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November 18, 1958 Minutes for 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. Chin. Martin Gov. Szymczak Gov. Vardaman 1/ X Gov. Mills Gov. Robertson Gov. Balderston x Gov. Shepardson x 1/ ae,i3 In accordance with Governor Shepardson's memorandum of March 8, 1957, these minutes are not being sent to Governor Vardaman for initial. 3342 Minutes of the Board of Governors of the Federal Reserve System on Tuesday, November 18, 1958. The Board met in the Board Room at 10:00 a dn. PRESENT: Mr. Mr. Mr. Mr. Mr. Mt. Martin, Chairman Balderston, Vice Chairman Szymczak Mills Robertson Shepardson Mr. Mr. Mr. Mr. Mr. Mr. Discount rates. 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 the l'ecleral Reserve Banks of Boston, Minneapolis, and Kansas City, approving the establishment without change by those Banks on November 17, 1958, of the rates on discounts and advances in their existing schedules. Wachovia Bank and Trust Company (Item No. 1). On November 13, the Board disapproved the application of the Wachovia Bank and Trust C°111PanY, Winston-Salem, North Carolina, to merge with The Wilmington 8"lagS & Trust Company of Wilmington, North Carolina, and also disapproved the establishment of branches in Wilmington at the present offices maintained bY 1414 _ 4-1-raington Savings & Trust Company. On November 14, the Board had been a4visecl of an informal request from officers of the Wachovia and Wilmington Bartk,, for a conference. It was informally agreed at that time that if a req vas received through proper channels a meeting would be arranged r°1' Wednesday, November 19, 1958, at 10 a.m. 334 11/18/58 -2- Prior to the meeting there had been distributed copies of a telegram dated November 17, 1958, from Waehovia Bank formally requesting an oPportunity to present to the Board of Governors additional information regarding its application. The Board unanimously authorized the Secretary to send the telegram attached to these minutes as Item No. 1 to the Wachovia Bank, indicating that the Board had granted its request for a conference on November 19. Election of a director at the Federal Reserve Bank of Minneapolis 1.1.2.11..._22.1. Prior to the meeting there had been distributed a memodated November 17 prepared by Mr. Hackley regarding a procedural tatter in connection with the election of a director of the Federal Reserve Bank of Minneapolis. In a telegram from the Minneapolis Reserve l*hk dated November 17, 1958, the question had been raised whether when 4 member bank's ballot for a Class A director had already been placed in the ballot box, a "substitute" ballot received from the member bank before the polls were closed, changing its vote from one candidate to all°ther, could be substituted for the one theretofore cast by that bank Placed in the ballot box. If this were permitted, the ballot 1:111 ginal1y cast would be withdrawn from consideration when the ballot box "° 1 45 opened. The question arose in connection with a closely e°4tested election at the Minneapolis Bank. Mr. Hackley's memorandum pointed out that the Board's letter of AUgust 3, 19280 (F.R.L.S. 3115) stated that "No ballot or envelope containing a ballot which has been passed through the slot by the Chairman and into the locked ballot box 33,11 11/18/58 -3should be withdrawn or returned to the member bank for correction." The memorandum added that despite the language of the 1928 letter, the Board in 1934 and again in 1945 permitted a member bank to substitute a-Properly prepared ballot for one previously submitted which was invalid. In the present case, there was no question as to the validity of the ballot originally cast. Therefore, in accordance with orderly election procedures and the Board's outstanding instructions, Mr. Hackley ' l ecommended that the casting of a substitute ballot should not be Permitted in the present case. Governor Robertson suggested a number of hypothetical situations /there it would be difficult to determine the validity or invalidity of ballots that had already been cast. He pointed out that the election Procedures for Reserve Bank directors were different from ordinary bell°ting and political elections. After consideration of various qtlestions, he agreed with the recommendation of the Legal Division and slIggested that further consideration be given to the development of a and fast rule to the effect that once a ballot was placed in the ballot box it could not be withdrawn or substituted for any reasons *wha tsoever. Governor Shepardson said he was somewhat concerned about the leotion process for directors on the grounds that it would not 1/13ear to conform with the usuel standards of secrecy surrounding 11/18/58 election processes. He wondered whether consideration should not be given to removing the ballot from the envelope bearing the authorization data an.. u placing it in the ballot box once the identifying information had been verified. In this way the secrecy of the