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Minutes for To: Members of the Board From: Office of the Secretary November 17, 1961 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. Chin. Martin Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Gov. Mitchell Minutes of the Board of Governors of the Federal Reserve System on Friday, November 17, 1961. PRESENT: Mr. Mr. Mr. Mr. Mr. The Board met in the Board Room at 10:00 a.m. Mills, Acting Chairman Robertson Shepardson King Mitchell Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Sherman, Secretary Kenyon, Assistant Secretary Thomas, Adviser to the Board Fauver, Assistant to the Board Noyes, Director, Division of Research and Statistics Farrell, Director, Division of Bank Operations Koch, Adviser, Division of Research and Statistics Spencer, General Assistant, Office of the Secretary Yager, Economist, Division of Research and Statistics Money market review. Mr. Yager commented on recent developments in the money market, after which Mr. Thomas presented a report on bank credit, the money supply, and related matters. Following discussion based on those reviews, all of the members cr the staff except Messrs. Sherman, Kenyon, Fauver, Farrell, and Spencer vithdrew from the meeting and the following entered the room: Mr. Solomon, Director, Division of Examinations Mr. Johnson, Director, Division of Personnel Administration Mr. Hexter, Assistant General Counsel Mr. Leavitt, Assistant Director, Division of Examinations Mr. Sprecher, Assistant Director, Division of Personnel Administration Mr. Hooff, Assistant General Counsel Mr. Potter, Senior Attorney Mr. Fuerth, Attorney OC) 11/17/61 Discount rates. -2The establishment without change by the Federal Reserve Banks of New York, Philadelphia, and San Francisco on November 16, 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. Items circulated or distributed to the Board. The following items, which had been circulated or distributed to the members of the Board and copies of which are attached to these minutes under the respective item numbers indicated, were approved unanimously: Item No. Letter to Riverside Trust Company, Hartford, Connecticut, approving the establishment of a 1?ranch in the vicinity of the intersection of , '-aSalle and Ellsworth Roads, West Hartford. 1 Letter to Security Trust Company of Rochester, Rochester, New York, approving the establishment a branch at 293 East Main Street. 2 :etter to Wells Fargo Bank American Trust Company, 6an Francisco, California, approving the establishrnent of a branch in Red Bluff. 1 3 etter to Wells Fargo Bank American Trust Company, 4 'Jan Francisco, California, approving the establishOf a branch in the vicinity of the intersection Saratoga, Prospect, and Campbell Avenues, San Jose tter to Alvin L. Gray, Esq., Cleveland, Ohio, ,!garding the application of Regulation T to ti rsonal lending activities of a securities dealer. etter to the Federal Reserve Bank of Dallas arding the question whether the operation of armored truck by a member bank to pick up ePosits requires a separate branch permit for t1Q/1 stop. 5 6 4-)11 11/17/61 -3Item No. Letter to the Federal Reserve Bank of Richmond aPProving revised salary structures at the head office and the Charlotte Branch effective December 29, 1961, and at the Baltimore Branch effective December 25, 1961. 7 In connection with Item No. 6, there was a general discussion of the questions presented by the use of armored truck service to pick 1113 deposits. It was pointed out that this matter had been the subject of consideration by the bank supervisory agencies over a long period of tune, and that the Board had reviewed the subject thoroughly in 1953 and concluded that branch banking was involved. It was known that this service 1484 being rendered by certain banks in New Jersey, and possibly one or two Other places, without branch authorization. Efforts had been made by the ederal supervisory agencies, in consultation with the New Jersey State Illthorities, to bring about a correction of this condition. For various reasons, however, the New Jersey authorities had demurred from particiPatIng in corrective steps, and the matter had never been brought to a conclusion. With respect to Item No. 7, attention was directed by Mr. j°111180n to the salary structure at the Baltimore Branch, where the only changes proposed were in certain of the higher grades. While this structure was slightly higher than the proposed head office structure, Ifould be below the local market, as indicated by the community survey Undert aken earlier this year. Therefore, the Personnel Division felt 11/17/61 that the subject should be discussed with the Richmond Bank informally when, it next conducted a survey. At the present time, however, the rate of employee turnover was at an all-time low, and the branch was not experiencing