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/63
Minutes for November 20, 1963
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, 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. Mitchell
4068
ve
Minutes of the Board of Governors of the Federal Reser
System on Wednesday, November 20, 1963. The Board met in the Board
Room at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Balderston, Vice Chairman
Mills
Robertson
Shepardson
Mitchell
Sherman, Secretary
Kenyon, Assistant Secretary
Molony, Assistant to the Board
Hackley, General Counsel
Noyes, Director, Division of
Research and Statistics
Mr. Farrell, Director, Division of
Bank Operations
Mr. Solomon, Director, Division of
Examinations
Mr. Connell, Controller
Mr. Shay, Assistant General Counsel
Mr. Daniels, Assistant Director,
Division of Bank Operations
Mr. Goodman, Assistant Director,
Division of Examinations
Mr. Sprecher, Assistant Director,
Division of Personnel Administration
Mr. Bass, Assistant Controller
Mr. Mattras, General Assistant, Office
of the Secretary
Mr. Doyle, Attorney, Legal Division
Mr.
Mr,
Mr.
Mr.
Mr.
ut change by the
Discount rates. The establishment witho
Peaerai Reserve
of the rates on
Bank of Atlanta on November 18, 1963,
was approved unanimously,
cliseoUnts and advances in its existing schedule
the understanding that appropriate advice would be sent to that Bank.
The following items, copies
Circulated or distributed items.
or
rs
Ikich are attached to these minutes under the respective item numbe
l'ililmated, were approved unanimously:
4069
11/20/63
-2Item No.
Memorandum from the Office of the Controller dated
November 6, 1963, recommending the adoption of a
1?°11cY covering the payment of expenses incurred
incident to the death of an employee while in
official travel status.
1
Letter to Chase International Investment CorporaNew York, New York, rescinding certain
conditions relating to investment in stock of
Arcturus Investment & Development, Ltd., Montreal,
Callada.
2
Letter to the Presidents of all Federal Reserve
!l_lks advising of Board concurrence in proposed
C4614algeS in the uniform protest instructions
ontained in the operating circulars of the
;
ederal Reserve Banks relating to cash items.
Letter to the Federal Housing Administration with
::gard to the possibility of obtaining the services
h Mr. Louis Teitlebaum for consultation on the
:
;Ze of statistical sampling in examinations of
"ue Federal Reserve Banks.
3
14.
In connection with Item No. 2, Mr. Goodman verified that the
terlms of the letter were harmonious with the provisions of Regulation K,
C°rPorations Engaged in Foreign Banking and Financing Under the Federal
Ileserve Act, as revised September 1, 1963.
Federal Reserve notes (Item No. 5). There had been distributed
Cil'aft of press release regarding the issuance of new $1 Federal Reserve
11*tes. The draft, in its present form, reflected consideration of comments
recelved from the Federal Reserve Banks in response to the Board's request
to
their suggestions concerning a previous draft.
Mr. Farrell reported that the proposed release had been concurred
bY the Treasury Department subject to certain minor changes, which
Ile described.
40?()
11/20/63
-3-
Agreement was then expressed with the press release, with the
lulderstanding that it would be issued on November 25, 1963.
Secretary's Note: A copy of the press
release, which was issued on November 26,
1963, rather than November 25, is attached
as Item No. 5.
Establishment of branches by foreign banking subsidiaries
item No.
. There had been distributed a memorandum from the Division
6)
er Examinations dated November
8, 1963, regarding a request from Chase
Manhattan Overseas Banking Corporation) New York, New York, for a waiver
of the requirement for prior consent of the Board to the establishment
new branches by Banco Lar Brasileiro, Rio de Janeiro, Brazil, or by
13alico Mercantil y Agricola, Caracas, Venezuela, both subsidiaries of
°haze.
The memorandum recommended that the Board approve a procedure
14volving a minimum of reporting requirements for the establishment of
branches in the country of domicile of a foreign bank controlled by a
c°11Doration operating under the provisions of section 25 or 25(a) of
the Federal Reserve Act.
The first procedure suggested would require
that the section 25 or 25(a) corporation advise the Board of the interition of its subsidiary foreign bank to establish other branches or
61;12"enCies in the country, under Regulation M procedure, unless otherwise
71.sed by the Board.
The second alternative would provide that, subject
to continuing observation and review, the Board would suspend until
ther notice the requirements with respect to prior consent to the
4O7
11/20/63
establishment of a branch or agency in the country, provided the Edge
°r agreement corporation notified the Board within 30 days of the
establishment of each branch or agency. The third alternative procedure,
and the one preferred by the Division of Examinations, would provide
that stibject to continuing observation and review, the Board would suspend
December 31, 1965, (with the right to terminate the authorization
111)014 90 days, written notice) the requirement with respect to prior
coasent to the establishment of a branch or agency in the country, proChase Manhattan Overseas Banking Corporation notified the Board
Ptonlptly of the establishment of each additional branch or agency by
it8
foreign subsidiary banks.
