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Minutes for
To:
Members of the Board
From:
Office of the Secretary
July 9, 1965.
Attached is a copy of the minutes of the
Governors of the Federal Reserve System on
of
Board
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. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Coy. Maisel
Minutes of the Board of Governors of the Federal Reserve System
on Friday, July 9, 1965.
PRESENT:
Mr.
Mr.
Mr.
Mr.
The Board met in the Board Room at 10:00 a.m.
Martin, Chairman 1/
Balderston, Vice Chairman
Mitchell
Maisel
Mr. Sherman, Secretary
Mr. Kenyon, Assistant Secretary
Mr. Broida, Assistant Secretary
Mr. Noyes, Adviser to the Board
Mr. Molony, Assistant to the Board
Mr. Fauver, Assistant to the Board
Mrs. Semia, Technical Assistant, Office of the
Secretary
Miss Eaton, General Assistant, Office of the
Secretary
Mr. Morgan, Staff Assistant, Board Members'
Offices
Mr. Furth, Consultant
Messrs. Koch, Partee, Axilrod, Ettin, and Eckert
of the Division of Research and Statistics
Messrs. Hersey, Sammons, Baker, Dahl, and Gekker
of the Division of International Finance
Money market review.
Mr. Axilrod commented on developments in
the Government securities market and Treasury financing plans, after
which Mr. Eckert discussed bank credit conditions.
Messrs. Axilrod and
Eckert included in their remarks references to distributed tables affording perspective on the money market and on bank reserve utilization.
Mr.
Baker then reviewed developments in foreign exchange markets.
Chairman Martin was called away from the meeting during the review.
At its conclusion all members of the staff except Messrs. Sherman, Kenyon,
and Sammons, Mrs. Semia, and Miss Eaton withdrew from the meeting and the
following entered the room:
1/
Withdrew from meeting at point indicated in minutes.
7/9/65
-2Mr. Hackley, General Counsel
Mr. Solomon, Director, Division of Examinations
Mr. Kakalec, Controller
Mr. Shay, Assistant General Counsel
Mr. Goodman, Assistant Director, Division of Examinations
Messrs. Egertson and McClintock, Supervisory Review
Examiners, Division of Examinations
Mr. Waller, Supervisory Accountant, Office of the
Controller
The following actions were taken subject to ratification at the
next meeting of the Board at which a quorum was present:
Discount rates.
The establishment without change by the Federal
Reserve Bank of Boston on July 6, 1965, and by the Federal Reserve Banks
of Cleveland, Richmond, Atlanta, St. Louis, Minneapolis, and Dallas on
July 8, 1965, of the rates on discounts and advances in their existing
schedules was approved unanimously, with the understanding that appropriate
advice would be sent to those Banks.
Circulated or distributed items.
The following items, copies
of which are attached to these minutes under the respective item numbers
indicated, were approved unanimously:
Item No.
Letter to Bank of America National Trust and
Savings Association, San Francisco, California,
approving the establishment of a branch in
Guayaquil, Ecuador.
1
Letter to First National City Overseas Investment
Corporation, New York, New York, granting permission
to purchase stock of Financiera Comercial, S.A.,
Mexico, D.F., Mexico.
2
7/9/65
-3Item No.
Letter to Corn Belt Bank, Bloomington, Illinois,
waiving the requirement of six months' notice of
withdrawal from membership in the Federal Reserve
System.
3
Letter to the Bureau of the Budget recommending
approval by the President of enrolled bill H. R.
5306, relating to payment of interest on time
deposits of foreign governments.
4
Reports on competitive factors.
After discussion, reports to
the Comptroller of the Currency on the competitive factors involved in
the following proposed transactions were approved unanimously for transmittal to the Comptroller, the conclusions being stated as indicated:
Purchase of assets and assumption of liabilities
of Central Bank National Association, Tacoma,
Washington, by Peoples National Bank of
Washington in Seattle, Seattle, Washington
Consummation of the proposed purchase of Central Bank National
Association, Tacoma, by Peoples National Bank of Washington in
Seattle would eliminate the competition presently existing between
them and would slightly increase the size of Peoples, the third
largest commercial bank in the State. The transaction would have
little effect on other banks in the Tacoma area, and the overall
effect on competition would not be significantly adverse.
Purchase of assets and assumption of liabilities
of The Union City National Bank, Union City,
Michigan, by The Southern Michigan National
Bank of Coldwater, Coldwater Michigan
The proposed purchase of assets and assumption of liabilities
of The Union City National Bank by The Southern Michigan National
Bank of Coldwater would eliminate a unit bank and the existing and
Potential competition between the participating banks.
A revision of the proposed conclusion having been agreed upon,
unanimous approval was given to the transmittal to the Comptroller of
-4-
7/9/65
the Currency of a report on the competitive factors involved in the
proposed purchase of assets and assumption of liabilities of Avalon
Bank, Avalon, Pennsylvania, by Western Pennsylvania National Bank,
Pittsburgh, Pennsylvania.
