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Minutes for November 20, 1964.
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.
Chm. Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Minutes of the Board of Governors of the Federal Reserve
System on Friday, November 20, 1964.
The Board met in the Board
Room at 10:00 a.m.
PRESENT:
Mt.
Mr.
Mr.
Mr.
Mills, Acting Chairman
Robertson
Shepardson
Daane
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Sherman, Secretary
Broida, Assistant Secretary
Molony, Assistant to the Board
Cardon, Legislative Counsel
Fauver, Assistant to the Board
Holland, Associate Director, Division
of Research and Statistics
Partee, Adviser, Division of Research
and Statistics
Sammons, Adviser, Division of International
Finance
Katz, Associate Adviser, Division of
International Finance
Reynolds, Associate Adviser, Division of
International Finance
Spencer, General Assistant, Office of
the Secretary
Axilrod, Chief, Government Finance
Section, Division of Research and
Statistics
Eckert, Chief, Banking Section, Division
of Research and Statistics
Keir, Chief, Capital Markets Section,
Division of Research and Statistics
Gemmill, Economist, Division of International
Finance
Furth, Consultant
Money market review.
There had been distributed tables afford-
Perspective on the money market for the period January - November 18,
1964/ and on bank reserve utilization for the period October 1963 - November'18, 1964, together with tables and a chart presenting certain data
°4 negotiable certificates of deposit at weekly reporting member banks.
11/20/64
-2-
Mr. Axilrod commented on developments in the Government
securities market, and Mr. Eckert discussed the level of reserves
and bank deposits.
Mr. Gemmill then reviewed developments in the
foreign exchange market, after which Mr. Katz presented a report
on current developments with respect to the British balance of
Payments situation.
During the foregoing presentation, the staff
responded to various questions asked by members of the Board based
On the reports that had been given.
Mr. Furth then withdrew, as did all members of the staff
except Messrs. Sherman, Sammons, and Spencer, and the following
Persons entered the room:
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Hackley, General Counsel
Hooff, Assistant General Counsel
Leavitt, Assistant Director, Division of Examinations
Egertson, Supervisory Review Examiner, Division of
Examinations
McClintock, Supervisory Review Examiner, Division of
Examinations
Lyon, Review Examiner, Division of Examinations
Poundstone, Review Examiner, Division of Examinations
Smith, Review Examiner, Division of Examinations
Discount rates.
The establishment without change by the
Pederal Reserve Banks of New York, Philadelphia, Richmond, Chicago,
and San Francisco on November 19, 1964, of the rates on discounts
4nd advances in their existing schedules was approved unanimously,
lith the understanding that appropriate advice would be sent to
those Banks.
11/20/64
Circulated or distributed items.
The following items, copies
Of which are attached to these minutes under the respective item
numbers indicated, were approved unanimously:
Item No.
Letter to The Chase Manhattan Bank, New York, New
York, approving the establishment of a branch at 1151
Hylan Boulevard, Grasmere.
1
Letter to Chase Manhattan Overseas Banking Corporation,
New York, New York, granting consent to acquire, either
directly or indirectly, shares of Banco Continental,
Lima, Peru.
2
Messrs. Sammons and Poundstone then withdrew from the meeting.
Report on competitive factors (York-Hanover, Pennsylvania).
A report to the Co4tro11er of the Currency on the competitive factors
involved in the proposed merger of First National Bank and Trust
Company of Hanover, Hanover, Pennsylvania, into National Bank & Trust
Company of Central Pennsylvania, York, Pennsylvania, was approved
unanimously for transmittal to the Comptroller.
The conclusion read
as follows:
There is little competition between National Bank &
Trust Company of Central Pennsylvania, York, and First
National Bank and Trust Company of Hanover.
Consummation of the proposed merger would add a
Significant volume of deposits to the now largest bank
Operating in the York and Harrisburg areas, and extend
that bank's operations into Hanover, thus exposing the
banks in the latter community and its immediate vicinity
to the competitive capabilities of a substantially larger
institution.
11/20/64
Report on competitive factors (Williamsport, Pennsylvania).
There had been distributed a draft of report to the Comptroller of the
Currency on the competitive factors involved in the proposed consolidation of The First National Bank of Williamsport, Williamsport, Pennsylvania, and Williamsport National Bank, Williamsport, Pennsylvania.
The report, in which the conclusion read as follows, was approved
unanimously for transmittal to the Comptroller:
The proposed consolidation of The First National Bank
of Williamsport and Williamsport National Bank would not
only eliminate the substantial amount of competition which
exists between participants but also would significantly
increase the concentration of banking resources in
Williamsport and Lycoming County. The competitive effects
of the proposed transaction would be clearly adverse.
Messrs. Egertson and McClintock then withdrew from the meeting.
Mount Clemens Industries Corporation (Items 3 and 4).
