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Minutes for To: July 8, 1960 Members of the Board From: Office of the Secretary Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement with respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. Otherwise, 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. Chin. Martin Gov. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King 25M1 Minutes of the Board of Governors of the Federal Reserve System On Friday, July 8, 1960. The Board met in the Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Martin, Chairman Mills Robertson Shepardson King Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Sherman, Secretary Thomas, Adviser to the Board Young, Adviser to the Board Hackley, General Counsel Solomon, Director, Division of Examinations Koch, Adviser, Division of Research and Statistics Brill, Associate Adviser, Division of Research and Statistics Nelson, Assistant Director, Division of Examinations Landry, Assistant to the Secretary Young, Assistant Counsel Pan American Bank of Miami. Governor Robertson referred to a tneettng to discuss the capital and asset problems of the Pan American Bank, Miami ) Florida, that took place on June 8, 1960, in the Board's offices. Irl attend, -ance, in addition to himself and members of the Board's staff, haci, 'leen Vice President Denmark of the Atlanta Reserve Bank and Mr. Sottile, ' all of the Executive Committee, and Mr. Moss, President, of Pan American ' At that meeting, Governor Robertson said, he had stated that even with the b est intentions shown by Mr. Sottile the situation of Pan American Bank h" advanced to a point where he personally could not agree to a long, °flal delay in the obtaining of sufficient capital for that institution. ceQrdinglY, he had stated that if Pan American Bank did not have the 7/8/60 -2- necessary additional capital by September 15, 1960, he would recommend to the Board of Governors that it take steps to oust the bank from membership and to the Federal Deposit Insurance Corporation that it cancel the bank's insurance. After the meeting had adjourned and Messrs. Sottile and Moss had departed, it was agreed that Mr. Denmark would advise Commissioner Green "Florida that Mr. Sottile had been informed that action was expected by September 15. Subsequent to the meeting a letter dated June 14 was received fr041 Mr. Sottile stating that he was trying to market $3 million in stock of the Pan American Bank. Governor Robertson said that last Thursday, June 30, he r eceived a telephone call from Mr. Sottile to the effect that his efforts to mar,_e. 4 t stock of Pan American Bank had been unavailing. Following his telephone conversation with Mr. Sottile, Governor Robertson said he had a letter to him stating that he personally was unprepared to consider 1\111ber proposals for obtaining additional capital for Pan American Bank and that he was not inclined to recommend such to the Board. Subsequently, he (Governor Robertson) had learned from Vice President Denmark that President Moss 0.,„ Pan American thought that the only way out was for Mr. Sottile to "la his banks. Governor Robertson went on to say that it appeared likely t0hla that Mr. Sottile would either have to sell his banks or certain other 4asta to meet his obligations prior to September 15 to avoid the bank superProblems that otherwise would result. He noted that the Federal Deposit , 141311 l'nee Corporation had been kept completely informed of these developments 7/8/60 -3- " a agreed fully with his position on them. He said that he was reporting these developments to the Board solely as an informational matter. Discount rates. The establishment without change by the Federal Reserve Banks of New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Kansas City, Dallas, and San Francisco on July 7, 1960, °ft the rates on discounts and advances in their existing schedules was 2,Led unanimously, with the understanding that appropriate advice would be sent to those Banks. Items circulated to the Board. The following items, which had been irculated to the Board and copies of t . hich are attached to these minutes the respective item numbers indicated, were approved unanimously: Item No. Let+ 'er to The Cleveland Trust Company, Cleveland, Ohio, -.) 1')r 4D "nA O 1 -v g the establishment of a branch at 14539 Cedar nJui South Euclid, Cuyahoga County. Letter to The Savings Deposit Bank and TrustCompany : h ori4,,lay Ohio, approving the establishment of a branch 4)epot Street. 2 tette ohio r to The Union Bank and Savings Company, BellTrue, 3 Nor.