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Minutes for June 9, 1959
To:
Members of the Board
From: Office of the Secretary
Attached is a copy of the minutes of the
Board of Governors of the Federal Reserve System on
the above date.
It is not proposed to include a statement
with respect to any of the entries in this set of
minutes in the record of policy actions required to
be maintained pursuant to section 10 of the Federal
Reserve Act.
Should you have any question with regard
to the minutes, it will be appreciated if you will
advise the Secretary's Office. Otherwise, if you
were present at the meeting, please initial in
column A, belay to indicate that you approve the
minutes. If you were not present, please initial
in column B below to indicate that you have seen
the minutes.
Chm. Martin
Gov. Szymczak
Gov. Mills
Gov. Robertson
Gov, Balderston
Gov. Shepardson
Gov. King
ce,4
Minute8 of the Board of Governors of the Federal Reserve System
on
Tuesday, June 9, 1959.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
The Board met in the Board Room at 10:00 a.m.
Martin, Chairman
Balderston, Vice Chairman
Szymczak
Robertson
Shepardson
King
Sherman, Secretary
Kenyon, Assistant Secretary
Riefler, Assistant to the Chairman
Thomas, Economic Adviser to the Board
Hackley, General Counsel
Farrell, Director, Division of Bank
Operations
Mr. Shay, Legislative Counsel
Mr. Benner, Assistant Director, Division
of Examinations
Mr. Smith, Assistant Director, Division
of Examinations
Mr. Hill, Assistant to the Secretary
Mr. Brill, Chief, Capital Markets Section,
Division of Research and Statistics
Miss Hart, Assistant Courv'el
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Cue tions on Regulation U (Item No. 1). Pursuant to the
urlde r
standing at yesterdayta meeting, there had been distributed to
the Board a revised draft of reply to a letter from the Continental
National Bank and Trust Company, Chicago Illinois, raising
qUesti-ons
concerning the definition of "carrying" contained in
ation U, Loans by Banks for the Purpose of Purchasing or Carrying
Ilegistered Stocks, as amended effective June 15, 1959.
Following comments by Mr. Hackley on the revised draft, which
had l,
veen prepared in an effort to be as responsive and informative as
Do
"ible, question was raised regarding the phrasing of the concluding
6/9/59
-2-
P°rtion and Mr. Hackley observed that the purpose of the illustrations
contained in the letter was to indicate a presumption.
Each individual
case) however, would require consideration of the particular circumstances
involved
and the general presumption was subject to rebuttal in the
light of such circumstances.
Unanimous approval then was given to the proposed letter, a
copy of which is attached hereto as Item No. 1.
It was understood that
°4 appropriately edited version of the letter would be sent to all
Federal Reserve Banks as a matter of information.
Miss Hart and Mr. Brill then withdrew from the meeting.
Letter to Congressman Reuss
(Item No. 2).
There had been
distributed to
the Board a draft of reply to a letter dated June 4,
1959, from Congressman Reuss of Wisconsin with respect to a proposed
hange in the pending reserve requirementsbill which had been the subject
"Previous correspondence between Mr. Reuss and the Board.
In the
t°111 presently proposed, the amendment would continue to provide uniform
11°quirements for
all reserve city banks, including those in New York
841 Chicago, when set at less than 20 per cent, but it would permit a
rential when the requirement for large New York and Chicago banks
- 8.44.
above 20 per cent and the requirement for other reserve city
banks
le8 fixed at the maximum of 20 per cent.
6/9/59
-3The proposed reply would state that the Board favored maintaining
three classes of banks for reserve purposes, as provided in present law,
and that in the Board's belief this would be more simply and
effectively
accomplished by eliminating the provision abolishing central reserve
banks from the pending bill than by the Reuss amendment, which would
defeat the purpose of having a third class of banks for reserve purposes
under conditions likely to prevail.
Furthermore, since the proposed
amendment would permit the fixing of a reserve requirement higher than
20 Per cent only for member banks in New York and Chicago, it would
riot be as
flexible as the Board's present authority to classify other
cities as central reserve cities should that become desirable.
