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'4)99/61
Minutes for
To:
Members of the Board
From:
Office Of the Secretary
March 27, 1963
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.
Chin. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
Gov. Mitchell
Minutes of the Board of Governors of the Federal Reserve
System on Wednesday, March 27, 1963.
The Board met in the Board
Room at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Balderston, Vice Chairman 1/
Mills
Robertson
King
Mitchell 2/
Sherman, Secretary
Kenyon, Assistant Secretary
Fauver, Assistant to the Board
Hackley, General Counsel
Solomon, Director, Division of Examinations
O'Connell, Assistant General Counsel
Sammons, Adviser, Division of International
Finance
Mr. Smith, Assistant Director, Division of
Examinations
Mr. Mattras, General Assistant, Office of
the Secretary
Mr. Entriken, Attorney, Legal Division
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Items circulated or distributed to the Board.
The following
items, copies of which are attached to these minutes under the respective
item numbers indicated, were approved unanimously:
Item No.
Letter to Westport Bank, Kansas City, Missouri,
granting its request for permission to exercise
fiduciary powers.
1
Memorandum from the Division of International Finance
dated March 25, 1963, regarding a request for the
services of Mr. Kaufman, Economist in that Division.
2
17—kintered meetiEg at point indicated in minutes.
2/ Withdrew at point indicated in minutes.
3/27/63
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With reference to Item No. 2, it was reported that Governor
Shepardson recommended approval of the request.
Application of Brenton Companies (Items
3 and 4). Pursuant
to the decision reached at the meeting on February 27, 1963, there
had been distributed a proposed order and statement reflecting the
Board's approval of the application of Brenton Companies, Inc., Des
Moines, Iowa, to acquire stock of the First National Bank of Davenport,
Davenport, Iowa (a proposed new bank).
The issuance of the order and statement was authorized; copies
are attached to these minutes as Items 3 and 4.
Governor Balderston, who had been called from the room at the
beginning of the meeting, returned to the room at this point.
Messrs.
Sammons, Mattras, and Entriken withdrew from the meeting.
Disappearance of securities at San Francisco.
Reference was
made to an article in today's edition of the San Francisco Examiner
concerning the unexplained disappearance several months ago of certain
Treasury certificates of indebtedness having a face value of $7.5 million
that had been held in custody by the Federal Reserve Bank of San Francisco
for a member bank. (The incident was reported to the Board at its
meetings on August 15 and September
6, 1962.) There was also read to
the Board an Associated Press dispatch, based on the newspaper article,
that had come in on the ticker service.
t
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3/27/63
Governor Balderston reported that he had just talked by telephone
with President Swan, who indicated that a detailed statement would be
issued today by the San Francisco Bank with respect to the matter.
Governor Balderston stated that he had asked Mr. Swan to have the
statement read to Mr. Sherman over the telephone as soon as it was
Prepared.
After discussion, it was understood that replies to inquiries
received at the Board's offices would make reference to the detailed
statement that was to be issued by the Reserve Bank.
It was also
understood that Governor Balderston would get in touch with the
Department of the Treasury to verify certain comments that the press
article had attributed to representatives of the Secret Service.
Governor Mitchell withdrew from the meeting prior to consideration
of the following matters.
Examination of Dallas Reserve Bank.
to the Board
There had been circulated
the report of examination of the Federal Reserve Bank of
Dallas made by the Board's examining staff as of October
5, 1962, together
With the usual accompanying memoranda.
At the Board's request, Mr. Smith commented on the information
contained in the report of examination.
In the course of his comments,
Mr. smith referred to a special study of the Bank's auditing function
that had been made by the Audit Review Committee of the Board of Directors
as a result of the discussion of the auditing program of the Reserve Banks
3/27/63
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at the 1961 meeting of the Conference of Chairmen of the Federal Reserve
Banks.
In this connection, Mr. Smith indicated that at the Dallas Bank
salary proposals for members of the audit staff continued to be handled
through the administrative processes applicable to the fixing of compensation for employees in various other functions of the Bank.