In the form in which approved, the conclusion
read as follows:
The proposed merger of Avalon Bank, Avalon, Pennsylvania,
and Western Pennsylvania National Bank, Pittsburgh, Pennsylvania,
would further the trend in the area towards elimination of independent banks through merger or similar transaction and eliminate
a small amount of competition.
Assessment to meet Board expenses.
There had been distributed
a memorandum from the Office of the Controller dated July 8, 1965, recommending that an assessment of .00412 of the total paid -in capital and
surplus of the Federal Reserve Banks as of June 30, 1965, be levied upon
the Banks to meet the estimated expenses of the Board for the second
half of 1965.
Such an assessment would produce $4,385,300.
The recommended assessment was approved unanimously.
The meeting then adjourned.
Secretary's Note: Acting in the absence of
Governor Shepardson, Governor Balderston
today approved on behalf of the Board the
following items:
Letter to the American Telephone and Telegraph Company (attached
Item No. 5) authorizing that company to proceed with certain changes
ln the Federal Reserve 81-D-1 Leased Wire System, as authorized by the
Conference of Presidents at its meeting on June 14, 1965. Copies of
the letter were sent to the Presidents of all Federal Reserve Banks.
Letter to the Federal Reserve Bank of Dallas (attached Item No. 6)
aPproving the appointment of Richard F. Carlson as assistant examiner.
7/9/65
-5-
Letter to the Federal Reserve Bank of Dallas (attached Item No. 7)
approving the designation of Carroll D. Blake as special assistant
examiner.
Letter to the Federal Reserve Bank of San Francisco (attached Item
No. 8) approving the designation of O.A. Strand as special assistant
examiner.
Memorandum from the Division of Administrative Services recommending an increase in the basic annual salary of Saul Clanton, Grounds
Maintenance Worker in that Division, from $5,554 to $5,803, with a change
in title to Gardener, effective July 18, 1965.
Secretary
BOARD OF GOVERNORS
Item No. 1
7/9/65
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 9, 1965.
Bank of America National Trust
and Savings Association,
300 Montgomery Street,
San Francisco, California 94120.
Gentlemen:
The Board of Governors of the Federal Reserve System grants
its permission to Bank of America National Trust and Savings Associas of Section
tion, San Francisco, California, pursuant to the provision
City of
25 of the Federal Reserve Act, to establish a branch in the
subject to
branch
such
maintain
and
operate
to
and
Guayaquil, Ecuador,
M.
n
Regulatio
of
and
Section
the provisions of such
Unless the branch is actually established and opened for
hereby shall
business oa or before July 1, 1966, all rights granted
granted will
hereby
authority
the
and
abandoned
be deemed to have been
date.
that
automatically terminate on
With respect to the President's program for the voluntary
May 28, 1965,
curtailment of foreign credit by banks, your letter of
approximately
total
will
branch
the
in
t
investmen
indicated that your
establishment of
US$556,000. As you are aware, with respect to the
in the form
foreign branches, funds provided by home office (whether
regarded as
of allocated capital, advances, or otherwise) should be
restraint
foreign assets for purposes of the voluntary foreign credit
effort.
Please inform the Board of Governors, through the Federal
opened for business,
Reserve Bank of San Francisco, when the branch is
the branch. The
furnishing information as to the exact location of
in locaBoard should also be promptly informed of any future change
tion of the branch within the City of Guayaquil.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the Board also had approved
a six-month extension of the period allowed to establish the branch;
and that if an extension should be requested, the procedure prescribed
in the Board's letter of November 9, 1962 (S-1846), should be followed.)
BOARD OF GOVERNORS
Item No. 2
7/9/65
OF THE
,.'1.90? Got;•.
4'4, •
FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
.1
of,
w•
ADDRESS OFFICIAL CORRESPONDENCE
<..‘- •
'
,
,44
RES-N.- •
TO THE BOARD
July 9, 1965.
First National City Overseas Investment Corporation,
399 Park Avenue,
New York 22, New York.
Gentlemen:
In accordance with the request contained in your letter
of May 27, 1965, transmitted through the Federal Reserve Bank of
New York, and on the basis of information furnished, the Board of
Governors grants consent for your Corporation to purchase and
hold approximately 35 per cent of the stock of Financiera Comercial,
S.A., Mexico, D.F., Mexico, at a cost of approximately US$400,000,
Provided such stock is acquired within one year from the date of
this letter.
The Board also approves the purchase and holding of
Shares of the Financiera within the terms of the above consent in
excess of 10 per cent of your Corporation's capital and surplus.
The foregoing consent has been given with the understanding that the foreign loans and investments of First National
City Overseas Investment Corporation, combined with those of First
National City Bank and International Banking Corporation, including
the investment now being approved, will not exceed the guidelines
established under the voluntary foreign credit restraint effort
now in effect, or that steps have been established to bring total
claims on foreigners to a level consistent with the guidelines
Within a reasonable length of time.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
Item No. 3
7/9/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
July 9, 1965.
