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Minutes for
To:
Members of the Board
From:
Office of the Secretary
may 21, 1964
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. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Minutes of the Board of Governors of the Federal Reserve
System on Thursday, May 21, 1964.
The Board met in the Board Room
at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Balderston, Vice Chairman
Mills
Robertson
Shepardson
Mitchell
Sherman, Secretary
Kenyon, Assistant Secretary
Cardon, Legislative Counsel
Fauver, Assistant to the Board
Hackley, General Counsel
Brill, Director, Division of Research
and Statistics
Mr. Farrell, Director, Division of Bank
Operations
Mr. Solomon, Director, Division of
Examinations
Mr. Kelleher, Director, Division of
Administrative Services
Mr. Connell, Controller
Mr. Harris, Coordinator of Defense Planning
Mr. Schwartz, Director, Division of Data
Processing
Mr. Hexter, Assistant General Counsel
Mr. O'Connell, Assistant General Counsel
Mr. Hooff, Assistant General Counsel
Mr. Garfield, Adviser, Division of Research
and Statistics
Mr. Kiley, Assistant Director, Division of
Bank Operations
Mr. Goodman, Assistant Director, Division
of Examinations
Mr. Leavitt, Assistant Director, Division of
Examinations
Mrs. Semia, Technical Assistant, Office of the
Secretary
Mr. Egertson, Supervisory Review Examiner,
Division of Examinations
Mr. McClintock, Supervisory Review Examiner,
Division of Examinations
Mr. Kakalec, Assistant to the Controller, Office
of the Controller
Mr. Steinberg, Economist, Division of Data
Processing
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
'
5/21/64
-2Discount rates.
The establishment without change by the Federal
Reserve Bank of Atlanta on May 19, 1964) of the rates on discounts and
advances in its existing schedule was approved unanimously) with the
understanding that appropriate advice would be sent to that Bank.
Circulated or distributed items.
The following items, copies
Of which are attached to these minutes under the respective item numbers
indicated, were approved unanimously:
Item No.
Letter to Chemical Bank New York Trust Company,
Ilew York, New York, approving the establishment
Of a branch in the Korvette City Shopping Center,
Town of Hempstead.
1
Letter to Rhode Island Hospital Trust Company,
Providence, Rhode Island, approving an extension
13f time to establish a branch in Middletown.
2
Letter to Lincoln National Bank of Miami, Miami,
Plorida, granting its request for permission to
carry reduced reserves.
Letter to International Banking Corporation,
4
Ilew York) New York, granting its request for
consent to purchase shares of New York London
Trustee Co. Limited, London, England.
Letter to the Federal Reserve Bank of Dallas
stating the Board's view that the status of The
Port Worth National Bank, Fort Worth, Texas, as
!bank holding company would terminate upon
u-ivestment of certain bank stocks.
5
Report on competitive factors (Spokane-Pasco, Washington).
Th
ere had been distributed a draft of report to the Comptroller of the
ClIrrency on the competitive factors involved in the proposed purchase
-. -1
Qtr:.?0.
5/21/64
of
-3-
assets and assumption of liabilities of Tr -Cities National Bank,
Pasco, Pasco, Washington, by Old National Bank of Washington, Spokane,
Spokane, Washington.
The report was approved unanimously for transmission to the
Comptroller, its conclusion reading as follows:
There appears to be little, if any, competition existing
between Old National Bank of Washington, Spokane, and Tr -Cities
National Bank, Pasco, and the proposed transaction would not
have adverse effects on other banks.
Proposal for Des Moines branch (Item No.
6).
There had been
circulated a memorandum dated May 14, 1964, from the Division of Bank
Operations regarding proposals for establishment of a branch of the
Federal Reserve Bank of Chicago in Des Moines, Iowa.
The memorandum
summarized developments over the last ten years relating to such proPosals, several studies of which had uniformly found no justification
for the establishment of an additional Federal Reserve office.
Most
recently, that fact had been indicated by Governor Mills in a reply to
14r. B. C. Grangaard, President, Central National Bank and Trust Company,
Des Moines, Iowa, who, in a letter of April 20, 1964, had stated his
uaderstanding that the subject had been discussed with the Board over
a 1Driod of many years and tluxt no definitive answer had been given.
14r. Grangaard had visited Governor Mills in October 1963 to discuss the
Proposal.
