The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Minutes for To: Members of the Board From: Office of the Secretary March 18, 1959 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 below 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. A Chm. Martin Gov. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson X Minutes of the Board of Governors of the Federal Reserve System on Wednesday, March 18, 1959. The Board met in the Special Library at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Balderston, Vice Chairman Szymczak Mills Shepardson Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Sherman, Secretary Kenyon, Assistant Secretary Thomas, Economic Adviser to the Board Johnson, Director, Division of Personnel Administration Molony, Special Assistant to the Board Solomon, Assistant General Counsel Nelson, Assistant Director, Division of Examinations Hooff, Assistant Counsel Young, Assistant Counsel Items circulated or distributed to the Board. Following discussion on the basis of staff comments, the following items, which had been circulated or distributed to the members of the Board and copies of Which are attached to these minutes under the respective item numbers tridicated, were approved unanimously: Item No. Letter to the Bishop National Bank of Hawaii, Honolulu, :11847aii, approving its application for membership in the Federal Reserve System. (For transmittal through the Federal Reserve Bank of San Francisco) Letter to the Comptroller of the Currency recommending :!Proval of the application of Anthony State Bank, :"th°nY, Texas, to convert into a national banking sociation. (With a copy to the Federal Reserve Bank " of Dallas) 1 2 -2- 3/18/59 Item No. Letter to the Bureau of the Budget interposing no objection to a proposed bill with respect to the appointment of conservators for national banks. 3 Letter to the Federal Reserve Bank of New York approving the payment of salary to certain employees at rates below the minima of the respective grades for a period not to exceed six months. 4 Messrs. Johnson, Nelson, Hooff, and Young then withdrew from the meeting. Reserve requirement legislation. A revised draft of statement on proposed reserve requirement legislation to be presented by Vice Chairman Balderston on behalf of the Board before the Senate Banking and Currency Committee on Monday, March 23, had been distributed shortly before this meeting, and it was agreed that this draft would be discussed at the Board meeting tomorrow. Governor Balderston then referred to a letter addressed to Chairman Martin by Senator Robertson under date of March 17, 1959, inquiring whether it would be equitable, and possible under reserve re quirement regulations, to permit banks with branches in different cities to maintain the reserves required of reserve city banks against deposits at offices in reserve cities and the reserves required of country banks against deposits at offices in other cities. The Board considered at some length the question raised in Senator Robertson's letter, and views were expressed as to the most 3/18/59 -3- appropriate type of reply. It was then understood that a draft of reply based on these views would be prepared for consideration by the Board tomorrow. Reception for Mr. King. On the basis of information presented in a memorandum from Mr. Fauver, Assistant Secretary, dated March 17, 1959, and upon the recommendation of Governor Shepardson, payment of the cost (estimated at $285) of the reception to be given on March 25, 1959, for Mr. G. Harold King, Jr., following his taking the oath of office as a member of the Board of Governors was approved unanimously. The meeting then adjourned. Secretary's Note: Governor Shepardson today approved on behalf of the Board the following items: Memorandum dated March 18, 1959, from Mr. Hostrup, Assistant Director, Division of Examinations, recommending the appointment of James Ronald Smith as Assistant Federal Reserve Examiner in that Division, with basic annual salary at the rate of $4,9801 effective the date he assumes his duties. Telegram to the Federal Reserve Bank of San Francisco (attached Item N approving the appointment of Denny C. Eckenrode as assistant e xaminer. Letter to Mr. Schaeffer, Chief Federal Reserve Examiner, Division ?I' Examinations (attached Item No. 6), relating to air travel between uuty stations by members of the Board's field examining staff. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. 4: 7 Item No. 1 3/18/59 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD mt.S\ 4044** March 18, 1959. Board of Directors, Bishop National Bank of Hawaii, Honolulu, Territory of Hawaii. Gentlemen: The Board of Governors of the Federal Reserve System approves the application of Bishop National Bank of Hawaii, Honolulu, Territory of Hawaii, for stock in the Federal Reserve Bank of San Francisco, subject to the numbered conditions hereinafter set forth: 1. Such bank at all tines shall conduct its business and exercise its powers with due regard to the safety of its depositors, and, except with the permission of the Board of Governors of the Federal Reserve System, such bank shall not cause or permit any change to be made in the general Character of its business or in the scope of the corporate powers exercised by it at the time of admission to membership. 2. The net capital and surplus funds of such bank shall be adequate in relation to the character and condition of its assets and to its deposit liabilities and other corporate responsibilities. In connection with the foregoing conditions of memberparticular attention is ca3led to the provisions of the °ardis Regulation H, as amended effective September 1, 1952, .I'egarding membership of State banking institutions in the Federal Reserve System, with especial reference to Section 7 thereof. copy of the regulation is enclosed. Acceptance of the conditions of membership contained in this letter should be evidenced by a resolution adopted by the uoard of directors and spread upon its minutes, and a certified )()PY. of such resolution should be filed with the Federal Reserve ank. Arrangements will thereupon be made to accept payment for appropriate amount of Federal Reserve Bank stock, to accept the ue.Posit of the required reserve balance, and to issue the appro1311-ate amount of Federal Reserve Bank stock to the bank. °GARD OF GOVERNORS Or THE rFEDERAL RESERVE SYSTEM - 2- Bishop National Bank of Hawaii The time within which admission to membership in the Federal Reserve System in the manner described may be accomplished is limited to 45 days from the date of this letter, unless the bank applies to the Board and obtains an extension of time. When the Board is advised that all of the requirements have been complied with and that the appropriate amount of Federal Reserve Bank stock has been issued to the bank, the Board will forward to the bank a formal certificate of membership in the Federal Reserve System. The Board of Governors understands that the director having a business connection with a firm engaged in conducting a securities business will resign prior to the bank's admission to the Federal Reserve System and that the relationships of the bank and the affiliated The Bishop Company, Ltd., will be maintained in accordance with applicable laws and regulations. The Board of Governors sincerely hopes that you will find membership in the System beneficial and your relations with the Reserve Dank pleasant. The officers of the Federal Reserve Bank will be glad to assist you in establishing your relationships with the Federal Reserve System and at any time to discuss with representatives of your bank means for making the services of the System most useful to you. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. Enclosure C.) BOARD OF GOVERNORS OF THE issall0000 :414t*41 FEDERAL RESERVE SYSTEM tr WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE SOAR° 7: 44 40 Item No. 2 3/18/59 0 MVP' 4 444*** March 18, 1959. Comptroller of the Currency, Treasury Department, Washington 25, D. C. Attention Mr. G. W. Garwood, Deputy Comptroller of the Currency. Dear Mr. Comptroller: March 2, Reference is made to a letter from your office dated 19co -,) enclosing copies of an application of the Anthony State Bank, Anthony, Texas, to convert into a national banking association and reesting a recommendation as to whether or not the application should e approved. V This bank has been a member of the Federal Reserve System noel November 7, 1951; and, in view of the Reserve Bank's knowledge ?c the institution and the latest report of examination as of October 1958, a field investigation of the application was not regarded as ' acessary. It is understood that the shareholders of The First National of Las Cruces, Las Cruces, New Mexico, have recently purchased conus the OLlLflg interest in the subject bank; and our informant advises iliew management and directorate are considered satisfactory. Favorable bliformation is available with respect to the financial history of the : 8 11k, adequacy of capital structure, future earnings prospects, and recomraerlri,oes to the community. Accordingly, the Board of Governors into convert to Bank a approval of the application of Anthony State "c1Lional banking association. 81. r e The Board's Division of Examinations will be glad to discuss d J.aspects of this case with representatives of your office if you so Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE OOL Cefk, Item No. 3 FEDERAL RESERVE SYSTEM r/ A * 3/18/59 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE 1'4 :17t0 *4 **hAt• Mitt * TO THE BOARD March 18, 1959. Mr. Phillip S. Hughes, Assistant Director for Legislative Reference, Bureau of the Budget, Washington 25, D. C. Dear Mr. Hughes: al MemThis is in response to your Legislative Referr with views s Board' the ting orandum of January 26, 1959, reques of Act the of II Title respect to a Treasury draft "To amend conservators" March 9, 1933, with respect to the appointment of for national banks. of the The new section would authorize the Comptroller jurishis under Currency to appoint a conservator for any bank resultinr diction whenever there have been substantial losses and cannot be ain from defalcations, the amount of which is uncert rise to a giving ascertained without an examination of the bank, that the tood unders doubt as to the solvency of the bank. It is ine determ to time proposed legislation would allow the necessary withency insolv the full amount of defalcation and the extent of t out injury to the ultimate position of the Federal Deposi as to made ination is Insurance Corporation when the final determ the disposition of the bank. has been Since receipt of this communication, the Board suggested two amendadvised by the FDIC that that corporation has the FDIC, as permit would first ments to the Treasury draft. The to tions obliga nce insura soon as possible, to discharge its done be cannot ntly appare depositors, which under existing law ent amendm second The unless the bank is in actual liquidation. could which ance" assist Would permit the FDIC to render "financial loan. a of making the or bank Include the purchase of assets of the that us ed inform has cy Curren The Office of the Comptroller of the Mr, Phillip S. Hughes -2- these amendments are acceptable to that Office since in no way do they alter the pertinent provisions of the Treasury draft. The proposed legislation, including the suggested amendments, does not directly affect the Board's responsibilities. However, the Board has no objection to favorable consideration of the proposal. Very truly yours, (Signed) Merritt Sherman hbrritt Sherman, Secretary. 1012 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 4 3/18/59 NDENCE ADDRESS orriciAL CORRESPO TO THE BOARD March 181 1959. CONFIDENTIAL (FR) Mr. F. L. Smedley, Assistant Vice President, Federal Reserve Bank of New York, New York 45, New York. Dear Mr. Smedley: In view of the circumstances described in your letter of February 26, 1959, the Board of Governors approves the con— a tinuation of the payment of salaries to 62 employees,for rates at 1959, 1, March from months six period not to exceed ied. below the minimum of the grade in which their job is classif Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. 1014 TELEGRAM LEASED WIRE SERVICE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON Item No. 5 3/18/59 March 18, 1959 MANGELS - SAN FRANCISCO Reurlet March 121 1959. Board approves appointment Denny C. Eckenrode as assistant examiner for Federal Reserve Bank of San Francisco. Advise date appointftent made effective. (Signed) Kenneth A. Kenyon IMNYON BOARD OF GOVERNORS OF THE Item No. FEDERAL RESERVE SYSTEM 6 3/18/59 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD March 18, 1959. Mr. Lloyd M. Schaeffer, Chief Federal Reserve Examiner, Federal Reserve Bank of Kansas City, Kansas City 6, Missouri. Dear Mr. Schaeffer: Following a review of its letter of July 2, 1954, on the subject of air travel between duty stations by members of the field examining staff, the Board has concluded that travel arrangements relating to the program of examinations of Federal Reserve Banks--when such arrangements lie within the framework of the Board's travel regulations-constitute an administrative matter within the province of the Division of Examinations. The Board understands that the Director of the Division of Examinations will inform you by letter of this date regarding the Division's current attitude on the performance of official travel by airline; accordingly, you may consider the Board's letter of July 2, 1954, as no longer in effect. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary.
@FedFRASER