The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
The attached set of minutes of the
of the Board of Governors of the Federal Reserve
System on November 5, 1959, which you have previously
initialed, has been amended at the request of Governor
Mills to insert an additional clause as stated in the
third full paragraph on page 10.
If you approve these minutes as amended,
please initial below.
ov. Szymczai
Minutes for
To:
November
5, 1959
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. Szymczak
Gov. Mills
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. King
al Reserve System on
Minutes of the Board of Governors of the Feder
Thursday, November
PRESENT:
5, 1959. The Board met in the Board Room at 10:00 a.m.
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Balderston, Vice Chairman
Szymczak
Mills
Robertson
Shepardson
King
Sherman, Secretary
Riefler, Assistant to the Chairman
Thomas, Economic Adviser to the Board
Shay, Legislative Counsel
Fauver, Assistant to the Board
Young, Director, Division of Research
and Statistics
Mr. Hackley, General Counsel
tions
Mr. Farrell, Director, Division of Bank Opera
ns
natio
Exami
of
ion
Divis
Mr. Solomon, Director,
and
rch
Resea
of
ion
Mr. Noyes, Adviser, Divis
Statistics
Research
Mr. Koch, Associate Adviser, Division of
and Statistics
Mr. Furth, Associate Adviser, Division of Inter
national Finance
Mr. Hexter, Assistant General Counsel
Mr. Daniels, Assistant Director, Division of
Bank Operations
Mr. Hostrup, Assistant Director, Division of
Examinations
Mr. Landry, Assistant to the Secretary
Mr. Davis, Assistant Counsel
Mr. Ford, Economist, Division of Research and
Statistics
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Items circulated or distributed to the Board.
The following
Board and
items, which had been circulated or distributed to the
the respective
copies of which are attached to these minutes under
item numbers indicated, were approved unanimously:
Item No.
Letter to the Peoples Trust Company of Bergen
County, Hackensack, New Jersey, approving the
establishment of an in-town branch at 25 Essex
Street.
1
-2-
11/5/59
Item No.
Letter to Leawood National Bank of Kansas City,
Kansas City, Missouri, granting permission to
maintain reduced reserves.
2
Letter to Citizens State Bank & Trust Company,
Kilgore, Texas, waiving the six months' notice
Of withdrawal from membership in the Federal
Reserve System.
3
Letter to the F.D.I.C. with regard to the ownership
Of First Security Bank of Twin Falls, Idaho, and
Whether it would be subject to the Bank Holding
Company Act.
5
Final Order and Statement in the matter of the
applications of The Atlantic National Bank of
Jacksonville and Atlantic Trust Company for prior
approval of the acquisition of the voting shares
Of Southside Atlantic Bank, Jacksonville, Florida.
With respect to Item No. 4,on a question from Governor Robertson,
Mr. Hackley said that the First Security Corporation of Salt Lake City
Would not be acquiring shares of the proposed First Security Bank of
Twin Fnlls in Twin Falls, Idaho, but rather principal stockholders and
officers of First Security Corporation would be acquiring voting shares
in the proposed First Security Bank.
Invitation from New York State Bar Association.
Governor
Balderston reported that a letter addressed to the Chairman had been
received from the New York State Bar Association inviting Board participation in a panel discussion of the antitrust law in connection with
the organization's next annual meeting on January 28, 1960. Indicating
that he doubted the Chairman would wish to participate in such a meeting,
-3-
11/5/59
he asked for an expression of opinion as to whether the Board should
accept and, if so, whom the Board might select as its representative.
He explained that high ranking representatives from the Federal Power
Commission, the Federal Communications Commission, and the Federal
Trade Commission, including possibly the chairmen of these agencies,
could be expected to participate in the panel discussion.
Governor
Balderston added that possibly Governor Robertson might serve as the
Board's representative, if it wished to participate in this meeting.
Mr. Hackley said that the desirability of having Board representation at this meeting could be argued on the grounds of the high
Professional standing of the New York Bar Association and of the
oPportunity presented for the Board to make clear its position with
respect to the Federal antitrust law so far as banking was concerned.
