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Minutes for ray 27, 1959 To: Members of the Board From: Office of the Secretary 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. Chm. Martin Gov. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King t Minutes of the Board of Governors of the Federal Reserve System on Wednesday, MaY 27, 1959. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Martin, Chairman Balderston, Vice Chairman Szymczak Mills Robertson Shepardson King _Mr. Sherman, Secretary Mr. Thomas, Economic Adviser to the Board Mr. Johnson, Director, Division of Personnel Administration Mr. Hackley, General Counsel Mr. Farrell, Director, Division of Bank Operations Mr. Noyes, Adviser, Division of Research and Statistics Mr. Kiley, Assistant Director, Division of Bank Operations Mr. Hill, Assistant to the Secretary Discount rates. The establishment without change by the Federal Reserve Bank of Atlanta on May 25) 1959, of the rates on discounts and advances in its existing schedule was approved uaanimously, with the understanding that appropriate advice would be sent to the Bank. 1958 budget experience of the Federal Reserve Banks. Under (late of May 13, 1959, the Division of Bank Operations distributed to the Board an analysis of the budget experience of the Federal Reserve BaIlks for 1958 prepared on the basis of reports received from the ' lespective Banks. The principal purpose of the report furnished under the procedure established in 1953 was to draw attention to and e Plain the significant differences between the budget provisions and ' eettlal expenses in the various Object and functional categories. 5/27/59 -2In commenting on the budgets, Mr. Farrell noted that gross expenses for 1958 amounted to $157.2 million, $5.9 million more than 1957. On an individual basis, all Banks except Boston reported total operating expenses under the amount of their budget. The largest surpluses were at Cleveland, San Francisco, and Atlanta, and ail were in the main the result of overbudgeting employe es' salaries aM depreciation. It was noted that this was probably in large Part the result of the business decline and the easing of the labor market that developed in the second half of 1957, after the 1958 budgets had been prepared. Because of the tendency on the part of some Banks to overbudget, Mr. Farrell said that it was the Division's intention to check the expense reports for the first half of 1959 when they were received and inform the Board as to the situation at that time so that to the extent necessary this matter could be called to the attention of the appropriate Presidents in connection with disellssions of the 1960 budget proposals. Mr. Farrell's comments calling for no action, the budget relx)rt was noted and accepted. Item distributed to the Board. The following item, which had been distributed to the Board and a copy of which is attached t° these minutes as Item No. 1 was approved unanimously: Letter to the Federal Reserve Bank of New York earding changes in foreign travel plans. 5/27/59 Letter to Congressman Reuss (Item No. 2). Governor Balderston related to the Board that a letter dated May 25, 1959) had been received from Congressman Henry S. Reuss of Wisconsin in which he requested the Board's views on his proposed amendment to H.R. 5237 to "retain the Present 26 per cent maximum limitation, whether or not central reserve City classification is eliminated." A draft reply to Congressman Reuss) prepared by Mt. Thomas and distributed to the Board at this meeting, stated that it would be particularly inequitable and impractical to raise reserve requirements for 01 reserve city banks to a level of 26 per cent and leave those for country banks at 14 per cent or less. The letter was discussed, revised and approved in the form attached hereto as Item No. 2. The meeting then adjourned. Secretary's Notes: Pursuant to the recommendation contained in a memorandum dated May 21, 1959, from Mt. Marget, Director, Division of International Finance, Governor Shepardson, acting on behalf of the Board, today granted permission to Jane S. Wilson, Clerk in that Division, to continue parttime employment as a clerk with Credit Bureau, Inc. Governor Shepardson approved today on behalf of the Board letters to the Federal Reserve Banks of New York and Minneapolis (attached Items 3 and 4) approving the appointment of 89 5/27/59 Thomas