The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Minutes for
To:
Members of the Board
From:
Office of the Secretary
June 23, 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.
Chm. Martin
Gov. Szymczak
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
Minutes of the Board of Governors of the Federal Reserve System
04 Tuesday, June 23, 1959.
PRESENT:
Mt.
Mt.
Mt.
Mr.
Mt.
Mr.
Mt.
The Board met in the Board Room at 10:00 a.m.
Martin, Chairman 1/
Balderston, Vice Chairman
Szymczak 2/
Mills
Robertson 2/
Shepardson
King
Sherman, Secretary
Kenyon, Assistant Secretary
Hackley, General Counsel
Connell, Controller
Farrell, Director, Division of Bank Operations
Furth, Associate Adviser, Division of International Finance
Mr. Hexter, Assistant General Counsel
Mr. Hostrup, Assistant Director, Division of
Examinations
Mr. Goodman, Assistant Director, Division of
Examinations
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Discount rates.
The establishment without change by the
Federal Reserve Bank of Atlanta on June 22, 1959, of the rates on
discounts and aevances in its existing schedule was approved
tularthnously, with the understanding that appropriate advice would
he sent to the Bank.
Report on S. 2139 (Item No. 1).
In the light of discussion
e.t the meeting of the Board yesterday, there had been distributed
c°1°1es of a revised draft of letter to the Senate Banking and Currency
c
W,
—/
Attended afternoon session only.
Withdrew from meeting at point indicated in minutes.
6/23/59
-2-
Committee commenting on S. 2139, a bill to amend the Small Business
Investment Act of 1958.
Like the previous draft, the proposed letter
/°111d state that the only provision of the bill directly relating to
the responsibilities of the Board was section
5, which would amend the
8111411 Business Investment Act so as to permit a nonbanking subsidiary
°11 a bank holding company to invest in the stock of a small business
investment company even if such investment would result in the investment company becoming a subsidiary of the bank's parent holding company.
However, instead of a flat statement that the Board would not object to
such an amendment, the revised draft indicated that the Board would not
bjeet provided the authority conferred by the proposed amendment was
not
utilized as a means of enabling bank holding companies, through
their control of small business investment companies, to acquire
interes.,_
us in nonbanking enterprises in a manner contrary to the
1111r13°ses of the Bank Holding Company Act.
Following comments by Mr. Hackley on the revised draft of
letter
at
particularly the caveat contained therein, the Board considered
some length whether the pending amendment, if enacted, might be used
Purposes contrary to the intent of the Bank Holding Company Act.
14 view of this possibility, it was the feeling of the Board that the
inclusion of a pertinent comment in the report on S. 2139 would be
e4visable.
Several suggestions for revision of the draft of letter
EL
6/23/59
Were
_3_
made, among them a suggestion which contemplated making the
statement that reconsideration of the matter might be called for in
the future if the possible development envisaged by the Board should
rnat
erialize.
There being agreement with this suggestion, unanimous approval
°-Ven
1418 (
to a letter to the Chairman of the Senate Banking and Currency
C°111mittee in the form attached as Item No. 1.
Re uest of Morgan Guaranty Trust Company (Item No. 2).
After
consideration of the favorable staff recommendation included in a file
that had been distributed to the Board, unanimous approval was given to
a letter to Morgan Guaranty Trust Company of New York, New York City,
Illth°rizing it to establish a branch at 14, Place Vendome, Paris,
lirallee) incident to the merger of Morgan & Cie.
Incorporated into
the applicant. This authorization was granted with the understanding
that the business of Morgan Guaranty's branch at l4. Place de la Concorde,
Pe.11-8, Was to be transferred to the Place Vendome location and merged
With the
business of Morgan & Cie.
1°eatlOn-
Incorporated's branch at that
An arrangement of this kind was contemplated at the time
Of the merger of J. P. Morgan and Co. with Guaranty Trust Company to
torm m
'Lorgan Guaranty Trust Company and its effectuation had since
bee()
me possible by virtue of an interpretation of law issued by the
Nel'i York State banking authorities.
Messrs. Furth and Goodman then withdrew from the meeting.
6/23/59
-4Applications by Citizens and Southern.
National
Citizens and Southern
Bank and Citizens and Southern Holding Company, both of
Savannah, Georgia, had applied under section 3(a)(2) of the Bank
11°2-cling Company Act for approval of the acquisition of 2,500 (12.5
Per cent) of the outstanding voting shares of the American National
8411k of Brunswick, Brunswick, Georgia.
Pursuant to discussion of this
illatter by the Board on June 10, 1959, there had been distributed, with
Illemorandum from the Legal Division dated June 22, 1959, a notice of
telltative decision and a tentative statement which would indicate that
the Board proposed to approve the applications. The tentative stateniellt 'would state, among other things, that (1) the financial history
e-Ild condition, the prospects, and the management of American National
a4c1 the two holding companies appeared to be satisfactory and apparently
11°111d not be adversely affected by the proposed transaction; (2) existing
e°111Petition between American National and the offices of the holding
Q°171PanY group was negligible, and the situation would not be changed by
the Proposed stock acquisition; and (3) in the Board's opinion the
Pri°Posed transaction would not have any significant effect on the
(111//e nience, needs, and welfare of the communities and area concerned
44d vould not expand the Citizens and Southern holding company system
beY°11c1 limits consistent with adequate and sound banking, the public
interest) and the preservation of competition in the field of banking.
14 c°11clus1on, the statement would declare it to be the judgment of the
6/23/59
Board
-5--
that the proposed acquisition would be in the public interest
and consistent with statutory objectives.
In commenting on the matter, Mr. Hackley said that the concluding
Paragraph of the tentative statement contained a phrase (that the
1)11°P°sed acquisition would be in the public interest) which might be
susceptible
of misinterpretation in view of previous decisions by the
Board
under the Bank Holding Company Act and in the light of discussions
by the Board concerning
the fundamental question of the philosophy of
that Act.
What was meant, of course, was that the Board would not
1113Pr°ve an application under the Act if such application were deemed
not to be in the public interest.
However, the language of the tentative
staternent might suggest that the Board would approve an application only
in the
event of an affirmative showing that the proposed transaction
electrlY would be in the public interest.
In this case, therefore, it
14°11.ld. be his preference to change the tentative statement
to read that
the Proposed acquisition
of stock would not be inconsistent with the
134hlic interest or with statutory objectives.
Mr. Hostrup stated that the Division of Examinations would
e€ree with the suggested change in language.
Governor Mills, who was not present when this application
"allY came before the Board for consideration, indicated that he
131'°13°sed to abstain from participation in the determination with respect
to
is
of a tentative decision. He did not wish to suggest a
6/23/59
-6-
detailed review of the case.
