Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, March 25, 1964, Volume 51, Part 3

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Minutes for

To:

Members of the Board

From:

Office of the Secretary

March 25, 1964.

Attached is a copy of the minutes of the
Board of Governors of the Federal Reserve System on
the above date.
It is not proposed to include a statement
with respect to any of the entries in this set of
minutes in the record of policy actions required to
be maintained pursuant to section 10 of the Federal
Reserve Act.
Should you have any question with regard to
the minutes, it will be appreciated if you will advise
the Secretary's Office. Otherwise, please initial
below. If you were present at the meeting, your
initials will indicate approval of the minutes. If
you were not present, your initials will indicate
only that you have seen the minutes.

Chm. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane

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Minutes of the Board of Governors of the Federal Reserve System
on Wednesday, March 25, 1964.
PRESENT:

Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

The Board met in the Board Room at 10:00 a.m.

Martin, Chairman
Balderston, Vice Chairman
Mills
Robertson
Shepardson
Mitchell
Daane
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

Discount rates.

Sherman, Secretary
Kenyon, Assistant Secretary
Bakke, Assistant Secretary
Hackley, General Counsel
Solomon, Director, Division of Examinations
Johnson, Director, Division of Personnel
Administration
O'Connell, Assistant General Counsel
Shay, Assistant General Counsel
Daniels, Assistant Director, Division of
Bank Operations
Kiley, Assistant Director, Division of
Bank Operations
Goodman, Assistant Director, Division of
Examinations
Smith, Assistant Director,Division of
Examinations
Leavitt, Assistant Director, Division of
Examinations
Thompson, Assistant Director, Division of
Examinations
Doyle, Attorney, Legal Division
Smith, Senior Economist, Division of Research
and Statistics
Egertson, Supervisory Review Examiner,
Division of Examinations
McClintock, Supervisory Review Examiner,
Division of Examinations

The establishment without change by the Federal

Reserve Banks of Atlanta and Minneapolis on March 23, 1964, of the rates

discounts and advances in their existing schedules was approved unani-

1404s1y, with the understanding that appropriate advice would be sent to
those

Banks.

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-2Circulated or distributed items.

The following items, copies

of which are attached to these minutes under the respective item
numbers indicated, were approved unanimously:
Item No.
Letter to Marine Midland Trust Company of Central
New York, Syracuse, New York, approving the establishment of a branch in the Valley Plaza Shopping Center.

Letter to Chemung Canal Trust Company, Elmira, New
York, approving the establishment of a branch in the
vlalage of Big Flats.

Letter to Montgomery County Bank and Trust Company,
Norristown, Pennsylvania, approving the operation
, a limited service branch at Valley Forge Park
,f
)
,
(
ggring the National Jamboree of the Boy Scouts of
America, July 10-28, 1964.

Letter to Peoples Trust City Bank, Reading,
ennsylvania, approving (1) the establishment of a
,
ftanch in Exeter Township, and (2) an investment
ln bank premises.

Letter to Wells Fargo Bank, San Francisco, California,

.Proving the establishment of a branch on Brewer
Island.

Letter to Wells Fargo Bank, San Francisco, California,
sPproving the establishment of a branch in Stockton.

Letter to Citizens State Bank, Puyallup, Washington,

Proving the establishment of a branch in the
ewood Square Shopping Center, Pierce County.

Letter to Wells Fargo Bank, San Francisco, California,
roving the establishment of a branch in San Mateo.

Letter to Wells Fargo Bank, San Francisco, California,

roving the establishment of a branch in the Del
te Shopping Center, Monterey.

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-3Item No.

Letter to United California Bank, Los Angeles,
California, approving the establishment of a
branch in Stockton.

Letter to Whitmore Company, Inc., Corning, Iowa,
granting a determination exempting it from all
holding company affiliate requirements except for
section 23A of the Federal Reserve Act.

Letter to the Federal Reserve Bank of Atlanta
aPProving the appointment of James L. Jones, Jr.,
8.5
Alternate Assistant Federal Reserve Agent.

Application of Hyannis Trust Company (Items 13, 14, and 15).
Pursuant to the decision reached at the meeting on March 13, 1964, there
had been distributed a proposed order and statement reflecting approval
of the application of Hyannis Trust Company, Hyannis, Massachusetts, to
c°11solidate with Cape Cod Trust Company, Harwichport, Massachusetts,
t°gether with a dissenting statement of Governors Robertson, Mitchell,
a'nd Daane. 1/
Issuance of the order and statements was authorized, subject to

a revision proposed by Governor Mills in the summary and conclusion of
the majority statement.

Copies of the order and majority statement, as

Issued, are attached as Items 13 and 14, respectively; a copy of the
clIssenting statement is attached as Item No. 15.
Messrs. Doyle, McClintock, and Egertson then withdrew from the

meeting.
Application of First Wisconsin Bankshares Corporation (Items 16
Pursuant to the decision reached at the meeting on March

Ine banks would consolidate under the charter of Hyannis Trust
Company and with the title Cape Cod Bank and Trust Company.

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there had been distributed a proposed order and statement reflecting
approval of the application of First Wisconsin Bankshares Corporation,
Milwaukee, Wisconsin, for permission to acquire 80 per cent or more of

the voting shares of Brookfield National Bank, Brookfield, Wisconsin,
Et Proposed new bank.
After discussion, issuance of the order and statement was
authorized.

Copies of the documents, as issued, are attached as Items

16 and 17, respectively.
Mr. Thompson then withdrew from the meeting and Mr. Furth, Adviser,
kvision of International Finance, entered the room.
Proposal of Banco do Brasil to establish a branch in New York
There had been distributed a memorandum dated March 19, 1964,
trOm Mr. Goodman regarding conversations he had had with Vice President
ellosse of the Federal Reserve Bank of New York and others concerning the
Pl'oposed establishment of a New York City branch by Banco do Brasil.

The New York State Banking Department had, as is customary in such cases,
8°1i-cited the views of the Reserve Bank.

While it was contemplated that

the State authorities would be advised that the Bank had no objection
to establishment of the branch, it was felt the Board should be informed
°I1 this fact before the advice was communicated.
The memorandum also pointed out that the Reserve Bank was on
I'scord with the State Banking Department as being opposed to the establishment of branches of foreign central banks in New York City, and that

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in this connection Mr. Furth had expressed some reservations about the
Pending proposal since Banco do Brasil had certain characteristics of a
central bank in addition to its commercial banking functions.

On the

Other hand, it was noted that the situation in Brazil was delicate from
the standpoint of the operation there of branches of United States banks,
and that the situation might be further complicated if Banco do Brasil's
4PPlication were to be denied.
In commenting on the memorandum, Mr. Goodman recalled that
arrangements for presentation of the branch proposal to the State Banking Department by a delegation from Brazil had been made through the
leral Reserve Bank of New York, and that the presentation of the
84401ication in this way had been preceded by a meeting in February 1964
between members of the Brazilian delegation and representatives of the
S. Department of State and the Board.
At Mr. Goodman's suggestion, Mr. Furth also commented on the
Pr°Posal.

He pointed out that while Banco do Brasil was the largest

cOblamercial bank in Brazil, it also served in some respects as a central
15441
" He alluded to the Superintendency of Money and Credit (SIUMOC),
/1hich had been established in 1945 to exercise control over the money
1/14rket and to prepare for the organization of a central bank, and comInellted that little progress had been made in the direction of creating

a. goq

-nuine central bank in the country and that in the interim a number

Ot the traditional central bank functions were being performed by Banco
0 10'gasil as agent of SUMOC.

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This fact, coupled with the absence of

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adequate means to enforce Banco do Brasil's representation that the
Proposed New York City branch would engage only in commercial banking
activities, might engender some concern over the proposal, but a
11

gentlemen's agreement" on this latter point could prove adequate.
Governor Mitchell expressed the thought that the logical reason

for Banco do Brasil's proposal would appear to be the commercial banking
advantages that would be gained by having a New York City branch, and
Governor Daane observed that even apart from this he would be concerned
about the repercussions of a denial of the proposal.
Governor Robertson asked what objection was seen to having a
branch of one country's central bank located in another country, and
Mr. Furth replied that it was mainly a matter of tradition, presumably
based on the fact that countries were reluctant to have foreign governkental functions carried out in their sovereign territory.
Governor Mills observed that in his view this was an important
c°nsideration of precedent bearing upon the pending application.

