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Minutes for November 25,1964
To:
Members of the Board
Prom:
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 proposed to place in the record of policy actions
required to be kept under the provisions of section 10 of the
Federal Reserve Act an entry covering the item in this set of
minutes commencing on the page and dealing with the subject
referred to below:
Page 19
Approval of a discount rate of 4 per cent
for the Federal Reserve Banks of Cleveland,
Richmond, Dallas, and San Francisco.
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.
Chairman Martin
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane
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Minutes of the Board of Governors of the Federal Reserve
System on Wednesday, November 25, 1964.
The Board met in the Board
Room at 10:00 a.m.
PRESENT:
Mr.
Mr.
Mr.
Mr.
Mr.
Martin, Chairman
Balderston, Vice Chairman
Mills
Shepardson
Daane
Mr. Sherman, Secretary
Mr. Young, Adviser to the Board and Director,
Division of International Finance
Mr. Molony, Assistant to the Board
Mr. Hackley, General Counsel
Mr. Farrell, Director, Division of Bank Operations
Mr. Solomon, Director, Division of Examinations
Mr. O'Connell, Assistant General Counsel
Mr. Shay, Assistant General Counsel
Mr. Goodman, Assistant Director, Division of
Examinations
Mr. Spencer, General Assistant, Office of the
Secretary
Miss Hart, Senior Attorney, Legal Division
Mr. Via, Senior Attorney, Legal Division
Mr. Forrestal, Attorney, Legal Division
Mr. Egertson, Supervisory Review Examiner,
Division of Examinations
Supervisory Review Examiner,
McClintock,
Mr.
Division of Examinations
Mr. Harris, Assistant Review Examiner, Division
of Examinations
Mr. Furth, Consultant
Distributed items.
The following items, COP-1_s of which are
4ttached to these minutes under the respective item numbers indicated,
were approved unanimously:
Item No.
to Morgan
l'etter
ii
Guaranty International Finance
New York, granting consent
York,
rporation, New
shares of Peruanoadditional
of
the purchase
Sociedad Anonima
Inversiones
iza de Fomento e
k Peruinvest"), Lima, Peru.
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-2Item No.
Te1egram to the Federal Reserve Bank of New York
authorizing the opening and maintenance of an
account in the name of the Bank of Zambia.
2
Mr. Furth then withdrew from the meeting.
Report on competitive factors (Circleville-Commercial Point,
°1110).
There had been distributed a draft of report to the Comptroller
Of the currency on the competitive factors involved in the proposed
merger of The First National Bank of Circleville, Circleville, Ohio,
and The Scioto Bank, Commercial Point, Ohio.
Governor Mills commented that an element favoring the proposed
merger was that it should increase banking competition in the area
near Columbus, Ohio, in which city there was already a concentration
Of banking resources.
He felt that the merger would provide a minor
antidote to this situation.
In discussion, it was agreed that the point mentioned by
Governor Mills should be brought out in the body of the report.
The
l'ePort, subject to the incorporation of the aforementioned change,
14as then approved unanimously for transmittal to the Comptroller.
The conclusion read as follows:
The First National Bank of Circleville and The Scioto
Bank do not appear to be direct competitors to an important
degree. Merger of the two banks would not be competitively
harmful to other banks, and the competitive effects of the
Proposed merger would not be adverse.
Report on competitive factors (Fort Wayne-Hoagland, Indiana).
There had been distributed a draft of report to the Comptroller of the
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Currency on the competitive factors involved in the proposed merger of
Lincoln National Bank and Trust Company of Fort Wayne, Fort Wayne,
Indiana, and First State Bank of Hoagland, Hoagland, Indiana.
Following a brief discussion during which agreement was expressed
With a change in the conclusion that would reflect a suggestion made
by Governor Mills, the report was approved unanimously for transmittal
to the Comptroller with the conclusion reading as follows:
Lincoln National Bank and Trust Company of Fort Wayne
is the largest bank in Fort Wayne and the surrounding area
and probably offers some competition for the much smaller
First State Bank of Hoagland. While the merger would
eliminate an independent bank and add to the resources of
the area's largest bank, the overall effect of the proposed
transaction on competition would not be significantly adverse.
Farmers & Merchants Bank of Long Beach (Items
3
and
4).
There
had been distributed a memorandum from the Legal Division dated November 23, 1964, regarding a request by Special Agent Kintz of the Federal
Bureau of Investigation, San Francisco, California (presumably on behalf of the United States Attorney for the Southern District of California)
directed to the Federal Reserve Bank of San Francisco, for copies of
certain letters in the files of the Reserve Bank relating to Farmers &
Merchants Bank of Long Beach, Long Beach, California.
The memorandum stated that the request was the latest in a
series of requests submitted by the United States Attorney or the
Pederal Bureau of Investigation incident to an investigation leading
to the
indictment and the preparation for trial of G. A. Walker,
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President, Farmers & Merchants Bank of Long Beach; Kenneth G. Walker,
Vice President; and C. Z. Walker, attorney for and a director of
Farmers Bank.
The request now before the Board followed upon an inspection
Of documents in possession of the Reserve Bank made by Agent Kintz
pursuant to authorization granted by the Board in a telegram of
August 27, 1964.
That telegram had authorized access by an Assistant
United States Attorney and a representative of the Federal Bureau of
Investigation to (1) open and confidential sections of all examination
reports of Farmers Bank for the years 1955 through 1961; (2) the line
cards prepared in connection with these examinations; and (3) examiners'
hand and typewritten work papers relating to the aforementioned examina-
tions.
In transmitting the latest request, the Reserve Bank's General
C°unsel stated that Mr. Kintz had seen each of the letters requested
4flot perhaps had taken notes.
The Bank's General Counsel also stated
that Mr.
Kintz's access to such material "was virtually unavoidable"
in connection with the investigation of the other information referred
to in the Board's telegram of August 27.
t4nky
According to the Reserve
Agent Kintz had indicated that the requested correspondence
11.1d be used generally for the purposes stated in the Board's August 27
telegram and under the terms and conditions set forth therein.
In
this connection, the staff of the Reserve Bank requested the Board's
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advice as to how they should proceed, inasmuch as the correspondence
requested might not be covered by the authority contained in the
telegram.
The memorandum went on to describe the correspondence, noting
that it could be categorized as (1) letters between the Federal Reserve
Bank and Farmers Bank; (2) letters between the Superintendent of Banks
Of the State of California and Farmers Bank; (3) letters between the
Board and the Federal Reserve Bank; and
(4) a letter from Republic
National Bank of Dallas, Texas, to the Chief National Bank Examiner,
Eleventh Federal Reserve District.
