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Minutes for

To:

Members of the Board

From:

Office of the Secretary

May 28, 1956.

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.

Chin. Martin
Gov. Szymczak
Gov. Vardaman
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson




Minutes of actions taken by the Board of Governors of the Fed"al Reserve System on Monday, May 28, 1956.

The Board met in the

Board Room at 10:00 a.m.
PRESENT: Mr.
Mr.
Mr.
Mr.

Martin, Chairman
Balderston, Vice Chairman
Szymczak
Mills
Mr. Carpenter, Secretary
Mr. Kenyon, Assistant Secretary
Mr. Thomas, Economic Adviser to the
Board
Mr. Leonard, Director, Division of
Bank Operations
Mr. Vest, General Counsel
Mr. Young, Director, Division of Research and Statistics
Mr. Conkling, Assistant Director, Division of Bank Operations

The following items, which had been circulated to the members of

the Board, were presented for consideration and the action taken in each
instance was as stated:
Letter to Mr. Erickson, President, Federal Reserve Bank of Boston,
reading as follows:
The Board of Governors authorizes expenditure of approximately $25,000 for the modernization of the old A. B.
See elevator and conversion of it to automatic operation
as proposed in your letter of May 17. It is understood
that this will complete the modernization of the elevator
equipment.
Approved unanimously.
Letter to Mr. Latham, Vice President, Federal Reserve Bank of
reading as follows:
Reference is made to your letter of May 10, 1956, regarding the request of The Colonial Trust Company, Waterbury,




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Connecticut, for an extension of time in which to establish a branch in the East End of Waterbury on Dune Street,
just north of Meriden Road. It appears that adverse
weather conditions have caused further delay in construction but that the office building will be ready for occupancy by July 31, 1956.
The Board of Governors concurs in your recommendation
and extends to July 31, 1956, the time within which The
Colonial Trust Company may establish the subject branch.
Approved unanimously.
Letter to the Board of Directors, The State Bank and Trust ComPanY, Defiance, Ohio, reading as follows:
This refers to your request for permission, under applicable provisions of your condition of membership numbered
1, to exercise statutory fiduciary powers.
Following consideration of the information submitted,
the Board of Governors of the Federal Reserve System grants
Permission to The State Bank and Trust Company to exercise
the fiduciary powers now or hereafter authorized under the
terms of its charter and the laws of the State of Ohio.
Approved unanimously, for
transmittal through the Federal
Reserve Bank of Cleveland.
Letter to the Board of Directors, The National Bank of Manassas,
Manassas, Virginia, reading as follows:
The Board of Governors of the Federal Reserve System
has given consideration to your application for fiduciary
Powers and grants you authority to act, when not in contravention of State or local law, as trustee, executor, administrator, registrar of stocks and bonds, guardian of
estates, assignee, receiver, committee of estates of lunatics, or in any other fiduciary capacity in which State
banks, trust companies or other corporations which come
Into competition with national banks are permitted to act
under the laws of the State of Virginia, the exercise of all
such rights to be subject to the provisions of the Federal




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Reserve Act and the regulations of the Board of Governors
of the Federal Reserve System.
A formal certificate indicating the fiduciary powers
which The National Bank of Manassas is now authorized to
exercise will be forwarded to you in due course.
Approved unanimously, for
transmittal through the Federal
Reserve Bank of Richmond.
Letter to the Board of Directors, Genesee County Savings Bank,
Flint,
Michigan, reading as follows:
Pursuant to your request submitted through the Federal Reserve Bank of Chicago, the Board of Governors of
the Federal Reserve System approves the establishment of
a branch in South Flint Plaza, near the southeast corner
of Hemphill and Fenton Roads, Burton Heights, Michigan, by
Genesee County Savings Bank, provided the branch is established within nine months from the date of this letter, and
approval of the State authorities is effective as of the
date the branch is established.
Approved unanimously, for
transmittal through the Federal
Reserve Bank of Chicago.
Letter to Mr. Woolley, Vice President, Federal Reserve Bank of
ansas City, reading as follows:
Reference is made to your letter of May 16, 1956,
submitting with a favorable recommendation a request of
the Westport Bank, Kansas City, Missouri, for permission
under Section 24A of the Federal Reserve Act to invest not
exceeding 4270,000 for the purpose of remodeling its banking premises, including the cost of a vault, equipment and
new furnishings.
The Board has given consideration to the information
you have submitted and approves the additional investment
of not exceeding 4270,000 by the Westport Bank for the
Purpose of remodeling its banking premises with the understanding portions of the expenditure are to be allocated