These comments
led to a discussion of the practices followed at the various Banks, and
it was agreed that a letter should be drafted to the Federal Reserve
Banks clarifying the views of the Board of Governors.
Whitney Holding Corporation.
Mr. O'Connell referred to current
litigation involving an attempt to nullify the Board's decision, by
order dated May 3, 1962, approving the application of Whitney Holding
Corporation, New Orleans, Louisiana, to become a bank holding company.
Mr. O'Connell stated that the Department of Justice, which was
representing the Board in this litigation, had advised him that the
petitioners were seeking a delay on the basis that the Department had
deposited certain exhibits with the Court under seal.
(This procedure
had been endorsed by the Board at its meeting on August 3, 1962.)
The
Department was opposing the move for a delay and wished to introduce a
statement to the effect that the exhibits in question had been among the
application papers that were available for public inspection at the time
the Whitney application was under consideration at the Board.
Mr.
O'Connell said that if a further check verified this recollection he
3/27/63
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would suggest that he be authorized to advise the Department that the
Board would have no objection to the proposed statement being made.
After discussion, Mr. O'Connell was authorized to advise the
Department of Justice in the manner he had suggested.
The meeting then adjourned.
Secretary's Note: Acting in the absence of
Governor Shepardson, Governor Robertson today
approved on behalf of the Board memoranda from
the Division of Research and Statistics dated
March 12 and March 13, 1963, recommending the
appointment of the following individuals as
Consultants in that Division effective until
December 31, 1963, on a temporary contractual
basis, with compensation at the rates indicated
and, when in travel status, transportation
expenses and a per diem allowance to be paid in
accordance with the Board's travel regulations:
George R. Hall, Assistant Professor
of Economics, University of Virginia,
Charlottesville, Virginia
$50 per day
Charles F. Phillips, Jr., Assistant
Professor of Economics, Washington
and Lee University, Lexington, Virginia
$50 per day
James W. McKie, Professor of Economics
and Business Administration,
Vanderbilt University, Nashville,
Tennessee
$75 per day
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 1
3/27/63
WASHINGTON 25. D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
March 27, 1963
Board of birectors,
Westport Bank,
Kansas City, Missouri.
Gentlemen:
This refers to your request for permission, under
applicable provisions of your condition of membership numbered
1, to exercise fiduciary powers.
Following consideration of the information submitted,
the Board of Governors of the Federal Reserve System grants
Westport Bank permission to exercise any and all fiduciary
powers now or hereafter conferred upon such bank by or pursuant
to the laws of the State of Missouri.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
issistant Secretary.
(
fyrl
Item No.'
3/27/63
March 25, 1963.
To:
Board of Governors
Prom: Ralph A. Young
Subject:
Temporary detail for
Mr. Richard Kaufman.
The Agency for International Development has requested that
we provide the services of Mr. Kaufman for a period of 30-40 days for
en assignment in Viet-Nam. Mr. Kaufman would assist in making a study
°I' the commercial import program in that country in an effort to
eliminate nonessential imports from the U.S.-financed aid Program.
1\jecessary travel and per diem expenditures would be paid by the
.A gency for International Development, but no request for reimbursement
l'or salary would be made.
I believe that this assignment not only presents an opportunity
or Mr. Kaufman to perform a useful service for the Government, but also
'O acquire experience and knowledge that would significantly enhance his
!"acity to perform his duties at the Board. For this reason, I recommend
wlat the Board approve this assignment, including the contribution of
111'. Kaufman's services without reimbursement.
f
It is also suggested that we take advantage of his presence
in the Far East and authorize him to spend up to three weeks visiting
.1-11gaporel Malaya, Thailand, India, and Pakistan. The additional cost
'nvolved would be relatively small and the value to the Board in terms
improving Mr. Kaufman's knowledge of the countries on which he works
llould be substantial.