However, without such a review and without
°$31'e complete knowledge of pertinent considerations, including the laws
(It the State of Georgia, he did not feel sufficiently conversant with
the ePPlication to participate in its determination.
Governor Robertson expressed the view that this case, in itself,
41 not make too much difference one way or the other. However, the
eituation. would be different if a succession of similar cases were to
e°4e IV in the State of Georgia. With that possibility in mind, he
Irc'uld prefer to keep the opinion in this case as innocuous and harmless
"P08sible.
One means of accomplishing that end might be to state in
the concluding paragraph of the tentative statement only that it was the
J114;ment of the Board, after viewing the relevant facts in the light of
the
geueral purposes of the Bank Holding Company Act and the factors
ellizzerated in section 3(c) thereof, that the application should be
13.1d. Thus, the question whether the acquisition of stock was in
the 14113
lic interest would not be the subject of specific comment.
Following further discussion in the light of Governor Robertson's
emits, Mr. Hexter stated that he could see nothing legally wrong with
4 fOl'ril of statement such as the Governor suggested.
eeeed
However, there
implicit in Governor Robertson's remarks the thought that if
44°-ther case of this kind should come up the Board might take a different
11°81ti°11. Mr. Hexter felt that this would be difficult and that the
6/23/59
-7-
manner
cinission of certain language from the tentative statement in the
slIggested would not diminish the difficulty.
In other words, should a
similar case come up in another section of Georgia, he felt that the
130ard would have difficulty in turning down the application.
Mr.
Hexter added the comment that unless the Board considered a proposed
traasaction consistent with the public interest, he doubted whether the
11°8-ra would be legally authorized to approve the application.
lt
Mr. Hackley concurred in the view that it would be difficu
for the Board, if it approved this application, to disapprove another
813Plication in a different part of Georgia which involved similar
circumstances.
However, it would be possible, if there were a
slIccession of such cases, for the Board at some point to take the
far the influence
13°sitioa that a further acquisition would extend too
°I' the holding company system throughout the State.
stemmed
Governor Shepardson commented that the whole problem
m. questions involving the basic philosophy of the Bank Holding
legislation,
C°111PanY Act; that is, whether the Congress, in passing the
intended thereby to stop further holding company expansion in the
the
hence of an affirmative showing of justification or whether
in the absence
Colixess intended not to interfere with such expansion
Of a.
interest.
Positive indication that it would not be in the public
-8-
/23
/59
Mr. Hackley recalled that former Governor Vardaman, when a
nismber of the Board, had raised this question and that at Governor
Var
daman's request he (Mr. Hackley) submitted a memorandum concerning
the legislative history of the Bank Holding Company Act in this respect.
It was his conclusion that the Congress intended to enable the Board in
it8 judgment to permit holding company expansion unless such expansion
/gas found to be in some manner inconsistent with the public interest.
Aec°rding to his interpretation, there would not necessarily have to
be aq affirmative benefit to the public in any concrete respect in
c)rder to justify approval of an application.
Opinions on this point
Ir/ight differ, but he believed that the language of Congressional
C°111nlittee reports, as distinguished from remarks on the floor of the
e°11gress, lent support to such a conclusion.
On the floor of the
aellgress, much was said on this subject that he felt could not be
'
i verl too much weight in interpreting the statute.
In a further comment, Mr. Hackley said that he would like to
a statement he made when this case previously was under conl'cleration by the Board. At that time, according to his recollection,
he e
xPressed the view that a decision by the Board to deny the applistion
- might not be upheld by the courts.
The impression he had
&liteA
nued to convey was that the courts probably would uphold a
810n either to approve or to disapprove, but that a court might
'
have
scnile question if an application of this kind were denied.
6/23/59
The suggestion then was made that this matter be held over for
further consideration after other items on the agenda had been disposed
or, and there was agreement with this suggestion.
Mr. Hexter then withdrew from the meeting.
Assessment to meet Board expenses.
A memorandum from Mr.
Connell dated June 22, 1959, which had been distributed to the Board,
lecommended that an assessment of .00251 of the total paid-in capital
'
culd surplus of the Federal Reserve Banks as of June 30, 1959, be levied
14504 the Banks to meet estimated expenses of the Board for the second
11111f of 1959.
Such a rate would produce a total of $3,132,480, while
ex'Penses, based upon calculations contained in the memorandum, were
es
timated at $3,135,300.
Following comments by Mr. Connell regarding the basis on which
eX'Penses for the second half of 1959 had been estimated, the levying of
114 etssessment at the rate recommended in the memorandum was approved by
Iluanimous vote.
At this point Mr. Harris, Coordinator of Defense Planning entered
the room.
Proposed extension of depositary receipt system.
With reference
to letters from the Treasury to the Reserve Banks dated June 11, 1959,
°sing an extension of the depositary receipt system to include the
)
131°I
'
he21:1-1i-ng of estimated income taxes of individuals, Mr. Farrell reported
that
la accordance with the understanding at yesterday's Board meeting
-10-
6/23/59
he got in touch with Mr. Leach, Chairman of the Presidents' Conference
d
Committee on Fiscal Agency Operations, who indicated that he intende
to discuss the proposal with the other members of the Committee.
Sub-
sequently, Mr. Leach sent to all Presidents a telegram suggesting, for
a reply to
ala Banks that had not yet replied to the Treasury's letter,
ed by a
the effect that it was thought the matter should be discuss
SYstem Committee with the Treasury due to its importance.
The telegram,
of the Board, also
e°Pies of which had been distributed to the members
expressed the view of the Committee on Fiscal Agency Operations that
there were important questions of policy as well as operations involved
414 that discussion with the Treasury should be at a high level.
not have
Mr. Farrell pointed out that Mr. Leach's wire would
ive
the effect of putting the Board in receipt of replies by the respect
Reserve Banks to the Treasury.
He raised the question whether a telegram
Shod be sent to the Banks from the Board requesting copies of such
ton
The alternative suggestion then was made that Governor Balders
appreci(et in touch with President Leach, indicate that the Board would
ttte being kept informed of developments, and state that the Board would
e°11sider it helpful to have copies of the Reserve Bank replies to the
Treasury if that could be arranged by Mt. Leach.
This suggestion was approved unanimously.
6/23/59
Statement by Congressman Patman.
With reference to the state-
Aent released under date of June 22, 1959, by Congressman Patman
emleeraing expenditures of the Federal Reserve Banks, question was
l'aised whether steps were in process to obtain full information on
the various criticized items. From discussion, it developed that the
ilciard's staff had begun a review of the material. It was then suggested
that/ as in connection with Mr. Patman's statement of February 1958, each
ilesez*ve Bank be requested to submit comments on those items in the current
statement pertaining to its activities, with special attention to those
itets not previously referred to by Mr. Patman and such supplementary
ectanents as might be deemed appropriate on matters mentioned in the 1958
41
elzient, including any actions taken in the light of the 1958 criticisms.
