Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, May 14, 1965, Volume 52, Part 5

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Minutes for

To:

Members of the Board

From:

Office of the Secretary

May 14, 1965

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.

Chm. Martin
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Gov. Maisel

Minutes of a meeting of the available members of the Board of
Governors of the Federal Reserve System on Friday, May 14, 1965.

The

meeting was held in the Board Room at 10:00 a.m.
PRESENT:

Mr. Balderston, Vice Chairman
Mr. Robertson
Mr. Maisel
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

Sherman, Secretary
Kenyon, Assistant Secretary
Broida, Assistant Secretary
Young, Adviser to the Board and Director,
Division of International Finance
Noyes, Adviser to the Board
Molony, Assistant to the Board
Cardon, Legislative Counsel
Brill, Director, Division of Research and
Statistics
Solomon, Director, Division of Examinations
Holland, Associate Director, Division of
Research and Statistics
Koch, Associate Director, Division of Research
and Statistics
Solomon, Adviser, Division of Research and
Statistics
Katz, Adviser, Division of International
Finance
Sammons, Adviser, Division of International
Finance
Spencer, General Assistant, Office of the
Secretary
Axilrod, Chief, Government Finance Section,
Division of Research and Statistics
Eckert, Chief, Banking Section, Division of
Research and Statistics
Keir, Chief, Capital Markets Section, Division
of Research and Statistics
Dahl, Chief, Special Studies and Operations
Section, Division of International Finance
Baker, Economist, Division of International
Finance
Furth, Consultant

Mr. Geng, Manager, Securities Department, Federal
Reserve Bank of New York

5/14/65

-2Money market review.

There had been distributed tables afford-

ing perspective on the money market and bank reserve utilization, in
which connection Mr. Koch called attention to the revised format of
the latter table and there was some discussion relating to money supply
trends.
Mr. Geng then reported on the money market and related matters,
after which Mr. Baker reviewed foreign exchange market developments.
Following these reports Mt. Geng, Mr. Furth, and all members
(*.If the Board's staff who had been present except Messrs. Sherman, Kenyon,
Moi
°nY, Solomon (Examinations), Sammons, and Spencer withdrew from the
meeting and the following entered the room:
Mr. Hackley, General Counsel
Mr. Shay, Assistant General Counsel
Messrs. Goodman and Leavitt, Assistant Directors, Division
of Examinations
Messrs. Egertson and McClintock, Supervisory Review Examiners,
Division of Examinations
Mr. Poundstone, Review Examiner, Division of Examinations
The following actions were taken subject to ratification at the
e)q meeting of the Board at which a quorum was present:
Discount rates.

The establishment without change by the Federal

Rese
rve Banks of Cleveland, Richmond, Atlanta, St. Louis, Minneapolis,
Kano
-.as City, and Dallas on May 13, 1965, of the rates on discounts and
advances

in their existing schedules was approved unanimously, with the

linderstanding that
appropriate advice would be sent to those Banks.

5/14/65

-3Circulated or distributed items.

The following items, copies

of which are attached to these minutes under the respective item number
s
indicated, were approved unanimously:
Item No.
Letters to The Detroit Bank and Trust Company,
netroit, Michigan, approving
the establishment
of branches at Garfield Road and Metropolitan
Parkway, Clinton Township, and at Dequindre
and Fourteen Mile Roads, Sterling Township.
Letter to Wells Fargo Bank, San Francisco,
California, approving an extension of time to
establish a branch
near Camden and Hillsdale
Avenues, San
Jose.
Letter to the Federal Deposit Insurance Corporalt310n regarding the application
of Fowler State
Fowler, Indiana, for continuation of deposit
_nsuran
ce after withdrawal from membership in the
t'ederal Reserve System.
Letter to Chase Manhattan
Overseas Banking CorporaNew York, New York, approving an amendment to
lts Articles of Association.