The
IlePlY would also state that the Board continued to believe a maximum
I'e quirement of 20 per cent would be adequate for all foreseeable purposes,
bUt
if the Congress should decide to retain the present central
lieserve city classification, with a maximum of 26 per cent for banks
it such
cities, the Board would see no serious objection.
The letter
14°41d suggest two technical changes in Mr. Reuss' proposed amendment,
°Ile(If which would serve to meet the legal objections expressed in the
jtine 2
reply to a previous letter from Mr. Reuss.
While these changes
1413111(1 clarify the amendment, the proposed reply would state that the
'
nevertheless would not favor the amendment's adoption.
After certain minor changes in the proposed letter had been
411gEes+
-ed, Governor Balderston raised the question whether the Board
4-1:r•
#4,4
6/9/59
'would want to
change somewhat the position it had taken thus far in the
correspond
ence with Mr. Reuss and state that, if the changes suggested
in the draft
of reply were made, the Board would not object seriously
t3
adoption of the proposed amendment.
In making this comment, he
recognized that Mr. Reuss suggestion was
t
not a particularly good one
because the differential between New York and Chicago banks
and other
reserve
city banks maid not be put into effect until the requirement
for
reserve city banks generally was at the maximum of 20 per cent.
A180, the
authority to go beyond PO per cent would be limited to banks
in tvo cities, New York and Chicago.
However, with the central reserve
city c
lassification apparently having been lost, Governor Balderston
/(:)ndered whether the Board should contin
ue to insist that it would
Object vigoro
usly to retention of a 26 per cent maximum requirement
large New York and Chicago banks.
He then read suggested language
\glitch would indica
te that although the Board would prefer retention of
three classes of
cities for reserve purposes, it would have no strong
objection, assuming the central reserve city classification was not
l'etained, to the inclusion of provisions in the reserve requirements
bill along the lines
of the Reuss amendment, as modified to the extent
811ggested in the current reply
to Mr. Reuss.
After discussion revealed general agreement with the suggestion
Of Governor Balder
ston, certain modifications in his proposed language
6k9/59
5
'
l ere agreed upon and unanimous approval was given to a letter to
Congressman Reuss in the form attached as Item No. 2, with the underthat copies would be sent to Chairman Spence of the House
?franking and Currency Committee and Chairman Brown of Subcommittee No. 2
of that
Committe
Letter to Congressman Celler (Item No. 3).
There had been
distributed to the Board a draft of reply to a letter dated June 40
1959/ in Which Chairman Celler of the House Committee on the Judiciary
inquired whether the
Board was undertaking an investigation of the
Proposed merger of
Chemical Corn Exchange Bank and the New York Trust
ComPanY, both of
New York City; the nature of such investigation;
./Ilethar the
Board intended to consult with the Antitrust Division of
the
Impartment of Justice and with the New York State Superintendent
Of Ba„
"
48; and whether the Board proposed to hold hearings on
the matter.
Mr. Hackley
pointed out that the proposed reply was similar
tO
the
the j
that
letter sent to Mr. Celler when he first inquired concerning
P. Morgan and
Co.-Guaranty Trust Company merger at a time when
ProPosal had just
been announced. The draft letter, he noted,
itt11314ad that
when the Board received an application in connection with
the Chemical-New
York Trust transaction, it would again communicate
vith Mr.
Celler.
na---'
8 aPProval then was given to the proposed letter to
Conn, e
saman
Celler, a copy of which is attached as Item No. 3.
6/9/59
-6Mr. Benner then withdrew from the meeting.
Verification and destruction of unfit United States currency
ite41811-1
------
There had been distributed to the Board a draft of
letter to Acting Secretary of the Treasury Baird in reply to his letter
of June 1, 1959, concerning the verification and destruction of unfit
United States
currency. The Board had, in a letter dated March 19, 1959,
re
Vested the Treasury's views regarding the adoption of alternative
Procedures which would eliminate certain security risks thought to
be inh
erent in the present arrangement. Two plans were suggested,
both
of Which would involve greater cost to the Treasury. In his
julls 1 letter, the Acting Secretary of the Treasury suggested that it
'would be
desirable for representatives of the Board to meet with
repres
entatives of the Treasury to identify operations in which opportittles for irregularities might be found and to explore possible
bY Which such opportunities might be minimized. Mr. Baird also
stated in
his letter that Mr. Heffelfinger, Fiscal Assistant Secretary
Or
the
Treasury, had communicated with Mr. Leach, Chairman of the
13reeid.—
.131 Conference Committee on Fiscal Agency Operations, for the
PUrposp
.
