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Minutes for March 9, 1959
To:
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 proposed to place in the record of policy actions
the
required to be kept under the provisions of Section 10 of
of
set
this
in
item
the
ng
Federal Reserve Act an entry coveri
t
subjec
the
with
g
dealin
and
minutes commencing on the page
referred to below:
Page 11.
Approval of a discount rate of
3 per cent at the Federal Reserve
Bank of Boston; and agreement to
approve the same rate for any other
Federal Reserve Bank advising of the
establishment of such rate.
Should you have any question with regard to the minutes,
Office.
it will be appreciated if you will advise the Secretary's
l in
initia
please
g,
Otherwise, if you were present at the meetin
you
If
s.
minute
the
e
column A below to indicate that you approv
te
indica
to
below
B
were not present, please initial in column
that you have seen the minutes.
A
Chairman Martin
Governor Szymczak
Governor Mills
Governor Robertson
Governor Balderston
Governor Shepardson
(.1 I3
System
Minutes of the Board of Governors of the Federal Reserve
on Monday, March 9, 1959.
PRESENT:
Mr.
Mr.
Mr.
Mr.
The Board met in the Board Room at 3:00 p.m.
Balderston, Vice Chairman
Szymczak
Mills
Robertson
Mr.
Mr.
Mt.
Mr.
Mr.
Sherman, Secretary
Kenyon, Assistant Secretary
Hackley, General Counsel
Molony, Special Assistant to the Board
Solomon, Assistant General Counsel
Mercantile Trust Company of St. Louis (Item No. 1).
There were
of proposed
distributed to the members of the Board copies of a draft
St. Louis
telegram to President Johns of the Federal Reserve Bank of
a current suit
authorizing him to produce, in response to subpoena, in
i, copies of
against the Mercantile Trust Company, St. Louis, Missour
14,
four letters from the Board dated between July 11, 1933, and August
or
1947, and addressed either to the Federal Reserve Agent in St. Louis
to the Mercantile-Commerce Bank & Trust Company of St. Louis (the
).
predecessor institution to the Mercantile Trust Company
The telegram
would request that, in producing those documents, President Johns state
that in view of the need in the public interest for maintaining the
banks,
confidentiality of communications between the Board and member
the documents not be made part of the record in the case unless copies
could not otherwise be obtained.
By way of background, Governor Robertson reported having been
advised by President Johns that when a motion to quash the earlier
the
subpoena served on Mr. Johns was argued in court this morning by
8911
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3/9/59
the grounds that the
United States Attorney, the motion was granted on
subpoena was not sufficiently specific.
Immediately, counsel for the
na sufficiently specific
plaintiff caused the issuance of a second subpoe
by the
to entitle it to enforcement, a motion to quash was made orally
was denied by the court.
United States Attorney, but the motion to quash
would be called as
Hence, when the case came to trial President Johns
nts in question.
a witness and required to bring with him the docume
produce the
When he went on the stand, he could either refuse to
produce the documents.
documents and risk a contempt citation or else
ce of the proposed telegram
Governor Robertson said that the last senten
could be
had been included with the thought that although no cooperation
least a possibility that
expected from plaintiff's counsel, there was at
a
the court might accede to a request that the documents not be made
Part of the record.
had gone
He then expressed the view that the Board
entiality
as far as it reasonably could in attempting to protect the confid
it
Of relationships between it and the Mercantile Trust Company, that
t, and that he
would in effect be producing the documents under protes
further.
doubted the advisability of carrying the matter
summarized the contents
At the request of the Board, Mr. Hackley
that this
of the four letters in question, following which he noted
al jurisdiction and
Proceeding was being heard in a court of origin
that there presumably would be no published opinion.
However, if the
in the
case were appealed to a higher court, the material might appear
S91
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3/9/59
record as a precedent for the disclosure of unpublished information.
The only apparent alternative would be to appeal the court's ruling
on the subpoena, and he was not sure whether that would be worth while.
In response to a question, he noted that the original letters held by
the respondent to the suit were material over which the Board had no
control.
If produced by the respondent in response to subpoena,
Presumably the Board would find it difficult to prevent a newspaper
from printing the letters even though they constituted unpublished
information.
After further discussion, it was agreed unanimously to authorize
President Johns to produce from the files of the Reserve Bank copies of
the documents covered by the subpoena, and the Secretary was requested
to call Mr. Johns and read the telegram that the Board proposed to
send to him.
After talking to President Johns, the Secretary returned
to the room and said that Mr. Johns had suggested including in the
authorization a letter from the Federal Reserve Agent at St. Louis to
Mercantile-Commerce Bank & Trust Company dated July 14, 1933, concerning
the letter from the Board to the Federal Reserve Agent dated July 11,
1933, and it was agreed that Mr. Johns should also be authorized to
Produce that letter.
A copy of the telegram sent to Mr. Johns pursuant
to this action is attached as Item No. 1.
Consideration then was given to the Board's letter of March 6,
1959, to Mr. Raymond P. Brandt, Chief of the Washington Bureau of the
S941.
3/9/59
St. Louis Post-Dispatch in response to certain inquiries made by him,
the question being whether, in view of the authorization given to
newspaper
President Johns, the Board should communicate further with the
representative.
n
During discussion of this point Governor Robertso
stated that, although he did not consider the matter too important, he
would be somewhat inclined, in the light of the subsequent development
and in the interest of maintaining good public relations, to get in
touch vith the newspaper representative and provide him information
along the lines he had been seeking.
