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Minutes for To: Members of the Board From: Office of the Secretary October 21, 1963 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 , your below. If you were present at the meeting . If the minutes of l approva initials will indicate e indicat will s initial you were not present, your . minutes the only that you have seen Chin. Martin Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. Mitchell Minutes of the Board of Governors of the Federal Reserve SYstem on Monday, October 21, 1963. The Board met in the Board Room 4t 10:00 a.M. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Martin, Chairman Balderston, Vice Chairman Mills Robertson Shepardson Mitchell Sherman, Secretary Kenyon, Assistant Secretary Broida, Assistant Secretary Young, Adviser to the Board and Director, Division of International Finance Mr. Fauver, Assistant to the Board Mr. Spencer, General Assistant, Office of the Secretary Mr. Mr. Mr. Mr. Messrs. Koch, Garfield, Holland, Williams, Dembitz, Altmann, Eckert, Fisher, Gehman, Osborne, Partee, Peret, Wernick, and Yager of the Division of Research and Statistics Messrs. Furth, Hersey, Katz, Emery, Gekker, Gemmill, Goldstein, Lupo, Maroni, and Swerling of the Division of International Finance Economic review. The Division of International Finance commented °II international financial conditions after which the Division of Research 4141 Statistics presented information relating to the domestic economy, ilich included a review of money market developments. Following discussion based on those reviews, all members of the 8t4111 except Messrs. Sherman, Kenyon, Fauver, and Spencer withdrew and the 401lowing entered the room: Mr. Farrell, Director, Division of Bank Operations Mr. Solomon, Director, Division of Examinations ‘'11581:' 10/21/63 -2- Mr. Mr. Mr. Mr. Johnson, Director, Division of Personnel Administration Hexter, Assistant General Counsel Leavitt, Assistant Director, Division of Examinations Bakke, Senior Attorney, Legal Division Discount rates. Reserve The establishment without change by the Federal Banks of New York, Philadelphia, Minneapolis, and San Francisco On October 17, 1963, of the rates on discounts and advances in their existing schedules was approved unanimously, with the understanding that appropriate advice would be sent to those Banks. Circulated item. The following item, a copy of which is attached tO these minutes as Item No. 1, was approved unanimously: utter to the Federal Reserve Bank of Cleveland approving a elrision in the minimum of Grade 1 of the salary structures , o°r the Cincinnati and Pittsburgh Branches, and noting the ' incellation of the salary structure applicable to employees oe „ the Record Center resulting from the closing of the Athens Mr. Johnson then withdrew from the meeting. Texas). Report on competitive factors (Wichita Falls, There he.d. been distributed a draft of report to the Federal Deposit Insurance ,poration on the competitive factors involved in the proposed merger or nil, 441e Texas Bank, Wichita Falls, Texas, with First State Bank of Wichita Wichita Falls, Texas. the The conclusion of the draft report stated that a merger of '41° banks would not have an adverse effect on competition. In discussion it was brought out that, because Texas law does ric)t permit branch banking, a merger of the banks would result in the 1°sing of the banking office of The Texas Bank. Thus, residents of 35, 10/21/63 -3- the area near Sheppard Air Force Base would lose one of their two alternative sources of banking services. It was noted, in this con- that the merger would still be approvable if there were Ireaid reasons to offset, as seemed possible, the adverse competitive effect in the Air Force Base area. Agreement was then expressed with a suggested deletion of a sentence in the body of the report relating to the competitive situation, f°110wing which the report was approved unanimously for transmittal to the Corporation, with the understanding that the conclusion would read 4S follows: A merger of The Texas Bank, Wichita Falls, Texas, with First State Bank of Wichita Falls, Wichita Falls, Texas, would have an adverse effect on competition only to the extent that it would result in the elimination Of one of two banking offices serving persons residing In the area near Sheppard Air Force Base. Application of New Jersey Trust Company. There had been distributed a memorandum dated October 16, 1963, from the Division clf)caminations recommending approval of an application by New aelsseY Trust Company, Asbury Park, New Jersey, for