„) aPproving the establishment of a branch at 4 `II Sandusky Street. tette to The Louisville Trust Company, Louisville, 400n11.akY, approving the establishment of a branch at rrankfort Avenue. tette miss r to The Union Savings Bank of St. Charles, St. Charles, 5 Clav°1 , 111, approving the establishment of a branch at 627 otreet 7/8/60 -4Item No. Irter to the Union Bank, Los Angeles, California, illPr°ving an extension of time to establish a branch ; 11 the vicinity of Carson Street and Madrona Avenue, °17rAnce, Lett s er to the Wells Fargo Bank American Trust Company, Francisco, California, approving the establishment a branch on North First Street, San Jose. 6 7 Answers to questions submitted by Commission on Money and Credit There had been distributed a memorandum from Mr. Young dated Jtkhe 29, 1960, attaching a package of 12 additional answers to questions 11)1itted to the Board by the Commission on Money and Credit on January 12, 1960. Mr. Young recalled that the first grottp of 11 answers was considered bY thE, - Board on June 13, 1960 and subsequently forwarded to the Commission, .11(1 that two draft answers were still in preparation and would shortly be tamC available to the Board. He noted that the Commission had indicated its illlingness to accept replies at this time as preliminary drafts subject to NIther modification as the Board might see fit. that the It was recommended, therefore, attached draft answers be forwarded promptly to the Commission subject t° this understanding. Following discussion, the 12 draft answers to questions submitted by the 1-88ion on Money and Credit were approved for transmission to the %knit aai°11, with the understanding that further revisions in the answers could b r4 ade by the staff without the necessity of bringing the answers back to the A copy of the letter of transmittal to the Commission on Money and is attached as Item No. 8. 7/8/60 -5Mr. Molony, Assistant to the Board, entered the room at this Point and Mr. Nelson withdrew. Proposed seminars to discuss preliminary replies to questions of 2?2.7121211.1112.22.ey and Credit (Item No. 9). Copies of a memorandum from Mr. Noyes dated June 29, 1960, had been distributed pertaining to the P°8stbility of holding a seminar at the Board next fall to which approximately 15 outstanding scholars would be invited for several days of informal discussion of the Boardts preliminary replies to the Commission on Money and erdit. 1111 Discussants would be asked to submit in advance brief written sals of the draft answers which might help in organizing a specific Ilericia. for the discussion. As in the case of earlier seminars conducted by the 13 oard, it was suggestei that honorariums for the work done in advance of tlie conference would be paid in the amount of $100 per discussant, it being estimated that such fees for the conference itself, travel costs, and "'sistence allowances would be approximately $3,000 if all invitees Part4 -Lcipated. The possibility was also mentioned in Mr. Noyes* memorandum or 8ubJecting the draft replies to System-vide critical appraisal through the seminar technique, thereby providing opportunity to younger members of rve Bank research staffs to become better acquainted with the thinking or th Boardta staff on economic problems. With respect to such an intra- SYst seminar, it was expected that two separate sessions would be required ew of the number of economists Reserve Banks were likely to send and the 'T/8/60 -6- °Ptimula size of such seminars. In order to minimize travel expenses, it 1418 suggested that the timing of these intra-System seminars could be coordinated with Federal Open Market Committee meetings. Governor Mills referred to discussion at the meeting on June 30, 19600 during which he had expressed doubt about the advisability of the 11°ardta holding a seminar to which academic people would be invited to 48cuss the Board's preliminary answers to questions propounded by the ectalission on Money and Credit. He still believed that should a group of rePresentatives from the academic community take a position contrary to the Bosrdts on the various questions submitted by the Commission, it could be a source of embarrassment. He cited as an example the controversial 413/16 of using reserve requirements or System open market operations in eecuting monetary policy so far as the different benefits to the Treasury illIrcQved were concerned. ill He did not believe that this issue had been met the answer to question 13 submitted by the Commission. Similarly, there 114 the question of whether margin requirements were intended to be and rel ' e In fact a credit control measure. He cited these questions as examples D a, 'ells of possible controversy. Governor Robertson observed that there was considerable merit in the Position taken by Governor Mills. On the other hand, there was much to be e aid for throwing the Board's record open for critical discussion by a broa, %& group in order to promote understanding of the workings of monetary 7/8/60 1)°1-icy. -7He noted that the proposed academic seminar would have the support °t the executive staff of the Commission on Money and Credit and that Mr. 1?°X) Director of Research for the Commission, would be expected to attend alld possibly would benefit from such a seminar. 