Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, November 18, 1965, Volume 52, Part 11

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Minutes for

To:

Members of the Board

From:

Office of the Secretary

November 18, 1965

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.

Chm. Martin
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Gov. Maisel

-37r
Minutes of the Board of Governors of the Federal Reserve
System on Thursday, November 18, 1965.

The Board met in the Board

Room at 10:00 a.m.
PRESENT:

Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

Martin, Chairman
Balderston, Vice Chairman
Robertson
Shepardson
Mitchell
Daane
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

Sherman, Secretary
Kenyon, Assistant Secretary
Fauver, Assistant to the Board
Hackley, General Counsel
Solomon, Director, Division of Examinations
Smith, Associate Adviser, Division of
Research and Statistics
Sammons, Associate Director, Division of
International Finance
Goodman, Assistant Director, Division of
Examinations
Leavitt, Assistant Director, Division of
Examinations
Dahl, Chief, Special Studies and Operations
Section, Division of International Finance
Poundstone, Review Examiner, Division of
Examinations
Smith, Economist, Division of Research and
Statistics
Veenstra, Chief, Financial Statistics Section,
Division of Data Processing
Glenn, Analyst, Division of Data Processing

Circulated or distributed items.

The following items, copies

°f which are
attached to these minutes under the respective item number,' indicated, were approved unanimously:
Item No.

Let,
bet‘er to The Detroit Bank and Trust Company,
Michigan, approving the establishment
Of
1 1 a branch at
,
Ann Arbor Road and Lilley Road,
'-Ymouth Township.

1

- trIt: L.
41.1 41'

11/18/65

-2Item No.

Letters to Bank of the Commonwealth, Detroit,
Michigan, approving the establishment of
branches
at 11531 Belleville Road, Van Buren
Township, and at 33500 Earle Memorial High'w ay, Sterling Township.

2-3

Letter to Bank of America National Trust and
Savings Association, San Francisco, California,
aPProving the establishment of a branch in
Saigon, South Vietnam.

4

Liketter to Georgia Railroad Bank & Trust Company,
ugusta, Georgia, approving the declaration of
a d rvidead
payable on December 31, 1965.

5

Letter to the Chairman of the House Banking and
c
urrency Committee transmitting a report pre!
ared by the Board's staff on developments in
'he structure of banking in the early 1960's.
Report on competitive factors.
draft

6

There had been distributed a

of report to the Comptroller of the Currency on the competitive

factors involved in the proposed merger of Greenville Bank and Trust
ComPanY, Greenville, Mississippi, Mechanics-State Bank, McComb,
Miss;
'ssiPpi, and Lawrence County Bank, Monticello, Mississippi, into
beposit
Guaranty National Bank, Jackson, Mississippi.
In discussion it was suggested that the conclusion of the
ren
-rort be
revised to put it in a form similar to the conclusion of
thereport transmitted by the Board yesterday on the proposed merger
Qf severe smaller Mississippi banks into the First National Bank of
Jacks

Accordingly, approval was given to the transmittal to the

Comm+.
-'roller of a report containing a conclusion in the following form,

t7;

-3-

11/18/65

Governor Robertson dissenting on the same basis that he had dissented
from the sending of the report transmitted yesterday:
There appears to be no significant competition existing
between Deposit Guaranty National Bank, Jackson, and the three
banks which it proposes to acquire (Greenville Bank and Trust
Company; Mechanics-State Bank, McComb, and Lawrence County
Bank, Monticello). Further, there is virtually no competition
existing among the three aforementioned mailer banks.
While consummation of this proposed merger and the proposed mergers of First National Bank of Jackson would result
ln the remaining banks in Amite-Wilkinson, Pike and Washington
Counties competing with the two largest banks in the State,
and thus, change the nature of competition in such areas, the
overall effect of the proposed transaction on competition would
not be significantly adverse.
Messrs. Smith (Associate Adviser), Sammons, Goodman, Dahl,
13°411dstone, Smith (Economist), Veenstra, and Glenn then withdrew from

the meeting.
17th Street National Bank.

At Chairman Martin's request Mr.