- 04 arranging a discussion with representatives of the Federal
Reservpio___
- Dunks
relative to the factors occasioning the recent cost
increa
Se in the currency verification and destruction operation.
6/9/59
-7The proposed reply to Mr. Baird stated that the matters mentioned
14 his letter and in the letter from Mr. Heffelfinger to Mr. Leach were
both matters
of System interest and closely related.
fore
The reply there-
suggested a meeting on both subjects at which the Board, the
Reserve Banks, and the Treasury would be represented.
A draft of letter to the Presidents of all Federal Reserve Banks,
Ithich had also
been distributed, suggested discussion of the verification
and
destruction function at the meeting of the Presidentst Conference
On June 15,
with a view to designating the Presidents who would attend
the Proposed
meeting with Treasury representatives.
Mr. Farrell stated that he had discussed the matter with Mr.
Leach) who was agreeable to the approach outlined in the draft letters.
Mr° Farrell noted
that the Division of Bank Operations was in the midst
Of a eurveY of currency verification and destruction operations at
each
of the offices where the work was being performed to determine the
ProemA
—Aural variations and the reasons therefor. He thought the report
could be
completed and in the hands of System representatives by about
11114-julY, which would permit a meeting with Treasury representatives
by
the end of
that month.
Following suggestions for minor changes in the draft letters,
q4estion vas
raised whether it mould be desirable for the Reserve Bank
General A
uditors to be represented at the meeting with the Treasury. It
les agreed,
however, that the preferable procedure mould be for each
l'resident to
obtain the view of the General Auditor at his Bank.
6/9/59
Unanimous approval then was given to letters to Mr. Baird and
to the
Presidents of all Federal Reserve Banks in the form attached
hereto as Items 4 and 5, respectively.
Statement before Ways and Means Committee.
meeting
At yesterday's
reference was made to a draft, distributed shortly before the
meeting, of a statement to be made by Chairman Martin before the House
WaYs and Means
Committee on June 10, 1959, in connection with hearings
°n Administration
proposals to increase the national debt limit,
eliminate the rate ceiling on Treasury bonds, and increase the interest
rates on United
States savings bonds. (The Chairman's appearance later
vas
deferred until June 11.)
Members of the Board expressed the view that the draft of state-
ment to
be made by the Chairman was well developed. It was indicated
that
certain suggestions had been made to the staff and that other
chat
,
f6es would be suggested before the statement was put in final form.
teelment was expressed with the view that the testimony should specifilY support
the Administration proposals.
In this connection, it was indicated that copies of the
tateMent of the
Secretary of the Treasury before the Committee would
be
distributed to the Board members as soon as available.
Mr. Shay stated that he understood Congressman Reuss had obtained
On to appear
before the Committee to urge adoption of a suggested
4e4dment to one
of the proposals that mould
in effect, rewire the
6/
9/59
-9.-
Federal Reserve to support the financing of the Government debt through
Purchases of Government securities and to make more flexible use of
reserve requirements.
It was then understood that the statement drafted for the use
et the Chairman -would be revised on the basis of such further suggestions
a8
might be received and presented in a form satisfactory to Chairman
Martin,
Letter on S. 2034 (Item No.
6). Reference was made to a letter
that had been received from the Chief Clerk of the Senate Committee on
the District of
Columbia inquiring whether Chairman Martin or any other
Board member
wished to testify at forthcoming hearings on S. 2034, a
bill
to amend the
District of Columbia Income Tax and Franchise Tax
Act of
1947) as amended) to provide that certain additional specific
officers of the
executive branch of the Federal Government shall be
"enaPt from
such Act". Among those specifically exempted would be the
members of the
Board of Governors not domiciled in the District of
C°14/11bie on the last day of the taxable year.
An identical bill was
ePorted out
recently by the House District Committee.
It vas indicated that no Board member wished to testify.
li°1'rever) it was agreed that an appropriate letter should be sent to the
Senate
Committee indicating that the bill would appear to clarify a
difficult
problem existing in the present law.
