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Minutes for To: ynrph 7, 19rn Members of the Board From: Office of the Secretary 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. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Minutes of the Board of Governors of the Federal Reserve System On Monday, March 7, 1960. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Balderston, Vice Chairman Szymczak Mills Robertson King Sherman, Secretary Thomas, Adviser to the Board Young, Adviser to the Board Shay, Legislative Counsel Molony, Assistant to the Board Fauver, Assistant to the Board Noyes, Director, Division of Research and Statistics Mr. Koch, Adviser, Division of Research and Statistics Mr. Landry, Assistant to the Secretary Mr. Keir, Chief, Government Finance Section, Division of Research and Statistics Mr. Mr. Mr. Mr. Mr. Mr. Mr. Report on money market developments. According to the under- standing reached at the meeting on Friday, March 4, 1960, Messrs. Thozas and Keir reported on recent developments in the money markets with Particular reference to the market for United States Government Bee Urities. Following a discussion of this report, it vas understood that a similar review would be scheduled for Board meetings on Monday of 'ach veek. Messrs. Young) Shay, Noyes, Koch, and Keir then withdrew from the m aeting and Messrs. Hackley, General Counsel, Farrell, Director, 14°n Of Bank Operations, Solomon, Director, Division of Examinations, 3/7/60 -2- jcihnson, Director, Division of Personnel Administration, Hexter, Assistant General Counsel, Daniels, Assistant Director, Division of Bank Operations, Nelson, Assistant Director, Division of Examinations, S15recher, Assistant Director, Division of Personnel Administration, Reynolds, Economist, Division of International Finance, and Miss Hart, Assistant Counsel, entered the room. Items distributed to the Board. The following items, which had been distributed to the Board and copies of which are attached to these nitraltes under the respective item numbers indicated, were approved una nimously. Item No. Lett toSt. Joseph Agency, Incorporated, South oe rncl, Indiana, granting an additional extension by time through June 7, 1960, for the retention ca St. Joseph Agency, Incorporated, of its general IriE"ltY insurance business, pursuant to the proSection 4(a) of the Bank Holding Company 1 Lettsr to The Honorable Xenophon Zolotas, Governor : 11 i he Bank of Greece, with respect to the avail: Of a member of the Board's staff to become , eutilre Director of the Foreign Trade Administrati-n °f the Greek Government Ministry of Commerce. 2 Of 1956. Amendment to Regulation U (Item No. 3). In accordance with the Board's discussion of March 4, 1960, there had been distributed a l'ellised proposed amendment to Section 221.3(b)(1) of Regulation U publication in the Fedrsel"ing to "carrying" along with a notice for 111/1 Register, that -would carry out the Board's decision on March 3, 1960, 3/7/60 _3- to restore the definition of this term to the form in effect prior to June. 15, 1959. Following suggestions as to certain desirable changes in the language of the notice to be published in the Federal Register, the Publication of the amendment was unanimously approved with the der- Ettanding that a press release be issued this afternoon at 3:30 p.m., and that a telegram be sent to all Federal Reserve Banks quoting the amendment and requesting them to print and distribute copies in the customa4y manner. A copy of the amendment in the form published in the Federal Register is attached as Item No. 3. Messrs. Thomas, Molony„ Fauver, and Hexter, and Miss Hart withat this point. Oklahoma City Branch building (Item No. 4). There had been circulated a memorandum dated February 29, 1960, from the Division of B"k Operations, attaching a draft letter to the Federal Reserve Bank "4naas City, authorizing it to proceed with plans for an addition to +tale n -klahoma City Branch building. Mr. Farrell recalled that, pursuant to action taken by the 1°Itrcl on January 5, 1960, a letter of the same date had been sent to the p emeral Reserve Bank of Kansas City requesting that further consider't be given to the expansion plans for the Oklahoma City Branch, 14cluding (1) provision of the fallout shelter in a more economical way 8°Me area normally used for operations; (2) razing the parking structure 3/7/60 -4- so that an addition could be built without the restrictions imposed