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743
Minutes of actions taken by the Board. of Governors of the
Federal Reserve System on Thursday, May 13,
PRESENT:

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

1954.

Martin, Chairman
Szymczak
Evans
Vardaman
Mills
Robertson
Mr. Carpenter, Secretary
Mr. Sherman, Assistant Secretary
Mr. Kenyon, Assistant Secretary

Minutes of actions taken by the Board of Governors of the
Federal Reserve System on May 12, 1954, were approved unanimously.
Letter to Mr. Bryan, President, Federal Reserve Bank of Atlanta,
reading as follows:
In view of the circumstances described in your letter
of May 6, 1954, the Board of Governors approves the retention
of Mr. C. R. Camp in a nonofficial capacity following his
retirement as an officer of the Bank on May 31, 1954, and
the payment of salary to him for the period June 1, 1954,
through December 31, 1954, at the rate of $7,500 per annum.
Approved unanimously.
Letter to Mr. Latham, Vice President, Federal Reserve Bank of
Boston, reading as follows:
This refers to your letters of April 2 and May 6, 1954,
regarding the request made on behalf of Post Publishing
Company, Boston, Massachusetts, for a determination by the
Board that the Company is not a holding company affiliate.
In the enclosures to your letters, it is stated that
Post Publishing Company is engaged principally in the
business of publishing a daily and Sunday newspaper. However, it is also stated that the Company has many other interests, including ownership of a radio station, the drilling
of natural gas wells, the discovery, development and exploitation of natural gas deposits, and the purchase and resale of




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5/13/54
natural gas. The Board understands that Post Publishing
Company is a holding company affiliate of The Perth Amboy
National Bank, Perth Amboy, New Jersey, by reason of the
fact that it owns 23,842 shares of the common stock of
that bank which represents more than 90 per cent interest
in the authorized and outstanding shares of such stock.
The Board also understands that over 20 per cent of the
assets of the Company are invested in these shares of stock
of the national bank and it appears that it is the intent of
the Company to participate actively in the control and
management of the bank.
As you know, section 2 of the Banking Act of 1933, as
amended, excludes from the definition of "holding company
affiliate" (except for the purposes of section 23A of the
Federal Reserve Act) any company which is determined by
the Board not to be engaged, directly or indirectly, as a
business in holding the stock of, or managing or controlling,
banks, banking associations, savings banks, or trust companies. While this provision refers to banks in the plural,
it is believed that, under rules of statutory construction
prescribed by Congress (U.S. Code, Title 1, sec. 1) it also
includes the singular. Although Post Publishing COmpany
controls only one bank, it appears to be engaged substantially
in the business of holding bank stock and in the business of
managing and controlling such bank.
On the basis of all of the facts of the case as presented
to the Board and in view of the nature of the Company's
business, the Board has concluded that it would not be warranted in making the determination requested, and it will be
appreciated if you will so advise the Post Publishing Company.
Consequently, the Company will not be in a position legally
to vote the stock of The Perth Amboy Nationnl Bank unless a
voting permit iscibtained from the Board.
Approved unanimously.
Letter to Mr. Denmark, Vice President, Federal Reserve Bank of
Atlanta, reading as follows:
This refers further to your letter of March 8, 1954, with
which you enclosed a copy of a letter dated March 4, 1954,
from Mr. William S. Woods, President of Trust Company of
Georgia Associates, advising that Associates had purchased the




