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9
Minutes for
To:
Members of the Board
From:
Office of the Secretary
June 4, 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.
ohm. Martin
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Gov. Maisel
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Federal Reserve Bank of St. Louis
Minutes of the Board of Governors of the Federal Reserve
System on Friday, June 4, 1965.
The Board met in the Board Room at
9:30 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Balderston, Vice Chairman
Robertson
Shepardson
Mitchell
Daane
Sherman, Secretary
Kenyon, Assistant Secretary
Broida, Assistant Secretary
Young, Adviser to the Board and Director,
Division of International Finance
Mr. Molony, Assistant to the Board
Mr. Cardon, Legislative Counsel
Mr. Morgan, Staff Assistant, Board Members'
Offices
Mr.
Mr.
Mr.
Mr.
Messrs. Brill, Holland, Koch, Garfield, Partee,
Axilrod, Bernard, and Keir of the Division
of Research and Statistics
Messrs. Sammons, Katz, Bake; and Dahl of the
Division of International Finance
Money market review.
Mr. Axilrod described recent developments
in the
Government securities market, Mr. Koch commented on bank credit
trends and the money
supply, and Mr. Baker reviewed foreign exchange
market developments.
Distributed materials referred to during these
Presentations included
tables affording perspective on the money market
and on bank
reserve utilization, and a table presenting data on recent
operations
in connection with the System's reciprocal currency arrange-
ments.
After discussion based on this review all members of the staff
who had been
present except Messrs. Sherman, Kenyon, Molony, and Brill
withdrew from the meeting and the following entered the room:
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-2Mr. Hackley, General Counsel
Mr. Solomon, Director, Division of Examinations
Mr. O'Connell, Assistant General Counsel
Mr. Shay, Assistant General Counsel
Mr. Leavitt, Assistant Director, Division of Examinations
Mr. Smith, Assistant Director, Division of Examinations
Miss Hart, Senior Attorney, Legal Division
Messrs. Egertson and McClintock, Supervisory Review Examiners,
Division of Examinations
Ratification of actions.
Actions taken by the available
members of the Board at a meeting on June 3, 1965, as recorded in the
minutes of that meeting, were ratified by unanimous vote.
Discount rates.
The establishment without change by the
Federal Reserve Banks of New York, Philadelphia, Chicago, and San
Francisco on
June 3, 1965, of the rates on discounts and advances in
their existing
schedules was approved unanimously, with the understanding that appropria
te advice would be sent to those Banks.
Extension of time to establish branch (Item No. 1).
Pursuant
to the
staff recommendation in a file that had been circulated to the
Board, unanimous
approval was given to a letter to Princeton Bank and
Trust Company,
Princeton Township, New Jersey, approving an extension
of time to
establish a branch at U.S. Route 206 and Mt. Rose-Rocky Hill
Road (also
known as Cherry Valley Road).
A copy of the letter is
attached to these minutes as Item No.
1.
lport on competitive factors.
Unanimous approval was given
to the
transmittal to the Federal Deposit Insurance Corporation of a
report containing the following conclusion on the competitive factors
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involved in the proposed purchase of assets and assumption of liabilities
of Bank of Dublin, Incorporated Dublin,
Virginia, by Peoples Bank of
,
Radford, Radford, Virginia:
While the proposed acquisition of assets and assumption
of liabilities of Bank of Dublin, Incorporated, by Peoples Bank
of Radford would eliminate a small amount of competition, the
overall effect of the proposed merger on competition would not
be adverse.
Application of Riverside Trust Company (Items 2-4).
There had
been distributed
a proposed order and statement reflecting approval by
the Board on
May 26, 1965, of the application of Riverside Trust Company,
Hartford, Connecticut, for permission to merge with Bristol Bank and
Trust Company,
Bristol, Connecticut.
(The title of the resulting bank
would be United
Bank & Trust Company.)
a
There had also been distributed
dissenting statement by Governor Maisel.
Discussion of the majority statement resulted in certain changes
being suggested by
members of the Board for the purpose of emphasizing
the
anticipated results of the merger from the standpoint of the com-
petitive situation in Bristol and the needs and convenience of the
community
while on the other hand de-emphasizing the situation
Hartford, which was regarded as having less significance so far as the
decision on the merger application was concerned.
Issuance of the order and statement then was authorized.
Copies
of the order,
statement, and dissenting statement, as issued, are attached
as II.V.
112.2_12.
121, respectively.
Messrs. Brill, Shay, Egertson, and McClintock, and Miss Hart
then withdrew
from the meeting.
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-4Civil Rights Act.
Pursuant to the discussion at the Board
meeting on June 2, 1965, there had been distributed under the same date
a further
revised draft of letter to the Bureau of the Budget on the
a pplicabili
ty of Title VI of the Civil Rights Act of 1964 to the Federal
Reserve Banks.
In discussion of this draft several additional changes of a
technical nature were suggested by members of the Board.
Question also
was raised
whether reference should appropriately be made in the letter
to the
legislative history, particularly on the point whether Title VI
was intended
to be applicable only where financial assistance through
the use of
appropriated funds was involved.
Mr. Hackley expressed the
view that this argument against the applicability of Title VI to the
Federal Reserve Banks was not particularly strong, and some members of
the Board
were inclined to agree.
Others felt that the legislative
history on this point should be mentioned if it appeared reasonably
c
onclusive.
At a certain point in the discussion, Chairman Martin reverted
to the
fundamental question involved and inquired whether other members
of the Board
were now inclined to agree with the opinion of Governor
Robertson
that Title VI should be interpreted as applicable to the
Federal Reserve Banks.
The replies were in the negative.
Chairman Martin then turned to Mr. Hackley, who said that while
he
regarded the question as close, he had concluded some time ago that
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Title VI did not apply to the Reserve Banks.
Chairman Martin commented
that emotionally
he would like to take the position that Title VI did
apply.
However, the matter involved an interpretation of law.
He
continued to feel that the issue should be decided on that basis, and
the weight
of staff legal opinion within the System appeared to be on
the side
that Title VI was not applicable.