Following a description of the correspondence sought by
Special Agent Kintz, the Legal Division memorandum recommended: (1) on
the basis of the origin and content of the letters between the Reserve
Bank and Farmers Bank, and in view of the Board's August 27 authorization, that the Board authorize the Reserve Bank to furnish copies thereof
to Agent Kintz; (2) that the Board authorize the furnishing of copies of
letters between the Superintendent of Banks and Farmers Bank, with the
expressed understanding that the Reserve Bank's General Counsel obtain
written authorization from the Superintendent of Banks for the requested
disclosure prior to release of the letters in question; (3) for reasons
cited in the memorandum, that the Board deny Agent Kintz's request for
eqies of the letters between the Board and the Federal Reserve Bank;
41cl (4) that the Board deny Agent Kintz's request for a copy of the
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letter from Republic National Bank of Dallas to the Chief National
Bank Examiner.
Attached to the Legal Division memorandum was a draft of
letter to the Federal Reserve Bank of San Francisco containing
authorizations and denials of authorization along the lines recommended.
At the Board's request Mt. O'Connell commented, his remarks
being based substantially on the information presented in the November 2n
,3 memorandum.
In the discussion that followed, Governor Mills said that
he would approve the Legal Division's recommendations for the reason
that the affected parties in this case were a bank and certain of
its officers who were open to legal criticism.
In such circumstances
he thought that neither a bank nor its officers should be sheltered
rl'om the scrutiny of the Federal Bureau of Investigation or the
Bepartment of Justice.
Governor Mills went on to point out that on August 27 the
Board had authorized a United States Attorney and a representative
or
the F.B.I. to inspect certain documents in the possession of the
ederal Reserve Bank of San Francisco relating to Farmers & Merchants
1844k of Long Beach.
He had dissented from the Board's action.
He
believed that any subject of examination should have the protection
°t a closed report, except where a subpoena was issued.
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As a result
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Of having permitted inspection, there was now before the Board a
request for copies of certain correspondence.
This correspondence
apparently had come before the eyes of the representative of the
Justice Department during the inspection of the examinations reports
and related material.
In Governor Mills' opinion, this matter
illustrated how far-reaching and improper it was for the Board to
authorize the release of information from confidential files relating
to the examination of a bank when such information had any bearing
on a bank's customers, as distinct from its officers.
Governor Shepardson commented that he thought that Governor
Mills had raised an important point--there was certain information
that should not be divulged.
In this connection, he wondered what
Steps should be taken, if any, to call to the Reserve Bank's attention
what seemed to be negligence in permitting inspection of certain
Material, access to which had not been authorized.
Chairman Martin suggested that a letter be sent to the Federal
Reserve Bank of San Francisco indicating the Board's concern in this
Matter and requesting information as to the circumstances attending
kg.ent Kintz's access to the correspondence in question.
After discussion, it was understood that a letter of the
nature suggested by Chairman Martin would be sent to the San Francisco
Reserve Bank.
A copy of the letter, in the form transmitted, is
attached as Item No.
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3. The letter to the Reserve Bank authorizing
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the furnishing of certain of the material requested by Mr. Kintz was
22knaml
unanimously.
A copy of that letter is attached as Item No.
4.
Mr. Fauver, Assistant to the Board, then entered the room.
Application of Wheeling Dollar Savings & Trust Co. (Items 5-7).
Pursuant to the decision reached at the Board meeting on November 12,
1964, there had been distributed a proposed order and statement reflecting approval of the application of Wheeling Dollar Savings & Trust Co.,
Wheeling, West Virginia, to acquire the assets and assume the deposit
liabilities of South Wheeling Bank and Trust Company, Wheeling, West
Virginia.
There also had been distributed a draft of a dissenting
statement by Governor Robertson.
Following discussion, the issuance of the order and statement
ras authorized with the understanding that certain editorial changes
would be made in the statement.
Copies of the order and statement,
aS issued, are attached hereto as Items 5 and
6. A copy of Governor
Robertson's dissenting statement is attached as Item No.
Application of Worthen Bank & Trust Company.
7.
There had been
distributed a memorandum from the Division of Examinations dated
November 16, 1964, and supporting papers with respect to the application of Worthen Bank & Trust Company, Little Rock, Arkansas, to merge
141th Bank of Arkansas, Little Rock, Arkansas.
In summary comments on the proposed merger, the Division's
Memorandum stated that in April 1964 the Board approved the establishflt
Bank of Arkansas of an in-town branch at the site of the
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suburban location of its head office, which would be relocated to
downtown Little Rock.
Approval was also given to contemplated
expanded operations involving more extensive competition in the commercial credit field, and in acting as correspondent for country banks.
In giving such approval, the Board had imposed a condition that executive management be suitably strengthened on or before consummation
Of the plan.
Bank of Arkansas' president had stated that if the
Proposed merger was not approved, the bank's head office would be
moved to a downtown location in Little Rock.
The memorandum went on to point out that as the service area
Bank of Arkansas was entirely within that of Worthen Bank & Trust
Company, the proposed merger would eliminate competition existing
between participants and would increase slightly the concentration
°r
deposits held by the two largest banks in the area.
These
competitive considerations, however, were not felt to be so detrimental as to weigh heavily in favor of denial of the merger.
Essentially,
the question presented by this application was whether the competitive
considerations and the considerations bearing on the needs and convenience of the community were sufficiently important to outweigh the
c°nsiderations involving management and the potential adverse effect
°f* that factor on Bank of Arkansas' future.
While the proposed merger was regarded by the Division of
Xaminations as a close case, it was the Division's view that, on
balance, the Board would be warranted in approving the application.
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At the Board's request, Mr. Egertson reviewed the facts of
the case, the competitive factor reports received from the other
Federal bank supervisory agencies and the Department of Justice, and
the reasons underlying the favorable recommendation of the Division
or Examinations, his comments being based on the material that had
been distributed.
Following Mr. Egertson's presentation, the staff responded to
various questions relating to the proposed merger.
Governor Balderston questioned the basis on which a supporting
statement would be prepared by the Legal Division if the Board approved
the application.
In response, Mr. Shay said that a supporting state-
Ment would likely emphasize the need for strengthening management at
Ilank of Arkansas and would also point to the uncartainty of that bank's
future earnings prospects.
Governor Balderston observed in this
con-
nection that the memorandum from the Division of Examinations indicated
that the growth of Bank of Arkansas had been satisfactory and that
based on the record of past earnings, the bank's earnings prospects
Ilere considered to be favorable.
In a lengthy discussion that followed, it was brought out
that while the growth record of Bank of Arkansas had been good, the
13resent location of its head office created some uncertainty with
re
sPect to future earnings prospects.
or
With respect to this aspect
the proposal, the Metropolitan Area Planning Commission of Little
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Rock had indicated that it believed the area surrounding the head office
Of Bank of Arkansas to have a somewhat unfavorable future outlook because
Of' congested traffic, inadequate off-street parking, and the dispersion
Of' commercial business over too wide an area.
Moreover, proposed
expressways would tend to route traffic away from the area.
At its
Present location, it seemed doubtful that Bank of Arkansas would become
an increasingly significant competitive factor.
Further, Bank of
Arkansas, earlier and independently of the merger application, had
received provisional approval from the Board to convert to a branch
Its present head office, which would be moved to a downtown Little
Rock location.
