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Minutes for jun,, To: Members of the Board From: Office of the Secretary 1: Attached is a copy of the minutes of the Board of Governors Of the Federal Reserve System on the above date. It is proposed to place in the record of policy actions required to be kept under the provisions of Section 10 of the Federal Reserve Act an entry covering the item in this set of minutes commencing on the page and dealing with the subject referred to below: 7 Approval of a discount rate of 3-1/2 per cent for the Federal Reserve Bank of Boston. 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 Minutes of the Board of Governors of the Federal Reserve System on Monday, June 13, 1960. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Balderston, Vice Chairman Szymczak Mills Robertson King Sherman, Secretary Thomas, Adviser to the Board Young, Adviser to the Board Shay, Legislative Counsel Molony, Assistant to the Board Fauver, Assistant to the Board Noyes, Director, Division of Research and Statistics Mr. Marget, Director, Division of International Finance Mr. Koch, Adviser, Division of Research and Statistics Mr. Furth, Associate Adviser, Division of International Finance Mr. Hersey, Associate Adviser, Division of International Finance Mr. Landry, Assistant to the Secretary Mr. Keir, Chief, Government Finance Section, Division of Research and Statistics Mr. Mr. Mr. Mr. Mr. Mr. Mr. Reports on money market and international developments. Messrs. Thomas and Keir reported on the money market and changes in the money 8UPp1y, and Messrs. Marget and Furth reported on recent international financial developments, with particular reference to the balance of Payments position of the United States. At the conclusion of these reports Messrs. Thomas, Shay, Marget, PlArth, Hersey, and Keir withdrew and the following entered the room: Mr. Hackley, General Counsel Mr. Farrell, Director, Division of Bank Operations 6/13/60 -2Mr. Masters, Associate Director, Division of Examinations Mr. Conkling, Assistant Director, Division of Bank Operations Mr. Hostrup, Assistant Director, Division of Examinations Mr. Nelson, Assistant Director, Division of Examinations Chief, Current Series Section, Collier, Mr. Division of Bank Operations Items circulated or distributed to the Board. The following items, which had been circulated or distributed to the Board and copies of which are attached to these minutes under the respective item numbers indicated, were approved unanimously: Item No. Letter to the Federal Reserve Bank of Chicago 1 approving the payment of salaries to the Bank's engineers and firemen at specified rates. Letter to the Federal Reserve Bank of Kansas City 2 approving the payment of salaries to two officers at the Oklahoma City Branch and one at the Omaha Branch at the respective rates fixed by the Board Of Directors. Letter to St. Joseph Agency, Inc., South Bend, Indiana, granting an additional extension of time, Pursuant to section 4(a) of the Bank Holding Company Act of 1956, of the period within which it may continue its general casualty insurance business. Report on competitive factors. 3 There had been circulated a draft report to the Comptroller of the Currency on the competitive factors involved in the proposed consolidation of The Citizens Bank ezd Trust Company of Bloomington, Indiana, into the First National I '4. ;'() 6/13/60 -3- Bank, Bloomington, Indiana, as required by section 18(c) of the 1960. Federal Deposit Insurance Act, as amended by the Act of May 13, There had also been circulated a memorandum from the Division of expressed Examinations dated June 3, 1960, in which agreement was with the conclusion of the Federal Reserve Bank of Chicago that the Proposed consolidation, if approved and consummated, would probably monopoly. reduce competition substantially and have a tendency towards Accordingly, it was recommended that this report be sent to the Comptroller's Office. Mr. Nelson said that the two banks involved were affiliated due to common ownership. Nevertheless, a certain degree of competition existed since there was no working arrangement between the two institutions. He went on to say that the proposed consolidation would eliminate the major source of potential competition for First National Bank from another commercial bank, whereas competition would be enhanced by the consummation of a reported offer from out-of-town sources to purchase control of The Citizens Bank and Trust Company. Governor Mills stated that in his opinion the conclusions °f both the Reserve Bank and the Division of Examinations were correct in this case. He foresaw a possible problem in the future, however, should the outside interests planning to purchase the State bank Comptroller Prove not to be a responsible group, thereby causing the 6/13/60 Of the Currency to disapprove the transaction, with the result that the ownership of the State bank would be left in unwilling hands. Unanimous approval was then given to the report to the involved in Comptroller of the Currency on the competitive factors the proposed consolidation of The Citizens Bank and Trust Company into the First National Bank, Bloomington, Indiana. The summary Slid, conclusions read as follows: The proposed consolidation will combine the two largest commercial banks in Monroe County, Indiana, into one institution which would have a decided advantage competitive-wise as it would be by far the largest financial institution in the county. The consolidation, if approved and consummated, would reduce present competition, would minimize the possibility of potential competition, and would tend toward monopoly. Conversely, sale of the smaller State bank to outside interests would almost certainly result in increased competition. Messrs. Hostrup and Nelson then withdrew and Mr. Brill, Associate Adviser, Division of Research and Statistics, entered the meeting. Answers to questions submitted by the Commission on Money and Credit (Item No. 4). With a memorandum dated June 8, 1960, from Mr. Young, there had been distributed a package of 11 proposed answers to and Credit qUestions submitted to the Board by the Commission an Money On January 12, 1960. The memorandum noted that this group of answers included only those replies that had received intensive editorial review and revision by a staff group. 