6/9/59
-10A copy of a letter sent to the Chief Clerk of the Committee
Pursuant to this understanding is attached as Item No.
Program for Japanese group.
6.
In view of circumstances mentioned
by Governor
Shepardson, it was agreed that a luncheon should be included
in the program
to be arranged on July 15, 1959, in connection with a
visit to the
Board's offices by a group of Japanese officials interested
In study
-16 the securities markets and traveling under the sponsorship
1,
of the
International Cooperation Administration.
This action was taken with the understanding that no precedent
II"
being set and that each duestion of this kind would be considered
n an ad hoc
basis.
In this connection, Chairman Martin expressed the
vial,/ that the
Board's responsibility for appropriate reception of
those
desiring to visit its offices extended into various sectors of
the
financial
field and was not necessarily restricted to representatives
°f member
banks and foreign central banks.
The meeting then adjourned.
Secretary's Notes: Governor Shepardson approved
today on behalf of the Board a memorandum from
Mr. Fauver, Assistant Secretary, dated June 8,
1959, recommending that a visit to the Board's
Offices on June 24, 1959, be arranged for participants in the current training program of the
International Bank for Reconstruction and
Development. The program was to include lunch.
619/59
Governor Shepardson also approved a memorandum
from Mr. Marget, Director, Division of International Finance, dated June 1, 1959, recommending
acceptance of the resignation of Nancy S. Martino,
Economist in that Division, effective June 13, 1959.
BOARD OF GOVERNORS
Item No. 1
6/9/59
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 9, 1959
Walsh, Second Vice President,
Continental Illinois National Bank
Trust Company of Chicago,
South LaSalle
Street,
'
411cago 90,
Illinois.
ear Mr.
Walsh:
Your letter of May 28, 1959, asks, in substance, two
quasti
f ons
concerning section 221.3(b)(1) of Regulation U as amended
;
0
r :nye June 15, 1959. First
you inquire whether the cases set
bel'
;
- 411 that section
are the only ones in which a loan is not to
tor24eellled to be for the
purpose of "carrying". Second, you ask
are !!idafloo as to whether loans in a number of specific
situations
‘14
,e not to be
deemed to be for such purpose.
The answer to
your first question is that, while section 22
loan '
1 3(b)(1) sets forth the main eases in which a stock-secured
eaee would
probably not be one for the purpose of "carrying , these
in w!,are not intended
to be all inclusive. Thus there may be cases
for '1:1-Lch loans
are made on the security of stock which has been held .
loansere than a year, but in
which, under all the circumstances, the
s
a ZuZ
i ,31_
1-1e
pose of "carrying". Conversely, there may be
of thc,the
stock which have been held for less than a year,
:re not for that Purpose. In other words, the effect
tor th secti:ri to create a rebuttable presumption that a loan is
rower e
l., PurPose of
"carrying" where secured by stock which the borpresttm"” held
for less than a year and, similarly, a rebuttable
thari P'ion to the
a year.
contrary where the stock has been held for more
the Do.
With respect
to your second question, it is evidel-tthat
reat itIl,
t of concern
is the relationship between the presumpon
where!11c1 th ,
y the length of time for which the stock has been held,
eth:4esurriPtion created by the purpose of the loan. In general,
flall a
St
to be pledged as collateral has been held for less
year,ock
as in the
conditions stipulated under (1), the loan
otrio4ave to be
treated as a regulated loan unless the lendintz to
,!ould be
satisfied that the purpose of the loan was stock
no
qtereds" funds used
to
registered
make
purchase
of
the
the
as
collateral.
BOARD
Mr,
OF
James D. Walsh
GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
-2-
Conversely, while the lending officer would not be excused
from.
refs "quiring into background circumstances in the illustrations
to under (2) where the stock offered as collateral had been
T
I
for more than
a year, this fact would create a presumption that
loan was not for
the purpose of carrying the stock, and the fact
tthere was a prior history of borrowing for the same purpose, or
,at he
expenses were of an unforeseen nature, would strengthen this
vre8111Vtion.