Governor Robertson observed that Mr. Hackley, in concluding
that Title VI
was not applicable, nevertheless had discarded all but
one of the
points argued by Counsel for the Federal Reserve Banks.
Governor Mitchell indicated that he had not discarded the opinion
of Reserve Bank
Counsel on two points.
He agreed that the operations of
member banks did
not constitute a program or activity within the purview
of Title VI,
and he also agreed with Reserve Bank Counsel that the services of the
Reserve Banks did not involve extension of Federal financial
assistance within the meaning of Title VI.
Governor Daane indicated
that his views
were similar to those of Governor Mitchell.
Mr. Hackley then suggested certain changes in the letter that
might be made
in recognition of the foregoing comments, and several of
the members
of the Board expressed themselves as regarding such changes
favorably •
Mr. Hackley added the colimient, however, that his own con-
clusion that Title
VI was inapplicable was based solely on his opinion
that no
program or activity within the purview of Title VI was involved.
Chairman Martin suggested that Mr. Hackley bring back to the
Board a further
revised draft of letter reflecting the discussion this
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morning, such revised draft also to be in a form with which Mr. Hackley
was satisfied from
a legal standpoint.
Mr. Hackley stated that this
would be done and that he would also redistribute for the Board's information portions of the Legal Division's review of the legislative history
so that the Board could determine to what extent, if any, it would seem
desirable to include in the letter references to the legislative history
in supp ort of
the position that Title VI was not applicable to the Reserve
Banks.
At Chairman Martin's request, Mr. Hackley reviewed the arguments
advanced by Assistant General Counsel Hexter in support of the position
that Title VI
should be regarded as applying to the Reserve Banks and
contrasted these arguments with his own opinion.
ques tion
In reply to another
from the Chairman, Mr. Hackley summarized his understanding
as to the type of
regulations that would have to be issued by the Reserve
Banks in the event
it was held that Title VI was applicable.
Chairman
Martin inquired of Mr. Hackley whether the latter felt that anything
would be gained by
calling together Counsel for the Reserve Banks for
further consideration of the question, and Mr. Hackley replied that in
his opinion
this would serve little purpose, all of the Counsel having
concluded without reservation that Title VI did not apply.
The Chairman then noted that there had also been distributed to
he Board, pursuant to previous understanding, a revised draft dated
June 2, 1965,
of a letter to the Presidents of all Federal Reserve Banks
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regarding extension of the System's services to member banks that violated Title VII of the Civil Rights Act, which Title prohibits racial
di
scrimination in employment practices by any employer engaged in an
industry affecting commerce.
Mr. Hackley noted that the June 2 draft took into account
several suggestions by members of the Board with regard to the previous
draft, and he also mentioned certain additional changes that he felt
would be in order.
There followed discussion during which members of the Board
suggested further minor changes of language, and question was raised
regarding the
sanctions provided by law where violations of Title VII
were
involved.
Mr. Hackley stated that he would furnish the Board with
in
formation on the sanctions.
The discussion concluded with an understanding that a further
revised draft of the letter on Title VII would be distributed.
112212.Ltisation of BancOhio Corporation.
At Chairman Martin's
request, Mr. O'Connell related a telephone call that he had received
last Friday
afternoon from a representative of the Justice Department
concerning an investigation that the Department reportedly had been
conducting for some time into the operations of BancOhio Corporation,
Columbus, Ohio, a registered bank holding company, on the basis of a
complaint that the activities of the holding company and its subsidiary
banks were in violation of provisions of the antitrust laws.
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Federal Reserve Bank of St. Louis
It appeared
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that recently a civil investigation demand was issued by the Justice
Department directing BancOhio to produce considerable documentation
relating to possible violation of sections of the Sherman and Clayton
Acts.
According to the Justice Department the demand was issued at
the request of
BancOhio, which had indicated that otherwise it would
not be
willing to supply the information in question.
Reportedly,
Counsel for BancOhio then approached the Attorney General and inquired
about the authority under which the demand was made, pointing out that
the Federal Reserve had concurrent jurisdiction for enforcement of
section 7 of the Clayton Act.
The Justice Department representative, Mr. O'Connell said,
inquired whether there would be any objection to their proceeding with
this investigation.
Mr. O'Connell went on to say that he then got in
touch with Governor Robertson, who authorized him to return the telephone
call and say
it was his (Governor Robertson's) view that since the
Justi-ce
Department was acting under statutory authority, the Board was
not in a position to say whether or not the Justice Department should
Proceed further and that the Board therefore could have no objection to
he Department's undertaking whatever action it considered appropriate.
Mr. O'Connell also related that yesterday the Attorney General
sPoke with
Chairman Martin by telephone and expressed
some
concern that
f the
investigation proceeded the impression might be obtained that
Just
ice was undertaking a general investigation of bank holding companies
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-9-
under the Clayton Act, thus possibly placing the Board of Governors in
the light of seeming not to be exercising its statutory responsibilities.
In this connection Mr. O'Connell brought out that the Board had no statutory authority to conduct a Sherman Act investigation, although, as
aforesaid, it had concurrent jurisdiction with the Justice Department
under section 7 of the Clayton Act.
Mr. O'Connell brought out that expansion of the BancOhio holding
company system over the past decade had been of modest proportions.
How-
ever, an application to acquire an additional bank was now pending before
the Board.
In substance, the question presented by the telephone calls
from the Justice Department appeared to be whether the Board itself
wished to undertake some sort of investigation of BancOhio Corporation,
presumably for alleged violation of section 7 of the Clayton Act.
Chairman Martin made supplementary comments regarding the details
of his conversation with the Attorney General, following which he observed
that the Board obviously could not tell the Attorney General to terminate
any investigation.
This left open the question whether the Board wished
to give the Attorney General any advice.
In the ensuing discussion Governor Mitchell referred to the Bank
Holding Company Act application that was now awaiting action and suggested
that Chairman Martin might wish to say to the Attorney General that the
Board in considering this application would give consideration, among other
things, to the applicability of section 7 of the Clayton Act.