14418 Therefore, although there a risk of the Systemta being embarrassed by such a seminar, this risk 6431forth taking for the sake of presenting all possible points of view. this reason, Governor Robertson said, he was sympathetic to holding the academic seminar Governor Shepardson said that on the condition the Commission did liCrt believe it was untimely to have a discussion of the preliminary replies to their questions before the release of their final report, he believed the holding of an academic seminar would be desirable. However, should the C°4111-8810n regard such a seminar as untimely, he believed it should not be held. Folloving a comment by Governor King that he was neutral on the 1444e, Chairman Martin said that it vould-be unfortunate for the Board to be DIac-eA in the position of soliciting the Commissionts assistance for stleh a seminar. He pointed out that the Commission itself had an adequate 4tap., for holding such a seminar. He then referred to the possibility that the 1)(a1tical atmosphere next fall would be such as to preclude a nonpartisan ' 88ion of monetary policy, adding that it might be better to postpone the vl'oPosed academic seminar until after the November elections. 7/8/60 -8After the other members of the Board indicated agreement with the vievs expressed by Chairman Martin, attention turned to the question of h°161ing an intra-System seminar. Following a brief discussion of this flatter) it was agreed that plans be made to hold such a seminar in the fell, possibly next October, with the understanding that details would be /431sited out by the staff for subsequent presentation to the Board, and that the Federal Reserve Banks be so advised. A copy of the letter sent to the illsesidents of all Reserve Banks later in the day is attached as Item No. 9. Request from Federal Reserve Bank of New York concerning questions 221—Ltl./e Commission on Money and Credit. : 1:t. Mr. Solomon reported a telephone call from Vice President Crosse of the Federal Reserve Bank of New York illr°1111ing him that, following receipt from the Commission on Money and it of questions similar to the two received by the Board concerning bkrop 4 supervision, ' answers had been prepared at the Reserve Bank. Mr. Crosse 111T-tired what the Board's wish was as to the procedure to be followed by the Bank in forwarding these answers. During the ensuing discussion it was c)lIght out that a somewhat different view of the examination function was tErl bY the New York Bank than by the Division of Examinations. It was agreed that Mr. Solomon inform Vice President Crosse that the Board Arior tt had no desire to see the answers prepared by the New York Bank to their transmission to the Commission on Money and Credit but that °Uld appreciate seeing the answers subsequently. It was understood that l'ice President Crosse would be supplied with copies of the Boardts replies t° the similar questions received by it from the Commission and that at 6°Rle later date Chairman Martin would take the occasion to remind Mr. Fox, ipirector of Research for the Commission, that the examination function the System was the primary responsibility of the Board. Messrs. Koch and Brill then withdrew from the meeting. Eligibility of "Deed of Trust Notes" as collateral for advances t(5 member banks (Item No. 10). There had been distributed a memorandum (lated June 29, 1960, from Mr. Walter Young concerning eligibility of hbe ed of Trust Notes" issued in connection with the military housing 131sc raiz under Title VIII of the National Housing Act as collateral for 4(hre'"e8 to member banks. Attached to the memorandum was a draft of itter to the Federal Reserve Bank of Dallas in reply to its letter of 'eh 28 1441 , 1960, that would take the position that: (1) The notes would not be eligible as collateral for 15-day advances under the eighth paragraph of section 13 of the Federal Reserve Act since the "Deed of Trust Notes" are not "bonds, notes, certificates of indebtedness, or Treasury bills" as those words are used in the eighth paragraph; (2) The notes are not "such notes, drafts, bills of exchange, or bankerst acceptances" as are eligible for /sediscount or for purchase by Federal Reserve Banks under the provisions of the Federal Reserve Act, and, accordingly, they are not eligible as collateral for 90-day advances under paragraph eight of section 13; , (3) The notes are not eligible for advances under the afi paragraph of section 13 which authorizes 90-day advances any individual, partnership, or corporation on promissory notes secured by direct obligations of the United States. tt 7/8/60 -10Mr. Young noted that the Dallas Reserve Bank had submitted to the 13°ard for determination the question as to whether certain "Deed of Trust Notes,,, ordinarily referred to as "Capehart Notes", issued by the so-called CaPehart Corporations" under the provisions of Title VIII of the National 1113tising Act were eligible as collateral for advances to member banks under allY of the provisions of section 13 of the Federal Reserve Act. He said that the Reserve Bank's submission of this matter to the Board resulted rr°111 an inquiry received from the Republic National Bank of Dallas as to %Illetaler the Capehart Notes were "direct obligations of the United States" 1111c1 eligible as collateral for advances under the last paragraph of section 13. e went on to say that Title VIII in actual operation provides a complex 111.