Because of the proposed expansion in operations, one
Of' the conditions upon which this plan had been approved was that
Management be suitably supplemented.
Consummation of the proposed
merger would supply needed management strength and depth for the scope
Of operations presently conducted by Bank of Arkansas.
This factor,
131us uncertainty about future earnings prospects of the bank, could be
brought out in a supporting statement if the Board approved the application.
At the conclusion of the foregoing discussion, the members of
the Board expressed their views.
Governor Mills said that he would approve the merger for the
ree.sons submitted by the Division of Examinations in its memorandum.
Re reearded the case as neutral plus.
As a neutral plus case, approval
Igeuld fulfill the wishes of the proponents of the proposed transaction.
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PUrthermore, the merger would not conflict with the public interest.
This
Ilas a case where consummation of the proposal would not result in a bank
1/1th an overconcentration of banking assets in the relevant area nor
Yould it materially alter the competitive picture.
Governor Shepardson stated that he agreed with Governor Mills'
views and that he would approve the application.
Governor Daane said that, as the Division of Examinations had
indicated, the case was a close one.
While there would be a slight
increase in the banking resources on the part of Worthen Bank, it did
not appear that the transaction would have any adverse effect on com13et1ti0n.
Also, it did not appear that the merger would have any
significant effect on the banking needs and convenience of the community.
Th
erefore, since the proposed merger seemed to be in the public interest,
he would approve it.
Governor Balderston and Chairman Martin indicated that they
als° would approve the application.
Thereupon, the application of Worthen Bank & Trust Company was
5--itt21:322191 unanimously, with the understanding that an order and statereflecting this decision would be drafted for the Board's consideration.
Messrs. Fauver, O'Connell, Via, Egertson, McClintock, and Harris
then withdrew from the meeting.
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Interpretation relating to short-term negotiable notes (Items 8
a ncl 9). There had been distributed a memorandum from the Legal Division
'
dated November 17, 196)4., discussing the question of the applicability
of section 32 of the Banking Act of 1933 to short-term unsecured
negotiable notes of commercial banks.
The memorandum stated that Discount Corporation of New York,
New York, New York, and Aubrey G. Lanston & Co. Inc., New York, New
York) primary dealers in securities of the United States Government
having interlocking directorates with member banks, had applied through
the Federal Reserve Bank of New York for a ruling by the Board to the
effect that they might deal or make a market in short-term unsecured
negotiable notes issued by commercial banks without contravening the
13rohibition of section 32 of the Banking Act of 1933 and the Board's
Regulation R, Relationships with Dealers in Securities under Section 32
°f the Banking Act of 1933.
The legal question that was raised by the two requests was
Ilhether the new notes were "other similar securities" within the
ea*ning of section 32 and Regulation R.
If the Board concluded that
Ileh notes were securities for this purpose and if Discount Corporation
"CI Aubrey G. Lanston then made a market in the notes, the firms would
he ineligible to continue their interlocking directorates with member
ba4k8 as now permitted under the exception to the prohibition of
ection 32 that the Board had provided in its Regulation R.
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Other hand, if the Board should conclude that such notes were not
"Other similar securities," then the two organizations could deal
OX' make a market in the notes and continue their interlocking directorates with member benks without contravening the prohibition of
section 32 and Regulation R.
The Legal Division memorandum pointed out that the solution
of the problem presented by Discount Corporation and Aubrey G. Lanston &
Co. involved close questions of statutory interpretation and legal delias well as important policy considerations.
In this connection,
f°ar conclusions were cited and discussed in some detail as constituting
alternative courses of action that the Board might consider.
In essence,
they were: (1) the notes in question were not "other similar securities"
(2) the notes were "other similar securities"; (3) the notes were "other
etmilar securities," but suitable for inclusion in the exception proided by Regulation R; and (4) the notes were "other similar securities,"
1514 Regulation R could be amended so that neither dealing in such notes
4OX' dealing
in the presently excepted securities would be treated as a
section 32 activity.
Attached to the memorandum were drafts of (1) an interpretation
that
would hold that the notes in question were not "other similar
securities" within the meaning of section 32 and Regulation R; (2) an
interpretation that the notes were "other similar securities"; (3) an
414eadment to Regulation R that would equalize the notes with U. S.
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Government securities; and
(4) an amendment to Regulation R that would
broaden the exception for notes and U. S. Government securities.
At the Board's request, Mr. Shay reviewed the legal question
involved in the requests from Discount Corporation and Aubrey G.
Lanston & Co. and described the alternative positions that the Board
alight consider adopting, his remarks being based substantially on
the information presented in the distributed memorandum of November 17.
Re Pointed out that if the Board should determine that the notes in
qUestion were not "other similar securities," dealing in such notes
14A-Ild not be an activity described in section 32 and, therefore, any securities firm would be free to make a market in them without affecting its
StatUS under Regulation R.
However, the Legal Division believed that
811°11 a position, while supportable, was legally weaker than a position
that would hold that the notes were "other similar securities" within
the meaning of section 32 and Regulation R.
If the Board adopted this
13°Gition, but did not amend Regulation R, one result would be that
neither Discount Corporation nor Aubrey G. Lanston & Co. could make a
sall'et in the notes without sacrificing their interlocking relationships
Illth member banks.
Another result would be that any dealing in such
11°tee would have to be included in computing the section 32 business
cl°11e by any other securities firm.
During a lengthy discussion that followed, Mr. Shay responded
to v
arious questions posed by members of the Board regarding the altertive positions that had been suggested for consideration.
Ile
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exchange, several members of the Board indicated that it would be
unfortunate if, by the precedent of an interpretation holding that
short-term notes issued by banks were not "other similar securities"
tor purposes of section 32 and Regulation R, the Board were required
to hold that short-term notes issued by finance companies also were not
securities for those purposes.
Mr. Shay observed in this respect that
it would be extremely difficult to distinguish an instrument issued by
4
finance company from a precisely similar instrument issued by a bank
simPly on the basis of the issuer.
It was suggested, however, that it
Might be argued that the bank notes in question, although clearly not
deposits, were very similar to certificates of deposit, designed to be
used almost interchangeably with them; therefore, such notes were not
similar to any instrument that a finance company could issue.
While
44Mittedly this argument was open to legal attack, it might be support-
As discussion proceeded, Governor Mills indicated that he
ravored the draft interpretation that had been submitted with the Legal
1/11r1sion's memorandum that would hold that the notes in question were
11c)t "other similar securities" within the meaning of section 32 and
Regulation R.
In this connection, he would not amend Regulation R.
Governor Shepardson commented that he leaned toward the same
illterpretation as Governor Mills.
However, he wondered whether "short-
te1111," as used in the draft interpretation, was a definitive limitation.
a time limitation of a year should be stated.
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Mr. Shay observed that it was expected that the short-term
negotiable notes would not have maturities exceeding one year.
To
try to spell out a time limitation seemed to fall within the province
Of an amendment to the Regulation rather than that of an interpretation.
Governor Balderston remarked that he also agreed with Governor
Mills and favored the draft interpretation holding that the notes in
qUestion were not "other similar securities."
