The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
FR 609
Rev. 10/59
Minutes for
To:
May 2, 1961
Members of the Board
From: Office of the Secretary
Attached is a copy of the minutes of the
rs of the Federal Reserve System on
Governo
Board of
date.
the above
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. Szymczak
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
Minutes of the Board of Governors of the Federal Reserve System
on Tuesday, May 2, 1961.
PRESENT:
Mr.
Mr.
Mr.
Mr.
The Board met in the Board Room at 10:30 a.m.
Balderston, Vice Chairman
Robertson
Shepardson
King 1/
Mr.
Mr.
Mr.
Mr.
Sherman, Secretary
Molony, Assistant to the Board
Hackley, General Counsel
Noyes, Director, Division of Research
and Statistics
Request for Mr. Furth to prepare article.
Governor Balderston
reported that the Financial Secretary of the Austrian Embassy had asked
Mr. Furth, Adviser, Division of International Finance, to write an article
on the United States dollar as an international reserve currency for a
special issue of the bulletin of Credit Anstalt, a large commercial bank
owned by the Austrian Government.
This would be one of a series of
articles, headed by an article by the President of the Austrian National
Bank on the Austrian schilling.
After discussion, it was agreed that it would be desirable for
Mr. Furth to prepare the article, subject to the understanding that he
would not accept any honorarium and that a draft of the article would
be submitted for general review to the Editorial Committee of the
Federal Reserve Bulletin.
Governor King joined the meeting during the discussion of the
aforementioned matter.
1/ Entered meeting at point indicated in minutes.
-2-
5/2/61
Commission on Money and Credit.
Governor Balderston summarized
a conversation with Mr. Frazar Wilde, Chairman of the Commission on
Money and Credit of the Committee for Economic Development, regarding
progress being made on the forthcoming report of the Commission.
Mr. Noyes then withdrew from the meeting and the following
members of the staff entered the room:
Mr. Kenyon, Assistant Secretary
Miss Carmichael, Assistant Secretary
Mr. Farrell, Director, Division of Bank
Operations
Mr. Solomon, Director, Division of Examinations
Mr. O'Connell, Assistant General Counsel
Mr. Benner, Assistant Director, Division of
Examinations
Mx. Leavitt, Assistant Director, Division of
Examinations
Mr. Young, Assistant Counsel
Discount rates.
The establishment without change by the Federal
Reserve Banks of Boston and Atlanta on May 1, 1961, of the rates on
discounts and advances in their existing schedules was approved unanimously, with the understanding that appropriate advice would be sent
to those Banks.
Dividend of New Haven Savings Bank
(Item No. 1).
There had
been circulated to the members of the Board a memorandum from the
Division of Examinations and a draft of letter to the Federal Reserve
Bank of Chicago regarding a request from New Haven Savings Bank, New
Haven, Michigan, for approval, under section
9 of the Federal Reserve
1513
5/2/61
-3-
Act and section 5199(b) of the U. S. Revised Statutes, of a dividend
in the amount of $2,500 declared and paid in 1960.
The proposed reply
indicated that the Board would interpose no objection.
In discussion, Governor Shepardson raised a question regarding
the apparent disparity between the low capital ratio of the bank, as
revealed by the Form for Analyzing Bank Capital, and the following
statement of the Federal Reserve Bank of Chicago that was quoted in the
April 13 memorandum:
In view of the absence of any asset problems of significance
and the fact that there has been no expansion of risk assets
since the previous examination, we do not consider the capital
position unsatisfactory at this time.
Commenting on this matter, Mr. Solomon indicated that admittedly
the capital position of the bank was not particularly strong.
As to
the dividend, it had already been paid and there seemed no strong reason
to raise an objection on that score.
As to the capital position in
general, there were several circumstances that would seem to suggest
that it might not be appropriate to press the bank to add to its capital
at this time.
Governor Shepardson stated that he was not suggesting that an
Objection be raised with respect to the dividend already paid.
His
concern was based on the statement that the Reserve Bank did not consider
the capital position of the bank unsatisfactory.
According to the
Form for Analyzing Bank Capital, the bank's ratio of actual capital to
5/2/61
-4-
requirement was 67.7 per cent, or a dollar deficiency of about $50,000.
He questioned whether such a ratio could reflect a satisfactory capital
situation and indicated that he thought it might be appropriate to call
the matter to the Reserve Bank's attention.
Governor Robertson expressed agreement with the proposal to call
the bank's capital position to the attention of the Reserve Bank.