Z
the list In all the illustrations cited under (1), the fact that
heldlisted stock to be pledged as collateral for the loan has been
for l s
for,es
than a year creates a presumption that the loan is
cone ,
t he purpose
of "carrying". However, several of the illustrations
1°5.ns which seem superficially, and without taking additional
ciZn,
eil;:::si
,nto account, to be for the purpose of meeting emeror recurring expenses the borrower has customarily
w4lo
rY term,
-v orary borrowing. Thus, setting aside for the moment
stook ..°ssible factors, it would appear that a loan secured by such
borr0'
43 Pay income taxes which the borrower has customarily paid by
accidn14.g
.1 money, or to buy a new car to replace one destroyed in an
or fire, or to pay medical expenses (as in illustrations
(b).
(e) and
\)
(f.))
need not be treated as purpose loans.
z
"retImstIt is expected
that lending officers will take all relevant
in thp enoes into consideration in applying the principles set forth
allENre;
gu1ati0n. If the lending officer is unable to arrive at an
befor4 1-11 a specific instance, the facts of the case may be laid
aNr-,Lhe Federal Reserve Bank, and if the Federal Reserve Bank,
appl
,',fue co
desirable, it may of course
'lor annsideration, should think it
interpretation by the Board.
Very truly yours,
(Si7;ned) Merritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 2
6/9/59
FEDERAL RESERVE SYSTEM
WASHINGTON
OFFICE OF THE CHAIRMAN
June 11, 1959.
The
Honorable Henry S. Reuss,
House of
Representatives,
Washington 25, D.
C.
near Mr. Reuss:
In reply to your letter of June 4, I can only restate
the D
4Joard's position with respect to the change you propose in
(
7 reserve
m
requirements
bill. The Board favors three classes
bell?anke for reserve purposes as provided in present law. We
e,tleve, however, that this purpose would be more simply and
tiLileectively accomplished by eliminating from the present bill
Provison
Your
r proposed abolishing central reserve city banks than by
amendment.
Your amendment evidently would necessitate uniform
requi
New rements for
all reserve city banks, including those in
wouilerk and Chicago, when set at 20 per cent
or less, and
and cci2ermit a
differential only when requirements for New York
par
,
"-Leage are set above 20 per cent. This would defeat the
to
'
- °se of having a third class under conditions that are likely
Prevail.
et hiEhe Since your proposed amendment would permit the fixing
and
r reserve
requirements only for member banks in New York
auth,nago, it would not be as flexible as the Board's present
ity to
classify other cities as central reserve cities if
in ZIIII%14ceos7e desirable to require higher reserves for banks
mum re
The Board, as previously stated, believes
that a maxiaeeabiquirement of 20 per cent would be adequate for all forePre3n):. PurPcees, but, if Congress should decide to retain the
26
central reserve city classification with a maximum of
Per cent
for banks in such cities, the Board would not object.
le
Cr
As a
technical matter, the language suggested in your
ght, with some further
clarifications, be sufficient to
The
Honorable Henry S. Reuss
-2-
meet the legal
objections suggested in my letter of June 2. The
Proposee new parenthetical language in clause (1) of the 6th
131aragraph of section 19 might be clearer if it merely read:
that the requirements fixed for member banks in New York
City and
;'itY
Chicago need not be the same as those fixed for member
banks in other reserve cities if the percentage fixed against
detand,
deposits for banks in such cities is higher than 20 per
Elimination of the "if" clause in the above language
would meet the objection stated in the second paragraph of the
Present
letter.
Again as a technical matter, it is suggested that the
1-.1e,w
exception at the end of the proposed amendment would be clearer
m.„4,,Ilariged to
read: "except that the maximum amount of reserves
may be required to be maintained against demand deposits by
74(1er banks in New York City and Chicago shall be 26 per centum,
Pcf_30vided that the Board of Governors may permit any such bank to
eMY the lower reserve prescribed for member banks in other reserve
a„ es or for member banks not in reserve cities in the same manner
to the same conditions as provided in subparagraph (2)
Of
1 the
the
preceding paragraph of this section."
With these changes in your proposed amendment (including
the el.
word Jtmination from the suggested change in clause (1) of the
in 8 if the percentage fixed against demand deposits for banks
ov_such cities is
higher than 20 per centum"), the Board would not
n]!3ct to
although it would prefer the
loiii as oradoption of the amendment,
iginally introduced.