Board of Directors,
Corn Belt Bank,
Bloomington, Illinois.
Gentlemen:
has forwarded to the
The Federal Reserve Bank of Chicago
Cashier Lawson's letter dated
Board of Governors Vice President and
resolutions dated June 11,
June 16, 1965, together with accompanying
rship in the
1965, signifying your intention to withdraw from membe
waiver of the six months'
Federal Reserve System and requesting
notice of the withdrawal.
requirement of six
The Board of Governors waives the
to the Federal
nder
surre
months' notice of withdrawal. Upon
Bank stock issued
ve
Reser
al
Reserve Bank of Chicago of the Feder
and appropriate
led
cance
be
to your institution, such stock will
of Section 208.10(c)
sions
provi
the
refund will be made thereon. Under
tution may accomplish termiof the Board's Regulation H, your insti
within eight months from the date
nation of its membership at any time
rship was given.
the notice of intention to withdraw from membe
e of membership be
It is requested that the certificat
of Chicago.
returned to the Federal Reserve Bank
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
Item No. 4
7/9/65
BOARD OF GOVERNORS
OFTHE
FEDERAL RESERVE SYSTEM
WASHINGTON
OFFICE Or THE CHAIRMAN
July 9, 1965.
Mr. Phillip S. Hughes,
Assistant Director for
Legislative Reference,
Executive Office of the President,
Bureau of the Budget,
Washington, D. C. 20503
Attention:
Mrs. Garziglia
Dear Mr. Hughes:
This is to advise in response to your communication of
July 8, 1965, that the Board recommends approval by the President
of the enrolled bill, H. R. 5306, "To continue the authority of
domestic banks to pay interest on time deposits of foreign governments
at rates differing from those applicable to domestic depositors."
Sincerely yours,
(Signed) Wm. McC. Martin, Jr.
Wm. McC. Martin, Jr.
BOARD OF GOVERNORS
Item No. 5
7/9/65
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE HOARD
July 9, 1965.
SERVICE REQUISITION NO. 185
81-D-1 Leased Wire System
Mr. H. E. West, Jr., Account Manager,
Long Lines Department,
American Telephone and Telegraph Company,
1725 K Street, N. W.,
Washington, D. C. 20006
Dear Mx. West:
You are hereby authorized to proceed with the installation
in the Federal Reserve Leased Wire System of four (4) new circuits as
outlined in Part "A" contained in your letter dated February 12, 1965,
to Mr. Clyde Harrell, Chairman of the Subcommittee on Cash, Leased Wire
and Sundry Operations. Coincident with the installation of these new
circuits, it is understood that there will be a realignment of existing circuits to improve transmission during the System's busy hours.
It is also understood that the cost of this new equipment
is to be as follows:
Monthly
.
144itional Equipment Charata -
4 Duplex Terminations Switching Center @ $350 $ 1,400
2 8i-D-1 Station Controls (Boston-Atlanta) @ $70
Total
Installation
$ 8,000
140
150
$ 1,540
$ 8,150
General Services Administration has been authorized to
effect a TELPAK application to the above circuitry and they will advise
You accordingly. It is understood that there may be an additional
charge rendered by your Company for private line Mileage charges.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
i -7.1("te`e.r)
BOARD OF GOVERNORS
Item No. 6
7/9/65
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS orrictAL CORRESPONDENCE
TO THE BOARD
July 9, 1965.
Mr. Thomas R. Sullivan, Vice President,
Federal Reserve Bank of Dallas,
Dallas, Texas. 75222
Dear Mr. Sullivan:
In accordance with the request contained
in your letter of July 6, 1965, the Board approves
the appointment of Richard F. Carlson as an assistant
examiner for the Federal Reserve Bank of Dallas,
effective today.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
Item No. 7
7/9/65
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20531
ADORIC•6 orrtivAL CORREOPONOCNOE
TO THE IBOAIRO
July 9, 1965.
Mx. Thomas R. Sullivan, Vice President,
Federal Reserve Bank of Dallas,
Dallas, Texas. 75222
Dear Mr. Sullivan:
In accordance with the request contained
in your letter of July 1, 1965, the Board approves
the designation of Carroll D. Blake, at present
an assistant examiner, as a special assistant
examiner for the Federal Reserve Bank of Dallas.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 8
7/9/65
•
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS arriotAL CORRESPONDENCE
TO THE MORRO
July 9, 1965.
Mr. E. H. Galvin, Vice President,
Federal Reserve Bank of San Francisco,
94120
San Francisco, California.
Dear Mk. Galvin:
In accordance with the request contained in
your letter of July 1, 1965, the Board approves the designation of 0. A. Strand as a special assistant examiner
for the Federal Reserve Bank of San Francisco.
Notations have been made on our records of the
names to be deleted from the list of examining personnel
for your Bank.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
@FedFRASER