He then went on to
sUggest certain editorial changes that might be made in the draft.
During further discussion, it developed to be the consensus
that an interpretation should be issued that would hold that short-term
negotiable notes of banks were not "other similar securities" under
section 32 of the Banking Act of 1933 and the Board's Regulation R.
Accordingly, the interpretation submitted with the Legal Division's
nlemorandum, subject to certain editorial changes agreed upon, was then
413Proved unanimously with the understanding that it would be published
in the Federal Register and the Federal Reserve Bulletin.
A copy of
the approved interpretation in the form transmitted to the Federal
Register is attached as Item No. 8.
A copy of a letter sent to the
laecieral Reserve Bank of New York in connection with the Board's action
attached as Item No. 9.
All members of the staff except Messrs. Sherman and Farrell
then withdrew from the meeting.
Building program at New York (Item No. 10).
There had been
distributed a memorandum from the Division of Bank Operations dated
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November 23, 1964, with regard to the acquisition by the Federal
Reserve Bank of New York of certain property in connection with its
Proposed building program.
At its meeting on October 26,1964, the Board interposed no
objection to the Reserve Bank exercising real estate options covering
4
site desired for the construction of an annex building.
The Division
memorandum indicated that the Bank now had to make a choice as to how
to proceed with the purchase of one parcel of property at 68-70 Nassau
Street.
Under one plan, the bank could purchase this property for
$536,000 with the provision that the seller would use its best efforts
to terminate all leases by June 1, 1965.
Under another plan, the
Rank could purchase the property for $487,000 subject to existing
leases, 15 of which would expire at various dates in the period 19651978.
In a letter of November 17, 1964, First Vice President Treiber
44vised that the New York Reserve Bank proposed to adopt the first of
the two plans cited.
In this connection, it was pointed out that the
411k's real estate consultant had estimated that termination of all
'
the leases at this location by the Reserve Bank would cost about
$700,000.
that
The Bank thought $700,000 was too high but had doubts
the seller would be able to terminate all the leases for $49,000 (the
clifference between $536,000 and $487,000).
However, the Bank felt
take
that if the seller could make such arrangements, the Bank should
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advantage of them.
If the seller could not arrange for the termina-
tion of the leases, the Bank could take title for $487,000.
Following comments by Mr. Farrell during which he noted that
the option expiration date was December 1, 1964, there was unanimous
agreement on the part of the Board to interpose no objection to the
New York Reserve Bank exercising the option to purchase property at
68-70 Nassau Street for $536,000.
A copy of the telegram sent to
the New York Bank in this connection is attached as Item No. 10.
Maximum interest rate on savings deposit (Item No. 11).
There
had been prepared by the Legal Division a draft of telegram to the
Federal Reserve Banks that would comment on a question that had been
raised as to the maximum rate of interest payable on a savings deposit
that had remained in a bank less than 12 months prior to November 24,
1964, the effective date of the revised Supplement to Regulation Q,
1)4Yment of Interest on Deposits.
The purpose of sending the telegram
to the Reserve Banks was to assist them in responding to inquiries,
II4rticu1ar with respect to computation of interest at maximum rates.
Following discussion, the sending of the telegram to the
ecleral Reserve Banks in the form attached as Item No. 11 was approved
lina
nimously.
The meeting then adjourned.
Secretary's Notes: Telegrams were received
today from the Federal Reserve Banks of Cleveland,
Richmond, Dallas, and San Francisco stating that the
directors of those Banks had established, subject to
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a rate of 4 per cent (rather than 3-1/2 per cent) on
discounts for and advances to member banks under
sections 13 and 13a of the Federal Reserve Act and
a rate of 4-1/2 per cent (rather than 4 per cent)
on advances under section 10(b). The directors of
the Federal Reserve Bank of Cleveland had also
established a rate of 5-1/2 per cent (rather than
5 per cent) on advances to individuals, partnerships,
and corporations other than member banks under the
last paragraph of section 13, and the directors of
the Federal Reserve Banks of Richmond, Dallas, and
San Francisco had established a rate of 5 per cent
(rather than 4-1/2 per cent) under this paragraph.
Pursuant to the authorization given at the meeting on
November 23, 1964, the Secretary informed the Banks
by telegram of the Board's approval of the rates
established by their directors, effective November 27,
1964. A press statement was issued at 4 p.m. EST, all
Reserve Banks and branches were notified by telegram,
and arrangements were made for publication of a notice
in the Federal Register.
Governor Shepardson today approved on behalf of the
Board a letter to the Federal Reserve Bank of Chicago
(attached Item No. 12) approving the appointment of
Ronald S. Reed as assistant examiner.
40111,64.
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
A •
A
Alliteit
Secret- y
AL
BOARD OF GOVERNORS
Item No. 1
11/25/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
November 25, 1964.
Morgan Guaranty International
Finance Corporation,
23 Wall Street,
New York, 8, New York.
Gentlemen:
In accordance with the request and on the basis of the
information furnished in your letter of November 12, 1964, transmltted through the Federal Reserve Bank of New York, the Board
°f Governors grants its consent for Morgan Guaranty International
tjnance Corporation to purchase and hold 7,500 additional shares,
Par value Peruvian Soles 1,000 each, of the capital stock of
reruano-Suiza de Fomento e Inversiones Sociedad Anonima, ("Peruinvest"),
Llma, Peru, at a cost of approximately US$376,000, provided such
stock is acquired within one year from the date of this letter.
The Board's consent is granted subject to the same con,
•
d itl.ons
prescribed in the Board's letter of March 22, 1962, granting
consent to the purchase of shares of Peruinvest.
The Board also approves the purchase and holding of
shares of Peruinvest within the terms of the above consent in
excess of 10 per cent of your Corporation's capital and surplus.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
402?
Item No. 2
TELEGRAM
LEASED WIRE SERVICE
11/25/611.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
November 25, 1964.
aral'aiS - NEW YORK
Our wire November 20. Board approves opening and maintenance.
°fan account on books of Federal Reserve Bank of New York in
the /lame of the Bank of Zambia, subject to the usual terms and
°°11cliti0n5. It is understood that participation in this
ccaunt will be offered to other Federal Reserve Banks.
(Signed) Merritt Sherman
SHERMAN
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
VO,
,40V C0,7
10.
BOARD OF GOVERNORS
Item No.
OF THE
11/25/64
3
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
November 25, 1964.
Mr. Eliot J. Swan, President,
Federal Reserve Bank of San Francisco,
San Francisco, California. 94120
Dear Mr, Swan:
Under date of October 21, 1964, your Bank's General
Counsel referred to the Board for consideration a request made
Of the General Counsel by Special Agent Doyle Kintz, San Francisco
°ffice of the Federal Bureau of Investigation, that he be furnished copies of certain letters contained in the files of your
Bank relating to Farmers & Merchants Bank of Long Beach, Long
Beach, California. The Board's reply of this date authorizes the
furnishing of copies of certain of the letters requested, and
declines such authorization in respect to certain letters.
