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Minutes for To: Members of the Board From: Office of the Secretary June 21, 1961 Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement With respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. Otherwise, please initial below. If you were present at the meeting, your initials will indicate approval of the minutes. If You were not present, your initials will indicate only that you have seen the minutes. Chm. Martin Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King 2f)‘ Minutes of the Board of Governors of the Federal Reserve System on Wednesday, June 21, 1961. PRESENT: Mr. Mt. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Balderston, Vice Chairman Robertson Shepardson Mr. Sherman, Secretary Mr. Kenyon, Assistant Secretary Miss Carmichael, Assistant Secretary Mr. Thomas, Adviser to the Board Mr. Young, Adviser to the Board and Director, Division of International Finance Mr. Noyes, Director, Division of Research and Statistics Director, Division of Bank Operations Farrell, Mr. Division of Examinations Director, Solomon, Mr. Counsel General Assistant Hexter, Mr. Counsel General Mr. Hooff, Assistant Mr. Koch, Adviser, Division of Research and Statistics Adviser, Division of Research Robinson, Mr. Statistics and Mr. Furth, Adviser, Division of International Finance Mr. Conkling, Assistant Director, Division of Bank Operations Discount rates. The establishment without change by the Federal Reserve Bank of Atlanta on June 19, 1961, of the rates on discounts and e43*rarIces in its existing schedule was approved unanimously, with the Urbzierstanding that appropriate advice would be sent to that Bank. Items circulated or distributed to the Board. The following lterns, vhich had been circulated or distributed to the Board and copies c3r lihich are attached to these minutes under the respective item numbers ilidleated, were approved unanimously: 6/21/61 -2Item No. Letter to the Federal Reserve Bank of Richmond " oreiving assessment of a penalty incurred by &ulealwood National Bank, Hallwood, Virginia, uecause of a deficiency in its required reserves. 1 Letter to State Bank of Northfield, Northfield, 2 Letter to The Southwest Bank, Inglewood, Cali1 11-1-a, granting permission to continue maintaining 2 f: ,educed reserves. 3 Letter to Chairman Dawson of the House Committee °11 Government Operations reporting on H. R. 7530, Et bill "To amend the Employment Act of 1946 to establish policies with respect to the productive cePital investments of the Government." 4 Letter to Bureau of the Budget reporting on einrolled bill S. 1619, "To authorize adjustments Alaccounts of outstanding old series currency, for other purposes." 5 Minnesota, approving an investment in bank Premises. Report on competitive factors (White Plains-New York, New York). 4 cll'aft of report to the Comptroller of the Currency on the competitive tektors involved in the proposed merger of National Bank of Westchester, white Ot Plains, White Plains, New York, into The First National City Bank Nele York, New York., New York, had been distributed under date of aUlle 13, 1961. The Secretary commented that Governor Mills' attendance at a rtleeting of the Board of Trustees of the Federal Reserve Retirement Shtez prevented his being present at the Board meeting this morning. 2(11‘ 6/21/61 -3- However, Governor Mills had requested that a statement expressing his views on the proposed report be presented at an appropriate time. The memorandum was then read, and it was understood that copies m°41d be distributed to the members of the Board. There was agreement that further consideration of the report to the Comptroller would be held over until tomorrow's meeting, when Governor Mills would be present al°ng with the members of the Board in attendance at the meeting today. (The statement submitted by Governor Mills is incorporated in the minutes c)f June 22, 1961.) Report on competitive factors (Clarksdale-Jonestown Mississippi). A draft of report to the Federal Deposit Insurance Corporation on the Q0m1petitive factors involved in the proposed merger of Peoples Bank of j°4estown, Jonestown, Mississippi, with and into Coahoma County Bank 44d Trust Company, Clarksdale, Mississippi, had been distributed under (11/te of June 16, 1961. The report concluded as follows: The proposed transaction would eliminate no important competition and should have no adverse effect on any other bank. There being no objection, the report was approved unanimously transmittal to the Corporation. Mr. Molony, Assistant to the Board, entered the room at this Continental Bank and Trust Company. Mt. Hexter