A similar proposal from the Des Moines Clearing House Associa-
tion had been sent to the Board in January 1963 by President Scanlon of
the Federal Reserve Bank of Chicago. In a letter dated July 26, 1963,
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5/21/64
President Scanlon was informed that before considering the matter again
it would be helpful for the Board to know whether the directors of the
Chicago Reserve Bank had recently discussed the proposal for a Des
Moines branch and, if so, what their views were.
Mr. Scanlon was under-
stood to have interpreted the Board's letter as leaving to his discretion
the question of presenting the proposal formally to the Chicago directors,
and he preferred not to do so.
Governor Mills stated that he had asked to have the subject
included on the agenda in order to forestall any claim that the proposal
had not been placed before the Board for discussion.
If the Board wished
to review the proposal thoroughly, that might be done, of course, but his
Personal feeling was that studies made several years ago had developed
ample information, and data subsequently submitted had not shown enough
Changes in circumstances to warrant a full-dress review.
In the ensuing discussion there was general agreement that the
Present circumstances did not justify establishment of a branch in Des
Moines.
However, views were expressed that the Board should consider
anY responsibly-sponsored proposal and make known its conclusion.
It
17as suggested that a letter be written to Mr. Grangaard indicating that
the Board had not found it appropriate at the present time to pursue
Proposals for additional Federal Reserve offices, unless President
Scanlon saw reasons why such a letter should not be written.
In response
to a question as to whether such a letter should not be addressed to
5/21/64
-5-
President Scanlon rather than to Mr. Grangaard, since branch proposals
from various sources would come to the attention of the former, it was
suggested that this point be taken up with Mr. Scanlon.
Secretary's Note: After consultation with
President Scanlon, a letter was sent to him
on May 26, 1964, in the form attached as
Item No. 6.
Electronic computer.
There had been distributed a memorandum
dated May 15, 1964, from Messrs. Schwartz and Steinberg reviewing the
increasing use the Board's staff had made of computers since the first
installation in 1958.
The present equipment, an IBM 1410, was leased
in 1962 with a purchase option that would expire on May n, 1964. The
Present and prospective work load was such that studies had been undertaken looking toward the acquisition of improved equipment.
An important
consideration in prospective need, and one that had recently assumed
high priority, was provision of computer support for the Board's relocation site.
The following alternatives were suggested:
(1) Exercise the purchase option to buy the present 1410 and
Illove it to the relocation site after a new computer was installed at
the Board's offices, perhaps about December 1965. The present machine
Could continue to do a certain amount of work for the Board's home office,
although the bulk of the work would be performed on a new computer in
Washington.
In an emergency situation the present machine at the defense
site would be a powerful asset.
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5/21/64
(2) Continue to lease the present computer until a replacement
was available, then return the present computer to the manufacturer and
install a new computer at the relocation site for remote use by the
Board.
There were two operating alternatives: (a) The entire operation
could take place at the relocation site and data and programs could be
sent from the Board's offices.
It would be necessary to install a small
computer at the home office for preparing tapes and for printing the
results that would be furnished in tape form by the remote main computer.
(b) A small computer at the Board's offices could be hooked into the main
computer at the relocation site, providing direct and immediate control
over the main machine much as though it were still in Washington.
Data
could be sent for production by a computer-to-computer communication
When necessary and by mail or messenger when appropriate.
(3) A third alternative would be to get rid of the present
machine, replace it with a new machine at the Board's offices, and install two small computers in the relocation site to be used mainly for
emergency computation.
Ease of maintenance, size of supply of spare
Darts, and space demands would argue in favor of this third alternative.
The memorandum explored these alternatives in some detail,
Including the capacities of equipment now becoming available and problems
that were likely to arise through division of equipment and staff between
t140 locations.
It was brought out that the catalog purchase price of the
Present hardware configuration was $623,000, towards which a rental credit
5/21/64
-7-
of $199,000 could be applied. The gross purchase price would be
$424,000.
To this it would be necessary to add about $15,000 for
maintenance, which was now included in the standard rental agreement,
and $13,000 for a 5th tape drive, bringing the total cost for use
through the end of 1965 to approximately $452,000.
The net cost of
owning the 1410, as of December 1965, as compared with continued rental,
was calculated at about $160,000.
In conclusion, it was stated that the staff was reluctant to
recommend, at the present state of the art and science of computation,
that a move be made in the near future to remote operations.
The extra
cost would be in excess of $100,000 a year, and the technology of remote
Operations, while promising, was of uncertain quality.
