Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, October 25, 1965, Volume 52, Part 10

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9

Minutes for

To:

Members of the Board

From:

Office of the Secretary

October 25, 1965

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. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Gov. Maisel

4,ry
tilt

Minutes of the Board of Governors of the Federal Reserve
System on Monday, October 25, 1965.

The Board met in the Board Room

at 10:00 a.m.
PRESENT:

Mr.
Mr.
Mr.
Mr.

Robertson, Acting Chairman
Shepardson
Daane
Maisel
Mr. Sherman, Secretary
Mr. Kenyon, Assistant Secretary
Mr. Young, Adviser to the Board and Director,
Division of International Finance
Mr. Molony, Assistant to the Board
Mr. Cardon, Legislative Counsel
Mr. Fauver, Assistant to the Board
Mr. Solomon, Director, Division of Examinations
Miss Eaton, General Assistant, Office of the
Secretary
Mr. Morgan, Staff Assistant, Board Members'
Offices
Mr. Furth, Consultant
Messrs. Brill, Holland, Koch, Partee, Solomon,
Axilrod, Bernard, Eckert, Ettin, and Beck
of the Division of Research and Statistics
Messrs. Hersey, Katz, Sanutions, Reynolds, and
Baker of the Division of International
Finance

Money market review.

Reports on the Government securities

Market and on foreign exchange matters were given by Messrs. Bernard
arid Baker, and tables were distributed affording perspective on the
r11°Iley and capital markets.
Mr. Koch commented on recent operations of the Trading Desk.
Re also mentioned that there had been distributed to the Board under
date of October 21, 1965, a memorandum summarizing recent experience
in estimating net borrowed reserves, which he thought would clarify

10/25/65

-2-

the record somewhat and on which the staff invited questions from the
members of the Board.
After a general discussion of the reports, all members of the
staff except Messrs. Sherman, Kenyon, Young, Molony, Cardon, Fauver,
Solomon (Examinations), and Sammons, and Miss Eaton withdrew and the
following entered the room:
Hackley, General Counsel
O'Connell, Assistant General Counsel
Leavitt, Assistant Director, Division of Examinations
Forrestal, Senior Attorney, Legal Division
Heyde, Attorney, Legal Division
Dahl, Chief, Special Studies and Operations Section,
Division of International Finance
Mr. Egertson, Supervisory Review Examiner, Division of
Examinations
Mr. Poundstone, Review Examiner, Division of Examinations

Mr.
Mr.
Mr.
Mr.
Mr.
Mr.

Discount rates.

The establishment without change by the fol-

lewing Federal Reserve Banks on October 21, 1965, of the rates on disc°uPts and advances in their existing schedules was approved unanimously,
with the
understanding that appropriate advice would be sent to the
re sPective Banks:

New York, Philadelphia, Chicago, and San Francisco.

Circulated or distributed items.

The following items, copies

Of which are attached to these minutes under the respective item numbers indicated, were approved unanimously:
Item No.
Ltetter to Chase International Investment Corporaa l", New York, New York, granting consent to the
e quisition of shares of a Western Hemisphere trade
e°rPoration to be known as Estano Aluvial, S.A. 1/

1

T he letter, as approved, reflected certain changes suggested at this
meeting in the draft that had been distributed.

tir)I
tit JP 1•

10/25/65

-3Item No.

Letter to The Rittman Savings Bank, Rittman, Ohio,
approving (1) the establishment of a branch on
North Main Street near the Rittman Shopping Center
and (2) an additional investment in bank premises.

2

Letter to Central Savings Bank and Trust Company,
Monroe, Louisiana, approving the establishment of
a branch at 401 North Fourth Street.

3

Letter to Security Bank and Trust Company, Lincoln
Park, Michigan, approving the establishment of a
branch at 1673 Fort Street.

4

Letter to Southern Arizona Bank & Trust Company,
Tucson, Arizona, approving the establishment of a
branch at 3667 East Grant Road.

5

Report on competitive factors (Martinsville-Stuart, Virginia).
Unanimous approval was given
to the transmittal to the Comptroller of

the Currency of a report on the competitive factors involved in the
Proposed merger of Patrick County Bank, Stuart, Virginia, into The
First National Bank of Martinsville and Henry County, Martinsville,
Virginia.

The conclusion read as follows:

The proposed merger of Patrick County Bank, Stuart,
into The First National Bank of Martinsville and Henry
County, Martinsville, would eliminate a small amount of
competition which exists between the two banks. Effectuation of the proposal would change, to some extent, the
nature of banking competition in Stuart. The First National
Bank of Stuart, which now competes locally with Patrick
Bank, of comparable size, would thereafter be in direct
competition with a branch of a substantially larger bank.
Bank of Dublin matter (Item No. 6).

