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Minutes for To: Members of the Board From: Office of the Secretary May 16, 1958 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, if you were present at the meeting, please initial in column A below to indicate that you approve the minutes. If you were not present, please initial in column B below to indicate that you have seen the minutes. A Chm. Martin Gov. Szymczak Gov. Vardaman 1/ Gov. Mills -Tr: "3.167 Gov. Robertson Gov. Balderston Gov. Shepardson x eel() 1/ In accordance with Governor Shepardson's memorandum of March 8, 1957, these minutes are not being sent to Governor Vardaman for initial. e System Minutes of the Board of Governors of the Federal Reserv on Friday, May 16, 1958. PRESENT: Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Szymczak Mills Shepardson Mr. Mt. Mt. Mt. Mr. Mt. Mt. Mt. Carpenter, Secretary Kenyon, Assistant Secretary Masters, Director, Division of Examinations Furth, Associate Adviser, Division of International Finance Sammons, Associate Adviser, Division of International Finance Solomon, Assistant General Counsel Goodman, Assistant Director, Division of Examinations Davis, Assistant Counsel Items circulated to the Board. The following items, which had been circulated to the members of the Board and copies of which are Itttached to these minutes under the respective item numbers indicated, 17"e a roved unanimously: Item No. Izetter to the State Bank of Albany, Albany, New York, r2ving the establishment of a branch in Plattsburgh, t w York. (For transmittal through the Federal Reserve 'n-k of New York) e 1 Lett car er to The National Bank of Sanford, Sanford, North powers. . e. approving its application for fiduciary (pox°lin of Bank t ttal through the Federal Reserve ittal ransmi transm 11,.4c 2 Discount rates. ams to Unanimous approval was given to telegr the Pederal Reserve Banks of New York, Philadelphia, Chicago, Minneapolis, the establishment without change ICariaa's City, and San Francisco approving br der of those Banks the San Francisco Bank on May 14, and by the remain -4 ..e."1 -IL ALII.J +t 5/16/58 -2- Oil May 15, 1958, of the rates on discounts and advances in their existing schedules. Question raised by Chase International Investment Corporation. As discussed in a staff memorandum which had been distributed to the blezbers of the Board, representatives of Chase International Investment C°rPoration, an Edge Act financing corporation, had raised with Governor SzYmczak the question whether the Board would consider certain proposed etivities to be inconsistent with Regulation K or the Edge Act. According to the description of those activities furnished in a memowhich had been handed to Governor Szymczak, Chase International 15110Posed to enter into an arrangement with the Government of Jamaica 114d-er which it would provide financial advice and other services to that Government for a fee. It appeared that Chase International would ttet in the capacity of adviser or consultant, especially in providing vcirious information about the United States markets which would be he4fu1 in meeting the Jamaican Government's objectives under a long1'44 t c'gram involving the raising of money abroad, the further developmen industry and tourism, and possibly a change or elaboration of the e)ci8ting banking system. 131 More specifically, the Jamaican Government ed to raise money in the United States market, presumably through the sale of bonds, to the extent of $20 million, which might be raised over 4 Period of time and not in one issue. Chase International would the 841'llse on matters such as the selection of investment bankers and 1.5u4 5/16/58 aegotiation of terms with them, but would not have any part in the Underwriting or distribution of securities or buy any such securities for its own account. In comments amplifying the material which had been distributed, Governor Szymczak referred to the language in section 6 of Regulation K 1Dre'viding limitations on the operations of an Edge Act financing corporain the United States, particularly in connection with the underwriting, sale, or distribution of securities. He pointed out that the proposal of Chase International had been presented in rather vague terms and said it /148 understood from representatives of the corporation that the memorandum tltrnished to the Board had not yet been cleared with the corporation's staff. He went on to say that the representatives of Chase Inter- 46ttioaal who had discussed the matter seemed cognizant of the many Itlestions which might be raised under an arrangement such as the one 13r°Posed. Following supplemental comments by Mr. Solomon, Governor Szymczak he would be inclined to recommend advising Chase International question 44-LIY that the Board did not wish at this time to raise any " 1113'out the proposed arrangement from the regulatory standpoint. However, the available information was quite limitedl developments should be iletched closely, and the Board should be kept fully advised, for there 1a. be hazards in an arrangement of this kind. °11. likewise was Governor Mills indicated that his general reaction , `"rable. some He suggested that the relationship might be compared to 1505 5/16/58 extent to one where the trust department of a bank acts for a client in an advisory capacity rather than a trust capacity. While he had 8°me over-all reservations about Edge Act nonbanking corporations as such, as long as they were actually in existence he saw no strong objection to a proposal of this kind. He suggested, however, that it might be lI°1‘th while to check informally with the Department of State regarding ' the status of the Government of Jamaica as a part of the British West Indies Federation, with