In reply to a question from Governor Balderston, Mr. Goodman
e3tPressed the view that a suspension, rather than outright waiver, of
the requirement for obtaining prior consent would have the advantage
(It Permitting the Board to look at the situation again after a few
rs of experience to see if the procedure was working out satisfactorily.
'
ha
It 40t, the suspension could be allowed to lapse.
4451
He indicated that he
no strong conviction as to which of the three alternative procedural
1)°13s1bilities outlined in the memorandum would be the best.
Governor Robertson indicated that he saw no good reason for
4tterentiating between Edge corporations, on the one hand, and national
- 4413
'
on the other hand.
In reply, Mr. Goodman noted that the provisions of Regulation M
4144e to branches of national banks and that, by virtue of Regulation H,
4 O72
11/20/63
Such provisions are extended to foreign branches of State member banks.
It might be said, be thought, that there was some reason for closer
stPervision in the case of direct foreign branches of a member bank
than in the case of branches of a foreign bank controlled by an Edge
Or agreement corporation.
In theory there was a difference.
In practice,
as admittedly hard to see much difference, but perhaps there was
sate basis for allowing greater latitude in the case, for example, of
the establishment of a branch in Brazil by a Brazilian bank awned by
1341 Edge corporation than in the case of the establishment of a branch
it Brazil by a member bank.
Governor Mills expressed agreement with the view, previously
indicated by Governor Robertson's comment, that the Board should be put
°4 notice of the proposed establishment of a branch by a foreign subsidIA wt.
bank of an Edge or agreement corporation. This would impose no
84hstantial burden, and the procedure would then be consistent with the
131
‘
°cedure prescribed under Regulation M.
Governor Balderston likewise indicated that he saw a virtue in
onsistency.
Mr. Solomon acknowledged that persuasive arguments could be
Qtrered for treating foreign subsidiary banks in the same way that their
PEtrent institutions or national banks were treated. He felt, however,
th 4.ua
the Board might be interested in the arguments presented by Chase,
%I'll-eh pointed out that when it went into a foreign country through a
1°e4113r organized institution it counted on the participation, support,
Or?
-6-
11/20/63
ad active cooperation of the local people.
Of course, when an Edge
°r agreement corporation held a majority of the stock of a local
institution it could clearly call the tune, so it could be said that
the Board would be justified in laying down the same rules as for the
Parent corporation.
However, an organization like Chase would contend
that it wanted the local interests to feel a sense of initiative and
resPonsibility.
It would maintain that it was difficult to convey this
1111Pression if the foreign bank made plans for another branch and were
told that those plans could not go forward until they were taken up with
the Board in Washington and there was a wait of 30 days to determine
Vhether the
Board had any objection.
An organization like Chase would
EtaY that it wanted to convey a degree of autonomy to the local people.
As the discussion proceeded, Mr. Goodman noted that whatever
Illteedure the Board prescribed for Chase, it probably would want to
Pliescribe also for other Edge and agreement corporations having substantial interests in foreign banking subsidiaries.
Governor Mills then referred to the limited experience under
the revised Regulation K and Regulation M.
He was apprehensive about
43N1-ng too fast without sufficient background.
Where no substantial
bur,A
-m.en was imposed, he saw an advantage in adhering to standard proat least until more experience was accumulated.
Governor Robertson spoke in favor of maintaining complete harmony
be
-"een procedures prescribed under Regulation K and under Regulation M.
eclisequently, he would require that the Board be advised of the proposed
r r7i/1
11/20/63
-7-
establishment of branches of foreign subsidiary banks of Edge or agreeMent corporations just as in the case of the proposed establishment of
r°reign branches of national banks.
This would be no great burden,
and he considered it a reasonable request to make.
Mr. Solomon commented, like Mr. Goodman previously, that presum8131Y the Board would want to follow a consistent policy for all comparably
situated Edge and agreement corporations.
He noted that there might
be some distinction between a situation where an Edge corporation held
the majority of the stock of a foreign subsidiary bank and one where
it owned a smaller percentage of the stock.
Governor Shepardson said he agreed completely with the thought
consistency.
Whatever was done for one ought to be made a rule of
general application.
He concluded that it might be well to follow the
rlr'st alternative procedure outlined in the memorandum from the Division
(1r Examinations, thus insuring complete consistency with the procedure
1)Ilescribed for nationnl banks under Regulation M, until the Board had
41-11ed more experience with the administration of the revised regulations.
The
argument Messrs. Solomon and Goodman had advanced might have some
V&Ildity, but he doubted that anyone would be hurt for the moment by
11°11owing the first alternative.
