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Minutes for To: Members of the Board From: Office of the Secretary March 2, 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 Chin. Martin Gov. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Minutes of the Board of Governors of the Federal Reserve System on Monday, March 23, 1959. PRESENT: Mr. Mr. Mr. Mr. The Board met in the Board Room at 9:30 a.m- Szymczak, Acting Chairman/ Mills Robertson Shepardson Mr. Sherman, Secretary Mr. Kenyon, Assistant Secretary Mr. Marget, Director, Division of International Finance Mr. Hackley„ General Counsel Mr. Furth, Associate Adviser, Division of International Finance Mr. Solomon, Assistant General Counsel Mr. Nelson, Assistant Director, Division of Examinations Mr. Wood, Chief, European Section, Division of International Finance Items circulated or distributed to the Board. The following iteras, which had been circulated or distributed to the members of the Bo4,,A and copies of which are attached to these minutes wider the recPeetive item numbers indicated, were approved unanimously: Item No. Letter to the City Trust Company, Bridgeport, b°44acticut, approving the establishment of two /;;;EITellca in Danbury incident to a proposed merger ta-ZI , the City National Bank & Trust Company of Reps41117* (For transmittal through the Federal "erva Bank of New York) 1oil -etter to the New Jersey Bank and Trust Company, or ft°11, New Jersey, approving the establishment Rale 'branch at 569 High Mountain Road, North Ma ea°11, instead of at High Mountain Road and brIchester Avenue. (For transmittal through the " 4.1. Reserve Bank of New, York) turew from meeting at point indicated in minutes. 1 ( 3/23/59 -2Item No. Letter to the Union Trust Company, Greensburg, ingthe establishment of a branch .. 11cliana, approving In Clarksburg incident to a proposed merger with The Clarksburg State Bank. (For transmittal through thC Federal Reserve Bank of Chicago) 3 Letter to the State Bank and Trust Company, Ann Arbor, Michigan, granting an extension of time within which to establish an in-town branch. (For transmittal through the Federal Reserve Bank of Chicago) 14- Letter to the Nevada Bank of Commerce, Reno, Nevada, ranting an extension of time within which to establish ! Fe11 in-town branch. (For transmittal through the deral Reserve Bank of San Francisco) 5 a Te le6ram to the Federal Reserve Bank of New York fPlar"ing the opening and maintenance of an account °r the Central Bank of Tunisia. Messrs. Hackley and Nelson then withdrew from the meeting. Clayton Act question involving Mr. Friedman. At the meeting Pebruary 19, 1959, the Board tentatively decided that exception n4mbered 7 in section 8 of the Clayton Act would not be applicable t° the service of Mr. Sidney Friedman as a director of both The Meadow-Brook National Bank of Nassau County, West Hempstead, New York, aXld the Commercial Bank of North Anerica, New York City. Since such 4 decision would have been contrary to the recommendation of the New ork Reserve Bank, it was agreed at that meeting, in accordance with the, ' anel practice, to determine whether the Reserve Bank wished to any additional information or views. In addition, The Meadow r 3/23/59 -3- Brook National Bank had requested discussion "with members of the staff of the Board of Governors" if it appeared that the decision was to be adverse. The Secretary reported that Mr. Friedman had visited the Reserve Bank and had expressed a desire to come to the Board's offices with his a ttorney for discussion of the matter, which raised the question whether arrangements should be made for a meeting at the staff or at the Board level. There was agreement with a suggestion of Governor Mills that if Mr. PriedmAn desired more than a technical discussion, arrangements should be made for him to meet with the members of the Board. Mr. Solomon then withdrew and the following members of the staff entered the room: Messrs. Noyes, Robinson, Williams, Altmann,Brill, Eckert, Fisher, Gehman, Kalachek, Keir, Manookian, and Trueblood, and Miss Dingle of the Division of Research and Statistics; Messrs. Hersey, Sammons, Gemmill, Irvine, and Katz of the Division of International Finance. Economic review. Following a summary of international trade kna inancial developments, Mr. Marget summPrized by saying that the Iletm abroad was good, generally speaking, although in a completely 11118Peetaoular way. United States exports, while far from desirable is, had shown a slight rise recently and the gold outflow had ished very substantially. More and more cases were being seen 3/23/59 -4- where foreign countries were reestablishing stability in the monetary and fiscal fields, which heightened the expectation that an increase in the level of United States exports, whenever it occurred, would be su stainable. The review of domestic business and financial developments revealed few noteworthy changes since the first week in March. The index of industrial production, finally established at 144 in February, seemed likely to rise one or two points further in March, which would Place the index near or equal to the peak reached in February 1957. I'llee8 of numerous industrial commodities were rising, private housing " ' arts in February were at the highest level for that month in four Years, and gross national product for the first quarter was estimated at bc "tQ3 billion, annual rate, which would represent an increase of ab°11t two per cent in terms of real output over the third quarter of 1957. Inventory accumulation appeared to be increasing, and recent 8111'NrsY5 indicated that business plans for plant and equipment expendi- tUres were being revised upward. However, unemployment showed only a seas, 'nal change since last November and total employment had increased °I11Y slightly from October through the end of February. During the review Governor Szymczak and Mr. Furth left the lieeting to attend a meeting of the National Advisory Council and Mr. lerlery Assistant to the Chairman, entered the room. 1 3/23/59 -5Comments by Mr. Eckert, which indicated that at the end of Pebrualj the money supply was four per cent above the year-ago level but showed an increase of only a little over one per cent since last jUlY, led to a discussion at the instance of Governor Mills concerning whether the current rate of growth of the money supply was sufficient t° sustain the pace