There
had been distributed a memorandum from the Division of Examinations
dated November 13, 1964, regarding a request of Mount Clemens Industries
Corporation, Bala-Cynwyd, Pennsylvania, for a determination exempting
it from all holding company affiliate requirements except those
contained in section 23A of the Federal Reserve Act.
The memorandum indicated that Mount Clemens Industries pro*P°sed to acquire a majority of the voting shares of Miami National
13411k) Miami, Florida.
Miami National was presently owned and controlled
by The Buckeye Corporation, New York, New York, which, in turn, was
11/20/64
..5..
Owned by Massachusetts Mohair Plush Co., Inc., New York, New York.
(Determinations exempting the two corporations from all holding
company affiliate requirements except those contained in section 23A
were granted on January 11, 1963.) Under the proposal that was
contemplated, Mount Clemens, which was owned by Buckeye, would acquire
from Buckeye the stock of Miami National; thereafter Mohair, Buckeye,
and Mount Clemens Industries would all be holding company affiliates
of Miami National.
The memorandum stated that the Division's recommendation for
a favorable determination was made on the basis of the Board's general
Policy applicable to one-bank cases.
Attached to the memorandum was
a draft of letter to Mount Clemens Industries Corporation that would
grant the requested determination.
Also attached was a draft of
letter to the Federal Reserve Bank of New York stating that the favorable determinations previously granted Massachusetts Mohair Plush Co.
and The Buckeye Corporation would remain in force and effect.
Governor Robertson commented that the application of Mount
Clemens Industries illustrated the undesirable type of development to
Ilbich he previously had objected in connection with granting favorable
determinations in so-called one-bank cases.
The letter to Mount Clemens Industries Corporation was then
al/Proved In the form of attached Item No. 3.
A copy of the letter
Sent to the Federal Reserve Bank of New York in connection with the
11/20/64
-6-
determinations previously granted Massachusetts Mohair Plush Co.
and The Buckeye Corporation is attached as Item No.
4.
Solar Investment Company and First National Bank of Pueblo
Item No.
5
There has been distributed a memorandum from the
Division of Examinations dated November 13, 1964, submitting a draft
Of letter addressed to Solar Investment Company, Inc., Pueblo, Colorado,
and The First National Bank of Pueblo, Pueblo, Colorado, granting
determinations that Solar Investment Company and First National
Bank were not holding company affiliates except for the purposes of
section 23A of the Federal Reserve Act.
During a brief discussion, Governor Robertson stated that he
Igas against granting a favorable determination.
In his opinion,
'First National Bank of Pueblo was using the device of a holding
company setup to facilitate the writing of insurance, and indirectly,
that bank was using Solar Investment Company to acquire Park National
Bank of Pueblo.
The device being used was merely for the purpose of
circumventing the law.
The letter to Solar Investment Company, Inc., and The First
National Bank of Pueblo was then approved, Governor Robertson dissenting.
A copy of the letter is attached as Item No.
5.
The meeting then adjourned.
Secretary's Note: Governor Shepardson today
approved on behalf of the Board memoranda
recommending increases in the basic annual
salaries of the following persons on the
Board's staff, effective November 22, 1964:
11/2o/64
-7-
Peter Gajewski, Economist, Division of Research and Statistics,
from $10,605 to $101960 per annum.
Denise C. O'Brien, Statistical Clerk, Division of Research and
Statistics, from $4,140 to $4,480 per annum.
Stephana Prager, Statistical Clerk, Division of Research and
Statistics, from $4,930 to $5,330 per annum, with a change in title
to Statistical Assistant.
Juliann Perkins, Maid, Division of Personnel Administration
$3,730
to $3,845 per annum.
from
Walter L. Worthy, Jr., Mail Clerk, Division of Administrative
Services, from $3,500 to $3,805 per annum.
3944
BOARD OF GOVERNORS
Item No. 1
ll/20/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICSAL CORRESPONDENCE
TO THE BOARD
November 20, .1964
Board of Directors,
The Chase Manhattan Bank,
New York, New York.
Gentlemen:
The Board of Governors of the Federal
Reserve System approves the establishment by
The Chase Manhattan Bank, New York, New York, of
a branch at 1151 Hylan Boulevard, Grasmere,
Borough of Richmond, New York, 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-1.846)1 should be followed.)
BOARD OF GOVERNORS
Item No. 2
11/20/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
November 20, 1964.
Chase Manhattan Overseas
Banking Corporation,
1 Chase Manhattan Plaza,
New York 15, New York.