Governor Mitchell agreed with the view that adherence to the
41se procedure as Prescribed for national banks by Regulation M would
4(4 hurt anyone, even though he recognized that Chase desired to maintain
11/20/63
-8-
the fiction that the foreign subsidiary banks in Brazil and Venezuela
'ere local institutions.
He did not feel that the requirement for a
30-day waiting period after providing notice of the proposed establishment of a branch would present any practical problem.
It being understood, then, that the Board desired to reply to
the Chase inquiry by prescribing the procedure set forth as the first
Egternative procedure in the memorandum from the Division of Examinations,
MI'. Goodman inquired whether the Board would want to have brought back
t° it a draft of letter that might be sent to all Edge and agreement
orporations, other than Chase, having foreign subsidiary banks.
In
resPonse to a question, he enumerated the Edge and agreement corporations
that would be involved. There was then an indication of general agreeOn the part of the Board members that, since the basic principle
44 been decided, the staff would be authorized to prepare and send to
411 Edge and agreement corporations with foreign banking subsidiaries
letters embodying this principle and stating the procedure to be followed
14 connection with proposals by foreign banking subsidiaries to establish
111
'
411ches.
A copy of the letter sent to Chase Manhattan Overseas Banking
C°11)oration pursuant to the foregoing decision is attached as Item No. 6.
Messrs. Shay, Goodman, and Doyle then withdrew and Mrs. Sette
°Iller, Economic Editing, Division of Research and Statistics, entered
the room.
11076
11/2o/63
Format of Annual Report.
-9Mr. Noyes displayed a mock-up of the
Proposed format of the Board's 50th Annual Report, covering the year
1963, and discussed considerations involved in the proposal.
It was
indicated that the matter had been discussed with Chairman Martin, who
indicated that he would have no objection.
Expressions by the members of the Board being favorable, it
1418 understood that the 1964 budget would be prepared on the basis that
the proposed format would be used.
All of the members of the staff except Messrs. Sherman, Noyes,
41115. Sprecher then withdrew from the meeting.
Appointment of Vice President at Denver. There was discussion
c)t the proposal, as set forth in a letter from Deputy Chairman Simons
clkted November 14, 1963, for appointment of a Vice President of the
?ederea Reserve Bank of Kansas City who would be assigned in charge of
the Denver Branch to succeed Vice President Puckett, who was to retire
the end of this year. It was concluded that no action would be taken
(311 this matter until after there had been an opportunity for members
clt the Board to discuss the situation with Chairman Scott, Deputy
Che•irman Simons, and President Clay when they were in Washington during
the first week of December.
Greeting card. The format of a card that would convey the
11°41'd'a holiday greetings and recognize the 50th anniversary of the
Si,
€4ing of the Federal Reserve Act was brought to the attention of the
4077
11/20/63
Bo8rd.
-10-
The Board authorized going ahead with the obtaining of a supply
Of the cards for appropriate distribution, along with payment of the
necessary costs.
Appointment of First Vice President at Minneapolis (Item No. 7).
On October 14, 1963, the Board indicated that it would be prepared to
aPProve the appointment of M. H. Strothman, Jr., currently Vice President
ami General Counsel of the Federal Reserve Bank of Minneapolis, as First
Vice President of the Bank effective January 1, 1964, if such action
should be taken by the Board of Directors of the Bank.
Advice had now
been received that such action was taken by the directors at their
leeting on November 14, 19630 with salary fixed at the rate of $252000
13er annum for the period January 1 through December 31, 1964.
Mr. Strothman's appointment as First Vice President effective
441-14-17 10 1964, for the remainder of the term expiring February 281
1966, was approved unanimously, along with the payment of salary to him
at
the rate of $25,000 per annum for the period January 1 through Decem-
ber 31, 1964.
A copy of the letter sent to the Reserve Bank pursuant
t° this action is attached as Item No.
7.
The meeting then adjourned.
Secretary's Notes: In implementation of
action taken by the Board on October 9, 1963,
Governor Shepardson approved on behalf of
the Board on November 19, 19630 a revision
of paragraph 3 of Section B of the Board's
travel regulations, effective October 9, 1963,
to read as follows:
4078
11/20/63
-11-
3. Travel on official business outside the continental
United States shall be undertaken only when approved in advance
by the Board of Governors, except that travel to the States
of Alaska and Hawaii may be authorized and approved by the
designated Board Member or by the Division Head, whichever is
necessary to conform with paragraphs 1 and 2 of this Section.
Reimbursement for expenses of such travel shall be in accordance with the Standardized Government Travel Regulations, and
when, because of unusual circumstances, the prescribed per
diem rate is substantially less than the amount required for
actual subsistence expenses, the traveler may, when authorized, be
allowed actual necessary travel expenses.