It was noted that the letters
the Board had authorized President Johns to produce would serve to
provide answers to three of the four questions that had been raised
by Mr. Brandt.
However, on the basis that there would not necessarily
be anything inconsistent in the reply made by the Board under date of
March
6 and the authorization subsequently given in response to subpoena,
it was the consensus that the Board need not take the initiative in
further
getting in touch with Mr. Brandt at this time in the absence of
developments.
Discount rates.
The Secretary reported that a telegram had
been received this afternoon from the Federal Reserve Bank of Boston
of
stating that the Bank's directors had today established a rate
3 Per cent (rather than 2-1/2 per cent) on discounts and advances
under sections 13 and 13a of the Federal Reserve Act, a rate of 3-1/2
per cent on advances under section 10(b), a rate of 4-1/2 per cent on
q9
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3/9/59
rates in
advances under the last paragraph of section 13, and other
al
the Bank's existing schedule without change, subject to the approv
of the Board of Governors.
to the
Thereupon, unanimous approval was given to a telegram
established by the
Federal Reserve Bank of Boston approving the rates
tanding that a press
directors, effective March 10, 1959, with the unders
at 4:00 p.m. EST,
statement in the usual form would be released today
l Reserve
advice of the action would be sent by telegram to all Federa
Federal
Banks and branches, and a notice would be published in the
Register.
be received
It was agreed unanimously that if telegrams should
had
from other Federal Reserve Banks advising that their directors
than 2-1/2 per cent,
established a discount rate of 3 per cent rather
es, the
along with appropriate subsidiary rates on discounts and advanc
established rates
Secretary would advise such Banks of approval of the
effective the following business day.
This authorization contemplated
form,
that in each case a press release would be issued in the usual
and branches,
notification would be sent to all Federal Reserve Banks
and a notice would be published in the Federal Register.
ed last
The Secretary then reported that there had been receiv
Friday, March
6, a telegram from the Federal Reserve Bank of Minneapolis
subject to the
stating that that Bank had established without change,
nts and advances
approval of the Board of Governors, the rates on discou
91
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3/9/59
in its existing schedule.
An officer of the Reserve Bank had advised
by telephone that a meeting of the Board of Directors could not be
inadvisable
arranged until Friday, March 13, that the Bank deemed it
to act to establish a different discount rate in the absence of a
reestablish
quorum of the Board of Directors, and that the action to
the existing rates had been taken by a quorum of the executive committee
in order to comply with the statutory requirement.
circumstances,
There followed discussion as to whether, in the
the Board should send a reply approving reestablishment of the existing
son suggested
rates on discounts and advances during which Governor Robert
that it might be preferable to defer a reply.
by the Board at
Governor Mills then referred to the discussion
its meeting on November 12, 1958, concerning procedure applicable to
the discussion at
situations of this kind, and expressed the view that
that meeting had established the principle of prompt reply to wires
discount
from Federal Reserve Banks advising of the establishment of
rates by the respective Banks.
the telegram
However, no decision was reached on the handling of
the matter
from the Minneapolis Reserve Bank, and it was understood that
would be considered further at the meeting of the Board tomorrow.
The meeting then adjourned.
3/9/59
-7Governor
Secretary's Note: In the absence of
approved
y
toda
n
rtso
Shepardson, Governor Robe
Federal
the
to
gram
tele
a
d
on behalf of the Boar
2)
No.
Item
d
ache
(att
Reserve Bank of Atlanta
as
ons
pers
two
of
approving the appointment
stant examiners.
examiners and three persons as assi
S9
TELEGRAM
LEASED WIRE SERVICE
SYSTEM
BOARD OF GOVERNORS OF THE FEDERAL RESERVE
WASHINGTON
March
Item No. 1
3/9/59
.9, 1959
Johns - St. Louis
Re your telephone inquiry today regarding production of
certain documents in records of your Bank in response to court
subpoena in suit against Mercantile Trust Company, St. Louis,
Board authorizes you pursuant to section 9 of Rules of Organization
to produce, in response to subpoena, copies of letter from Board to
John S. Wood, Federal Reserve Agent, dated July 11, 1933, letter from
John S. Wood to John G. Lonsdale, Chairman of the Board, MercanLilaCommerce Bank & Trust Company, dated July 14, 1933, letter from Board
to W. L. Hemingway, Mercantile-Commerce Bank & Trust Company, dated
December 12, 1933, letter from Board to Mercantile-Commerce Bank ('.4
Trust Company, dated March 27, 1935, and letter from Board to W. L.
Hemingway, Chairman of the Board, Mercantile-Commerce Bank & Trust
Company, dated August 14, 1947.
However, Board requests that in
Producing such documents you state that, in view of need in public
interest for maintaining confidentiality of communications between
Board and member bank, these documents not be made pprt of the record
in the case unless copies cannot otherwise be obtained.
(Signed) Merritt Sherman
Sherman
TELEGRAM
SERVICE
Item No. 2
LEASED WIRE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
3/9/59
March 9, 1959.
DENMARK - ATLANTA
Reurlet March
4, 1959,
Board approves appointments of Charles
Ray Chapman and William S. Dennis, Jr., as examiners and Jack
Daniel Hardage, Charles Branan Lindsay, and Carleton William
Sturtevant as assistant examiners for Federal Reserve Bank of
Atlanta, effective March 9, 1959. Advise as to salary rates.
(Signed) Kenneth A. Kenyon
KENYON
@FedFRASER