reported that ill the United States District Court case entitled The Continental Bank 6/21/61 -4- 8tIld Trust Company v. William McChesney Martin, Jr., et al., the Board's ni°tion to dismiss the bank's complaint was granted on June 20, 1961. He recalled that on July 18, 1960, the Board ordered Continental Bank to increase its capital by not less than a specified amount within six months. On September 19, 1960, the bank filed suit in the United States District Court for the District of Columbia for declaratory judgment, Injunction, and other relief. On December 2, 1960, the bank filed a in°tion for summary judgment on the matter. A motion to dismiss the bank's complaint was filed December 15, 1960, on the Board's behalf. Pending determination of the matter by the District Court, it haa been agreed that no action would be taken to secure compliance with the Board's July 18 order. However, in view of the dismissal of the the Board would now be faced with a decision as to what steps, if should be taken to implement its order. aQtions Various alternative were under discussion by the staff, and the question would be 131ssented shortly for the Board's consideration. S. 1005 and H.R. 5044. Question was raised regarding the status °II bills S. 1005 and H.R. 5044, relating to the statutory limitation °4 "Penditures for the construction of Federal Reserve Bank branch After discussion, it was understood that Chairman Martin would take such steps, if any, as might seem appropriate in this regard. 6/21/61 In this connection, Mr. Farrell commented informally regarding the status of pending branch building projects and indicated that 84)131s0Priate memoranda with respect to them would be submitted to the IlOarli in due course. Holding of foreign currencies. It was noted that there had been distributed to the members of the Board a memorandum from Mr. Young dated June 16, 1961, srut a supplementary memorandum of the same date Mr. Furth, relating to the possibility of Federal Reserve holdings or foreign currencies. A question of procedure was raised, and it was agreed, pursuant to a suggestion by Chairman Martin, that the matter %11314.d be placed on the agenda for discussion at the meeting on Monday, Xle26. The meeting then adjourned. Secretary's Notes: Pursuant to recommendations contained in memoranda from appropriate individuals concerned, Governor Shepardson approved on behalf of the Board on June 20 and 21, 1961, respectively, acceptance of the resignations of the following persons, effective at the close of business June 23, 1961: Shepfield A. Whitley, Cafeteria Laborer, Division of Aftinistrative Services Carolyn M. Hall, Statistical Clerk, Division of Research and Statistics 6/21/61 -6Pursuant to recommendations contained in memoranda from appropriate individuals concerned, Governor Shepardson approved on behalf of the Board on June 21, 1961, increases in the basic annual salaries of the following persons on the Board's staff, effective June 25, 1961: title Division Basic annual salary To From Board Members' Offices 1)0reen Dippre, Secretary to Mr. King $ 7,560 $ 7,820 5,005 4,040 5,170 4,145 4,145 4,040 4,250 4,145 14,014.0 4,675 4,145 14,8140 4,355 5,005 12,730 Office of the Secretary V. Caulfield, Senior Records Clerk j°art Tt, --Etitara A. Byrne, Minutes Clerk Legal aearine A. Chambers, Stenographer Jticilr D. Taylor, Stenographer Research and Statistics Hollingshead, Clerk-Stenographer r1eY Ann Owen, Secretary E. Quinn, Clerk-Stenographer ZY Ann O'Leary, Secretary 9-es Alan Yager, Economist !1[14!iorie 4,250 14,814.0 12,14.70 Bank Operations L. AA— Pat1.4xle Phipps, Statistical Typist —4.cIa A. Leonard, Statistical Clerk 4,565 3,760 4,670 3,865 Examinations Ce.rol Lee 4,040 Do Jones, Stenographer 6,015 Examiner Reserve 1a8 L. orre, Assistant Federal A 11/3 -alldra T 41o4o PreA - ", Rider, Stenographer 12,730 - w. Troup, Supervisory Review Examiner 4,145 6,180 4,145 12,990 6/21/61 SelarY increases Namet e effective June 25 1961 (continued) Divi ion Basic annuAl salary To From • Administrative Services .T,clan C. Bell, Printing Clerk "illiam F. Becker, Captain, Guard Force Ruth Jean Myers, Publications Clerk , 141•11a I. Davis, Clerk-Stenographer c' D. Maddox, Guard uames Jackson, Laborer $4,995 4,995 5,170 4)355 $51160 5,160 5,335 4 46o 3,815 3,920 3,710 3,815 Secretai3 BOARD OF GOVERNORS otttto* OF THE 4 4 41:101W N1 ii((\.,)1,',.;;;a pl 3* * 40 ‘1,1;i1k4 * ',.. • 91. ..,-. 