Most important,
it was desirable to preserve the analyst-to-computer character of the
Boardts computation center.
New and powerful computer-oriented research
Prospects were foreseen, and it was believed that in the immediate future
their creation and development would rest heavily cn close communiciation
With the central computer.
alternative be adopted:
at
On balance, it was recommended that the first
to purchase the present 1410, continue to use it
the Board's offices until a suitable replacement was selected) and
bring the replacement computer into the Board's offices, probably in
late 1965.
At the beginning of the discussion Governor Mills remarked that
he had served on the committee that discussed the original purchase of
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5/21/64
a computer, and at that time he had been inclined to hold back until
computer design had advanced to a state where a system acquired would
not quickly become obsolete.
Now, however, he had switched to the
Side of wanting to be sure the Board had the best equipment available.
Governor Robertson stated that he wanted to explore the proposal further.
He had a question as to whether a large computer at
the relocation center could not be tied in with a new computer at the
Board's offices, and also tied in with the Richmond Reserve Bank's
computer system, perhaps at less cost than the plan offered in the
memorandum.
The computer system at Richmond, even if adequate now,
might not be adequate a few years hence.
The possibility that, unless
computer facilities were provided at the relocation site, it might be
found necessary in two years to rent or buy another Richmond computer,
would seem to have a bearing upon the present proposal.
Mr. Schwartz commented on developments in the use of computers
et the Federal Reserve Banks, the trend of which appeared to be in the
clirection of using a single new machine, with broader capabilities, to
replace several present pieces of equipment.
Governor Mitchell commented on the possibilities of performing
411 Federal Reserve Bank accounting relating to member banks in one
Place.
In his view, a computer at the relocation site, under the staff
Proposal, would be merely a piece of hardware in an unstaffed building;
this was not a proposal addressed to the performance of regular functions
5/21/64
-9-
in that building.
It seemed to him that the present proposal therefore
was inconsistent with the Board's thinking six months ago to put plans
In motion for construction of facilities at the relocation site subject
to the expectation that the center would house continuing operating
functions, with a staff permanently based there to include some senior
Persons.
Until decisions had been made as to the specific functions to
be performed at the center, it did not seem sensible to decide what kind
Of computer to install there.
Governor Robertson noted that purchase of the present Board
computer would not preclude the possibility of setting up a larger
machine at the relocation center.
If the Board exercised the purchase
option, there would still be time to work out what functions were to be
handled at the center.
Mr. Schwartz expressed agreement with the possibility suggested
by Governor Robertson.
He added that if the 1410 was placed at the
relocation site and a more modern machine obtained for the Washington
c'ffice, over the next several years it could be determined what work
could appropriately be done at the center, and a larger machine might
then be acquired to use at the center in conjunction with the 1410.
PI'oposal to exercise the purchase option was a holding action:
The
it would
Permit further analysis of what work could be done feasibly at the center
414 therefore what equipment should be installed there.
After further discussion of the alternative possibilities,
governor Balderston suggested that the essence of the matter was timing -
5/21/64
-10-
the question was whether to take immediate action with respect to
Purchasing the equipment now in the Board's building and then plan
further for computer operations at the relocation site.
Governor Shepardson commented that the Board's use of electronic
data processing equipment had provided a good deal of leadership in the
field, and some of the outstanding progress made had been attributable
to having the equipment available in the Board's offices.
Although it
was possible to work through remote connections, there was an advantage
in having the facilities on the home ground, so far as comprehension of
Possible uses of the equipment and the continuing evolution in data
Processing were concerned.
Perhaps at some later time a major center
for the whole System would be indicated, and possibly the Board's relocation center would be the appropriate site.
As of now, however, it would
seem advisable, because of the coming deadline for exercising the purchase
°Ption, to buy the present machine and leave it in the Board's offices.
There would be opportunity for further study, since it was not contemplated
that another machine would be acquired for at least a year or two.
Even
at that time he foresaw the probability that there would be a real advantage in maintaining the principal processing center for research in
Washington, with accessibility to interested staff that could hardly
be maintained through remote connections.
While he understood that
remote operations could be serviced, the reduced ability of staff to
14°rk out data processing problems as compared with what could be done
;1"'"•4
_0I
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5/21/64
at the Board's offices would be a limiting factor in what he thought was
an outstanding program of development.
If the 1410 was purchased, it
would provide for the relocation site, if transferred there, a system
fully compatible with the system that would be acquired for the Board's
Offices, and it would also provide a facility for emergency operations.