permission to etablish a branch in the Borough of Oceanport, Monmouth County, 4e14 Jersey. Mr. Leavitt stated that subsequent to the time this matter Placed on today's agenda, a question had arisen with respect to the flling date of the application. When the case was originally ussed with the Federal Reserve Bank of New York, it was understood 3588 10/21/63 that the application of New Jersey Trust Company had been filed prior to September 25, 1963, the date on which First Merchants National Bank, AshIlrY Park, New Jersey, filed an application to establish a branch in (3ceanport. Therefore, it seemed that the application of New Jersey Tr11.8t Company had priority. However, Mr. Leavitt said, he later called the Federal Reserve Bank of New York to determine the exact date on /41ich the application of New Jersey Trust Company had been filed and IM8 informed that the bank apparently had not submitted a recent apIplication to the State Bank Commissioner; the application approved by the State Bank Commissioner for a branch in Oceanport was one submitted elIeral years ago by New Jersey Trust Company of Long Branch prior to Its merger with Asbury Park and Ocean Grove Bank. Since, in these 'eumstances, there seemed to be some question as to which application ell sholad be regarded as having priority, the Federal Reserve Bank of Nelg York was asked to explore this matter further. Accordingly, it w42 suggested that Board action be deferred. Following discussion, it was understood that action on the 1 411P ication of New Jersey Trust Company to establish a branch in 0ee8al.port would be deferred pending receipt of additional information *°111 the Federal Reserve Bank of New York. Federal Reserve notes (Item No. 2). There had been distributed 141(ler date of October 17, 1963, a draft of telegram to the Federal Rese_ -e Banks regarding the issuance of the one dollar Federal Reserve " 358 10/21/63 40tes expected to be shipped to all Federal Reserve Banks and branches ling November 1963. The draft telegram would point out that some 8Pecial interest had been indicated in the low-numbered notes of the new series, and that the Board believed it would be undesirable to release any law-numbered notes to individuals, regardless of their Position. The telegram would go on to relate that a suggestion had been °4de that such notes be retained in the archives of the Board and the Reserve Banks, and the Reserve Banks would be invited to submit their 00ments with regard to the disposition of the low-numbered notes. At the Board's request, Mr. Farrell commented on the matter, 11°.ting that it had been reported to the Board previously that there had been raised with the staff informally certain questions regarding the distribution of the initial Federal Reserve notes of the $1 denomination. The view of the Board had been that any such questions should be addressed to the Board by letter for determination. Mr. Farrell went on to mention that during recent conversations the Treasury Department, he had conveyed this view of the Board. Silbsequently, in conversation with a Reserve Bank officer regarding the Drobi A.em the suggestion had been made that sets of the lower-numbered 11°.tes of all the Reserve Banks be retained in the archives of the Board EL4c1 the twelve Federal Reserve Banks. The proposed telegram would solicit the views of the Reserve Banks. Following further discussion, the telegram to the Federal Reserve }3e.tit 8 was approved unanimously. A copy is attached as Item No. 2. 3590 10/21/63 -6- Whitney Holding Corporation (Item No. 3). There had been aistributed a memorandum dated October 17, 1963, from the Legal Division 11-th regard to a request by Whitney Holding Corporation, New Orleans, L°uisiana, for a further extension of time within which to comply with the condition contained in the Board's order of May 3, 1962, approving the formation of Whitney Holding Corporation, that Whitney National 8411k in Jefferson Parish, Louisiana, be opened for business within 31% months. The memorandum brought out that opponents of the holding company 44a secured a temporary injunction against the Comptroller of the Currency r11(3ra the United States District Court for the District of Columbia preventing the Comptroller from issuing the requisite charter to the Jefferson ish bank to do business. In a collateral action, a petition for review 131' the Board's order, pursuant to section 9 of the Bank Holding Company At vas filed in the United States Court of Appeals for the Fifth Circuit in New Orleans. Since the injunction precluded Whitney from complying th the Board's