Sincerely yours,
Wm. McC. Martin, Jr.
BOARD OF GOVERNORS
OF THE
Item No.
FEDERAL RESERVE SYSTEM
6/9/59
WASHINC3TON
OFFICE OF THE CHAIRMAN
june 9, 1959
The
Honorable tmanuel Celler
Conaittee ou the
Judiciary,
House of
Representatives,
Washington
25, D. c.
I3ear Mr.
Chairman,
Chairman:
to
This is in response to your letter of June 4, 1959, referring
vuv L0 0f
th,
the proposed merger of the Chemical Corn Exchange Bank
te be L New York Trust, Company, both of New York City, and requesting
ati0
as to (1) whether this Board is undertaking an investiproposed transaction, (2) the nature of such investig,ana th°) whether or not
the Board will consult the Antitrust Division
the Bee Uew York State
Superintendent of Banks, and (h) whether or not
ard proposes to
hold hearings with respect to this matter.
and
the
Board This proposal is, of course, of considerable interest to .
oorme
However, no application has been received by theBoard
Board
itiadeuion with
the proposed transaction. As you know, the
inei, erhave no
statutory responsibility with respect to the combined
proposed
oapit
.
iitself unless it
should
involve
a
diminution
in
the
or combined
surplus of the merging institutions so as to
t the
Board's approval under section 18(c) of the Federal
tion 7 Insurance
Act; and the transaction would not fall within seethe Clayton
Act, under which the Board has certain juristhe es?,,unless
it should involve an acquisition of stock. However,
au
.pli8hment by the
continuing bank of branches at locations
of
Boardl
415Prova74'fices of the
absorbed institution would require the
s
beiZe
cormeet
Unless and until an
application is received by the Board in
in it,
c)n l'ith this proposal the Board believes that it would not
:flee:
n:,?,sition to respond to the questions stated in your letter,
,"''- rrounr1-71ers to those
questions would depend upon the circumstances
rd 111;1-rig the
application. If any such application is received,
the
responsi_
e
''&14ties4.1 be glad to
advise you promptly as to its related
alld Proposed
procedures.
;',0a
Sincerely yours,
.
11))41-"'-'7h iteS
rac,t, /
71
Wm. McC. Martin, Jr.
3
BOARD OF GOVERNORS
OF THE-.
Item No.
FEDERAL RESERVE SYSTEM
6/9/59
WASHINGTON
OFFICE OF THE CHAIRMAN
The
Honorable Julian B. Baird,
Acting Secretary of the Treasury,
4a
shington 25, D. C.
June
15)
Dear Mr.
Secretary:
the ,
Thank you very much for your letter of June 1 concerning
•
verification
and destruction of unfit United States currency.
Board would be happy to arrange for representatives of
12ed
Thet
eral
Reserve
System to meet with representatives of the Treasury
d
tl„,lscuss this matter, as suggested in your letter. You suggested
ic;;- such a meetinc,might, identify operations in which opportunities
be Ixregularities may be found and explore means by which they could
mraillnimi%ed. It is noted that Mr. Heffelfinger has also written to
A,
'
each, Chairman of the Presidents, Conference Committee on Fiscal
5ency
pederal
Operations, to suggest discussions with representatives of the
Reserve Banks on the matter of variations in costs and proonA
--ures
our_
.L o.t,lowed in verifying and destroying the unfit United States
lency.
SYste• 'appears to the Board that both of these matters are of
conn-m ?-nterest
and that they are closely related. In this latter
,
i ecblon„ the Board understands that the variations among the Reserve
Ba,
caX inthe procedures followed result largely from additional preity Imns 'hat Eire felt necessary at certain Banks to improve the securthe
e 0Pnration.
In this iicrht. the Board feels that the purposes mentioned by
both
Pren4°u and Mr, Hefelfincfer could be most effectively served if the
ellt 3 after discussing the matter at their forthcoming Conference
renr;ne ]53 could designate one, two, or three Presidents to join with
ill",:2taLives of the Board in discussing the whole problem at a meet-'" repreoentatives of the Treasury.
propo.rsal After the
Presidents have had an opportunity to consider this
flIrther 3 I shal] be pleased to get in touch with you with regard to
arrangements for the suggested meeting.