He
also commented that the Form for Analyzing Bank Capital was used flexibly
in the reviewing process to seek out banks that were in need of capital.
For various reasons, banks having less than 100 per cent of their capital
requirement, as shown by the form, might not necessarily be in an unsatisfactory position.
Governor Shepardson replied that he recognized the so-called
standard was only a guideline.
He could understand that a 10 or 20
per cent capital deficiency might be explainable.
indicated deficiency reached
However, when the
33 per cent, as in this case, he questioned
Whether it could still be maintained that the bank was adequately
capitalized, assuming the guideline was thought to provide a reasonable
approximation.
Governor Robertson agreed generally with this observation.
After further discussion, the letter to the Federal Reserve Bank
of Chicago interposing no objection to the action of New Haven Savings
Bank in declaring and paying the reported dividend in 1960 was approved
5/2/61
-5-
unanimously, with the understanding, however, that reference to the
bank's capital situation would also be made.
A copy of the letter, as
sent, is attached as Item No. 1.
Mr. Benner withdrew from the meeting at this point.
The following items, which had
Items circulated to the Board.
been circulated to the Board and copies of which are attached to these
minutes under the respective item numbers indicated, were approved
unanimously:
Item No.
Letter to United California Bank, Los Angeles,
California, approving an extension of time to
establish a branch in Buena Park.
2
Letter to United California Bank, Los Angeles,
California, approving an extension of time to
establish a branch in Montebello.
3
Letter to Percival Insurance Agency, Inc.,
Garden City, Kansas, regarding its status as
a holding company affiliate.
I.
Letter to Senator Lausche of Ohio regarding a
constituent's request that an opinion be obtained
from the Attorney General as to certain Board
actions under section 16 of the Federal Reserve
Act.
5
In connection with Item No.
4,
Governor Robertson commented
that this case appeared to fall within the scope of the Board's policy
relating to so-called "one-bank" cases.
In the circumstances, he would
vote to grant the requested determination, although he did not agree
With the Board's policy.
5/2/61
-6Factors to be considered in branch applications.
In connection
With approval of the applications of United California Bank for additional
time to establish two branches (Items 2 and 3), Governor Shepardson noted
that the Board was frequently confronted with a situation where a large
bank filed an application to establish a branch while the development
in which the bank proposed to locate the branch was still in the planning
stage.
By such a procedure, a large bank might pre-empt a territory
and thereby eliminate the possibility of locating independent banks in
the area.
In the light of this situation, he expressed the view that
applications to establish branches should be reviewed carefully in order
to determine whether there was a real need and whether plans were
sufficiently well developed.
With respect to the applications of United
California Bank, he was agreeable to an extension of time within which
they could be established since there were indications that plans for
opening the branches were now fairly definite.
His question related,
rather, to the general approach that should be followed with reference
to large banks pre-empting territory by filing premature applications.
Mr. Solomon stated that the Division of Examinations had this
Problem in mind when considering applications.
There were, of course,
certain circumstances, such as those involving construction, which
resulted in delays in establishing branches.
The requirement that a
branch be established within a prescribed period of time was a device
to afford assurance that the situation would be reviewed if the branch
had not been opened for business by the date indicated.
A
JLO0400
5/2/61
-7Governor Shepardson then pointed out that in the development of
a shopping center a large bank might be involved in the financing arrangements for the project and would, accordingly, be in a position to know
about the development before plans for establishing it would come to the
attention of any independent group that might be interested.
In response, Mr. Leavitt said that in considering applications of
this kind the Division of Examinations made a practice of determining
whether the shopping center was actually under construction or whether
firm financing had been arranged.
Also, it was the practice to review
estimated deposits and earnings of the proposed branch on the basis of
figures provided by the Reserve Bank.
Mr. O'Connell pointed out that in some instances commercial
enterprises would not wish to locate in a new shopping center unless
they were assured that there would be banking facilities in the area.
Mr. Solomon then noted that a considerable period of time is
Often necessary to make plans for the establishment of a banking office.
Accordingly, it was natural for banks to apply considerably in advance
Of the date they actually expected to open for business.
However, an
effort was made to screen out applications that appeared to be premature.
Governor Robertson commented that it was a wholesome point of
view that Governor Shepardson had presented.
The problem was complicated
somewhat by the fact that it was frequently necessary to make provision
5/2/61
-8-
for banking quarters as a part of the whole construction plan of a new
development.
Also, as had been pointed out, large banks sometimes
learned of a new development because they were involved in financing the
project, and it was to be expected that the sponsors of a development
might want a particular bank in the area because of the fact that they
had been dealing with that bank.