individual ballots would be protected. Governor Mills pointed out that the casting of the ballots for a director of a Federal Reserve Bank was usually accomplished by resolution of the board of directors of individual commercial banks 4nd that these resolutions were spread on their minutes. Therefore, he felt the election of Reserve Bank directors did not have the characteristics of secrecy which usually were attached to balloting. Ire f avored the recommendation made by Mr. Hackley that a substitution of ballots should not be permitted in the present instance. Governor Balderston made the point that if the present rule had been standing for such a long period of time it would be unwise to c onsider changing it at the last minute because any change would lAnd oUbtedly result in hard feelings, especially in a closely contested election. Thereupon, the Board unanimously approved the sending of the tel to the Minneapolis Reserve Bank attached to these minutes as Item m the Bank that in the present case a substitute ball° t should not be counted. 4r) 11/18/58 At this point, all the members of the staff withdrew and the Board went into executive session. Additional revest of Senate Permanent Subcommittee on InvestiFollowing a meeting with the Federal Advisory Council, the gations. 1/c'ard reconvened in Chairman Martin's office at 12:30 p.m. with Chairman Ma-litin and Governors Balderston, Szymczak, Mills, Robertson, and Shepardson Present. The Secretary was called to the Chairman's office and informed that pursuant to the request contained in a letter from Senator John L. McClellan, Chairman of the Senate Permanent Subcommittee on Investigations, dated November 18, 1958, the Board had authorized that all vouchers for t vel or other expenses of any nature submitted to and paid by the Federal Reserve Board to any member of the Board for the period j444arY 1, 19461 to date be made available to staff members of the SIthcommittee. It had further authorized that there be made available the originals or photostats of toll call ledgers maintained by the Board. This authorization was given with the understanding that the Board's SeeretarY and General Counsel would work together in making the necessary 111.aterial available through the appropriate divisions of the Board co ncerned. At this session Chairman Martin was requested to communicate ‘'rith Governor Vardaman by telephone for the purpose of informing him that the Board had authorized the making available to the Subcommittee 8t4ff of vouchers for travel expenses or for expenses of any other nature ecYvering any member of the Board. 11/18/58 -6- Thereupon the meeting adjourned. Secretary's Note: Governor Shepardson today approved on behalf of the Board a letter to the Federal Reserve Bank of Chicago (attached Item No. 3) approving the appointment of Norton D. Obrecht as assistant examiner. A.,,1_,A4.1.-14, 3348 TELEGRAM Item No. 1 11/18/58 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASH I NGTON November 18 1958 Mr, John F. Watlington, Jr., President, Wachovia Bank and Trust Co., Winston Salem, N. C. Board has granted request contained in your telegram of November 17 for opportunity to present additional information to Board at 10:00 a.m. on November 19 at Board's Offices with respect to your application concerning merger of Wilmington Savings and Trust Company- into your Bank. (Signed) Merritt Sherman Merritt Sherman, Secretary, Board of Governors of the Federal Reserve System too pa. 4 ESS `4AR EloArtbRATES l NL ti, ' 7.tlit4; Z 4jS .... ...iovertmoRs or THE FEDERAL RESERVE SYSTEM 3349 TELEGRAM LEASED WIRE SERVICE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON Item No. 2 11/18/58 November 18, 1958 Strothman - Minneapolis Reurwire November 171 1958. In light of Board's letter of August 3, 1928 (FRI'S #3115), it is Board's view that where a member bank has already cast ballot for Class A director and that ballot is not invalid for any reason and has been placed in ballot box, it would not be permissible to allow casting and insertion in ballot box of substitute ballot by member bank with subsequent withdrawal Of original ballot from consideration when ballot box is opened after closing of polls. Accordingly in present case substitute ballot should not be counted. (Signed) SHERMAN ( BOARD OF GOVERNORS 100, 1**4 OF THE 1'04:40'4 FEDERAL RESERVE SYSTEM Item No. 3 11/18/58 4 A WASHINGTON 25, D. C. 4 0. ADDRESS OrFICIAL CC:IRRESPONOENCE TO THE BEIARO 4kole,0:0* 40401.0 November 18, 1958 W. R. Diercks, Vice President, eueral Reserve Bank of Chicago, ellicago 901 Illinois. °ear Mr. Diercks: In accordance with the request contained in your letter c) ofZI.:smber 13, 1958, the Board approves the appointment of Norton D. 04 cut as an assistant examiner for the Federal Reserve Bank of rnadeagO. Please advise as to the date upon which the appointment is e effective. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary.
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