°cedure for obtaining construction of needed military housing whereby a 1)11-Irate contractor after competitive bids is selected by the Secretary of bete Ilse or his designee to construct housing facilities on Government-owned laro The contractor then organizes a corporation which, for nominal rental, 14 granted a long-term lease of the Government property by the Secretary on the `Jasis of which the corporation obtains a construction loan secured by a 1c)rstgage on the lease. After completion of the construction, the corporation obtn. ' ins from a private lending institution a loan secured by a long-term ' -661;gs on the lease and building and evidenced by a "Deed of Trust Note". At this Point, the project, subject to the encumbrance, is turned over to the s ecretary who, on behalf of the United States, executes a guaranty which 7/8/60 -11him, without prior demand being made upon the corporation-mortgagor, t° Pay the principal and interest on the long-term mortgage. At the same time, the Secretary acquires custody of the property and the capital stock of the c°r'oration is transferred to the Secretary. When this is done, Mr. Young said) nothing apparently remains of the corporation except a "shell" which, 1113c)n payment of the mortgage obligation, is required by law to be dissolved by the Secretary. He noted that as a part of the modus operandi the Federal li°118ing Commissioner insures the final long-term mortgage. Mr. Young said that he had discussed the foregoing procedure with l'ePresentatives of the General Counselts Office of both the Federal Housing /Alai nistration and the Defense Department to secure such additional information 4 might be of assistance in resolving the question presented by the Dallas Reee rve Bank. He noted further that the Treasury Department accepts "Deed of Trus t Notes" at face value as collateral to secure Treasury tax and loan 1141111ts under Departmental Circular 92, that the Office of the Comptroller or t he Currency regarded these notes as constituting a direct obligation of the u nited States, and that the Dallas Reserve Bankts ccunsel took the same 13°Elition regarding these notes as was expressed in the draft letter to the Rese rlfe Bank attached to his memorandum of June 29. According to Mr. Young, the l'easons for taking this position, namely, that the notes should not be NB.rded as "direct obligations of the United States" within the meaning of the last paragraph of section 13 of the Federal Reserve Act and the Boardts 7/8/60 -12- Regulation A, Advances and Discounts by Federal Reserve Banks, were as 131101'43: (1) the notes are not executed by the United States or an agency thereof. (2) the Treasury does not consider the Government's obligation ilnder the notes as a part of the public debt; (3) the positions taken by the Treasury and the Comptroller of the Currency with respect to these notes liere for different purposes; (4) to regard these notes as direct obligations 1411Thin the meaning of the last paragraph of section 13 could open the door riltUre similar cases; (5) the term "direct obligations" is parenthetically "fled in two places in section 3(a) of Regulation A as meaning only bonds, 11(3tes, Treasury bills, or certificates of indebtedness of the United States. Governor King commented that although he agreed technically with the ' .4118ion reached by the Legal Division on this question, in view of the r"t that monetary policy was frequently criticized because of its particular "rect on the construction industry, as a practical matter it might be 14\Usable to depart from a narrow interpretation of section 13 and the Board's 4gill5.tion A. However, he did not feel strongly about the matter. Governor Mills expressed concern lest such a liberal interpretation or C °11 ateral eligible for advances by the Federal Reserve Banks cause the 1()/leten-, -4 authorities to lose to that extent control over the volume of credit the i ntended to supervise. Mr. Hackley observed that the question at issue was a close one. Re rioted that not only had the Treasury Department and the Comptroller of the 7/8/60 -13ruled on the nature of "Deed of Trust Notes" but that the Attormey General in a letter to the Secretary of Defense dated October 22, 1959, advised that the Secretary s guarantee constituted a final obligation c't the United States, and that its validity was not conditional upon an exl5ressed pledge of the faith and the credit of the United States, nor *)uld. it depend on the evidence of appropriations for its payment. However, l'as the opinion of the Legal Division that these technical constructions (4 the nature of the notes in question were contrary to the general intent or section 13 of the Federal Reserve Act. Furthermore, as