However, he could not stress too much
the need for reviewing applications carefully to guard against problems
of the nature referred to by Governor Shepardson.
The Board, he noted,
had customarily imposed a time limit of not over one year in approving
branch applications, even in cases where it was apparent that the branch
would not get into operation for a longer period, so as to assure a second
look at the situation.
He was glaxl. that Governor Shepardson had raised
the question, and that the staff was reviewing applications carefully
with this aspect of the matter in mind.
The discussion concluded with a comment by Mr. Solomon regarding
the screening out of some prospective applications at the Reserve Bank
level.
Messrs. O'Connell and Leavitt then withdrew from the meeting
and Mr. Shay, Legislative Counsel, entered the room.
Report on H. R. 3330.
There had been circulated to the members
of the Board, with a covering memorandum from the Legal Division dated
APril 20, 1961, a draft of letter to Chairman Spence of the House
Committee on Banking and Currency replying to a request for the Board's
5/2/61
-9-
views on H. R.
3330, a bill "To provide that no member of the Board of
Directors of the Federal Deposit Insurance Corporation shall hold any
Other public office or position and for other purposes."
The proposed
reply, which was substantially the same as the Board's letter of June 2,
1960, reporting on a similar bill, stated that the Board had no
objection to the provision forbidding members of the Board of Governors
and its staff from serving on the Board of Directors of the Federal
Deposit Insurance Corporation.
It would also indicate that the Board
questioned the desirability of removing the Comptroller of the Currency
from the Board of the Federal Deposit Insurance Corporation for the
reason that the Corporation's Board, as constituted under present law,
Promotes coordination and cooperation on matters within the purview of
the Corporation affecting both State-chartered banks and national banks.
Governor Robertson said he would disagree with the letter as
drafted.
As he had indicated at the Board meeting on June 2, 1960, and
earlier at hearings before the Senate Committee on Banking and Currency
with reference to the Financial Institutions Act, he believed that the
Comptroller of the Currency did not have the time to serve also as a
director of the Federal Deposit Insurance Corporation.
He then
suggested that in reporting on the bill the Board might consider
expressing an opinion only oa those provisions of the bill that affected
the Board itself.
It would
he suggested, be more appropriate for the
Pederal Deposit Insurance Corporation and the Comptroller of the Currency
iL0/40.
r-e'ss"'
5/2/61
-10-
to report on those provisions relating to the service of the Comptroller
on the Board of the Corporation. 1/
There ensued a general discussion as to the type of letter that
might be appropriate in reporting on the bill, having in mind, among
other considerations, the report made by the Board on a similar bill
a year earlier.
During the discussion Mr. Hackley referred to a recent
meeting of staff representatives of the three Federal bank supervisory
agencies, at which this bill and certain other proposed legislation were
reviewed.
It was understood from the meeting that the Federal Deposit
Insurance Corporation had written a letter to the Budget Bureau to the
general effect that the services of the Comptroller on the Board of the
Corporation had been of great value to the Corporation and no fault was
seen in the present arrangement which would warrant a change.
It was
suggested at the meeting that a justification for the present arrangement could be found in the fact that a substantial proportion of insured
deposits was held in national banks.
On the point mentioned last by Mr. Hackley, it was noted that
it could be argued according to the same general logic that the
Comptroller should be a member of the Federal Reserve Board, or that
the Federal Reserve Board should be represented on the Board of the
Corporation.
In the light of the comments made in the course of further
discussion, Mr. Hackley suggested that the letter to Chairman Spence
17
Governor Robertson had dissented from the position taken in the
Board's letter of June 2, 1960.
r
5/2/61
-11-
might be redrafted along the lines that the Board would have no objection
to the provisions of the bill that would in effect prohibit a member
of the Board of Directors of the Federal Deposit Insurance Corporation
from holding any office or position in the Federal Reserve System, but
that the question relating to the service of the Comptroller of the
Currency on the Board of the Federal Deposit Insurance Corporation was
one with respect to which those two agencies had intimate knowledge and,
since the Board did not have such knowledge, it would prefer not to
express an opinion.
It was agreed that a revised draft of letter along these lines
would be prepared for the Board's consideration.
Governor King stated that, in the event he was not present when
the revised draft was considered, he would like to say at this time
that he had no very strong thoughts on the matter because he did not
know haw much the Comptroller could contribute as a member of the Board
of Directors of the Federal Deposit Insurance Corporation.