of economic recovery. More broadly, the question vas whether a System policy of consistently maintaining negative free reserves around the $100 million level might exert a pressure that, if continued, would be incompatible with the kind of credit expansion and m°11eY suPPly increase needed to foster economic growth and stability. Staff comments in this regard included technical observations on the seasonal pattern of the money supply during the early part of the calendar' Year, factors to be borne in mind in using money supply statistics not In seasonally adjusted, and the relatively high rate of money turnover recent months. The view was expressed that a particular level of Ile".tive free reserves might or might not be consistent with rapid sec410mic growth, depending upon what other forces were operating in the economy. The meeting then adjourned. Secretary's Note: Governor Shepardson today approved on behalf of the Board a telegram to the Federal Reserve Bank of San Francisco (attached Item No. 7) approving the appointment of Robert J. Vilchinsky as assistant examiner. N. OSI BOARD OF GOVERNORS OF THE Item No. 1 FEDERAL RESERVE SYSTEM 3/23/59 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD March 23, 1959. Board of Directors, City Trust Company, Bridgeport, Connecticut. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of New York, the Board of Governors of the Federal Reserve System approves the establishment of the following branches by City Trust Company, Bridgeport, Connecticut: 23h Main Street, Danbury, Connecticut 2-6 Shelter Rock Road, Danbury, Connecticut This consent is given provided: (a) the merger with City National Bank & Trust Company of Danbury, Danbury, Connecticut, is effected substantially in accordance with the proposed Agreement of Merger dated February 11, 1959; (b) shares of stock acquired from dissenting shareholders are disposed of within six months from the date of acquisition; (c) the branches are established within six months from the date of this letter; and (d) formal approval of State authorities is obtained. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. -111grit BOARD OF GOVERNORS OF THE Item No. 2 3/23/59 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADORE138 orriciAL CORRESPONDENCE TO THE BOARD March 23, 1959. Board of Directors, New Jersey Bank and Trust Company, Clifton, New Jersey. Gentlemen: The Board of Governors approves the establishment of a branch by New Jersey Bank and Trust Company, Clifton, Ilew Jersey, at 569 High Mountain Road, North Haledon, New JfteraeY, instead of at High Mountain Road and Manchester enue, North Haledon, New Jersey, as approved by the Board on June 18, 1958. This new location is approved provided the branch is established by June 18, 1959, and that formal aPproval of State authorities is effective at the time the branch is established. Very truly yours, (Sine) Kenn-.3th A. hinyon Kenneth A. Kenyon, Assistant Secretary. 108 BOARD OF GOVERNORS *„ Or 41:4',000401;4,4 0111 ) THE Item No. 3 FEDERAL RESERVE SYSTEM vl% 3/23/59 WASHINGTON 25. D. C. 1,4* ADDRESS OFFICIAL CORRESPONDENCE *4 To THE BOARD March 23, 1959. Board of Directors, Union Trust Company, Greensburg, Indiana. Gentlemen: the Pursuant to your request submitted through rs Governo of Federal Reserve Bank of Chicago, the Board shment establi Of the Federal Reserve System approves the f a branch at the present location of The Clarksburg State Bank, Clarksburg, Indiana, by Union Trust Company, Provided, (1) the merger of The Clarksburg State Bank with the Union Trust Company is effected substantially in accordance with the agreement between the parties dated February 2, 1959, (2) shares of dissenting stockholders of the constituent corporatinns which may be acquired are disposed of within six months from acquisition, and (3) the establishment of the branch is effected within six months from the date of this letter. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS 40****4 OF THE tiblop% FEDERAL RESERVE SYSTEM .* 14. ,;• WASHINGTON 25, D. C. Item No. 14. 3/23/59 ADDRESS OFFICIAL CORRESPO TO THE BOARD 44** March 23, 1959. Board of Directors, State Bank and Trust Company, Ann Arbor, Michigan. Ge ntlemen: Pursuant to your request submitted through the Federal Res vith erve Bank of Chicago, the libard of Governors extends the time „ 1 in which State Bank and Trust Company, Ann Arbor, Michigan, establish an in-town branch near the southwest intersection v4 Stadium Boulevard and Jackson Avenue, to September lb, 1959, e! the authorization contained in the Board's letter dated C "13) 1958. t , Unless significant progress is made toward establishing 130-4,,oranch before the expiration of this extension of time, the ' will not be disposed to grant a further extension. Very truly yours, (Signed) Kennethlt. Kenyon Kenneth A. Kenyon, Assistant Secretary. OCNCE BOARD OF GOVERNORS OF THE 2,40ov to4v 1.40' , Item No. 3/23/59 FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD ".4Ittgal: March 23, 1959. Board of Directors, Nevada Bank of Commerce, Reno, Nevada. Gentlemen; through In accordance with the request submitted of Board the , Francisco San of the Federal Reserve Bank thich within time the 1959, 1, Governors extends to October in granted authority the under may, Nevada Bank of Commerce at branch a establish 1958, 19, the Board's letter of June 1379 South Virginia Street, Reno, Nevada. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. 10Sfi BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM LEASED WIRE SERVICE Item No. 6 3/23/59 WASHINGTON March 231 1959. PATER - NEV( YORK , Your wire March 19. Board approves the opening and maintenance of an account on your books in the name of the Banque Centrale de Tunisie, subject to the usual terms and conditions upon which your 138.11k maintains accounts for foreign central banks and governments. It is understood that you will in due course offer participation in this account to other Federal Reserve Banks. (Signed) Merritt Sherman SIERMAN 1190 TELEGRAM item No. 7 LEASED WIRE SERVICE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 3/23/59 March 23, 1959. SWAN ur FRANCISCO March 17 1959. Board approves appointment Robert J. Vilchinsky as assistant examiner for Federal Reserve Bank of San Francisco. Advise date Appointment made effective. (signed)Kenneth A. Kenyon KENYON
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