In accordance with the recommendation contained
in a memorandum dated November 15, 1963, from
Mr. Koch, Associate Director, Division of Research
and Statistics, Governor Shepardson authorized on
behalf of the Board on November 19, 1963, a dinner
to be held on the evening of November 21 in connection with the "Laboratory on Regression" sponsored
by the System Committee on Computers in Research
and being held at the Board on November 21 and 22.
It was understood that the cost of the dinner for
approximately 75 persons would be about $530.
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:
increases
Nameitle
effective November 24, 1963
Division
Basic annual salary
From
To
Office of the Secretary
tialie B. Brawl Assistant Supervisor, Subject
m
Files
'
c Elizabeth Jones, Technical Assistant
mn'cli M. Karstetter, Secretary
garet J. Moister, Supervisor, Subject Files
eartne Krieger Semia, Technical Assistant
$ 5,885
6,055
81840
4,885
6,280
8,840
9,105
5,045
6,465
9,105
13,270
9,475
4,565
4,250
13,695
9,790
4,725
4,390
Research and Statistics
---aY Altmann, Economist
Pet
m er GajPwski, Economist
p:1'Y Anne McVeigh, Secretary
44Y Winters, Statistical Clerk
4079
11/20/63
-12-
increases, effective November 214-
Name and title
1963 (continued)
Division
Basic annual salary
From
To
International Finance
targaret H. Brewster, Clerk
riYart S. Sharigan, Secretary
$4,110
6,280
$4,250
6,465
5,51i.5
5,715
Bank Operations
'Cathryn A. Jackson, Statistical Assistant
Examinations
William E. Rudbarger, Review Examiner8
8,575 ,84o
Administrative Services
lii.telen L. Hulen, Chief, Publications Services
arY K. Nantell, Cafeteria Helper
7,800
3,665
8,025
5,375
5,514.5
3,770
Office of the Controller
aelln S. Barber, Accounting Clerk
Ace
e
ceof resignation
Joan B. Wilson, Editorial Assistant, Division of Administrative
vices, effective at the close of business November 22, 1963.
Secret
BOARD OF GOVERNuRS
OF THE
Item No. 1
11/2063
FEDERAL RESERVE SYSTEM
Correspondence
Board of Governors
overnor
Dee
4O80
November 6, 1963.
Subject:
liepardson.
-41.1-VALof the Controller______
During the current examination of the Omaha Branch of
the Federal Reserve Bank of Kansas City,Senior Examiner Jerome T.
, 11eY died on November 1, 1963, Mr. Kelley was in travel status,
7a3hington, D.C., was his headquarters, and his residence was
naltimore, Maryland. So far as is known, this is the first case
in the history of the Board of an employee dying while in a.travel
etatus.
5
The Board has no established policy governing expenses
incurred for the preparation and transportation of the remains of
IT employee who dies while in an official travel status. Therefore,
order to set a policy that will coincide with the Government
Practice, the following recommendations are submittedt
Recommendations
That in the event of death of an officer or employee of
!he Board, including that of the present decedent Mr. Jerome T.
:
elleY2 while in official travel status within or outside the contim
tel limits of the United States, the Board pay either direct or
41 a reimbursable basis, the costs enumerated and within the limim
ations prescribed in Executive Order 85572 as amended.
i
Further, that for such travel the necessary costs of
transportation of the personal baggage of the decedent be allowed,
iect to the provisions of the Standardized Government Travel Rogue.
ti°11s governing the payment of charges for transportation of baggage
eenerally
•
Ir
The Government practice in respect to defraying these
ets is based upon the Act of July 8, 1940 (54 Stat 743), and
ecutive Order 8557 dated September 30, 19402 as amended. The
Zecntive Order prescribes the necessary regulations required by
;le Act and the pertinent parts of the Order are attached for the
44rdt s information. It is to be noted the policy applies to of:
t Lea travel both within and outside the continental limits of
e United States (the original 48 States).
Z
Attachment
-.
Division of Personnel Adminis
EXECUTIVE ORDER NO. 8557
(Dated September 30, 1940)
4.081
PART II-PREPARATION AND TRANSPORTATION OF THE REMAINS OF EMPLOYEES
DYING WHILE IN A TRAVEL STATUS AWAY FROM THEIR OFFICIAL STATION
AND WITHIN THE CONTINENTAL LIMITS OF THE UNITED STATES
Section 2. When an employee dies while traveling on official
business within the continental limits of the United States, the
head of the department concerned shall pay the expenses of preparing
the remains of the decedent and of transporting the remains to the
home or official station of the decedent or to such other place as
the head of the department may designate as the appropriate place of
interment, provided that in no case shall the expenses payable be
greater than the amount which would have been payable had the place
of interment been the home or official station, whichever shall be
more distant.