8anco do Brasil were to establish a branch in New York, the result could
be the diversion to the branch of operations now carried out through the
ecleral Reserve Bank of New York, thus lessening the quantity of infor414tion available to the Reserve Bank.
Mr. Goodman acknowledged this possibility but indicated that
‘c).M all available information such a possibility was remote.
rl

In this

e°11flection, he referred to a letter written to Banco do Brasil in 1951

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by Mr. Sproul, then President of the Federal Reserve Bank of New York,
when the question of a branch in New York City first was raised, setting
forth certain suggested conditions that might be made applicable to the
activities of such a branch.

According to Mr. Goodman, these conditions,

which were essentially in the nature of assurances that only commercial
banking functions would be engaged in by the branch, apparently were
expressive of the role now envisioned for the proposed branch.

However,

Mr. Lang, Adviser to the Federal Reserve Bank, had recommended against
resurrection of these express conditions in connection with the pending
aPPlication.
n
Governor Robertson expressed the belief that any objectio to
Banco do Brasil's pending proposal would be inadvisable.

Although the

situations were not strictly comparable, he could foresee the need for
the Federal Reserve to have an office in Europe at some time for the
P4rPose of maintaining closer liaison with European central banks.
he could
After further discussion, Chairman Martin observed that
See

n, and it was thereupon
little valid basis for expressing objectio

New York would be advised infor11.4 .2athat the Federal Reserve Bank of
proposal to advise
1nel-1Y that the Board was in accord with the Bank's
of its lack of objection.
the New York State Banking Department
Secretary's Note: Following the meeting,
Mr. Goodman telephoned Mr. Crosse to advise
him of the Board's view.
on Mr. Hexter, AssistDuring the course of the foregoing discussi
on thereof
4 General Counsel, entered the room, and at the conclusi
41'
Mr

Purth withdrew from the meeting.

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-8Release to the public of reports on competitive factors.

There

had been distributed a memorandum dated March 19, 1964, prepared jointly
by the Legal and Examinations Divisions, relating to a staff
proposal
that reports on competitive factors in bank merger cases prepared by or
submitted to the Board pursuant to section 18(c) of the Federal Deposit
Insurance Act be released to the public in the following manner:
(1) Upon receipt of reports to the Board on competitive factors from each of the three other agencies with
respect to a merger application, copies be forwarded by
the Board promptly to the applicant and be supplied to
anyone on request; and
(2) Following the mailing of reports by the Board
on competitive factors in connection with merger applications pending before either of the other two banking
agencies, the Board supply copies of such reports to
anyone on request.
This proposal had initially been made in a joint memorandum to

the Board from these Divisions dated February 4, 1964, and had been
discussed at the Board meeting on February 17, at which time the Board's
staff had been directed to ascertain informally the reactions of the
8taffs of the Federal Deposit Insurance Corporation, the Office of the

C°MPtroller of the Currency, and the Department of Justice to such a
Plan and to bring the proposal back to the Board for further consideration.
Mr. Shay commented that informal discussions with staff personnel
°I' the Federal Deposit Insurance Corporation and the Justice Department
lielrealed a generally favorable reaction to the proposal.

Personnel in

the Office of the Comptroller indicated that the Comptroller had recently
eeased the practice of making public reports on competitive factors.

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-9Mr. Shay further stated that while the Legal and Examinations

Dtvisions were still of the view that the proposal had merit, the recent
establishment of an inter-agency committee on bank merger matters might
suggest the desirability of deferring action until the views of the
committee could be ascertained.
Chairman Martin expressed the thought that discussion of the
subject within the inter-agency committee would be desirable, and
sUggested that the Board's representatives on the committee present
the question for consideration.

Accordingly, it was agreed that a

decision on the staff proposal for making competitive factor reports
Public would be held in abeyance.
Messrs. Goodman, Shay, and Smith (Senior Economist) then withdrew
from the meeting.
Report on draft legislation relating to destruction of Federal
1
.1?.a2rve
notes (Item No. 18).

There had been distributed a memorandum

aated March 24, 1964, from Messrs. Hackley and Bakke, with attached
draft report to the Bureau of the Budget, regarding certain draft legislation submitted to the Bureau of the Budget by the Treasury Department
that Would (1) provide for the destruction of unfit Federal Reserve notes
1416-er procedures and at locations designated by the Secretary of the
treasury, and permit allocation of credit for destroyed notes among the
eserve Banks as determined by the Board; (2) transfer the duties and
r4Iletions now performed by the Comptroller of the Currency in regard to

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Federal Reserve notes to the Secretary of the Treasury; and (3) repeal
the requirement that the System maintain a gold redemption fund on
deposit with the Treasury Department.
Mr. Hexter stated that the Board's staff had worked closely
'with the staff of the Treasury Department in drafting this legislation,
the primary motivation for which was a desire to mitigate the expense
that would be involved in destruction of $1 Federal Reserve notes unfit
for further circulation.

The proposed legislation would provide, in

effect, that unfit Federal Reserve notes need not be sorted, for credit
PurPoses, according to the particular Reserve Banks that had issued
them and then forwarded to Washington for destruction by the Treasury
Department.

Instead, the Reserve Banks would be allowed to destroy

Unfit notes themselves, and credit for these notes would be allocated
the
4rnong the Reserve Banks on a formula basis, thereby greatly reducing
Cost of handling and shipping.
Following discussion of a textual change recommended by the
that the
staff, Governor Daane suggested that it would seem desirable
ciraft report to the Budget Bureau put greater emphasis upon the costsaving aspects of the proposed legislation, and it was agreed that this
l'rould be done.
of the provision
There ensued discussion concerning the effects
In the draft legislation that would eliminate the gold redemption fund
141aintained by the Reserve Banks with the Treasury Department and of the

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-11allowing unfit Federal Reserve notes destroyed at the Reserve

Banks no longer to be sorted according to Bank of issue.

It was noted

that the principle of individual Bank reserves against note liabilities
would be preserved by virtue of the fact that, notwithstanding elimination
Of a sort of unfit notes by Bank of issue, there would continue to be an
allocation of credit to each Bank on a formula basis.

Governor Mills

by the Conference
Observed that the proposed procedures had been considered
°f Presidents and had met with a favorable reaction.
legislation was then
The letter to the Budget Bureau on the draft
d at this meeting.
IltaIlaMd unanimously, subject to the changes suggeste
to these minutes as
4 Copy of the letter, as transmitted, is attached
Item No. 18.
Advantages of System membership (Items 19 and 20).

There had

been distributed a proposed reply from Chairman Martin to Mr. Malcolm S.
Reading, PennRuth) Chairman of the Board of Peoples Trust City Bank,
sYlvania, who had written a letter to the Board under date of March 2,
banks of the
1964) in which he suggested expansion of services to member
Pecleral Reserve System and cited certain aspects of membership in the
SYstem that tended to place member banks at a competitive disadvantage
/41th nonmember banks.
dated March 18,
There had also been distributed a copy of a letter
1964, from Mr. Walter E. Hoadley, Chairman of the Board of the Federal
Reserve Bank of Philadelphia, in which it was reported that Mr. Ruth's

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letter had been the subject of extended discussion at a meeting of the
Board of Directors, and that the directors viewed with concern the trend
Of thinking on the part of member banks in regard to the value of System
membership.
In discussion of the proposed letter to Mr. Ruth, Governor Mills
noted that it endorsed the recommendation in the April 1963 report to
the President by the Committee on Financial Institutions for a uniform
System of graduated reserves against demand deposits, and that the statement was phrased in a manner suggesting Board support for the proposal.

Re inquired whether the Board was prepared to express such a view at this
time.

In his opinion the proposal had not been thought through sufficiently

by the Board to evaluate its impact and ramifications.
Although some of the members of the Board indicated that they
l'rould feel prepared to support the Committee's recommendation, it was
agreed that no statement of position on that point was necessary in the
Iselay to Mr. Ruth.
in
Governor Robertson then suggested that it would be desirable,

the letter to Mr. Ruth, to stress the importance of the central banking
Unction, and the importance of the commercial banks assuming their share
Of the responsibility and burden.
it might be desirable
Mr. Solomon suggested, for this purpose, that
t° include with the letter a copy of the memorandum sent recently to
e°rIgressman Rains, for transmission to a constituent in his discretion,

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that discussed in some detail the advantages and responsibilities of
membership in the System.
Governor Daane stated that he felt this would be a good idea,
since his reaction to the draft letter to Mr. Ruth was that it had not
convincingly spelled out the advantages of membership other than the
"backstop" value in time of stress.
Chairman Martin expressed accord with the suggestion, and it
is.e understood that the letter to Mr. Ruth would be revised accordingly.
Mr. Sherman noted that the Board no doubt also wished to acknowledge the letter from Chairman Hoadley, and it was agreed that it would
be desirable to enclose with such reply copies of the letter to Mx. Ruth
and the memorandum originally prepared for Congressman Rains.
Transmittal of letters to Messrs. Ruth and Hoadley in line with

the foregoing discussion was then approved unanimously.