six-month proviso regarding the opening of the new bank, "sel for the Corporation petitioned the Board for modification of Its order to extend the time for compliance so that litigation to have the Injunction dissolved could be pursued. The request was granted by the Board, and the required date for opening of the Jefferson Parish b€tnk vas extended until November 4, 1963. Litigation concerning the injunction was still in progress, with 110 A ' erinite date for its conclusion in sight, and Counsel for Whitney 10/21/63 -7- Ro1d1ng Corporation was now petitioning the Board for another extension Of time within which to comply with the condition imposed by the Board. For reasons stated, however, the memorandum expressed the opinion that the Board had no jurisdiction to modify its original order. There set forth a comprehensive discussion of the authority of the Board to modify an order under the Bank Holding Company Act while judicial 1*cl/icy was pending, from which reasoning it was concluded that the court 14)111c1 have exclusive jurisdiction after the record of a case had been transmitted to the court. It was therefore recommended by the Legal nivision that Whitney Holding Corporation be advised to seek appropriate l'elief from the Court of Appeals, where the petition for review was Pending. A draft of letter to Counsel for Whitney Holding Corporation indaoating that the Board was of the opinion that it lacked jurisdict104 to grant the extension of time requested was attached to the memo- At the Board's request Mr. Bakke commented on the matter, his re/narks being based largely on the contents of the October 17 memorandum, --"vwing which there was general discussion of the question. Governor Mills expressed some concern that if there was a shadow t doubt about the legal interpretation that an extension of time such 48 requested was within the exclusive jurisdiction of the Court, Whitney 11°341ing Corporation should be given the benefit of that doubt. He noted, 3592 10/21/63 -8- 8411ong other things, that the Board's previous order granting an extension (3f time would expire on November 4, which raised the question whether the Court would have time to hear the case. Mr. Hexter said when Whitney Holding Corporation first requested an extension of the time within which Whitney National Bank in Jefferson Parish was to be opened for business, the significance of the fact that the record of the case was already in the hands of the Court had escaped the notice of the legal staff. He and Mr. Bakke had reviewed the matter thoroughly, and he was satisfied that Mr. Bakke's reasoning was clearly correct. Thus, although there might be always some slim area of doubt on 4 legal question of this kind, it appeared that Counsel for Whitney R°1cling Corporation had been in error in the first instance in requesting extension of time from the Board. There had also been an oversight °lithe part of the Board's staff in recommending favorable action by the 13(pard on the request. Governor Robertson pointed out that in any event Whitney Holding 'Poration was not left without recourse; it could seek relief from the eQiIrt. Furthermore, even if the Board acted on the request, the Court Q°4.41 still take a different position. In further discussion, Mr. Hexter pointed out that the statute giVes a reviewing court specific authority to modify orders of the Board. Regarding the point that the extension of time previously granted the Board would expire on November 4, Mr. Bakke said that the Court 359Q LO/21/63 -9- l'IoUld be entitled to grant interim relief pending determination of the ease on its merits. Counsel for Whitney could petition the Court for an appropriate extension of time pending resolution of the case on its Merits, and the Court could issue an immediate order to that effect. Mr. Fauver referred to a recent article in the American Banker indicating that the Court of Appeals had denied the petition of Whitney for rehearing, and it was understood that the Legal Division would consider the pertinence of this aspect of the matter. It was noted, however, that in any event Counsel for Whitney might wish to petition the SUPreme Court for certiorari. A suggestion was made by Governor Mitchell that the Board possibly c°Lad grant the request for an additional extension of time, while advising Whitney that such action probably was not of much value and that Whitney 811c1ld seek action from the Court to protect its interests. In discus- 81(3n of this suggestion, Mr. Hexter expressed the view that it was dc)1413tful whether the Board, contrary to sound principles