S°1°"n read a letter addressed to the Chairman under date of November 16,
1965' by Mr. Camp, Acting Comptroller of the Currency, in reply to the
?'"rd's letter of November 9 to the Comptroller regarding the 17th
Street National Bank of Denver, Denver, Colorado.
read a

Copy of

Mr. Solomon also

a letter that had been sent to the Comptroller by Chair-

Randall of the Federal Deposit Insurance Corporation.
There followed discussion of developments in the matter, including

a report by Governor Shepardson on a conversation he had had earlier

this
week in Denver with Vice President Snider and Cashier Stempel of

'

11/18/65

-4-

the Denver Branch, Federal Reserve Bank of Kansas City.

Among other

things, Governor Shepardson related certain remarks by Messrs. Snider
and Stempel indicating that the national bank's report of condition
as of October 13, 1965, may have given a misleading impression of the
banks condition.

The bank reportedly advised that the manner of

Presentation in the condition report had been sanctioned by the Office
°f the Comptroller of the Currency.
bat

4g

It was understood that steps were

taken by Messrs. Hackley and Solomon to obtain clarification.
Various other steps that might be considered by the Federal

Reserve in the current circumstances were discussed, and during the
discussion Chairman Martin was twice called from the meeting to receive
t

-ePhone calls from Treasury Under Secretary Barr.

Chairman Martin

t'ePorted that according to Mr. Barr the matter of the bank's condition
'was being brought directly to the attention of the Comptroller of the
Curre

neY, who was presently out of the country.

The discussion con-

ed with a comment by Chairman Martin that he felt the Board had
made 4
Its position clear through the sending of its November 9 letter
to the
Comptroller, with copies to Treasury Secretary Fowler, Under
Seer

etarY Barr, and Chairman Randall, and it was understood that no

(irther

steps were contemplated at the moment by the Board except to

°I)tel° a complete report on the aforementioned question concerning the
e°11dition statement.
All members of the staff except Messrs. Sherman and Kenyon
then

withdrew from the meeting.

4

11/18/65

-5-

Program to improve service to the public (Items 7 and 8).

Ref-

erence was made to a memorandum from President Johnson to the heads of
departments and agencies dated November 1, 1965, relating to a program
aimed at improving further the quality of service rendered to the public.
The memorandum indicated that Chairman Macy of the Civil Service Commission had been placed in charge of this effort, with responsibility
for coordinating the activities of each department and agency and rendering periodic reports to the President.

The memorandum requested

that the head of each department and agency assign a top person to
develop the program within the particular organization, that the name
of the official selected be forwarded to Chairman Macy, and that a
report be made to Chairman Macy by December 15, 1965, on steps taken
arid

Plans for further improvement.
At Chairman Martin's suggestion, Governor Shepardson was des-

-14aat.tA

as the member of the Board who would have responsibility for

directing

within the Board's organization, the development of a pro-

such as described in the President's memorandum.

A copy of the

letter sent to the Chairman of the Civil Service Commission reporting
his designation is attached as Item No. 7.
At the instance of Governor Shepardson, there followed discusS

of the question of exploring the various services rendered to the
Publi
tior

by the Federal Reserve Banks, and it was understood that Gover-

Shepardson would pursue this phase of the matter through the

-

11/18/65
Conference

-6of Presidents of the Federal Reserve Banks.

A copy of a

letter sent to the President of the Federal Reserve Bank of Boston is
attached as Item No. 8; similar letters were sent to the other Reserve
Bank Presidents.
The meeting then adjourned.
Secretary's Notes: Pursuant to the action
taken by the Board on November 8, 1965, it
had been ascertained that Kenneth H. Hannan,
Executive Vice President of Union Carbide
Corporation and currently a Class B director
of the Federal Reserve Bank of New York,
would accept appointment, if tendered, as a
Class C director of the Bank for the threeyear term beginning January 1, 1966. Accordingly, a telegram was sent today to Mr. Hannan
informing him of his appointment as Class C
director for the term indicated and as Deputy
Chairman of the Bank for the year 1966.
Governor Shepardson today approved on behalf
of the Board memoranda recommending the following actions relating to the Board's staff:
Salar

increases

Name and
title

effective November 21 1 1965

Division

Basic annual salary
To
From

Office of the Secretary
T. Colwell, Records Clerk
11' Elizabeth Jones, Technical Assistant
.
:
J r garet J. Moister, Supervisor, Subject Files
-alltle Krieger Semia, Technical Assistant