Copies of these

letters, as sent, are attached to these minutes as Items 19 and 20,
l espectively.
'
Messrs. O'Connell and Leavitt then withdrew from the meeting.
Examination of Atlanta Reserve Bank.

There had been circulated

t0 the Board the report of examination of the Federal Reserve Bank of
Atlanta made by the Board's examining staff as of January 3, 1964.

The

a summary
118klal accompanying memoranda also had been circulated, and
memorandum from the Division of Examinations dated March 19, 1964, had

been distributed.

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-14During a review of the examination findings by Mr. Smith, Governor

Mills commented that the summary memorandum suggested a degree of resistance
on the part of the Reserve Bank to certain recommendations made by Peat,
s
Marwick, Mitchell & Co. following a review of the Bank's audit procedure
in May 1963, in particular those recommendations addressed to use of
sampling techniques.
a
Mr. Smith replied that he believed in time there would be
the
natural evolution in the direction of less detailed verification in
aUdit procedures of the Reserve Banks and resort to greater use of testing
and sampling methods.

He commented further that it had been rather tra-

ditional for those responsible for the audit function to proceed cautiously,
bilt he recognized that advances in the state of the art should be taken
into account.
its staff,
Governor Robertson inquired whether the Board, through
Ifas exercising leadership in this regard, to which Mr. Smith replied that
it was planned to discuss the matter at the biennial Conference of General
Auditors to be held in 1965.

Governor Robertson expressed the belief that

the initiative should be taken more promptly.

Mr. Solomon observed that

such
the consultation of some Reserve Banks with outside auditing firms
4

of the leadership
Peat, Marwick, Mitchell & Co. had been an outgrowth

exerted by the Board in suggesting re-evaluation of the audit function.
want to
Ah educational process was involved, and the Board might not
Press for moving in the direction of drastically simplified procedures
t°0 quickly.

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-15In this connection, Governor Mills commented that there had been

some uncertainty in his mind about the manner in which sampling techniques
l'rould be applied, but it was now clear to him from comments by Haskins &
Sells that the samples selected during the internal audits of the Reserve
Banks and those chosen for review by the Board's examiners would be
different; the Board's examiners would not be duplicating the samples
taken by the Reserve Banks' auditors.
Governor Robertson observed that there might be a degree of
resistance to change on the part of those responsible for the audit function.

If follow-up on the recommendations of the independent auditors

who had
studied Reserve Bank procedures was deferred until the next
scheduled Conference of General Auditors, a great deal of momentum would
be lost.

In his opinion, the exercising of leadership in encouraging

the Reserve Banks to accept modified practices called for prompt attention.
Mr. Smith noted that in considering the question of changes in
I ractices of the Reserve Bank auditors, the attitude of Reserve Bank
tils.nagement was an important factor; for example, there might be a strong
desire at some Bank to be as certain as possible that any and all errors
/r°1-1ld be spotted.
Governor Mitchell observed that the question was one of balancing
the element of maximum assurance against the cost involved; isolated errors
1°113,4 be difficult to uncover without a 100 per cent audit check, but the

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Primary objective of auditing should be to pick up systematic defalcations,
and Haskins & Sells had expressed the opinion that this could be accomplished
satisfactorily through the use of sampling techniques.
Governor Shepardson expressed agreement with Governor Robertson's
thinking that the Board should exert leadership in encouraging the Reserve
&Inks to accept greater use of sampling for internal audits, and other
Members of the Board concurred.

Governor Mills suggested that one step

in this direction might be to transmit to the Reserve Banks, to give

them sone insight into current thinking on sampling techniques, pertinent
11°rtions of the recent report to the Board by Haskins & Sells on procedures
r°11owed by the Board's examining staff in examinations of the Federal
Reserve Banks.
The possibility also was mentioned of convening a special meeting
c)f the General Auditors to discuss this subject.

There was general accord

that this would be desirable, and it was understood that arrangements for
a conference would be considered.
Mr. Smith then continued with his comments on the Atlanta
eaMination, and it was agreed that there were no other matters disclosed

13 the examination that required action by the Board at this time.
Member bank borrowing.

The Atlanta examination report had cited

three member banks in the Sixth District as having engaged in frequent
b01'r°wing from the Reserve Bank in the period since the previous exami114tion.

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-17Governor Mitchell stated that this led him to comment that he

'was becoming increasingly concerned about two questions relative to
member bank borrowing.

First, there was the criticism of academicians

that the discount window of the Reserve Banks was not used frequently
enough.

Many people seemed to feel that this was an instrument that

could be used as a vehicle for the more effective use of funds and that
this possibility was being ignored in the System's administration of the
cliecount window.

At the same time, he was also concerned by indications

that member banks in some Districts where agricultural credit was in
Short supply used the discount window for sustained periods in violation
or the Board's Regulation A, Advances and Discounts by Federal Reserve
119414) while other banks in similar areas did not use the window at all.
There seemed to be a number of member banks that used Federal Reserve
el'edit for as long as half a year at a time to obtain funds to meet
seasonal requirements.

He suggested that consideration might be given

'I_
to t,
Q possibility of amending Regulation A to allow the Reserve Banks
to take loans to member banks for rather extended periods to accommodate
seasonal needs for funds as a normal practice.

In his view, this could

11417e significant value as an advantage of membership in the System, particrlY from the standpoint of rural banks.
'
Ills

It might, however, require the

1113 of two discount rates, one for longer term use of the discount
'
'‘rihA
44.01.1.
1
.4/
Governor Mills noted that Governor Mitchell's suggestion raised
44 imPortant question that should be analyzed carefully.

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The issue had

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been raised repeatedly by bankers associations in Kansas and Nebraska,
occasioned by the fact that as the size of farms and farming operations
had grown there had been a corresponding increase in credit requirements.
Some member banks would like to turn to the discount window as a source
Of funds to meet credit demands in excess of those that could be met
°lit of deposits generated in the local area.

This raised the question,

boWever, whether the member banks' lending capacity should be

augmented

through the discount window to finance what were essentially capital transOne problem was the absence of branch banking.
Governor Daane then suggested that it would seem desirable to
841k Mr. Holland, Associate Director, Division of Research and Statistics,
t° submit a memorandum to the Board concerning the ramifications of the
Illestions raised by Governors Mitchell and Mills, and it was agreed
11114nimous1y that he be requested to do so.

Governor Robertson added

that the subject might also be appropriate for consideration at a meet-`°, of the Reserve Bank discount officers.
The meeting then adjourned.
Secretary's Notes: With the approval of
Governor Shepardson, the Secretary of the
Presidents' Conference was advised by letter
dated March 24, 1964, that the Board approved
the continued service of designated members
of its staff as associates of various subcommittees of the Conference.
Governor Shepardson a proved on behalf of the
Board on March 24, l964-, the request contained
in a memorandum from Mary Elizabeth Mehall,
Statistical Clerk in the Division of Research
and Statistics, for permission to work part
time at a local drug store.

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-19Pursuant to the recommendation contained in
a memorandum from the Secretary of the Board,
Governor Shepardson today approved on behalf
of the Board acceptance of the resignation
of Carol M. Karstetter, Secretary in the Office
of the Secretary, effective at the close of
business March 27, 1964.
Governor Shepardson today noted on behalf of
the Board a memorandum from the Division of
Administrative Services advising that Herbert W.
Young, Building Superintendent in that Division,
had made application for retirement, effective
at the close of business March 31, 1964.

't)

Secretary

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BOARD OF GOVERNORS

Item No. 1
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OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

March 251 1964

Board of Directors,
Marine Midland Trust Company of
Central New York,
Syracuse, New York.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment of a branch in Valley
Plaza Shopping Center, 4141 South Salina Street, Syracuse,
Onondaga County, New York, by Marine Midland Trust Company of Central New York, provided the branch is established within one year from the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke

Karl E. Bakke,
Assistant Secretary.

(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
Of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 91 1962 (S-1846), should be followed.)