In submitting this matter for the Board's determination,
Mr. Scott made the following statement:
"You should know that Mr. Kintz has seen each of
the enclosed letters and perhaps has taken notes therefrom. His access to this material was virtually unavoidable in connection with his investigation of the
Other information referred to in your telegram."
Inasmuch as the inspection by representatives of the United States
2t
torney's Office and the Federal Bureau of Investigation authorized
t
uY the Board's August 27 telegram was restricted specifically to
,
he open and confidential sections of reports of examination of
armers & Merchants Bank of Long Beach for the years 1955 through
,961, to the line cards prepared in connection with such examinations,
:fld to the examiners' work papers, handwritten and typed, prepared
Utilized in connection with such examinations, the Board is not
,,ear as to why Agent Kintz's access to the letters in question
awas virtually unavoidable", as stated by Mr. Scott, The Board
,884mes that the correspondence which was the subject of your
tter of October 31 and the Board's reply of this date is physically
Parated in your files from the reports of examination, and line
atds and working papers related thereto. It is further assumed
l
r
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Mr, Eliot J. Swan
-2-
that the Board's authorization of August 27 would have constituted
adequate basis for denial of Agent Kintz's access to the correspondence in question, even had his notice of such correspondence
been, as stated, virtually unavoidable.
The Board will appreciate your advice as to the
circumstances attending Agent Kintz's access to the correspondence
d
iscussed.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
aa.
,
Item No. 4
BOARD OF GOVERNORS
11/25/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
November 25, 1964.
Mr, Eliot J. Swan, President,
Federal Reserve Bank of San Francisco,
San Francisco, California. 94120
Re:
United States v. K. G. Walker, et al.,
Case No. 33332-CD; S.D. Cal.
Dear Mr. Swan:
This refers to a letter of October 21, 1964, from
Walter F. Scott, General Counsel of your Bank, to the Board's
General Counsel, relating to the above-entitled case and containadvice that, pursuant to authorization from the Board by
'telegram dated October 27, 1964, Special Agent Doyle KinItz,
Federal Bureau of Investigation, San Francisco Office, had studied
certain materials in the files of your Bank relating to Farmers
Merchants Bank of Long Beach, Long Beach, California
( Farmers Bank"). Mr. Scott has advised that upon Mr. Kintz's inspection of the Reserve Bank files, he has asked that a copy be
1.1rI1ished to him of each of 33 letters, individually identified
ln Mr. Scott's letter as to date, sender, and addressee. It is
the Board's understanding that Mr. Kintz has stated that copies of
these letters are desired for the same purposes and under the terms
and conditions set forth in the Board's telegram of August 27.
%
The letters to which Mr. Kintz's request is directed are
identifiable according to sender-addressee as follows: (a) 15 letters
exchanged between the Federal Reserve Bank and Farmers Bank;
(b) 14 letters exchanged between the Superintendent of Banks, State
°f California, and Farmers Bank; (c) 3 letters exchanged between the
Board of Governors and the Federal Reserve Bank; and (d) a letter
Isorn the Senior Vice President of Republic National Bank of Dallas,
Dallas, Texas, to the Chief National Bank Examiner, Eleventh Federal
Reserve District. In general, the foregoing letters bear upon
transactions conducted by or in connection with Farmers Bank, many
°f which are discussed in the reports of examination of Farmers Bank,
dated from 1956 through 1961.
*Should have read August 27, 1964.
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Federal Reserve Bank of St. Louis
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Mr. Eliot J. Swan
-2-
Pursuant to the provisions of section 261.2(a) of the
Board's Rules Regarding Information, Submittals, and Requests
(12 CFR 261.2(c)), the Board authorizes the furnishing to
Mr. Kintz of copies of the letters exchanged between the Federal
Reserve Bank and Farmers Bank, the specific dates of which are as
follows: August 15, October 18, October 31, December 3, 1956;
October 16, December 11, December 31, 1957; January 17, January 31,
February 3, August 21, October 16, 19581 June 29, July 26, 1960;
and December 8, 1961.
Under the afore-cited Rules, and subject to the 'condition
hereinafter stated, the Board also authorizes the furnishing of
copies of the letters exchanged between the Superintendent of Banks,
State of California, and Farmers Bank, the specific dates of which
are as follows: July 9, August 24, 1956; June 28, August 16, 1957;
June 16, July 24, August 19, August 29, 1958; September 21, 1959;
September 7 (two letters), October 26, 1960; July 14, September 11,
1961. Copies of the foregoing letters are to be given to Mr. Kintz
only after there has been obtained from the State Superintendent of
Banks written authorization for the furnishing of such copies. This
direction is given with the knowledge that your Bank has ascertained
011 an oral basis that the Superintendent of Banks has no objection
to the release of copies of the letters to Mr. Kintz.
In respect to the three letters exchanged between your
4ank and the Board, in view of the apparent likelihood that some or
all of the material that is given to Mr. Kintz will be introduced
xn evidence in the forthcoming trial of the defendants Walker, the
Board declines to authorize the furnishing of copies of these letters
to Mr. Kintz. It is the Board's view that the release of essentially
lntra-agency correspondence of this nature, under the circumstances
here presented, would constitute a precedent that could prove extremely detrimental to the effective performance by the Board and
the Reserve Banks of essential regulatory and supervisory functions.
As to the letter from Republic National Bank of Dallas to
the Chief National Bank Examiner, inasmuch as the Federal Reserve
Bank was neither the sender nor addressee of this letter, the Board
c°neludes that a copy thereof should not be placed in Mr. Kintz's
.1,°ssession through your Bank. The best interests of both the
)
40ard and your Bank would appear to be served if Mr. Kintz were to
tequest either the Republic National Bank of Dallas or the Comptroller
Of the Currency for a copy of the letter in question.
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
;
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Mr. Eliot J. Swan
-3-
In accordance with the Board's understanding of Mr. Kintz's
request, the authorizations herein given contemplate that before the
materials furnished are used either at trial or before a Federal
grand jury, the Board's authorization for such use will be requested
by United States Attorney Whelan.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
4033
Item No.
5
11/25/64
UNITED STATES OF AMERICA
BEFORE THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON, D. C.
In the Matter of the Application of
ITHEELING
DOLLAR SAVINGS & TRUST CO.
fn
approval of acquisition of assets of
0outh Wheeling Bank and Trust Company
ORDER APPROVING ACQUISITION OF BANK'S ASSETS
There has come before the Board of Governors, pursuant to the
8"k Merger Act of 1960 (12 U.S.C. 1828(c)), an application by Wheeling
tIcIllar Savings & Trust Co., Wheeling, West Virginia, a State member bank
c) the Federal Reserve System, for the Board's prior approval of its
ec141-sition of assets and assumption of deposit liabilities of South
-eling Bank and Trust Company, Wheeling, West Virginia.
Notice of the
130sed acquisition of assets and assumption of deposit liabilities, in
nrm
approved by the Board, has been published pursuant to said Act.