There was agreement with this suggestion and it was understood
that a telegram reflecting this decision would be sent to the Presidents
all Federal Reserve Banks.
Proposed construction project. Pursuant to an earlier decision
c't the Board, Harbeson Hough Livingston and Larson, architects of
l'hiladelphia, Pennsylvania,
ma prepared preliminary drawings for a
alle4er area to be incorporated in plans previously developed for a
kasible addition to the Federal Reserve Building on property owned by
the t
°ard and located across "C" Street. At the time of this meeting,
44. 0
°4. the members of the Board had had an opportunity to inspect these
—Ags, which suggested alternative approaches to the problem.
6/23/59
-12Governor Shepardson, at whose request this matter was on the
agenda, expressed the view that the Board had acted wisely in bringing
the Plans to their present stage of development in order to determine
Vhat could be done.
While he was unable to offer a reliable estimate
of the cost of the fallout shelter project, if carried forward to
eczPletion, rough estimates on a footage basis indicated that the
illinimum proposal might result in an expenditure of close to $1 million.
It occurred to him that the Board should now consider carefully, in the
of pertinent considerations, including the economic situation,
whether it wished to proceed with construction of the fallout shelter
O
the plans in abeyance.
Governor Shepardson then called upon Mr. Harris for comments
°4 the progress of the fOlout shelter program generally and his
e\reauation of the urgency of the matter.
In response, Mr. Harris reviewed studies within the Government
that had led to the declaration of a national fallout shelter policy
111/a to a directive that designs and budget estimates for new Federal
bilildings should include provision for adequate fallout shelter areas.
He l'ecognized that distinctions could be drawn between the program with
l'e ard to new Federal buildings and the project under consideration by
the Board.
On the other hand, it occurred to him, in view of the leader-
' 111.P being taken by the Federal Government, that an exhibition of
4
-ulitiative on the Board's part would be in order. The role to be
6/23/59
entirely clear,
Played by the Federal Reserve post-attack was not yet
but it would be a vital one, whether subordinate to that of the Treasury
Or not, and from the standpoint of the national interest it seemed
1111Portant for the Federal Reserve to provide leadership and continuity
for the defense planning program if others lagged behind.
In principle,
therefore, a decision to go forward with the fallout shelter would be
would be
At the same time, there was the question whether it
Proper.
construction
tactically and economically propitious to undertake the
/It this point. Deferral of a decision for a few months probably would
completion date
'flake no material difference from the standpoint of the
c)f the project.
understood
After brief reference to fsllout shelter provisions
to be under consideration at certain Federal Reserve Banks, Governor
Mills said it was his feeling that the Board should defer any definite
fsllout
4ctl-on involving construction or the expenditure of funds for a
Shelter at this time. If the Board were considering the construction
°r aal all-purpose building, with fallout shelter provisions, that would
be one matter.
However, to go forward with construction for a special
13t1rPose, one for which it was hoped that the area would never have to
be used,
thA+
was a different matter.
Furthermore, there was the possibility
the Board would have to build to provide for growth needs.
In 01
the circumstances, including the present economic climate, it was his
c°4clusion that the Board should weigh the proposal carefully before
.°1-11g forward.
6/23/59
After comments by Governor Shepardson on the manner in which
the plans for a fell out shelter were designed to fit in with plans
heretofore developed for a possible addition to the Federal Reserve
Bililding, if such an addition were decided upon at a later date,
Governor Robertson expressed the view that the York done thus far
aefinitely should have been accomplished.
However, he felt that
the Board should not proceed further until firm top-level commitments
011 the part of the Federal Government had been made.
The question was
Whether there would be an adequate fallout shelter program throughout
the Government, and there seemed little purpose in having a Federal
Reservefallout shelter except in coordination with a general program.
lie thought it possible that the picture might be sufficiently clarified
to Permit the Board to make a decision within a period of perhaps three
Oi" four months.
Meanwhile, he would hold the plans in abeyance.
Governors King, Szymczak, and Balderston indicated that their
viewS were similar to those of Governor Robertson.
Accordingly, after further discussion Governor Shepardson
l'ecommended that the fallout shelter project be laid on the table
14clefinitely and that the Board authorize payment to the architects
work performed to date on the basis of the agreement between the
13°11rd and the architectural firm.
The recommendations of Governor Shepardson were approved
114sI11Jm0usly.
6/23/59
-15All of the members of the staff then withdrew and the Board
went into executive session. Following the executive session the
nieeting recessed and reconvened in the Board Room at 2:30 p.m. with
all of the members of the Board present.
From the staff, Messrs.
Sherman, Kenyon, Hackley, Farrell, Hexter, and Hostrup were present
al°11-g with Messrs. Riefler, Assistant to the Chairman, Shay, Legislative
C°11nsel, and Benner and Smith, Assistant Directors, Division of Examinations.
Applications by Citizens and Southern (Item No. 3).
In
eceordance with the understanding at this morning's session, further
'
c°4sideration was given to the question of issuing a notice of tentative
decision approving the applications of Citizens and Southern National
1361.4k and Citizens and Southern Holding Company, both of Savannah,
Ce°176-18., to acquire 12.5 per cent of the stock of the American National
13a4k, Brunswick, Georgia.
Governor Robertson commented that when this matter was discussed
ea lier he expressed an assenting view on the basis that there were no
tr°ng arguments for or against approving the applications.
he had experienced a change of heart.
not
Now, however,
The Bank Holding Company Act, he
cent
permits a holding company to acquire not more than five per
of the stock of a bank without Board approval, thus setting a standard,
the laws of Georgia provide that a holding company may not acquire
111°1'e than 15 per cent of a bank's stock.
If the Board were to approve
the stock acquisition by Citizens and Southern when no evidence was
6/23/59
Presented that the acquisition would contribute to the convenience,
needs, or welfare of the community, he doubted whether the Board would
have a basis for objection should the holding company system seek to
aeqUire an interest in some other bank.
If the acquisitions should go
far enough, the Board might find a basis for objection, but in the
Illeantime its hands would appear to be tied.
Nevertheless, in each
case the holding company system would be extending its sphere of
influence.
This was a situation that he felt the Board should not
countenance unless it was shown that the proposed transaction would
enhance the convenience, needs, and welfare of the community concerned,
'would serve to provide needed capital or management, or would produce
some other tangible benefit.
Consequently, Governor Robertson said, he would be disposed to
clenY the Citizens and Southern applications now under consideration.
In the thought that this might develop to be the majority point of
he had drafted a revision of the tentative statement on the
Matter, and copies there<d-were distributed.
Governor Mills recalled that he abstained from participation
in the discussiOn this morning because he had not had the advantage of
he4ring the arguments when the case previously came before the Board
1*(31
' consideration.