In a distributed memorandum

dated October 22, 1965, Mr. Hackley noted that on October
4, 1965, the

r

10/25/65

-4-

Board granted a request of The First Virginia Corporation, Arlington,
Virginia, for access to the confidential sections of certain examination reports of the Bank of Dublin, Dublin, Virginia, which was now
merged into a subsidiary of First Virginia Corporation, in connection
With the latter's effort to establish its claim under a bankers blanket
bond

issued to the Bank of Dublin.

In requesting access to the con-

fidential sections, First Virginia Corporation had agreed
not to cite
or quote, or otherwise reveal, any of the information therein without
first obtaining authorization from the Board.

In a letter of October 21,

First Virginia requested authority to quote in its proof of loss to be
filed with the bonding company a question from the officers' question11'9i-re, included in the confidential section of the examination reports,
and the response furnished by the executive vice president of Bank of
tsubli .
the

The question in effect asked for a listing of loans made for

accommodation of others than those whose names appeared on the

bank,
s records, and the reply was "none."

First Virginia did not pro-

13°se to refer to the source of the quotation, but would merely use a
description.
Governor Robertson suggested that a check be made to make sure
that the reference in the confidential section was an exact quotation
fr Om the officers' questionnaire, and Mr. O'Connell said he would check

this with the Federal Reserve Bank of Richmond.

3:3G,
10/25/65

-5-

The request of First Virginia Corporation to quote the item
in question in the manner indicated then was granted.

A copy of the

letter sent to First Virginia Corporation is attached as Item No. 6.
Request for copies of applications (Item No. 7).

In a dis-

tributed memorandum dated October 13, 1965, the Legal Division reported
that in a letter dated August 13, 1965, transmitted through the Federal
Reserve Bank of Atlanta, Mr. James B. McDonough, Jr., an attorney in
Tampa, Florida, had requested copies of applications
filed by the
First National Bank of Tampa and the Union Security and Investment
Company, both of Tampa, Florida, with respect to the acquisition of
v°ting stock to be issued by Second National Bank of Tampa, Tampa,
Florida, a then proposed
new bank.

These applications were approved

by order of the Board dated May 18, 1964.

At its meeting on September 15,

1965, the
Board adopted an amendment to its Rules of Procedure providing
that "Unless the Board shall otherwise direct, each holding company and
Merger application received subsequent to October 30, 1965, shall be
inade available for inspection by the public except for portions thereof
'9s to which the Board determines that disclosure would not be in the
Public interest."

Therefore, the applications in question were tech-

nical,
-l y subject to the Board's previous rule that in the absence of an
°rder for a public proceeding such an application was not available for
Pection by the public except in circumstances in which the Board
deemed such disclosure to be in the public interest.

No public hearing

10/25/65

-6-

or presentation was ordered in connection with the applications sought
by Mr. McDonough.
In the opinion of the Legal Division at least two arguments, as
set forth in the memorandum, could support denial of the request, but
other arguments would support granting the request.

On balance the

Division recommended granting the request.
The request for access to the applications was approved unanimously, together with a letter to Mr. McDonough in the form attached
to these minutes as Item No. 7.
Request was also made in the October 13 memorandum that the
%)ard grant to the staff a continuing authorization to receive and
determine similar requests for access to applications filed with and
acted upon by the Board prior to October 30, 1965.

Under such an

authorization the staff would assume the responsibility in each
instance of reviewing the application so as to protect against
release of any material considered to be of a confidential nature.
The continuing authorization was granted, with the understanding that any unusual situation would be brought to the attention of the Board.
The meeting then adjourned.
Secretary's Notes: On October 22, 1965,
Governor Shepardson approved on behalf
of the Board the following items:

10/25/65

-7-

Letter to the Federal Reserve Bank of New. York (attached Item No. 8)
approving the appointment of William H. Braun, Jr., as examiner.
Memoranda recommending the following actions relating to the Board's
staff:
Aaa2LIEL.21
Constance I. Stokes as Stenographer, Division of Personnel Administration, with basic annual salary at the rate of $4,005, effective the
date of entrance upon duty.
Sa-ary increases
Patricia A. Schoen, Stenographer, Division of Research and Statistics,
from $4,630 to $5,000 per annum, with a change in title to Secretary,
effective October 24, 1965.
Jacqueline Schuster, Statistical Clerk, Division of Data Processing,
from $5,660 to $6,060 per annum, with a change in title to Digital
Computer Programmer, effective October 24,-1965.
Tra
,.
Denise C. Blackburn, from the position of Statistical Clerk in the
?ion of Research and Statistics to the position of Statistical
?asistant in the Division of International Finance, with an increase
In basic annual salary from $4,480 to $5,000, effective November 7, 1965.
Governor Shepardson today approved on behalf
of the Board a letter to the Bureau of the
Budget (attached Item No. 9) forwarding certain schedules for calendar years 1964, 1965,
and 1966, for use in making a presentation on
a memorandum basis of data on the financial
operations of the Board of Governors in a
separate section of the 1967 Federal budget
document.

Item No. 1
10/25/65

BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS

orriciAL

CORRESPONDENCE

TO THE BOARD

October 25, 1965.