Also, it would seem that moving the present machine to the relocation
center would have an advantage from the standpoint of research at the
Reserve Banks, where major research projects were sometimes impeded by
use of Bank equipment for routine operations.
A Reserve Bank economist
handling a research project might go to the center and work it out on
the machine there.
It appeared to Governor Shepardson that, while the
possibility of a major data processing center might be realized at some
Point in the future, this was a sufficiently remote possibility to justify
having a major unit at the Board's offices for some time to come.
When
all improved computer system was acquired for the Washington office,
removal of the 1410 to the relocation center would provide a fully
°Perational unit for emergency and special uses.
Governor Robertson suggested that the advantages of ready
accessibility by the staff to the machinery might be overrated.
As
he understood it, communications could be set up so that staff members
liould have everything except the machinery in front of them.
He was
in favor of exercising the option to buy the 1410, but delaying the
4equisition of a larger machine as long as possible, in the interim
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5/21/64
considering the possibility of installing at the relocation center a
large computer into which the Washington operations could be tied.
Governor Shepardson stated that the cost of full communication
With a remote machine apparently would be substantial, and there ensued
a discussion of the expense factor.
Mr. Brill, reverting to the point made as to the value of
Physical accessibility of a computer, expressed the view that the flexibility the Board's staff now had through direct access to the computer
had been an essential element in getting done what was needed.
He had
Observed elsewhere machine operations so large that they created, in a
sense, a bureaucracy that thwarted experimental research.
His concern
was that no arrangement be instituted that would limit experimental
research in the future.
Governor Shepardson expressed agreement with Governor Robertson's
concern about keeping the gate open to new developments in electronic
data processing.
He regarded the initiative, flexibility, and imagination
that hail been displayed by the staff as the best protection against being
frozen into a position where advantage was not taken of new developments.
Governor Robertson remarked, however, that it would not be
(lesirable to set plans so firmly now that they would have to be followed
through even if a major installation at the relocation site should become
clearly preferable.
Governor Mitchell commented that if the Board desired to turn
a340-Y from the thinking that the relocation site should be an operational
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5/21/64
center, that issue should be met squarely.
He believed that if de-
cisions were made first as to what jobs were to be performed at the
site, the desirability of a certain plan for computer operations there
would become apparent.
The only decision immediately confronting the
Board, apparently, was whether the present computer system was obsolete.
If so, it should be retired.
He was ready to accept a judgment that the
staff needed a more powerful machine, but he was not prepared to say
that the present machine should be kept for the relocation site if its
use there was questionable.
The discussion turned at this point to problems of reprogramming
for changed equipment, of providing an adequate staff for data processing,
and of the use of such processing for specific projects.
Governor Balderston then asked if Governor Shepardson, who had
been following the use of the Board's electronic data processing equipMent closely, felt that the Board was at a point where a decision could
be reached.
Governor Shepardson said that he thought it could.
He believed
it had been understood, and still was, that work on the relocation center
Would proceed, and that there would be exploration to ascertain what
flanctions could be carried on there so as to make it a live unit that
could also function in an emergency.
At the time the earlier decision
Was made) a program of the functions that might be relocated had not
Yet been formulated.
Data processing had been discussed, but no specific
131ans had been presented for its conduct at the defense site.
Relocation
1S40
5/21/64
of functions involved some substantial problems.
One real possibility
was presented in the proposal to have at the site an operational piece
of equipment that would meet emergency needs, and that could handle some
more or less routine data processing functions on a regular basis.
The
idea that such an installation could be used as an auxiliary research
unit by the Reserve Banks also had much to commend it.
The flexibility
and progress shown by the staff indicated that there was little danger
of assuming a posture that would preclude further progress based on
technological advances.
If the Board should buy the present 1410, and
a year or so from now put it at the relocation site and rent a larger
one for the Washington office, it would even then not be precluded from
Putting in a major installation at the site if it should be determined
some years hence that one could be used advantageously.
After further discussion, Governor Mills stated that he would
rayor
purchasing the 1410, adding that it was his expectation that
'within a few months the Board would see fit to accept the whole staff
Proposal.
If the present capacity use of the present equipment, with
some work being farmed out, was a portent for the future, new, larger,
and more adaptable equipment would surely be needed.
t° Such an installation would take some time.