4 f 4 '. f ' *D4kft ,) III t ' 44,:kt€410 Wi FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 1 6/21/61 ADDRESS OFFICIAL CORRESPONDENCE TO INE BOARD -444444- June 211 1961 141". Aubrey N. Heflin, Pirst Vice President, Federal Reserve Bank of Richmond, Richmond 13, Virginia. Dear Mr. Heflin: This refers to your letter of June 12, regarding the pentY of $42.69 incurred by the Hallwood National Bank, Hallwood, ; 7, V"rginia, on a deficiency of 7.8 per cent in its required reserves 'or the biweekly period ended May 31, 1961. It is noted that the deficiency may have resulted from leliance by the Hallwood National Bank on an incorrect balance ' f:esPorted to it by your Bank. It is also noted that the member .11: has been notified of the deficiency but has not yet requested ; eller of any kind. In the circumstances, and in view of your recommendation, Board authorizes your Bank to waive the assessment of the PeaaltY of $42.69 for the period ended May 31, 1961. the Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 2 6/21/61 ADDRESS OFFICIAL CORRESPONOENCE TO THE BOARD June 211 1961 Board of Directors, State Bank of Northfield, Northfield, Minnesota. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Minneapolis, the Board of Governors of the Federal Reserve System approves, under the provisions of Section 24A, of the Federal Reserve Act, an investment in 12enk premises by State Bank of Northfield of not to exceed 0100,000 for the purpose of acquiring and remodeling property for banking premises. It is understood that subsequent to the inception or this program the capital stock of the bank will be increased bY stock dividend to $100,000 as required by the Commissioner of Banks for the State of Minnesota. Very truly yours, (Signed) Elizabeth L: Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No. 3 FEDERAL RESERVE SYSTEM 6/21/61 WASHINGTON 25, O. C. ADDRESS orricim. CORRESPONDENCE TO THE BOARD June 21, 1961 Board of Directors, The Southwest Bank, Inglewood, California. G entlemen: Pursuant to your request submitted through the Federal Reserve Bank of San Francisco, the Board of Governors, acting under the provisions of Section 19 of the Federal Reserve Act, Fants permission to The Southwest Bank to continue to maintain same reserves against deposits as are required to be mainQI,ined by banks located outside of central reserve and reserve ies, upon the opening of its additional branch in the city 04 Los Angeles. T Your attention is called to the fact that such per8810n is subject to revocation by the Board of Governors. • Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS OF THE Item No. 146/21/61 FEDERAL RESERVE SYSTEM WASHINGTON OFFICE OF THE CHAIRMAN June 22, 1961 The Honorable William L. Dawson, Chairman, ,0111mittee on Government Operations, tuollse of Representatives, riashington 25, D. C. 9 near Mr. Chairman: This is in response to your letter of June 12 requesting ePort on the bill H.R. 7530 no amend the Employment Act of laj .1-Y146 to establish policies with respect to productive capital investra Rents of the Government." This bill is the same as H.R. 960 and F.11. 1968 on which the Board reported to you in a letter dated 1961; and as H.R. 5135 and H.R. 5197 on which the Board rebruarY , aported lit, ce dated June 8, 1960. As was done in the to you in a letter dad se of the Board's letter of February 141 1961, a copy of the Board's , teriLter of June 8, 1960 is enclosed for ready reference since it dealt S°111e detail with matters presented by these measures. . While a capital budget has same attractive features, the liTe_?rtainties attaching to these proposals outlined in my letter of bs 'L Year continue to be applicable. Budgetary problems will not ' is solved by modifying the system of governmental accounting. It of ren conceivable that focus on the technical accounting aspects econamic udgets erns. might diminish attention to the fundamental rrobi For this reason and for other reasons spelled out in my Priem; or --°1-le letters to you the Board does not believe that adoption the Proposed budgetary system would serve a constructive purpose at this time. Sincerely yours, (Signed) Wm. MCC. Martin, Jr. Wm. McC. Martin, Jr. .0sttr e E el BOARD OF GOVERNORS OF THE Item No. FEDERAL RESERVE SYSTEM 6/21/61 WAS OFFICE OF THE CHAIRMAN June 21, 1961 Mr. Phillip S. Hughes, Assistant Director for legislative Reference, Bureau of the Budget, Washington 25, D. C. Dear Br. Hughes: This is in response to your request of June 20, 1961, for the Board's views on the enrolled bill, S* 1619, "To authorize adjustments in accounts of outstanding old series currency, and for other purposes'''. This is to advise that the Board recommends approval of this legislation by the President* Sincerely yours, (Signed) Wm. McC. Martin, Jr. Itn. MC. Martin, jr* 5
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