Entirely apart from this case, however, Governor
11(lbertson's draft statement and presentation raised questions as to the
1113int of view that should be applied generally in considering applie4tions under the Bank Holding Company Art.
Governor Mills thought
6/23/59
-17-
there had been general acceptance of the position that, inasmuch as the
Act did not impose a death sentence on the expansion of bank holding
e°41Panies, an application involving expansion of a holding company
sYstem could be approved by the Board in the absence of clear objections
lrhen the application was reviewed in the light of the five factors re'
to be considered pursuant to the provisions of the Bank Holding
C°111PanY Act.
He did not believe that it would be wise to reverse a
13°sition of that kind.
The decisions handed down by the Board were in
4 sense establishing case law in the eyes of the banking fraternity,
end the Board should be cautious about taking actions that would
establish fixed precedents.
In the event the disposition of the
1173al'a was to disapprove the Citizens and Southern applications, he
felt that such action should be on grounds other than those cited by
GWernor Robertson.
If he had had the benefit of the initial discussion
c)f the case, he would himself have been looking for a basis to oppose
the indirect expansion of Citizens and Southern into another area where
Its control of total deposits and banking outlets would be quite subste4ti5l.
However, from the information available to him, he doubted
thilt the present applications would represent an expansion contrary to
the Public interest unless such expansion was deemed to afford undue
Q°11centration in the particular area.
At the request of Governor Balderston, Mr. Hackley reviewed, as
he
"441Q. this morning, the memorandum he prepared some time ago at the
l'en
Uest of former Governor Vardaman wherein he endeavored to determine
6/23/59
-18-
the philosophy of the Bank Holding Company Act in respect to holding
c°14PanY expansion.
From this study of the legislative history of the
Act) he had reached the conclusion that it was the intent of the Congress
to give complete discretion to the Board, requiring only that the Board
c°nsider each application in the light of the five factors set forth in
the Act.
He saw no evidence of intent that the Board should turn down
a4 application except where it found an indication that the proposed
transaction would contribute affirmatively to the public interest.
In
at least two previous cases, Mr. Hackley recalled, the statutory factors
were
more or less neutral and the elimination of an independent bank was
ilivolved, but the Board approved the applications.
He felt that it would
be difficult for the public and the bank holding companies to reconcile
dellial of the current applications with approval of the earlier applications to which he referred.
In further discussion Governor Robertson noted that the statute
aefilles a company as a bank holding company if it owns or controls 25
'cent or more of the stock of two or more banks.
1)el
The Board, he felt,
11°111c1 guard against establishing a principle that a bank holding company
InIght at will acquire an interest less than 25 per cent as long as the
b
concerned was not in direct competition with banks in the same
company system.
It
If the Board took such a position, he thought
ght be difficult to find a case where it would be possible for the
to
ard to deviate.
The Board, he suggested, would then be almost in the
1)°13it1on of expanding the legislation by anministrative decision.
6/23/59
-19Mr. Hackley responded that if a bank holding company were to
request approval for a series of proposed stock acquisitions of less
than 25 per cent, the Board could take the position that the holding
c°111PatY was seeking to expand its sphere of influence, even though
tot necessarily- controlling the banks concerned, in such manner that
the proposed acquisitions would be inconsistent with the objectives
or the Bank Holding Company Act.
the
This was a matter of judgment that
Board must exercise under the statute.
Governor Shepardson expressed doubt whether, if the Board
aPProved the current applications, it would necessarily be estopped
fl'om denying future applications by holding companies desiring to
broaden their coverage, even if such holding companies were not
"V
represented in the areas concerned.
On the premise laid
d°1411 by Mr. Hackley concerning the objectives of the Bank Holding
e°mPatY Act and in the light of the policy followed generally by the
Bc'ard in the past, he did not see how the Board could justify denying
the Citizens and Southern applications now before it.
8ee
Neither did he
that the Board would be foreclosed from refusing to permit the
h°1ditg company system to acquire the stock of additional banks in
the
State.
At some point it might be considered that the holding
c° PatY system was expanding its sphere of influence beyond what would
1)e consistent with the intent of the Bank Holding Company Act.
6/23/59
-20Governor Mills commented that it would be within the discretion
of
the Board to determine at what point the penetration of a market area
jek8
such as to limit competition unduly.
Such a limiting of competition
could take place even though a bank was not technically controlled by a
h°1ding company.
In the present case, for example, ownership by Citizens
4 Southern of 12.5 per cent of the stock of American National Bank
"
vclad allow employees of American access to the pension and other
13e x'sonnel benefits inuring to the employees of the Citizens and Southern
gr°1113 Of banks.
Furthermore, it seemed probable that there would be
Ulliform treatment of loans and uniformity of banking practices.
It
1°°111d seem within the Board's responsibility in a given case to determine
"What
point the penetration of a market area and elimination of
c°410etitive sources of financing would be contrary to the public interest.
Chairman Martin expressed the view that unless, in the present
ea") the Board had a clear conviction that an unsound penetration of
laarket
area was involved, it would be making its own law, so to speak,
bY denying the applications.
In his opinion, the Board had to consider
each case on an ad hoc basis, and the Board was given wide discretion
114cler the law.
He did not feel, for example, that the Board necessarily
11-(1 be bound in a case arising in the State of California by a
elqous decision in a case in the State of Georgia.
'
Pl
Governor Szymczak stated that his instinct caused him to regard
the current case adversely, but that he could not find arguments to
6/23/59
-21-
euPPort a negative decision.
The only argument appeared to revolve
around the possibility that the Citizens and Southern system might keep
expanding and that at some point the Board would have to stop further
exPansion.
While he did not know where the stopping point was, similar
Problems existed in other areas of the country.
"
14
unable
With that in mind, he
to find a basis for a negative decision in this particular
ease.
Comments by Governor Shepardson indicated that his position was
to that of Governor Szymczak.
Governor Balderston said that, using Mr. Hackleyts interpretation
ct the law as a basis, he did not see how he could vote against this
Particular application even though he realized that penetration of a
market area was involved and that ownership of 12.5 per cent of American
Niticlnalts stock, together with representation on the board of directors,
*kid afford Citizens and Southern influence over the bank's affairs.
)aarefore, his vote would remain favorable. At the same time, he would
like to see the conclusion in the tentative statement modified along
the lines suggested by Mr. Hackley this morning so as to indicate
174erelY that the Board did not consider the proposed stock acquisition
Inconsistent with the public interest or the objectives of the statute.
Governor King said that when this matter first came before
111:1"'
l several days ago he viewed it without particular concern and
"
4
earehed for tangible benefits that might flow from the proposed
the
6/23/59
tr
ansaction.
-22He had mentioned one of these at the Board meeting on
J4ne 10, namely, that the acquisition of a minority stock interest by
the Citizens and Southern group might tend to solidify the other shareholders, but upon further reflection he doubted whether this would
represent an important tangible benefit.
