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Minutes for To: March 30, 1961 Members of the Board From: Office of the Secretary tes of the Attached is a copy of the minu System on rve Rese Board of Governors of the Federal the above date. a statement It is not proposed to include set of this with respect to any of the entries in ired to requ ons acti minutes in the record of policy ral Fede the of be maintained pursuant to section 10 Reserve Act. with regard to Should you have any question you will advise if the minutes, it will be appreciated se initial below. plea the Secretary's Office. Otherwise, initials will your If you were present at the meeting, were not present, you If indicate approval of the minutes. have seen the you that your initials will indicate only minutes. Chin. Martin Gov. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Minutes of the Board of Governors of the Federal Reserve System on The Board met in the Board Room at 10:00 a.m. Thursday, March 30, 1961. PRESENT: Mr. Mr. Mr. Mr. Mr. Martin, Chairman Szymczak Mills Robertson Shepardson Sherman, Secretary Kenyon, Assistant Secretary Thomas, Adviser to the Board Young, Adviser to the Board and Director, Division of International Finance Mr. Shay, Legislative Counsel Mr. Molony, Assistant to the Board Mr. Fauver, Assistant to the Board Mr. Hackley, General Counsel Mr. Noyes, Director, Division of Research and Statistics M. Farrell, Director, Division of Bank Operations Mr. Solomon, Director, Division of Examinations Mr. Johnson, Director, Division of Personnel Administration Mr. Hooff, Assistant General Counsel Mr. Robinson, Adviser, Division of Research and Statistics Mr. Benner, Assistant Director, Division of Examinations Mr. Leavitt, Assistant Director, Division of Examinations Mr. Mr. Mr. Mr. Discount rates. The establishment without change by the Federal Reserve Bank of Atlanta on March 29, 1961, of the rates on discounts 444 advances in its existing schedule was approved unanimously, with the understanding that appropriate advice would be sent to that Bank. Items circulated to the Board. The following items, which had been circulated to the members of the Board and copies of which are 4ttached to these minutes under the respective item numbers indicated, 14el'e approved unanimously: 3/30/61 -2Item No. Letter to Stromsburg Bank, Stromsburg, Nebraska, /gaiving the requirement of six months' notice of vithdrawal from membership in the Federal Reserve System. 1 Letter to the Federal Reserve Bank of New York interposing no objection to two members of the lank's staff serving in the Office of the Under ' Secretary of the Treasury for Monetary Affairs for a certain period of time. 2 Letter to The Chase Manhattan Bank, New York City, an extension of time to establish a t sPProving 'ranch at 110 West 52nd Street. 3 Letter to The Bank of New York, New York City, Proving an extension of time to establish a °ranch at 360 Park Avenue. 4 Letter to Bank of Dearborn, Dearborn, Michigan, PProving the establishment of branches at 8650 -.h Telegraph Road and 25604 Van Born Road, 'laYne County. 5 g 6 f etter to Traverse City State Bank, Traverse -tY, Michigan, approving the establishment of : 8. branch at 1034 East Eighth Street. Letter to Chairman Dawson of the House Committee 8.4 Government Operations reporting on H. R. 5657, A bill that would amend the Budget and Accounting 1921, to provide for retirement of the public t by setting aside each fiscal year a portion 'the budget receipts for that purpose. Report on competitive factors (Dayton, Ohio). 7 There had been distributed copies of a draft of report to the Comptroller of the Currency °4 the competitive factors involved in the proposed consolidation of The ?ecl/Ples Bank and Trust Company and The Merchants National Bank and Trust e°1111DanY of Dayton, both of Dayton, Ohio. 3/30/61 -3After discussion, agreement was expressed with a suggestion that the conclusion in the report be changed to read as follows: The proposed consolidation of Peoples Bank and Trust Company and Merchants National Bank and Trust Company, now third and fourth largest Dayton banks respectively, by reducing Dayton banks to only three in number, would further limit alternative sources of banking services. The growth of each bank over the past decade indicates significant competitive ability. The resulting bank would be able to provide stronger competition to the two larger city banks, and as Dayton and nearby suburbs would be the primary field of its operations any adverse competitive effects on the smaller county banks would seem to be unlikely. The report was then approved unanimously for transmittal to the Comptroller. Request for permission to declare dividend (Items 8 and 9). At the meeting on Wednesday, March 29, preliminary consideration was given to the request of Farmers Bank and Trust Company, Knox, Indiana, tOr permission to declare a quarterly dividend of *1,875 to be paid on 14arch 31, 1961, but no action was taken and it was understood that the 1)1vision of Examinations would obtain certain additional information. Mr. Solomon now