Section 3. Preparation of Remains..The costs of preparation
Of remains allowable under section 2 of these regulations shall in.
elude the costs of embalming, cremation, necessary clothing, and
Casket. The total amount Allowed for such preparation shall not
exceed
.The costs of trans.
Section 4. Transportation of Remains.
portation of remains allowable under section 2 of these regulations
shall include the costs of removal of the remains from the place
where death occurred to an undertaking establishment, procurement of
burial and shipping permits, furnishing an outside case for shipment
(including, when necessary, the sealing of such shipping case),
removal to a common carrier, transporting the body by common carrier,
and one removal at the place of interment from the common carrier
to an undertaking establishment or other place of immediate delivery.
Instead of conveyance by common carrier, removal of the remains over.
land by hearse (including ferry charges, bridge tolls, and similar
items) may be allowed, provided that the total charges for trans—
Portation Shall not exceed the total costs of transportation had
Conveyance been made by common carrier. If conveyance is by hearse,
no allowance shall be made for an outside shipping case.
21
Increased from $100 by Executive Order 10209 issued in 1951.
-2OF EMPLOYEES
PART III.-PREPARATION AND TRANSPORTATION OF REMAINS
ENTAL
LIMITS
DYING WHILE IN A TRAVEL STATUS OUTSIDE THE CONTIN
E
POST
A
OUTSID
TO
OF THE UNITED STATES OR WHILE ON ASSIGNMENT
THE UNITED STATES
on official
Section 5. When an employee dies while traveling
of the United States or
business outside the continental limits
while on assignment to a post outside the United States, the head
of the department concerned shall pay the expenses of preparing
the remains of the decedent and of transporting the remains to the
home or official station of the decedent or to such other place
as the head of the deparLment may designate as the appropriate
Place of interment, provided that in no case shall the expenses
Payable be greater than the amount which would have been payable
had the place of interment been the home or official station,
Whichever shall be more distant°
am
Section 6. Preparation of Remains. The costs of prepar
5
n
of
sectio
these
tions
regula
under
le
tion of remains allowab
shall include all the ordinary costs of embalming, cremation,
necessary clothing, and a casket or container suitable for
Shipment to the place of interment° There shall also be allowed
any expenses necessarily incurred in complying with local laws
and laws at the port of entry in the United States relative to
the preparation of dead bodies for transportation and burial,
Section 7. Transportation of Remains° The costs of trans.
n 5 of these reguportation of remains allowable under sectio
l of the decedent's
for
remova
s
charge
lations shall include the
d
to an undertaking
occurre
death
remains from the place where
t to a common
aking
ishmen
undert
establ
establishment, from the
of
the
place
interment,
to
r
carrie
carrier, thence by common
ent
common carrier.
interm
the
from
of
and one removal at the place
by common
means
than
other
by
The remains may be transported
r is
by
carrie
nce
common
conveya
carrier, provided that when
such
of
e
the
expens
toward
allowed
available there shall be
of the sum allow.
Other transportation an amount not in excess
carrier,
by
common
rted
transpo
able had the remains been
4083
Item No. 2
11/20/63
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
November 20, 1963.
Victor E. Rockhill,
esident,
. 114se International Investment Corporation,
4 Chase Manhattan Plaza,
New York, New York 10005.
Pr
ear Mr. Rockhill:
g
Reference is made to your letter of December 27, 1962 regardin
the
to
d
McCloy,
Mr.
J.
addresse
John
1954
a Board?s letter of December 29,
I:airman, Board of Directors, The Chase Bank [now known as Chase Intering conditions to the
,
itional
Investment Corporation ("CIIC")] prescrib
be
to
ion
organized under the
restment by The Chase Bank in a corporat
was
ntly formed under
ion
subseque
corporat
Canadian
tE!'''s of Canada. The
he name
ent, Ltd. ("Arcturus") and it
Developm
&
nt
Investme
of Arcturus
8 understood CIIC presently owns all of the outstanding shares of Arcturus.
to
n
2 in the attachment
Your letter referred to conditio numbered
the Board's letter of December 29, 1954 which provided:
not, without the prior
"2. The Canadian corporation will
engage or participate in
s,
Governor
of
approval of the Board
the public sale or distribution of securities or the underwriting
basis) directly or indirectly,
thereof (except on a mere standby
Chase
in any foreign country in which The Chase Bank or The
the confor
a
branch
York has
National Bank of the City of New
duct of depositary banking."
numbered "3" in the Board's letter
letter also referred to condition
and Arcturus to purnuary 20, 1960 granting general consent to CIIC
c har,
of
corporations.
