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Minutes for To: Members of the Board From: Office of the Secretary June 29, 1965. 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. Robertson Gov. Balderston Gov. Shepardson Gov. Mitchell Gov. Daane Goy. Maisel .•. Minutes of the Board of Governors of the Federal Reserve System on Tuesday, June 29, 1965. PRESENT: Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Robertson Shepardson Maisel Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Sherman, Secretary Kenyon, Assistant Secretary Noyes, Adviser to the Board Molony, Assistant to the Board Hackley, General Counsel Farrell, Director, Division of Bank Operations Solomon, Director, Division of Examinations Kakalec, Controller Koch, Associate Director, Division of Research and Statistics Daniels, Assistant Director, Division of Bank Operations Spencer, General Assistant, Office of the Secretary Altmann, Senior Economist, Division of Research and Statistics Egertson, Supervisory Review Examiner, Division of Examinations Circulated or distributed items. The following items, copies of Which are attached to these minutes under the respective item numbers indicated, were approved unanimously: Item No. Letter to Seattle Trust and Savings Bank, Seattle, Washington, approving the establishment of a branch in the Rose Hill Shopping Center, King County. 1 Letter to the Comptroller of the Currency requesting that an order be placed with the Bureau of Engraving and Printing for printing Federal Reserve notes during fiscal 1966. 2 -2- 6/29/65 Reports on competitive factors. There had been distributed drafts of reports to the Federal Deposit Insurance Corporation on the competitive factors involved in (1) the proposed consolidation of Thompson Savings Bank, Hudson, Michigan, with Hudson State Savings Bank, Hudson, Michigan, and (2) the proposed merger of Security Trust Company, Cooperstown, North Dakota, with Binford State Bank, Binford, North Dakota. The reports were approved unanimously for transmittal to the Corporation, the conclusions therein being stated as follows: Hudson The proposed consolidation of Thompson Savings Bank, Hudson, and Hudson State Savings Bank would eliminate a substantial amount of existing and potential competition between the two banks, and the alternative source of banking service in Hudson. It would, therefore, have a significantly adverse effect on competition. Binford-Cooperstown Binford State Bank, Binford, and Security Trust Company, Cooperstown, are closely associated through common ownership and management, and there is no effective competition between them. While the proposed merger would foreclose all potential competition between the two banks in the event the affiliated relationship should terminate, the competitive structure of banking in the general area would remain essentially the same. Studies on price measurement (Item No. 3). After discussion the Board authorized the commissioning of papers on prices and price measurement of the kind referred to in a distributed memorandum dated June 25, 1965, (copy attached as Item No.3), from Mr. Brill, Director, Division 6/29/65 -3- of Research and Statistics. It was anticipated that this would occasion an overexpenditure in the pertinent account of the 1965 budget of the Division of Research and Statistics, and such overexpenditure was authorized. The meeting then adjourned. Secretary's Notes: On April 12 and April 29, 1965, the Board granted Montgomery County Bank and Trust Company, Norristown, Pennsylvania, and Pacific State Bank, Hawthorne, California, extensions of time until June 30, 1965, to file registration statements pursuant to section 12(g) of the Securities Exchange Act of 1934 and Regulation F, Securities of Member State Banks, because mergers into other banks were pending. Since these mergers were still in process, letters were sent today to the respective banks granting their requests for further extensions of time to file registration statements. Copies of the letters are attached as Items 4 and 5. Governor Shepardson today approved on behalf of the Board the following items: Memorandum from the Office of the Controller dated June 25, 1965, recommending approval of an overexpenditure of $4,400 in the Furniture and Equipment account of the budget of the Division of Administrative Services to cover the purchase of six dictating machines and four transcribing machines for use in the Division of Examinations. Memoranda recommending the following actions relating to the Board's staff: Appointments under Youth 02portunity Program Temporary appointment (not to exceed 700 hours or extend beyond September 30, 1965) of the following as Summer Trainees in the Division Of Administrative Services, with compensation at the rate of $1.25 per hour, effective