5/28/56
to expense, furniture and fixtures and the affiliated Westport Safe Deposit Company, as well as bank premises, when
the program is completed. Please advise the bank accordingly.
Approved unanimously.
Letter to Mr. L. A. Jennings, Deputy Comptroller of the Currency,
Treasury
Department, Washington, D. C., reading as follows:
Reference is made to your letter of May 7, 1956 stating
that the First Security Corporation, Salt Lake City, Utah,
has purchased all the outstanding stock of the First Bank of
Culdesac, Culdesac, Idaho, and that the First Security Corporation has requested the consent of the Comptroller to
have the First Security Bank of Idaho, National Association,
Boise, Idaho, purchase the assets and assume the liabilities
of the First Bank of Culdesac and establish a branch at the
present location of that bank. You request the advice of
the Board in relation to section 7 of the Clayton Antitrust
Act.
The First Bank of Culdesac is located in a small farming community, and the nearest banking facility is some 25
miles distant. The acquisition will increase the percentage
of offices and deposits now controlled by First Security
Bank of Idaho, National Association, Boise in the area only
Slightly. In the circumstances the Board does not believe
that a Clayton Act proceeding would be warranted or that any
Objection should be raised to the proposed branching in view
of that Act.
Approved unanimously.
signature of the Chairman to The Honorable Arthur
S. Fir, Letter for the
re„7mming, Director, Office of Defense Mobilization, Washington, D. C.,
-Lung as follows:
This is to advise you that in accordance with the
Evaluation of Board of Governors Participation in the FallWinter 1955-56 Surprise Relocation Test, forwarded to you
with my letter of February 17, 1956, the Board's Emergency
Relocation Plan of May 21, 1954, has been reviewed and
again brought Up to date. Two copies of the revised plan
are submitted herewith for your information and files.




Approved unanimously.

5/28/56
Reference was made to a memorandum dated May 17, 1956, from
the Division of Bank Operations, which had been circulated to the members of the Board, recommending for reasons stated that the Board approve an attached draft of Schedule J, a proposed supplement to the
State member bank report of condition (Form F. R. 105), for use in obtaining additional information on securities, and loans on securities,
from such banks at the forthcoming mid-year call, subject to Budget
Bureau clearance and provided corresponding forms were obtained from
national
banks and insured nonmember banks.

The memorandum also recom-

mended that the Division of Bank Operations be authorized to make any
minor changes in phraseology, arrangement, etc., of items and related
instructions that might be agreed upon in negotiations with the Bureau
Of the Budget, the Office of the Comptroller of the Currency, and the
Federal Deposit Insurance Corporation. Drafts of suggested letters to
those
three agencies were submitted with the memorandum.
There being agreement with the
recommendations contained in the memorandum, unanimous approval was given
to the following letter to Mr. Paul F.
Krueger, Clearance Officer, Office of
Statistical Standards, Bureau of the
Budget, together with the letters on
the subject which it was recommended be
sent to the Comptroller of the Currency
and the Chairman of the Federal Deposit
Insurance Corporation:
We are enclosing two copies of your form 83 and of a
siraft of Schedule J that we expect to have the State member
banks use as a supplement to the reports of condition at




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the forthcoming mid-year call date. We understand that the
Office of the Comptroller of the Currency and the Federal
Deposit Insurance Corporation expect to use a similar form.
No changes are proposed on report of condition form F. R.
105 or on the other related forms.
It is expected that the proposed Schedule J will be
collected from banks only at the next call date, but it may
be found desirable to collect similar data at intervals in
the future. Item 1, the maturity breakdown of obligations
of States and political subdivisions, has not been collected
since the June 30, 1947, call when the form bore Budget Bureau No. 55-R004.4. Since that time, holdings of these
securities have nearly tripled at all commercial banks and
the June 1947 data are too old to be of value in analyses
of bank assets.
The proposed breakdown of "other" bonds, notes, and debentures, in item 2, has not been obtained since the June
1942 call. At least a one-time classification of these securities, by type of issuer, is desirable for use with the
Board's flow-of-funds study.
The breakdown between loans for purchasing or carrying
United States Government securities and those for purchasing
or carrying other securities is available only at New York
and Chicago weekly reporting banks which hold about 57 per
cent of all "purpose" loans. This coverage could be increased
to about 81 per cent by obtaining the data from all weekly
reporting member banks. However, it seems desirable to obtain these data at one date, in the proposed items 3 and 4,
from all insured commercial banks in order that the estimated
volume of credit extended for purchasing or carrying United
States Government securities may be eliminated from our
Present series on stock market credit.

Mr. Conkling then withdrew from the meeting.
There followed a further discussion of the subject which, at the
nieeting of the Board in executive session on May 25, 1956, Governor Mills




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was asked to explore with the assistance of Messrs. Leonard and Vest.
A memorandum on the matter has been placed in the confidential files
Of the
Board.

The meeting then adjourned.

Secretary's Note: Governor Balderston
today approved on behalf of the Board
the following letter to Mr. Mangels,
President of the Federal Reserve Bank
of San Francisco:
Thank you very much for your invitation to the Board
to send a representative to your Business Outlook Conference on June 1. Mr. Kenneth B. Williams, Assistant Director, Division of Research and Statistics, has been designated to represent us and Mr. Young has informed Mr. Wheeler
or these arrangements.