any difficulty in recruiting employees. This situation apparently had some relationship to the degree of unemployment in the neatimore area. On balance, therefore, the Division recommended approval of the Baltimore structure. Comments by members of the Board reflected to different opinion. The meeting then adjourned. Secretary's Note: 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: b Mary L. Scott as Records Clerk, Office of the Secretary, with asic annval salary at the rate of $4,145„ effective the date of entrance upon duty. Sal inase Nyart S. Sharigan, Secretary, Division of International Finance, tr °1111. $5,820 to $6,015 per annum, effective November 26, 1961. S a increases with change in titles 0, Margaret J. Moister, from $5,820 to $6,015 per annum, with a poarlge in title from Assistant Supervisor, Administrative Subject and er!C Files, to Supervisor, Subject Files, Office of the Secretary, .Lective November 26, 1961. 3S'i 11/17/61 -5- Salary increases with change in titles (continued) Lillie B. Brow, from $5,335 to $5,655 per annum, with a change in title from Senior Records Clerk to Assistant Supervisor, Subject Files, Office of the Secretary, effective November 26, 1961. l''rmission to engage in outside activity Paul Gekker, Economist, Division of International Finance, to accept appointment as Consultant in Soviet Economics at George Washington University. .••••,• ,• k_>(.1 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 1 11/17/61 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD November,17, 1961 Board of Directors, Riverside Trust Company, Hartford, Connecticut. Gentlemen: The Board of Governors of the Federal Reserve System approves the establishment of a branch in the vicinity of the intersection of LaSalle and Ellsworth Roads, West Hartford, Connecticut, by. Riverside Trust Company, Hartford, Connecticut, provided the branch its established within one year from the date of thia letter. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. r: e'rt -1$,","1 ‘JC)If BOARD OF GOVERNORS OF THE Item No. 2 11/17/61 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD November 17, 1961 Board of Directors, Security Trust Company of Rochester, Rochester, New York. Gentlemen: The Board of Governors of the Federal Reserve System approves the establishment of a branch by Security Trust Company of Rochester, Rochester, New York, at 293 East Main Street, Rochester, New York, provided the branch is established within one year from the date of this letter. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 3 11/17/61 ADDRESS orriciAL CORRESPONDENCE TO THE °CARD November 17, 1961 Board of Directors, Wells Fargo Bank American ' Trust Company, an Francisco, California. Gentlemen: The Board of Governors of the Federal Reserve System approves the establishment of a branch in the vicinity of the downtown business area of Red Bluff, Tehama County, California, by Wells Fargo Bank American Trust Company, provided the branch is established within one year from the date of this letter. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael) Assistant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 4 11/17/61 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD November 17, 1961 Board of Directors, Wells Fargo Bank American Trust Company, San Francisco, California. Gentlemen: The Board of Governors of the Federal Reserve System approves the establishment of a branch in the vicinity of the intersection of Saratoga, Prospect and Campbell Avenues, San Jose, Santa Clara County, California, by Wells Fargo Bank American Trust Company, provided the branch is established mithin one year from the date of this letter. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. ,4 I BOARD OF GOVERNORS 4.trott,:, 4,4 oto OF THE Item No. 5 FEDERAL RESERVE SYSTEM - 11/17/61 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE , k mat TO THE BOARD November 17, 1961 14r. Alvin L. Gray, Esq., 1012-14 Citizens Building, Cleveland, Ohio. bear Mr. Gray: Your letter of August 17, 1961, to the Securities and Change Commission has been referred to the Board of governors for rePlY, since the regulations governing credit in the securities markets 1./ider the Securities Exchange Act of 1934 are promulgated by the Board. Ic)u inquire whether a loan venture under which your client would lend lip to 85 per cent of the value of listed securities would be in viola.1-on of the regulations relating to margins. Your principal question 'PPears to be whether loans otherwise subject to Regulation T, which erns extensions of credit by brokers and dealers, would be exempt r°111 the Regulation if made by a dealer "personally" rather than as a Part of his business as dealer, r The Board of Govlirnors takes the position that such loans 0 lad be subject to the Regulation, on the ground that one who is a rcreditor" as defined in section 220.2 of the Regulation is to be 4egarded as a creditor with respect to all his activities that relate ; 1 (1 securities transactions so that when they are of the kinds covered Y. Regulation T they must comply with that Regulation. Section 220.3 of Regulation T provides in part: "(a) ... All financial relations between a creditor and a customer, whether recorded in one record or in more than one record, shall be included in and be deemed to be parts of the customer's general account with the creditor .. .." (Underscoring supplied.) 