reported that the stock of the bank was rather 1/ide1Y held in the community and that apparently a good deal of talk Illight be generated if the proposed dividend were not declared. In this eonnection, he called attention to the language of the proposed transIrilttal letter to the Chicago Reserve Bank which brought out that any i'llrther dividend declarations in 1961 would also require the Board's 3/30/61 -4- aPproval. The letter would request the Reserve Bank to bring most strongly to the attention of the member bank that an urgent need for substantial additional capital existed and that losses should be eliminated before the next report of condition. Mr. Solomon commented that the proposed dividend would be l'elatively small. If the dividend were permitted to be paid, it was felt by the Reserve Bank that the member bank would be in a better Position to sell additional capital stock. As to management, the Reserve Bank felt that a strengthening might be achieved through greater attention on the part of the directors. These and other matters etrecting the bank's condition had been discussed at a recent meeting °f the directors with the Indiana State banking authorities, in which the Reserve Bank participated. In further discussion, agreement was expressed with the suggestion that the letter to the member bank be expanded to set forth the Board's e°ncern about the substantial volume of criticized assets, other Unsatisfactory conditions reflected in the current report of examination, 44d the urgent need for additional capital. Accordingly, unanimous approval was given to a letter to the Ilarmers Bank and Trust Company in the form attached as Item No. 8. A e°13Y of the letter of transmittal to the Federal Reserve Bank of Chicago 18 attached as Item No. 9. 3/30/61 -5Messrs. Hooff and Leavitt then withdrew. Inquiry from Bank Stock Corporation of Milwaukee (Item No. 10). 14 a letter dated March 17, 1961, President Allen of the Federal Reserve Bank of Chicago presented for the Board's consideration certain questions that had been raised with him by the President of Bank Stock Corporation Of Milwaukee, Milwaukee, Wisconsin, regarding the Clayton Act suit filed against that Corporation by the Department of Justice following the Illoard's approval of its acquisition of The Bank of Commerce, also of Milwaukee. The President of Bank Stock Corporation had inquired (1) whether the Board wished to join the Corporation in asserting that the action of the Justice Department constituted "an unwarranted and illegal challenge of the Board's jurisdiction and authority", and (2) if not, whether the illoard would like to "confer and collaborate with Bank Stock Corporation 14 the preparation of its case." In a memorandum dated March 28, 1961, which had been distributed, the Legal Division recommended that the Board clecline the requests of Bank Stock Corporation. A draft of reply to F1'esident Allen was submitted with the memorandum. In discussion, agreement was expressed with a suggested editorial ehange in the proposed reply, following which unanimous approval was given to the letter to President Allen of which a copy is attached as Item N 3/30/61 -6Request of Hardy Subcommittee (Item No. 11). In a letter to Chairman Martin dated March 28, 1961, Chairman Hardy of the Foreign Operations and Monetary Affairs Subcommittee of the House Committee on Gavernment Operations requested that there be made available to the staff of the Subcommittee for examination the Board's file on the aPPlication of Bank Stock Corporation of Milwaukee for approval of the 4equi50n of shares of The Bank of Commerce, Milwaukee, Wisconsin. There had been distributed a draft of reply indicating that the file vonld be made available. In discussing the matter, Mr. Hackley noted that the policy of the Board had been to provide the Subcommittee full access to the Board's files, He also pointed out that the proposed reply would contemplate aking available to the staff of the Subcommittee not only the al2Plication but also all memoranda and correspondence included in the file on the case in question. Governor Mills stated that his approach was different from the P°sition that would be taken in the proposed reply. In previous instances, he pointed out, the Board had supplied to the staff of the 811hcommittee various records and information pertaining to the Board's 1ternal operations, and he had felt that this was proper. Here, however, the Board was requested to make available to the Subcommittee its records 14ith respect to an application that had been made to the Board. In other cls, the Board was being asked to place at the Subcommittee's disposal ' 14°1 3/30/61 -7- material that under its Rules of Organization and Procedure constituted Unpublished confidential information. This material would include, among other things, memoranda prepared by the Board's staff as background to the published Order and Statement, and only recently the Board had taken the position that intra-agency staff memoranda on bank Merger cases should not be released to outside parties. In the circumstances, he felt that