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controlling stock in the DeKalb National Bank, Brookhaven,
Georgia. On May 4, Mr. Sibley of the Trust Company of
Georgia, discussed this matter with Chairman Martin, Governor
Robertson, and members of the Board's staff, particularly
with respect to the question whether the purchase of such
stock was consistent with the provisions of section 9 of the
Federal Reserve Act which makes State member banks subject
to the limitations of section 5136 of the Revised Statutes.
Before undertaking to express an opinion with respect
to this question, the Board feels that it would be desirable
for it to have information as to the amount of stock purchased, the manner in which the purchase was financed, the
nature and purpose of the arrangement under which the stock
Is being temporarily held by trustees, and any other information having a bearing on the question.
In the course of the discussion of this matter with
Mr. Sibley, mention was made of other cases in which the
Board has taken the position that the purchase of stock by
a subsidiary of a member bank was inconsistent with the provisions of section 9 of the Federal Reserve Act and section
5136 of the Revised Statutes; and Mr. Sibley indicated that
he would appreciate being advised as to the factual situation
in these cases.
In one of these cases, arising in 1953, a State member
bank had a subsidiary which had been organized prior to 1933,
and of which the member bank owns 95 per cent of the stock,
but which for some time had been relatively inactive. It
was proposed that this subsidiary would acquire a majority
of the stock of a national bank in another county with the
thought that eventually the State member bank would absorb
the national bank and convert it into a branch if and when
State law should be amended to permit the establishment of
out-of-county branches. The Board took the position that the
proposed purchase of the stock by the subsidiary would be inconsistent with the provisions of section 9 of the Federal
Reserve Act and section 5136 of the Revised Statutes.
In another case which arose in 1949, a wholly owned subsidiary of a State member bank, which was engaged in the
business of managing real estate and acting as an insurance
agent, had purchased the stock of an insurance company. The
Board took the position that the purchase of such stock by the
subsidiary was contrary to the spirit and purposes of the law
and that the facts and circumstances of the case afforded
ample justification for disregarding the corporate fiction
and holding that the stock had been purchased by the member bank




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in violation of the law. In addition, the Board took the
position that the acquisition of the stock was not in compliance with a condition of membership applicable to the
member bank which required it to obtain the permission of
the Board of Governors before exercising, either directly
or through the subsidiary, any powers not being exercised
when the bank was admitted to membership. Accordingly,
the Board requested that the stock be disposed of as promptly
as practicable.
It will be appreciated if you will advise the Trust
Company of Georgia of the substance of this letter, requesting
that it furnish the information indicated above and advising
it also that the Board will be glad to have the benefit of
any views or comments which the Trust Company may care to
make in connection with this matter. In transmitting the
Trust Company's views, the Board will, of course, be glad to
have any comments which your Bank may wish to submit.
Approved unanimously.
Letter for the signature of the Chairman to The Honorable David
McK. Key, Assistant Secretary of State, Washington, D. C., reading as
follows:
This is in reply to your letter of May 3, 1954, regarding representation at international conferences during
the fiscal year 1956.
As you know, the Board does not operate with appropriated funds and its participation in international conferences,
therefore, does not involve the budgetary procedure outlined
in your letter. However, the statutory responsibilities of
the Board make it necessary that it have a continuing interest
in some international and monetary conferences. In addition,
the membership of the Chairman of the Board on the National
Advisory Council on International Monetary and Financial
Problems makes it advisable for the Board and its staff to
participate in certain conferences dealing with monetary and
related matters.
It is not possible to state at this time the particular
conferences in which the Board will participate during the
fiscal year 1956. The Board's decision is likely to depend
on the agenda of the particular conference and on the degree
to which the Department of State or other agencies arranging
for United States participation may indicate the need of experts in monetary, banking, or related fields for the United




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States delegation. Whenever the Department indicates to the
Board the need for assistance of this type for a particular
international conferencelyou may be assured that the Board
will assist in every way possible.
In the past, members of the Board and its staff have
participated in the annual meetings of the Boards of Governors of the International Monetary Fund and the International
Bank for Reconstruction and Development, which are included
in your list of international conferences. Members of the
Board's staff have also participated occasionally in meetings
of the United Nations Economic and Social Council or of its
commissions or subcommissions, and it is possible that during
the fiscal year 1956, the Board will wish to have its staff
participate in such meetings.




Approved unanimously.