expressed by Gc)Irerilor Mills, it seemed undesirable as a policy matter to expand the illealling of section 13, advances to individuals partnerships, and corporations on direct obligations of the United States, to bring about provision of a 8"c"arY market by the Reserve Banks for securities guaranteed by the Defense "-ument. He said, in reply to a question from Mr. Thomas, that the notes Cori cerned differed from Merchant Marine bonds in that the latter were not dllsect obligations of the United States Government. Following an observation by Governor Robertson that should it ever be a ' eemed advisable to include other types of direct Treasury obligations tteicie from Treasury bonds, notes, bills, and certificates of indebtedness %tItlith - the meaning of section 13, Regulation A could be amended, the letter to ge Dallas Reserve Bank expressing the view that "Deed of Trust Notes" Mow, 4-u not be regarded as "direct obligations of the United States" within 7/8/60 the meaning of the last paragraph of section 13 and the Board's Regulation A %/as approved unanimously. A copy of this letter is attached as Item No. 10. All of the members of the staff with the exception of Mr. Sherman then withdrew from the meeting. Luncheons for central bank delegates. Governor Shepardson stated that tentative arrangements had been made for the Board to give the usual IlIncheons for representatives of foreign central banks who would be attending the annual meetings of the International Monetary Fund and the International 411k for Reconstruction and Development on September 28 and 29, 1960, and that unless there was objection to these dates, plans would go forward on that basis. He also noted that in past years, because these were in the 44tIll'e of "command performances" for the members of the Board and staff, the cil)at of these luncheons had been paid by the Board. In all other cases, Board 8'44 staff members paid for their own lunches, he said, and he stated reasons why, in this case, it was preferable that Board and staff members also bear the cost of their lunches. He therefore recommended that the giving of the LAnch eons be approved with the understanding that the Board would pay the 05t of lunches for visiting central bankers and that the Board discontinue the Practice of paying the cost of lunches for Board and staff members who rtlIght attend. Governor Shepardson's recommendation was approved unanimously. The meeting then adjourned. 7/8/60 -15- Secretaryts Note: Governor Shepardson today approved on behalf of the Board the following items: Memoranda from appropriate individuals concerned recommending pqr, -eases in the basic annual salaries of the following persons on the —411'cits staff, effective July 10, 1960: Naze Basic annual salary 1/ Division To From Office of the Secretary 14111sgaret J. Moister, Assistant Supervisor, ) 4 4Ministrative, Subject, and FOMC Files lChange in title from Senior Records Clerk) $ 5,335 $ 5,655 9,735 4,355 4,46o 4,670 10,635 4,460 4,565 4,840 4,565 4,675 9,215 4,250 10,635 4,355 5,355 12,990 8,080 5,520 13,250 8,955 Research and Statistics Robert M. Fisher, Economist T. Gregory, Statistical Clerk 07cl-a L. Mehl, Clerk-Stenographer 411- Roberts, Secretary p,(Change in title from Clerk-Stenographer) '11ces D. Skehan, Statistical Assistant 4(C.118-nge in title from Statistical Clerk) Snyder, Economist l'othY E. Swink, Statistical Clerk Examinations Jete Jern !H. Joyce, Assistant Federal Reserve Examiner toill 'e T. Kelley, Senior Federal Reserve Examiner ' 8 W o Zidek, Federal Reserve Examiner Personnel Administration qith J. (*,, Sherbine, Clerk-Stenographer rqeritorious increase approved July 7, 1960, brings salary to $4,46o) 4,250 4,355* err3Led where necessary to correspond with steps in new salary schedule, lective July 10. 7/6/60 -16122E22.2fL, effective July 10, 1960 (continued) 1. 122.1=.11t.11.2 1 1_1;itle Basic annual salary 1/ To From Division Administrative Services Faber, Supply Clerk L41-i81TI Hyde, Guard E. Peacock, Charwoman qtrellthe . p 13/fl Roush, Guard Ph A. Sherrod, Photographer (Offset) H. Wilson, Chief, Automatic Data Processing elld Telegraph Services $ 4,340 4,880 3,710 4,130 6,178 9,995 $ 4,445 4,985 3,815 4,235 6,490 10,255 6,600 6,765 Office of the Controller "aite Waller, Jr., Accounting Technician Letter to the Federal Reserve Bank of New York (attached Item No. 11) IIPProv4 atsi -Lng the appointment of Bruce A. Cassella and Joseph J. DePaolo as 'stant examiners. Cleveland (attached Item No. 12) 8.Apisr, Letter to the Federal Reserve Bank of ' Jving the appointment of Gary C. Kornish as assistant examiner. Letter to the Federal Reserve Bank of Cleveland (attached Item No. 13) 11PArovi J-ng the designation of David Rose and Terry Stith as special assistant o/I ZIera, the designation of four persons as special assistant examiners : tle i Unrestricted basis, and the designation of four other persons as special ant examiners on a restricted basis. 11 .,110 Letter to the Federal Reserve Bank of San Francisco (attached Item 1511ri7.