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Federal Reserve Bank of St. Louis

984
BOARD OF GOVERNORS

Item No. 2

OF THE

3/25/64

FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
ADDREBB OFFICIAL COFIREBPONDENCE
TO THE BOARD

March 25, 1964

Board of Directors,
Chemung
Canal Trust Company,
Elmira, New York.
Ceatiemen:
The Board of Governors of the Federal Reserve System
!
f,!Proves the establishment of a branch at the northeast corner of
Z41141 and Maple Streets, Village of Big Flats, Chemung County,
:ex') York, by Chemung Canal Trust Company, provided the branch is
stablished within one year from the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke

Karl E. Bakke,
Assistant Secretary.
(lhe letter to the Reserve Bank stated that the
also had approved a six-month extension
the period allowed to establish the branch;
ZrIct that if an extension should be requested,
Procedure prescribed in the Boardts letter
November 9, 1962 (5-1846), should be followed.)

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Federal Reserve Bank of St. Louis

BOARD OF GOVERNORS

Item No.

OF THE

3/25/64

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

March 25, 1964

Board of Directors,
Montgomery County Bank
and Trust Company,
Norristown, Pennsylvania.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the operation of a limited service branch
by Montgomery County Bank and Trust Company at Valley
Forge Park, Montgomery County, Pennsylvania, during the
period of the National Jamboree of the Boy Scouts of
America from July 10 through July 28, 1964.
Very truly yours,
(Signed) Karl E. Bakke

Karl E. Bakke,
Assistant Secretary.

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Federal Reserve Bank of St. Louis

Item No.

BOARD OF GOVERNORS

3/25/64

OF THE.

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

March 25 1964

Board of Directors,
Peoples Trust City Bank,
Reading, Pennsylvania.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment of a
branch by Peoples Trust City Bank on U. S.
Highway 422, approximately one and one-half miles
southeast of the Borough of Mt. Penn and adjacent
to the Village of Reiffton, in Exeter Township,
Berks County, Pennsylvania, provided the branch
is established within one year from the date of
this letter. The Board also approves, under the
provisions of Section 24A of the Federal Reserve
Act, an investment of $152,000 in bank premises
by Peoples Trust City Bank to purchase land and
to construct quarters for the new branch.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)

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Federal Reserve Bank of St. Louis

987
Item No.

BOARD OF GOVERNORS

3/25/64-

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS orracam. CORRESPONDENCE
TO THE BOARD

March 25) 1964

(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.

(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
°I* November 9, 1962 (s-1846), should be followed.)

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Federal Reserve Bank of St. Louis

BOARD OF GOVERNORS

Item No.

3/25/64

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20451
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

March 251 1964

Karl E. Bakke,
Assistant Secretary.

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Federal Reserve Bank of St. Louis

BOARD OF GOVERNORS

Item No.

3/25/64

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADLII4EFIS OFFICIAL CORRESPONDENCE
TO THE BOARD

March 25, 1964

Board of Directors,
Citizens State Bank,
Puyallup, Washington.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment of a
branch by Citizens State Bank in the Edgewood
Square Shopping Center in the vicinity of the
intersection of North Meridian Street and MiltonJovita Highway, Pierce County, Washington, provided the branch is established within one year
from the date of this letter.
Very truly yours,

(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.

(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-18)46), should be followed.)

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Federal Reserve Bank of St. Louis

BOARD OF GOVERNORS

Item No. 8

3/25/64

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, CI. C. 20551
ADDREB5 OFFICIAL CORREBPONOCNICIE
TO THE BOARD

March 25, 1964

Board of Directors,
Wells Fargo Bank,
San Francisco, California.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment of a
branch by Wells Fargo Bank in the vicinity of the
northwest corner of the intersection of 19th
Avenue and Bayshore Freeway, San Mateo, California,
provided the branch is established within one year
from the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)

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Federal Reserve Bank of St. Louis

BOARD OF GOVERNORS

Item No. 9

OF THE

3/25/64

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPO
TO THE BOARD

March 250 1964
a

Board of Directors,
Wells Fargo Bank,
San Francisco, California.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment of a
branch by Wells Fargo Bank in the Del Monte
Shopping Center on Old Capitol Site on Carmel
Hill, Monterey., CAlifornia, provided the branch
Is established within one year from the date of
this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.

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Federal Reserve Bank of St. Louis

DENCE

2
BOARD OF GOVERNORS

Item No. 10
3/25/64

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

March 25, 1964

Board of Directors,
United California Bank,
Los Angeles, California.

Gentlemen:
The Board of Governors of the Federal Reserve System
approves the establishment of a branch by United California
Bank in the vicinity of the southeast corner of the intersection
of Pacific and Yokut Avenues, Stockton, California, provided
the branch is established within one year
from the date of this
letter.
Very truly yours,

(Signed) Karl E. Bakke

Karl E. Bakke,
Assistant Secretary.

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Federal Reserve Bank of St. Louis

9"3
BOARD OF GOVERNORS

Item No. 11
3/25/64

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

March 25, 1964

Mr. Floyd F. Whitmore, President,
Whitmore Company, Inc.,
Corning, Iowa.
Dear Mr. Whitmore:
This refers to the request submitted through
the Federal Reserve Bank of Chicago for a determination
by the Board of Governors of the Federal Reserve System
as to the status of Whitmore Company, Inc., as a holding
company affiliate.
From the information presented, the Board understands that Whitmore Company, Inc., is engaged in operating
760 acres of farm land and a general insurance agency, and
is a sizable feeder of cattle and hogs; that it is a holding company affiliate by reason of the fact that it owns or
controls 1,200 (96 per cent) of the 1,250 outstanding shares
of stock of The Okey-Vernon National Bank of Corning, Corning,
Iowa; and that it does not, directly or indirectly, own or
control any stock of, or manage or control, any other banking institution.
In view of these facts, the Board has determined
that Whitmore Company, Inc., is not engaged, directly or
indirectly, as a business in holding the stock of, or
managing or controlling banks, banking associations, savings banks, or trust companies within the meaning of
section 2(c) of the Banking Act of 1933 (12 U.S.C. 221a);
and, accordingly, it is not deemed to be a holding company
affiliate except for the purposes of section 23A of the
Federal Reserve Act and does not need a voting permit from
the Board of Governors in order to vote the bank stock
which it owns or controls.

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Federal Reserve Bank of St. Louis

BOARD OF GOVERNORS Ur THE FEDERAL RESERVE SYBTEM

994

Mr. Floyd F. Whitmore

If, however, the facts should at any time indicate
that Whitmore Company, Inc., might be deemed to be so engaged, this matter should again be submitted to the Board.
The Board reserves the right to rescind this determination
and make further determination of this matter at any time
on the basis of the then existing facts, including additional acquisitions of bank stocks even though not constituting
control.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.

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Federal Reserve Bank of St. Louis

995
BOARD OF GOVERNORS
pOF Got;•

Item No. 12
3/25/64

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
1•
,
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

March 25, 1964

14r. Jack Tarver, Chairman,
Federal Reserve Bank of Atlanta,
A tlanta,
Georgia. 30303.
Dear Mr. Tarver:
In accordance with the request contained in your letter of
March 12, 1964, the Board of Governors approves the appointment of
.1P. James L. Jones, Jr. as Alternate Assistant Federal Reserve Agent
't the Federal Reserve Bank of Atlanta to succeed Mr. Eric B. Hingst.

This approval is given with the understanding that Mr. Jones
11 be solely responsible to the Federal Reserve Agent and the Board
ai Governors for the proper performance of his duties, except that,
vtiring the absence or disability of the Federal Reserve Agent or a
bacancY in that office, his responsibility will be to the Assistant
,'ederal Reserve Agent and the Board of Governors.
When not engaged in the performance of his duties as Alternate
As
4istant Federal Reserve Agent, Mr. Jones may, with the approval of the
a eral Reserve Agent and the President, perform such work for the Bank
t,s will not be inconsistent with his duties as Alternate Assistant
ederai
Reserve Agent.
It will be appreciated if Mr. Jones is fully informed of the
d0rtance of his responsibilities as a member of the staff of the
1 1P
4
f„ "al Reserve Agent and the need for maintenance of independence
4.°M the operations of the Bank in the discharge of these responsibilities.
Please have Mr. Jones execute the usual Oath of Office which
ahould
be forwarded to the Board of Governors along with notification
v4 the
effective date of his appointment.
Very truly yours,
(Signed) Merritt Sherman

Merritt Sherman,
Secretary.

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Federal Reserve Bank of St. Louis

Item No. 13
3/25/64
UNITED STATES OF AMERICA
SYSTEM
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE
WASHINGTON, D. C.

