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Minutes for June To: 7, 1961 2 Members of the Board From: Office of the Secretary Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement with respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. Otherwise, please initial below. If you were present at the meeting, your initials will indicate approval of the minutes. If You were not present, your initials will indicate only that you have seen the minutes. Chin. Martin Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Minutes of the Board of Governors of the Federal Reserve System on Tuesday, June 27, 1961. PRESENT: Mr. Mr. Mr. Mr. Mr. The Board mat in the Board Room at 11:15 a.m. Martin, Chairman Balderston, Vice Chairman Mills Robertson Shepardson Mr. Sherman, Secretary Mr. Kenyon, Assistant Secretary Miss Carmichael, Assistant Secretary Mr. Noyes, Director, Division of Research and Statistics Mr. Solomon, Director, Division of Examinations Mr. Hexter, Assistant General Counsel Mr. Eckert, Chief, Banking Section, Division of Research and Statistics Discount rates. The establishment without change by the Federal Reserve Banks of Boston and Atlanta on June 26, 1961, of the rates on °Ilscounts and advances in their existing schedules was approved unanimously, Illth the understanding that appropriate advice would be sent to those Banks. Request of Justice Department regarding banks reporting in business 1°an surv Item No. 1). Pursuant to the understanding at the Board nieeting on June 26, 1961, there had been distributed to the members of the 13c)e.rd a revised draft of letter replying to the request of the Department JUstice for a list of the 1,900 banks which submitted reports in the 195 )business loan survey or, as an alternative, an indication as to which °r 43 banks listed in its letter had submitted reports in that survey. After a number of changes in wording had been suggested and agreed 1111, unanimous approval was given to a letter in the form attached as 6/27/61 -2Messrs. Noyes and Eckert then withdrew from the meeting. Administrative Conference of the United States (Item No. 2). On June 1, 1961) the Board approved the designation of Mr. Chase, Assistant General Counsel, as a member of the Administrative Conference of the United States, which was created pursuant to Executive Order 10934 of APril 13, 1961, to assist the President, the Congress, and the administrative agencies and executive departments in improving existing Etc141inistrative procedures. In a letter to the Board dated June 21, 1961, the Executive Secretary of the Conference requested that $1,000 he provided "from appropriated funds of your agency for the fiscal year 1' an the a like amount for fiscal 1962 to assist in meeting expenses of Conference "until such time as the 1962 fiscal needs of the Conference e44 be determined". There had been distributed with a covering memorandum from the I gal Division dated June 23, 1961, a draft of reply indicating that 41t11°ugh the Board does not operate with appropriated moneys, as a requested for the work IIELIticiPating agency it would provide the funds W the Conference. After certain changes in the wording of the proposed reply were 411g8ested and agreed upon, a letter enclosing the Board's check for $1,000 l'rlls ..ra2y2d. unanimously, with the understanding that a like amount would be 1'11111i-shed in fiscal year 1962. This A copy of the letter is attached as Item No. 2. Pproval also constituted authorization of an overexpenditure in the 1961 budget of the Legal Division to cover this item of $2,000. 6/27/61 Messrs. Solomon and Hexter then withdrew from the meeting. c_i_ELE2a_alecon_oEEcworiniccsvrth. Governor Shepardson referred to a memorandum dated June 26, 1961, in which Mr. Young, Adviser to the Board and Director of the Division of International Finance, recomtfiended that John E. Reynolds, Economist in the Division of International ?Ina/ice, be designated as a member of the United States delegation to ri"ings of the working group established by the Economic Policy Committee or the Organization for European Economic Cooperation to study the economic gl.°1'th of member countries in preparation for the first meeting of the esz31-1°1111c Policy Committee under the new Organization for Economic C°0Peration and Development. After a brief discussion, the designation of Mr. Reynolds was -oved unanimously. Accordingly, Mr. Reynolds was authorized to attend the next meeting of the working group, scheduled to be held in Paris July 21 22) 1961, as well as any subsequent meetings of the group, and payment ' '31' his expenses incident to attendance at such meetings also was authorized. The meeting then adjourned. Secretary's Notes: At 10:00 a.m. the members of the Board who were present at today's Board meeting heard an oral presentation regarding the application of Marine Midland Trust Company of Southern New York, Elmira, New York, to merge with First National Bank and Trust Company of Ithaca, Ithaca, New York, which was denied by the Board on March 27, 1961. A stenographic transcript has been placed in the Board's files. 6/27/61 -4Governor Shepardson today approved on behalf of the Board the following items: Memorandum from the Division of Research and Statistics recommending 4ceeptance of the resignation of Wilma Jean Brand, Technical Editor, Division Research and Statistics, effective July 8, 1961. , Letter to the Federal Reserve Bank of New York (attached Item No. 3) ?roving the appointment of Lester G. Graf, James B. Hart, Paul W. Lofberg, °bert A. Rough, and John J. Strick as assistant examiners. a Telegram to the Federal Reserve Bank of Minneapolis (attached Item No. PProving the appointment of James A. Nichols as assistant examiner. Governor Shepardson today noted on behalf of the Board that application for retirement had been filed by Sven E. Johnson, Inspector-Foreman, Division of Administrative Services, effective at the close of business June 30, 1961. Secret'-1 4) rBOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON Item No. 1 6/27/61 OFFICE OF THE CHAIRMAN June 281 1961 The Honorable Lee Loevinger, Assistant Attorney General, Department of Justice, Washington 25, D. C. Dear Judge Loevinger: This is in reply to your letter of June 6, in which you re— Suest a list of the 1900 banks which submitted reports in the 1955 Idusiness Loan Survey, or as an alternative, an indication as to which of the 43 banks listed in your letter submitted reports in that Survey. Your letter further states that some of the data related to the Survey appear to be of use to the Department in its activities concerning bank mergers, and that the information re— quested would aid in deciding whether or not to seek further informa— 'ilon concerning the Survey. The Board has given your request most careful consideration, and to cooperate in any way it can with the Department in le„arrying out its statutory responsibilities. However, the present 4.!cluest raises a serious question concerning possible jeopardy to ;'."e System's future ability to conduct studies of this character and .1(3 gather and publish a vast array of banking data of great value to the work of the Board, to other Government agencies, and to the public nerally, not to mention the even more essential question of a pos— ible breach of faith through violation of an implied commitment. r The Federal Reserve Systemts statistical surveys and current etatistical reporting series are conducted on a voluntary basis. Participation in all cases has been unusually high. We believe nat our success in securing such a high degree of voluntary participa— ':1011 rests in large measure on a strict observance by the Board of g8eurances regarding confidentiality given to respondents. It may assist yousin appraising the usefulness of a direct equest by the Justice Department to banks for copies of their 1955 :"Ponse, to know that of the 43 banks listed in your letter, 22 re— Pcnded. As you can appreciate, the reliability of data obtained from The Honorable Lee Loevinger -2- a scientifically selected sample of banks as representative of conditions among banks generally is greatly influenced by the level of the response of banks in the sample in providing the requested information. We are, therefore, most anxious to avoid any breach in confidentiality that might jeopardize bank cooperation in special surveys or continuation of the established programs of voluntary current reporting of banking statistics. The Board strongly urges that in communicating with banks in the course of its investigations, the Department avoid reference, directly or indirectly, to a bankts Participation in the 1955 Survey or other Federal Reserve statistical surveys. We should also call your attention to the questionable value of the reports filed in that Survey as indicators of the composition business loan portfolios of individual banks. The Survey was designed to provide reliable estimatesof outstanding business loans on a national basis. Each respondent with deposits above $10 million supplied information for only a small sample of individual loans, randomly selected. While this provides statistically reliable estimates or all member banks, generalizations about an individual bankts operabased on these samples could be grossly misleading. For the ap°ve reasons, the Board must respectfully decline your request. Sincerely yours, (Signed) Wm. McC. Martin, Jr. Wm. McC. Martin, Jr. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 2 6/27/61 WASHINGTON 25, D. C. • 'o'°' ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD WIO \t4I 404*** June 27, 1961. Mr. Webster P. Maxson, Executive Secretary, Administrative Conference of the United States, Office of Administrative Procedure, Department of Justice, Washington 25, D. C. Dear Mr. Maxson: Receipt is acknowledged of your letter of June 21, 1961, asking that the Board of Governors provide $1,000 from appropriated funds of your agency for the fiscal year 1961" and a like amount for fiscal 1962 to assist in meeting expenses of the Administrative Conference of the United States, established pursuant to Executive Order 10934 of April 13, 1961. The Board of Governors does not operate with appropriated moneys. However, since the Board is participating in the Conference and has designated a member of its staff to be a member of the Conference, the Board is enclosing its check in the amount of $1,000 for credit to the sPecial account, as requested in your letter. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. Enclosure BOARD OF GOVERNORS OF THE. FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 3 6/27/61 ADDRESS OFFICIAL CORRESPONDENCE TO THE SOAR() June 28, 1961 CONFIDENTIAL (FR) 11r. Howard D. Crosse, Vice President, Federal Reserve Bank of New York, New York 45, New York. Dear Mr. Crosse: ned in your letter In accordance with the request contai tment of the fol?I' June 21, 1961, the Board approves the appoin e Bank of New lowing as assistant examiners for the Federal Reserv York: Robert A. Rough John J. Strick James B. Hart Paul W. Lofberg Lester G. Graf appointments. ?lease advise us of the effective dates of the of stock of It is noted that Mr. Graf owns one share bank, member State Dilnkirk Trust Company, Dunkirk, New York, a or le, possib if which he will dispose of prior to employment, s Board' the that , course shortly thereafter. It is understood, of underaPProval of the appointment of Mr. Graf is given with the ation of standing that he will not participate in any examin institution. that of stock owns Dunkirk Trust Company so long as he Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. TELEGRAM Item No. 4. 6/27/61 LEASED WIRE SERVICE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON June 28, 1961 DEMING -- MINNEAPOLIS Reurlet June 221 1961, Board approves appointment of James A. Nichols as assistant examiner for Federal Reserve Bank of Minneapolis. Please advise effective te of appointment. (Signed) Elizabeth L. Carmichael CARMICHAEL
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