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-10Mr. Solomon stated that the BancOhio application should be ready
for consideration by the Board within the near future.
Chairman Martin then stated that he would propose to tell the
Attorney General that this application would be before the Board for
consideration in due course, that at such time the Board would consider
the matter in the light of the provisions of section 7 of the Clayton
Act, but that the Justice Department would have to make its own decision
on what it wanted to do with respect to the investigation currently in
process.
There was general agreement that a response to the Attorney
General along the lines indicated by Chairman Martin would be appropriate.
Mr. Leavitt then withdrew from the meeting.
Report by Haskins & Sells (Items 5 and 6).
Under date of April 2,
1965, there had been distributed to the Board copies of the report that
had just been received from the accounting firm of Haskins & Sells covering their review in 1964 of the procedures employed by the Board's
examiners in examinations of the Federal Reserve Banks.
The report,
dated December 21, 1964, stated that the firm's review consisted principally of evaluating and discussing with representatives of the Division
of Examinations revised examining programs and procedures developed by
the Division, partly as a result of recommendations contained in the
firm's report of December 20, 1963.
In a memorandum dated May 25, 1965, which also had been distributed to the Board, the Division of Examinations discussed the
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accountants' report and stated that the Division had no substantive
disagreement with the views expressed therein.
The concept of the
examination function outlined in the report corresponded with the understanding of the Division of Examinations, which assumed that it also
was in accord with the Board's views.
The memorandum referred to a letter from Haskins & Sells to
Governor Shepardson dated April 8, 1965, which dealt in part with the
possibility that the firm might assist the Division of Examinations
during 1965 in working out problems and refining the revised audit programs and procedures, with particular emphasis on the areas referred
to in the firm's 1964 report.
One specific area in which assistance
might be rendered was the development and application of statistical
sampling techniques to the examination procedures.
Later in the year
1965 the firm would propose to visit one of the Reserve Banks during
the course of the examination thereof by the Board's examiners, at which
time the primary purpose would be to observe the entire examination
procedure, with emphasis on observing the effectiveness of the refined
procedures and resolving problems that had developed in applying them.
The Division of Examinations indicated general agreement with these
proposals by Haskins & Sells.
Governor Shepardson related the substance of conversations that
he had had with a representative of Haskins & Sells, following which he
recommended that the firm be retained by the Board for the purpose of
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providing services along the lines indicated in the letter of April 8,
1965.
He also recommended that the firm be retained to examine the
Board's books and accounts for the year 1965.
After discussion, Governor Shepardson's recommendations were
approved unanimously.
Copies of the letters sent to Haskins & Sells
pursuant to this action are attached as Items 5 and 6.
All members of the staff except Mr. Sherman then withdrew from
the meeting.
Building plans (Items 7 and 8).
Governor Shepardson referred
to a recent discussion of the Board in executive session regarding plans
for an annex building and a proposal for doing certain remodeling work
including enlargement of dining facilities in the present building.
At
that time, he noted, the Board concluded that satisfactory arrangements
could be made for any necessary enlargement of dining facilities within
the present building, rather than to include such facilities in the proposed annex.
The Board had decided to defer final decision on this
phase of the program for remodeling within the present building and to
proceed with plans for the annex with no provision for dining facilities
there other than for the possible use of the large meeting room for
occasional large luncheons.
Governor Shepardson noted that the Board
had also concluded that it should now pay the architects, Harbeson
Hough Livingston & Larson, for such portion of the agreed -upon fee for
services rendered (including the plans for remodeling of kitchen and
dining facilities in the present building) in accordance with article 4,
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paragraph (a)(1) of the Board's contract with that firm dated December 7,
1962, as amended.
Governor Shepardson went on to say that there still remained the
problem of space and how the Board should proceed to provide adequate
space to meet its needs in the future.
A question had been raised by
Governor Balderston at the earlier discussion as to whether it would
be possible to continue to use the present space in the Federal Deposit
Insurance Corporation building and perhaps to increase the space under
lease in that building, while following up on the Loewy-Snaith proposals
for alterations to the interior of certain parts of the Board's present
building designed to improve space utilization, appearance, and working
conditions.
With respect to the latter point, Governor Shepardson said that
Mr. Snaith had called him on the telephone yesterday to inquire as to
the Board's thinking with respect to the presentation made by that firm
on may 18, 1965.
During the conversation, Mr. Snaith commented that the
possible layout that he had presented on May 18 sought to provide a
maximum possible capability in the present building, rather than an
optimum utilization of the building, considering such factors as appearance and convenience of working arrangements.
Mr. Snaith had indicated
that if the Board did not feel that it needed to seek maximum space
utilization, his firm could develop a more attractive plan than had been
submitted on May 18.
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4
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-14Governor Shepardson then turned to the matter of space in the
Federal Deposit Insurance Corporation building, stating that he had
discussed with Chairman Randall of that Corporation the possibility of
extending the Board's lease on space it now was using and of possibly
increasing such space.
Mr. Randall had indicated that the Corporation
expected the Board to vacate the space it was now using when the lease
ran out in 1968.
There was a high probability that the Corporation
would not wish to renew the present lease on the grounds that its own
plans called for more space than was presently available--in fact, it
had recently terminated a lease with another agency for a smaller amount
of space.
Mr. Randall had also commented that so far as he was concerned
plans for space needs during the next few years should be based on the
assumption that the present general arrangement for bank supervision at
the Federal level would continue essentially unchanged.
Referring again to the Board's recent discussion in executive
session, Governor Shepardson recalled that there appeared to be agreement that plans for an annex building should go ahead, although the
suggestion had been made that a different architectural firm should be
considered.
One possibility would be to proceed with the underground
garage facilities and the first floor of the annex building and with
obtaining such additional space in the present building as might be
made available under a layout such as that presented by the LoewySnaith firm.