In general,
however, he felt it probably would be better if there was no tie-in and
the Comptroller was not a member of the Board of the Corporation.
Mr. Young then withdrew from the meeting.
Release of policy action records.
Governor Balderston reported
that President Hayes of the New York Reserve Bank called on the telephone
Yesterday and discussed the possibility of publishing the Federal Open
Mal'ket Committee policy record more frequently, perhaps on a quarterly
0"‘4
1528
-12-
5/2/61
basis, after an appropriate lapse of time.
Governor Balderston noted
that under the present practice Committee policy actions taken in
December were published in the Board's Annual Report about three months
later, whereas there was a fifteen-month delay in publishing the record
of actions taken in January.
He also said that President Hayes had
suggested that the subject might be placed on the agenda of the May 9
Federal Open Market Committee meeting for the purpose of preliminary
discussion.
Governor Robertson indicated that his present thinking would
favor issuance of the policy record more frequently, with some lapse of
time between the date of the action and the release of the record.
The
length of time that should elapse was a matter of judgment, but he
thought it might be appropriate to consider issuing the policy record
on a quarterly basis, with a lapse of two or three months before
publication.
Mr. Hackley commented that the Board clearly could decide to
publish its own policy actions prior to their publication in the
Annual Report.
As far as the law was concerned, the Board's responsibility,
In respect to the policy record of the Federal Open Market Committee, was
to publish in its Annual Report, a record of the policy actions taken
by the Committee.
However, some Presidents might raise a question as to
Whether any decision to publish such record more frequently should not
rest with the Committee.
.
A
AI, A
l .
7
5/2/61
-13General agreement was expressed that in any event it would be
desirable to have the views of the Presidents serving on the Open
Market Committee, and also the other Presidents.
Accordingly, it was
agreed to request the Secretary of the Open Market Committee to include
the subject on the agenda of the May 9 Committee meeting for the purpose
of preliminary consideration.
During the discussion that followed, it was suggested that
consideration also might be given to the possibility of publishing the
record of Board policy actions on such basis as might be decided upon
in the case of the record of the Open Market Committee.
In this
connection it was noted that during a three-month period the Board
might not take any policy actions.
Under such circumstances
there
might be a question whether a statement should be issued indicating
that no policy actions had been taken by the Board during the particular
quarter.
It was also noted that a number of Board policy actions are
the subject of immediate press releases.
The meeting then adjourned.
Secretary's Note: Governor Sbepardson today
approved on behalf of the Board the following
items:
Letter to the Federal Reserve Bank of San Francisco (attached
Item No. 6) approving the appointment of John F. Mattimoe, Jr., as
assistant examiner.
1530
5/2/61
-14-
Memorandum from the Division of Personnel Administration recommending the appointment of Juliann Perkins (presently Substitute Maid)
as Maid on a regular full-time basis, with salary at the rate of
$3,3.85 per annum, effective May 2, 1961.
Secretary)
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 1
5/2/61
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
*:4L KS% *t.
May 3, 1961.
Mr. Hugh J. Helmer, Vice President,
Federal Reserve Bank of Chicago,
Chicago 90, Illinois.
Dear Mr. Helmer:
This will acknowledge your letter of March 3,
1961, enclosing a letter dated February 20, 1961, from
New Haven Savings Bank, New Haven, Michigan, asking
approval for the declaration of a dividend in violation
of Section 9, Federal Reserve Act, and Section 5199(b),
United States Revised Statutes, in the amcunt of $2,500
declared and paid in 1960.
Under the statute, the Board's approval is
to the declaration of the dividend.
prior
required
Prior approval cannot be given in this case as it
appears that the dividend has already been paid. However, the Board will raise no objection to the member
bank's action in declaring the dividend. It is suggested that you notify the member bank approval of the
Board must be obtained for future declarations of dividends pursuant to the above laws.
The Board notes the cornrdent in your letter of.
March 3 that New Haven Savings Bank's capital position
is barely satisfactory, as well as the comment on Form
F.R. 212 that your Bank does not consider the capital
position unsatisfactory at this time. In view of the
very real doubt as to the capital adequacy of the bank,
the Board believes that efforts to effect improvement
in the situation should be continued.
Very truly yours,
61er-
if
7/
cit_
A • 6--(tic( d'
1izabeth L. Carmichael,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 2
5/2/61
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE SOAR°
May 2, 1961
Board of Directors,
United California Bank,
Los Angeles, California.