„, noting that Donald R. Maas, an assistant examiner, will not letloate in any examination of the bank of which his father is an officer. Secretary _ JUsted where necessary to correspond with steps in new salary schedule, l'Iractive July 10. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 1 7/8/60 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARS July 8, 1960 Board of Directors, The Cleveland Trust Company, Cleveland Ohio* Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank or Cleveland, the Board of (1,9vernors approves the establishment of a branch at :!.4539 Cedar Road, South Euclid, Cuyahoga County, Ohio* DY The Cleveland Trust Company, dleveland„ Ohio* This approval is given provided the branch is established Vithin nine months from the date of this letter* Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS Ottn4,* ' 01404 OF THE Item No. 2 7/8/60 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. 0 ADDRESS OFFICIAL CORRESPONDENCE 't,Attto TO THE BOARD July 8, 1960 Board of Directors, The Savings Deposit Bank and Trust Compau, Elyria, Ohio, Gentlement Pursuant to your request submitted through the Federal Reserve Bank of Cleveland, the Board of Governors approves the establishment of a branch on nePot Street, Elyria, Lorain County, Ohio, by The ,ings . Deposit Bank and Trust Company, Elyria, Ohio. " 11.8 approval is given provided the branch is established within six months from the date of this letter. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. A.e.31 BOARD OF GOVERNORS ;,(elitt10,4 0)124'4 OF THE Item No. 3 FEDERAL RESERVE SYSTEM 7/8/60 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TC1 THE SOAR° July 8, 1960 Board of Directors, The Union Bank and Savings Company, Bellevue, Ohio. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Cleveland, the Board of Governors approves the establishment of a branch at 114 North Sandusky Street, Bellevue,,Ohio, by The Union Bank and Savings Company, Bellevue, Ohio. This approval is given provided the branch is established Within nine months from the date of this letter. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS otto*,0 4' 4; V Sop 0 OF THE .% Item No. 4 FEDERAL RESERVE SYSTEM 7/8/60 WASHINGTON 25. D. C. 444_ ADDRESS orricsm. CORRESPONDENCE TO THE SWARD *ti 44 ' 40404* July 8, 1960 Board of Directors, The Louisville Trust Company, Louisville, Kentucky. G entlemen: Pursuant to your request submitted through the Federal Reserve Bank of St. Louis, the Board of Governors of the Federal Reserve System approves the establishment of a branch at 4000 Frankfort Avenue, Louisville, Kentucky, bY The Louisville Trust Company, Louisville, Kentucky, 0vided the branch is established within six months from ums date of this letter. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. 25F, BOARD OF GOVERNORS ,441100*4 OF THE •* FEDERAL RESERVE SYSTEM 'tell WASHINGTON 25, O. C. ADOR *kttaft * °maw. OORFIESPONCIENCC TO THt 'MARC) July 8, 1960 Board of Directors, The Union Savings Bank of St* Charles, St* Charles, Missouri. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of St Louis the Board of ' 40vernors of the Federal Reserve System approves the establishment by The Union Savings Bank of St* Charles, St* Charles, Missouri, of a branch at 627 Clay Street, St* Charles Missouri, provided the branch is established within six months from the date of this letter* Very truly 70 (Signed) Merritt Sherman Merritt Sherman, Secretary. No. 5 7/8/60 BOARD OF GOVERNORS 4,4tiztt#4,4 OF THE , tt FEDERAL RESERVE SYSTEM WASHINGTON 25, O. C. Item No. 6 7/8/6o ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD titt0. 444** July 8, 1960 Board of Directors, Union Bank, Los Angeles, California. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of San Francisco, the Board of Governors of the Federal Reserve System extends until July 14, 1961, the time within which Union Bank may establish a branch in the vicinity of Carson Street and Madrona Avenue, Torrance, California, under the authorization contained in the Board's letter of July 14, 1959. Very truly yours, (Signed) Merritt Merritt Sherman, Secretary. ir--f rBOARD OF GOVERNORS 4tettiztt**4 OF THE 01, 47;4 tt, Item No. 7 FEDERAL RESERVE SYSTEM 7/8/60 t a WASHINGTON 25. D. C. ADDRESS a orricIAL CORRESPONDENCE TO THE BOARD ,ftt fal0. -,144a0 Jay 8, 1960 Board of Directors, Wells Fargo Bank American Trust Company, San Francisco, California. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of San Francisco, the Board of Governors Of the Federal Reserve System approves the establishment of a branch in the vicinity of the Civic Center on North First Street, San Jose, California, by Wells Fargo Bank American Trust Company, provided the branch is established within one Year from the date of this letter. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. ,r) 1,0„ BOARD OF GOVERNORS l, 1. ‘2 / *Cir ' ' ' 4''' Z,',.-1 ‘1 '.:.W. .1„,y,” II. T11; OF THE Item No. 8 FEDERAL RESERVE SYSTEM 7/8/60 WASHINGTON I,, OFFICE OF THE CHAIRMAN ''.