On the other hand, Board participation could be awkward in view of the
Possibility of Federal legislation on bank mergers next year and the
difference in views of the bank
supervisory agencies as compared with
those taken by the Department of Justice on the question of bank mergers
as related to the antitrust law.
Governor Mills remarked that it could be embarrassing for the
Board to have any one of its members attempt to speak for the whole
Board in areas where the Board had not reached a clear determination
Of its position.
For this reason, he would prefer to have the Board's
General Counsel attend the meeting as the Board's representative since
he was one step removed from the policy area and would be able to confine
.J.
11/5/59
h1
remarks to the purely legal status of any questions raised.
Governor Robertson said that he was inclined to believe that
the Board should participate in the meeting.
He would be willing to
attend as the Board's representative if there were no objection.
Governor Shepardson said that he felt there was much to be said
for taking advantage of an opportunity to get better understanding of
the Board's problems through discussions such as this appeared tc offer.
If a question of protocol was involved, perhaps a Board member should
attend the meeting. Otherwise, he favored Governor Mills' suggestion
that Mr. Hackley serve as the Board's representative.
Governor King presented the view that it would be best to avoid
sending any representative if at all possible, but if it was unavoidable
he favored Mr. Hackley's attending for the reason that he would not be
Presumed to speak for the Board on a policy basis.
Subsequently, he
indicated that if the other members of the Board felt that it should
Participate, he would not object strongly.
Governor Szymczak referred to the possibility of other requests
of this nature being sent to the Board should the Board acquiesce in the
request from the New York Bar Association.
However, this involved an
issue within the proper purview of the Board, and if Governor Robertson
was willing to undertake to deal with the questions that could be expected, he would have no objection to his going.
In the alternative,
he felt Mr. Hackley could appropriately represent the Board.
Governor
-5-
11/5/59
Szymczak suggested, however, that before reaching a definite decision
it would be desirable to ascertain whom the other Government agencies
Planned to send as their representatives to the meeting.
There was
requested to obtain
agreement with this suggestion, and Mr. Hackley was
this information and report back to the Board.
Proposals by Congressman Porter for monetary reform
On September 25,
(Item No.
6).
1959, Congressman Porter of Oregon had sent copies of
ted changes in the
proposals for the demonetization of silver and associa
request for their
monetary system to the Chairman and Mr. Young, with a
comments.
The Chairman's interim reply of October
5, 1959, stated that
the Board's staff was being asked to study the specific proposals.
memorandum from Mr. Marget dated October 28,
A
1959, which commented on
distributed
Congressman Porter's proposals in some detail, had been
before this meeting.
the general
In commenting on the memorandum, Mr. Furth said that
l place
nature of the staff views was that, while silver had no rationa
in our present day monetary system, there was no compelling reason to
demonetize silver.
On the other hand, the Congressman's technical
of United
suggestions relating to the cancellation and retirement
notes, and the
States notes and their replacement by Federal Reserve
ations of $1 and $2
proposal to confine silver certificates to denomin
and gradually to replace circulating silver certificates of $5 and $10
face value with Federal Reserve notes, seemed worthwhile.
11/5/59
-6A discussion then ensued, during which it was noted that
Congressman Porter also had sent his proposals to the Treasury and the
Council of Economic Advisers, and it was suggested that the staff inquire
regarding the nature of the replies being furnished by those agencies,
With the understanding that if they were consistent with the views expressed in the staff memorandum, a copy of the memorandum would be transmitted
to Mr. Porter.
Secretary's Note: Pursuant to the understanding,
a letter was sent to Congressman Porter on November 12,
1959, transmitting the staff memorandum on his
proposals for monetary reform. A copy of this letter
is attached as Item No. 6.
Messrs. Thomas, Daniels, and Ford then withdrew from the meeting.
Request from Justice Department for notice of receipt of appliS.ations under the Bank Holding Company Act.
There had been circulated
to the Board under date of October 30, 1959, a memorandum from the Legal
Division indicating that the Board currently sends the Department of
Justice a copy of each "Notice of Tentative Decision" on a bank holding
company application and of each "Notice of Hearing" on each application
at the time of transmittal of any such notice for publication in the
Federal Register, a practice enunciated in a letter dated February 27,
1959, to Victor Hansen, Assistant Attorney General in charge of the Antitrust
Division of the Department of Justice.