In essence, the question was
(111° of determining an appropriate stopping point, and in this connection
he noted that the Congress had indicated one stopping point in the Bank
11°14ing Company Act by providing that a holding company may acquire
tlich as five per cent stock interest in a bank without obtaining the
4Proval of the Board of Governors.
Where the acquisition of a greater
st0ck interest was desired, the Congress gave the Board leeway for
the exercise of its discretion. Governor King said it was his feeling
that
any proposed stock acquisition of more than five per cent should
l'equire, in order to be eligible for approval, a definite indication
Of the public interest being better served thereby.
case
In this particular
he could not find any tangible benefit to the public interest.
nial of the application, he pointed out, would not affect materially
the business or operations of the holding company system. If the Board
sh°uld approve the applications now before it, he would have difficulty
seeing how the Board conld disapprove other applications of this
'character in the future unless the application clearly disclosed bad
tnt
nt on the part of the bank holding company concerned.
In his
°Pilitc3n, moreover, it was highly doubtful that such an indication would
6/23/59
be
-23-
Pparent, at least on the surface.
Therefore, he would disapprove
the application.
Governor Mills said that the matter had now been reviewed
thoroughly enough for him to feel justified in participating in the
'Vote on issuing a notice of tentative decision.
His position, he
said, was favorable to approval.
It was then decided, by a vote of 5 to 2, to issue a notice
Of tentative decision approving the applications of Citizens and
Southern National Bank and Citizens and Southern Holding Company to
acqUire 12.5 per cent of the voting shares of the American National
.44k.
Chairman Martin, Vice Chairman Balderston, and Governors Szymczak,
Mills, and Shepardson constituted the majority, while Governors Robertson
44d Ring constituted the minority.
This action was taken with the
Unde
of the tentative statement
rstanding that the concluding paragraph
14°Uld be worded in the manner suggested by Mr. Hackley at this morning's
"881°n, namely, to state that the proposed acquisition of stock would
ric)t be inconsistent with the statutory objectives and the public
interes.Lt.. Copies of the notice of tentative decision and the tentative statement issued pursuant to this action are attached under
Item N
Mr. Hackley stated that copies of his memorandum interpreting
the objectives of the Bank Holding Company Act in regard to holding
e°111PallY expansion would be distributed to the members of the Board
tO1' review.
-24-
6/23/59
During the foregoing discussion Mr. Molony, Special Assistant
to the Board, entered the room and at this point Mr. Hostrup withdrew.
Bills H. R. 6092 and 6093 (Item No. 4).
Pursuant to the
Understanding at the Board meeting on June 18, Chairman Martin visited
Chairman Brown of Subcommittee No. 2 of the House Banking and Currency
e°mmittee on Friday, June 19, for discussion of the Board's report of
June 1) 1959, with respect to bills H. R. 6092 and 6093, relating
Principally to national banks.
In its June 1 report the Board made
sPecific suggestions regarding four of the provisions of the two bills,
and on two of those points the Subcommittee subsequently made revisions
to take the Board's comments partially into account.
the
Nevertheless,
Board's comments were being construed in some quarters in such
18-nner as to suggest that they would constitute an impediment to
fay
orable action on the two bills.
Following Chairman Martin's visit with Chairman Brown, there
distributed to the members of the Board copies of a memorandum
fr°nl M. Shay dated June 19, 1959, submitting for consideration a draft
°I* letter
33()rdi
5
to Chairman Brown.
This letter would bring out that the
June 1 statement was intended only to give the Subcommittee
the benefit of the Board's judgment as to proposed amendments to
Sting law that would either directly affect member banks or appear
to relate to the soundness of banks generally.
It was felt not
114likely, the draft would state, that there might be areas of some
6/23/59
-25-
disagreement on matters such as those upon Which the Board commented.
At the same time, since the bills were of concern principally to the
ComPtroller of the Currency and in view of other relevant circumstances,
the Board would not wish to insist upon the few changes suggested by it
if to do so would jeopardize favorable consideration of the many other
Provisions of the bills with respect to which there appeared to be
general agreement.
After commenting on his meeting with Mr. Brown, Chairman Martin
said he thought it desirable to discuss with the Board the possibility
of
softening the impression that the Board was trying to prevent
favorable action on the bills.
The Board should not give an inch
if it felt sure that it was right and that to maintain its position
14
"
highly important.
However, the making of a report in the form of
a vritten statement had caused some resentment and Chairman Brown
felt strongly that the Board, if it desired to make suggestions, should
have appeared and testified.
Therefore, if it were considered possible
the Board to do so without abandoning its over-all position, he
thellght it -would be helpful to place on record a letter indicating
that it was not the Board's intent to try to kill the bills.
Governor Balderston distributed copies of a possible revision
of the last paragraph of the proposed letter, and Governor Robertson
8.18° suggested certain changes in the language of that paragraph.
iflg his suggestions, Governor Robertson noted that the proposed
In
6/23/59
-26-
letter would become part of the record.
He did not feel that the Board
should take a position and later say in effect that it really did not
alean what it said previously.
However, the Board could honestly say
that it was trying only to be constructive and helpful and that it was
not trying to jeopardize the bills as a whole.
At the request of Governor Mills, Mr. Hexter reviewed one of
the provisions of H. R. 6092 on Which the Board had expressed reservations,
118111e1Y, the provision which would permit a national bank to make
unlimited advances to the endorser or guarantor of instalment consumer
Paper if an officer of the bank certified in writing that the responsibilitY of each maker of such obligations had been evaluated and the
bank was relying primarily upon each such maker rather than the
etdorser
or guarantor, and if the bank's files or the knowledge of its
"leers of the financial condition of each maker of such obligations
Ilas reasonably adequate.
At the conclusion of Mr. Hexterts comments, Governor Mills
_
diAzated that he would consider this a very broad liberalization and
that his own thinking would run toward restrictiveness rather than
ilberalization in this field.
Chairman Martin then commented that, based on his conversation
7.1t111 Chairman Brown, it did not seem feasible to reopen the question
Qr the
provisions with respect to Which the Board originally commented.
6/23/59
If
-27-
it appeared to the Board that any further communication would have
to reopen these questions, it would seem preferable to let the matter
remain as it now stood.
The real problem, as he saw it, was to try to
get the Board out of a position Where parties could charge that it was
trYing to kill the legislation.
He did not feel personally as strongly
as Other members of the Board might feel about the provisions of the
bills on Which the Board's statement expressed reservations, and for
thi8
reason he might be viewing the matter in a somewhat different
perspective.
It would be his inclination to drop the matter at this
P°int unless
a letter could be devised that would help to improve the
e3cisting situation.