Gentlemen:
In accordance with the request contained in your letter of
November 4, 1964, transmitted through the Federal Reserve Bank of
New York, and on the basis of information furnished, the Board of
Governors grants consent for Chase Manhattan Overseas Banking Corporation ("GMOBC") to purchase and hold, either directly, or indirectly
,t hrough an intermediary corporation to be formed under the laws of
veru for the sole purpose of holding such shares, approximately 51
Per cent of the voting shares, par value Soles 100 each, of Banco
Continental ("Banco"), Lima, Peru, at a cost of approximately
US$1,850,000, provided such stock is acquired within one year from
the date of this letter.
The Board also approves the purchase and holding of shares
°f Banco within the terms of the above consent in excess of 15 per
cent of CMOBC's capital and surplus.
The Board's consent to the proposed purchase and holding
°f shares of Banco by GMOBC is granted subject to the following conditions:
(1) That CMOBC shall not hold, directly or indirectly,
any shares of stock in Banco if Banco 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 if Banco
establishes any branch or agency or takes any
action or undertakes any operation in Peru or
elsewhere, in any manner, which at the time would
not be permissible if Banco were a corporation
organized under said Section 25(a);
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Chase Manhattan Overseas Banking Corporation
-2-
(2) That, when required by the Board of Governors,
CMOBC will cause Banco to permit examiners
selected or auditors approved by the Board of
Governors to examine Banco and to furnish the
Board of Governors with such reports as it may
require from time to time;
(3)
That CMOBC shall not carry on its books the
shares of Banco at a net amount in excess of
its proportionate share of the book capital
accounts of Banco, after giving effect to the
elimination of all known losses; and
(4) That any share acquisitions or dispositions by
Banco be reported under Section 211.8(d) of
Regulation K in the same manner as if Banco were
a corporation organized under Section 25(a) of
the Federal Reserve Act.
Subject to continuing observation and review, the Board
suspends, until further notice the provisions of subparagraph (1) of
the third paragraph of this letter so far as they relate to restrictions on loans granted by Banco in Peru in the currency of that country.
Upon completion of the proposed acquisition, it is requested
that the Board of Governors be furnished, through the Federal Reserve
Bank of New York, with a translation of the Articles of Association
and By-Laws of Banco Continental, including any new amendments. If
CMOBC acquires the stock of Banco through an intermediary corporation,
Please furnish pertinent details regarding the corporation, including
tr
anslations of the Articles of Association and By-Laws and a list of
°fficers and directors.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
BOARD OF GOVERNORS
Item No.
OF THE
11/20/64
3
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
November 20, 1964
Mr. J. C. Lepanto, Secretary,
Mount Clemens Industries Corporation,
10 Union Avenue,
Bala-Cynwyd, Pennsylvania.
Dear Mr. Lepanto:
This refers to the request contained in a letter dated
October 21, 1964, submitted to the Federal Reserve Bank of
13hiladelphia, for a determination by the Board of Governors of
the Federal Reserve System as to the status of Mount Clemens
Industries Corporation, Bala-Cynwyd, Pennsylvania, as a holding
company affiliate.
From the information presented, the Board understands
that Mount Clemens Industries Corporation, following its merger
with Mount Clemens Industries, Inc. (a Michigan corporation having
its principal office in New York City), will be engaged directly
in manufacturing and selling metal stampings and assembly parts to
the automotive industry; that its subsidiary companies will be engaged in various enterprises, including the production of decorative
Parts used in the appliance and automotive fields, the manufacture
Of heavy-duty trucks, tractors, and specialized equipment, and the
Production of structural components for aircrafts and missiles; that
,t will become a holding company affiliate if and when it acquires
362,276 shares, or approximately 81 per cent of the total outstanding
!hares, of Miami National Bank, Miami, Florida; and that it will not,
directly or indirectly, own or control any stock of, or manage or
control, any other banking institution.
view of these facts, the Board has determined that
Clemens Industries Corporation will not be engaged, directly
or indirectly, as a business in holding the stock of, or managing
o
banks, or trust
controlling banks, banking associations, savings
Act of
Banking
the
of
2(c)
ftpanies within the meaning of section
to be
deemed
be
not
will
it
233 (12 U.S.C. 221a); and, accordingly,
23A
section
of
purposes
the
7, holding company affiliate except for
.
(
Of
from the
the Federal Reserve Act and will not need a voting permit
Board of Governors in order to vote the bank stock which it will own.
Mount
I
3948
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Mr, J. C. Lepanto
-2-
If, however, the facts should at any time indicate that
Mount Clemens Industries Corporation might be deemed to be so
engaged, this matter should again be submitted to the Board. The
Board reserves the right to rescind this determination and make
further determination of this matter at any time on the basis of
the then existing facts, including additional acquisitions of bank
stocks even though not constituting control.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
949
BOARD OF GOVERNORS
Item NO.