The memorandum also noted that at
the time the Board considered adoption of the foregoing procedure it was
Pointed out in a memorandum of February 24, 1959, from the Legal Division
-7-
11/5/59
that the Department of Justice might conceivably wish to be advised
Promptly upon the receipt of every application.
Mr. Hackley commented that recently the Department of Justice,
through Mr. Daniel Ohlbaum, an attorney in the Department's Antitrust
Division, informally inquired as to whether the Board would advise the
Department of Justice of the receipt of every application under the
Bank Holding Company Act. The Board's staff had made no suggestion to
14.1". Ohlbaum that this inquiry be put in writing since it seemed preferable to present the matter to the Board for its preliminary consideration
before suggesting to Justice that a written request be sent to the Board
in this matter.
Mr. Hackley noted that the Department of Justice had a direct
aM legitimate interest in cases involving acquisition of bank stock by
holding companies since they fell within the scope of section 7 of the
Clayton Act, with respect to which the Attorney General as well as the
Board had enforcement authority.
Furthermore, section 11 of the Bank
Holding Company Act made it plain that such acquisitions, even though
regulated by that Act, were also subject to the antitrust law.
In view
Of the foregoing, as well as of the fact that the Board's Rules of
Organization expressly recognized that the requested material was
available to certain other agencies of the United States which had
a proper interest in such material, the Legal Division believed it
would be appropriate to advise Justice of the receipt of each holding
11/5/59
-8-
company application on a confidential basis at the same time that a
copy of the application was sent to the Comptroller of the Currency
OZ' the State bank supervisory authority.
Governor Mills stated that in his judgment the Board would be
in error if it acceded to a request of Justice in this matter since it
involved extending the theory of interagency cooperation beyond its
Proper province by releasing unpublished information that could be used
adversely against an applicant.
In his opinion, should the Board accede
to Justice's request, it would be abdicating its responsibility under
the Bank Holding Company Act.
He referred to a bill pending in Congress
requiring corporations to give Justice preliminary notice of intentions
to merge with one another, and he suggested that should the request of
Justice be followed, the intent of Congress might be contravened.
Governor Mills also referred to another pending piece of legislation,
the bank merger bill, involving the reaching of agreement by bank supervisory agencies regarding the disposition of bank mergers falling within
their province and specifying that Justice would only be involved on a
consulting basis.
He also pointed out that neither of these bills had
been acted on favorably in Congress and, should the Board accede to the
request of Justice, it would in a sense be pamitting the contention of
Justice that it should have an equal status with bank supervisory agencies
in this field as well as its contention that it should have an equal voice
'Wherever establishment of branch banks was concerned.
-9-
11/5/59
Mr. Hexter said that, should a formal request be made by Justice
for information as to receipt of applications, it was not clear that
the Board could easily refuse to give the information.
He based this
position upon the fact that Justice was not now able to acquire full
information about applications under the Bank Holding Company Act of
1956, in contrast to the situation obtaining with respect to its jurisdiction in other areas under the Sherman and Clayton Antitrust Acts where
it had a working arrangement with the Federal Trade Commission for exchanging information.
Governor Robertson said that he could see no basis on which the
Board could justify declining to comply with a request by Justice for
this information, provided a written official request was received.
He
could hardly iningine the Board placing itself in a position where Justice
could say that it could not act on a timely basis because the Board had
declined to inform it of an application.
He agreed with Mr. Hackley's
made
comments, and he felt that the staff member from Justice who had
the informal inquiry should be told that the Board could not act on the
question without a formal request from the Attorney General.
Governor Shepardson commented that it might be difficult to
refuse a formal request.
However, he noted that there currently was
FirstPending a civil antitrust suit by the Justice Department against
of
america Corporation, following Board approval in January, 1959
Bank
acquisition by that Corporation under section 3(a)(2) of the
-10-
11/5/59
Holding Company Act of stock of the California Bank, Los Angeles, California, and he wondered 'whether that might provide a basis for not
acceding to a request from Justice until that question was settled. Also,
since legislation that might affect the Board's position in these matters
vas pending, it might be desirable to 'wait until Congress had acted.