(Signed) Ralph A. Young
UNITED STATES OF ANERICA
Item No.
3/27/63
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
3
WASHINGTON, D. C.
In the Matter of the Application of
BRENTON COMPANIES, INC.,
Des Moines, Iowa,
for prior approval of acquisition of
Shares of First National Bank of Davenport,
Davenport, Iowa
•••
ORDER APPROVING APPLICATION UNDER
BANK HOLDING COMPANY ACT
There has come before the Board of Governors, pursuant to
section 3(a)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 1842)
and section 222.4(a)(2) of Federal Reserve Regulation Y (12 CFR 222.4(a)(2)),
44 application by Brenton Companies, Inc., Des Moines, Iowa, for the
Board's prior approval of the acquisition of
6o per cent or more of the
voting shares of First National Bank of Davenport, Davenport, Iowa.
As required by section 3(h) of the Act, the Board notified the
Comptroller of the Currency of the receipt of the application and requested
his views.
The Comptroller recommended approval of the application.
A Notice of Receipt of Application was published in the Federal
11(=gister on January 15, 1963 (28 Federal Register 386), affording opportunity for submission of comments and views regarding the proposed acquisition.
The time provided by the notice for filing comments and views has
eXPired and the matter has been considered fully by the Board.
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IT IS HEREBY ORDERED, for the reasons set forth in the Board's
Statement of this date, that the said application be and hereby is
granted, and the acquisition by Applicant of
6o
per cent or more of the
voting shares of First National Bank of Davenport is hereby approved
Provided that such acquisition shall not be consummated (a) within
7
calendar days after the date of this Order or (b) later than
3
months
after said date.
Dated at Washington, D. C., this 27th
day of March, 1963.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and
Governors Balderston, Mills, Robertson,
Shepardson, and Mitchell.
Absent and not voting:
Governor King.
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
(SEAL)
‘")
Item No.
4
3/27/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY BRENTON COMPANIES, INC.,
DES MOINES, IOWA, FOR APPROVAL OF ACQUISITION OF SHARES OF
FIRST NATIONAL BANK OF DAVENPORT, DAVENPORT, IOWA
STATEMENT
Brenton Companies, Inc., Des Moines, Iowa ("Applicant"), a
registered bank holding company, has applied pursuant to section 3(a)(2)
of the Bank Holding Company Act of 1956 ("Act"), for the Board's prior
aPProval of the acquisition of 60 per cent or more of the outstanding
("Bane), a proVoting shares of the First National Bank of Davenport
Posed new bank to be located in the city of Davenport, Iowa.
Statutory factors. - Section 3(c) of the Act requires that
the Board take into consideration the following five factors: (1) the
financial history and condition of the holding company and banks concerned; (2) their prospects; (3) the character of their management;
s and area con(4) the convenience, needs, and welfare of the communitie
cerned; and (5) whether or not the effect of the acquisition would be
to expand the size or extent of the bank holding company system involved
beyond limits consistent with adequate and sound banking, the public
interest, and the preservation of competition in the field of banking.
IL083
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e
Discussion. - Applicant, organized in 1948 for the purpos
controls thirteen
of managing the Brenton family banks, presently
The financial history, condition and
banks in the State of Iowa.
, and its prospects are favorable.
management of Applicant are satisfactory
history; however, based on
Bank, of course, has no financial
million at the end
Projected deposits of $3.5 million and loans of $1.7
that its management will be
of the third year of operation, considering
personnel, and in view of the area
supplied from Applicant's experienced
prospects appear favorable.
that it will primarily serve, Bank's
County, is located on the
Davenport, Iowa, the seat of Scott
the extreme eastern section of
north bank of the Dississippi River in
the State. Its 1961 population is estimated to be slightly over 90,000
y 122,000.
and that of Scott County approximatel
The principal business
of the river.
district is about three blocks north
approximate geographical center
Bank will be located in the
miles north of the business district,
of Davenport, about one and a half
thoroughfares, one of which becomes
at the intersection of two major
U. S. Highway 61 to Dubuque.
Within the principal business district
other are two of the three banks located
and within a few blocks of each
in and serving Davenport.