$ 4,641
10,185
7,304
10,185

$ 4,797
10,491
7,511
10,491

7,479

7,733

17,055
5,523
15,696

17,645
5,694
16,204

Legal
bavid

Robinson, II, Attorney
Research and Statistics

kurt.

steVaY Altmann, Senior Economist
Ot il?na P. Smith, Statistical Assistant
v--.1-e K. Thompson, Economist

•
11/18/65

-7-

-§, lay increases, effective November 21

1965

(continued)
Basic annual salary
To
From

Division
Examinations
8. A. Dittrich, Senior Federal Reserve
,.Examiner
william E. Rumbarger, Review Examiner

$12,945

$13,380

9,879

10,185

4,149
4,102
4,514
3,943

4,641
4,221
4,742
4,072

6,278
8,241

6,470
8,961

6,470

6,662

Administrative Services
4.enda D. Eyler, Stenographer
Mary K. Nantell, Cafeteria Helper
Charlie
H. Ward, Lead Laborer
Walter L. Worthy, Jr., Mail Clerk
Office of the Controller
:
,
1ean S. Barber, Accounting Clerk
40bert S. McClellan, Analyst
Data Processing
Kathr yn A.
Jackson, Statistical Assistant
Sala
.
-----4X„...1ncrease L_-effective December 5, 1965
Judith L. Meyer, Stenographer, Division of International Finance,
111 $4,149 to $4,641 per annum.

of t Barbara Wilson, from the position of Stenographer in the Division
al* Operations to the position of Stenographer in the Division of
ratenational Finance, with no change in basic annual salary at the
of $4,797, effective November 21, 1965.

:

Secretary

:17C_
Item No.
11/18/65

BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551

orriciAt. CONREMPONOCHCC
TO THE BOARD

November 18, 1965.

Board of Directors,
The Detroit Bank and Trust Company,
Detroit, Michigan.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by The Detroit Bank
and Trust Company, Detroit, Michigan, of a branch at the
southeast corner of Ann Arbor Road and Lilley Road,
Plymouth Township, Wayne County, Michigan, provided the
branch is established within six months from the date
Of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)

-

•40,

BOARD OF GOVERNORS
OF THE

Item No. 2
11/18/65

FEDERAL RESERVE SYSTEM
WASHINGTON, 0. C. 20531
ADORES/

orriciAL

CORRESPONDENCE

TO THE SOAP°

November 18, 1965.

Board of Directors,
Bank of the Commonwealth,
Detroit, Michigan.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by Bank of the
Commonwealth, Detroit, Michigan, of a branch at 11531
Belleville Road, Van Buren Township, Wayne County,
one
Michigan, provided the branch is established within
year from the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-l846), should be followed.)

ry vos,

BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM

E :e
t

Item No. 3
11/18/65

WASHINGTON, O. C. 20531

•

atromeas orricom. OOMNCOPONOOPiet
TO THE 00A000

November 18, 1965.

Board of Directors,
Bank of the Commonwealth,
Detroit, Michigan.
•

Gentleme •
The Board of Governors of the Federal Reserve
System approves the establishment by Bank of the
Commonwealth, Detroit, Michigan, of a branch at 33500
Earle Memorial Highway (Van Dyke Road), Sterling Township,.
Macomb County, Michigan, provided the branch is established
within one year from the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke

Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)

„•....
OF Cot,•
•
4)*
'
:

4'1C)/1:•

(

BOARD OF GOVERNORS

Item No. 4
11/18/65

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20351
ADDRESS

orriciAL

CORRESPONDENCE

TO THE BOARD

November 18, 1965.

Bank of America National Trust
and Savings Association,
300 Montgomery Street,
San Francisz:o, California. 94120
Gentlemen:
The Board of Governors of the Federal Reserve System
grants its permission to Bank of America National Trust and Savings
Association, San Francisco, California, pursuant to the provisions
of Section 25 of the Federal Reserve Act, to establish a branch
in the City of Saigon, South Vietnam, and to operate and maintain
such branch subject to the provisions of such Section and of
Regulation M.
Unless the branch is actually established and opened for
b usiness on or before November 1, 1966, all rights granted hereby
Shah l be deemed to have been abandoned and the authority hereby
granted will automatically terminate on that date.
As you are aware, with respect to the establishment of
foreign branches, funds provided by home office (whether in the
form of allocated capital, advances, or otherwise) should be re8arded as foreign assets for purposes of the voluntary foreign
credit restraint effort.
Please inform the Board of Governors, through the Federal Reserve Bank of San Francisco, when the branch is opened for
,usiness, furnishing information as to the exact location of the
oranch. The Board should also be promptly informed of any future
change in location of the branch within the City of Saigon.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.

florayt.,rBOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM

Item No. 5
11/18/65

WASHINGTON, D. C. 20551
ADDRESS OIFICIAL CORRESPONDENCE
TO THE BOARD

November 18, 1965.