Mr. Hexter responded that justice unquestionably had jurisdiction
over Clayton Act matters parallel to the Board's, and there could be no
question as to the right of Justice to look into any acquisition of bank
stock by a holding company.
Governor Szymczak commented that, in his opinion, the more interdepartmental cooperation in Government the better, and he said that he
vas in favor of acceding to the request of Justice.
Governor Mills said that it appeared to him that the suggestion
made by Governor Robertson to have the Legal Division return Mr. Ohlbaumts
call and say the Board would not consider this request unless it was
received in writing from the Attorney General invited a reply.
He
'would vote against this suggestion and, instead, if it should be decided
to advise Justice of bank holding company applications, would ask that
bank holding companies be notified through the Federal Register or by
direct communication that Justice would be informed of all applications
under the Bank Holding Company Act at the time of their receipt by the
Board.
Governor King said that, as suggested by Governor Mills, to
tall Justice the Board would not act on the request unless it vas
11/5/59
-11-
sUbmitted formplly would no doubt result in the Board's receiving such
a letter.
However, he did not like to negotiate or act on an inquiry
from the staff level reported in this discussion, and he would prefer
to tell Mr. Ohlbaum frankly that if his Department wanted such a request
to be considered it should be put in writing at the top level.
Governor Shepardson said that, on the basis of the discussion,
it seemed to him entirely appropriate for the Board staff member who
received Mr. Ohlbaum's call to respond that it was not the Board's
Practice to consider requests of this type except when made officially,
but that if and when the Department of Justice should make a request,
the matter would doubtless have consideration.
Governor Szymczak Observed that there was a possibility that
the Justice Department would be reticent to put its request in writing
should Governor Robertson's suggestion be followed.
Personally, he
would not ask for a formal request but would make the applications
available to Justice now.
He would not object to a formal request,
however, if the majority of the Board favored that procedure.
Following further discussion as to the alternative courses of
proposal was
action available in this matter, Governor Robertson's
.21. with Governor Mills dissenting.
!.P.P.InIe
Mr. Hexter then withdrew from the meeting.
Draft answers to questions submitted to Chairman Martin by
2211gressman Patman (Item No. 7).
There had been attached to a
-12-
11/5/59
1959, and
transmittal memorandum from Mr. Young dated October 29,
ted
circulated to the Board, draft answers to the questions submit
to Chairman Martin by Congressman Patman in supplementation of the
on July 30,
Chairman's testimony before the Joint Economic Committee
1959,
done on
Mt. Young said that there was still some editing to be
the answers to the questions from Mr. Pathan, that it was hoped they
could be completed and submitted by the end of next week, and that the
the members
staff would appreciate receiving the general reaction of
Of the Board to the proposed replies as well as any specific suggestions
for change.
tions for
After a general discussion, during which a few sugges
the draft
changes were made, approval was given to the general form of
replies with the understanding that when they were revised in a form
satisfactory to the Chairman they would be transmitted to Mr. Patman.
Secretary's note: A copy of the letter
transmitting the replies to Mr. Patman
on November 18, 1959, is attached as
Item No. 7.
The meeting then adjourned.
Secretary's note: Governor Shepardson
today approved on behalf of the Board a
letter to the Federal Reserve Bank of
e
11/5/59
-13Boston (attached Item No. 8) approving
the designation of Fred D. Sahagian as
special assistant expminer.
•
••
Secretary
2
8
.3
BOARD OF GOVERNORS
OF THE
901.*00
Item No. 1
11/5/59
FEDERAL RESERVE SYSTEM
4
WASHINGTON 25, D. C.
4
4
41
0
ADDRE•11 OrFIOIAL CORREOPONOENCE
TO THE BOARD
4
4
**218. MO.
November
5, 1959
Board of Directors,
Peoples Trust Company of Bergen County:
Hackensack, New Jersey.