it would be in error to supply the requested information unless the file should be subpoenaed, in which event the Board could then determine whether the information should be released. Mr. Shay noted that the Committee on Government Operations was charged with determining efficiency at all levels of Government. He Understood that the interest of the Subcommittee in reviewing the file 14 question arose out of the situation that had developed in bank holding e°mPany and bank merger cases where applications had been approved by the bank supervisory agencies and the Department of Justice subsequently instituted antitrust proceedings. This was the kind of investigation that /1e3 within the province of the Subcommittee. Mr. Hackley commented that he assumed the Subcommittee would be interested primarily in the factors that the Board had taken into account in aPProving the application and also in the several memoranda furnished bY the Department of Justice. It did not appear that the Subcommittee 1443 seeking access to this file with a view to disclosing or making public ellY information regarding the business or financial affairs of the 4 dr,rt-t ... A -8- 3/30/61 applicant or the Bank of Commerce. Instead, it appeared that the Subcommittee was interested in procedural aspects, including relations of the Board with the other bank supervisory agencies and the Justice Department. Comments by the other members of the Board indicated that they favored compliance with the request of the Subcommittee, it being assumed that the interest of the Subcommittee in the file in question was along the lines suggested by Messrs. Shay and Hackley and that the confidential nature of some parts of the file would be taken into consideration by the Subcommittee. Certain suggestions were made for editorial changes in the form of the proposed reply to Chairman Hardy, following which approval was given to a letter in the form attached as Item No. 11, Governor Mills dissenting for the reasons he had stated. Mr. Furth, Adviser, Division of International Finance, entered the meeting at this point. North Shore Bank, Miami Beach (Item No. 12). On March 15, 1961, the Board considered a request from Thomas E. Lindsey, Examiner for the Federal Deposit Insurance Corporation, for permission to photostat certain pages of reports of examination of the North Shore Bank, Miami teach, Florida, that he had been holding in custody for the use of the United States Attorney in Miami in connection with the preparation of a case involving certain officers and directors of the bank. It was 1111derstood that this procedure had been requested by the United States 3/30/61 -9- Attorney. The Board advised Mr. Lindsey, through the Federal Reserve Bank of Atlanta, that he should not agree to the mAking of the photostats aM that any request of the United States Attorney should come to the Board through the Department of Justice. In a letter dated March 28, 1961, the Justice Department requested authorization to make the photostatic copies, indicating that they were desired solely for the confidential use of the United States Attorney Etni that they would not be taken to court or used as evidence. The Department also requested use of the reports of examination for a further Period of 90 days from March 18, 1961. A memorandum dated March 29, 1961, from the Division of Examinations, which had been distributed to the Board, outlined and, commented on the questions presented by the most recent letter from the Department of Justice. In discussing the matter, Mr. Solomon suggested that the Possibility should be borne in mind that at some stage permission might be requested to offer in evidence the reports of examination or portions thereof. Nevertheless, he and Mr. Hackley indicated that they felt it W:fuld be difficult, in the circumstances of this case, to deny either the current requests of the Justice Department. however, They suggested, that if the Board authorized the preparation of photostatic "'Pies of the pages in question, it specify that there be stamped or Irritten on each copy a legend to the effect that the copy was solely 3/30/61 -10- for the confidential information and use of the United States Attorney, Miami, Florida, and was not to be presented or taken to court or used 48 evidence. Governor Mills recalled that 'when this matter originally came before the Board he had outlined the principles to which he thought the Board should adhere in maintaining the confidentiality of information Of this kind. However, the Board took the opposite view, and the sequence of events with which the Board was familiar had ensued over a Period of months. In the circumstances, he would like to be recorded as abstaining from voting on the requests now before the Board. After further discussion it was agreed, with Governor Mills abstaining, to advise the Department of Justice (1) that the reports Of examination could remain in the custody of Examiner Lindsey for the additional period of time requested, and (2) that photostatic copies Of Pages 11, 20, and 21 of the reports might be made under the general