In the Matter of the Application of
111:ANIIIS TRUST COME'ANY
'
1Pnrova1 of consolidation with
"ape Cod Trust Company

ORDER APPROVING CONSOLIDATION OF BANKS
There has come before the Board of Governors, pursuant to
the Bank Merger Act of 1960 (12 U.S.C. 1328(e)), an application by
IlYa„4

Trust Company, Hyannis, Massachusetts, a State member bank

°f the
of the
Federal Reserve System, for the Board's prior approval
cons ,
Harwichport,
°Iidation of that bank and Cape Cod Trust Company,
Iles&
charter of
achusetts, a State nonmembr insured bank, under the

the

former and with the title of Cape Cod Bank and Trust Company.

Cape
44 incident to the consolidation, the main office and branch of
of Cape Cod Bank and
C°1 Trust Company would be operated as a branch
l'Ic4": Company.
bY the

approved
Notice of the proposed consolidation, in form

Board, has been published pursuant to said Act.
Upon consideration of all relevant mate7ia1 in the light of

the ,

&actors set forth in said Act, including reports furnished by the

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Federal Reserve Bank of St. Louis

997
-2C°111Ptroller of the Currency, the Federal Deposit Insurance Corporation,
and the
ive factors involved in
Department of Justice on the competit
the

proposed consolidation,
forth in the
IT IS HEREBY ORDERED, for the reasons set

Eaard's Statement of this date, that said application be and hereby
consummated
aPProved, provided that said consolidation shall not be
(0 Within seven calendar days after the date of this Order or
(b) later than three months after said date.
March, 1964.
Dated at Washington, D. C., this 25th day of
By order of the Board of Governors.
and
Voting for this action: Chairmen Martin,
Governors Balderston, 11111s, and Shepardson.
Voting against this action:
Mitchell, and Deane.

Governors Robertson,

(Signed) Merritt Sherman
Merritt Sherman,
Secretary.

(34L)

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Federal Reserve Bank of St. Louis

998
BOARD OF GOVERNORS

Item No. 14
3/25/64

OF THE
FEDERAL RESERVE SYSTEM

APPLICATION OF HYANNIS TRUST COMPANY
FOR APPROVAL OF CONSOLIDATION WITH
CAPE COD TRUST CGMPANY

STATEMENT

Hyannis Trust Company, Hyannis, Massachusetts ("Hyannis
Zrua tit
) a State member bank of the Federal Reserve System, with
(14"Its of $13.3 million as of September 30, 1963, has applied, puro
suant ,
c the Bank Merger Act of 1960 (12 U.S.C. 1828(c)), for the
Eoardla prior approval of the consolidation of that bank and Cape Cod
ittt Company, Harwichport, Massachusetts ("Cape Cod Trust"), with dete
154it8 of $9.2 million as of the same date. The banks would consolida
t ttde
t the charter of Hyannis Trust and the title of Cape Cod Bank end
Itust

Company.

As an incident to the consolidation, the present main

044_
4 e and branch of Cape Cod Trust would become branches of the re4ati
ng bank, increasing to five the number of offices (including one
teaftr,
Q-nal branch) operated under the charter of Hyannis Trust. In
ion, Hyannis Trust has received approval to establish two other
1)14knehes which are not yet operative.
Under the Act, the Board is required to consider, as to each
'"e banks involved, (1) its financial history and condition, (2) the

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Federal Reserve Bank of St. Louis

999
-2adequacy of its capital structure, (3) its future earnings prcspects,
(10 the general character of its managemeat, (5) whether its corporate
1)(47ers are consistent with the purposes of 12 U.S.C., Ch. 16 (the
derai Deposit Insurance Act), (6) the convenience and needs of the
colt4unities to be served, and (7) the effect of the transaction on
monopoly).
competition (including any tendency toward
not

The Board may

all these factors,
approve the transaction unless, after considering

it linds the transaction to be in the public interest.
condition, the
Banking factors. - The financial history and
ment of Hyannis
4413its1 structure, the earnings prospects, and the mannge
/113t appear satisfactory.

that the

The same is true of Cape Cod Trust, except

ent a subcapital structure of the resulting bank would repres

Cod
tantial improvement over the present capital structure of Cape
111.1st.
ial condition,
The resulting bank would have a sound financ
cts, and greater
"adequate capital structure, favorable earnings prospe
Hyannis Trust or
of management than presently available to either
4
"
eaPe Cod Trust.
of any of the banks
There is no indication that the powers
of 12 U.S.C.,
14111ved are or would be inconsistent with the purposes

Ch. 16.
ities. - The head office
Convenience and needs of the commun
Arid

located at Hyannis, Massachusetts,
seasonal branch of Hyannis Trust are

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Federal Reserve Bank of St. Louis

IL0JO
-3resort area of Cape
tbellt 70 miles southeast of Boston in the popular
Osterville.
(434. Its other branch is six miles southwest of Hyannis at
Both communities are also serviced by offices of other commercial banks,
as

Well as by mutual savings banks and cooperative banks.

The permanent

is estimated at about

Pon0.4ation of the Hyannis Trust service area

19000, with a summer population exceeding 53,000.
Harwichport (1960
The head office of Cape Cod Trust is at
N4Jaation: 3,700), 13 miles east of Hyannis.
miles further to the northeast at Orleans.

Its sole branch is 15

These communities are served

other commercial
'mutual savings and cooperative banks and offices of

ks are reasonably accessible to residents of the communities.

The

overlap that of
setvice area of Cape Cod Trust does not significantly
IlYannis Trust.
the resulting
The substantially increased loan limits of
the larger
bank would provide an alternative source of credit for
industry,
Cape Cod businesses, such as the fast growing construction
local mutual savings banks
Ithich are now -Forced on occasion to rely upon
for needed funds to finance
(4' upon ccmmercial banks outside Cape Cod
the ,
larger resulting bank would
e—panding local economy. Moreover, the

be -vie to
department that wculd be
operate a greatly improved trust
adequate trust service
onsiderable benefit to individuals for whom
'
cent or more of its
deThe area from which the bank acquires 75 per
corporations ("IPC deposits")
and
partnerships,
P"ita of individuals,

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Federal Reserve Bank of St. Louis

-4-

not now locally available.

The resulting bank would also be able to

1de installment loan service on an expanded scale.
"
1)r
Competition. - Present competition between Hyannis Trust and
C`4* Cod Trust is not significant.
Trust

After the establishment by Hyannis

of a prcposed branch in South Yarmouth, the nearest office of

Cape Cod Trust would be its main office nine miles to the east, and
three offices of three commercial banks would separate it from the
804th Yarmouth branch.

While it is to be expected that some potential

e°10Petiti0n would be eliminated thereby, consummation of the consolidaticlo Would enable a local commercial bank to compete more effectively
with larger mutual savings and cooperative banhs and Boston commercial
banks.

The proposal would unite the first and third largest of the
8i

commercial banks in the combined service areas of the participating

ban,.
8.
"

The resulting bank would hold about 45 per cent of the IPC de-

the circnm1(3a its in commercial banks located in its service area. In
atanc_ s
e of this case the particularly competitive operations of mutual
a percentage
c4Iiingc banks substantially reduce the importance of such
fiaure.

resulting
If savings bank deposits are taken into account, the

batik would hold only about 17 per cent of bank deposits in its service
arse.
This figure would be reduced further if cognizance were also
take_
" of share accounts in local cooperative banks.
and
Summary and conclusion. - The increased lending limits
Nlend
---ed services, including trust administration, which could be made

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Federal Reserve Bank of St. Louis

1002

Ilsila'ble by the resulting bank would benefit the communities served.
Wo

eliminated.
significant existing or foreseeable competition would be

the
'11/I-E resulting bank would be able to compete more effectively with
ler
ge local mutual savings and cooperative banks, and also with outside
.
.kercial banks already serving the Cape Cod area, without adversely
tE j

1.1

institutions
the general competitive situation of financial

in mite,
--= area,
Accordingly, the Board finds the proposed consolidation to
e

n the public interest.

ila,reh 25, 1964.

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Federal Reserve Bank of St. Louis

1
3
Item No. 1T"
3/25/64
AND DAANE
DISSENTING STATEMENT OF GOV7RNORS ROBERTSON, MITCHELL,
t of
The positive factors cited by the majority in suppor
anToval of the application in this case are not impressive.

There is

11° showing of significant present needs for the increased lending limit
and e%panded trust and othar services.