the respective dates of entrance upon duty (expected to be about June 30, 1965): Horace H. Fletcher Marvin L. Green William R. Hill Paul T. Manns David S. Witherspoon 6/29/65 -4- Meritorious salary increases, effective July 4, 1965 Name and title Division Basic annual salary From To Office of the Secretary Lee S. Elliott, Supervisor, Clearing Unit Helen E. Cook, Supervisor, Bank and Miscellaneous Records Roberta M. O'Rourke, Secretary Jewell I. Seay, Indexing and Reference Assistant $ 6,650 6,800 $ 6,850 6,985 6,060 5,165 6,245 5,330 18,170 18,740 18,170 11,315 10,250 10,605 8,945 5,990 5,495 5,165 4,480 18,740 11,670 10,605 10,960 9,240 6,155 5,660 5,330 4,630 10,960 6,060 6,800 11,315 6,245 6,985 11,670 12,025 10,605 7,650 10,960 7,850 6,450 6,650 Research and Statistics Stephen H. Axilrod, Chief, Government Finance Section Lyle E. Gramley, Senior Economist Martha R. Seger, Economist James P. Bennett, Economist William Paul Smith, Economist Mary Janice Krummack, Economist Joan R. Winter, Statistical Assistant Jeannette R. DeLawter, Secretary Suzanne D. Courtright, Statistical Assistant Julia G. Back, Library Assistant International Finance David G. Hayes, Economist Davita C. Hays, Secretary Katherine Hichborn, Secretary Bank Operations Mary M. Durkan, Technical Assistant Examinations Irwin W. Robinson, Federal Reserve Examiner Anna S. Courtney, Supervisor, Recording and Stenographic Section Frank P. Herigstad, Assistant Federal Reserve Examiner 6/29/65 -5- Meritorious salary increases, effective July 4, 1965 (continued) Name and title Division Basic annual salary From To Administrative Services Mary E. Sanders, General Assistant Helen L. Hulen, Chief, Publications Services Edward J. Finck, Purchasing Assistant David Sullivan, Guard John M. Pope, Guard Hampton L. Logan, Laborer $ 8,690 8,690 5,875 5,680 5,085 3,385 $ 8,935 8,935 6,060 5,830 5,220 3,500 4,630 6,430 10,605 4,780 6,615 10,960 Data Processing Dorothy Folsom, Draftsman Daisy L. Condon, Secretary Donald B. Fitzhugh, Data Processing Planner Acceptance of resignation William N. Huff, Economist, Division of Research and Statistics, effective at the close of business June 30, 1965. fiSSiOfl to engage in outside activity Paul Quirante, Statistical Clerk, Division of Research and Statistics, to work for a local oil company on a part-time basis. Secretary BOARD OF GOVERNORS Item No. 1 6/29/65 OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 ADDRESS OFFICIAL CORRESPONOENCE TO THE BOARD June 29, 1965. Board of Directors, Seattle Trust and Savings Bank, Seattle, Washington. Gentlemen: The Board of Governors of the Federal Reserve System approves the establishment by Seattle Trust and Savings Bank, Seattle, Washington, of a branch in the Rose Hill Shopping Center on Northeast 85th Street between 126th and 128th Avenues Northeast, in an unincorporated area of King County, approximately one mile east of Kirkland, Washington, provided the branch is established within six months from the date of this letter. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. (The letter to the Reserve Bank stated that the Board also had approved a six-month extension of the period allowed to establish the branch; and that if an extension should be requested, the procedure prescribed in the Board's letter of November 9, 1962 (S-1846), should be followed.) BOARD OF GOVERNORS Item No. 2 6/29/65 OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 AOOREMI OFFICIAL OORRCIIPONDIENCC TO THIE MOARD June 29, 1965. The Honorable, The Comptroller of the Currency, Treasury Department, Washington, D. C. 20226 Sir: It is respectfully requested that you place an order with the Bureau of Engraving and Printing for printing 2,275,072,000 Federal Reserve notes (single units) of the 1963 Series or 1950 Series during the fiscal year ending June 30, 1966, in the amounts and denominations shown below for the various Federal Reserve Banks: Denamination Number of notes Dollar amount Boston $1 5 10 20 50 100 79,360,000 23,680,000 30,080,000 4,480,000 768,000 768,000 $79,360,000 118,400,000 300,800,000 89,600,000 38,400,000 .76,800,000 New York $1 5 10 20 50 100 151,040,000 55,040,000 25,600,000 12,800,000 3,072,000 2,560,000 $151,040,000 275,200,000 256,000,000 256,000,000 153,600,000 256,000,000 Philadelphia $1 5 10 20 50 100 93,440,000 35,840,000 32,000,000 3,200,000 1,024,000 768,000 $93,440,000 179,200,000 320,000,000 64,000,000 51,200,000 76,800,000 The Comptroller of the Currency - 2 - Denamination Number of notes Dollar amount Cleveland $1 5 10 20 50 100 92,800,000 29,440,000 19,200,000 24,320,000 1,280,000 768,000 $92,800,000 147,200,000 192,000,000 486,400,000 64,000,000 76,800,000 Richmond $1 5 10 20 50 100 127,360,000 45,440,000 37,120,000 38,400,000 512,000 1,536,000 $127,360,000 227,200,000 371,200,000 768,000,000 25,600,000 153,600,000 Atlanta $1 5 10 20 50 100 154,880,000 38,400,000 14,720,000 10,880,000 -1,024,000 $154,880,000 192,000,000 147,200,000 217,600,000 -102,400,000 Chicago $1 5 10 20 50 100 211,200,000 76,800,000 71,040,000 48,000,000 1,792,000 2,304,000 $211,200,000 384,000,000 710,400,000 960,000,000 89,600,000 230,400,000 St. Louis $1 5 10 20 50 100 70,400,000 17,280,000 5,760,000 7,040,000 1,024,000 512,000 $70,400,000 86,400,000 57,600,000 140,800,000 51,200,000 51,200,000 ,Minneapolis $1 5 10 20 50 100 30,080,000, 12,800,000 $30,080,000 64,000,000 3,200,000 64,000,000 256,000 . 