Upervision and control of Mr. Lindsey, provided a legend such as described by Messrs. Solomon and Hackley was stamped or written on each c°13Y. It was understood that the reply to the Justice Department would note the statement in its letter that the photostatic copies would be It elnPloyed solely for the confidential information and use of the government attorney for the preparation of the case" and that they 11°1414 "not be presented or taken to court nor used as evidence at any stage of the prosecution of this matter." -11- 3/30/61 A copy of the letter sent to the Department of Justice pursuant to the foregoing action is attached as Item No. 12. Mr. Benner then withdrew. Question regarding reserve city status of Toledo, Ohio. On March 1, 1961, the Board announced that it was publishing in the Federal Register, with an invitation to submit comments not later than April 1, 1961, proposed amendments to Regulation D, Reserves of Member Banks, that would provide a new basis for classifying reserve cities. According to one provision of the proposed amendments, any city classified as a reserve city on January 1, 1961, could continue to be so classified effective June 1, 1961, even though it did not fall within the scope Of certain other provisions, if a written request for continuance (together with a certified copy of a resolution of the board of directors Of such member bank duly authorizing such request) was received on or before May 15, 1961, and if such request was granted by the Board. Under the standards contemplated by the proposed amendments, Toledo, °hio, would be discontinued as a reserve city effective June 1, 1961, Unless such a request was made and was acted upon favorably by the 13°ard. If such a request was granted, Toledo would remain a reserve eitY at least until the next triennial review; that is, until June 1, 1964. Chairman Martin reported having received information that of the three member banks in Toledo, the two smaller banks desired to have 3/30/61 -12- the reserve city designation continued while the largest bank preferred to let the designation be discontinued. This situation had apparently given rise to contention, with the result that a compromise had been suggested. It appeared that all three member banks would join in a request that the reserve city designation be continued if the situation could be reviewed after one year rather than three years. Upon consideration of the situation referred to by Chairman Martin, it appeared that a change in the proposed amendments published in the Federal Register would be necessary to permit a course of action along the lines contemplated by the member banks in Toledo. Accordingly, it was understood that the Chairman would indicate informally to the Parties concerned that their oral inquiry would be regarded as constituting Compliance with the April 1 desdline for submission of comments, that they should, however, submit their views and arguments in writing as soon Ets possible, and that such views and arguments, if submitted in writing, l'ould be considered by the Board along with other comments received on the proposed amendments to Regulation D. All of the members of the staff except Messrs. Sherman, Kenyon, Parrell, and Solomon then withdrew. Additional information on merger cases. Governor Robertson referred to the proposed merger of Manufacturers Trust Company and the Ranover Bank, both of New York City, and to a statement made on the floor clt the Senate on March 24, 1961, by Senator Robertson of Virginia ir -13- 3/30/61 concerning an employment contract that Manufacturers had entered into with the Chairman of its Board, Mr. Horace C. Flanigan. A letter aUbsequently sent by Mr. Flanigan to Senator Robertson had also been Published in the Congressional Record. Governor Robertson suggested that it would seem desirable for the Board to have in its files, in connection with the consideration of bank merger applications, information on any contracts with officers Of the merging banks such as the one referred to in the statement by Senator Robertson. He added that the Federal Reserve Bank of New York bad indicated its willingness to make appropriate inquiry in pending merger cases if requested to do so by the Board. There was general agreement that such information should be available to the Board. However, Governor Mills suggested that it would Seem preferable if the information could be obtained in the usual course rather than to make special inquiries. It was agreed that a Procedure such as suggested by Governor Mills would ordinarily be Preferable, and that special inquiries should be limited to any pending cases in which the usual investigatory procedures had already been °°mPleted. Accordingly, it was understood that the matter would be haadled on that basis. At this point Mr. Smith, Assistant Director, Division of 4aminations, entered the room. 3/30/61 Report of examination--Federal Reserve Bank of New York. The report of examination of the Federal Reserve Bank of New York made by the Board's examining staff as of October 21, 1960, had been circulated to the