Work preliminary
To put the present equip-
on a standby basis at the relocation center conformed to the view
he had understood Mr. Harris to support for some time, namely, that if
there was to be continuity of functions in the face of a disaster, there
tUst be the equipment to make it possible.
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5/21/64
Governor Robertson observed that it should be possible in the
relatively near future for the Board and the Richmond Bank to develop
a schedule of functions to be relocated, on the basis of which a better
decision could be made as to the kind of computer needed at the relocation center.
At the present time, he believed the purchase of the
Present 1410 would be justified, but he would take no steps beyond that.
Governor Shepardson said that he also would purchase the present
equipment.
Governor Mitchell stated that he did not favor the purchase,
because he did not believe in buying things unless it was known how
they would be used. There was involved in the purchase proposal, he
added, a question of judgment as to whether technological change was
going to continue at a rapid rate.
If so, it would seem better to
continue to rent equipment; if technology had settled down for a while,
then the purchase might be justified.
Governor Balderston stated that he would buy the existing
equipment.
He would be interested in further studies as to the functions
410Propriate for transfer to the relocation defense site, and he assumed
that upon the outcome of such studies would depend the ultimate disposition of the 1410.
The purchase of the 1410 computer system was thereupon approved,
Governor Mitchell dissenting.
'
-16-
5/21/64.
Secretary's Note: A purchase contract was
sent to International Business Machines
Corporation, Washington, D. C., by letter
dated May 27, 1964, and a letter contracting
for maintenance of the machine was sent to
the Corporation on May 28, 1964.
Messrs. Brill, Connell, Kelleher, Harris, Schwartz, Garfield,
Kakalec„ and Steinberg then withdrew from the meeting.
Undivided profits.
There had been distributed a memorandum
dated May 19, 1964, from the Legal Division, attaching a proposed interPretation that would state, for reasons indicated, that "it is the Board's
opinion that undivided profits do not constitute 'capital', 'capital
stock', or 'surplus' for the purposes of provisions of the Federal
Reserve Act .
."
The interpretation had been drafted pursuant to
the Board's request at the meeting on May 14, 1964, and in the light
Of a statement by the Comptroller of the Currency in the March 1964
Supplement to his Manual for National Banks, that "Undivided profits
Which are in fact earned surplus may be considered as unimpaired sur
Plus funds in computing the lending limit on loans to individual borrowers
Contained in 12 U.S.C.
84."
Governor Balderston noted that two questions were presented:
first, whether the interpretation should be published, and second,
Whether the "Dillon procedure" should be followed, that is, whether
the proposed interpretation should be sent to designated representatives
of the comptroller of the Currency and the Federal Deposit Insurance
5/21/64
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C0rporation for comment, in line with the request of the Secretary of
the Treasury in a letter of March 3, 1964, looking toward coordination
Of policies of the Federal bank supervisory agencies.
Discussion disclosed general agreement that the interpretation
Should be published, but that prior to publication it would be advisable
to follow the "Dillon procedure."
In answer to an inquiry from Governor
Balderston, members of the Board indicated a view that it would not seem
necessary to send the proposed interpretation to the Presidents of the
Federal Reserve Banks for comment.
Mr. McClintock then withdrew from the meeting.
Messenger service.
There had been distributed memoranda dated
May 20, 1964, from Messrs. Hackley and Hooff, prepared pursuant to the
discussion at the meeting on May 14, 1964, regarding a recent ruling
Of
the Comptroller of the Currency as follows: "To meet the requirements
°f its customers, a National Bank may provide messenger service by means
°f an armored car or otherwise, pursuant to an agreement wherein it is
sPecified that the messenger is the agent of the customer rather than
the bank.
Deposits collected under this arrangement are not con-
sidered as having been received by the bank until they are actually
delivered to the teller at the bank's premises.
Similarly, a check is
e°nsidered as having been paid at the bank when the money is handed to
the messenger as agent for the customer." It appeared that the Federal
ljePosit Insurance Corporation, in a recent unpublished letter written by
Its General Counsel, had taken a positicn substantially like that taken
bY the Comptroller.
1
5/21/64
-18Mr. Hooff's memorandum reviewed the positions taken by the Board
over a number of years regarding various situations bearing on this question.
Mr. Hackley's memorandum observed that the question whether the
use of armored cars by banks for the purpose of picking up deposits
constituted the operation of a branch presented difficult problems of
both law and policy.