Gentlemen:
Pursuant to your request submitted through the
Federal Reserve Bank of San Francisco, the Board of Governors
of the Federal Reserve System extends until August 17, 1961,
the time within which United California Bank, Los Angeles,
(formerly California Bank), may establish a branch in the
vicinity of the intersection of Commonwealth and Grand
Avenues, Buena Park, California.
It is understood that the branch is to be opened
in temporary quarters at 7551 Commonwealth Avenue, and that
a permanent site has been acquired at the northeast corner
of Commonwealth and Western Avenues, approximately two
blocks west of the location contained in the Board's original
authorization dated November 17, 1960.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
r
iJ
BOARD OF GOVERNORS
OF THE
o
0
.
..
FEDERAL RESERVE SYSTEM
I.
WASHINGTON 25. D. C.
o•
Item No.
ADDRESS orricum. CORRESPONDENCE
TO THE BOARD
AL
May 2, 1961
Board of Directors,
United California Bank,
Los Angeles, California.
Gentlemen:
Pursuant to your request submitted through
the Federal Reserve Bank of San Francisco, the Board
of Governors extends until November 10, 1961, the time
within which United California Bank, Los Angeles,
(formerly California Bank), may establish a branch in
the vicinity of the intersection of Beverly and
Montebello Boulevards, Montebello, California, under
the authorization contained in the Board's letter of
May 10, 1960.
3
5/2/61
Very truly yours,
(signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
J*1
BOARD OF GOVERNORS
OF THE
rr.
44)%t 64)v,
FEDERAL RESERVE SYSTEM
...1 *
*
°{,
Item No. 4
5/2/61
WASHINGTON 25. D. C.
4 0
0
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
,
,4tA. WittO
**
i00044°
'
i‘t‘
May 2, 1961
Mr. Loren Percival, President,
Percival Insurance Agency, Inc.,
Garden City, Kansas.
Dear Mr. Percival:
This refers to the request contained in your letter
of March 6, 1961, libmitted through the Federal Reserve Bank
of Kansas City, for a determination by the Board of Governors of
the Federal Reserve System, as to the status of Percival Insurance
Agency, Inc. as a holding company affiliate.
The Board understands that Percival Insurance Agency,
Inc. is engaged in the business of selling all kinds of insurance;
that such company is a holding company affiliate by reason of fact
that it owns 1,332 shares of stock of The Garden National Bank of
Garden City, Kansas, which amount is more than 50 per cent of the
number of shares voted at the last election of directors of that
bank; and that such company ddes not, directly or indirectly, own
or control any stock of, or manage or control, any other banking
institution.
In view of these facts) the Board has determined that
Percival Insurance Agency, Inc. is not engaged, directly or indirectly, as a business in holding the stock of or managing or
controlling banks, banking associations, savings banks, or trust
companies within the meaning of section 2(c) of the Banking Act of
1933, as amended; and, accordingly, such company is not deemed to
be a holding company affiliate except for the purposes of
section 23A of the Federal Reserve Act and does not need a voting
permit from the Board of Governors in order to vote the bank stock
uhich it owns.
If, however, the facts should at any time indicate that
Percival Insurance Agency, Inc. might be deemed to be so engaged,
this matter should again be submitted to the Board. Particularly,
Should future acquisitions by or activities of the company result
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Mr. Loren Percival
In its attaining a position whereby the Board may deem desirable a
determination that the company is engaged as a business in the holding of bank stock, or the managing or controlling of banks, the
determination herein granted may be rescinded. The Board reserves
the right to rescind this determination and make further determination of this matter at any time on the basis of the then existing
facts.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
r)'
4
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 5
5/2/61
WASHINGTON
OFFICE OF THE VICE CHAIRMAN
May 2, 1961
The Honorable Frank J. Lausche,
United States Senate,
Washington 25, D. C.
Dear Senator Lausche:
Reference is made to your letter of April 6, 1961,
addressed to Thomas J. O'Connell of the Board's legal staff, enclosing copies of letters received by you from Mr. Amos B. Thompson,
concerning which you and Mr. O'Connell had a telephone conversation
on April 5, 1961, and, it is understood, again on April 18, 1961.
It is further understood that you have requested a written resume
of the information orally transmitted by Mr. O'Connell concerning
the exchange of correspondence between Mr. Thompson and the Board
of Governors over the past several years, as well as a statement of
the Board's position on the question raised by Mr. Thompson in his
letters to you.