Gentlemen:
Pursuant to your request submitted through
the Federal Reserve Bank of New York, the Board of
Governors of the Federal Reserve System approves the
establishment of a branch at 25 Essex Street,
Hackensack, New Jersey, by Peoples Trust Company of
Bergen County, Hackensack, New Jersey, provided the
branch is established within six months from the
date of this letter.
Very trul,y yours:
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Seoretary.
3824
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
Item No. 2
11/5/59
WASHINGTON 25, D. C.
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
November 52 1959
Mr. W. N. Brownfield, Executive
Vice President,
Leawood National Bank of Kansas City,
l ansas City, Missouri.
Dear Mr. Brownfield:
Pursuant to your request submitted through the Federal Reserve Bank of Kansas City, the Board of Governors
acting under the provisions of Section 19 of the Federal
Reserve Act., grants permission to your bank to maintain the
same reserves against deposits as are required to be maintained
by banks located outside of central reserve and .reserve cities,
effective as of the date your bank opened for business.
Your attention is called to the fact that such perMission is subject to revocation by the Board of Governors of
the Federal Reserve System.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
Item No.
3
11/5/59
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD
Nst
"004**0
November 5, 1959
Board of Directors,
Citizens State Bank & Trust Company,
Kilgore, Texas°
Gentlemen:
The Federal Reserve Bank of Dallas has forwarded
to the Board of Governors your letter of October 15, 1959,
and the accompanying resolution signifying your intention to
Withdraw from membership in the Federal Reserve System and
requesting waiver of the six months' notice of such withdrawal.
In accordance with your request, the Board of
Governors waives the requirement of six months' notice of
Withdrawal. Upon surrender to the Federal Reserve Bank of
Dallas of the Federal Reserve Bank stock issued to your
institution, such stock will be canceled and appropriate
refund will be made thereon. Under the provisions of Section
10(e) of the Board's Regulation H, as amended effective
September 1, 1952, your institution may accomplish termination
of its membership at any time within eight months from the date
the notice of intention to withdraw from membership was given.
It is requested that the certificate of membership
be sent to the Federal Reserve Bank of Dallas for disposition.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
BOARD OF GOVERNORS
OF THE
Item No. 4
11/5/59
FEDERAL RESERVE SYSTEM
WASHINGTON 25, D. C.
ADORES!' OFFICIAL CORREBPONDIENCE
TO THE BOARD
November 5, 1959
Mr. Edward H. DeHority, Deputy Chief,
Division of Examination,
Federal Deposit Insurance Corporation,
Washington 25, D. C.
Dear Mr. DeHority:
This refers to your letter to Mr. Solomon of August 6,
1959, inquiring, in effect, whether ownership of shares of the then
proposed First Security Bank of Twin Falls, Twin Falls, Idaho,
by principal stockholders and officers of First Security Corporation, Salt Lake City, Utah, would be subject to the Bank Holding
Company Act of 1956.
You state in your letter that Mr. Harry Eaton, President
of the Twin Falls Bank and Trust Company, was writing in detail
to Chairman Martin with respect to this matter. In this connection, Chairman Martin had received a letter dated May 29, 1959,
from Mr. Eaton, which Chairman Martin answered under date of
June 10, 1959. The letter to which you refer, however, has not
Yet been received by Chairman Martin.
The relevant provisions of the Bank Holding Company Act
are applicable only to acquisition of direct or indirect ownership
or control of voting shares of a bank by a bank holding company as
such, and they are not applicable to the acquisition of bank stock
by individuals. Accordingly, it does not appear that organization
of the First Security Bank of Twin Falls under the circumstances
set forth in your letter would fall within the scope of the Bank
Holding Company Act or within any other area of Federal law under
which the Board has jurisdiction.
Very truly yours,
(Signed) Merritt Sherman
Merritt Sherman,
Secretary.
UNITLD STATES OF AMERICA
BEFORE THE BOARD OF GOVLRJORS OF THE FEDERAL RrSERVE SYSTEM
Item No. 5
11/5/59
1(JASNINGTON, D. C.