Sincerely yours,
(Signed) Wm. MCC. Martin, Jr.
Wm. McC. Martin, Jr.
4
Item No. 5
BOARD OF GOVERNORS
6/9/59
OF THE
FEDERAL RESERVE SYSTE
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
June 91 1959.
Dear sir:
Mr
'J111.
Enclosed are a copy of a letter to Chairman Martin from
lett„ lan B. Baird, Acting Secretary of the Treasury, and a copy of a
c,' to
set
,_-e, a.ry President Leach from Mr. W. T. Heffelfingerj Fiscal Assistant
the oTreasury, both with regard to the currency verification
wicinestruc't'
147 meet Mr. Baird's letter suggests that representatives of the Treas°Pera.L i l'ith representatives of the Federal Reserve System to identify
Na0;;°n8 in which opportunities for irregularities may be found and to
leti;er- Ineans by which they may be minimized, and Mr. Heffelfinger's
the Tr suggests that
representatives of the Federal Reserve Banks and
Poseib urY meet to discuss
explanations of the rising costs and the
th
(
Irt establishing greater uniformity in the procedures followed
e Reserve
Banks
tem .1,st It
appears to the Board that both of these matters are of Systior:414,e,rest and that
they are closely related. In this latter connecin tIle'"e Board understands that the variations among the Reserve Banks
that
rocedures
followed result largely from additional precautions
°PereZe felt necessary
at certain Banks to improve the security of the
11i:t3
1 both
ext
In this light the
Board suggests that the purposes mentioned
Mrr.iiBaird and Mr. Heffelfinger could be most effectively served
%tad ,
"
--,SCUSSing the matter, the forthcoming Presidents' Conference
the 13 ,esign
ate one
oard
two, or three Presidents to join representatives of
\%rio
411 discus
'
sion
of the whole problem, including the views of the
4 U8 Gene
eaS41%
ral Auditors, at a meeting with representatives of the
Y.
th
"Itenti In
connection with the proposed program it may be of interest
in that the
Nage(' °
Board's Division of Dank Operations is currently
making a survey of
the currency verification and destruction
Ysation at each office where the work is being performed,. These surr
in the
pvro are
specifically toward determining the variations
edures followed and the reasons therefor. It is hoped that a report
t
eh
:s! surveys can be made available to the designated representatives
Ty„
rrssidents1 Conference before any meetings are held with the
asury,
-,
The Board regrets having to suggest discussion of this topic
at the f
f0
Conference on such short notice, but it hopes that
because
of previous discussions of the matter the Presidents will be
1„.esable to the
program outlined above. Because of the short time
zo
c sre
ue Conference, the proposed handling of the matter has been disPresident&
'
Conte
informally with Mr. Erickson as Chairman of the
ersneel and this letter is being sent directly to each President.
Very truly yours,
A"."/"`C-441/(
eLaYan,
Merritt
Secretary.
're Tliz PRESIDENTS
OF ALL FEDERAL RESERVE BANKS
BOARD OF GOVERNORS
Item No. 6
OF THE
FEDERAL RESERVE SYSTEM
6/9/59
WAS
OFFICE OF THE CHAIRMAN
June 9, 1959
14r. Chester H. Smith,
Chief Clerk,
C
ommittee on The District of Columbia,
United States Senate,
Washington 25, D.
C.
Dear Mr. Smith:
Your letter of June 8, 1959, related that hearings have been scheduled on June 15, 1959, before the Subcommittee on Fiscal Affairs of your Committee on S. 2034,
Which would exempt members of certain additional Federal
agencies from the District of Columbia income tax law. You
asked to be notified if I or any members of the Board desired to submit oral or written testimony on the bill.
It appears that the bill would correct a diffiTatY existing under the present law, and the invitation
f your letter is appreciated. This will advise you, how17r, that neither I nor any of the members of the Board
uesire to appear before the Subcommittee or submit testimony
on the
Sincerely yours,
jfI
/%
''')
-, i t, I(
•,
• ,
'
-
Wm, McC. Martin, Jr.
,1-4
'.
@FedFRASER