'e and hold stock in generally designated types
of
letter states that it would
The concluding paragraph of your
s with respect to Edge Act
Governor
of
that the policy of the Board
in that no prohibition
altered
been
has
18 PcIrations and their subsidiaries
or
their
ions
corporat
subsidiaries engaging
11°w being imposed upon such
country
in which the parent
foreign
a
ba,lhe business of underwriting in
or the Edge Act corporation carries on depositary banking. In the
Governors confirm to you that
thecumstances, you asked that the Board of
longer
applicable to CIIC or Arcturus.
no
aforementioned conditions are
;Pear
Q
period
As you will recall, your letter was received during the
whe
gly,
Accordin
" Regulation K was being reviewed for purposes of revision.
4084
!WARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Mr. Victor E. Rockhill
-2-
consideration of Your request was deferred pending the adoption of
4 revised Regulation K which became effective September 1, 1963.
As to the provision in the Board's letter of January 20, 1960
granting general consent to CIIC and Arcturus, on September 12, 1963 you
were advised that, in view of the adoption of the revised Regulation K
Which contains in Section 211.8(a) a General Consent for investment in
!hare s of other corporations in certain situations, the general consent
ln the Board's letter of January 20, 1960 was terminated.
In view of the statutory limitations in Section 25(a) with respect
to the activities of corporations organized thereunder and the restrictions
and limitations
now contained in the Board's Regulation K, as revised effectlye September 1, 1963, the Board hereby rescinds all of the conditions
Prescribed in its letter of December 29, 1954 regarding the proposed acquisit1(3n of shares of the Canadian corporation subject to the condition that:
CIIC shall not hold any shares of stock in Arcturus (a) if Arcturus
at any time fails to restrict its activities to those permissible
to a corporation in which a corporation organized under Section
25(a) of the Federal Reserve Act could, with the consent of the
Board of Governors, purchase and hold stock, or (b) if Arcturus,
directly or indirectly, takes any action or engages in any operation in Canada or elsewhere, in any manner, which at the time
Would not be permissible if Arcturus were a corporation organized
under said Section 25(a).
In
this connection, however, your attention is called to the provisions of
Saection 211.8—Investments in Shares of Other Corporations of Regulation K,
whic
revised effective September 1, 1963, and particularly to subsection (c)(1)
h relates to Conditions, as follows:
"Shares of stock in a
as practicable if (0
ness of underwriting,
United States or (ii)
that their holding is
Act or this part."
corporation shall be disposed of as promptly
such corporation should engage in the busiselling, or distributing securities in the
the Corporation is advised by the Board
inappropriate under section 25(a) of the
The Board believes that Arcturus should not be permitted to make
ve
of bi stments in, and loans to, any one person, as defined in Section 211.2(e)
ex,'‘egulation K, in amounts which, combined with those to such person by
wou , would be in excess of that permitted to CIIC. Accordingly, the Board
regard the limitations on CIIC as applicable to the investments (inding loans) of CIIC and Arcturus on a combined basis.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
N6I ti85
20/63
Item
BOARD OF' GOVERNORS
OF THE
S-1901
FEDERAL RESERVE SYSTEM
WASHINGTON 28. D. C.
AOOPIESE OFFICIAL. CORRESPONDENCE
TO THE OCIAIIIC
November 20, 1963.
Under date of October 18, 1963, Mr. Deming, Chairman of the
CaZittee on Collections and Accounting of the Conference of Presidents,
to all members of the Conference of Presidents a memorandum requesting
e41ndication whether they approved a letter report of the Subcommittee on
27 .ctions and the Subcommittee of Counsel on Collections dated September
and the course of action outlined in his memorandum, with respect
0'
opr°Posed changes in the uniform protest instructions contained in the
t'ating circulars of the Federal Reserve Banks relating to- cash items.
By a letter dated November 8, 1963, Mr. Deming has advised the
44tapprci that all members of the Conference of Presidents have indicated their
acti°val of the letter report of September 27, 1963, and of the course of
°II outlined in his memorandum of October 18, 1963.
The Board concurs in this action of the Conference of Presidents.
the paragraph regarding protest
ItNi tilngly, subparagraphs (1) and (2) of
operating
circulars of the Federal
kesew're advice of nonpayment in the
cash
of
items will be amended in
the t've Banks relating to the colrection
of
27, 1963, so that
report
September
the rrtanner recommended by the letter
(1)
and
(2)
of that paragraph
Ilit1i4troductory provisions and subparagraphs
read as follows:
"Federal Reserve Banks will receive, handle, and forward
cash items subject to the following uniform instructions rearding protest and wire advice of nonpayment except that
urilted States Government checks will not be protested:
"(1) PROTEST dishonored items of $1,000 and
-2r(a)
that appear on their face to be drawn
outside of the state in which payable,
except those bearing on their face the
A.B.A. no-protest symbol of a Federal
Reserve Bank or of a preceding bank
endorser, or
"(b)
that bear on their face the legend,
'PROTEST REQUIRED,' of a Federal Reserve Bank or of a preceding bank
endorser.
