, Messenger $ 9,050 $ 9,290 3,150 31 340 3,150 3,245 3,435 3,214.5 5,280 5,580 5,430 5,730 Office of the Controller Jean S. Glascock, Secretary Joseph H. Hoyle, Supervisor, Payroll and Disbursing Salary increases effective July 12, 1959 Division Basic annual s From ary To .M•••••••••••••1 Legal Margaret A. Smith, Stenographer 4,040 4,135 Research and Statistics Mary T. Gregory, Statistical Clerk MarY Jane David R. Harrington, Economist Hull, Jr., Economist Marcia L. Mehl, Clerk-Stenographer 3,945 7,030 5,260 4,040 4,040 7,270 5,430 4,135 Hagler, Federal Reserve Examiner 7,990 Tyndall, Assistant Federal Reserve Examiner 5,260 8,230 51 4-30 3,755 3,850 Exnmi nations Herbe Linwo Personnel hiministration Judith J. Sherbine, Clerk-Stenographer • ,AL.•.;. 7/8/59 SY JUy (continued) Division Basic annual salary From To Administrative Services Donald B. Fitzhugh, Tabulation Planner Herbert E. Haney, Operator, Tabulating Equipment Blanche E. Peacock, Charwoman 6,135 5,130 3,245 $ 6,285 5,280 3/340 Acce tance of resignation M417 E. Prather, Cafeteria Helper, Division of Administrative Services, effective July 7, 1959. Governor Shepardson today approved on behalf of the Board a letter to the Federal Reserve Bank of Richmond (attached Item No. 11) approving the designation of Douglas L. Anderson) L. Gerald Perks, Jr., Reginald E. Slaughter, and Carroll E. Taylor as special assistant examiners, and a letter to the Federal Reserve Bank of Chicago (attached Item No. 12) approving the appointment of John E. Ryan as assistant examiner. Li Secretary I ,•,./ BOARD OF GOVERNORS OF THE Item No. 1 7/8/59 FEDERAL RESERVE SYSTEM 4 i* WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE „ .4 TO THE BOARD tilt; : 44 41g, blitSVA July 8, 1959. Bankers 16 Nall International Corporation, Street, New York 15, New York. G entlemen: theThe Board of Governors has received a certificate of Secretary and three directors of Bankers International Corporation, dated June 24, 1959, certifying the information 7squired by Section 3(c) of Regulation K as prerequisite to the Issuance of a final permit to commence business. There is enclosed herewith a final permit of the Board of Goverrs no granting to Bankers International Corporation authoritY to commence business as a corporation organized under the provisions of Section 25(a) of the Federal Reserve Act. Upon completion of the organization of the Corporation, itWill be appreciated if you will furnish the Board of Governors, thro by_lutLI the Federal Reserve Bank of New York, with a copy of the the aws of the Corporation and advise, in writing, as to the date Corporation commences business. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. Enclosure BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WAS July 8, 1959. WHEREAS, the Board of Governors of the Federal Reserve SYstem on the twenty-eighth day of May, Nineteen Hundred and Fifty Nine, approved the Articles of Association and Organization Certificate of Bankers International Corporation in accordance With the terms of Section 25(a) of the Federal Reserve Act; and WHEREAS by satisfactory evidence presented to the Board - of Governors of the Federal Reserve System it appears that Bankers International Corporation has complied with all of the provisions of the statutes of the United States required to be rplied with before a corporation shall be authorized to cornder Section 25(a) of business as a corporation organized under " Z Federal Reserve Act; NOW, THEREFORE, it is hereby certified that Bankers International Corporation is authorized to commence business as 2. corporation organized and operating under the provisions of !tction 25(a) of the Federal Reserve Act and the regulations of e Board of Governors of the Federal Reserve System issued in accordance therewith. r IN WITNESS WHEREOF I have hereunto set my hand and caused the seal of the Board of Governors of the Federal Reserve SYstsm to be affixed on the day and year first above written. (Signed) Merritt Sherman Territt Sherman, Secretary. BOARD OF GOVERNORS OF THE - Item No, 2 7/8/59 FEDERAL RESERVE SYSTEM • kt WASHINGTON 25, D. C. ;.+ ADDRESS OFFICIAL CORRESPONDENCE TO TNE BOARD °O+Aktkti .0 July 8, 1959. Board of Directors, Bound Brook Trust Company, Bound Brook, New Jersey. G entlemen: Pederal Pursuant to your request submitted through the Bank of New York, the Board of Governors of the i,....,FedeReserve ral Reserve System approves the establishment of an ;';.cl own branch at the southwest corner of West Union Avenue Nov .* ii-e'sseller Avenue, by Bound Brook Trust Company, Bound Brook, verseY, provided the branch is established within one year from is r!1 the date of this letter and approval of State authorities in effect as of the date of the establishment of the branch. of not Itfunds 1 tadditional capital nderstoodt . that less than: WOO .,., ad,000 will be provided through h the 5a1 lc of , s . ditiol , . la-L. common citocir orilr to the establishment of the proposed branch. ' ' ' ' Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No. 7/8/59 FEDERAL RESERVE 'SYSTEM c4A WASHINGTON 25, D. C. t *o o mat 'tittott*** ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD July 8, 1959. Board of Directors, The Western Security Bank, Sandusky, Ohio. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Cleveland, the Board of Governors 5 the Federal Reserve System approves the establishment by The Western Security Bank of a branch in the Sandusky Plaza Shopping Center, Cleveland Road, Sandusky, Ohio, 1.1ovided the branch is established within nine months from the date of this letter. Very truly yours, (Signed) Kenneth A. Kriyox Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS tn144 4 0 " 6144, .‘ OF THE I' zs 0. A I ft Item No. 4 FEDERAL RESERVE SYSTEM 7/8/59 WASHINGTON 25. D. C. AODRESS OFFICIAL CORRESPONDENCE TO THE BOARD July 8, 1959. Board of Directors, Pan American State Bank, Bro wnsville, Texas. Gentlemen: This refers to your request for permission, under applicable provisions of your condition of membership numbered 1, to exercise fiduciary powers. Following consideration of the information sUbmitt A e-, , the Board Of Governors of the Federal Reserve System i.'4,1!te permission to Pan American State Bank to exercise the a).,:u?ial'Y powers now or hereafter authorized by its charter "' 'the laws of the State of Texas. T Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE No. 5 8 /59 7/ Item FEDERAL RESERVE SYSTEM WASHINGTON 25, O. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD July 8, 1959. Comptroller of the T Currency, reasury Department, Washingl,don 25, D. C. Attention Mr. Hollis S. Haggard, Chief National Bank Examiner. Dear Mr. Comptroller: office Reference is made to a letter received from your dated April 20, 1959 enclosing an application to ! Ifganize a natonal bank at Chardon, Ohio, and requesting a °mmendation as to whether or not the application should be approved t4e,r„,. Irt lf=o en contained in a report of investigation of vp.o.ca • by an examiner for the Federal Reserve Bank to u:veland indicates generally favorable findings with respect posale factors usually considered in connection with such proAccordingly, the Board of Governors recommends favorable consi!' tzeration of the application. The Board's Division of Examinations will be glad to discuss , officf, .anY aopects of this case with representatives of your - lf you so desire. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No. 6 FEDERAL RESERVE SYSTEM 7/8/59 WASHINGTON 25. D. C A* ;? k ADDRESS CH- FACIAL CLIRRESPONOCNCE +.t TO THE BOARD July 8, 1959. Comptroller of the Currency, Treasury Department, lashington 25, D. C. Attention Pr. W. M. Taylor, Deputy Comptroller of the Currency. Dear Mr. Comptroller: Reference is made to a letter from your office dated May 6, l950) Char'e' enclosing copies of an application to organize a national bank at or on, Illinois, and requesting a recommendation as to whether t the application should he approved. A report of inventigation of the application made by an exner for the Federal Reserve panic of Chicago indicates that a capital s ructure of 300,000 would be provided for the bank instead of '„?2.00,01_0 r1°I'm in the application. This revised capital structure would appear to , could adequate. The investication also indicates that the community flPport another bank and that prospects for profitable operations are 4tieasonably good. With respect to management, it appears that Er. George ?Ilwards and his brother, Mr. J. Thomas Edwards, together with one of , L2'eIr present associates, will participate in the management of the probank. Their management of State Rank of Eureka, Eureka, Illinois, ha been wiLti favor unsatisfactory and unreliable and we would not look a vested 4 n,the application for the proposed bank if the Edwards'had trl)tererit in the manaement. However, if arrangements are made for other IcImPetent management which would be satisfactory to your office, the bank — ard recommends approval of the application to organize a national at Charleston, Illinois. discuss The Tloardis Division of Examinations will be glad to anY aspects of this cnne with representatives of your office if you so desire. Very 1- ru35, yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. ,. t TELEGRAM Item No. 7 BOARD OF GOVERNORS 7/8/59 OF THE FEDERAL RESERVE SYSTEM LEASED WIRE SERVICE WASHINGTON July 8, 1959. C°°1411S — NEW YORK Your wire July 2. Board approves the opening and maintenance of ar 4CCOUnt on your books in the name of the European Investment 11411k subject to the usual terms and conditions upon which your Ballk maintains accounts for foreign central banks and governments. It i8 understood that you will in due course offer participation in thi8 aCCOUnt to the other Federal Reserve Banks. (Signed) Merritt Sherman SHERMAN BOARD OF GOVERNORS q^,iipfk,,, OF THE Item fio. 3 I2 14%* FEDERAL RESERVE SYSTEM 7/8/59 WASHINGTON 25. D. C. 3a ADORE5S OFFICIAL CORRESPONDENCE TEl THE BOARD rattwet,' July 8, 1959. Mr. George E. Kroner, Vice President, Federal Reserve Bank of St. Louis, Post Office Box 442, St. Louis 66, Missouri. Dear Mr. Kroner: This refers to your letter of April 24, 1959, requesting the Boats views on the question presented by the First National of Vandalia, Illinois, as to whether the bank may pay a bonus Of 1/2 per cent