25,600,000 The Comptroller of the Currency - 3- Denomination • Number of notes Dollar amount Kansas City $1 5 10 20 50 100 62,080,000 21,120,000 10,880,000 13,440,000 256,000 512,000 $62,080,000 105,600,000 . 108,800,000 268,800,000 12,800,000 51,200,000 Dallas' $1 5 10 20 50 100 67,840,000 16,640,000 11,520,000 5,760,000 512,000 768,000 $67,840,000 83,200,000 115,200,000 115,200,000 25,600,000 76,800,000 San Francisco $1 5 10 20 50 100 188,800,000 54,400,000 23,040,000 40,320,000 1,280,000 2,816,000 $188,800,000 272,000,000 230,400,000 806,400,000 64,000,000 281,600,000 Totals $1 5 10 20 50 100 1,329,280,000 426,880,000 280,960,000 211,840,000 11,520,000 14,592,000 2,2754,072,000 $1,329,280,000 2,134,400,000 2,809,600,000 4,236,800,000 576,000,000 1,45912001000 12,545,280,000 Respectfully, (Signed) Merritt Sherman Merritt Sherman, Secretary. Item No. 3 6/29/65 MEMORANDUM June 25, 1965 TO: Board of Governors FROM: Daniel H. Brill SUBJECT: Contributed papers on the subject of prices and price measurement. ing the establishment of a The Board will recall authoriz price measurement earlier this consultant committee on prices and served by the committee are The principal purposes to be ating problems in improving (a) exploration of the conceptual and oper y of the relationship of the measurement of price changes, (b) stud year. lems to the price stability these conceptual and statistical prob fostering of academic interest targets of monetary policy, and (c) and training in the area of price measurement. committee was formed under Pursuant to the authorization, a University of the chairmanship of Professor Irving Kravis of the ittee includes Professor Franklin M. Pennsylvania. In addition, the comm nology; Professor Dorothy S. Fisher, Massachusetts Institute of Tech rt E. Lipsey, National Brady, University of Pennsylvania; Dr. Robe Kellogg, Deere & Co.; Bureau of Economic Research; Mr. Lester S. of Chicago. Professor Zvi Griliches, University in April and most recently The committee has met twice, once committee that the on June 17. It was the unanimous feeling among the commissioning of a series optimal approach at this stage would be the price measurement of contributed papers outlining new approaches to the recognized scholars and/or Problem, such papers to be undertaken by graduate students of exceptional merit. The papers would attack the .4) -2Problems at a variety of levels, and, hopefully, range widely over relatively unexplored areas of economic theory and statistical Practice. Some would grapple with the theoretical implications of Changes in quality and in technological processes for price measures. Others would be empirical pilot studies attempting to apply some of the newer techniques of regression analysis and quantitative psychology to the measurement of quality change. At least one, and possibly two, Papers are recommended on the subject of the price measures relevant as targets of or guides to monetary policy. Other subjects recommended for exploration by the committee include analysis of problems arising in the deflation of dollar expenditure figures in order to obtain estimates of real output, the cyclical behavior of measures of sensitive Prices, and improvement in the measurement of the price of labor, especially the pricing of fringe benefits. The Council of Economic Advisers is particularly interested in the last noted subject, since fringe benefits account for so large a share of recent wage settlements. No specific contribution on the subject of transactions vs. quoted prices was recommended, in part because this problem is being explored in a project being undertaken by the National Bureau under the direction of Professor Stigler, and in part because an analysis of transactions as against list prices in the area of steel mill Products is now under way by the Board's staff. A more complete de scription of prospective papers is given in the attached copy of the minutes of the last meeting of the consultant committee. Preliminary inquiry by members of the committee indicates substantial interest on the part of a number of eminent scholars in -3Participating in this exploration. Before proceeding to a more formal on these papers. inquiry, the