"(2) DO NOT PROTEST items of less than $1,000, or items
of $1,000 and over except those protestable under
subparagraph (1)."
It is understood that the effective date of this amendment will
be 1
, L eft to the discretion of the Chairman of the Subcommittee on Collec;(348 in order that it may be coordinated with the effective date of
tltnilar action to be taken by the Bank Management Committee of the American
ballkers Association with respect to the transit instructions of its member
!
a 4ks. It is also understood that, at the time of announcement of the
j'endment, the Federal Reserve Banks will issue a circular in substantially
44_i,form terms explaining the reasons for and the effect of the amendment,
crlo that such a circular is presently being drafted by the Subcommittee of
0°114sel on Collections in collaboration with the Chairman of the Subcommittee
4
Collections.
It is understood further that the Chairman of the Subcommittee on
dat'ections will wire each Federal Reserve Bank advice as to the effective
be e of the amendment and, in order that the issuance of the amendment may
med to coincide with the mailing of the ABA's communication to its
te
47ers, that he will also advise each Federal Reserve Bank of the mailing
e selected by the Bank Management Committee.
No change is being made in the protest instructions applicable to
collection of noncash items. Accordingly, the paragraph regarding "Proof t Practice in Absence of Instructions" contained in the operating letters
ef,the Reserve Banks regarding the collection of noncash items, as amended
kective May 1, 1959, will continue to read as follows:
the
"In the absence of specific instructions in the sending
bank's collection letter, this Bank will receive, handle, and
forward noncash items subject to the following protest instructions:
"(a) DO NOT PROTEST items of less than $1,000.
"(b) PROTEST dishonored items of $1,000 or over,
except bonds, debentures, coupons, and
other similar securities."
408'
-3This letter supersedes the Board's letter of March 10, 1959,
(S-1690) now contained in F.R.L.S. #4511. The present letter will appear
in the Federal Reserve Loose-Leaf Service as #4368.
Very truly
Merritt
Secre
IO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
rs,
4088
Item No,
BOARD OF GOVERNORS
4
11/20/63
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25. O. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
November 20, 1963.
Mr. Carlos Starr,
DePuty Associate Commissioner for Management,
Federal Housing Administration,
14ashington, D. C. 20411
Dear Mr. Starr:
Mr. Frederic Solomon, Director of the Board's Division
,'
ctf.Examinations, has had informal discussions with Mr. Louis
Aeltlebaum, Director, Audit and Examination, Federal Housing
ministration, regarding the possibility that Mr. Teitlebaum
"
trI
uight provide some consultation and advice with respect to the
tse of methods of statistical sampling in the activities of the
hctard i s Division of Examinations. It appears that it might be
elPful if Mr. Teitlebaum could provide such ass4tance for a
&eriod of a few days, including a visit to a location away from
fashington. The Board would be pleased to provide reimbursement
a°r expenses, a fee, or both, in any manner that might be
TP?ropriate, either by payment to the FHA, or by payment to Mr.
oetItlebaum if he performed the services while on annual leave or
herwise off duty from your organization.
It would be appreciated if you would let us know
whethe
se_ . r you would have any objection to the performance of such
pri=vices by Mr. Teitlebaum, and whether you would have any
eference as to the nature of any such arrangements.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
November 26, 1963,
Por immediate release
l Reserve System and the
The Board of Governors of the Federa
than 50 million new $1
Treasury Department announced today that more
Issuance of the new
Pederal Reserve notes are going into circulation.
12
$1 notes, authorized by Congress last June, has already begun at all
cial banks in every
Federal Reserve Banks and their 24 Branches to commer
Part of the country.
This will make more silver available for coinage
demand for currency in connecPurposes and help to meet the increased
tion with pre-Christmas business.
the initial
To facilitate the widest possible distribution,
commercial
auFPly of the new notes is being distributed through normal
n notes will be available
banking channels; none of the first 50 millio
to the public at any of the Federal Reserve Banks or Branches.
y resemble the present
The new $1 Federal Reserve notes closel
replace completely.
41 silver certificates, which ultimately they will
Ihe back of the new notes and the portrait of George Washington on the
face will be exactly the same a
the silver certificates.
The main
of
difference will be the addition of a symbol, appearing to the left
Federal Reserve Bank, and the
the Portrait, identifying the issuing
wording on the face of the bill.
The notes bear the signatures of,the
er of the United States, as do
Se
tretary of the Treasury and the Treasur
Pederal Reserve notes of other denominations.