4 6/13/60 advanced Answers to the remaining questions from the Commission were in stages of preparation, it being hoped that they would be available for Board consideration around the end of this month. It was suggested in the memorandum that the Board authorize the forwarding of this first be group of answers to the Commission stating that they were still to considered as in preliminary rather than final draft. In this connection, reference was made to the fact that the Commission staff had indicated autumn. informally that answers would not be considered final until next During a discussion of the draft answers to the 11 questions, concise Governor Robertson suggested the advisability of inserting a statement at the outset of each answer stating in summary form the sUbstance of the answer to the question. Governor Balderston expressed 4 similar view, adding that the technical nature and length of the enswers might discourage the Commission members and the business world from a full reading. n Mr. Young said that the questions submitted by the Commissio 011 Money and Credit were quite technical and, in some cases at least, %lad not be answered in a simple fashion. He felt it important that the informed professional group that would be reading these answers get the feeling that they had been prepared in comparable terms and on a level similar to that of the questions submitted. As a possible means n, he said °f meeting the points raised by Governors Robertson and Baldersto a Eeminar to that, if the Board so desired, it might be possible to organize discuss the questions to which the academic fraternity could be invited, p't 6/13/60 -6- since it was from this source rather than from business groups that controversy originated. Governor Mills said that his understanding of the nature of the assignment to the staff had been expressed by Mr. Young. He thought the answers could be paraphrased in language more digestible by the layman if and when these answers, which had been requested in confidence, were published. As to Mr. Youngts suggestion for a seminar in which academic persons would participate, he thought this question should be examined closely because of the confidential nature of the questions. Chairman Martin commented that it would be some time before the answers to these questions would be published. In reading over the draft answers he had found nothing that would disturb him should any of the statements be made public. Since the preparation of answers to all of thQ questions was running behind schedule, he believed it was important to get the answers to the Commission as soon as possible. As Mr. Young had noted, the letter of transmittal could make clear that the Board wished to review its answers before they were made public. Following further discussion, transmittal of the package of 11 4newers to questions submitted to the Board by the Commission on Money ezd Credit was authorized with the understanding that the transmittal letter would specify that these answers were not to be published without rilrther editing by the Board. A copy of the letter of transmittal to the C°Mmission on Money and Credit is attached as Item No. 4. 217 6/13/60 -7- The meeting then adjourned. Secretary's Notes: A telegram was received today advising that the directors of the Federal Reserve Bank of Boston had established, subject to the approval of the Board of Governors, a rate of 3-1/2 per cent (rather than L. per cent) on discounts for and advances to member banks under sections 13 and 13a of the Federal Reserve Act, a rate of 4 per cent on advances under section 10(b), and a rate of 4-1/2 per cent on advances to individuals, partnerships, or corporations other than member banks under the last paragraph of section 13. Pursuant to the authority given at the meeting on June 2, 1960, the Secretary advised the Federal Reserve Bank of Boston of approval of these rates, effective June 14, 1960. All Reserve Banks and branches were notified by telegram, a press statement in the usual form was issued at 4:00 p.m., EDT, and arrangements were made for publication of a notice in the Federal Register. Acting in the absence of Governor Shepardson, Governor Robertson today approved on behalf of the Board the following items: Memorandum dated June 9, 1960, from Mr. Farrell, Director, biv4 A 4.sion of Bank Operations, recommending the appointment of Patricia '1. Leonard as Clerk-Typist in that Division, with basic annual salary at the rate of $3,195, effective the date of entrance upon duty. Letters to the Federal Reserve Bank of New York (attached Items 5 6Lnd 61 approving the appointment of Frank P. Crawley as assistant examiner, -wut. the reappointment of John T. Seguin and Frank A. Anderson as examiners. Letter to the Federal Reserve Bank of Chicago (attached Item No. 7) PProving the appointment of Lloyd J. MacDonald as examiner. Letter to the Federal Reserve Bank of Dallas (attached Item No. 8) ap.r. eroving the appointment of Dale L. Bates as assistant examiner. Secretary BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. O. C. ADDRESS Item No. 1 6/13/60 OFFICIAL CORRESPONDENCE TO THE BOARD June 13, 1960 CONFIDENTIAL (FR) Mr. H. J. Newman, Vice President, Federal Reserve Bank of Chicago, Chicago 90, Illinois. Dear Mr. Newman: The Board of Governors approves the payment of salaries by the Federal Reserve Bank of Chicago to the Bank's Engineers and Firemen at annual rates of $6,905.60 and t6,115.20, respectively, effective July 4, 1960, in accordance with the request contained in your letter of June 1, 1960. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. "Cs BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 2 6/13/60 AOORCIII orrociAL CORRICIIMONDENCE TO THE BOARD June 13, 1960 CONFIDENTIAL (FR) Mr. George H. Clay, Vice President and Secretary, Federal Reserve Bank of Kansas City, Kansas City 6, Missouri. Dear Mr. Clay: The Board of Governors approves the payment of salaries to the following officers of the Federal Reserve Bank of Kansas City for the period July 1 through December 31, 1960, at the rates indicated, which are the rates fixed by your Board of Directors as reported in your letter of May 26, 1960: Name Title Annual Salary Oklahoma City Branch H. W. Pritz F. W. Alexander Vice President Cashier $15,500 13,600 Omaha Branch George C. Rankin Cashier $12,800 Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 3 6/13/60 a ADDRESS orriciAL CORREEPONCkeNCE TO THE BOARD 4*,;;;ALKIA -4044.0 June 131 1960 Mr. W. W. Brummitt, Vice President, St. Joseph Agency, Inc., St. Joseph Bank Building, South Bend 1, Indiana. Dear Mr. Brummitt: This refers to the application of St. Joseph Agency, Inc. and St. Joseph Bank and Trust Company, requesting an additional 60 or 90-day extension of time within which St. Joseph Agency, Inc. may continue its insurance business. Pursuant to the provisions of section 4(a) of the Bank Holding Company Act of 1956, the Board hereby grants the requested extension of time to and including September 61 1960. Very truly yours, (Signed) KennethA. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No. FEDERAL RESERVE SYSTEM 6/13/60 WASHINGTON 9 o n OFFICE OF THE CHAIRMAN 0,744m0c June 13, 1960 Mr. Frazar B. Wilde, Chairman, Commission on Money and Credit, 711 Fifth Avenue, New York 22, New York. Dear Frazar: In my letter of May 31 I indicated that it would be about the middle of, or late, June before we would have some of our answers to your Commission's questions ready for submission. We now have drafts of 11 of the 25 answers that we are preparing for you and I am enclosing herewith copies of them. From discussion with the Commission's staff, we understand any submission at this time may be subject to later substantive revision if, on the basis of our own internal review and consideration, we conclude such revision to be desirable. We will keep3our staff advised as to the progress we make here and whether we determine some answers to need revision. We hope to be able to submit the balance of our draft answers to you by early July. Sincerely yours, (Signed) Wm. McC. Martin, Jr. Wk. McC. Martin, Jr. Enclosures 5 4 fr;'! BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. * * Item No. 6/13/60 ADDRESS OfFICIAL CORRESPONDENCE TO THE BOARD June 13, 1960 CONFIDENTIAL (FR) Mr. 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 June 7, 1960, the Board approves the appointment of Frank P. Crawley as an assistant examiner for the Federal Reserve Bank of New York. Please advise as to the date on which the appointment is made effective. It is noted that Mr. Crawley is indebted to The National State Bank of Newark, Newark, New Jersey, In the amount .of $92. Accordingly, the Board's approval of Mr. Crawley's appointment is given with the understanding that he will not participate in examinations of that bank until his indebtedness has been liquidated. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No. 6 FEDERAL RESERVE SYSTEM 6/13/60 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE SOAR° June 13, 1960 Mr. John F. Pierce, Chief Examiner, Federal Reserve Bank of New York, New York 45, New York. Dear Mr. Pierce: In accordance with the request contained in your letter of June 6, 1960, the Board approves ;the reappointment of John T. Seguin and Frank A. Anderson, at present special examiners, as examiners for the Federal Reserve Bank of New York, effective June 16 and June 30, respectively. The authorizations heretofore given your bank to designate Messrs. Seguin and Anderson as special examiners are hereby canceled. Please advise as to the salary rates. It is noted that Richard J. Pfleging and John J. Cooney are to be transferred on June 16 and June 30, respectively, to the Bank Relations Department for a rotational training period of approximately 12 to .18 months, and that their commissions as examiners for your Bank are to be retained. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Sberetary. 2U BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. AOC:04M Item No. 7 6/13go orriatAL CORPICIPONOENCe TO THE BOARO June 13, 1960 Mr. W. R. Diercks, Vice President, Federal Reserve Bank of Chicago, Chicago 90, Illinois. Dear Mr. Diercks: In accordance with the request contained in your letter of June 1, 1960, the Board approves the appointment of Lloyd J. MacDonald as an examiner for the Federal Reserve Bank of Chicago. Please advise as to the date on which the appointment is made effective. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon) Assistant Secretary. BOARD OF GOVERNORS 440.1t** V OF THE FEDERAL RESERVE SYSTEM Item No. 8 03/60 WASHINGTON 25, D. C. ADORERS OFFICIAL CORRCIIPONOENCE TO THIE BOARD June 131 1960 MI-, L. G. Pondram„ Vice President, Federal Reserve Bank of Dallas, Dallas 2, Texas. Dear Ni. Pondram: In accordance with the request contained in your letter of June 80 1960, the Board approves the appointment of Dale L. Bates as an assistant examiner for the Federal Reserve Bank of Dallas, effective today. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary.
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