Consideration then was given to a final paragraph of the proletter to Chairman Brown Which would state that the purpose of
the Board's statement was to give the Subcommittee the benefit of the
18°ardis
judgment
as to four provisions of the bills that would either
clirectlY affect member banks or would seem to relate to the soundness
°I' banks generally, that views understandably might differ on the
illatter commented upon by the Board, and that the Board would not wish
t0 Je9Pardize favorable consideration of the bills.
After discussion, a letter in such form was approved, Governor
Mill
8 dissenting because he felt that the letter would represent a
IselTersal of the Board's position and Governor Robertson dissenting
6/23/59
-28-
because he regarded the language of the last paragraph as unnecessarily
e°nciliatory.
A copy of the letter sent to Chairman Brown pursuant to
this action is attached as Item No.
4.
Storage of emergency currency.
In view of a letter to the
Treasury from Chairman Robertson of the Senate Banking and Currency
C°mmittee which indicated reluctance to introduce a bill that would
Permit construction of an emergency currency vault at Fort Riley,
441eas, with funds to be reimbursed to the Treasury by the Federal
Reserve, Governor Robertson suggested the alternative of using thirdlevel vault facilities at the Salt Lake City Branch of the Federal
Reserve Bank of San Francisco and considering the construction of
84ditional vaults at the Helena Branch of the Federal Reserve Bank of
Mit
neapolis and perhaps some other Federal Reserve branch location.
48 a first step, he proposed that Mr. Farrell, Director of the Division
0r Bank Operations, be authorized to explore the possibility of
utilizing the Salt Lake City facilities with representatives of the
Trea
sury.
Following discussion of a question raised by Governor Mills,
It
agreed that construction of additional vault facilities at
l'ederal Reserve Banks or branches for the storage of emergency currency
'..4"4-1.es should not be undertaken until after discussion with the
lia/110
4.11R and Currency Committees of the expenditures that would be
1"°11red, particularly in view of the question raised by Chairman
/kq)p.,
'son with respect to the construction of a vault at Fort Riley.
6/23/59
-29-
However, it was felt that the matter of utilizing existing vault
facilities was in a different category and that it would be appropriate
to
explore use of the third-level vault at the Salt Lake City Branch.
Accordingly, Mr. Farrell was authorized to enter into exploratory
diacussions with representatives of the Treasury Department, with the
understanding that he would then report back to the Board.
Request for 1958 examination reports.
Chairman Martin referred
to a telegram from Congressman Patman requesting that copies of the
isePorts with respect to examinations of the Federal Reserve Banks made
dilring 1958 be sent to the House Banking and Currency Committee in
°1'der that they might be available for inspection.
It was agreed that the Board should comply with the request.
ii°vever, it was noted that only one copy (the original) of the reports
14" available at the Board's offices, except on microfilm.
Accordingly,
It vas agreed, in order that copies of the reports might be available
ill the Board's offices for reference, to request each Reserve Bank by
telegram to send to the Board one copy of the report of examination of
that Bank, either the copy previously furnished to the Chairman or to
the President of the Bank. This procedure was agreed upon with the
tinde rstanding that the reports of examination would be sent to the
404
a
banking and Currency Committee, in accordance with Congressman
Patma,
--Is request, as soon as copies had been received from the respective
leBerve Banks.
6/23/59
3().
During the foregoing discussion Mr. Shay withdrew from the
m eeting and Mr. O'Connell, Assistant General Counsel, entered the room.
Proposed extension of depositary receipt system.
With reference
to the understanding at this morning's session, Governor Balderston
stated that he had been in touch with President Leach, Chairman of the
Committee on Fiscal Agency Operations, and that Mr. Leach had seat a
telegram to the Presidents of all other Federal Reserve Banks requesting
them to
to
furnish copies to Mr. Leach and to the Board of replies made
the Treasury's letter of June 111 1959, proposing that the depositary
leesipt system be extended to include the handling by the Reserve Banks
'
Of remittances by individunls against estimated income taxes.
Governor Robertson then withdrew from the meeting. All of the
MeMbers of the staff except Messrs. Sherman, Kenyon, Hackley, Molony,
O'Connell, and Benner also withdrew at this point.
Motion to disqualify Governor Robertson. Respondent in the
Metter of The Continental Bank and Trust Company, Salt Lake City, Utah,
tiled with the Board under date of June 3, 1959, a motion pursuant to
Beetion 7(a) of the Administrative Procedure Act to disqualify Governor
liebertson as a member of the Board to review the Report and Recommended
leeillion of the Trial Examiner, or otherwise to participate in the
decision on this matter.
Accompanying the motion was an affidavit of
Corlt
inental's President, Mr. Walter E. Cosgriff, asserting his belief
118 to the personal prejudice of Governor Robertson and incorporating
6/23/59
by
-31-
reference portions of testimony during the hearing in this matter,
correspondence between Governor Robertson and Mr. Cosgriff during the
period when the Governor was in the Office of the Comptroller of the
Currency,
and a finding by the Trial Examiner that "patent bad bloods
exists between said Robertson and affiant."
Special Counsel to the Board had filed a memorandum in opposition
to
Respondent's motion to disqualify.
Under date of June 22, 1959, there had been distributed to the
fliembers of the
Board copies of a memorandum from Mr. O'Connell presenting
the View that the motion to disqualify was properly submitted to the
Board4
pursuant to section 7(a) of the Administrative Procedure Act and
that the Board had authority to consider the motion and rule thereon.
41'• OtConnell's memorandum also suggested standards or criteria according
t° Which the Board might make a determination if it accepted authority
"d Proceeded to rule on the motion to disqualify.
It was Mr. 0,Connell's
tlion that the memorandum of Special Counsel in opposition to the
41°.tion correctly reflected (1) the case law construing section 21 of
the Judicial Code relating to disqualification of Federal judges, (2)
the validity of the application of the same criteria to questions of
(118qUa1ification of administrative officials, and (3) the rule of law
tbat Proof of a personal bias or prejudice toward a party is indispenisable to the disqualification of an administrative official.
6/23/59
-32At this point Governor Szymczak withdrew from the meeting.
Before leaving, however, he stated that he had studied the motion to
disqualify, Mr- O'Connell's memorandum, and related documents and had
reached the conclusion that the motion should be considered by the
Board and denied.
At the Board's request, Mr. O'Connell then reviewed the
reasons for the opinion expressed in his memorandum that the Board
'would have authority and jurisdiction to consider the motion to
disq4alifY and either grant or deny it.
been
Checked
This opinion, he said, had
informally with counsel for several Federal regulatory
agencies.
Mr. O'Connell also discussed factors that must be considered
If the Board should assert jurisdiction and pass on the merits of the
1111°tI°11. In further comments, he noted that a copy of the memorandum
fr°111 'Special Counsel to the Board had been mailed to Counsel for
Res
pondent, that a period of five days had elapsed without a reply
havi
ng been filed, but that the Board, if it should act today on the
111°tion to disqualify, might wish to defer announcement of its decision
tor
a few more days in order to see whether a reply from Respondent
1118 received.