of law, should 4ttemPt to modify a Board order when it did not have the power to do so. ellairman Martin then commented that in a matter of this kind it would set.. appropriate for the Board to follow the advice of its legal staff. Following further discussion, the letter to Counsel for Whitney 11014ing Corporation was approved. A copy is attached as Item No. 3. Request for report on competitive factors. that Mr. Solomon reported the Federal Reserve Bank of Dallas had received an informal request 3594 -10- 10/21/63 tor of the a copy of the report made by the Board to the Comptroller Currency on the competitive factors involved in the proposed consolidation Or Texas National Bank of Houston, Houston, Texas, and The National Bank or Commerce of Houston, Houston, Texas. (This report was transmitted on October 16, 1963.) e Bank by The request was made of the Dallas Reserv the two banks involved in the proposed consolidation. that the Board should Following discussion, it was the consensus usly decided nelt make an exception to the general position it had previo ed 11Pon that a request for a report on competitive factors should be direct ed. to the supervisory authority to whom the report had been render Accord- Houston the Federal Reserve Bank of Dallas should inform the two the hanks that their request should be presented to the Comptroller of Currency. g, Secretary's Note: Subsequent to this meetin letter a ed receiv ations Examin the Division of informing from the Federal Reserve Bank of Dallas asked had banks n Housto two the the Board that on report the of copy a for t reques that their awn. withdr be s factor competitive The meeting then adjourned. Secretary's Notes: Acting in the absence of Governor Shepardson, Governor Robertson approved on behalf of the Board on October 18, 1963, a letter to the Federal Reserve Bank of Boston (attached Item No. 4) approving the appointment of David F. Evans as assistant examiner. Governor Shepardson today approved on behalf of the Board the following items: 3595 10/21/63 11- Letter to the Federal Reserve Bank of New York (attached Item No. 5) • )roving the appointment of Leonard F. Hoffman as assistant examiner. Memorandum from the Division of Administrative Services recommending 4n increase in the basic annual salary of Edward Cross, Photographer (OffSet) in that Division, from $6,781 to $6,968, effective October 27, 1963. Secretary BOARD OF GOVERNORS Item No. 1 10/21/63 OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS 'OFFICIAL CORRESPONDENCE TO THE BOARD October 21, 1963 CONFIDENTIAL (FR) Mr. Roger R. Clouse, Vice President and Secretary, Federal Reserve Bank of Cleveland, Cleveland, Ohio. Dear Mr. Clouse: In response to your letter of October 4, 1963, revised the Board of Governors has approved the following ati Cincinn minimum ranges of the salary structures at the 1963: 3, and Pittsburgh branches, effectiVe September Cincinnati Grade 1 $2,626 Pittsburgh Grade 1 $2,652 The Board has noted the cancellation of the salary structure applicable to employees of the Record Center, resulting from the closing of the Athens Office. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary 3,597 Item No. 2 AM TELEGR SERVICE 1021/63 LEASED WIRE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON October 21, 1963. Pl'esidents of all Federal Reserve Banks Reserve notes are expected 'Limited numbers of the new $1 Federal during November. to be shipped to all Federal Reserve Banks and Branches Shortage of silver may necessitate issuance of some of these notes y not be (4414 December, but issues in large quantities will probabl 49111ired or desirable for several months thereafter. a press statement Treasury and Board staff are presently drafting 411143411cing the first issuance of the new notes. Draft of this statement 1/141 be submitted to your Bank for comments before release. notes Some special interest has been indicated in the Number 1 The Board believes Possibly other low numbers) of the new series. it v_ numbered notes to uuld be undesirable to release any very low (411d hid iv that uniform System policy iduals, regardless of their position, and be desirable in this regard. Suggestion has been made that such for example, 4(Ite4 should be retained in archives of Banks and Board; and furnish other Banks and - might keep its own Number 1 note lioer d with Numbers 2 through 13, with other Reserve Banks following a 4r procedure. 4re may Board would appreciate any comments your Bank to make with regard to disposition of law numbered notes. (Signed) Merritt Sherman SHERMAN. BOARD OF GOVERNORS Item No. 3 10/21/63 OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD October 21, 1963. 