Board, along with the usual accompanying memoranda. Mr. Smith commented on matters disclosed by the examination, and on the basis of his comments it was agreed that there were no matters appearing to require action on the part of the Board. All of the members of the staff then withdrew and the Board vent into executive session. Program of American Economic Association. The Secretary was informed later by Chairman Martin that during the executive session the Board gave consideration to a memorandum dated March 27, 1961, from Mr. Young, Adviser to the Board and Director of the Division of International Finance, regarding the possible presentation by him of a Paper on the forthcoming report of the Commission on Money and Credit at a session of the meeting of the American Economic Association to be held in New York City in December 1961 which vas to be devoted to the aforementioned report. The Secretary was informed that the presentation of such a paper by Mr. Young had been el -__e_ared with the Board on the basis of Mr. Young's willingness to submit it to the Board for approval of position. The meeting then adjourned. -15- 3/3o/6i Secretary's Note: Pursuant to the recommendations contained in memoranda from appropriate individuals concerned, Governor Shepardson today approved on behalf of the Board the following items relating to the Board's staff: AP1221],q2E2EI Marjorie M. Gray as Statistical Clerk, Division of Research and Statistics, with basic annual salary at the rate of $3,970, effective the date of entrance upon duty. Transfer and salary increase Alma Davita Clift, from the position of Secretary in the Division °f International Finance to the position of Secretary in the Division of !!!rsonnel Administration, with an increase in her basic annual salary from Pg4675 to $4,84o, effective April 2, 1961. Secretary 00*Op* * 40 44 III 9449, 4 4 :;°i, : 44 - 11 40.ta '4 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM '4) '4)A * 0 44 .#• 0 -1111 *0° 4a. WASHINGTON 25, D. C. Item No. 1 3/30/61 ADDRESS OFFICIAL CORRESPO NDENCE TO THE BOARD March 30, 1961 Board of Directors, Stromsburg Bank, Stromsburg, Nebraska. Gentlemen: The Federal Reserve Bank of Kansas City has forwarded to the Board of Governors your letter, togethe r with the accomPanying resolution dated February 24, 1961, signifying your intention to withdraw from membership in the Federal Reserve SYstem and requesting waiver of the six months' notice of such withdrawal. In accordance with your request, the Board of Governors Waives the requirement of six months' notice of withdrawal. Upon surrender to the Federal Reserve Bank of Kansas City of the Federal Reserve Bank stock issued to your institution, such stock will be canceled and appropriate refund will be made thereon. Tinder the provisions of Section 10(c) of the Board's Regulat ion U your institution may accomplish termination of its membership 't any time within eight months from the date the notice of -ultention to withdraw from membership was given. It in requested that the certificate of membership be returned to the Federal Reserve Bank of Kansas City. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 2 3/30/61 01 ' ADDRESS orriciAL CORRESPONDENCE TO THE BOARD 4totsv,, "4466* March 30, 1961 Confidential (FR) Mr. Thomas M. Timlen, Jr., Secretary, Federal Reserve Bank of New York, New York 45, New York. Dear Mr. Timlens This is in reply to your letter of March 20, 1961, advising that at the request of Mr. Robert V. Roosa, the services of two members of the Bank's staff, Messrs. Bruce K. MacLaury and Peter D. Sternlight, are being made available to the Under Secretary of the Treasury for Monetary Affairs. It is noted that Messrs. MacLaury and Sternlight have been granted a leave of absence with pay, each for a period of up to four months, commencing on or about March 20 and March 26, respectively. The Board interposes no objection to their serving in the Office of the Under Secretary for this period on the basis of arrangements discussed with Mr. Hayes and Mr. Treiber, and as outlined in your letter. Very tray yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 3 3/30/61 ADDRESS OFFICIAL. CORRESPONDENCE TO THE SOAR° 46,41•Cfat -4+Atikoz.* March 30, 1961 Board of Directors, The Chase Manhattan Bank, New York, New York. Geutlemen: Pursuant to your request submitted throuch the Federal Reserve Bank of New York the Board of Governors of the Federal Reserve System extends to August 21, 1961, the time within which The Chase Manhattan Bank, New York, New York, may establish a branch at 110 West 52nd Street, New York, New York. Very truly yours, (signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS 0404410 4 OF THE FEDERAL RESERVE SYSTEM ' WASHINGTON 25, D. C. .0 Item No. 4 3/30/61 ADDRESS OfFICIAL CORRESPONDENCE TO THE •DARO m1,40*** March 30, 1961 Board of Directors, The Bank of New York, New York, New York. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of New York the Board of Governors of the Federal Reserve System extends to October 16, 1961, the time within which The Bank of New York, New York, New York, may establish a branch at 360 Park Avenue, New York, New York. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 5 3/30/61 ADDRESS OFFICIAL CORRESPONDENCE TO THE SOAR° March 30, 1961 Board of Directors, Bank of Dearborn, Dearborn, Michigan. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Chicago, the Board of Governors of the Federal Reserve System approves the establishment of branches at 8650 North Telegraph Road, and 25604 Van Born Road, Dearborn Township, Wayne County, Michigan, by Bank of Dearborn, provided the branches are established within one Year from the date of this letter. It is understood that, under conditions imposed by the State, on or before June 1, 1961, the bank will sell at least 3,575 shares of $10 par value common stock to provide new capital funds of not less than $891 375.00 and that the directors Of the bank will recommend to the shareholders at their annual , meeting in January 1962, a further increase in capital stock of at least five per cent of the number of shares of common stock then outstanding, at a premium to be fixed by the shareholders. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, O. C. Item No. 3/30/61 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD 63, *tt 44. tstO• v.*** March 30, 1961 Board of Directors, Traverse City State Bank, Traverse City Michigan, Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Chicago, the Board of Governors of the Federal Reserve System approves the establishment of a branch at 1034 East Eighth Street, Travcrse City, Aichigan, by Traverse City State Bank, provided the branch is established within one year frm the date of this letter. 6 Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS Item No. OF THE FEDERAL RESERVE SYSTEM 7 3/30/61 WASHINGTON OFFICE OF THE CHAIRMAN March 30, 1961 The Honorable William L. Dawson, Chairman, Committee on Government Operations, House of Representatives, Washington 25, D. C. Dear Mr. Chairman: This is in response to your letter of March 17, 1961, requesting a report on the bill H.R. 5657. The bill would amend the Budget and Accounting Act, 1921, to provide for retirement of the public debt by setting aside each fiscal year a portion of the budget receipts for that purpose. H.R. 5657 is identical with H.R. 1851, which, together with H.h. 1770 and H.R. 2471, was covered in our report to you under date of February 17, 1961. _With that report was enclosed a copy of my letter of June 8, 1960, which conveyed to you the Board') views on H.R. 5203, a similar bill in the 86th ,Congress. The comments in my letter of June 8, 1960, would seem to be equally applicable to H.A. 5657. The Board has found no reason to change its views, and, accordingly, continues to doubt that the effects of such measures would be sufficiently beneficial to justify their enactment. For your convenience, a copy of my letter of June 1960, is enclosed herewith. Sincerely yours, (Signed) Wm. McC. Martin, Jr. Wm, plcC. hartin, Jr. 8, BOARD OF GOVERNORS 4tettit***,. OF THE VOL. 4to kV FEDERAL RESERVE SYSTEM Item No. 8 3/30/61 WASHINGTON 25, D. C. iiM ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD *4itz$0 tz`z March 30, 1961 Board of Directors, Farmers Bank and Trust Company, Knox, Indiana. Gentlemen: The Board has reviewed a copy of your letter of March 10, 1961, to Mr. Hugh J. Helmer, Vice President, Federal Reserve Bank of Chicago, Chicago, Illinois, requesting that you be permitted to declare a quarterly dividend of $1,875 to be paid on March 31, 1961. The Board's permission is necessary under the provisions of Section 9 of the Federal Reserve Act and Section 5199(b), United States Revised Statutes. After consideration of the facts, the Board approves the declaration of this dividend. This approval is confined to the declaration of a dividend to be paid March 31, 1961, and does not authorize any other declaration of dividends during 1961 or later. The Board is concerned about the substantial volume of criticized assets and other unsatisfactory conditions reflected in the current report of examination of your bank and hopes that an immediate effort will be made to bring about correction of these matters. In particular your attention is directed to the urgent need for additional capital as discussed with you in the meeting With Mr. E. E. MacDonald, Supervisor of Banks of Indiana, and Mr. Leland Ross of the Federal Reserve Bank on March 9, 1961, in the office of the Indiana Department of Financial Institutions. The Board would appreciate your advising Vice President Helmer of the Reserve Bank as promptly as possible of your plans for providing new capital through the sale of common stock. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS ottit**** OF THE , 444 CO GOp A ( P % o f. * FEDERAL RESERVE SYSTEM Item No. 9 3/30/61 WASHINGTON 25. D. C. ig ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD 04 4 , 417(0.0 ****41 March 30, 1961 Mr. Hugh J. Helmer, Vice President, Federal Reserve Bank of Chicago, Chicago 90, Illinois. Dear Mr. Helmer: Your letter of March 15, 1961, recommends the approval of a declaration of a quarterly dividend of $1,875 payable March 31, 1961, by the Farmers Bank and Trust Company, Knox, Indiana, under the provisions of Section 9, Federal Reserve Act, and Section 5199(b), United States Revised Statutes. Accompanying your letter is a copy of a letter from the member State bank requesting permission to declare the above-mentioned dividend. The Board has given careful consideration to the facts of this application and approves the declaration of a quarterly dividend o1.a,875 payable March 31, 1961, as shown by the enclosed letter which you should forward to the member bank. A copy of this letter is enclosed for your files. Future dividend declarations in 1961 and possibly later may also require the Board's approval. It is believed essential that you bring most strongly to the attention of the member bank the urgent need for a substantial increase in the capital of the bank and that the elimination of losses be made before the next report of condition is requested. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. Enc1o5ures-2 BOARD OF GOVERNORS „00*** .,r0C21)601, 4 tilh OF THE O., FEDERAL RESERVE SYSTEM t ill lo Item No. 10 3/30/61 WASHINGTON 25. D. C. ADDRE•S ornatm. CORRESPONDENCE TO THE SOARD 41. mot March 30, 1961 Mr. Carl E. Allen, President, Federal Reserve Bank of Chicago, Chicago 90, Illinois. Dear Mr. Allen: This refers to your letter of March 17, 1961, wherein you advise of the inquiries made of you by Mr. A. S. Puelicher, President of the Bank Stock Corporation of Milwaukee, on the subject of the Board's participation, through either of two courses outlined by Puelicher, in the Corporation's defense of the suit recently filed by the Department of Justice against the Corporation under section 7 of the Clayton Act. The Board has considered Mr. Puelicher's requests and has concluded that, in view of the statutory responsibilities under which the Board and the Department of Justice, respectively, have acted 1 .n this matter, it would be inappropriate for the Board either to Join Bank Stock Corporation in the defense of the suit in question cr to participate or collaborate with that Corporation in the preparation of its defense. It will be appreciated if you will inform Mr. Puelicher Of' the Board's conclusions. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. 4,° P2 (01tIty BOARD OF GOVERNORS 0.% OF THE Item No. 11 3/30/61 FEDERAL RESERVE SYSTEM WASHINGTON %Nalu160,fr OFFICE OF THE CHAIRMAN March 30, 1961 The Honorable Porter Hardy, Jr., Chairman, Foreign Operations and Monetary Affairs Subcommittee of the Committee on Government Operations, House of Representatives, Washington 25, D. C. Dear Mr. Chairman: This refers to your letter of March 28, 1961, requesting that the Board's file in the Matter of the Application of Bank Stock Corporation of Milwaukee, for prior approval of acquisition of voting shares of the Bank of Commerce, Milwaukee, Wisconsin, be made available for examination by the staff of your Subcommittee on Foreign Operations and Monetary Affairs. The Board will make the file with respect to this application available for the purpose of examination by the staff of your Subcommittee, as specified in your letter. Sincerely yours, (Signed) Wt. McC. Martin, Jr. WM. McC. Martin, Jr. BOARD OF GOVERNORS OF THE Item No. 12 3/30/61 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE SOAR() March 30, 1961 Mr. Herbert J. Miller, Jr., Assistant Attorney General, Criminal Division, United States Department of Justice, Washington 25, D. C. Attention: Re: Mr. Nathaniel E. Kossack, Chief, Fraud Section. U. S. v. Baron deHirsch Meyer, et al (HJM:NEK:fea 29-18-243) Gentlemen: This refers to your letter of March 28) 1961, in which You request the continued use of reports of examination of the North Shore Bank, Miami Beach, Florida, for a further period of 90 days from March 18, 1961. The Board agrees to this extension of time under the arrangements previously consummated that the reports are to remain in the custody of Mr. Thomas E. Lindsey, Examiner, Federal Deposit Insurance Corporation, and are not to be presented or taken to the court nor used in evidence in any legal proceeding. Your letter also requests authorization to make photostatic copies in the office of the United States Attorney, Miami, Florida, of pages 11, 20 and 21 of these reports. Your letter states that these photostatic copies will be employed solely for the confidential information and use of the government attorney for the preparation of the case and that they will not be presented or taken to court nor used as evidence at any stage of the prosecution of this matter. The Board also agrees to this request provided the copies are prepared and employed as above indicated under the general supervlsion and control of Mr. Lindsey and provided further that a legend ie stamped or written on each copy as follows: "Solely for the confidential information and use of the United States Attorney, Miami, Florida, and not to be presented or taken to court nor used as evidence.” Very tru , 3,r y urs„ Merritt Sherm Secretary.
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