Upon consideration of all relevant material in the light of
the
factors set forth in said Act, including reports furnished by the
c°41
Ptroller of the Currency, the Federal Deposit Insurance Corporation,
411d
the Department of Justice on the competitive factors involved in the
ll'c°Posed transaction,
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Federal Reserve Bank of St. Louis
-2-
IT IS HEREBY ORDERED, for the reasons set forth in the
4ara l s Statement of this date, that said application be and hereby is
aPproved, provided that said acquisition of assets and assumption of
dePosit liabilities shall not be consummated (a) within seven calendar
daYs after the date of this Order, or (b) later than three months after
said date.
Dated at Washington, D. C., this 25th day of November, 1964.
By order of the Board of Governors.
Voting for this action: Chairman Martin, and
Governors Balderston, Mills, and Mitchell.
Voting against this action:
Absent and not voting:
Governor Robertson.
Governors Shepardson and Daane.
(Signed) iierritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
403,
BOARD OF GOVERNORS
Item No.
6
11/25/64
OF THE
FEDERAL RESERVE SYSTEM
APPLICATION BY WHEELING DOLLAR SAVINGS & TRUST CO.
For, APPROVAL OF ACQUISITION OF ASSETS OF
SOUTH WHEELING BANK AND TRUST COMPANY
STATEMENT
Wheeling Dollar Savings & Trust Co., Wheeling, West Virginia
(tIIIeeling Dollar"), with total deposits of $40.4 million, has applied,
Pursuant to the Bank Merger Act of 1960 (12 U.S.C. 1823(c)), for the
toard's
prior approval of its acquisition of the assets and assumption
(1 deposit liabilities of South Wheeling Bank and Trust Company,
4ng, West Virginia ("South Wheeling Bank"), which has total
'
den
/
r°sits of $6.7 million.—
Wheeling Dollar would be precluded by
ttat
e law from operating the office of South Wheeling Bank as a branch.
Under the law, the Board is required to consider, as to each
°f thhe
banks involved, (1) its financial history and condition, (2) the
adeq
uacY of its capital structure, (3) its future earnings prospects,
(4) the
general character of its management, (5) whether its corporate
11°Ilet's are consistent with the purposes of 12 U.S.C., Ch. 16 (the
etieral Deposit Insurance Act), (6) the convenience and needs of the
Q(141ratinity to be served, and (7) the effect of the transaction on
"I/Petition (including any tendency toward monopoly). The Board may
tlot
-PProve the transaction unless, after considering all of these
to
it finds the transaction to be in the public interest,
sit figures are as of May 30, 1964.
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Federal Reserve Bank of St. Louis
4036
-2-
Banking factors. - The financial histories of Wheeling Dollar
and South Wheeling Bank are satisfactory, and each bank has a sound asset
condition and an adequate capital structure.
Wheeling Dollar's earnings
record is good, and its future earnings prospects are satisfactory.
Although the earnings record of South Wheeling Bank also is good, its
future earnings prospects are regarded as uncertain since they appear
to be heavily dependent upon the continued availability to the bank of
the
services of one individual.
About 45 per cent of the deposits of
South Wheeling Bank originate from beyond the area that the bank normally
llould be expected to serve.
This business, which is attributable
directly to the many acquaintances and wide personal following of South
1411 e
ling
Bank's chief executive officer, most probably would be lost in
substantial part if he should become inactive.
While the management of each bank is satisfactory, South
eeling Bank faces a prospective management succession problem in that
it
cannot replace from within the organization its chief executive
Off;
'
cer and the next ranking officer, both of whom may be forced into
l'etirement for reasons of health.
However, the management succession
Pt°blem confronting South Wheeling Bank is not only one of finding,
hir
-- ng, and retaining capable managerial talent, although this, alone,
Pres..
'nts difficulties in view of the small size of the bank and the
411ett ractivene55 of the area in which the bank is situated.
It is an
'Parable part of the more pervasive problem which results essentially
t.(31r1 the bank's unusual dependence upon the business-generating ability
of its
principal officer and the implications which this fact has for the
b
s
Prospects.
The problem, viewed in this dimension, takes on
Colls
id
erable significance.
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Federal Reserve Bank of St. Louis
-3-
Consummation of the proposal, which would remove the
fcTegoing uncertainty concerning South Wheeling Bank, would not
adversely affect the banking factors as they relate to Wheeling Dollar.
There is no indication that the corporate pouers of the banks
nres or t:ould be, inconsistent with the purposes of).2 U0S.C o,
Ch. 16.
Convenience and needs of the communities. - Wheeling Dollar
and South Wheeling Bank are two of six commercial banks located in
1/11eeling, Ohio County, West Virginia.
The city of Wheeling is located
in the northwestern part of the State on the eastern bank of the Ohio
liver, which separates
West Virginia and Ohio.
The service area
/
of
Itheeling Dollar consists of Ohio County and considerable portions, as
Ileasured by population, of the adjacent counties of Marshall and Brook
Ilest Virginia and Belmont County in Ohio.
The service area of South
Illieeling Bank is smaller and contained entirely within the service area
(IfIlheoling Dollar.
South Wheeling Bank derives 35 per cent of its
deP°sits from Belmont County, about 56 per cent from the southern portion
(1 1:
n.
mieeling and the nearby communities of Bethlehem and Mozart, and the
balance
from the remainder of the city of Wheeling.
There is no evidence
that the
banking needs and convenience of the community are not being
adequatelY met.
The population of the Wheeling Standard Metropolitan
2ta
tisrical Area, which consists of Ohio and Marshall Counties in West
Virginia and
Belmont County in Ohio, decreased during the decade
1950-1960 from 196,000 to 190,000
persons.
The economy of the Wheeling
Ilhich is dependent for the most part upon various industrial
of .11
ea fromm whichh a bank obtains 75 per cent or more of its deposits
'lviduals, partnership
s, and corporations ("IPC deposits").
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Federal Reserve Bank of St. Louis
(103fi
-4-
enterprises, has suffered from declining activity.
Although there has
been some recent improvement, unemployment is both substantial and
Persistent.
Economic conditions are especially poor in the sector from
vhich South Wheeling Bank derives most (i.e., about 56 per cent) of its
dePosits, and it does not seem probable that these conditions will be
improved substantially, or in the immediate future, by the redevelopment
Ptogram planned for a portion of this sector near the location of South
Wheeling Bank.
Both Wheeling Dollar and South Wheeling Bank offer the usual
tange of banking services.
Their offices are only five blocks apart,
the office of Wheeling Dollar being located in the main business district
Of
Wheeling, which lies across Wheeling Creek from the declining area to
the south in which South Wheeling Bank has its office.
t140
The offices of
other commercial banks situated in the main business district of
Ijilee1ing are within six blocks of the office of South Wheeling Bank.
Th48, existing and potential customers of South Wheeling Bank, upon
c°11s ummation of the proposal, would continue to have reasonably
cOnvenient sources of commercial bank services, and it does not appear
that
e
h banking convenience and needs of any area served by South
%eeling Bank would be adversely affected to any significant extent.
