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Minutes for To: Members of the Board From: Office of the Secretary June 30, 1964. Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement with respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. Otherwise, please initial below. If you were present at the meeting, your initials will indicate approval of the minutes. If you were not present, your initials will indicate only that you have seen the minutes. Chm. Martin Gov. Mills Gov. Robertson Goy. Balderston Gov. Shepardson Goy. Mitchell Gov. Daane tiort _ILL Minutes of the Board of Governors of the Federal Reserve System on Tuesday, June 30, 1964. PRESENT: The Board met in the Board Room at 10:00 a.m. Mills, Acting Chairman Robertson Shepardson Daane Mr. Mr. Mr. Mr. Sherman, Secretary Bakke, Assistant Secretary Molony, Assistant to the Board Hackley, General Counsel Solomon, Director, Division of Examinations Hexter, Assistant General Counsel Hooff, Assistant General Counsel Young, Senior Attorney, Legal Division McClelland, Assistant to the Director, Division of Examinations Mr. Veenstra, Chief, Financial Statistics Section, Division of Data Processing Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Report on legislation proposed by Farm Credit Administration. There had been distributed a memorandum from the Legal Division dated June 29, 1964, with attached draft letter of response to a request by the Bureau of the Budget for the Board's comments on a draft bill proposed by the Farm Credit Administration. Essentially, this legislation was designed to amend the Federal Farm Loan Act and the Farm Credit Act of 1933 to provide means for expediting the withdrawal of Government capital from Federal intermediate credit banks in favor of private ownership by production credit associations, including an increase in the maximum permissible debt to capital ratio for these banks. visions were also included. A number of other related pro- The memorandum pointed out that the Treasury Department had registered strong objection to the proposed increase in 6/3o/64 -2- the banks' debt to capital ratio, and to the provision of the draft bill that would require borrowers from production credit associations to invest in an "equity reserve" on which no dividends would be paid. Governor Shepardson commented that he had discussed the Treasury Department objections with the Governor of the Farm Credit Administration, on the basis of which he believed the differences in point of view between the Farm credit Administration and the Treasury would be resolved satisfactorily. The suggestion had been made that the Treasury Department's objections to the draft bill were without merit. During the course of further discussion, Governors Mills and Shepardson commented at length upon the historical and operational aspects Of the Federal intermediate credit banks. Governors Robertson and Daane expressed the opinion that in view of the Treasury's objections to the draft bill, the Board should explore the basis for these objections before deciding upon the nature of the comments to be submitted to the Budget Bureau. It was also suggested that it would be helpful if the file materials on the subject could be reviewed by the Board. Accordingly, it was agreed that the report to the Bureau of the Budget would be deferred pending development of further information by the staff and a review of background documents by the Board. Extension of direct purchase authority (Item No. 1). There had been distributed a draft of letter to the Bureau of the Budget recommending 2,..1 -3- 6/30/64 approval of an enrolled bill, H. R. 11499, extending for two years the authority of Federal Reserve Banks to purchase United States obligations directly from the Treasury. The letter was approved unanimously; a copy is attached to these minutes as Item No. 1. Changes in location of banking offices (Item No. 2). There had been distributed a memorandum from the Division of Examinations dated June 19, 1964, to which was appended a draft of letter to Senator Proxmire member bank's intention to responding to his inquiry concerning a State move its main office to another location, and a related proposal by one of the Senator's constituents that changes in the location of main offices and branch offices of commercial banks should not be allowed without public notice and opportunity for a public hearing before the appropriate • bank supervisory agency. Governor Mills commented that while the draft letter was rather long, he was inclined to the view that under the circumstances of this case such a degree of elaboration was desirable, in that it demonstrated the thoroughness of the Board's efforts in handling the Senator's inquiry. Following further discussion, in the course of which several to, the letter was approved suggested changes in the text were agreed minutes as Item No. 2. unanimously in the form attached to these Developments concerning midyear call. Governor Robertson reported to the Board recent developments regarding the midyear call for bank rePorts of condition. His comments included reference to difficulties -4- 6/3064 encountered with respect to obtaining agreement by the Comptroller of the Currency to a date for the call and to steps that might be taken in order to obtain consistent statistical data for all commercial banks as of the date ultimately decided upon. The meeting then adjourned. Secretary's Notes: Pursuant to the action taken by Governor Shepardson on behalf of the Board on June 17, 1964, regarding payment of the cost of increased retirement benefits