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Federal Reserve Bank of St. Louis
However, Governor Shepardson noted that the costs of that
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portion of the annex building wculd probably run in the neighborhood of
$4,000,000 and that Loewy-Snaith had made a rough estimate of costs of
around $2,250,000 for alterations to the present building along the lines
of their May 18 layout.
Thus, the probable investment if such a program
were followed would be such that the Board might better be advised to
go ahead with the entire annex building.
Since Chairman Randall was firm
in feeling that the Federal Deposit Insurance Corporation could not make
additional space available and that they probably would not be in a
position to renew the present lease when it expired, Governor Shepardson
said that he had reached the conclusion that the Board should proceed
With plans for the annex and that he would so recommend.
In addition,
as to the Loewy-Snaith study, Governor Shepardson said that he thought
it probably would be worthwhile for the Board to authorize the second
stage of the proposal outlined in the Board's letter of April 2, 1965;
that is, that the Board should authorize the next step at a cost of
$12,500, which would involve the preparation of preliminary designs to
show the appearance of the basic systems of office layout including
sketches, plans, and renderings, as well as estimates of the cost of
altering the interiors in certain portions of the Board's present building.
Governor Shepardson noted that this would still be in terms of a
proposal for the Board's consideration but that it seemed to offer sufficient prospects of improving the utilization and appearance of the
present building to justify the expenditure involved.
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Federal Reserve Bank of St. Louis
Such work would
81
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require about three months, he understood.
Accordingly, Governor
Shepardson said that he would recommend (1) that the Board request the
firm of Harbeson Hough Livingston & Larson to proceed with preparation
of preliminary plans for an annex building along the general lines of
the structure that had been discussed and (2) that the Board request
the firm of Loewy-Snaith to proceed with the second phase of its proposal referred to in the Board's letter of April 2, namely, the preparation of designs and sketches, plans, and renderings, along with cost
estimates, for alterations to portions of the Board's present building
to improve space utilization, appearance, and working conditions.
If the Board concurred in the foregoing recommendations, Governor
Shepardson said that it would be necessary to make at least a tentative
determination as to which offices and divisions would remain in the
present building and which would move to the annex building, in order
that planning by either the architects or the Loewy-Snaith firm could
proceed most effectively.
His study of the matter suggested that, in
addition to the Board members' offices, it appeared to him that the Board
definitely should plan to keep in the present building the Office of the
Secretary, the Legal Division, the Division of Research and Statistics,
and the Division of International Finance; and that it definitely should
plan to locate in the annex the Personnel Division, Division of Administrative Services, Controller's Office, Office of Defense Planning, and
Division of Data Processing.
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Federal Reserve Bank of St. Louis
Depending on the amount of space needed
, • 4r:-,rib
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and available, location of the Division of Examinations and the Division
of Bank Operations would have to be determined later.
On this tentative
basis, the firm of Loewy-Snaith could be asked to proceed with specific
plans for remodeling certain office areas in the present building,
although if the Board should ultimately decide to undertake such work
he (Governor Shepardson) would assume that the work in perhaps only
one or possibly two areas would be undertaken at the outset.
Governor Balderston commented that in the light of Governor
Shepardson's report it appeared clear to him that the Board should proceed promptly toward the erection of an annex building.
He also would
favor authorizing the second stage report from Loewy-Snaith regarding
improvement in space arrangements in the present building.
Governor Daane inquired as to the degree of firmness that Chairman
Randall had indicated with respect to Board space in the FDIC building,
to which Governor Shepardson responded that Mr. Randall had not stated
that the Board would need to vacate such space in three years but he was
firm in saying that he did not feel additional space could be made available or that the Corporation would wish to renew the present lease.
How-
ever, he (Governor Shepardson) felt sure that if the Board had a definite
program underway and needed, say, another year to complete a building,
Mr. Randall and others at the Corporation would wish to be entirely
cooperative.
On the other hand, it seemed clear that the Board could
not get additional space in the Corporation's building and that it should
not expect to retain the present space much beyond 1968.
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Chairman Martin remarked that, quite aside from the availability
of space in the FDIC building, he personally felt that the Board would
be better off to give up the space in that building as part of its longerrun program.
Governor Mitchell stated that he had a different judgment than
any that had been indicated regarding building plans.
First, the Board
had not decided what it would have at its defense relocation facility
at Culpeper, Virginia.
He still felt it desirable to have some working
facilities at that location--in fact he would not favor a standby facility
unless it was operable.
He did not feel that plans for an annex should
be designed until a decision had been made on the relocation facility.
Second, because of the disadvantages of having the Board's operations
in more than one building, one could argue for abandoning the present
building and constructing a larger one that would adequately meet all
of the Board's needs--but he had no expectation that such a program
Would be acceptable to anyone.
He did not believe that the Board's
Present building provided the amount and kind of space that could be
gotten from it, and thus he felt that steps should be taken to improve
the utilization of this building along the lines suggested by the LoewySnaith study.
It might be possible to accommodate the staff's needs in
the present building for some years to come, particularly if the defense
facility were made operable and some functions transferred there.
How-
ever, while favoring Governor Shepardson's proposal for having the second
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stage of the Loewy-Snaith proposal undertaken, he thought the Board
could get along for several years with its existing building and he
would not be disposed to proceed with plans for an annex building at
this time.
Third, if plans were to be undertaken for an annex, Governor
Mitchell said that he was not favorably impressed with the architectural
firm of Harbeson Hough Livingston & Larson.
When the Board went ahead
With plans for an annex he would like to think that the Federal Reserve
would be putting up another outstanding building, and, on the basis of
What he had seen of the present firm, he would like to see the Board
employ another architect for any such annex building.
Governor Daane said that he felt that the Board should go ahead
With the proposal to make the present building of maximum use and attractiveness, and he would go along with that part of Governor Shepardson's
recommendation in authorizing the Loewy-Snaith firm to prepare specific
Plans.
This might take care of the Board's needs for some time, but he
believed that at least preliminary plans for an annex building should be
Prepared, without any commitment at this stage for construction.
He would
also give serious consideration to Governor Mitchell's suggestion regarding making the defense facility operable.