by the parking structure; or (3) abandonment of the present location and construction of a building on a new site. He recalled further that the Board also proposed that a representative of the Division of Bank Operations and the Boardts consulting architect, Mr. Witherell, Visit Oklahoma City to discuss the situation with representatives of the Kansas City head office and the Oklahoma City Branch. Subsequently, in a letter dated February 4, 1960, the Bank submitted a new fallout heater plan which seemed to obviate any need for Board representatives to it the Oklahoma City Branch. Mr. Farrell explained that the new "heme located the shelter in the basement of the addition by shortening the nev vault by 13-1/2 feet, lowering the basement floor under the shelter area by about 30 inches to permit a mezzanine floor in the shelter/ Providing a turntable in the security court, and locating the outside trance to the shelter area on the front of the addition. the Proposed scheme He added that s in line with the Office of Civil and Defense M6b1lization directive that fallout shelters should preferably be pro'tided dual-purpose area; that Mr. Witherell recommended that plans be dey .e-Loped on the basis of this scheme, and that the estimated cost of 35)() to —0,000, excluding movable equipment, seemed reasonable and in line with the $22,000 bid for provision of fallout shelter area tn the addition to the Atlanta building which presented a simpler problem. There being no questions, unanimous approval was given to the letter to the Federal Reserve Bank of Kansas City authorizing it to 930 3/7/60 Proceed with the plans for the addition to the Oklahoma City Branch building. This letter is attached Item No. 4. Messrs. Farrell and Daniels then withdrew from the meeting. !pplication to organize a national bank at Boulder, Colorado. There had been circulated a memorandum dated February 15, 1960, from the Division of Examinations recommending favorably with respect to an aPPlication to organize a national bank at Boulder, Colorado. Mr. Nelson stated that the investigating examiner of the FedereaReserve Bank of Kansas City concluded that the application be conaidered as not altogether unfavorable and that the Division of Exami11at10118 agreed that the proposed bank to be located in the Arapahoe -te Shopping Center, one mile east of the present central business area of Boulder, would be an added convenience for the public. In view °tad equacy of the capital structure of the proposed bank, the future earn,__ '"ga prospect, and the good general character of its proposed manaenient, it appeared a favorable recommendation might be in order. How- Vice President Mills of the Kansas City Reserve Bank recommended that the application be denied on the basis of no apparent need for a bitilk at the proposed location and the presence in Boulder of ample bEtilking facilities at present, and he reported that President Leedy 84tI First Vice President Koppang concurred in his recommendation. During the discussion that followed, it was brought out that there 'ere three commercial banks in Boulder, a city of some 37,000 931 3/7/6o -6- P0Pulation, that future development around Boulder looked promising, and that this development might be expected to take place largely in the area that would be served by the proposed new Governor Robertson stated that he considered this a borderline application. There was no question about the sponsorship of this bank °r that it would be operated successfully. However, he felt that the three existing banks provided reasonably adequate service to a city of 37414°O, and that no great inconvenience was resulting to persons and businesses located in the shopping center a mile east of town because °f the distance to those banks. He noted that the largest of the three Present banks was the sponsor of the new bank. 11" In his judgment, there considerable doubt as to whether the application should be approved, hie reason for this view-being the lack of demonstrated need for another bEalk• In accordance with the usual procedure in such cases, it was reed that the Kansas City Reserve Bank be requested to submit any additionel information it desired concerning this application with an indi0 eati 4 that the Board was considering recommending to the Comptroller °t the Currency that he pass favorably on the application to organize rlational bank at Boulder, Colorado. All members of the staff except Messrs. Sherman and Landry withdre— w rrom the meeting at this point. 