Any needs not met by the par-

ticipating banks can be accommodated at adequate banking facilities
in Boston or elsewhere at nearer sources.
a "credit
deficit area".

The Cape Cod area is not

The asserted need for strengthening the

managed banks
caPits1 structure of the smaller of the two sound and well
adds
nothing of consequence in support of the application.
present
On the other hand, significant potential and some
c°1Illletition will be foreclosed by the consolidation.

Furthermore, the

lietY substantial increase in the present dominance of Hyannis Trust lithich, after the consolidation, will be more than twice as large as
the

disrupt
next largest bank in the combined area - will inevitably

the relatively favorable competitive balance that now prevails among
the commercial banks in the area.

e
We are not convinced that the advers

the limited competition
c°111Petitius aspects are sufficiently mitigated by
ft°m the mutual savings banks and cooperative banks operating in the area.
of this case which
On balance, we find nothing in the record
ing adverse competitive
justifies approval in the face of the forego
e°4s4d erations.
We would deny the application.

Match 25,
1964.

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Federal Reserve Bank of St. Louis

Item No. 16
3/25/64
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHIrGTON, D. C.

In the Matter of the Application of
XRST WISCONSIN BANKSHARES CORPORATION
o
f°
,r aPproval of the acquisition of voting
'
ar'es of Brookfield National Bank,
r'°01(fie1d, Wisconsin, a proposed new bank.

ORDER APPROVING APPLICATION UNDER
BANK HOLDING COMPANY ACT

There has come before the Board of Governors, pursuant to
0n
"
8
3(a)(2) of the Bank Holding Company Act of 1956 (12 U.S.C.
%)and section 222.4(a)(2) of Federal Reserve Regulation Y
(12 OVR 222.4(a)(2)), an application on behalf of First Wisconsin
Ilat*
'
St-lazes Corporation, Milwaukee, Wisconsin, a registered bank

holdi113

company, for the Board's approval of the acquisition of 80 per

"Or more of the 3,000 voting shares of the Brookfield National
anit
, Brookfield, Wisconsin, a proposed new bank.
As required by section 3(b) of the Act, notice of receipt

(/ the

aPplication was given to the Comptroller of the Currency with

a
l'-quest for his views and recommendation.
IIPt"al of the application.

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Federal Reserve Bank of St. Louis

The Comptroller recommended

Notice of receipt of the application was

1005
-2-

Published in the Federal Register on January 4, 1954 (29 Federal
Ilagister 117), 'which provided an opportunity for submission of
comments and views regarding the proposed acquisition, and the time
f°r filing such comments and views has expired and all comments and
Jews filed with the Board have been considered by it.
IT IS ORDERED, for the reasons .)-et forth in the Board's
Statement of this date, that said application be and hereby is approved,
Ptovided that the acquisition so approved shall not be consummated
(a)

within seven calendar days after the date of this Order or

(1)) later than three months after said date.
Dated at Washington, D. C., this 25th dny of linrch, 1964,
By order of the Board of Governors.
Voting for this action: Vice Chairman Balderston, and
Governors Mills, Robertson, Shepardson, Mitchell, and
Deane.
Absent and not voting:

Chairman Martin.

(Signed) Merritt Sherman

Merritt Sherman,
Secretary.

(stiq

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Federal Reserve Bank of St. Louis

1006
BOARD OF GOVERNORS

Item No. 17
3/25/64

OF THE
FEDERAL RESERVE SYSTEM

APPLICATION BY FIRST WISCONSIN BANKSHARES CORPORATION
FOR APPROVAL OF THE ACQUISITION OF VOTING SHARES OF
BROOKFIELD NATIONAL BANK

STATEMENT

First Wisconsin Bankshares Corporation, Milwaukee, Wisconsin
("APPlicant"), a registered bank holding company, has applied to the
Beard of Governors, under the Bank Holding Company Act of 1956 ("the
Act"), for permission to acquire 80 per cent or more of the 3,000 shares
)1)'f common stock to be issued of the Brookfield National Bank, Brookfield,
ilisconsin ("Brookfield National" or "Bank"), a proposed new bank.
Views and recommendation of supervisory authority. - As
equired by section 3(b) of the Act, the Board notified the Comptroller
Of

the Currency of receipt of the application and requested his views

thereon.

The Comptroller recommended approval of the application.
Statutory factors. - Section 3(c) of the Act requires the

13c4 tcl to take into consideration the following five factors: (1) the
1 history and condition of the holding company and the bank
"neerned; (2) their prospects; (3) the character of their management;
(4) the convenience, needs, and welfare of the communities and the area
ccneerned; and (5) whether the effect of the proposed acquisition would
e te

expand the size or extent of the bank holding company system

iliv°1ved beyond limits consistent with adequate and sound banking,

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Federal Reserve Bank of St. Louis

-2-

the public interest, and the preservation of competition in the field
Of banking,
Applicant has engaged in the ownership and control of banking
institutions since its organization in 1929.

It presently owns seven

b4nk8 and a trust company, all located in the State of Wisconsin.
Three of the seven banks and the trust company are located in Milwaukee
C°untY; the remaining four banks are located in Eau Claire (Eau Claire
County), Fond du Lac (Fond du Lac County), Madison (Dane County), and
Applicant's largest banking subsidiary,
1/
Fir
st Wisconsin National Bank, Milwaukee, held at June 29, 1963,

Oshkosh (Winnebago County).

$702 million of total deposits, representing approximately 77 per cent
Of the $915 million of total deposits held by all of Applicant's banks.
The permanent site of the proposed Brookfield National Bank
ill be in the City of Brookfield, Waukesha County, in a shopping center
1/°Posed to be developed by Sears, Roebuck and Co., on a 136-acre site
4°4ted approximately nine miles west of downtown Milwaukee.

Bank will

ol/en for business in temporary quarters near the site of the shopping
°enter.
Financial histor
•11.1,D.k

condition

and

ros ects of A DIP licant and

- Applicant's financial history and condition are considered to

sat
isfactory.

operational history
On the basis of its nearly 35 years'

44 the sound financial condition of its subsidiary banks, including a
oz1.4
"'deration of the deposit growth of these banks, Applicant's prospects
Unless otherwise indicated, all banking data noted are of this date.

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Federal Reserve Bank of St. Louis

1008

-3-

appear favorable.

The Board finds that Bank's prospects are satisfactory.

This determination is based, in part, upon the favorable financial his0J

and condition both of the Applicant and its existing subsidiary

banks, as well as upon the following facts.

Bank, when permanently

1°cated, will be the only bank in the large shopping center to which referWas earlier made.

Bank's designated primary service area (the area

4ft which approximately 75 per cent of Bank's deposits of individuals,
Partnerships, and corporations will be derived), hereafter described, has
14`I substantial population growth since 1950 and there is reason to bethat the area will continue to experience such growth.

Bank's

dell°sits, projected by Applicant to the end of each of Bank's first
three

Years of operation, are estimated to be $2.1 million, $3.6 million,

1141 $4.7 million, successively.

On the basis of Bank's proposed location

attcl the projected growth of its primary service area, the foregoing proappear reasonable and Bank's prospects favorable.
Character of management. - Applicant's directorate consists of
141tembers, 25 of whom are officers and/or directors of Applicant's
banking and
trust company subsidiaries.

Similarly, Applicant's officers,

llith few exceptions, are also officers of at least one of Applicant's
banking
and trust company subsidiaries.

The financial history and con-

ditiOn of Applicant and its subsidiaries, heretofore discussed, support
the
c°nclusion that the management of Applicant and its banking and trust
"anY subsidiaries is satisfactory. Bank's management will be drawn
ituti
allY from personnel of Applicant's Milwaukee area subsidiaries.
4eh of
the five proposed directors of Bank is presently a director and/or

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Federal Reserve Bank of St. Louis

1009
-4-

°fficer of one or more of Applicant's Milwaukee subsidiaries.

The Board

e°ncludes that the character of Bank's management will be satisfactory.
Conveniences needs

- Bank's

and welfare of the communities and area

primary service area, as designated by Applicant,

e tends over an area of slightly more than 20 square miles in Waukesha
C°untY and lies generally between the cities of Waukesha and Milwaukee.
Bank's proposed site is some seven miles east of Waukesha and about
tliae miles west of Milwaukee.