1 ,°1111 L. Monroe, Esq., 1 ,sillroe& Lemann, );44 'lleY Building, "ell Orleans, Louisiana. 70130 Re: Your case #1562-131-D 1)(4Lr Mr. Monroe: recius This is in reply to your letter of September 24, 1963, the sting a further extension of time within which to comply with ths Condition contained in the Board's order of May 3, 1962, approving °rmation of Whitney Holding Corporation, that Whitney National ' tiler in Jefferson Parish be opened for business within six months 0110ea-fter. This condition was the subject of an order by the Board IllIti tober 19, 1962, wherein the time for compliance was extended November 4, 1963. or The reason for these requested extensions is the inability Holding Corporation to comply with the requirement in the 1-tneY 1 8o , 8 original order regarding time of opening of the proposed new b 'due to an injunction entered by the United States District Court op the . of Columbia on July 6, 1962, preventing the Comptroller 'the Currency from issuing the requisite charter. The Board has carefully considered your most recent request, is of t. of the opinion that it lacks jurisdiction to grant an extension inie• (1. tj Section 9 of the Bank Holding Company Act of 1956 3.0. 1848) provides, in pertinent part, that ' "Upon the filing of such petition [i.e., a tition for judicial review of an order of the .0ard issued under the Act] the court shall have Jurisdiction to affirm, set aside, or modify the rder of the Board and to require the Board to _ake such action with regard to the matter under veview as the court deems proper. . . ." V Z 3599 Ilalcolm L. Monroe, Esq. -2-. Pi 1 to its amendment in 1_958, the foregoing section provided that upon tile.' would acfiling of the transcript in the case the reviewing court re the stated jurisdiction. A review of the legislative history 85-791; the statute effecting the 1958 amendment of section 9 (P. L. ory ic Stat. 941) leads to the conclusion that, although the statut state, a proper construetllage quoted above does not expressly so jurisdiction with th"14 of section 9 is that the Board has concurrent the order involved 0„?rqviewing court in regard to modification of aVr until the record in the case has been transmitted to the court, This is conei llhich time the court's jurisdiction becomes exclusive. ve law concerning with established principles of administrati Cial review of agency actions. fact that the In light of the foregoing, and in view of the Boar otAd has filed the record in your case with the United States Court n that any rer,PPeals for the Fifth Circuit, it is the Board's opinio 0.est for an extension of time within which to comply with the ' /30 4rdl e order should be addressed to that Court. is The Board recognizes that its position in this matter ittneistent with the action of a year ago, whereby your first Board direst for extension was granted. However, at that time the uction constr 41;4ot take into consideration the matter of statutory guidance the of t fitt°118eed above, and therefore did not have the benefi it. °rded thereby in acting upon the petition then before Very truly yours, .Ici/g/3.-Jt5- Secretary 1 3600 otit 4 BOARD OF GOVERNORS Item No. OF THE 10/21/63 4 A. tP.*. FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD October 21, 1963 Isr. Luther M. Hoyle, Vice President, ! rederal Reserve Bank of Boston, toston, Massachusetts. bear Mr. Hoyle: In accordance with the request contained in Mr. Aubrey's 1.:14 tv:,ter of October 10, 1963, the Board approves the appointment of Bank of !,-(1 P. Evans as an assistant examiner for the Federal Reserve ent. appointm the of 40eton. Please advise the effective date Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. 3601 BOARD OF GOVERNORS Item No. OF THE 10/21/63 5 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD : 1963 October 21 CoNp Howard D. Crosse, Vice President, meleral Reserve Bank of New York, "e14 York, New York. Dear Mr. Crosse: In accordance with the request contained in your letter of 0 , R ctober 11, 1963, the Board approves the appointment of Leonard F. N fman as an assistant examiner for the Federal Reserve Bank of w York. Please advise the effective date of the appointment. It is noted that Mr. Hoffman owns seven shares of stock Lew*ls County Trust Company, Lowville, New York, a State member and that he will dispose of this stock prior to his employment Y Your bank. Very truly yours, (signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary.
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