After initially holding that the practice did not
involve branch banking, the Board had taken the position in recent years
that the use of armored cars for picking up deposits would involve the
Operation of branches, and the position had not been based on whether
or not the armored car company acted as agent for the bank or the customer.
However, no interpretation to this effect had been published by
the Board.
If, in response to inquiries stimulated by the Comptroller's
ruling, the Board should now make public its position taken over 10 years
ago (but not enforced) that the practice involved branch banking even
though the armored car company purported to act as agent for the customer,
State member banks would be placed at a disadvantage with respect to
both national banks and nonmember insured banks.
If, on the other hand,
the Board should now publish an interpretation in conformity with the
Positions taken by the Comptroller and the Federal Deposit Insurance
Corporation, such action would apparently constitute a reversal of the
130srdis position.
As a legal matter, it might be forcefully argued that
'where the armored car company contractually acted as agent for the customer, no deposit was received until the funds were delivered to the
bank-
In such a situation, the risk of loss of the funds prior to
ALt_S
5/21/64
-19-
receipt by the bank would apparently fall on the customer.
However,
it seemed Obvious that the use of a contract making the armored car
company the agent of the customer would amount to a mere subterfuge,
insofar as the question of branch banking was concerned, where the bank
Provided the service at its own expense.
After summary comments by Mr. Hackley, Mr. Farrell commented
that the Reserve Banks were now sending armored cars to pick up member
bank deposits.
While different sections of law were involved, the
Board might be charged with inconsistency if it said that armored car
service involved a branch operation for a member bank when the Reserve
Banks were offering the same service.
Governor Mills remarked that there was a distinction in that
the Reserve Banks were using armored cars as an improvement over mail
service.
The position years ago, which he thought held philosophically
today, was that the Federal Reserve was the guardian for all sizes and
tripes of banks under its jurisdiction, and had a responsibility to proMote a competitive status that was equitable.
An older argument was
that the banks that could afford armored car pick-up service injected
themselves into market areas of small independent banks, which would
then lose their more important customers.
In any event, however, he
feared that the position heretofore taken by the Board was now untenable.
Governor Robertson suggested that before taking any action the
toard request its Counsel to arrange a meeting, if possible, with Counsel
5/21/64
-20-
for the Federal Deposit Insurance Corporation and the Comptroller of
the Currency in order to be sure that each agency had all the facts and
reasoning involved.
After further discussion of the possible ramifications of the
Comptroller's ruling and the merits of a meeting of counsel of the
three agencies such as Governor Robertson had suggested, it was agreed
that his suggestion should be followed.
The meeting then adjourned.
Secretary's Notes: Pursuant to the recommendation contained in a memorandum from the Division of Personnel Administration, Governor
Robertson, acting in the absence of Governor
Shepardson, approved on behalf of the Board
on May 20, 1964, the appointment of Susan W.
Stewart as Clerk-Stenographer in that Division,
with basic annual salary at the rate of $4,3551
effective the date of entrance upon duty.
Pursuant to recommendations contained in memoranda from appropriate individuals concerned,
Governor Shepardson today approved on behalf
of the Board the following actions relating
to the Board's staff:
Ointments
Patricia Ann Beckham as Clerk-Stenographer, Division of Personnel
Ac.
lministration, with basic annual salary at the rate of $3,880, effective the date of entrance upon duty.
Marilynn S. Cunningham as Operator, Key Punch (Trainee), Division
W Data Processing, with basic annual salary at the rate of $3,620,
effective the date of entrance upon duty.
Establishment of new position
New position of computer programmer in the Financial Statistics
See+ '
,ion of the Division of Data Processing.
7
Secretary
BOARD OF GOVERNORS
Item No. 1
5/21/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May 21, 1964
Board of Directors,
Chemical Bank New York Trust Company,
New York, New York.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment by
Chemical Bank New York Trust Company, New York,
New York, of a branch in Building E, Korvette
City Shopping Center, on the west side of Rockaway
Turnpike approximately 720 feet south of the
intersection of Rockaway Turnpike and Peninsula
Boulevard, Unincorporated area of Inwood, Town
of Hempstead, Nassau County, New York, 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.)
9en.•
JLS48
BOARD OF GOVERNORS
.....
Of Cot,•
k •
'
Item No. 2
5/21/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
(4t RES
.
*1
May 21, 1964
Board of Directors,
Rhode Island Hospital Trust
Company,
Providence, Rhode Island.