4090
-2The new notes will read (above the portrait):
"The United
States Of America" and (below the portrait) "One Dollar." The legend
Stating that the bill "Is Legal Tender For All Debts, Public and Private," appearing on the silver certificates will also appear on the
neW Federal Reserve notes, but the new notes will not contain any
reference to silver.
Thus, they will not carry the language:
"This
Certifies That There Is On Deposit In The Treasury Of The United States
Of America" (above portrait) and "One Dollar In Silver Payable To The
Bearer On Demand" (below the portrait).
currency
Federal Reserve notes have been the basic circulating
of the United States fcr many years, comprising over 85 per cent (more
on
than $30 billion) of the fa** amount of all currency in circulati
today.
They are backed 100 per cent by collateral in the form of
geld certificates, U. S. Government securities, or short-term paper
d iscounted or purchased by the Federal Reserve Banks.
4f 9.1
BOARD OF GOVERNORS
Item No.
OF THE
063
11/2
6
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADDRESS
orriciAL
CORRESPONDENCE
TO THE HOARD
November 21, 1963.
Ch Charles Cain, Jr., President,
Case Manhattan Overseas Banking Corporation,
Nehase Manhattan Plaza,
Y°rk, New York 10005.
44 Mr.
Cain:
Reference is made to your letter of October 16, 1963 again
•
toecillestlng
that the condition of prior consent of the Board of Governors
441the establishment of any branch by Banco Lar Brasileiro, Rio de
°, Brazil, and Banco Mercantil y Agricola, Caracas, Venezuela,
be
You state that, in view of the changes in Regulations K and
4lia
'
which the managements of the Venezuelan and Brazilian banks are
ap,rie, You are again being pressed by the managements of those banks to
"
..,Y for relief from this requirement.
This relates to the subject of your letter of January 3, 1963
41)out
kellth
matters previously discussed by Messrs. Agemian and Haberkern with
teive.is of the Board's staff. As you will recall, your letter was re'
during the period when Regulations K and M were being reviewed for
kirne
shi'°8es of revision, particularly in connection with the adoption of a
irlari''ified procedure with respect to the establishment of branches. AccordOf j
, final consideration of your request was deferred pending the adoption
teviue revised Regulation M, which became effective August 1, 1963, and the
sed Regulation K, which became effective September 1, 1963.
The Board feels that in cases where a Corporation operating under
4cti
the -°11 25 or 25(a) of the Federal Reserve Act holds 25 per cent or more of
hoov°ting shares of a foreign bank, a procedure similar to the modified
folledure set forth in § 211.6(b) of the revised Regulation K should be
foto°wed with respect to the establishment of branches or agencies of such
Nira'an bank. Therefore, the provisions of sub-paragraph (1) of the third
19 2gtaPh of the Board's letters to The Chase Manhattan Bank dated February 14,
egarding Banco Lar and May 2, 1962 regarding Banco Mercantil y Agricola
4horti°4ified so far as they relate to the establishment of any branch or
in Brazil in the case of Banco Lar or in Venezuela in the case of
4t1c,,
e
tlercantil, to provide that CMOBC shall dispose of its holdings in either
Npobank in the event that either establishes any branch or agency with
to which (1) the Board has not been given thirty days' prior notice
'the Board has interposed objection.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Mr, Charles Cain,
409"
_
The provisions of sub-paragraph (1) of the sixth paragraph
of the Board's letter to The Chase Manhattan Bank dated January
5, 1959
- regarding The Chase Manhattan Bank (South Africa) Ltd. and of sub'Paragraph (1) of the fourth paragraph of the letter dated December 16,
1960 regarding The Chase Manhattan Trust Corporation Limited, Nassau,
Bahamas, are also similarly modified so far as they relate to the establishment of any branch or agency, in the Republic of South Africa in
the case of the South African bank or in the
Bahamas in the case of the
Bahamian trust corporation.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
'
1.1,
4'1(4
,
'BOARD OF GOVERNORS
Item No.
OF THE
11/20/63
7
FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.
ADDRESS orrociAL CORRESPONDENCE
TO THE BOARD
November 20, 1963
CONFIDENTIAL (FR)
Mr. Atherton Bean, Chairman,
Federal Reserve Bank of Minneapolis,
Minneapolis, Minnesota. 55440 '
Dear Mr. Bean:
The Board of Governors approves the appointment of
Mr. Maurice H. Strothman, Jr., as First Vice President of
the Federal Reserve Bank of Minneapolis, effective January 1,
1964, for the unexpired portion of the five-year term that
began March 1, 1961.
The Board also approves the payment of salary to
Mr. Strothman as First Vice President at the rate of $25,000
Per annum for the period January 1 through December 31, 1964.
This rate, fixed by your Board of Directors, was reported in
Your letter of November 14, 1963.
Sincerely yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary:
@FedFRASER