›UgALV -fil July 8, 1960 Mr. Frazar B. Wilde, Chairman, Commission on Money and Credit, Pa Fifth Avenue, New York 22, New York. bear Frazar: You will recall that in mid-June the Board submitted Zaft ci answers to 11 of the 25 questions addressed to us by the :; r1Imission. I am transmitting herewith another group of 12 'raft answers and hope to have the balance of the answers 4vailab1e within the month. As in the case of the earlier submission, we are tra nsmitting these drafts on the understanding that they may ' 86 subject to later revision if further review and consideration al . ,1ggest the need therefor. We will continue to keep your staff 'vised on these matters. Sincerely yours, af.e9 Wm. McC. Martin, Jr. ?InelOSUres BOARD OF GOVERNORS .0011***4 ejigiQI/ Q0,,f`o OF THE FEDERAL RESERVE SYSTEM Item No. 9 7/8/60 er WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD July 8, 1960. Dear Sir: Enclosed is a set of the draft answers to all but two of n. e questions addressed to the Board by the Conmission on Money and Tdit and referred to in its letter of January 12, 1960. (A copy ' 1 the initial 22 questions that the Commission submitted was sent to 7(), on February 11, and three additional questions subsequently were lilornitted to the Board relating to bank examination and supervision.) iS hoped that the answers to the two remaining questions will be :!va11able within the month. Copies of all answers are also being sent °Y the Director of Research and Statistics to the head of researh at T01111 Bank. 1 i In approving the transmission of a group of 12 of these ar13 wers to the Commission on Money and Credit today, the Board also ' cl?nsidered and approved a proposal that arrangements be made for a pe-scussion of the draft replies by economists from throughout the 0 deral Reserve System early in the fall of this year, probably in rect°ber. The purpose of this letter is to let you know of the plans 11..r such a meeting, which will be held in the Boards building in f lington. Details as to the timing of the discussions, which will al---ow the seminar technique, will be forwarded to your Bank later, g with an indication of the number of System econcmists that it Eht be desirable to plan on having in attendance at these discussions. Very truly yours) ( Merritt Sherman Secretary. Nclosures 1° TiE PRESIDENTS OF ALL FEDERAL RESERVE BANKS BOARD OF GOVERNORS oti100*,, OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 10 7/8/60 ADDRESS OFFICIAL CORRESPONDENCE TO THE 1110ARD '0,;14 MOOV July 8, 1960 14r. T. A. Hardin, Vice President, Federal Reserve Bank of Dallas, Dallas 2, Texas. Dear Mr. Hardin: This is in response to your letter of March 28, 1960, with j e closures, in which you submitted to the Board for determination ue question as to whether certain "Deed of Trust Notes", issued !rider the provisions of Title VIII of the National Housing Act in nnection with the military housing program, are eligible as lateral for advances to member banks under any of the provisions 'd4 section 13 of the Federal Reserve Act. r by It is understood that the "Deed of Trust Notes" are issued "Capehart Corporations" and that the financing institutions advance the funds for the housing construction look to the rn.4!nse Department for payment pursuant to a so-called guaranty agreeexecuted by the Secretary of Defense or his designee under which the ted States undertakes to make each periodic payment which becomes 46 on the note without prior demand for such payment. After careful consideration of the questions involved, the 80ard --40 concluded that: (1) The notes would not be eligible as collateral for 15-day advances under the eighth paragraph of section 13 of the Federal Reserve Act since the "Deed of Trust Notes" are not "bonds, notes, certificates of indebtedness, or Treasury hills" as those words are used in the eighth paragraph; BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Mr. T. A. Hardin -2- (2) The notes are not "such notes, drafts, bills of exchange, or bankers' acceptances" as are eligible for rediscount or for purchase by Federal Reserve Banks under the provisions of the Federal Reserve Act, and, accordingly, they are not eligible as collateral for 90-day advances under paragraph eight of section 13; (3) The notes are not eligible for advances under the last paragraph of section 13 which authorizes 90-day advances to any individual, partnership, or corporation on promissory notes secured by direct obligations of the United States. Some comment seems desirable with respect to (3) above. Is41°twithstanding the fact that in a broad sense the Government's contract ° make periodic payments on the notes without prior demand appears be a direct obligation of the United States, it is the Board's "tew that the Government's contract does not constitute such an ' ( ) 1I ligation within the meaning of the last paragraph of section 13. _nder that paragraph, advances by Reserve Banks are authorized on !Uch obligations subject to