---------------------
la the Natter of the Applications of
THE ATLANTIC NATIONAL BANK OF JACKSONVILLE
and
ATLANTIC TRUST CONPANY
for prior approval of acquisition of
voting shares of Southside Atlantic Bank,
Jacksonville, Florida
Nal
OREM APPPOVING APPLICATIONS UNDER
BANK HOLDING CONPANY ACT
There having come before the Board of Governors pursuant to
section 3(a)(2) of the Bank Holding Company Act of 1956 (12 USC 1843)
and section 4(a)(2) of the Board's Regulation Y (12 CFR 222.4(a)(2)),
applications on behalf of The Atlantic National Bank of Jacksonville
and the Atlantic Trust Company, whose respective principal offices are
in Jacksonville, Florida, for the Board's prior approval of the
acquisition of up to 94.75 per cent of the outstanding voting shares
°f a proposed bank, the Southside Atlantic Bank, Jacksonville, Florida;
a
Notice of Tentative Decision referring to a Tentative Statement on
said applications having been published in the Federal Register on
October
16, 1959 (24 FR 8423); said Notice having provided interested
Persons an opportunity, before issuance of the Board's final order, to
file objections to or comments upon the facts stated and the reasons
indicated in the Tentative Statement; and the time for filing such
comments received having
objections and comments having expired and
been duly considered;
forth in the
IT IS HEREBY ORDERED, for the reasons set
cations be and
Board's Statement of this date, that the said appli
tic National
hereby are granted, and the acquisition by The Atlan
to
Bank of Jacksonville and the Atlantic Trust Company of up
proposed bank,
94.75 per cent of the outstanding voting shares of the
ved,
the Southside Atlantic Bank, Jacksonville, Florida, is hereby appro
within three months from
Provided that such acquisition is completed
the date hereof.
of November, 1959.
Dated at Washington, D. C., this 5th day
By order of the Board of Governors.
rston and
Voting for this action: Vice Chairman Balde
and King.
rdson
Shepa
tson,
Governors Szymczak, Mills, Rober
Absent and not voting:
Chairman Martin.
(signed) Merritt Sherman
Merritt Sherman,
Secretary.
(SEAL)
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
NVILLE AND
APPLICATIONS BY THE ATLANTIC NATIONAL BANK OF JACKSO
OF
ITION
ACQUIS
OF
AL
APPROV
ATLANTIC TRUST COMPANY FOR PRIOR
BANK
IC
ATLANT
IDE
VOTING SHARES OF SOUTHS
STATEHENT
onal")
The Atlantic National Bank of Jacksonville ("Nati
and the Atlantic Trust Company ("Atlantic"), both of Jacksonville,
have
Florida, at times hereinafter referred to as flApplicants",
y
applied, pursuant to section 3(a)(2) of the Bank Holding Compan
Act of 1956 ("the Act"), for the Board's prior approval of the
of a proacquison of up to 37,900 of the 40,000 voting shares
a
Posed new bank, Southside Atlantic Bank, Jacksonville, Florid
,
(tig
outhside").
ies
Both National and Atlantic are bank holding compan
under the Act since Atlantic (which is not itself a bank) directly
owns a controlling interest in 7 banks and all of Atlantic's outthe stockstanding stock is held by trustees for the benefit of
holders of National.
Banking
Views and recommendations of the Commissioner of
,21111_,Ihe Comptroller of the Currency. - One of the Applicants is
a national bank and the proposed bank is to be a Florida State
bank. Accordingly, as required by section 3(b) of the Act, the
Board gave notice of the applications to the Comptroller of the
Currency and to the Commissioner of Banking for the State of
Florida. The Comptroller advised that careful consideration had
been given this proposal in the light of the five factors set
-2--
forth in section 3(c) of the Act and he recommended the Board's
ePProval of these applications.
The Commissioner advised that
the proposal met with his approval and he also recommended
approval by the Board.
Statutory factors. — Section 3(c) of the Act requires
the Board to take into consideration the following five factors:
(1) the financial history and condition of the holding companies
and the bank concerned; (2) their prospects; (3) the character of
their management;
(4) the
convenience, needs, and welfare of the
communities and the area concerned; and (5) whether or not the
effect of the acquisition would be to expand the size or extent of
the bank holding company system involved beyond limits consistent
Nith adequate and sound banking, the public interest, and the preservation of competition in the field of banking.