per year retroactive to January 1, 1957, to all who hold its outstanding five-year, 2-1/2 per cent certificates of eposit, , Provided they renew the certificates at maturity. Presumably, 3 per cent would be paid on the renewed certificates. The Board has given its approval to certificates of deposit Providing for increasing rates of interest depending on the length of time the deposit is in the bank if the period of notice of withdrawal is consistent with that required by the Supplement to Regulation Q ror the rate of interest paid. For example, if a certificate provides for Payment five years after date at a rate of 2-1/2 per cent but 1)!!rmit5 earlier payment after 90 days notice at a rate of 2 per cent, ;171 certificate complies with Regulation Q. (1953 BULLETTO 721; 116301.2) In such a case, the extra interest provides an i nducement for the depositor to leave his deposit with the bank until tile end of the 5-year period rather than withdraw it prior to that While admittedly the present case is not exactly the same, it tfl"Y be retiArded as closely analogous. Also, the Board has taken the position that a member bank the rate of interest on outstanding certificates of deposit pay the maximum rate of 3 per cent on such certificates Provia t!: -Ou this rate of interest is not paid for any period before Jn , -,nuary 1957, although in that case there was no suggestion that the 1,1 r, str„ .1-Laer interest would be conditioned upon the renewal of the out"44-ling certificates. MaY fflodif Y so as 2389 Mr. George E. Kroner -.2- The Board is of the opinion that, consistent positions taken in the situations mentioned above, the bonus in the present case relates only to the time the been on deposit, the additional interest would be paid and the total would not exceed the maximum permissible with the proposed money has for such time, rate. The Board has no objection to use of the so-called "savings Investment coupon certificate" by a national bank as a form of time certificate of deposit. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. TELEGRAM LEASED WIRE SERVICE Item No. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON July 7/8/59 8, 1959 Bryan -Atlanta Referring Mr. Patterson's letter of June 12, 1959, Board will interpose no objection to demolition of the Sewage and Water Building on the recently acquired New Orleans Branch building site, as approved by the head office and branch directors. (Signed) Merritt Sherman Sherman 9 BOARD OF GOVERNORS Qop.4.,,, , , ,. OF THE * ti 4 40" : IT .4 ‘,1 * Item No. 10 7/8/59 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. 4.1f* **' *4‘18. wttzt4 l'-' 4)0 '' -°' 4 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD July 8, 1959 Mr. Carl E. Allen, President, Federal 'Reserve Bank of Chicago, Chicago 90, Illinois. Dear Mr. Allen: stil eference is made to your letter of June 12, 1959, the Board's approval for the payment by the Federal nrve Bank of Chicago of a fee of $10,000 to the law firm of Chicago, for services to be rendered by that firm _°°'ing toward a reasonable tax assessment for the period 1959-1962 vn the real properties owned by the Bank. reque The Board approves the payment of this sum to the designated law .e• n the basis of the understanding stated by you to exist that'41rm h fee is subject to reconsideration contingent upon satisfact' t is 1°n with the amount of the final assessment. Very truly yours, (Sired) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS OF THE 4rt Item No. 11 7/8/59 , ** FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. p.1 -* la, 44 **;4441, ttit,t,V ' 4044.t.Wa ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD July 8, 1959 Mr, N. L. Armistead, Vice President, Federal Reserve Bank of Richmond, Richmond 13, Virginia, Dear Mr. Armistead: In accordance with the request contained in your letter of July 3, 1959, the Board approves the designation of the following employees as special assistant examiners for the Federal Reserve Bank of Rlehmond, for the purpose of participating in the examination of member banks only: Douglas L. Anderson L. Gerald Perks, Jr. The Board also approves the designation of the roll • -°141ng employees as special assistant examiners for the Federal Reserve Bank of Richmond, for the purpose of partiPating in the examination of member banks only, except the uank listed immediately above their names: 5 The Bank of Virginia, Richmond Virginia Reginald E. Slaughter Carroll E. Taylor Bank of Richmond, Richmond, Virginia Reginald E. Slaughter Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. 2:i93 BOARD OF GOVERNORS OF THE Item No. 12 7/8/59 FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD July 8, 1959 Hr. W. R. Diercks, Vice President, Federal Reserve Bank of Chicago, Chicago 900 Illinois. Dear Mr. Diercks: In accordance with the request contained in your letter of July 20 1959, the Board approves the appointment of John E. Ryan as an assistant examlner for the Federal Reserve Bank of Chicago. Please advise as to the date on which the appoint— ment is made effective. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary.
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