1-2

3

4

5

In connection with Item No. 5, Mr. Goodman noted that Chase
Ilanhattan had objected to a restriction placed by the Board on activities
Of

the New York agency of The Standard Bank Limited, London, in connection
with granting consent to Chase Manhattan to acquire shares of the
"IC

resulting from the merger of Standard Bank and the Bank of West

Aftlea Limited. However, at the request of Chase Manhattan, the question
was being deferred pending a visit to
the U.S. in June by the ChairStandard Bank.

5/14/65

-4Report on competitive factors (Lancaster-Baltimore, Ohio).

Unanimous approval was given to the transmittal of a report to the
Comptroller of the Currency on the competitive factors involved in
the proposed purchase of assets and assumption of liabilities of The
Bank of Basil Company, Baltimore, Ohio, by The Fairfield National
lank of Lancaster, Lancaster, Ohio.

The conclusion read as follows:

The Bank of Basil Company, Baltimore, and The Fairfield
National Bank of Lancaster do not appear to be competitors to
a significant extent, and there is no likelihood the transaction would adversely affect other area banks. The competitive effects of the proposed transaction would not be adverse.
All members of the staff except Messrs. Sherman and Kenyon
then withdrew from the meeting.
Salary of officer at Atlanta Bank.
having

Governor Balderston reported

received word from Chairman Tarver by telephone yesterday that

it Ilas anticipated that the Board of Directors of the Federal Reserve
}lank of Atlanta, at a meeting this morning, would appoint M. Monroe
Kimbrel as Senior Vice President of the Bank, effective June 2, 1965,
and fix his salary at the annual rate of $27,500 subject to approval
Of the Board
of Governors.

The appointment of Mr. Kimbrel would be

in line with the plan of succession discussed with the Board of Govel-l°rs in late 1964, and to which the Board had reacted favorably,
lthough the
plan was being accelerated somewhat in view of the decistall
of President Bryan to retire from his position the first of September.

It was understood that Mr. Kimbrel would resign as a Class A

5/14/65

-5-

director of the Bank no later than the date of assumption of his duties
as Senior Vice President.

Chairman Tarver also advised that Mr. Kimbrel

had arranged for the disposition of the bank
stock that he had held.
After discussion, it was agreed unanimously that upon receipt
of a telegram from Chairman Tarver advising that the Board of Directors
Of the Atlanta Bank had taken the contemplated action, the Secretary
Of the
Board of Governors should reply by telegram that the Board approved
the Payment of salary to Mr. Kimbrel as Senior Vice President at the
annual rate of $27,500 effective June 2, 1965.
Secretary's Note: Subsequent to the meeting
a wire was received from Chairman Tarver
reflecting action by the Board of Directors
relative to the appointment and payment of
salary to Mr. Kimbrel, and the Secretary of
the Board of Governors replied by telegram
containing advice such as he had been authorized to transmit.
In this connection, it was suggested by Governor Robertson that
f°r record purposes Chairman Tarver be requested to confirm in writing
his
oral advice regarding the disposition by Mr. Kimbrel of the latter's
b ank
stock, with indication of the manner in which disposition had been
aeco
mplished.
The foregoing suggestion led to a discussion of the question
°f h°1ding of bank shares by members of the immediate families of
Reserve Bank officers, particularly by wives, and comment was made

that

the Board apparently had not had occasion to express an attitude

5/14/65

-6-

on. this subject.

It was suggested that the Board consider the matter

in more detail at an early meeting, with a view to determining whether
discussio

n with the Presidents' Conference would appear advisable.

The meeting then adjourned.
Secretary's Notes: Acting in the absence
of Governor Shepardson, Governor Robertson
approved on behalf of the Board on May 13,
1965, a memorandum from the Division of
Research and Statistics dated May 3, 1965,
recommending the appointment of Richard D.
Karfunkle, Textile Economist, E. I. DuPont
de Nemours and Company, Wilmington, Delaware,
as a Consultant to that Division effective to
December 31, 1965, on a temporary contractual
basis with compensation at the rate of $60
per day for each day worked and with transportation expenses and per diem when in
travel status to be paid in accordance with
the Board's travel regulations.
Governor Shepardson today approved on behalf
of the Board the following items:
Memorandum from the Division of Bank Operations dated May 12, 1965,
1:!commending
that a new Grade 13 position be established in the Accountlug and Currency
Unit of that Division.
Memoranda recommending the following actions relating to the Board's