If these two things were done,
the Board might find its present building adequate for some years to come.
He would also wish to plan for an annex, but he did not have a judgment
as to an architect on the basis of his present knowledge.
Governor Robertson said that he felt this was the wrong time to be
going ahead with construction of an annex.
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Federal Reserve Bank of St. Louis
However, Governor Shepardson's
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report today indicated that the Board should proceed to get plans for
such a building so that it could move ahead if that became necessary.
Within another year it might be possible to determine more clearly
Whether such a building was needed.
judgment to express.
As to the architect, he had no
With respect to the Loewy-Snaith proposal, Gov-
ernor Robertson said that he had doubts about the feasibility of
remodeling the present building along the lines of their layout presented on May 18.
It would be a great mistake to do anything that
would damage the present building.
Thus, he would make plans for an
annex and he would get whatever was necessary in the way of specific
Proposals from Loewy-Snaith, but he would think a long while before
undertaking a major remodeling of the existing building.
Governor
Robertson also said that he hoped the Board would consider within the
next few days the question of the location of a computer center at the
defense facility, and he believed that this would bear a definite
relationship to the questions raised by Governor Mitchell earlier at
this meeting.
He also said that he agreed with the view expressed by
Chairman Martin that in the longer run the Board should not contemplate
using space in the FDIC building, that it ought to have its own facilities.
Chairman Martin said that it appeared that the Board came out
fairly clearly in favor of proceeding with the second stage of the
Loewy-Snaith proposal for remodeling portions of the Board's present
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Federal Reserve Bank of St. Louis
6/4/65
-21-
building.
As to the annex, at least a majority felt that the Board
Should proceed to obtain preliminary plans, and this would no doubt
take the better part of a year or perhaps longer.
As to Governor
Mitchell's comment about the present architects, Chairman Martin felt
that if a different firm were to be employed, a considerable delay
might occur in making a selection and getting them started on the
development of plans.
He was confident Harbeson Hough Livingston &
Larson had competence to produce plans for a good building; the Board
might not care to use such plans and it might later on consider another
architect, but it seemed to him wiser to go ahead with that firm at
this time than to start the selection of a new architect.
Governor Shepardson noted that under the existing contract with
the Livingston firm the Board could terminate the arrangement at any
time and pay them for services rendered to date.
However, the firm
had been the architects for the present building, it had prepared plans
for an annex building in the early 1940's, and when the Board decided
in 1962 that it would not need a building of the size that had been
designed in the 1940's as an annex, it quite naturally turned to the
same firm for the purpose of discussing a modified annex building.
When he had talked with Mr. Livingston earlier, Governor Shepardson
said that he had expressed the view that a modified annex building
should complement the present building.
However, the Board had expressed
no definite view on architectural style for an annex and he was confident
that the present architects could adapt to whatever style the Board
desired.
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Federal Reserve Bank of St. Louis
6/4/65
-22Chairman Martin said there was a rational reason for using the
present firm that had designed the present building.
The firm took
great pride in this building and it was quite understandable that in
thinking about an annex it would think in terms of an architectural
Style that would blend with the present building.
He had no doubt but
that the Livingston firm had the technical competence to design many
other styles of building if the Board desired that they do so.
The Chairman then asked whether there was agreement that the
Loewy-Snaith firm should be requested to proceed with the second phase
of their proposal, namely, the development of specific plans and cost
estimates for improving the space utilization, appearance, and working
conditions in the present building, such plans and estimates to cost
not more than $12,500.
There was unanimous agreement that the firm
Should be requested to proceed in that manner.
Governor Shepardson then inquired whether there was agreement
that the firm of Harbeson Hough Livingston & Larson should be compensated
at this time for architectural services rendered to date, in accordance
With the contract of December 7, 1962, as amended, including payment
for architectural and engineering services rendered in connection with
Plans for remodeling kitchen and dining facilities, and the Board unanimously authorized payment for such services.
During further discussion, Chairman Martin stated that the Board
seemed to be quite close to agreement on asking the Livingston firm to
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Federal Reserve Bank of St. Louis
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6/4/65
prepare preliminary plans for an annex building.
He noted that Governor
Mitchell had indicated disagreement with this procedure, but he pointed
out that the Board had been discussing this general subject for several
Years and he expressed doubt that it would be possible to change the
Program along the lines indicated by Governor Mitchell at this stage
and still produce preliminary plans for an annex within the next year
or a little more.
Accordingly, it might be best if the Board would pro-
ceed with Governor Shepardson's recommendation and for Governor Mitchell
to express his dissent.
Governor Mitchell indicated that he would follow this procedure,
and Governor Daane stated that he also wished to dissent.
Accordingly,
With Governors Mitchell and Daane dissenting, approval was given to
letters to the firms of Harbeson Hough Livingston & Larson, and Raymond
Loewy/William Snaith, Inc., in the form of attached Items 7 and 8.
The meeting then adjourned.
Secretary's Notes: Subsequent to the meeting,
the Board (Governors Balderston, Shepardson,
Mitchell, and Daane) authorized Mr. O'Connell,
Assistant General Counsel, to inform the
Federal Reserve Bank of Atlanta that it was
authorized to comply with a request of the
District Supervising Examiner (Atlanta) of
the Federal Deposit Insurance Corporation for
information and data relating to the reserve
position, borrowings, and flow of return items
of the Five Points National Bank of Miami, Miami,
Florida, for various dates, it being understood
that the Corporation was preparing to issue a
written notice of intent to terminate the status
of Five Points National Bank as an insured bank
pursuant to section 8(a) of the Federal Deposit
Insurance Act.
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Federal Reserve Bank of St. Louis
6/4/65
-24Governor Shepardson today approved on behalf
of the Board the following items:
Memorandum from the Division of Research and Statistics dated
June 3, 1965, requesting that the Board authorize payment of actual
necessary transportation expenses and per diem at the rate of $16
to Jack M. Guttentag, Associate Director, Department of Finance,
Wharton School of Finance and Commerce, University of Pennsylvania,
and Robert Killebrew, graduate student at the University of Pennsylvania, in connection with travel to Washington D. C., and return
for the purpose of attending a meeting at the Board on June 8, 1965,
relating to ways and means of adding to available knowledge on the
terms of mortgage loans secured by income producing properties.