They are the Davenport Bank and Trust Company
million), and the First Trust and
(June 30, 1962, deposits of $100
of $19 million).
Savings Bank (June 30, 1962, deposits
Davenport's
miles west of Bank's proposed
third bank, located about one and a half
Trust Company (June 30, 1962, deposits
Site s is the Northwest Bank and
0,14
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of $21 million).
A fourth bank, Bettendorf Bank and Trust Company, is
east-southeast in the contiguous city.
located about four miles to the
of Bettendorf.
$7 million.
30, 1962, of
This bank had deposits, as of June
are located within Bank's
None of the four banks mentioned
service area, which has an estimated
Projected seven square mile primary
Population of about 30,000.
However, Applicant states that the four
ss of the area.
banks are in competition for the busine
that there presently exists in
Applicant has made no showing
usual banking services.
the Davenport area any unserved demand for
the population of Davenport increased
However, in the period 1950-1961,
by 15,050.
banks have been established in
In the same period no new
the city of Davenport or in nearby areas.
Of the four banks presently
newest bank in Davenport was opened for
serving the area involved, the
business in 1941.
1949.
y
The Bettendorf Bank and Trust Compan was opened in
overbanked, and it appears that it can
Davenport is presently not
institution.
well support an additional banking
In view of Bank's pro-
city that is experiencing commercial
Posed location in a section of the
downtown Davenport, there is reasonable
development extending north from
a healthy, although gradual, growth
assurance that Bank will experience
rate.
extent, mirror what appears to be
Bank's growth will, to a large
more convenient banking services
a present need within the area for
than are presently available.
The reasonable appearance of benefit to
favor of approval of the application.
the public in this respect weighs in
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As to the effect of the proposed acquisition on banking
nt's subsidiary bankcompetition in the area involved, none of Applica
ing offices are located in Scott County nor in any of the counties
contiguous thereto.
Applicant's nearest subsidiary to Bank's proposed
location is approximately 90 miles northwest.
compete in the Davenport area.
None of these banks
Applicant's thirteen subsidiary banks
ed
are located in eight counties of the State, and at June 30, 1962 operat
deposits of $64.5 million, reptwenty-four offices and held aggregate
s, and 2 per cent of the deposits,
resenting 2.8 per cent of the office
of all banks in the State.
Applicant's banks ranged in size from
deposits.
$7.5 million down to $1.9 million of
are three banks located in
As mentioned earlier, there
Davenport and one in Bettendorf.
Assuming that at the end of three
the deposit and loan totals projected
Years of operation, Bank has reached
by Applicant, and presuming that the banks in Davenport and the one bank
tive midyear 1962 deposit and loan
in Bettendorf remain at their respec
than 2.5 per cent of the deposits and
totals, Bank would control less
Davenport, and of the five banks in
of the loans of the four banks in
Davenport and Bettendorf.
to a determination of the size
A study of all data relevant
proportions
and extent of Applicant's present system reflects that the
total deposits controlled by
Of total banking offices represented and
State as a whole are relatively small.
APPlicant's banking offices in the
The extent to which these figures would be increased as a result of the
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proposal under consideration is negligible.
Similarly, Applicant's
entry into the city of Davenport and the Davenport-Bettendorf area
in an undue conthrough consummation of this proposal would not result
centration in any respect.
of Applicant's proposal
The Board concludes that consummation
structure in the
would not adversely affect the existing competitive
le promise of improvareas concerned, but rather would offer reasonab
that presently exists.
ing to a modest degree the competition
in the light of the
Accordingly, viewing the relevant facts
ed in section 3(c),
general purposes of the Act and the factors enumerat
it is the judgment of the Board that the proposed acquisition would be
es and the public interest and
consistent with the statutory objectiv
that the application should be approved.
March 27, 1963.
@FedFRASER