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Minutes for To: o ember 3A 1958 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. A Chm. Martin Gov. Szymczak Gov. Vardaman Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson 331 Minutes of the Board of Governors of the Federal Reserve System on Friday, November 14, 1958. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. Martin, Chairman Balderston, Vice Chairman Szymczak Vardaman Mills Robertson Shepardson Mr. Mt. Mt. Mr. Mt. Mt. Discount rates. the The Board met in the Board Room at 10:00 a.m. Sherman, Secretary Fauver, Assistant Secretary Hackley, General Counsel Masters, Director, Division of Examinations Solomon, Assistant General Counsel Nelson, Assistant Director, Division of Examinations Unanimous approval was given to telegrams to following Federal Reserve Banks approving the establishment without change by those Bqnks on November 13, 1958, of the rates on discounts 44d advances in their existing schedules: New York Cleveland Richmond Atlanta Items circulated to the Board. Chicago St. Louis Dallas The following items, which had been circulated to the members of the Board and copies of which are ' ettached to these minutes under the respective item numbers indicated, l'rere P.P.X.11221101 unanimously: Item No. L arter to the Zeeland State Bank, Zeeland, Michigan, reving its application for full fiduciary powers. (P „or transmittal through the Federal Reserve Bank of , aicago) Lett er to the Comptroller of the Currency recommendinc n : E-111)°val of an application to organize a national bank A.ermit, Texas. 1 2 11/14/58 -2- Wachovia Bank and Trust Company matter. Governor Szymczak said that in response to a call from the Chairman's Office yesterday afternoon he had received a visit from Mr. Archie Davis, Chairman of the Board of Wachovia Bank and Trust Company. Mr. Davis, who had been informed of the Board's decision yesterday to disapprove the application for merger of Wachovia with The Wilmington Savings 8: Trust Company, stated that representatives of both institutions would appreciate an oPportunity to have a hearing before the Board at which they could Present directly to the Board additional evidence as to why they b elieved the proposed merger was in the public interest. Because the proposed merger had been tentatively scheduled to be completed on November 17, and public announcement had been made of that plan, Mr. DaNris was anxious to learn as soon as possible whether the banks 'P7011]4 be granted the hearing in order to assist them in preparing their announcement that the merger would not take place on the 17th. Governor Szymczak vent on to say that at his request the Secretary had checked informally with the available members of the Board yesterday afternoon to ascertain whether they would wish to indicate at that time Whether to accord Wachovia the requested hearing. Upon being latormed by the Secretary that at least one of the Board Members did 4f3t wish to discuss the matter except at a meeting, Governor Szymczak 84id that he informed Mr. Davis that his oral request would be presented to the Board today. It was Mr. Davis' hope that when the announcement 331 11/14/58 -3- lia8 made that the merger would not take place on November 17, it would be Possible for the bank to state that it would have a hearing before the Board concerning the matter. Governor Mills said that presumably the regular procedure had been followed and that the Federal Reserve Bank of Richmond had been notified of the Board's decision and was conveying that information "Ticially to Wachovia Bank and Trust Company. If this were not the case, he felt that it would be highly irregular for the Board to deviate tl'om the established administrative procedure and to open itself to the Charge that it had been unduly influenced by a party at interest in a case before the Board. In Governor Mills' opinion Mr. Davis would expose hiltself to serious charges for having injected his person into this Pr"eeding in any but a normal course. Mr. Masters said that following the meeting yesterday Mr. Wayne °f the Richmond Reserve Bank called at his office and was told of the 13°ard'8 decision in this matter. Usually, he said, in cases such as th8 where the time element was important, the Reserve Bank would have been notified of the Board's action by telephone and the customary letter Uld follow, but in this case since Mr. Wayne was in the building he vae informed of the Board's action in the manner indicated. Mr. Masters 4180 said that the formal letters of notification to the Reserve Bank to Wachovia had been prepared yesterday afternoon but he did not know " 4 vhether they had been mailed. The Secretary stated that the letters isesched his office late in the afternoon, but they had not yet actually been put into the mail. 3319 11/14/58 -4- Chairman Martin stated that the question before the Board was Whether or not the request for a hearing should be granted. One thing to consider was whether there was the remotest chance that the Board would change its view in regard to this merger. The fact that shares Of stock of the two banks concerned had already been affected because Plans for the merger had become public compounded the difficulties that might arise if there were further uncertainty as to the Board's position. Under normal circumstances, he felt that the Board should try to hear any party affected by one of its decisions, especially where there were Practical difficulties as there were in this case. He then inquired of Governor Mills whether it was his feeling that the Board should not grant the Wachovia and Wilmington banks the requested hearing. Governor Mills stated his view that the Board should carry through in the normal course. If, after the Board's decision had been conveyed formally to Wachovia, it saw fit to ask for a hearing,the 13°8-rd presumably should take up the request on its merits. It was G°11ernor Mills' feeling that no indication should be given to Wachovia at this 841- time as to whether the Board would grant the requested hearing, he expressed regret that the letter formally advising Wachovia of the Board's denial of its application had not gone forward last night. Governor Robertson said thatl with respect to the sending of the letters advising the Richmond Reserve Bank and Wachovia of yesterday's 13°8-rd action, the Secretary had cslled hill on the telephone about 5:30 p.m. last evening to say that the letters had just reached his 3320 11/14/58 -5- office and to inquire as to his personal judgment on whether it would be preferable to mail them then or to hold them over until the Board had had an opportunity to consider the oral request by Wachovia for an oPportunity to appear before the Board and to seek reconsideration of the Board's decision to deny approval of the merger. Governor Robertson said he commented to the Secretary that he thought it made little difference whether the letters were mailed at