Memorandum from the Division of Administrative Services recommending the appointment of Laura A. Smith as Charwoman in that Division,
With basic annual salary at the rate of $3,385 effective the date of
entrance upon duty.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
Item No. 1
6/4/65
OF THE
FEDERAL RESERVE SYSTEM
:0
WASHINGTON, O. C. 20551
ADORESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 4, 1965.
Board of Directors,
Princeton Bank and Trust Company,
Princeton Township, New Jersey.
Gentlemen:
The Board of Governors of the Federal Reserve
System extends to November 29, 1965, the time within
which Princeton Bank and Trust Company, Princeton
Township, New Jersey, may establish a branch at the
southeast corner of the intersection of U. S. Route 206
and Mt. Rose-Rocky Hill Road (also known as Cherry
Valley Road), Princeton Township, New Jersey.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
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Federal Reserve Bank of St. Louis
1891
Item No. 2
6/4/65
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
••••
In the Matter of the Application of
RIVERSIDE TRUST COMM'
f(3r approval of merger with
Bristol Bank and Trust Company
OR= APPa0VIIZ
MERGER
OF BANKS
There has come before the Board of Governors, pursuant to the
Bank Merger Act of 1960 (12 U.S.C. 1828(c)), an application by Riverside
Trust Company, Hartford, Connecticut, a State member bank of the
Federal Reserve System, for the Board's prior approval of the merger
°f that bank and Bristol Bank and Trust Company, Bristol, Connecticut,
utVer the charter of the former and title of United Bank & Trust
Company.
As an incident to the merger, the five authorized offices
of Bristol Bank and Trust Company would become branches of the
resulting bank. Notice of the proposed merger, in form approved by
the
Board, has been published pursuant to said Act.
Upon consideration of all relevant material in the light of
the factors set forth in said Act, including reports furnished by the
Comptroller of the Currency, the Federal Deposit Insurance Corporation,
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Federal Reserve Bank of St. Louis
892
-2-
and the Attorney General on the competitive factors involved in
the proposed merger,
IT IS HEREBY ORDEPED, for the reasons set forth in the
Board's Statement of this date, that said application be and hereby
is approved, provided that said merger shall not be consummated
(a) within seven calendar days after the date of this Order or
(b) later than three months after said date.
Dated at Washington, D. C., this 4th day of June, 1965.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and
Governors Balderston, Robertson. Shepardson,
Mitchell, and Daane.
Voting against this action:
(Signed)
Governor Uhisel.
Merritt Sherman
Merritt Sherman,
Secretary.
(cEAL)
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
Item No. 3
6/4/65
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY RIVERSIDE TRUST COMPAEY
FOR APPROVAL OF MERGER WITH
BRISTOL BANK AND TRUST COMPANY
STATEMENT
Riverside Trust Company, Hartford, Connecticut ("Riverside"),
With total deposits of $44 million, has applied, pursuant to the Bank
Merger Act of 1960 (12 U.S.C. 1828(c)), for the Board's prior approval
Of the merger of that bank and Bristol Dank and Trust Company,
Bristol, Connecticut ("Bristol Bank"), which has total deposits of
1/
$18 million.—
The banks would merge under the charter of Riverside,
which is a member of the Federal Reserve System, and the title of
United Bank & Trust Company, Hartford, Connecticut ("the resulting
bank").
The resulting bank would also be a member of the Federal
Reserve System.
Incident to the merger, the head office of Riverside
would become head office of the resulting bank, and Riverside's ten
branches, together with three existing and two approved but not yet
established offices of Bristol Bank, would become branches of the
resulting bank.
Under the law, the Board is required to consider, as to each
of the banks involved, (1) its financial history and condition, (2) the
adequacy of its capital structure, (3) its future earnings prospects,
If Deposit figures are as of December 31, 1964.
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Federal Reserve Bank of St. Louis
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(4) the general character of its maaagement, (5) whether its corporate
Powers are consistent with the purposes of 12 U.S.C., Ch. 16 (the
Federal Deposit Insurance Act), (6) the convenience and needs of the
community to be served, and (7) the effect of the transaction on
competition (including any tendency toward monopoly).
The Board may
not approve the proposed merger unless, after considering all of these
factors, it finds the transaction to be in the public interest.
Banking factors. - The financial history and condition of
RINerside and Bristol Bank are satisfactory.
Riverside's capital
structure is reasonably adequate, and its earnings prospects and
ala negement are favorable.
Bristol Bank's capital structure is
Its earnings prospects also are favorable, and its manage-
adequate.
ment is satisfactory.
The condition of the resulting bank would be
sound, its capital structure would be reasonably satisfactory, its
earnings prospects
would be favorable, and its management would be
competent
.
Neither the corporate powers of the two existing banks, nor
those
of the resulting bank, are, or would be, inconsistent with the
PurPoses of 12 U.S.C., Ch. 16.
Convenience and needs of the communities. - Both Hartford,
he State capital, and Bristol, some fifteen miles to the southwest,
located in Hartford County, in the north central part of
C"necticut, in a prosperous, growing industrial area with some
Peripheral agriculture, particularly tobacco.
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Federal Reserve Bank of St. Louis
In 1960, Hartford had
95
_3-
162,000 and Bristol 46,000 inhabitants.
New Britain, with a 1960
n them.