for Board annuitants, the letter of which a copy is attached as Item No. 3 was sent today to the Federal Reserve Bank of Richmond concerning payment of the cost of an increase in the survivor's benefit of Mrs. Irene H. Flagg, widow of Maurice P. Flagg. Governor Shepardson today approved on behalf of the Board a letter to the Federal Reserve Bank of St. Louis (attached Item No. 4) approving the reappointment of Francis M. Miller as assistant examiner. Governor Shepardson also approved today on behalf of the Board meritorious salary increases for the following persons on the Board's staff as recommended by the various divisions, effective July 5, 1964: Name and Title Division Basic Annual Salary From To Office of the Secretary Margaret C. Caldow, Assistant Supervisor, Stenographic Section Dorothy L. Saunders, Secretary Cleo J. Kray, Records Clerk Prances R. Williams, Records Clerk $6,285 $6,46o 5,330 4,355 4,635 5,490 4,495 4,775 2315 6/3064 -5- Meritorious salary increases effective July 5, 1964 (continued) Division Name and Title Basic Annual Salar From To Research and Statistics Bernard N. Freedman, Economist Edward A. Manookian, Economist Theodore G. Flechsig, Economist Evelyn M. Hurley, Economist Caroline M. Burgess, Assistant Chief Librarian Mary Jane Harrington, Economist James D. Goetzinger, Economist Jean C. King, Technical Editor Eleanor Jean Pratt, Research Assistant Gail Roberts, Secretary Claudia M. McGolerick, Secretary Mary V. F. Baker, Statistical Assistant Margaret Campbell, Secretary $12,880 12,495 12,110 10,970 $13,265 12,880 12,495 11,300 9,530 9,530 8,690 7,490 7,260 6,110 5,760 5,810 5,010 9,810 9,810 8,970 7,720 7,490 6,285 5,935 5,970 5,170 10,970 9,250 12,110 12,495 11,300 9,530 12,495 12,880 9,250 6,110 9,530 6,285 14,515 8,970 14,965 6,110 4,635 11,630 11,960 6,285 4,775 11,960 12,290 7,160 6,770 7,355 6,965 International Finance Robert F. Emery, Economist Margaret Garber, Economist Helen B. Junz, Economist James K. Nettles, Economist Bank Operations Edwin G. White, Technical Assistant Helen M. Bennett, Secretary Examinations John T. McClintock, Supervisory Review Examiner Att W. Hammons, Jr., Assistant Federal Reserve Examiner Patricia L. Gannon, Secretary Carol Ann Slocombe, Stenographer James K. Sanford, Review Examiner Robert G. Sundberg, Review Examiner 9,250 Personnel Administration Ruth Hadley Goodyear, Secretary Sudelle Rice, Employee Development Technician 6/30/64 -6- Meritorious salary increases effective July 5, 1964 (continued) Name and Title Division Basic Annual Salary From To Administrative Services Helen M. Capozio, Publications Assistant Willa McC. Davis, Utility Clerk Mary E. Johnson, Telephone Operator Esmond C. Langley, Head Messenger Lola A. Buckley, Telephone Operator Hubert G. Weems, Guard Bert Harvey, Messenger Walter Worthy, Messenger $ 1,160 5,170 5,335 5,055 4,525 4,o90 3,305 3,305 $ 7,355 5,330 5,475 5,195 4,65o 4,195 3,410 3,410 7,490 10,310 7,720 10,640 Data Processing Winofred J. Racz, Chart Machine Operator Robert M. Steinberg, Economist Mary L. Roberts, Statistical Assistant Marguerite Renucci, Statistical Clerk Albert C. Bain, Senior Operator (Tabulating Equipment) 6,460 4,775 6,77o Secretary 6,635 4,915 6,965 BOARD OF GOVERNORS OF THE Item No. 1 FEDERAL RESERVE SYSTEM 6/3o/64 WASHINGTON OFFICE OF THE CHAIRMAN June 30, 1964. Mr. Phillip S. Hughes, Assistant Director for Legislative Reference, Executive Office of the President, Bureau of the Budget, Washington, D. C. 20503 Dear Mr. Hughes: This is to advise, in response to your communication of June 29, 1964, that the Board recommends that the President approve the enrolled bill, H. R. 11499, "To amend section 14(b) of the Federal Reserve Act, as amended, to extend for two years the authority of Federal Reserve banks to purchase United States obligations directly from the Treasury." Sincerely yours, (Signed) Wm. MCC. Martin, Jr. WM. McC. Martin, Jr. `23.18 rrr.r.r - yx •", 4,)194.) - BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 2 6/30/64 WASHINGTON OFFICE OF THE CHAIRMAN July 6, 1964. The Honorable William Proxmire, United States Senate, Washington, D. C. 20510 Dear Senator Proxmire: Reference is made to a letter dated April 7, 1964, addressed to you by Mr. Donald Mulvaney, Community Relations Chairman of a neighborhood organization known as Co-operation West Side, which was transmitted to this Board on May 4, with a request for such report as might seem warranted after consideration of its content. The letter relates to a proposed change in location of the main office of the Park State Bank, Milwaukee, Wisconsin, a State member bank, from 3405 West Lisbon Avenue to the northeast corner of the intersection of 76th Street and Capitol Drive, both locations within the corporate limits of the city of Milwaukee. This change in location was approved by the Commissioner cf Banks of the State of Wisconson on January 31, 1964, subject to certain requirements that are not relevant to the issue raised by Mr. Mulvaney. There are specific provisions of the National Bank Act and the Federal Deposit Insurance Act requiring approval of changes in the location of main offices and branches of national banks and insured State nonmember banks, respectively. However, there is no statute under which a State member bank is required to obtain the Board's permission before changing the location of its main office or branches. Proposed changes in location of the main office of a State member bank are reviewed by the Federal Reserve Banks and are presented to the Board for consideration only if the proposed change falls within the