The Board's correspondence records contain letters of
inquiry and comment from Mr. Thompson as early as May 1956. Although
:. Thompson has written on moiie than one subject in this period of
14
time, his more recent inquiries relate to the question of the Board's
authority to establish a rate of interest to be paid by each Federal
Reserve Bank into the Treasury of the United States on outstanding
Federal Reserve notes, less the amount of gold certificates securing
such notes. The question of the Board's legal authority in this regard appears also to be the principal question raised by Mr. Thompson
in his letters to you.
This issue has been the subject of numerous statements by
the Board and its members over the past several years. In 1947, at
the time the Board proposed, pursuant to section 16 of the Federal
Reserve Act, to levy an interest charge on outstanding Federal Reserve
notes, the proposed levy was discussed at length by Chairman Eccles
Of the Board before both Banking and Currency Committees of Congress
at open hearings. The Board's 1947 action in this respect was the
subject of a published announcement in the Federal Reserve Bulletin
for may of that year and was reported to Congress in the Board's
BOARD
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
The Honorable Frank J. Lausche
-2-
Annual Report for 1947.. Thereafter in each Annual Report to date
the Board has informed Congress as to the amounts paid by the
Federal Reserve Banks to the Treasury as interest on Federal Reserve
notes. The payments made by each of the Federal Reserve Banks for
1960 are shown at page 119 of the Board's Annual Report for 1960, a
COpy of which is enclosed.
A much more detailed statement on the subject of these
payments, with particular emphasis on the legal aspects, was put into
the record of the hearings before the Finance Committee of the Senate
ln August 1957 in connection with the testimony presented by Chairman
Martin of the Board. A copy of this statement, as it appears at
Pages 1580-1585 of the hearings before the Committee on Finance, is
enclosed for your information. The enclosed copy of Mr. Thorpson's
letter to the Chairman, dated July 29, 1960, indicates that Er. Thompson
had access to the statement of the Chairman made before the Committee.
A copy of the Board's reply to Mr. Thompson, dated August 11, 1960, is
also enclosed.
In reference to Mr. Thompson's request of you to obtain an
opinion from the Eepartment of Justice as to the Board's actions under
section 16 of the Federal Reserve Act, and your inquiry of Mr. O'Connell
as to any similar request by Mr. Thompson that may have been made of
the Board, the Board's records reflect that in an undated letter recelved at the Board's offices on December 30, 1958, and, subsequently,
bY letter dated August l, 1960, Mr. Thompson urged that an opinion of
tThe Department of Justice be obtained. On the assumption that
IT
Thompson is urging that there be requested an opinion of the Attorney
General on this subject, I am sure you are aware of the limited circumtEnces unde4 114ich such an opinion may be required (see 5 U.S.C.A.,
E'ect3.ons 303, 3011 and 307). A study of the court decisions and opinions
°i the Attorney General on the question of who may require or request
the Attorne:- General's on'aion on questions of law raises a question
as to whether such an opinion could be required by, or would be given
Lo, the Board.
Uven assuming that under the statutory provision cited the
Ejoard may recuire the Attorney General's opinion on a question of law
arising in the administration of the Board's functions, a request for
ouch on opinion, or for more informal advice from the Attorney General's
Staff, would and should be made only where the Board entertains a welllounded doubt as to the legality or propriety of action either taken
?r proposed. The Board's conviction as to the legality of its action
Is evidenced in the testimony and statement presented to the Committees
of the Congress hereinbefore cited. Under these circumstances it is
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
The Honorable Fi'ank J. Lausche
the Board's judgment that a request for an opinion of the Attorney
General or for advice from his Department would be inappropriate and
would be so considered by that Department. Inasmuch as Mr. Thompson
has directed a similar request to the Attorney General,presumably he
has been fully advised by the Department of Justice in this respect.
We hope that this information will be of assistance in
connect5on with the matters raised by Mr. Thompson, whose letters
to you are herewith returned.
Sincerely yours,
(Signed) C. Canby Balderston
C. Canby Balderston,
Vice Chairman.
Enclosures
g.J
318
1:
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item61No. 6
WASHINGTON 25. D. C.
SS OFFICIAL. CORRCePONOtNCE
TO THE SOAR°
40**
May 2) 1961
Mr. H. E. Hemmings,
First Vice President,
Federal Reserve Bank of San Francisco,
San Francisco 20, California.
Dear Mr. Hemmings:
In accordance with the request contained in your
letter of April 181 1961, the Board approves the appointment of John F. Mattimoe, Jr. as an assistant examiner for
the Federal Reserve Bank of San Francisco. Please advise
us of the effective date of the appointment.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
@FedFRASER