The character of Bank's primary service

al'ea is essentially residential. In the past 12 years the area's population has increased from approximately 3,500 to 15,000.
has

Waukesha County

experienced the most rapid growth of any county in the State, its

P°Pulation having increased 84 per cent in the previous ten years.
A major portion of the wage earners residing in the area that
Bank will primarily serve commute to places of employment in other secticlls of the Milwaukee Metropolitan Area (Milwaukee and Waukesha Counties)
13iving time from the area to both Waukesha, the industrial center of
Ilaukesha County, and to Milwaukee, the industrial and financial center
f the State, has been reduced to but a few minutes by the recent opening
f Interstate Expressway 94 which bisects Waukesha County in an east-west
di
rection. Two other major thoroughfares facilitate east-west traffic
hr°ugh the County.

Applicant's prediction of continued residential

develoPment of the Brookfield area appears reasonable in view of the

ahwaY development contributing to relatively prompt access to the large

eeaters of employment to the east and west.

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Federal Reserve Bank of St. Louis

1010
-5-

Although, as indicated, Bank's primary service area is
Predominantly residential in character, it also contains four small
industries, numerous comalercial establishments, professional offices,
and other retail and service establishments.

By early 1966, the now

limited commercial character of this area will experience substantial
exPansion through the construction and occupancy of the proposed shopping
center to be developed in the area by Sears, Roebuck and Co.

Present

Plans call for occupancy by about 60 business establishments.
At the present time there are no banking offices located in
Bank's primary service area.

However, within a five-mile radius of Bank's

Proposed site there are six banking offices, one of which, Mayfair
ilational Bank, Wauwatosa, is a subsidiary of Applicant.

The closest bank-

ing office to the proposed site is the Elm Grove office of Wauwatosa State
4nk located in the Village of Elm Grove, 1.6 miles from Bank's proposed
Sites

A portion of Elm Grove is included within Bank's primary service

area,

as are portions of the City of Brookfield and portions of the City

"Hew Berlin.

Brookfield, with an estimated population at January 1963

"23,000, has two banking offices, the Elm-Brook State Bank and the
4°°kfield Office of the Waukesha County Marine Bank.

The three remain-

within the above-mentioned five-mile radius which derive some
14104

cullass from Bank's primary service area are Applicant's bank in

41.114atosa, the New Berlin State Bank, New Berlin, and the Central Bank,
/
11
8t

Allis, located, respectively, about five, four, and six road miles

4°T4 Bank's proposed site.

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Federal Reserve Bank of St. Louis

IOU

-6-

It is Applicant's position that its acquisition of Bank,
resulting in the immediate availability of a wide spectrum of banking
services, would respond to a presently unserved demand from within Bank's
Primary service area for certain of these services.

While Bank's opera-

at this time would, in respect to certain of Bank's potential
customers, constitute a more convenient banking facility than is now
available, the existence of six banking offices within distances from
aPProximately one and one-half to six road miles from Bank's proposed
Site precludes a finding as to any significant unserved demand for bankServices of a nature usually required by a predominantly residential
co
maunity.
However, in regard to the future needs and convenience of the
l'esidents and businesses within Bank's primary service area, Applicant has
established a stronger case for approval of its acquisition of Bank. ComPletion of the proposed shopping center in which Bank will be permanently
lccated will give impetus to substantially increased commercial activity
thin Bank's primary service area.

Establishment of some 60 enterprises

41 the shopping center will create a need for banking services of a volume
facility
44d type presently not required in the area, and for a banking
41°re conveniently located than are any of the banks now serving the area,
i

s apparent from the documentation supporting this application that

he developers of the shopping center consider important to the develop.
tilellt the presence of a banking facility.

Should this application be

cletlied, the proposed Bank would not open for business, and there is no
itldieation that any other interests are prepared to undertake the establishttlent of a bank at or near Bank's proposed site.

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Federal Reserve Bank of St. Louis

101.2
-7-

In view of the need for banking services which likely will
accompany the opening of the proposed shopping center, and assuming
the continucd residential expansion predicted in and near Bank's priirlatY service area, the Board concludes that the corprenience, needs,
and welfare of the area weigh toward approval of Applicant's proposal.
Effect on adequate and sound banking, Public interest, and
baro

competition. - The principal market area in relation to which

the Board must determine the probable effects of Applicant's proposal
generally

encompasses that portion of Waukesha County constituting Bank's

designated primary service area and contiguous portions of the cities of
8r°°kfield, West Allis, and New Berlin and the Village of Elm Grove.
C°nsideration must be given also to any impact that may reasonably be
fltieipated on the Waukesha and Milwaukee banks nearest to and apparently
8r/fing the area concerned.
Applicant has no bank in Waukesha County.

Its banks at Eau

C4ire, Fond du Lac, Madison, and Oshkosh derive but a negligible portion
Of their tot-al business from the Milwaukee area.

Applicant's Milwaukee

Cc)untY banks, although controlling a substantial portion of the total
Offices

and deposits of all banks in the Milwaukee Metropolitan Area,

derive relatively little of their total business from Bank's desig"ted primary service area.

These banks, operating 16 offices, held

°rIlbined total deposits of $719.6 million, $702 million of which
letC held by First Wisconsin National Bank.

A total of $461,000

c) deposits and $1.4 million of loans were derived by Applicant's

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Federal Reserve Bank of St. Louis

1013
_8-

li-lwaukee area banks from Bank's proposed primary service area.

substantial portion of the last mentioned business undoubtedly consists
of convenience accounts placed with the Milwaukee banks, principally
First Wisconsin National Dank, by depositors and borrowers who have their
Places of business or work in Hilwaukee.

If Bank is established, it un-

doubtedly would attract a portion of the latter accounts as a more convenient source of deposit and service.
The degree to which banking offices and bank deposits in the
Ililwaukee area are concentrated in the Applicant's group

banks has

Previously been the subject of concern to this Board, and is a significant
factor in the present case.

Applicant's Milwaukee area banks held

36.5 per cent of the total deposits of all banks in
tan

Area.

1.8 not

the

Milwaukee Metropoli-

However, within Bank's primary service area, Applicant's system

presently a dominant operating force, and it does not appear that

its competitive strength in that area, to be reflected in its operation
Of Bank, will be so enhanced by that operation as to constitute a force into adequate and sound banking, the public interest, or banking compewould
tition. This conclusion is premised upon the fact that Applicant
be acquiring
a newly established bank rather than a going concern with
numerous well-established accounts; that Bank's business, rather than
b°ing comprised principally of accounts captured from other area banks,
ili be derived principally from the shopping center in which it will be
1°cated, and from residents new to the area, many of whom will have no
131'"iously established bank connections in Bank's area; and that the
banking offices that are currently competing in varying degrees for the

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Federal Reserve Bank of St. Louis

10„4:
-9ence undue
business within Bank's primary service area should not experi
adverse competitive effects from Bank's operation.
banking offices
As to the effect of Brnk's establishment on the
ly to
now serving the area principally concerned, the office most direct
the
be affected by Applicant's proposal will be the Elm Grove office of
Wauwatosa State Bank, 1.6 miles from Bank's proposed site.
State Bank's total deposits are about $35 million.
1962, the Elm Grove office held $3.4 million.

The Wauwatosa

At June 30,

Even assuming that the

of services that Applicant
Proposed Bank would make use of the full line
d, there is
asserts will be available to it, a fact not easily assume
of
little likelihood that the service and growth potential of an office
4

$35 million bank will be unduly impeded.

As to the remaining banks or

and are
banking offices that are serving Bank's primary service area
located some three to six miles from Bank's proposed site, with the
e%ception of Nayfair National Bank

each is closer to a section of Bank's

Primary service area than Eank will be.

On the basis of all the circum-

stances presented, the Board perceives no significant adverse effect on
Bank.
these banking offices from Applicant's acquisition and operation of
context of its direct effect
Viewing Applicant's proposal in the
On the inhabitants of the area primarily to be served by Bank, as well
al of the proposal appears
48 on the banks now serving that area, approv
14arraated.
Of

question as to whether, in view
However, there remains the

bank deposits in the
the extent to which the banking offices and

lled
Ililwaukee Hetropolitan Area are now concentrated in the banks contro

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Federal Reserve Bank of St. Louis

1015
-10by Applicant, even the relatively small increase in concentration that
would follow from the acquisition of Bank can be said to be consistent
with the public interest and the preservation of banking competition.
In the Board's Judgment, such increase, albeit slight, is a fact adverse
to approval of the application.

However, a more decisive consideration,

in the opinion of the Board, is the extent to which the future needs and
convenience of the area involved will be served by Applicant's acquisition
of Bank, This result outweighs to a sufficient degree the adverse consideration noted as to warrant approval of the application.
Conclusion. - Viclwing the relevant facts in the light of the
general purposes of the Act and the factors enumerated in section 3(c)
thereof, it is the Board's judgment that the proposed acquisition would
be consistent with the public interest and that the application should
be

approved.

arch 25, 1964.