Gentlemen:
The Board of Governors has approved an extension
until September 21, 1964, of the time within which Rhode
Island Hospital Trust Company may establish a branch in
a new shopping center on West Main Road, Middletown, Rhode
Island. The establishment of this branch was authorized
in a letter dated June 20, 1963.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
BOARD OF GOVERNORS
Item No.
OF THE
3
5/21/64
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE HOARD
May 21, 1964.
Board of Directors,
Lincoln National Bank of Miami,
6013 N. W. 7th Avenue,
33127
Miami, Florida.
Gentlemen:
With reference to your request submitted through
s,
the Federal Reserve Bank of Atlanta, the Board of Governor
Federal
the
of
19
Section
of
ns
acting under the provisio
Bank
Reserve Act, grants permission to the Lincoln National
as
deposits
against
reserves
same
the
of Miami to maintain
effecbanks,
city
ve
nonreser
by
ed
maintain
are required to be
tive May 28, 1964, the first biweekly reserve computation
period beginning after the date of this letter.
Your attention is called to the fact that such
s.
permission is subject to revocation by the Board of Governor
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
_SSO
Item No. 4
BOARD OF GOVERNORS
5/21/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
il!r[01:
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
*f!?,iit.REs;c:••
May 211 1964
International Banking Corporation,
399 Park Avenue,
New York 22, New York.
Gentlemen:
In accordance with the request contained in your letter
of April 2, 1964, transmitted through the Federal Reserve Bank of
New York, and on the basis of information furnished, the Board of
Governors grants consent for your Corporation to purchase and hold
up to 187,500 shares of New York London Trustee Co. Limited ("NYLT"),
London, England, with £75,000 (approximately US$210,000) paid in,
subject to further calls not to exceed £112,500, making a total investment of £187,500 (approximately US$525,000), provided the initial
purchase is made within one year from the date of this letter.
It is understood that the principal office of NYLT will
be located at the present office of M. Samuel & Co. Limited in Shell
House, 55 Bishopsgate, London E.C.2. It is further understood from
Vice President Mitchell's letter of May 8, 1964 that the primary
activity of NYLT at the London Branches of First National City Bank,
situated at 17 Bruton Street, London W.1, and at 117 Old Broad Street,
London E.C.2, will be limited to the availability of one or two
knowledgeable bank officers and employees in each office to discuss
the services offered by NYLT with prospective customers and to solicit
business for NYLT which would then be referred to its principal office,
and that the London Branches of First National City Bank will also
provide securities and custodian services and related bookkeeping
services for, and act as depository for the funds of, NYLT.
The Board's consent to the proposed purchase and holding
of shares of NYLT by IBC is granted subject to the following condition:
That IBC shall not hold any shares of stock in NYLT if NYLT at
any time fails to restrict its activities to those permissible
to a corporation in which a corporation organized under Section
25(a) of the Federal Reserve Act could, with the consent of the
Board of Governors, purchase and hold stock, or if NYLT establishes
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
International Banking Corporation
-2-
any branch or agency or takes any action or undertakes
any operation in England or elsewhere, in any manner,
which at the time would not be permissible if NYLT were
a corporation organized under said Section 25(a).
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
)
1
OC;.•
BOARD OF GOVERNORS
Item No.
5
5/21/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
May 21, 1964.
Mr. Thomas R. Sullivan,
Vice President,
Federal Reserve Bank of Dallas,
Station K, Dallas, Texas. 75222
Dear Mr. Sullivan:
addressed
This acknowledges your letter of April 30, 1964,
Examiof
on
s
Divisi
the
Board'
of
or
Direct
to Mr. Frederic Solomon,
addressed
1964,
15,
dated
April
letter
a
nations, in which you enclose
Worth
Fort
The
of
ent
Presid
Bond,
to the Board by Mr. Lewis H.
refers to Bank's
National Bank ("Bank"), Fort Worth, Texas. Mr. Bond
of the Bank
ions
the
provis
under
status as a bank holding company
y "[Bank]
whereb
a
al
of
s
propos
advise
Holding Company Act of 1956 and
West
the
either
of
of
shares
number
is going to sell a sufficient
in
gs
holdin
its
to
Bank
reduce
Side State Bank or Riverside State
bank
the
of
shares
nding
the
outsta
that bank below 25 per cent of
of a bank
Provided [Bank] would then be removed from the category
ts to be
reques
Bond
Mr.