such "limitations, restrictions, and !!gulations" as the Board may prescribe. While the term "direct Zligations of the United States" is not specifically defined in Re gulation Ap nevertheless in two places in section 3(a) of that bogulation, the term is parenthetically defined as meaning only thrlds, notes, Treasury bills, or certificates of indebtedness of s"41i:e United States. Clearly this evidences an intent that the term 1 have that meaning wherever it is used in the Regulation. Of course, the "Deed of Trust Notes" are eligible for 4.h 4floes under section 10(b) although at a rate of interest not less w&an 4,,,z one-half of one per cent per annum higher than the highest rate ve4icable to discounts for member banks then in effect. clv Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS , 4,0000,4 OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, II. C. ot,tto *0 4tvnt Item No. 11 7/8/60 .ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD July 8, 1960 Mi. Howard D. Crosse, Vice President, Federal Reserve Bank of New York, New York 45, New York. Dear Mr. Crosse: In accordance with the request contained in your letter of July 5, 1960, the Board approves the appointment of Bruce A. Cassella and Joseph J. DePaolo as assistant examiners for the Federal Reserve lank of New York. Please advise as to the effective dates of the appointments. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS • .vy 4 * ** .* t , OF THE FEDERAL RESERVE SYSTEM 21* * 4 4 4 9tAL Mt Item No. 12 7/8/60 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE ° TO THE BOARD 4440 July 8, 1960 CONEMEN',„.....2_1_11.AL 1 FR It'. Paul C. Stetzelberger, Vice President, Federal Reserve Bank of Cleveland, Cleveland. 11 Ohio. Dear Mr. Stetzelberger: In accordance with the request contained in your letter of June 29, 1960, the Board approves the appointment Of Gary C. Kornish as an assistant examiner for the Federal Reserve Bank of Cleveland. Please advise as to salary rate and the effective date of the appointment. It is noted that Mr. Kornish is indebted to The °hio Savings &Trust Company, New Philadelphia, Ohio, a State member bank, in the amount of $950. Accordingly, the Board's Approval of the Appointment of Mr. Kornish is given with the understanding that he will not participate in any examination of that bank until his indebtedness has been liquidated. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS eat**4,4 40i,*4 OF THE * FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. fl 7/8/60 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD 1 'AMW14(4 ' July 8, 1960 Ilk'. G. T. Quast, Chief Examiner, rederal Reserve Bank of Cleveland, Cleveland 1, Ohio. Dear Mr. Quast: In accordance with the request contained in your letter of June 30, 1960, the Board approves the designation Of David Rose and Terry Stith as special assistant examiners tor the Federal Reserve Bank of Cleveland. Inasmuch as Lawrence Gibson, Charles G. Glass, Robert Groh, and 011ie Mantyre are no longer indebted to nY member bank, the Board approves their designation as :Teoial assistant examiners for the Federal Reserve Bank of w-eveland on an unrestrict ed basis. The Board also approves the designation of the t°11awi individuals as special assistant examiners for the ng Ped,, -, Reserve Bank of Cleveland for the purpose „-a1 of partiZfPattrig in examinations of banks except the bank listed ..igmediately above their names: The Fifth Third Union Trust Company Cincinnati, Ohio Harry Goebel, Jr. The First National Bank of Cincinnati Cincinnati Ohio Thomas Petroze BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Mr. G. T. Quast -2- The Peoples-Liberty Bank and Trust Company Covington, Kentucky Robert Baughman. The Provident Bank Cincinnati Ohio Robert R. Eveleth An authorizations heretofore given your Bank to designate these employees as special assistant examiners are hereby canceled. Appropriate notations have also been made in our records of the other names to be deleted from the list Special assistant examiners. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. 5131 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 14 7/8/60 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD July 8, 1960 22NFIDEN1FR ** Eliot J. Swan, First Vice President, Federal Reserve Bank of San Francisco, San Francisco 201 California. Dear Mr. Swan: This will acknowledge your letter of June 281 1960, with reference to Donald. R. Maas, whose appointmen t as an assistant examiner for the Federal Reserve Bank of San Francisco was approved by the Board on January 20, 1959. It is noted that Mr. Maas is the son of Fred Maas, Xecutive Vice President of Farmers and Merchants Bank of California, Lodi, California, a State member bank. 'is understood that Mr. Maas will not participate in any ezamination of Farmers and Merchants Bank of Central CAlifornia 48 'Ong aS his father is an officer of that bank. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary.
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