purview of condition of membership numbered 1, imposed pursuant to authority contained in Section 9 of the Federal Reserve Act, which reads as follows: "Such bank shall at all times conduct its business and exercise its corporate powers with due regard to the safety of its depositors, and, except with the permission of the Board of Governors of the Federal Reserve System, such bank shall not cause or permit any change to be made in the general character of its business or in the scope of the corporate powers exercised by it at the time of admission to membership." The Honorable William Proxmire -2- 2319 in location of the At the request of its management, the proposed change Federal Reserve the by reviewed main office of the Park State Bank was of the Reopinion the in since Bank of Chicago in January, 1964, and, of the character general the in serve Bank it did not involve any change not matter was the powers, bank's business or the scope of its corporate of light the in However, presented to the Board for consideration. a further Mr. Mulvaney's letter, the Reserve Bank was requested to make its of Board the advise investigation of the proposed relocation and findings. the The Board has been informed that the bank now occupies brick and story seven a of floor first floor and a portion of the second by is owned building The Avenue. concrete building at 3405 West Lisbon the Park Building Corporation, a wholly owned subsidiary of the bank. In 1957, at a total cost of approximately $145,000, a two-story addition was constructed on the rear of the building, providing drive-in and inadequate parkadditional bookkeeping facilities, and a very small and area, immediate the in residents time, ing area was acquired. At that rebank's the now group protesting including several members of the and building, bank the to s location, protested against the improvement and litigation of amount e the building company experienced a considerabl properties the extra expense in acquiring three residences and having rezoned for commercial use. The present lobby of the bank is quite attractive, but entrance is gained only by passing through a pair of doors at sidewalk level, ascending several steps, and then passing through a second pair of doors. The exterior walls of the quarters contain only a few windows, all of Which are above eye-level so that a view of the lobby from the outside is impossible. Furthermore, the bank has only one outside neon sign cannot be displaying its name. The sign is rather inconspicuous, but it to the given been has on Considerati augmented due to a city ordinance. entrance the remodeling to and facilities Purchase of additional parking and exterior walls of the bank. However, due to past experience in acquiring additional land and the limitations on further remodeling imposed by the construction of the building, the management considers such improvements to be almost impossible and indicates that these are the primary reasons for the decision to relocate the bank. A new site measuring approximately 200' x 280' has been purchased. It is 3-1/2 miles northwest of the present location and is bounded by Capitol Drive on the south, 76th Street on the west, Perkins Place on the north, and an alley and private residence on the east. Plans for a modern banking structure providing ample drive-in facilities are now being drawn by a local architect. It is expected that the future quarters can be operated with less expense because of more efficient layout The Honorable William Proxmire -3- of the drive-in and lobby facilities. Management is positive that the savings on remodeling costs of its present quarters and the sale price of the building company stock will substantially exceed the purchase price of the new site and the construction cost of the new building. The area surrounding the present location of the bank is primarily residential, with numerous stores, offices and other business Avenue (all establishments along Lisbon Avenue, Vliet Street and North (both Streets 35th and 27th running east-west), and the thoroughfares of neighborthe in industries running north -south). There are a few small plant hood, the largest being a paint and glass products manufacturing the of majority large a Although owned by one of the bank's directors. maintained. dwellings are quite old, they are well The area to which the bank proposes to move is also primarily Street, residential in nature. Capitol Drive, Appleton Avenue and 76th modern very by lined are site, the main thoroughfares adjacent to the and stores and shopping areas, professional buildings, apartment houses the around and in immediately area a few small industrial plants. The triangle (approximately two blocks on each side) in which the bank will be located is almost completely improved, with the exception of the bank site. It is an outscanding and attractive location. Practically all of the dwellings in the adjoining area are of very recent construction and there is a considerable amount of vacant property available for improvement. The major difference in the neighborhoods surrounding the present and future locations of the bank is that the former is an old but well maintained area, whereas the latter is an almost entirely new development. Otherwise, there is little difference in the general make-up of the areas. The president of Park State Bank was quite emphatic in stating that the possibility of a future decline in the present neighborhood served by the bank had very little, if any, bearing on the management's decision to move. The question of competition and the future