M. Murphy and Gordon L. Lindstrom as assistant examiners for the respective Banks, and a letter to the Federal Reserve Bank of Richmond (attached Item No. 5) approving the appointment of seven persons as special assistant examiners. BOARD OF GOVERNORS OF THE Item No. 1 5/27/59 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD May 27, 1959 Mr. William H. Braun, Jr., Secretary, Federal Reserve Bank of New York, New York 45, N. Y. Dear Mr. Braun: Your letter of May 21 regarding changes in foreign travel plans of officers and members of the staff of your Bank during the current year has been brought to the attention of the Board of Governors. The Board has no objection to the change in plans indicated. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. .441tiqkp.;rx, ,„, 0 '',-7 'D .; f, ' V 1 ,... BOARD OF GOVERNORS OF THE Item No. 2 5/27/59 FEDERAL RESERVE SYSTEM WASHINGTON 1 k; =c) el OFFICE OF THE VICE CHAIRMAN *A,, ,..44'. May 27, 1959 The Honorable Henry S. Reuss, House of Representatives, Washington 25, D. C. Dear Mr. Reuss: asking for This is in response to your letter of May 25 5237 to H.R. to ent the Board's views as to your proposed amendm r or whethe tion, limita "retain the present 26 per cent maximum ated.” elimin not central reserve city classification is ors would Of course, as you know, the Board of Govern reserve city l centra the hope that the Congress does not abolish letter, the your to e respons classification. However, in direct m maximu the sed increa Board believes that an amendment that cent, per 26 to banks city for limitation on reserve requirements no serve would banks, y countr Without a parallel increase for table and Practical purpose. It would be particularly inequi banks to city e reserv all for ements impractical to raise requir at a level of 26 per cent and leave those for country banks the Ili Per cent or less. The spread between requirements of e city banks, large country banks and those of the smaller reserv some of which compete with each other, would be much larger cal than could be justified on grounds of equity or of practi oPeration of the banking system. Sincerely yours, ) /I C. Canby Bald ston, Vice Chairman. BOARD OF GOVERNORS OF THE Item No. 3 FEDERAL RESERVE SYSTEM 5/27/59 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD May 270 1959 Mr. John F. Pierce, Chief Examiner, Federal Reserve Bank of New York, New York 45, New York. Dear Mr. Pierce: In accordance with the request contained in your letter of May 22, 1959, the Board approves the appointment of Thomas M. Murphy as an assistant examiner for the Federal Reserve Bank of New York. Please advise as to the date on which the appointment is made effective. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 4 5/27/59 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD May 27, 1959 Mr. Frederick L. Deming, President, Federal Reserve Bank of Minneapolis, Minneapolis 2, Minnesota. Dear Mr. Deming: In accordance with the request contained in your letter of May 22, 1959, the Board approves the appointment of Gordon L. Lindstrom as an assistant examiner for the Federal Reserve Bank of Minneapolis. If the appointment is not made effective June 8, 1959, as planned, please advise the Board. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS ) otiOtort, OF THE - Item No. 5 FEDERAL RESERVE SYSTEM 5/27/59 WASHINGTON 25, D. C. ADDRESS ,L*0 4 4;Tithttur:" orreciAL CORRESPONDENCE TO THE BOARD "44olo, May 27, 1959 Mr. N. L. Armistead, Vice President, Federal Reserve Bank of Richmond, Richmond 13, Virginia. Dear Mr. Armistead: In accordance with the request contained in your letter of Ilb.y 18, 1959, the Board approves the designation of the following employees as special assistant examiners for the Federal Reserve Bank of Richmond for the purpose of Participating in examinations of member banks only, except the bank listed immediately above their names: First and Merchants National Bank of Richmond, Richmond, Virginia J. C. Brockenbrough Franklin S. Clark Robert C. Duffer Johnson N. Snoddy, Jr. The Central National Bank of Richmond, Richmond, Virginia Franklin S. Clark Chalmer R. Wright The First National Bank of Ashland, Ashland, Virginia Everett G. Melton The First National Bank of Baltimore, Baltimore, Maryland James W. Cloud Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary.
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