Board's staff seeks authorization to commissi It is not possible to give a precise statement of the number precisely of papers which will actually be undertaken or to estimate the total cost involved. In the past, the Board has generally offered This honorarium was based an honorarium of $1,500 for similar papers. Ott a rough estimate of the man days of work likely to be involved in nts. completing a paper times the average daily fee paid consulta Since we understand that this is still an acceptable fee for this type of papers. Paper, we would propose to offer it to authors of the proposed The committee has recommended about a dozen papers. would be completed in this calendar year. Not all In fact, several of the Prospective authors are fully committed until next spring. The best about approximation is that expenditures for such papers would be next year, $10,000 for this calendar year and perhaps as much again but there is a strong possibility that the distribution of expenditures would be more heavily weighted toward 1966. I At the time the committee was authorized by the Board, advance what indicated that it would be difficult to estimate in expenditures would be involved and, therefore, no request was included in the budget. is clarifying, Now that the program of the price committee authorization is requested to undertake the studies noted and to overbudget expend the appropriate account in the Research Division's 1965 to the extent necessary. Attachment. BOARD OF GOVERNORS Item No. 4 6/29/65 OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20531 A001111MO orriaim. 00111 11 1C•PONOCNOC TO THC BOARD June 29, 1965. Montgomery County Bank and Trust Company, ' Norristown; Pennsylvania. Attention: Mr. Merrill A. Bean, Senior Vice President. Re: Regulation F -- extension of time to file. Gentlemen.: Reference is made to your letter of June 21, 1965, in which you request a further 60-day extension of time until August 29, 1965, to file a registration statement pursuant to section 12(g)of the Securities Exchange Act of 1934. A previous request for an extension of time to file until June 30, 1965,was granted, based on the fact that Montgomery County Bank proposes to merge with and into Broad Stree t Trust Company, Philadelphia, Pennsylvania, a nonmember State bank. You state that the merger was approved by the shareholde rs of the respective banks on April 14, 1965, and that the Pennsylvan ia Department of Banking has indicated approval of the merge r, subject to the approval of the Federal Deposit Insurance Corporation. You furth er state that you have no reason to believe that the appro val by the FDIC will be denied, but that agency has not yet made a determination with respect to this matter. In view of the above information, the Board grants a further extension of time until August 29, 1965, for your bank to file the registration statement pursuant to section 12(g) of the Securities Exchange Act of 1934. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. „7” , 44re, BOARD OF GOVERNORS Item No. 5 6/29/65 OF THE FEDERAL RESERVE SYSTEM WASHINGTON. O. C. 20551 ADONION• Or/ICIAL 00 ROCISPONOENCIC TO The MOARO June 29, 1965. Pacific State Bank, 13545 South Hawthorne Boulevard, Hawthorne, 'California. Attention: Re: Mr. E. C. Aldrich, President pro tem. Regulation F -- extension of time to file . Gentlemen: Reference is made to your letter of June 22, 1965, in which you request an extension of time unti l August 30, 1965, to file a registration statement pursuant to section 12(g) of the Securities Exchange Act of 1934. A previous request for an extension of time to file until June 30, 1965, was granted, based on the fact that Pacific State Bank Proposes to merge with and into United States National Bank of San Diego, San Diego, California. You state that the Comptroller of the Currency has authorized both banks to proceed with their publication Of a Notice of Intention to Merg e and Notice of Special Stockholders Meetings. In anticipation of such publication, the United States National Bank has filed with the Comptroller of the Currency its proxy material. It anticipates that it will receive approval of such proxy material within the next 10 days and that immediately thereafter Publication of the described notices will commence by both banks for a 30-day period. 'Accordingly, you believe that the special stockholders meeting of both banks can in all probability be held on or before August 6, 1965. In view of the above information, the Board grants a further extension of time until August 30, 1965, for your bank to file a registration statement pursuant to section 12(g) of the. Securities Exchange Act of 1934. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, • Secretary.
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