Population of 82,000, is located almost betwee
s of the United
Hartford, one of the main insurance center
four mutual savings
States, is served by aye commercial banks and
yet opened for
banks. A recently chartered national bank has not
business in Hartford.
are
The two largest Hartford banks, which
of the
also the largest in the State, hold about 95 per cent
cent of the deposits
deposits of commercial banks and over 62 per
Of all banks (including mutual savings banks) in the city.
commercial
Riverside has 3.7 per cent of deposits of
Hartford. While
banks, and 2.4 per cent of deposits of all banks in
in the city, it is
Riverside is the third commercial bank in size
banks with which it
smaller than any of the four mutual savings
mortgages, and certain
competes for savings deposits, real estate
Other types of loans,
been involved in
In the past ten years, Riversile has
cent and 28 per cent
three mergers, which have accounted for 31 per
Riverside's ten
of its deposit and loan growth, respectively. Of
branches, six were acquired by merger with banks in six outlying
Hartford, Essex, Old Lyme,
communities, Broad Brook, Portland, New
convenience
and Windsor. It does not appear from the record that the
substantially affected
and needs of any of these communities would be
by the merger.
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Federal Reserve Bank of St. Louis
M9G
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Bristol, although developing as a residential community, is
Primarily an industrial center, employing about 10,000 persons in
69 plants engaged in the manufacture of machinery, metals, instruments,
watches, clocks, and other products.
The New Departure Division of
the General Motors Corporation, employing over 3,000 workers, is the
eitY's largest employer.
Commercial expansion in recent years
and the
includes two new shopping centers, with a third in progress,
City is
carrying out a sizeable urban renewal program.
The city is
served by two commercial banks operating five in-city branches, and
two additional branches of Bristol Bank have been approved, but not
Yet opened.
There is one mutual savings bank in Bristol.
The lending limit of Riverside is $320,000 and of Bristol
sank is $175,000; the lending limit of the resulting bank would be
$495,000.
Evidence in the record indicates that a number of
c ustomers and potential customers of Bristol Bank require credit in
excess of its present lending limit.
Mile the two large Hartford
banks actively solicit business in Bristol, there will be increased
convenience in having locally available in Bristol offices of a
larger commercial bank with a lending limit of about half a million
dollars.
Bristol
Competition. - The nearest offices of Riverside and
Ilank are about ten miles apart, and the two do not appear to be in
competition with one another to any important extent.
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Federal Reserve Bank of St. Louis
The competitive
-5would not
situation in Hartford, and in the State of Connecticut,
be significantly altered as a result of consummation of the proposed
merger.
ng
In Bristol, some imbalance may result, since the remaini
instead of
commercial bank in the city, a $9 million institution,
competing with a bank twice its size, will be faced with a rival
almost seven times as large.
However, the evidence in the record
affected, and
suggests that this small bank would not be adversely
there is nothing in the record to indicate that the other smaller
banks in the areas concerned would be adversely affected as a result
of consummation of the merger.
Throughout Connecticut, mutual savings banks, in the range
in which they function, offer vigorous competition to commercial
exceed those
banks. The total deposits of the mutual savings banks
of the commercial banks. Indeed, the two commercial banks in Bristol
now compete with a mutual savings bank which holds over two-thirds
of all deposits in the community.
The resulting bank would be almost
exactly the size of the mutual savings bank.
While there has been
the
a recent increase in banking concentration in Connecticut,
a large share
Proposed merger would not involve banks controlling
of total State deposits.
On the contrary, it may lead to some
Bristol.
increased competition for the mutual savings bank in
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Federal Reserve Bank of St. Louis
-6-
Summary_p
.:DA._conclusion. - Consummation of the proposed
merger between two banks that are not in significant competition with
one another would enable the resulting bank better to serve the
needs, and would add to the convenience, of the growing, industrial
community of Bristol.
Accordingly, the Board finds that the merger would be in the
Public interest.
June 4, 1965.
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Federal Reserve Bank of St. Louis
Item No. 4
6/4/65
DISSENTING STATEMENT OF GOVERNOR MAISEL
As I read the legislative history of the Bank Merger Act,
I./here competitive factors are substantially adverse, a merger must
Promise to provide substantial offsetting benefits before the responsible agency is justified in approving it.
The record in the present
ease shows at most that there may be some slight improvement in
el)nvenience to a few borrowers who will be accommodated in Bristol
instead of having to travel fifteen miles to Hartford, when the
Riverside and Bristol banks are merged.
This improvement cannot possibly outweigh the very serious
illereasing concentration in commercial banking which has been taking
Place in Hartford County.
In 1950, the County enjoyed competitive
services of twenty-five commercial banks.
dis appeared.
4
By 1964, eight of these had
Approval of the present merger will leave only sixteen,
d ecrease of more than a third in the past fourt:2en
In this
respect, Hartford County is a microcosm of the State as a whole, which
Ilent from 112 commercial banks at the end of 1950 to 66 at the end of
1964.
While the banks involved in the present merger are not the
largest in the County, they are far from being the smallest.
I do not
think Congress intended the Bank Merger Act to lead to a situation in
Ilhich three or four banking systems would completely dominate commercial life in a busy, industrial area like central Connecticut, with
°IllY a few little local banks left to preserve a flavor of individuality.
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Federal Reserve Bank of St. Louis
#10
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The majority gives weight to the competition offered by
mutual savings banks, which divide County deposits almost equally with
the commercial banks.
This competition is limited to certain areas.
Mutual savings banks do not compete in the critical functions, for
example, of commercial loans and demand deposits.
But even when the
fourteen mutual savings banks which have been in Hartford County since
before 1950 are added to the twenty-five commercial banks doing business there at that time, the disappearance of almost a quarter of the
individual banks in a county, over a period of fourteen yezrs, as to
ale to signal a significant increase in concentration.
I would disapprove the application.
a4lle 4, 1965.
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Federal Reserve Bank of St. Louis
n
BOARD OF GOVERNORS
Item No. 5
6/4/65
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 11, 1965.