If such a reply were forthcoming, it would then be
D°Baible to reconsider the matter in the light of the contents of
That
document
6/23/59
33
In reply to a question, Mr. O'Connell said that if the Board
undertook to consider the matter and decided to deny the motion, it
voUld be in order for Governor Robertson, should he so desire, to
sUbmit a statement withdrawing from further participation in the case
In the
even though the Board had denied the motion to disqualify him.
absence of any action on the part of the Board on the motion to dislualifY, he would hesitate to say whether Governor Robertson would be
a position to submit a statement on his own behalf because the
motion to disqualify was directed to the Board.
In reply to another question, Mr. O'Connell and Mr. Hackley
discussed further the factors that must be taken into consideration by
the Board in reaching a decision on the motion to disqualify.
Mr.
°Connell also described the type of order that might be issued by
the Board if it acted on the motion, adding that the order could be
"
4 °mP5.nied by whatever statement, if any, Governor Robertson might
etIrs to submit.
After further consideration of the matter, it was voted
14/18311m0usly to deny the motion to disqualify Governor Robertson.
This
aetion was taken with the understanding that a draft of order denying
the motion 'would be prepared but that its issuance would be deferred
'a few days to see whether Respondent filed a reply to the memorandum
1'431
*13111 Special Counsel to the Board.
6/23/59
31
Oral argument in Continental case.
With reference to oral
rgument in the matter of The Continental Bank and Trust Company,
scheduled
for July 22, 1959, Mr. Hackley raised the question whether
the Proceedings would be open to the public.
He noted that the record
Of the case would suggest making the oral argument public in the
absence of action by the Board to the contrary.
It was agreed that the oral argument should be open to the
PUblic and Mr. Molony was authorized to respond in such manner to any
irtqUiries.
The meeting then adjourned.
Secretary's Note: Governor Shepardson today
approved on behalf of the Board letters to
the Federal Reserve Banks of Boston and Cleveland (attached Items 5 and 6) approving the
appointment of Robert Michael Scanlan and
Ronald Eugene Freese as assistant examiners
for the respective Banks.
ecretaz
BOARD OF GOVERNORS
OF THE
Item No. 1
6/23/59
FEDERAL RESERVE SYSTEM
WASH I NOTCH
OFFICE OF THE CHAIR MAN
June 23, 1959
The
Honorable A. Willis Robertson, Chairman,
'°Imilittee on Banking and Currency,
1,L d States Senate,
-44ungton 25, D. C.
bea.„
— 4r. Chairman:
This is in response to your request of June 10, 1959,
report on S. 2139, a bill "To amend the Small Business
"tment Act of 1958, and for other purposes."
tor
4
The only provision of the bill which directly relates
:a
141
of the Board is section 5, which amends
"
, 302(b) of the Small Business Investment Act in order to
permla banking subsidiary of a bank holding company to invest
iliv"le stock of a small business investment company, even if such
bee21'me1t would result in the small business investment company
ie ;"ng a subsidiary of the bank's parent holding company. This
HoC
ri.” now permissible by reason of section 6(a)(1) of the Bank
-".ng Company. Act, as that section has been construed by the Board
1/4r1 interpretation published in the October 1958 Federal Reserve
°tin, at p. 1161, a copy of which is enclosed.
The Board does not object to the proposed amendment.
hollv"sideration of this matter might be called for in the future,
be J.", if the authority conferred by the proposed amendment should
401.03'il4zed by bank holding companies to acquire interests in
114
( 4king enterprises in a manner contrary to the purposes of the
fig Company
Act.
Sincerely yours,
(Signed) Wm. McC. Martin, Jr.
WM. McC. Martin, Jr.
trloloaure
BOARD OF GOVERNORS
OF THE
Item No. 2
6/23/59
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 23, 1959.
Morgan Guaranty Trust Company
of New York,
140 Broadway,
New York 15, New York.
Gentlemen:
In accordance with your request, the Board of
Governors of the Federal Reserve System authorizes Morgan
Guaranty Trust Company of New York, New York, New York,
Pursuant to the provisions of Section 25 of the Federal
e,
Reserve Act, to establish a branch at 14, Place Vendom
Cie.
&
Morgan
Paris, France, incident to the merger of
York,
Incorporated into Morgan Guaranty Trust Company of New
from
months
six
Provided such branch is established within
the date of this letter.
Paris
It is understood that the business of your
be
will
e,
Concord
Branch, now located at 4, Place de la
e,
Vendom
Place
transferred to the proposed branch at 14,
Morgan
of
Branch
and merged with the business of the Paris
& Cie. Incorporated at that location.
through the
Please advise the Board of Governors,
proposed branch
Federal Reserve Bank of New York, when the
understood
is established and opened for business. It is
without
branch
no change will be made in the location of the
the prior approval of the Board of Governors.
Very tray yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
Item No. 3
BOARD OF GOVERNORS
6/23/59
OF THE
FEDERAL RESERVE SYSTEM
NOTICE OF TENTATIVE DECISION ON APPLICATIONS FOR PRIOR APPROVAL
OF ACQUISITION BY TWO BANK HOLDING COMPANIES
OF VOTING SHARES OF A BANK
Notice is hereby given that, pursuant to section 3(a)
of the Bank Holding Company Act of 1956, Citizens and Southern
National Bank, Savannah, Georgia, and Citizens and Southern
Holding Company, Savannah, Georgia ("Applicants"), have applied
for the Board's prior approval of action whereby Applicants would
acquire 2,500 of the outstanding voting shares of American
National Bank of Brunswick, Brunswick, Georgia.
Information
contained in the applications and other information relied upon
by the
Board in making its tentative decision are summarized in
the Board's Tentative Statement of this date, which is attached
hereto and made a part hereof, and is on file with the Federal
Register Division and available for inspection at the office of
the Board's Secretary and at the Federal Reserve Banks.
The record in this proceeding to date consists of the
applications, the Board's letter to the Comptroller of the
Currency inviting his views and recommendations on the applicati°11e, the reply of the Comptroller of the Currency, this Notice
ct Tentative Decision, and the facts set forth in the Board's
Tentative Statement.
-2-
For the reasons set forth in the Tentative Statement,
the Board proposes to grant the applications.
Notice is further given that any interested person may,
not later than fifteen (15) days after the publication of this
notice in the Federal Register, file with the Board in writing any
comments on or objections to the Board's proposed action, stating
the nature of his interest, the reasons for such comments or
objections, and the issues of fact or law, if any, presented by
said applications which he desires to controvert.
Such statement
should be addressed: Secretary, Board of Governors of the Federal
Reserve System, Washington 259 D. C.