that time or after the Board had considered the request for a hearing, although he would lean slightly on the side of holding the letters until the Board had considered this request. a Perhaps this personal opinion had been f actor in the Secretary's decision not to mail the letters last evening, especially since the Secretary had seemed inclined to mail them then. With respect to the request that Mr. Davis had made for a he aring, it was Governor Robertson's opinion that the Board should grant to anyone an opportunity to come in and to discuss a problem such as Wachovia was faced with. He doubted that the bank would be able to present facts that would cause the Board to change the decision that it had reached, but he would favor granting Wachovia and Wilmington Savings & Trust the requested hearing. In acting on this request, he coUld not sep that it made any difference whether the letters were 144iled last night or today: the Richmond Bank had been informed Ye aterdaY that the Board had denied Wachovia's application, and the Vice President of that Bank had informed Wachovia of the decision; eNrerYb°dY concerned knew that the Board had taken action and, because 3321 11/14/58 -6- of the time element, Wachovia had made this oral request for a hearing. He felt that the Board should be perfectly willing to let representatives Of Wachovia and Wilmington Savings come in and discuss the matter as they wished to do so, and he thought that the Board would look a little bit stuffy if it declined to consider the request when everybody concerned knew what the facts of the Board's decision were. Governor Vardaman said he did not understand that Governor 111118 was objecting to the idea of a hearing but that he wanted the formalities to be observed, a view in which he (Governor Vardaman) c oncurred. Chairman Martin said he thought the letters regarding yesterday's Board. action should be sent immediately so that there should be no doubt Concerning the position that had been taken. objection to the requested hearing. Personally, he had no He suggested that Governor Szymczak eall Mr. Davis on the telephone and inform him that if a formal request for a hearing was received in time, the Board would be prepared to grant the request nnd that it could be set for 10 a.m. on Wednesday, November 19. There was agreement with Chairman Martin's suggestion, although G°vernor Vardaman indicated that he would not be present on November 19. Pro osal of Congressman Celler re arding restricted stock o tions. ?rior to the meeting there had been distributed a memorandum dated NOveMber 5) 1958' from Mr. Solomon, regarding a proposal of Congressman °eller that restricted stock options be exempted from Regulation U. 3327 11/14/58 -7- The Chairman asked that this matter be deferred until a later date inasmuch as Senator Williams had talked with him concerning the same sUbject and might wish to submit a brief indicating his position °a this matter. Access to Board's records by Mr. Robert E. Dunne. The Secretary reported that in accordance with the Board's action yesterday, Mr. Robert E. Dunne, Assistant Counsel for the Senate Permanent Subcommittee cn Investigations, had called at his office yesterday afternoon and that the records authorized by the Board had been made available to Mr. Dunne for his inspection. Conference with representatives of The Michigan Bank. The Secretary reported that, in accordance with the Board's action on November 3, representatives of The Michigan Bank would like to appear before the Board at 2:30 p.m. on Monday, November 24, 1958, with l'esPect to that bank's application for approval of the establishment of two branches. The date was acceptable to the members of the Board, ella the Secretary was authorized to advise The Michigan Dank accordingly 4na to notify it that an official reporter would prepare a transcript Of the conference and that the bank might obtain a copy of the transcript it it wished. Thereupon the meeting adjourned. tr?* 00) 1_03 11/14 58 A-- 3 -8Secretary's Note: Pursuant to the recommendations contained in memoranda from appropriate inaividuals concerned, Governor Shepardson today approved on behalf of the Board the following items affecting the Board's staff: Transfer and salary increase Gordon. B. Grimwood, from the position of Economist in the Division of International Finance, to the position of Economist in the Office of Defense Planning, with an increase in his basic annual salary from $10)370 to $11,3551 effective November 16, 1958. , effective November 16 1958 Bessie McCrael Statistical Clerk, Division of Research and Statistics, from $4,135 to $4,230 per annum. , Ellen Carpenter, Statistical Clerk, Division of Bank Operations, ' J r°m $3,495 to $3,590 per annum. Abraham Rose, Cafeteria Laborer, Division of Administrative Services, rrom $3,211.5 to $3,311.0 Per anntlah Eleanor W. Yates, Cafeteria Laborer, Division of Administrative Services, from $2,960 to $30055 per annum. Aece tance of resignation ,,,Mary V. Malarkey, Clerk-Stenographer, Division of Personnel 'numanistration, effective November 14, 1958. Se 3321 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 1 11/14/58 ADDRESS OrriCIAL CORRESPONDENCE TO THE BOARD November 14, 1958 Board of Directors, Zeeland State Bank, Zeeland, Michigan. Gentlemen: This refers to your request for permission, under applicable provisions of your condition of membership numbered 1, to exercise fiduciary powers. Following consideration of the information submitted, the Board of Governors of the Federal Reserve System grants permission to the Zeeland State Bank to exercise the fiduciary 13°1i/ors now or hereafter authorized by its charter and the laws of the State of Michigan. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. oiAtot*,,, ow 401,,44, ‘‘',1- ( • - BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM 4 Item No. 2 11/14/58 4, WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD November 14, 1958 Comptroller of the Currency, Treasury Department, Washington 250 D. C. Attention Mr. G. W. Garwood, Deputy Comptroller of the Currency. 1°644 'mr. Comptroller: Reference is made to a letter from your office dated September 13, 1957, enclosing copies of an application to organize national bank at Kermit, Texas, and requesting a recommendation s to whether or not the application should be approved. : Information contained in a report of investigation of aPplication made by an examiner for the Federal Reserve Bank t°L-Dallas discloses generally favorable findings with respect to factors usually considered in connection with such proposals. e°rdingly, the Board of Governors recommends approval of the application to organize a national bank at Kermit, Texas. the The Board's Division of Examinations will be glad to discuss any aspects of this case with representatives of your —.rice if you so desire. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary.
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