Discussion. — Applicants operate 8 banks (including National)
in. 6 counties of the State of Florida, with aggregate deposits of
$324,602,000. As of December 31, 1958, these banks represented
2°9 Per cent of the total number, and held 7.2 per cent of the total
deposits, of all banks in Florida. Applicants presently have 3 banks
in Duval County (in which Jacksonville is located) and one bank in
each of 5 other counties, none of which immediately adjoins Duval
County. As of June 10, 1959, there were 15 banks operating in Duval
C°untY with total deposits of $604,389,000, of which Applicants'
banks held $210,075,000 or 34.8 percent.
_3_
Although the proposed site of Southside is referred to
as being in Jacksonville, it is actually about one-half mile south
of the city limits of Jacksonville, at the intersection of Emerson
Avenue and 2hillips Hit7hway, in an area desi,neted as South
Jacksonville. This area extends approximately 10 miles south and
east of the downtown section of Jacksonville.
The populatjon of
J acksonville as of January 1, 1959, has been estimated at approximately 235,000. An analysis of relative growth shows that the
Populetion increase in the city of Jacksonville has been at a much
Slower pace than the growth elsewhere within Duval County.
It appears that Southsidets prjrzry service area would
encompass a major nortjon of South Jacksonville, extending from the
Proposed location of Southside approximately two miles to the St.
Johns River to the north, northvest,and southwest; beyond and somewhat parallel to U. S. Highway 90 to the northeast; and about four
to seven miles to the south and southeast. This area has an estimated population of between 15,000 and 20,000, and presently no
bank is located therein. Two banks not connected with bank holding
e°T'Panies are located, respectively, about 2 miles and 3.5 miles to
the northwest of Southsidets proposed site. The facts indicate that
the over-all growth anr.' development in the South Jacksonville area
in the recent past has been greater in the designated primary service
area of Southside than in the remaining portion of South Jacksonville,
and the primary service area should enjoy a major share of South
Jacksonville's future growth.
'lith respect to the statutory factors that the Board must
consider in passing upon this application, it appears that the conand prospects of the holding companies are good and that their
mana7,emcnts are competent, anC. that Southside's prospects would also
be favorable and its management competent. The facts support the
conclusion that establishment and operation of the bank would contribute materially to the convenience of present and future businesses
and residents of the portion of South Jacksonville to be served by
the new bank, especially in view of anticipated continued growth in
that area.
It remains to be considered whether the proposed acquisition
11°111dl expand the size or extent of the holding company system beyond
limits consistent with adequate and sound banking, the public interest,
and preservation of co'lpetition in the field of banking.
The proposed acquisition would not significantly increase
APPlicants' percentages of control of banking offices or deposits
Ilithin the State of Florida. It would cause Applicants to control
4 of
16 banks in Duval County and 4 of 15 banks in the Jacksonville
a'rea.
According to Applicants' estimate of Southside's deposits at
the end of its first year of operation, an estimate that appears
reasonable in the juegment of the Board, the acquisitjon would result
ill an increase in Applicants' percentage of control of total deposits
°f banks from 34.8 per cent to 35.1 per cent in Duval County and from
35
per cent to 35.5 per cent in the Jacksonville area; and it would
cause Applicants to control one of 3 banks in the South Jacksonville
area' with approximately 7 per cent of the total deposits of these
3 banks.
Applicants' present 3 banks in Duval County cre located,
respectively, 3.8, 4.9, arid 9.5 miles from the site of the proposed
new bank. The nearest of these banks, and by far the largest, is
located in the downtown section of Jacksonville and is in competition
Idith
4 other
downtown banks, 2 of which are large banks.
On the basis of these facts, it does not appear that the
Proposed transaction would result in undue concentration of control
Of banking resources by the Applicants in the relevant areas indicated above.
The proposed transaction would not, in the Boardts judgment,
have an adverse competitive effect upon non-holding-company banks in
the areas concerned, in view of the distances of the nearest of such
banks from the proposed location of Southside, the size of those
tanks, and the present and probable future population of the South
Ja cksonville area and, more particularly, of Southsidets primary
service area.