3SSO BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Mra Alvin L. Gray 4. You mentioned in your letter that several New York companies have undertaken programs such as your client has proposed. Without further details as to such activities it is not possible to comment a . n Whether such programs are subject to the Board's regulations. If Y?li have any further questions as to the application of the regula tlons, you may find it convenient to contact the Federal Reserve Bank Of Cleveland. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. Paiclosure: Regulation BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 6 11/17/61 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD November 17, 1961 Mr. L. G. Pondrom, Vice President, Federal Reserve Bank of Dallas, Dallas 2, Texas. Dear Mr. Pondrom: Reference is made to your letter of October 19) 1961, Trust regarding the question presented by the Southern Arizona Bank and truck Company, Tucson, Arizona, whether the operation of an armored by a bank to pick up deposits requires a separate branch permit for each stop, in view of the fact that the Board has held such an operation to constitute branch banking. The Board's control over the establishment of branches by member State banks is derived from section 5155(e) of the Revised Statutes (12 USC 36(e)), which provides: "No branch of any national bank association shall be established or moved from one location to another without first obtaining the consent and approval of the Comptroller of the Currency." This has been made applicable to State member banks, subject to the aPProval of the Board) by the third paragraph of section nine of the Federal Reserve Act. of The Board has consistently held that the picking up branch. a cr ePosits by an armored truck constitutes the operation of ! section under branches of on definiti the upon . .1ilis opinion is based 0 • 0 to " branch a defines which s, Statute of the Revised include • • • any branch place of business ... at which deposits are received, . . .". Thus, each stop of the truck at which a the dePosit is picked up would be a branch; aid therefore, since BOARD Or GOVERNORS or THE ?voltam.. RESERVE SYSTEM Mt. L. G. Pondrom .2. statutes require the Board's approval when a branch is nestablishedo u a separate branch permit mould appear to be necessary for each stop at which the bank operated a branch. Very truly yours, (Signed) Merritt Sherman • Merritt Sherman, Secretary. 3883 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 7 11/17/61 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD November 17, 1961 CONFIDENTIAL CFR) MI'. Edward A. Wayne, President, Federal Reserve Bank of Richmond, Richmond 13, Virginia. Dear Mr. Wayne: Reference is made to your letter received October 13, 1961, in which your Bank requests the approval of upward adjustments in the salary structures applicable to the employees of your Bank and its b ranches. The Board approves the following minimum and maximum salaries for the respective grades of the Richmond-Charlotte Branch structure, effective December 29, 1961, and the Baltimore Branch structure, effective ecember 25, 1961. GradeRichmond-Charlotte Maximum Minimum 1 2 $2,444 2,600 3 2,808 3,068 3,432 3,796 4,212 4,628 4 5 6 7 8 9 10 11 12 13 14 15 16 4,966 $3,302 3,510 131:It 4,628 5,148 5,694 6,266 6,708 8,02 5,3827 5,980 6,630 8,944 7,280 7,982 8,762 9,594 9,828 10,790 11,830 12,948 Baltimore Maximum Minimum $2,392 2,613 $3,198 3,562 2,860 3,857 3,146 4,251 33,58g 4,225 151:72739 200 4 6 1: 5 3113 6,7 5 7,007 5,629 6,097 7,605 8,255 6,708 9,048 7,280 7,982 8,762 9,828 10,790 11,830 9,594 12,948 The Board approves the payment of salaries to the employees, other than officers, within the limits specified for the grades in which the Positions of the respective employees are classified. It is 3S84. -'2 assumed that all employees whose salaries are below the Withal.= of their respective grades as a result of the structure increase will be brought within the appropriate range as soon as practicable and not later than April 1, 1962. Your letter indicated that the 1962 budget provides for additional salary expense arising from these changes in structure. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary.
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