Haskins & Sells,
1000 Connecticut Avenue, N. W.,
Washington, D. C. 20036
Gentlemen:
This letter refers to the reviews your firm made in 1963 and
1964 with respect to the procedures employed by the Board's examiners
in the examination of a Federal Reserve Bank, generally for the purposes outlined in the Board's letter of May 9, 1963. With further
reference to those purposes and in the light of the recommendations
and suggestions which resulted from the studies already completed,
Your letter of April 8, 1965, outlined certain proposals regarding
services your firm might render during 1965 that would be of assistance to the Board's examination program. To summarize, such proposals
were:
(1)
Assistance to the Division of Examinations in
refining the revised programs and procedures
adopted by the Division following your 1963
study and further changes made since your 1964
review. In particular, you would assist the
Division in the development of statistical
sampling techniques appropriate for inclusion
in the Division's examination procedures.
(2)
A visit by your representatives to one of the
Reserve Banks during the course of the examination
of the Bank by the Board's staff. The primary
purpose of such visit "would be to observe not
only the examination procedures...but more
particularly, to observe the effectiveness of
the refined procedures and to assist in resolving
the problems that have developed in applying
these procedures."
desires
The Board has reviewed and approved your proposals and
With
year.
current
the
that you undertake the outlined program during
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Federal Reserve Bank of St. Louis
Haskins & Sells
reference to part (2), you will, as in the past, have full discretion
regarding the scope of your review, and the planner in which it will be
conducted; also in the choice of the examination to be the subject of
Your study.
It is understood that your compensation will be on the basis
Of your regular fee rates.
Your acknowledgment of this letter will be appreciated.
Very truly yours,
Merritt Sher
Secretary.
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Federal Reserve Bank of St. Louis
Item No. 6
6/4/65
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 11, 1965.
Haskins & Sells,
1000 Connecticut Avenue, N. W.,
20036
Washington, D. C.
Gentlemen:
promptly
It is requested that your firm undertake, as
books
the
of
audit
an
ient,
after January 1, 1966, as is conven
Reserve
Federal
the
of
rs
and accounts of the Board of Governo
System for the year 1965.
by the
No restrictions have been or will be placed
manner
the
or
audit
the
of
Board upon your firm as to the scope
as
audit
the
ke
willma
you
and
in which it is to be conducted,
le
desirab
be
to
you
to
appears
as
extensive and in such manner
Comds.
standar
g
auditin
d
accepte
in accordance with generally
customarily charged
pensation will be on the basis of the fee
type.
this
of
work
by your firm for audit
Very truly yours,
(Signed). Merritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 7
6/4/65
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 8, 1965.
Mr. William H. Livingston,
Harbeson Hough Livingston fig Larson,
Architects Building,
Philadelphia, Pennsylvania 19103.
Dear Mr. Livingston)
Board a
Present
cost of
hood of
On May 27, 1965, you and your associates presented to the
plan for enlargement of the dining facilities in the Board's
building. You also reported at that time that the estimated
making the improvements outlined would be in the neighbor81,284,900.
The Board has given careful consideration to the plan that
You presented as well as other less costly possibilities and has
reached the conclusion that satisfactory arrangements can be made for
any necessary enlargement of dining facilities within the present
building, It has therefore decided to defer final decision on this
phase of the program at this time and to proceed with plans for the
annex with no provision for dining facilities there other than for
the possible use of the large meeting room for occasional large
luncheons.
Accordingly, the Board has authorized your firm to continue
with its study and planning along lines that Governor Shepardson will
be happy to discuss with you at an early date.
Pending your meeting with Governor Shepardson the Board
wishes to emphasize that in developing plans both as to the exterior
and as to the interior of an annex building, there is no intent to
suggest that such structure should be a replica of the present
building, nor need it be of the same architectural design or style,
so long as it would be harmonious with the present building and its
surroundings. In other words, you should feel free in carrying
forward work on the annex building to utilise such ideas of layout,
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Federal Reserve Bank of St. Louis
Ur. William H. Livingston
apace arrangement, design, and materials as would be appropriate
in a structure being built at the present time in the light of all
developments to date, so long as the end result would provide a
structure that would be attractive, efficient, and in keeping with
the type of building constructed for the Board in 1936 and 1937.
The Board also authorised payment of your fee for
architectural services in connection with the plans presented on
NY 27 for enlargement of dining facilities, and tho Board's check
for $25.055.55--the amount submitted in your statement dated June 1.
1965, pursuant to the agreement between your firm and the Board
dated December 7, 1962--as amended, will be sent to you promptly.
The Board further authorised payment of the appropriate
Portion of your fee for architectural and engineering services in
connection with the proposed annex building at such time as you may
determine and so notify the Board that approximately half of the
vork on the preliminary plans and estimates has been completed as
Provided in Article 4, Paragraph (a)(1) of the Board's contract with
your firm.
Very truly yours.
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS
Item No. 8
6/4/65
07 THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS orriciAL CORRESPONDENCE
TO THE BOARD
Juno 8, 1965.
Raymond Loewy/William Snaith, Inc.,
425 Park Avenue,
New York 22, New York.
Gentlemeut
This refers to the presentation to the Board on May 18,
1965, by your representatives of a possible layout for the alterations to the interior of certain portions of the Board'ø building
designed to provide improved space utilisation, appearance, and
working conditions in the portions of the Board's building that
you'd be affected.
Your presentation of the first stage of the study authorised
in the Board's letter of April 2, 1965 has been carefully reviewed,
and the Board has concluded that a reasonable amount of space could
be created under your proposal. It therefore has authorised the next
step to be taken, which would involve the preparation of preliminary
designs to show the appearance of the basic systems of office layout
including sketches, plans, and renderings, as well as estimates of the
cost of altering the interiors. It is understood that this step will
require approximately three months and that the fee will be 812,5004
The Board suggests that you communicate with Governor
Shepardson for the purpose of discussing the procedural details
involved. In this connection, it may be said that the Board is not
necessarily interested in obtaining the maximum possible gmount of
additional private office space but has in mind an improved use of
the present building in terms both of a reasonable increase in office
layout and an improvement in appearance and arrangement of the areas
that might be affected.
Governor Shepardson will be prepared to discuss with you
the particular offices toward which your attention should be primarily
directed in proceeding with the second step involved in your proposal,
Ole referred to in the Board's letter of April 2.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
@FedFRASER