Board of Directors,
Georgia Railroad Bank & Trust Company,

Augusta, Georgia.
Gentlemen:
e
The Board of Governors of the Federal Reserv
of
6
ph
paragra
of
ons
provisi
Systam Approves, under the
n 5199(b)
Section 9 of the Federal Reserve Act and Sectio
of a
tion
declara
the
es,
Of United States Revised Statut
Trust
Se
Bank
ad
Railro
dividend of $93,750 by Georgia
letter does
Company, payable December 31, 1965. This
ds that
dividen
of
tion
not authorize any future declara
ing
forego
the
under
would require the Board's approval
statutes.
Very truly yours,
(Signed) Karl E. Bakke

Karl E. Bakke,
Assistant Secretary.

Item No. 6
11/18/65
BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON
OFFICE OF THE CHAIRMAN

December 14, 1965

The Honorable Wright Patman, Chairman,
2°118a Banking and Currency Committee,
2129 Rayburn House Office Building,
W
ashington, D. C. 20515
33eal' Mr. Chairman:
the
In response to your letter of April 14, 1965,
Banking
of
re
enclosed document "Developments in the Structu
ta the Early 1960's," has been prepared by the Board staff.
ed
The format and content of this report were develop
your
of
members
,11118uant to subsequent discussions between
1)
alittee staff and the Board staff. Generally, the report
°11aws a format similar to that of two previous studies done
.
the Senate's Select Committee on smAil Business. However,
Ile discussion of State banking structure developments and
ed
,„:—Atsas in concentration levels has been considerably amplifi
litan
Metropo
d
Standar
of
aspects
Zd a section discussing similar
added.
"atistical Area activity in these two areas has been

r

Sincerely yours,
(Signed) Wm. McC. Martin, Jr.
McC. Martin, Jr.
41.c1o8ure.

k,)

Item No. 7
11/18/65
BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINEITON
°MOIL or THE CHAIRMAN

November 24, 1965.

Dear .John:
With reference to the President's
Memorandum of November 1, 1965, the Board has
asked Governor Shepard son to assume the responsibility for reviewing the quality of service
given by the Board and its staff to the public.
We also note that a report is to be
sent to you by December 15 as to plans for
further improvement in the quality of service
being given by the Board's organization.
Sincerely yours
(Signed) Bill
PUG MC. Martin, Jr.

The Honorable John W. Macy, Jr.,
Chairman,
United States Civil Service Commission,
Washington, D. C. 20415.

C':
kik)

Item No. 8
11/18/65
BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON
OFFICE OF THE CHAIRMAN

November 26, 1965

Mr. George H. Ellis, President,
Federal Reserve Bank of Boston,
Boston, Massachusetts 02106.
Dear George:
Enclosed is a copy of a memorandum from President
Johnson dated November 1, 1965, which is accompanied by a report
that he received from John Macy, Chairman of the United States
Civil Service Commission, dealing with improving communications
and contacts of Government departments and agencies with the public.
The Board has discussed the subject covered by this
memorandum and it is, of course, in full accord with the general
objectives set forth. It has asked Governor Shepardson to assume
the responsibility for reviewing the quality of services given by
the Board and its staff and to develop improvements where desirable.
The Board believes that all of the Federal Reserve System
xyould wish to and should be included in a program for providing the
best Possible service to the American public, as reflected in not
?nlY its policy decisions but in its operations and individual conThe President's communication provides an opportunity for
the Board and all of the Reserve Banks to review present practices
c ld to develop improved service wherever feasible. Governor
T
hepardson will be in touch with the Chairman of the Conference of
;
residents regarding steps that might be taken throughout the System
,
Lo help further this objective.
Sincerely yours,
(Signed) Bill
Wm. McC. Martin, Jr.
Enclosure