ConTetition. - Wheeling Dollar is the largest of the six2I
Comm
ercial banks located in Wheeling and, with 22.5 per cent of the IPC
depo
t
si-
4/
is the largest of the 19 commercial banks operating in its
/ A
bank is proposed to be located in downtown Wheeling near, and
"rt new
h
of,
4/ ,
Wheeling Dollar's office.
"ePosit figures are as of June 30, 1964.
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Federal Reserve Bank of St. Louis
tJ
-5-
service area.
South Wheeling Bank accounts for less than 5 per cent of
the IPC deposits held by the 13 commercial banks operating in Wheeling and
ill
Belmont County, Ohio, and less than 4 per cent of such deposits in
the area served by Wheeling Dollar.
As noted earlier, offices of the pro-
Pcnent banks are only five blocks apart and Wheeling Dollar's large
service area includes within its boundaries the entire service area of
South Wheeling Bank.
If the $6 million in IPC deposits held by South
heeling Bank were acquired by Wheeling Dollar, the latter's share of all
such deposits held by commercial banks in its service area would be
increased
to 26.2 per cent.
The proposed transaction would eliminate all existing and
P°t ntial competition between South Wheeling Bank and the other banks
in its service area, including Wheeling Dollar. However, banking
cus tomers in the area served by South Wheeling Bank would continue to
have access to a number of reasonably convenient alternative commercial
banking offices.
Further, despite the fact that, under the proposal,
everal members of the staff of South Wheeling Bank, including its two
Principal officers, would join the staff of Wheeling Dollar, the latter
11°uld not gain an additional banking office.
Thus, under these circum-
stances,the amount of banking business which Wheeling Dollar would be
ble to gain and retain as a result of the acquisition would seem to be
rt)thQdlY less than the total volume now held by South Wheeling Bank.
Nrth
, the proposed transaction would not result in an increase in
‘
eling
Dollar's capital and surplus accounts, and, thus, there would
be no
increase in its lending limit.
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Federal Reserve Bank of St. Louis
,
I040
-6-
Summary and conclus4_on. - Although consummation of the
Pt°Posed transaction would result in the elimination of a banking
°4(:fice through the closing of an independent commercial bank, it would
not materially affect the banking needs and convenience of the community
concerned, and it is not probable that the consequences for banking
competition in the relevant area would be adverse.
Wheeling Dollar,
without the benefit of an additional banking office, would find it
nQcessary to contend with other banks for the business now held by
South Wheeling Bank.
Further, consummazion of the proposed transaction
14°111d afford an orderly solution for the potential earnings problem of
South Wheeling Bank, which is occasioned by its location and its
e%traordinary dependence upon the continued availability of the services
Of its present chief executive officer.
Accordingly, the Board finds that the proposed acquisition
c)-E assets and assumption of liabilities would be in the public interest.
November
25, 1964.
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Federal Reserve Bank of St. Louis
4041
Item No.
7
11/25/64
DISSENTING STATEMENT OF GOVERNOR ROBERTSON
When a bank is given a charter, it receives a license to
engage in the banking business - a business vested with a public
interest.
Hence, it assumes an implied obligation to provide banking
facilities to the community so long as the public need therefor
exists - certainly so long as it is feasible and profitable for it to
do so.
Of course, it can legally cease to carry out this obligation -
but only in accordance with the applicable provisions of law.
The
question here is whether the Bank Merger Act of 1960 can be used for
this purpose.
In this case there is a clear public need, as evidenced by
the volume of business and profits enjoyed by the South Wheeling Bank -
the only bank in south Wheeling, West Virginia. If this acquisition is
ecinsummated, that bank will cease to exist and south Wheeling will be
left without a banking office.
The Bank Merger Act of 1960 was enacted for the purpose of
sa eguarding our multiple unit banking system from continued erosion
thr°ugh bank absorptions.
Here, by virtue of the Board's decision, it
is being used for another purpose - as enabling legislation to permit
a s
mail but sound, profitable, and growing bank to cease operation and
to be absorbed by its largest competitor without due regard for the
11°Q(Is and convenience of the community.
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-2As I read the Bank Merger Act and its legislative history,
Congress clearly did not intend by that measure to provide a "way out"
for a bank and its stockholders so long as it is possible and profitable for the institution involved to pursue its responsibility to
serve the public. As a matter of fact, not so long ago the Board
emphasized this responsibility when, in denying a proposed bank
8cquisition, it said that "the principal consideration ... is the
convenience and needs of the communities and area concerned, rather
than its benefits to the banks involved". (1962 Federal Reserve Bulletin
548, 550; similarly, 1953 Federal Reserve Bulletin 902, 909) In my
Judgment, the decision of the majority in the present case fails to
meet this test.
The majority relies heavily for its approval of this application on what it fears might happen to South Wheeling Bank if its chief
executive officer and its next ranking officer, aged 57 and 50,
48Pacttve1y - and particularly the former - should be forced into
retirement for reasons of health.
Everyone must admit that the bank
i8 successful and that its future prospects can be characterized only
48 favorable, unless the majority's anxiety is warranted.
For the past
at
five years, South Wheeling Bank has enjoyed an increase in deposits
4 rate exceeding the average for all Wheeling banks, and its net current
°Perating earnings have been better than the average for banks in its
si2e group in the Fourth Federal Reserve District.
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Federal Reserve Bank of St. Louis
The majority's
4043
-3-
apprehension concerning management and its relationship to future
Prospects of the South Wheeling Bank is hard to understand in view of
the fact that both of the bank's senior officers are to continue in
comparable capacities with the larger applicant bank.
Indeed, it would
seem that the anticipated continuation of the business-generating
r, may
ability of the small bank's chief executive officer, in particula
well have been a significant consideration supporting Wheeling Dollar's
interest in the proposal.
The majority's decision permitting the demise of South
Wheeling Bank leaves to the customers of that bank no choice but to
Seek new banking connections.
Wheeling Dollar, which is Wheeling's
largest bank, is six times the size of South Wheeling Bank and three
times as large as the smallest of the other two banks in the downtown
business section of Wheeling.
However, the favorable experience of
South Wheeling Bank is indisputable testimony to the fact that many
members of the public prefer to deal with a small, conveniently located
banks rather than one of its much larger competitors.
The decision of
the zajority whi,..11, in effect, would deprive a great number of these
People of the alternative of doing business with a small bank seems
°d(11Y at variance with the view stated by the Board in denying an
aPPlication in an earlier case where it stated: "Competition throughout
all ranges of banking size and services is in the public interest."
(1962 Federal Reserve Bulletin 548, 553)
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Federal Reserve Bank of St. Louis
4044
-4-
Furthermore, the success of South Wheeling Bank reflects
the contribution that it is making to the economic life of its
community.
To halt - as the majority does - continuation of this
contribution ought to require more by way of justification than can
be found in the record of this case, particularly in view of the
redevelopment program in south Wheeling, in connection with which some
land in the affected area already has been cleared and sold for use by
new business concerns.