Act".
the
by
d
holding company as define
under the
status
to
as
n
Bank's
inatio
determ
advised of the Board's
ment.
divest
ed
propos
Act subsequent to the
latest
The Board understands that, on the basis of the
Bank's
for
basis
the
tute
consti
facts
ing
available data, the follow
nding
outsta
the
of
y:
All
compan
g
holdin
present status as a bank
Fort Worth
voting shares of each of three nonbanking companies,
Worth
Fort
and
y,
Compan
ment
Invest
Investment Company, Trinity
Bank's
of
t
the
benefi
for
es
truste
by
National Company, are held
cent of
per
37.03
y
owns
Compan
ment
Invest
Shareholders. Fort Worth
y
the voting stock of Riverside State Bank, Fort Worth; and Trinit
stock of West
Investment Company owns 36.6 per cent of the voting
of Tarrant State
stock
voting
the
of
Side State Bank, and 5 per cent
y owns 9.92 per
Bank, both of Fort Worth. Fort Worth National Compan
and 5 per
Bank,
State
Worth
Fort
cent of the voting stock of South
h.
Paduca
Bank,
al
Nation
cent of the voting stock of The First
stock of each of
Since more than 25 per cent of the voting
which are held
of
shares
the
of
all
ies
two banks is owned by compan
by trustees for the benefit of Bank's shareholders, Bank is a bank
(3) of section 2(a) of
holding company within the meaning of clause
the Act.
L`r ..%10
BOARD
OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Mr. Thomas R. Sullivan
-2-
Inasmuch as Mr. Bond's statement of proposed divestment
action suggests a direct ownership by Bank of stock in both West
Side State Bank and Riverside State Bank which the Board does not
understand to exist, the Board will interpret Mr. Bond's proposal
to mean that, through appropriate action taken by either Fort Worth
Investment Company or Trinity Investment Company, ownership in
either Riverside State Bank or West Side State Bank will be reduced
to less than 25 per cent of the outstanding voting stock. Assuming
a bona fide sale resulting in the aforementioned reduction to less
than 25 per cent of outstanding voting stock of either Riverside
State Bank or West Side State Bank, the status of Bank as a bank
holding company would appear to be terminated. If the sale of stock
in either bank occurs in substantial conformance with the understand
ing herein stated, and assuming no other circumstances exist that
would cause Bank in other respects to fall within the definition of
a bank holding company as contained in section 2(a) of the Act, the
Board is of the opinion that Bank will have ceased to become a bank
holding company.
Neither the Act nor the Board's Regulation Y issued
thereunder contains procedural requirements relating to cessation of
bank holding company status. The only action that appears appropriate
is for Bank to advise the Federal Reserve Bank when consummation of
the proposed divestment has occurred. Such divestment would make unnecessary the filing by The Fort Worth National Bank of a Form F.R.Y-6,
Annual Report, for the fiscal year in which the divestment occurs.
It will be appreciated if the substance of this letter is
transmitted to Mr. Bond.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
Item No.
BOARD OF GOVERNORS
6
5/21/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS
orricIAL
CORRESPONDENCE
TO THE BOARD
May 26, 1964.
Mr. C. J. Scanlon, President,
Federal Reserve Bank of Chicago,
Chicago, Illinois 60690.
Dear Mr. Scanlon:
With your letter of January 18, 1963, you forwarded to
the Board a resolution of the Des Moines Clearing House Association
legarding the proposed establishment of a branch of the Federal
eserve Bank of Chicago in Des Moines. As you know, this was
Drought to the attention of the Board upon receipt and, since then,
,
t,here have been a number of discussions of the subject of Federal
reserve Bank branches with the result that the Board has not felt
,hat a persuasive case has been made for the establishment of a
'ranch in Des Moines at this time.
J
b h a
_ ranch
"11 the
should
In addition, a Des Moines banker recently discussed
member of the Board his desire for the establishment of a
of your Bank in that city, and he was informed that studies
subject had not led to the conclusion that such a branch
be established.
purpose of this letter is to let you know that the
80ard has The
again had this matter before it and has reaffirmed the
vaiew that it would not be appropriate to give further consideration
bt this time to the establishment of additional Federal Reserve
,ranch offices. In arriving at this conclusion, the Board has
rLilaken into consideration the technological advances that are being
in the high speed handling of checks which may require, for an
'Jficient and high speed operation, a centralization of check
,,tearing operations, rather than further decentralization of such
"rk,
Very truly yours,
1
t
Merritt Sherman,'
Secretary,
@FedFRASER