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Federal Reserve Bank of St. Louis

BOARD OF GOVLPNONS
OF THE

Item No. 18
3/25/64

FEDERAL RESERVE SYSTLM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE UOARD

March 25, 1964.

Mr. Phillip S. Hughes,
Assistant Director for
Legislative Reference,
Bureau of the Budget,
Washington, D. C. 20503
Dear Mr. Hughes:
In response to the request of your office for views on
the Treasury Department's draft bill "To authorize revised procedures
for the destruction of unfit Federal Reserve notes, and for other
Purposes," the Board wishes to express its unqualified support thereof.
Members of the Board's staff worked closely with representatives of the Treasury Department in developing the draft bill, and
the Board is of the opinion that it is entirely satisfactory in all
m aterial respects.
Particularly in regard to the revised procedures for
destruction of unfit Federal Reserve notes, the need for this legislation is becoming increasingly critical. The issuance of $1 Federal
notes, authorized by P. L. 88-36 of June 4, 1963, commenced
late
t_ate last year, and since that time the Federal Reserve Banks have
"een accumulating and storing unfit notes of this denomination in
1-iticipation of destruction procedures such as are contemplated in the
draft bill and the economies to be realized incident thereto. As the
v°1ume of these $1 notes in circulation has increased, there has been
a corresponding increase in the accumulation of those which are
to the Reserve Banks in a condition rendering them unfit for
turther
f
circulation.
Within a few weeks or months the volume of such unfit
currency accumulated at the Reserve Banks will become considerable,
and destruction in accordance with the plan contemplated under the
au thority contained in the proposed legislation should begin promptly.
. option of this plan would permit annual savings of many hundreds of
siflousands of dollars in handling and shipping expenses by making it
11ecessary to sort unfit $1 Federal Reserve notes according to Bank
issue and then forward them to Washington for destruction.

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Federal Reserve Bank of St. Louis

BOARD

SYSTEM
OF GOVERNORS OF THE FEDERAL RESERVE

. Phillip S. Hughes

-2-

be
Accordingly, in view of the substantial economies to
realized, it is the Board's hope that the draft bill will be introduced and enacted into law as expeditiously as possible.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.

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Federal Reserve Bank of St. Louis

MIS
BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM

Item No. 19
3/25/64

WASHINGTON

OFFICE OF THE CHAIRMAN

March 26, 1964.

Mr. Malcolm S. Ruth,
Chairman of the Board,
Peoples Trust City Bank,
Reading, Pennsylvania.
Dear Mr. Ruth:
The Board has given a great deal of thought to your frank
letter of March 2, 1964, regarding membership in the Federal Reserve
System.
in the
You are quite right in pointing out that membership
involves
statutes,
present
under
Federal Reserve System, at least
certain burdens that apply to nonmember banks only in lesser degree,
if at all. The principal burden is the requirement that member banks
Illaintain specified percentages of their deposits as reserves and that
these reserves be in the form of deposits at the Reserve Bank or vault
cash. Depending on the law of the particular State, a nonmember bank
may be able to maintain reserves in smaller amount, in less expensive
°1111, or both. It is also true that many of the benefits of the
!
!ederal Reserve System accrue to the banking system in general, and to
c,he entire nation, and not merely to banks that are members of the
,
5Y5 tern
accompany
I know that you are well aware of benefits that
membership in the System. These may not be as readily apparent or as
the burden
easily appraised as are some of the burdens, particularly
that reason may not always
°f maintaining required reserves, and for
pe accorded as much weight as they deserve. For example, the privilege
tf having access to credit at the Federal Reserve Bank may be likened
°
from any
a form of insurance -- and of a kind not truly available
Other source.
of imparting strength
This insurance has the valuable feature
is obtained under it
and above the amount of credit that actually
lly, the
rft the Reserve Bank at any particular time. More specifica
!
can
arise
ailability of the credit to meet contingencies that may
"
not
would
that
and resources
Permit an effective use of a bank's capital
this
ultimate
to
access
bank's
°therwise be appropriate. Similarly, the
!ource of credit can provide assurance to the bank's customers, and thus
'nerease the attractiveness of the bank's services.
ovar

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Federal Reserve Bank of St. Louis

Mr. Malcolm S. Ruth

-2-

As a prudent and experienced banker you will, I am sure, not
lightly dismiss the value of such protection to both your bank and its
c ustomers. I hope you will not consider it presumptious, however, for
Me.to suggest that in a long period of prosperity, such as we have been
enjoying, there may be a tendency to underestimate the worth of such a
safeguard. It would seem to me that this could be especially unfortunate in the case of a bank, such as yours, which has assets of more
than $100 million and therefore might not always be able to have the needs
Of the bank and its customers readily met elsewhere in time of stringency.
Since you point out that you have a local competitor about
twice your size that is not a member of the Federal Reserve System, I
believe you will want to weigh very carefully whether discontinuance of
Your Federal Reserve membership would not reduce your ability to compete.
would suggest for your consideration that if the value of membership
tS suitably appraised, it may be seen as a significant competitive bene'Elt that can outweigh its more readily apparent burdens.
In my statement before the House Banking and Currency Committee
tl?at was published at p. 148 of the February, 1964 Federal Reserve Bulle.
.
ln, and to which you referred, I urged Congressional action on proposals
'he Board has advanced for simplifying the laws regarding extension of
it by Reserve Banks to member banks. These simplifications would
fredit
increase the usefulness of these credit facilities.

These changes would require legislation. So would changes in
requirements along the lines recommended in Chapter II of the
l;Pril, 1963 Report of the President's Committee on Financial Institutions.
or convenient reference, I am enclosing an excerpt from that chapter as
is
.!11 as a copy of the full report.) In the meantime, the System
usefulness
o
increasing its
roughlY canvassing the possibilities of
ithin existing legislation. But whatever it may be possible to accomish with or without legislation, I am convinced that a bank, particuif it
arlY of your size, would sacrifice extremely important advantages
a
memorandum
of
copy
a
gave up membership in the System. I am enclosing
PjePared in January, 1964 on "Advantages in Federal Reserve Membership"
nat You may find of interest.
reserve

e
r

your
On behalf of the Board and myself. I want to thank you for
the
on
you
our
thoughts
with
frankness, for the opportunity to share
you are devoting to this
:ubject, and for the careful consideration that
that I may have been
hope
I
decision.
a!rious question before reaching a
that the benefits
s,
and
deliberation
o'le to be of some assistance in your
such value as
of
you
as
to
being
appeal
t membership in the System will
'
the System.
with
association
of
years
deserve continuation of your forty
Sincerely yours,
) 1/
)
t
Af
Ill
tnclosures

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Federal Reserve Bank of St. Louis

Wm. McC. Martin, Jr.

BOARD OF GOVERNORS

Item No. 20
3/25/64

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

March 26, 1964.

Mr. Walter E. Hoadley, Chairman,
Federal Reserve Bank of Philadelphia,
Philadelphia, Pennsylvania 19101.
Dear Mr. Hoadley:
Your letter of March 18, 1964, commenting on a letter from
Mr. Ruth, Chairman, Peoples Trust City Bank, Reading, Pennsylvania,
and on the general subject of membership in the Federal Reserve System
was brought to the attention of the Board in connection with the
Board's consideration of an appropriate response to Mr. Ruth.
The Board shares your concern over the present trend of
thinking among a growing number of member banks in regard to the
matter of membership in the Federal Reserve System. Likewise, the
Board concurs in Your suggestion that positive steps should be taken
to arrest this trend.
In this
14r. Ruth's letter
all Reserve Banks
therein
discussed
this. area.

connection, the Board is transmitting copies of
and Chairman Martin's reply to the presidents of
requesting their thoughtful attention to the issues
and soliciting their ideas for remedial action in

Also, there is attached to Chairman Martin's letter, a copy
which is enclosed for your information, a reproduction of comments
made by the Board in January of this year concerning a letter similar
Mr. Ruth's. It is hoped that the points discussed in this memorandum may be helpful to the Reserve Banks in dealing with questions
concerning advantages of continued System membership.

Very truly yours,
(Signed)

Merritt Sherman,

Merritt Sherman,
Secretary.

Closure

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Federal Reserve Bank of St. Louis

Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, March 25, 1964, Volume 51, Part 3

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