prospects of Park State Bank were also reviewed by the Reserve Bank. There are four other banking offices within a radius of 1-1/2 miles of the bank's present location and a like number of existing banking offices within a 2-mile radius of its future site. Nevertheless, the management of the bank estimates that it will not lose more than 5 per cent (less than $1,000,000) of its present deposits as a result of the relocation and that it will gain at least $5,000,000 in new deposits within the next 2 or 3 years. This estimate is based on the fact that more than 55 per cent of its present deposits are time accounts of people residing throughout the entire city of Milwaukee and that none of these funds are expected to be Withdrawn because of the relocation. Also, large demand deposits of businesses owned by the bank's directors will not be withdrawn. 1,11(1+4 4ie.)4,:..L The Honorable William Proxmire -4- Board concurs in the Based on the foregoing information, the that the proposed evidence no is opinion of the Reserve Bank that there made in the general be to change a change in location will cause or permit corporate powers the of scope the character of the bank's business or in membership of n conditio that which it exercises, and, consequently, . proposal numbered 1 is not applicable to the vested with a public It is true that the banking business is banking were not into relating laws interest and that various Federal banking. However, for possible tended to guarantee the greatest profits underlying the are motive profit private capital investment and the y owned banks privatel and se, enterpri principles of our system of free officers of banks, are an integral part of that system. Directors and recommend in the discharge of their responsibilities, must necessarily ive competit to a bank's shareholders such actions as will maintain its s soundnes d position in the community and tend to insure its continue bankadequate and growth, including actions relating to the provision of supering quarters, facilities, and services. When required by law, consideration, visory authorities in assessing such proposals must give future among other things, to the capital structure, earnings and of the comneeds and nce convenie the as well prospects of the bank, as munity it serves. occurred to some In his letter Mr. Mulvaney states that it has of his group "that there may be hundreds of cities in the .United States a member where this same problem is repeating itself", and asks you, as at "that of the Senate Banking and Currency Committee, to write a bill days 90 least would prohibit a bank or branch from relocating without local Prior notice to depositors, publications of such intentions in hearpublic a newspapers within seven days of notice to depositors, and ing before proper banking agencies." main To the best of the Board's knowledge, relocations of in the place taken have offices or branches of State member banks that ies communit the in interest past have not been detrimental to the public of ion legislat Federal served. Accordingly, the Board does not believe e desirabl or y necessar the type suggested by Mr. Mulvaney to be either insofar as concerns State member banks. Sincerely yours, (Signed) Wm. McC. Martin, Jr. Wm. McC. Martin, Jr. BOARD OF GOVERNORS Item No. OF THE 3 6/3064 FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD June 30, 1964. Mr. Edward A. Wayne, President, Federal Reserve Bank of Richmond, Richmond, Virginia 23213. Dear Mr. Wayne: This refers to Mr. Kenyon's letter of May 31, 1963, in which he advised you of the adjustment to be made in the survivor's benefit of Mrs. Irene H. Flagg, widow of Maurice P. Flagg, as a result of enactment of Public Laws 87-793 and 88-25 and, that the Board authorized the Federal Reserve Bank of Richmond to pay to the Retirement System of the Federal Reserve Banks approximately $108 to cover the cost of this increase for Mrs. Flagg for 18 months. The U. S. Civil Service Commission has included in its current a ppropriation requests to Congress, funds necessary to extend this increase benefit for another fiscal year. The Board has, therefore, requested the Retirement System of the Federal Reserve Banks to continue to bill on a pay-as-you-go basis for the cost of these benefits to its annuitants or their survivors through June 30, 1965. In order that the Widow of Maurice P. Flagg may continue to receive the annuity that would have been payable under the Board Plan; and in conformance with Mr. Leach's to the Board of September 9, 1955; the Board authorizes the Federal _ Reserve Bank of Richmond to pay to the Retirement System of the Federal Reserve Banks approximately $72 to cover the cost of continuing the $6 monthly increase for Mrs. Flagg for the period July 1, 1964 through June 30, 1965. It is understood that the Retirement Office will bill you in the hear future for the cost of the indicated supplement for Mrs. Flagg. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS Item No. OF THE FEDERAL RESERVE SYSTEM 4 6/30/64 WASHINGTON, O. C. 20551 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD July 1, 1964. Mr. O. 0. Wyrick, Vice President, Federal Reserve Bank of St. Louis, St. Louis, Missouri 63166. Dear Mr. WYrick: In accordance with the request contained in your letter of June 24, 1964, the Board approves the reappointment of Francis M. Miller as an assistant examiner for the Federal Reserve Bank of St. Louis. Please advise the effective date of the reappointment. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary.
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