Staff:

ers
Ad . Catherine B. Davian,
from the position of Secretary to Mr. Young,
vtlser to the Board, to the position of Secretary to Governor Maisel,
ti
an increase in basic annual salary from $7,510 to $7,955, effecMaY 19, 1965.
1w_ Christine
Cushman, from the position of Clerk in the Division of
wij
r national Finance to the position of Senior
Clerk in that Division,
ti
an increase in basic annual salary from $4,630 to $5,000, effecve MaY 23, 1965.

Item No. 1
5/14/65

BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THIC BOARD

May 14, 1965

Board of Directors,
The Detroit Bank and Trust Company,
Detroit, Michigan.
Gentlemen:
The Board of Governors of the Federal Reserve System
approves the establishment by The Detroit Bank and Trust
Company, Detroit, Michigan, of a branch at the southwest
corner of Garfield Road and Metropolitan Parkway, Clinton
Township, Macomb County, Michigan, provided the branch is established within one year from the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke

Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)

Item No. 2
5/14/65

BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
ADDRESS OFFICIAL CORNIESPONOICNCIE
TO THIE 110ARD

May 14, 1965

Board of Directors,
The Detroit Bank and Trust Company,
Detroit, Michigan.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by The Detroit Bank and
Trust Company, Detroit, Michigan, of a branch at the
northeast corner of Dequindre and Fourteen Mile Roads,
Sterling Township, Macomb County, Michigan, provided the
branch is established within one year from the date of
this letter.
. Very truly yours,
(Signed) Karl E. Bakke

Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)

BOARD OF GOVERNORS

Item No. 3
5/14/65

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

May 14, 1965

Board of Directors,
Wells Fargo Bank,
San Francisco, California.
Gentlemen:
The Board of Governors of the Federal
Reserve System extends to May 26, 1966, the time
within which Wells Fargo Bank, San Francisco,
California, may establish a branch in the vicinity
of the intersection of Camden and Hillsdale Avenues, San Jose, California.
Very truly yours,
(Signed) Karl E. Bakke

Karl E. Bakke,
Assistant Secretary.

BOARD OF GOVERNORS

....

.•

Item No. 4
5/14/65

OF THE

4 c)0Vcc.

FEDERAL RESERVE SYSTEM
WASHINGTON, 0. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

May 14, 1965

The Honorable K. A. Randall, Chairman,
Federal Deposit Insurance Corporation,
Washington, D. C.
20429
Dear Mr. Randall:
Reference is made to your
1965, concerning the application of
Fowler, Indiana, for continuance of
after withdrawal from membership in
System.

letter of April 29,
Fowler State Bank,
deposit insurance
the Federal Reserve

There have been no corrective programs urged
Upon the bank, or agreed to by it, which have not been
fully consummated, and, in the Board's opinion, there are
no programs that it would be advisable to incorporate as
conditions of admitting the bank to membership in the
corporation as a nonmember of the Federal Reserve System.
Very truly yours,
(Signed) Karl E. Bakke

Karl E. Bakke,
Assistant Secretary.

BOARD OF GOVERNORS

Item No.
5/14/65

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
ADDRESS OFFICIAL. CORRESPONDENCE
TO THE BOARD

May 14, 1965.

Chase Manhattan Overseas Banking
Corporation,
1 Chase Manhattan Plaza,
New York, New York. 10005
Gentlemen:
In accordance with the request contained in your letter
May
4, 1965, transmitted through the Federal Reserve Bank of
°f
LIew York, and pursuant to the provisions of Section 211.3(a) of
Regulation K, the Board of Governors approves the amendment to
Article SEVENTH of the Articles of Association of your Corporation
to
provide that the capital stock of Chase Manhattan Overseas
Ranking Corporation shall be $11,810,000, divided into 11,810
shares of the par value of $1,000 each.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.