Following expiration of the said 15-day period, the
Board's Tentative Decision will be made final by order to that
effect, unless for good cause shown other action is deemed approPriate by the Board and is so ordered.
Dated at Washington, D. C., this 23rd day of June,
By the Board of Governors.
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
(SEAL)
1959.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY CITIZENS AND SOUTHERN NATIONAL BANK AND CITIZENS
AND SOUTHERN HOLDING COMPANY FOR PRIOR APPROVAL OF ACQUISITION OF
VOTING SHARES OF AMERICAN NATIONAL BANK OF BRUNSWICK, GEORGIA
TENTATIVE STATEMENT
Citizens and Southern National Bank, Savannah, Georgia
("National"), and Citizens and Southern Holding Company, Savannah,
Georgia ("Citizens"), both of which are bank holding companies,
have applied, pursuant to section 3(a)(2) of the Bank Holding
Company Act of 1956 ("the Act"), for the Board's prior approval
of Citizens' acquisition of 29500 of the 20,000 outstanding voting
Shares of American National Bank of Brunswick, Brunswick, Georgia.
View and recommendations of the Comptroller of the
-
As required by section 3(h) of the Act, the Board gave
notice of the applications to the Comptroller of the Currency.
The
Comptroller recommended that the applications be approved by the
()ard.
Statutory factors. -
Section 3(c) of the Act requires
the Board to take into consideration the following five factors:
(1) the financial history and condition of the holding company and
bank concerned; (2) their prospects; (3) the character of their
Management; (4) the convenience, needs, and welfare of the communities and the area concerned; and
(5) whether
or not the effect of the
acquisition would be to expand the size or extent of the bank holding
Company system involved beyond limits consistent with adequate
and sound banking, the public interest, and the preservation of
competition in the field of banking.
Discussion. - Citizens is a bank holding company under
section 2(a)(1) of the Act because of its ownership of more than
25 per cent (in fact, a large majority) of the stock of each of
10 banks, with deposits ranging from $2.5 million to $27.4 million,
and aggregating over $100million„ located in 10 communities in
Georgia.
National, a bank with its head office in Savannah,
Georgia, and its center of operations in Atlanta, operates 12
offices holding aggregate deposits of $470 million.
It is a bank
holding company as defined in section 2(a)(3) of the Act, since
all of the outstanding shares of Citizens are held by trustees for
the benefit of the shareholders of National.
American National Bank, with deposits of $12.2 million,
has its head office in Brunswick, the county seat of Glynn County,
and a branch office in Jesup, the county seat of Wayne County.
It appears that the financial history and condition, the
Prospects, and the management of American and the two holding
companies are satisfactory and would not be adversely affected by
the proposed acquisition.
The City of Brunswick (population about 20)700) is served
by three banks, and there is one other bank in Glynn County.
WaYne County has two banking offices, both in Jesup, one of them
being a branch of American. American holds about one-third of all bank
deposits in Glynn County and a majority of the deposits in Wayne
County.
The Brunswick and Jesup offices of American are about
77 miles and 66 miles, respectively, southwest of Savannah, the
location of the nearest banking offices of the Citizens and Southern
group. Existing competition between American and the banking
offices of the group is negligible, and this situation would not
be changed by the proposed stock acquisition.
It is to be noted
that the proposed acquisition involves only 12-1/2 per cent of the
outstanding stock of American, so that American will not become a
ft
subsidiary" of the holding companies; subsidiary status, under
sections 2(d)(1) and 2(d)(3) of the Act, is based on ownership of
25 per cent or more of the voting shares of the bank concerned.
In the opinion of the Board, the proposed transaction
would not have any significant effect on the convenience, needs,
and welfare of the communities and the area concerned, and would
not expand the Citizens and Southern holding company system beyond
limits consistent with adequate and sound banking, the public
interest, and the preservation of competition in the field of
banking.
Conclusion. - Viewing the relevant facts in the light
of the general purposes of the Act and the factors enumerated in
section 3(0, it is the judgment of the Board that the proposed
acquison would not be inconsistent with the statutory objectives
and the public interest and that, accordingly, the application
Should be approved.
June 23, 1959.
BOARD OF GOVERNORS
OF THE
Item No. 4
FEDERAL RESERVE SYSTEM
6/23/59
WAS
OFFICE OF THE CHAIRMAN
I)
June 23, 1959
The Honorable Paul Brown,
Chairman, Subcommittee No. 2,
Committee on Banking and Currency,
House of Representatives,
Washington 25, D. C.
Dear Mr. Chairman:
June 1, 1959, were
Enclosed with my letter to you of
Governors on the bills
.?,optes of a statement of the Board of
submitted pursuant to
n.3. 6092 and H.R. 6093. The statement was
of the hearYour letter of May 19 and was included in the record
your Subcommittee.
ings on these bills on May 26 and 27 before
Board had specific
As indicated in its statement, the
sions contained in the
uggestions on only four of the many provi
!
rably
uwo bills. It is understood that your Subcommittee is favo
it
that
but
d sposed toward adopting some of these suggestions
Board
the
ement,
1sagrees with others. Since submitting its stat
to
er
lett
nas considered the comments contained in Mr. Jennings
ons.
You of June 5, 1959, with respect to the Board's suggesti
5
of course, was to
The purpose of the Board's statement,
as to
give your Subcommittee the benefit of the Board's judgment
ct memaffe
tly
direc
if3our provisions of the bills that would either
e to
relat
to
seem
d
woul
ar banks of the Federal Reserve System or
that
ver,
howe
,
nized
ur.le soundness of banks generally. It is recog
upon by the Board;
ews may differ as to the matters commented
rable consideration
favo
rdize
411d the Board would not wish to jeopa
'
of these bills.
n
Sincerely yours,
(Signed) Wm. McC. Martin, Jr.
Wm. McC. Martin, Jr.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 5
6/23/59
WASHINGTON 25, D. C.
ADDRESS OFFICIAL. CORRESPONDENCE
TO THE BOARD
June 23, 1959..
Mr. Benjamin F. Groot, Vice President,
Federal Reserve Bank of Boston,
Boston 60 Massachusetts.
Dear Mr. Groot:
In accordance with the request contained
in your letter of June 161 1959, the Board approves
the appointment of Robert Michael Scanlan as an
assistant examiner for the Federal Reserve Bank of
Boston. 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
OF THE
Item No. 6
FEDERAL RESERVE SYSTEM
6/23/59
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 23, 1959.
Mr. Paul C. Stetzelberger, Vice President,
Federal Reserve Bank of Cleveland,
Cleveland 1, Ohio.
Dear Mr. Stetzelberger:
In accordance with the request contained
in your letter of June 18, 1959, the Board approves
the appointment of Ronald Eugene Freese as an assistant examiner for the Federal Reserve Bank of Cleveland.
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.
@FedFRASER