Both present and potential support of this
snlall bank to its community and to the success of the redevelopment
Pro3ram will be lost.
In short, it would seem that the principal
beneficiaries of this acquisition are the senior officers and stockholders of South Wheeling Bank - not the affected public, at whose
eXPense the bank is unjustifiably excused from its responsibilities.
Consummation of the acquisition will diminish banking
ecrapetition, as the majority recognizes.
The service area of South
heeling Bank lies entirely within that of Applicant, and the competiion that will be eliminated is substantial.
In the area of Wheeling
ftft which South Wheeling Bank derives over $3 million, or about 56
Per cent, of its deposits (the south Wheeling area in which there is no
Other banking office), Wheeling Dollar derives over $3.6 million, or
4
little over 10 per cent, of its deposits.
South Wheeling Bank
°riginates over $700,000, or approximately 24 per cent,of its loans
the area, while Wheeling Dollar originates over $1,160,000, or
http://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
4045
-5..
approximately 6 per cent,of its loans in the area. Even though all
Of the business of South Wheeling Bank may not flow to Wheeling Dollar
after the acquisition, I do not see how consummation of the proposal
tan fail to further fortify to a material degree Wheeling Dollar's
already distinctly dominant position in the area.
Since I cannot share the grave concern of the majority with
respect to the future prospects of South Wheeling Bank but am deeply
concerned over the serious adverse effects that the transaction will
have on the needs and convenience of the community and on competition,
be
conclude that consummation of the proposed acquisition would not
in the public interest, and hence I would deny the application.
November 25,
1964.
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Federal Reserve Bank of St. Louis
G
TITLE 12 - BANKS AND BANKING
Item No.
11/25/64
CHAPTER II - FEDERAL RESERVE SYSTEM
SUBCHAPTER A - BOARD OF' GOVERNORS OF THE FEDERAL RESERVE SYSTEM
[Reg. R]
PART 218 - RELATIONS WITH DEALERS IN SECURITIES
UNDER SECTION 32, BANKING ACT OF 1933
Short-term Negotiable Notes
218.109 Short-term negotiable notes of banks not securities under
section 32, Banking Act of 1933.
(a) The Board of Governors has been asked whether short-term
unsecured negotiable notes of the kinds issued by some of the large
banks in this country as a means of obtaining funds are "other similar
securities" within the meaning of section 32, Banking Act of 1933
(12 U.S.C. 78) and this Part.
(b) Section 32 forbids certain interlocking relationships
between banks which are members of the Federal Reserve System and
individuals or organizations "primarily engaged in the issue, flotation, underwriting, public sale, or distribution, at wholesale or
retail, or through syndicate participation, of stocks, bonds, or
Other similar securities. .
•
•
Therefore, if such notes are
securities similar to stocks or bonds, any dealing therein would be
an activity covered in section 32 and would have to be taken int6
"nsideration in determining whether the individual or organization
involved was "primarily engaged" in such activities.
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Federal Reserve Bank of St. Louis
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(c) The Board has concluded that such short-term notes of the
kind described above are not "other similar securities" within the
meaning of section 32 and this Part.
(12 U.S.C. 248(i).
Interprets or applies 12 U.S.C. 78.)
Dated at Washington, D. C., this 25th day of November, 1964.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
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Federal Reserve Bank of St. Louis
4t1A,
Item No. 9
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
11/25/64
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
10 1HE BOARD
November 25, 1964.
Mr. William F. Trieber, First Vice Presiden
Federal Reserve Bank of New York,
New York, New York.
10045
Dear Mr. Trieber:
This refers to letters from your Bank of September 9, 1964,
aald October 5, 1964, transmitting requests from Discount Corporation
of New York and from Aubrey G. Lanston & Co., Inc., which ask for an
interpretation by the Board on the question whether short-term
unsecured
ne gotiable notes of the kinds issued by some of the large banks in the
country are "other similar securities" within the meaning of section 32
of the Banking Act of 1933 and the Board's Regulation R. Your letter
°f October 15, 1964, transmitted a memorandum prepared by Davis Polk
wardwell Sunderland
& Kiendl at the request of Discount Corporation, and
4 memorandum prepared by the Legal Division of your
Bank both of which
8 13Port the view that such notes are not "other similar securities"
within the scope of the section.
Enclosed with this letter is a copy of an interpretation of
Board concluding that such notes are not "other similar securities"
)
cr purposes of the statute and regulation. The interpretation will
t.,e published in early issues of the Federal Register and in the
'
e!deral Reserve Bulletin. Additional copies are enclosed for your
A'nvenience in transmitting them to Discount Corporation and
411bre:YO. Lanston & Co., Inc.
the
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
Nclosures
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Federal Reserve Bank of St. Louis
4049
TELEGRAM
Item No. 10
11/25/64
LEASED WIRE SERVICE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
November 25, 1964
New York
Treiber
Board will interpose no objection to proposal in
your November 17, 1964 letter relative to exercise of
option to purchase property at 68-70 Nassau Street for
$536,000.
(Signed) er
SHERMAN
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Federal Reserve Bank of St. Louis
Sherman
S-1938
Item No. 11
TELEGRAM
LEASED WIRE SERVICE
11/25/64
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
WASHINGTON
November 25, 1964
10 THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
Question has been raised as to maximum rate of interest
Payable under revised Supplement to Regulation Q on savings deposit
that had remained in bank less than 12 months prior to November 24,
1964, effective date of revised Supplement.
not retroactive.
New maximum rates are
Consequently, a savings deposit that has remained
011 deposit for less than 12 months prior to November 24 may bear
i4terest at a rate' not exceeding 4 per cent only for
beginning
period
with such date and at rate not in excess of 3-1/2 per cent
Period prior to such date, except that if and when a deposit
whicH was in bank prior to November 24, 1964 has remained in bank
()t' full 12 month period, interest may then be adjusted to provide
Ear
yield not in excess of 4 per cent from date of deposit.
This
kleition is consistent with position taken in fourth paragraph of
'd'8
4°4
wire to Federal Reserve Banks dated December 7, 1961 (S-1817).
(Signed) Merritt Sherman
Sherman
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Federal Reserve Bank of St. Louis
el0:3 -*
BOARD OF GOVERNORS
Item No. 12
11/25/64
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCL
TO THE BOARD
November
27, 1964.
Mr. Leland Ross, Vice President,
Federal Reserve Bank of Chicago,
Chicago, Illinois. 60690
Dear Mr. Ross:
In accordance with the request contained in your
letter of November 20, 1964, the Board approves the
appointment of Ronald S. Reed as an assistant examiner for
the Federal Reserve Bank of Chicago. Please advise the
effective date of the appointment.
It is noted that Mr. Reed's wife is employed in
a secretarial capacity by Continental Illinois National
Bank and Trust Company, Chicago, Illinois. Accordingly,
it is understood that, should the occasion arise to examine
that bank, he will not be permitted to participate in any
examination of the department in which she then is employed.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.
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