particular reference to the authority of the ja4laican Government in financial matters. The other members of the Board concurred in the suggestion that it /g°111d be desirable to discuss the matter with the State Department. If this check did not indicate a different course of action, it was onal that Governor Szymczak would advise Chase Internati inliestment Corporation informally that on the basis of the information 4vailable to it, the Board would raise no question from a regulatory 8t41140int about that corporation's entering into relationships with the Government of Jamaica along the lines described, with the underkeep standing, however, that Chase International would be expected to the Board nt. informed of developments under such an arrangeme meeting. Messrs. Furth and Sammons then withdrew from the Status of Re ublic National Bank. After expressing the view 04 j Bank, Dallas, Texas, -arillarY 14, 1958, that the Republic National 48 a bank holding company within the meaning of the Bank Holding 15O 5/16/58 -5- Company Act, the Board subsequently extended until June 9, 1958, the time for Republic to register under the Act. The Board's position was based on the fact that 25 per cent or more of the stock of each of eight different banks was held by eight different investment compPnies Ighose stock was in turn held by trustees for the benefit of shareholders RepUblic. SUbsequently, through the Federal Reserve Bank of DFillas, RePublio advised that seven of the eight investment companies had reduced their holdings of bank stock below 25 per cent, with the result that it aPPeared that Republic had ceased to be a bank holding company, as defined in the Bank Holding Company Act. A memorandum from Messrs. Solomon and Davis dated May 14, 1958, which had been distributed to the members of the Board, discussed the question arising out of the fact that Republic II not yet registered as a bank holding company and apparently did not " intend to do so, despite the fact that according to the view previously exPressed by the Board it was a bank holding company on May 9, 1956, the date of enactment of the Bank Holding Company Act. Since it appeared, holiever, that Republic's failure to file a registration statement was t Most no more than a technical violation of the Act, the memorandum c)11c1uded that it would not serve any useful purpose to report this 1714tter to the Department of Justice. Accordingly, it was recommended that no further action be taken. by Mr. Following a discussion based on supplementary comments avi s, unanimous agreement was expressed with the recommendation of the Legn, Division. 5/16/58 -6The meeting then adjourned. On May 15, 1958, Secretary's Note: Governor Shepardson approved on behalf of the Board the following items: Memorandum dated May 6, 1958, from Mr. Connell, Controller, 1 commending the transfer of Susan 0. Hoffman from the position of 4 atistical Clerk-Typist in the Division of Research and Statistics athe position of Accounting Technician in the Office of the Controller, 1ot-ch an increase in her basic annup3 salary from $1,708 (half-time " d s1s) to $3,670 (full-time basis), effective the date she assumes her ' 4%7 duties. Letter to the Federal Reserve Bank of Atlanta (attached Item approving the designation of Franklin D. Hughes and John N. Elder 3°' sPecial assistant examiners. NO. 1508 Item No. 1 5/16/58 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD May 16, 1958 Board of Directors, State Bank of Alban:v, Albany, New York. Gentlemen: Pursuant to your request submitted through the F°deral ResPrve Bnpk of New York, the Board of Governors of the Fecieral Reserve System approves the establishment of a branch at 308 Cornelia Street, Plattsburgh, Clinton 2°LintY, New York, by the State Bank of Albany, Albany, York, provided the bmwth is established within six months from the date of this letter. VPry truly yours, (Signed) S. R. Carpenter S. R. Caroenter, Secretnry. BOARD OF GOVERNORS OF THE Item No. 2 5/16/58 FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD May 16, 1958 Board of Directors, The National Bank of Sanford, Sanford, North Carolina° G entlemen: The Board of Governors of the Federal Reserve ''.y. stem has given consideration to your application for _.44.l. uciary powers and grants you authority to act, when "°T. in contravention of State or local law, as trustee, 64xecutor, administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver, committee of estates of lunatics, or in any other fiduciary capacity til Which State banks, trust companies or other corporat 1°118 Which come into competition with national banks ..!'e Permitted to act under the laws of the State of North Carolina, the exercise of all such rights to be Islubjellt to the provisions of section 11(k) of the Federal 4 serve Act and Regulation F of the Board of Governors of ! wle Federal Reserve System. A formal certificate indicating the fiduciary I a"rs which The National Bank of Sanford is now authorl zed to exercise will be forwarded to you in due course. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary° BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM 1* Item NO. 3 5/16/58 WASHINGTON 25, D. C. 4 4 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD May 15, 1958 14r. J. F. Denmark, Vice President, Federal Reserve Bank of Atlanta, Atlanta 3, Georgia. near Mr. Denmark: In accordance with the request contained in your letter of May 9, 1958, the Board approves the designation of eFran • D. Hughes and John N. Elder as special assistant miners for the Federal Reserve Bank of Atlanta to participate " examinations of State member banks only. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary.
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