3/7/6o -7Authorization for construction of Federal Reserve Bank Branches. Goltsarnor Balderston raised the question whether the Board should take ateps to secure an increased authorization from Congress for construeOf Federal Reserve Bank branches. Chairman Martin stated reasons why, in his judgment, it would riot be desirable to submit a proposal to the Congress at this time, alld there was general concurrence in the Chairmants views. Governor King stated, however, that he felt it would be unfortunate if such an authorization had not been secured by the time the /1ederea Reserve Banks were ready to proceed with construction of some rieeded branch buildings. Margin requirements against loans on U. S. Government securities. Gove rnor Robertson reported on discussions held recently with Comptroller Of Currency Gidney and Mr. Wolcott, Chairman of the Federal Deposit Irle" '4rance Corporation, relative to a proposal to impose margin requireIllente Oh bank loans secured by United States Government securities. He savi — " T.nat the principal question concerning such a proposal remained the "we as the one he had indicated to the Board at its meeting on February lo ) 1960, namely, whether such a requirement should be based on el4111buting to soundness in banking, or whether the emphasis should be (5t1 clseating a better securities market by preventing the unloading of Gove Illment securities in a falling market. 3/7/60 It was understood that Governor Robertson would continu e to hold conversations with Messrs. Gidney and Wolcott on this matter. Mr. Landry withdrew from the meeting at this point. Tax remittances to Federal Reserve Banks. Chairman Martin rePcrted on discussions that he and Governor Balderston held on Marth 2, 1960, with Under Secretary of the Treasury Baird and Fiscal A881stant Secretary Heffelfinger regardi ng the Treasury plan advanced la "June that the Federal Reserve Banks extend their depositary ties as fiscal agents of the Treasury to include receipt s of PaYMents made by individ uals on estimated income taxes on a quarterly 111"e1ment basis. The Chairman said that he had asked Mr. Farrell, tirector Of the Division of Bank Operations, to prepare a memoran dum I'egal ' cling this proposal and that, in the meantime, his inclination was tom Iorm the Treasury that the Federal Reserve would prefer not to get itto wie position of issuing withholding tax receipts on a "retail" basis " 'ell though it is Ilkqe currently performing a similar function for banks and corporations. APPointment of director at Little Rock Branch. Governor King l'ell'clIted that, in conformance with the request by the Board at its meet14 04 February 23, 1960, he had made inquiri es regarding an individual Illight be considered for appointment as director of the Little Rock of the Federal Reserve Bank of St. Louis. It was understood that he would furnish Mr. Fauver, Assistant to the Bo ard, information regarding the person he had in mind in order that 3/7/6o -9- Pa-Mr . uver might prepare a memorandum for distribution to the Board on this question. Meeting 13alde th Alfred P Sloan Foundation Fellows. Governor ton stated that he had received a letter from Mr. John N. Wynne, Director of the School of Industrial Management at Massachusetts Institute Of Technology, requesting that he (Governor Balderston) meet with a gr°111) of approximately 50 Alfred P. Sloan Foundation fellows who would lett W ashington on Wednesday, March 300 1960. He stated that he planned meet with this group in Room 1202 of the Board building at 2:30 p.m. 04 that day. The meeting then adjourned. Se tary. \-,- I A. BOARD OF GOVERNORS 4%0of/ .,f,4v 00,4. t nt VA, OF THE FEDERAL RESERVE SYSTEM Item No. 1 3/7/60 WASHINGTON 25, O. C. ii ADORES/I °maim. CORPICOPONOCNCE TO THIC GOMM March 7, 1960 Mi. Paul M. LaMar, President, St. Joseph Agency, Inc., St. Joseph Bank Building, South Bend 1, Indiana. Dear Mr. LaMar: This refers to the applications of St. Joseph 1,gerleY, Inc. and St. Joseph Bank and Trust Company, relating L,c). the operation of a general casualty insurance business, requesting an additional 90-, day extension of time within which St. Joseph Agency, Inc. may retain its general casualty insurance business. Pursuant to the provisions of section 4(a) of the ank Holding Company Act of 1956, the Board hereby grants 1.r1 additional extension of time to and including June 70 960, for the retention by St. Joseph Agency, Inc. of its general casualty insurance business. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. trel ej.0 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 2 3/7/60 WASHINGTON OFFICE OF THE CHAIRMAN March 7, 1960 AIR NAIL The Honorable Xenophon E. Zolotas, Governor, Bank of Greece, Athens, Greece. Dear Governor Zolotas: I was pleased to learn from your letter of February 17 that the Greek Government desires to appoint a member of the Board's staff, Mr. Richard M. Westebbe, to the position of Executive Director of the Foreign Trade Administration of the Greek Government Ministry of Commerce. Ide.think highly of Mr. Westebbe here, and are delighted to thInk he has an opportunity to be of service to you. The Board cannot give Mr. Westebbe a leave of absence for a period as long as two years, since our staff iS not large enough to permit us to keep Mr. Westebbe's 1. )resent position vacant during his absence. However, it le understood that Mr. Westebbe is willing to accept the 1?ositi0n with the Greek Government on the basis of resignIng as a member of the Board's staff. After Mr, Westebbe Fompletes the assignment of the Ministry of Commerce, the Board of Governors will be happy to discuss with him his reemployment on the Board's staff. The date suggested in your letter, April 1, 19600 11111 be satisfactory to the Board. Sincerely yours, (Signed) Wm. McC. Martin, Jr. WM. McC. Martin, Jr. TiTLY.::. 12 - A1:1) 11 ..., Item No. 3 3/7/60 r;OL,7,CAPVA A - OF TE 0.2 ' PAT 221 - LOnS LY EAS j!L.1 THE AViCi]A!TIEri C 01 ii Loans to "Carry" !:?er.;isterod f -toc%s I. .i.ffectivo 1:arch 3, 1964 pararaph (OW of 221.3 ancindd to rend as follows: 221.3 lir-co11_nneous oro/ . 4.11.1161.11.......011.e Oa. (b)(1) No loan, hotlover it may be scoured, noed be treated as a loan for the purpose of "carryine a stock registered on a national cocurities exchan7e unless the loan is as described in 84bparagraph (2) of this parzvraph or the purpow of the loan is to onablo tho borrower to reduce or retire inCobteeiness which 173 (Iriinally incurred to purchase such a stock, Or, if he be a brol::or or a dealer, to carry such stocks for customers. 2a• Tho pL.I.rpec of this v‘,12nCnt is to restore the of parai;rah (b)(1) of scotion 221.3 as it stood bore , jz:20 15 1959, in order to avoid ad,11.nistrativo problz!as z.ricinc; 11Wor t1:3 preIision thc,t has boon in e.iiect since that 6ate. ,)ver, the Loard is concorind with evasivo extensions of bank 11°w' c- dit for the purpose of carryin ro.sr 1-'Qns to be nlovt in co-col,In7 nnd prvoatin I, '.) ca Ca C 01.1.7220:::Cf.3 01. k),• .;)„,rt. stocks and c.:ects attepts to circ - OltQ •ll-74 7 -22. Tho notice, public participation, and deforrod +effective dat3 procedures doscr1t:x1 in section it of the Athainistrative Procedure Act are not followed in connection with this amendment for the reasons and good causo found as stated in pararaph (o) of 262.2 of the Board's Rules of Procedure (?art 262 of this ,ndchapter), and specifically becau.se in connection 'with this arnc, nent such procoduros are unnecessary as they Trould not aid the POrsons affected and uould carvo no other useful varpoco• (Ffec. 230 1/.3 Stat. 901; 1 . 5 U.S.C. 73u. Interprets or applics zees, 2, 3, 7, 17 4.3 Stat. 331, 632, t336, as amended, 15 U.S.C. 76b, 7ac, 73g, MO EOAU OF Clovsz:oas OF THE ficiLLSPAL VE 0;147:naf..1) Itlerrit iJ3rriLt Secretary. 1 C BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 4 3/7/60 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD March 7, 1960 Mr. George H. Clay, Vice President and General Counsel, Federal Reserve Bank of Kansas City, Kansas City 6, Missouri. Dear Mr. Clay: is made to your letter of February 4, 1960, Which hich you forwarded the architects' sketch showing a revised ! ,al for a fallout shelter in the addition to the Oklahoma P c; li 4)° b Branch building. with e revised proposal appears to satisfy basic _ requ4J.remenTtls1 and your Bank is authorized to proceed with the ! ° ! 2- 1 s for the addition. However, it is requested that, after ivimlF.'; consideration to the commonts and suggestions of pia litherell, the Board's consulting architect, revised preliminary 8 reflecting provision for fallout shelter be submitted. Witherell's comments are being transmitted in a separate letter from the sion of Bank Operations. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary.
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