On the basis of the entire record in this case, the Board
ec)ncludes that the proposed acquisition would probably meet e7.1isting
and Potential needs for banking services in, and materially contribute
to the convenience and welfare of, the communities and area concerned,
and that the proposed acquisition would not expand the Applicants'
h°1d1ng company system beyond limits consistent with adequate and
sc)und banking, the public interest, and preservation of competition
in the field of banking.
1
g)k
-6Conclusion. - The above views were incorporated in the
Tentative Statement issued in connection with the Notice of
Tentative Decision published in the Federal Register on October 16,
1959 (24 FR 8423), affording interested persons an opportunity to
submit comments on, or objections to, the Board's proposed action.
Consideration has been given to comments that have been received.
Viewing the relevant facts in the light of the purposes
°f the Act and the factors enumerated in section 3(c) of the Act, it
is the judgment of the Board that the proposed acquisition would be
consistent with the statutory objectives and the public interest and
that, accordingly, the applications should be approved. It is so
ordered.
November 5, 1959
4 t ti
BOARD OF GOVERNORS
0t,
,
0
Item No.
OFTHE
11/5/59
FEDERAL RESERVE SYSTEM
WASHINGTON
0
0
0
°mac OF THE CHAIRMAN
1,24'
ooqoo*
November 12, 1959
The Honorable Charles O. Porter?
House of Representatives,
Washington 25, D. C.
Dear Mr. Porter:
In my letter of October 5 I stated that the
Board's staff was being asked to study the questions presented in your letter of September 25, 1959, regarding the
feasibility of the suggestions in the monetary reform bill
that you contemplate introducing in the next session of
Congress.
The staff has now provided the Board with a
memorandum summArizing the results of its study of your
tentative proposal. As you may be interested in reading
the memorandum, I enclose a copy for your information.
sincerely yours*
(Signed) Win. M.cC. Martin, Jr.
Wm. Mc0. Martino Jr.
Enclosure.
6
BOARD OF GOVERNORS
OF THE
Item No.
FEDERAL RESERVE SYSTEM
11/5/59
WASHINGTON
OFFICE OF THE CHAIRMAN
November
18, 1959
The Honorable Wright Patman,
Vice Chairman,
Joint Economic Committee,
1201 House Office Building,
Washington 25, D. C.
Dear Mr. Patman:
I am transmitting herewith copies of answers to your
48 supplementary questions to my testimony before the Joint
Economic Committee on July 27, submitted with your letter of
August 17. In preparing the answers, we have tried to accommodate your request that replies be brief. In every case,
however, I am afraid we have not succeeded, although we have
endeavored to avoid repetition by combining answers to related
questions.
Even though you suggested that quick and short answers
to the questions should be possible, the preparation of adequate
responses has taken a good deal of time. In part this has resulted from the range of subjects covered. I trust that the
time required to complete answers to your questionnaire has not
impeded unduly your Committee's work.
Sincerely yours,
v
Wm. McC. Martin, Jr.
Enclosures
7
t)(
BOARD OF GOVERNORS
OF THE
Item No. 8
FEDERAL RESERVE SYSTEM
11/5/59
WASHINGTON 25, D. C.
ADDRESS
orrimAL
CORRESPONDENCE
TO THE SOARD
November 5, 1959
Mr. B. F. Groot, Vice President,
Federal Reserve Bank of Boston,
Boston 6, Massachusetts.
Dear Mr. Groot:
In accordance with the request contained
in your letter of October 15, 1959, the Board
approves the designation of Fred D. Sahagian as a
special assistant examiner for the Federal Reserve
Bank of Boston for the purpose of participating in
the examinations of:
Depositors Trust Company, Augusta, Maine;
The Merrill Trust Company, Bangor, Maine;
The Connecticut Bank and Trust Company,
Hartford, Connecticut; and
Rhode Island Hospital Trust Company,
Providence, Rhode Island.
The authorization heretofore given your
Bank to designate Mr. Sahagian as a special assistant
examiner is hereby canceled.
Very truly yours,
(Signed) Kenneth A. Kenyon
Kenneth A. Kenyon,
Assistant Secretary.
@FedFRASER