OF THE
11/20/64
4
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
November 201 1964
Mr. Howard D. Crosse, Vice President,
Federal Reserve Bank of New York,
New York, New York. 10045
Dear Mr. Crosse:
On January 11, 1963, the Board issued determinations
that Massachusetts Mohair Plush Co., Inc., New York, New York,
and its subsidiary, The Buckeye Corporation, New York, New York,
were not deemed to be "holding company affiliates" with respect
to Miami National Bank, Miami, Florida, except for the purposes
of section 23A of the Federal Reserve Act.
Under a covering letter dated October 28, 1964, the
Board received from the Federal Reserve Bank of Philadelphia a
request for a similar determination by Mount Clemens Industries
Corporation, Bala-Cynwyd, Pennsylvania, a subsidiary of The
Buckeye Corporation, with respect to its ownership of control of
Miami National Bank which it proposes to acquire from The Buckeye
Corporation. Copies of (1) an October 21, 1964, letter from
Mount Clemens Industries Corporation, and (2) an October 21, 1964,
letter from The Buckeye Corporation and Massachusetts Mohair Plush
C0., Inc., were reportedly forwarded to your Bank by the Applicant.
In the latter-mentioned letter it was requested that the Board
determine that upon such acquisition of stock by Mount Clemens
Industries Corporation neither of the other two corporations would
be "holding company affiliates" except for the purpose of section 23A.
There is enclosed for your information a copy of the
CorporaBoard's letter of this date to Mount Clemens Industries
of
affiliate
!ion relating to its status as a holding company
recited
information
Miami National Bank. On the basis of the
therein, it appears that there has been no substantial change in
BOARD OF QOVERNORS OF THE FEDERAL RE ERVE SYSTEM
Howard D. Crosse
-2-
the factual situation which existed at the time of the Board's
January 11, 1963, determinations issued to Massachusetts Mohair
Plush Co., Inc., and The Buckeye Corporation. Consequently, it
is the Board's opinion that new determinations are not necessary
and the 1963 determinations by the Board remain in force and
effect. Please advise Massachusetts Mohair Plush Co., Inc.,
and The Buckeye Corporation accordingly.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
Enclosure
BOARD OF GOVERNORS
Item No.
OF THE
11/20/64
5
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
November 20, 1964
!r. R. B. Bailey, President,
oolar Investment Company, Inc.,
P. 0. Box 156,
Pueblo, Colorado.
Mr. R. B. Bailey, President,
The First National Bank of Pueblo,
P. 0. Box 156,
Pueblo, Colorado.
Dear Er, Bailey:
This refers to the requests contained in your letters
dated August 25, 1964, and November 4, 1964, submitted through the
Pederal Reserve Bank of Kansas City for determinations by the Board
.?.f Governors of the Federal Reserve System as to the status of Solar
:investment Company, Inc., and The First National Bank of Pueblo as
holding company affiliates.
From the information presented, the Board understands
tha t the objects and purposes for which Solar Investment Company,
was formed were to carry on a general real estate, insurance,
ollection, investment, brokerage, or other lawful business; that
defined by section 2(c)(1) of
i8 a holding company affiliate as
by reason of the fact that
221a)
re Banking Act of 1933 (12 U.S.C.
of capital stock of Park
shares
it owns all of the 25,000 outstanding
that
it owns 305 (.27) of
?ational Bank of Pueblo, Pueblo, Colorado;
National
150,000 outstanding shares of capital stock of The First
of
Bank
National
hank of Pueblo, Pueblo, Colorado; that The First
2(c)(2)
section
by
defined
4-uebl0 is also a holding company affiliate as
Solar
of
,
nrf such Act by reason of the fact that the common stock
vestment Company, Inc., is held by three trustees (M. D. Thatcher,
the
M. Farrar, and R. B. Bailey), for the pro rata benefit of
neither
that
!
to
Pueblo; and
ckholders of The First National Bank of
8.01ar Investment Company, Inc., nor The First National Bank of Pueblo,
irectly or indirectly, owns or controls any stock of, or manages
:
controls, any other banking institution.
l
p
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Mr. R. B. Bailey
-2-
In view of these facts, the Board has determined that
Solar Investment Company, Inc., and The First National Bank of
Pueblo are not engaged, directly or indirectly, as a business in
holding the stock of, or managing or controlling banks) banking
associations, savings banks, or trust companies within the meaning
of section 2(c) of the Banking Act of 1933 (12 U.S.C. 221a); and,
accordingly, they are not deemed to be holding company affiliates
except for the purposes of section 23A of the Federal Reserve Act
and do not need a voting permit from the Board of Governors in
order to vote the bank stock which they own or control.
If, however, the facts should at any time indicate that
Solar Investment Company, Inc., or The First National Bank of
Pueblo might be deemed to be so engaged, this matter should again
be submitted to the Board. The Board reserves the right to rescind
these determinations and make further determination of this matter
at any time on the basis of the then existing facts, including
additional acquisitions of bank stocks even though not constituting
control.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
@FedFRASER