Chase International Investment Corporation,
I Chase Manhattan Plaza,
New York, New York. 10005
Gentlemen:
In accordance with the request contained in your letter of
JulY 19, 1965, transmitted through the Federal Reserve Bank of New York,
and on the basis of information furnished, the Board of Governors grants
consent for your Corporation to purchase and hold approximately 8 per
cent of the common shares of a Western Hemisphere trade corporation to
bC know as Estano Aluvial, S.A., at a cost of approximately US$333,000,
Provided such stock is acquired within one year from the date of this
letter.
It is the Board's understanding that Estano Aluvial, S.A.,
will not (1) engage in the business of underwriting, selling, or dis,t_ributing securities in the United States nor (2) engage in the general
b usiness of buying or selling goods, wares, merchandise, or commodities
in the United States or transact any business in the United States except such as may be incidental to its international or foreign business.
The foregoing consent is given with the understanding that
the foreign loans and investments of your Corporation, combined with
those of The Chase Manhattan Bank (National Association) and Chase
nhattan Overseas Banking Corporation, including the investment now betng approved, do not exceed the guidelines established under the volunarY foreign credit restraint effort now in effect.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.

Item No. 2
10/25/65

BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
ADDRESS arrociiit. CORRESPONDENCE
TO THE SOARD

October 25, 1965

Board of Directors,
The Rittman Savings Bank,
Rittman, Ohio.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by The Rittman Savings
Bank, Rittman, Ohio, of a branch on North Main Street
near the Rittman Shopping Center, Rittman, Ohio, provided
the branch is established within six months from the date
of this letter.
The Board of Governors also approves, under the
provisions of Section 24A of the Federal Reserve Act, an
additional investment in bank premises of $40,000 for the
purposes of acquiring land and for the construction of
a building thereon in which the proposed branch will be
located.
Very truly yours,
(Signed) Karl E. Bakke

Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)

Item No. 3
10/25/65

BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
.

AOORrell arricom. COPINICOPONOCNOC
TO THE ROAR°

October 25, 1965

Board of Directors,
Central Savings Bank and Trust Company,
Monroe,. Louisiana.
Gentlemen:
The Board of Governors of the Federal Reserve System
aPproves the establishment by Central Savings Bank and Trust
Company, Monroe, Louisiana, of a branch at 401 North Fourth
Street, Monroe, Louisiana, provided the branch is established
'Within six months from the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke

Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
11°ard also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)

44
1
ej•evi#/

BOARD OF GOVERNORS

Item No. 4
10/25/65

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, 0. C. 20531
ACIONEMS

ornotAL

COREESPONOIENCE

TO THE BOARD

October 25, 1965

Board of Directors,
Security Bank and Trust Company,
Lincoln Park, Michigan.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by Security Bank and
Trust Company, Lincoln Park, Michigan, of a branch at
1673 Fort Street, Lincoln Park, Michigan, provided the
branch is established within six months from the date of
this letter.
Very truly yours,
(Signed) Karl E. Bakke

Karl E. Bakke,
Assistant Secretary.

(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)

Item No. 5
10/25/65

BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20581
ADDRESS

OFFICIAL

CORRICIPPONOICNCE

TO THIE SOARD

October 25, 1965

Board of Directors,
Southern Arizona Bank & Trust Company,
Tucson, Arizona.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by Southern Arizona
Bank & Trust Company, Tucsonl Arizona, of a branch at
3667 East Grant Road, Tucson, Arizona, provided the branch
is established within one year from the date of this letter.
Very truly yours,
(Sighed) Karl E. Bakke

Karl E. Bakke,
Assistant Secretary.
(The letter to the Reserve Bank stated that the
Board also had approved a six-month extension
of the period allowed to establish the branch;
and that if an extension should be requested,
the procedure prescribed in the Board's letter
of November 9, 1962 (S-1846), should be followed.)

tzkrv7if
Item No. 6
10/25/65
BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE SOARES

October 25, 1965.

The First Virginia Corporation,
2924 Columbia Pike,
Arlington, Virginia. 22204
Attention

Mr. Ralph A. Beeton, President

Gentlemen:
This refers to your letter of October 21, 1965, referring
to the Board's letter of October 4, 1965, and requesting permission
t° quote in the Proof of Loss to be filed by First Virginia
Corporation under a Bankers Blanket Bond issued to the Bank of Dublin,
. ncorporated, Dublin, Virginia, an item cited at page E(1)-(c) of
the confidential section of the report of examination of the Bank of
Dublin as of May 3, 1965, by the Federal Reserve Bank of Richmond,
sPeeifically Item 15 of the "Officers' Questionnaire" and the response
Made by Executive Vice President Evans of the Bank of Dublin to that
item.
It is understood that, if such permission is granted, First
Vi
rga Corporation's Proof of Loss would include a description along
the
following lines set forth in your letter of October 21, 1965:
"On the occasion of the examination of the Bank of
Dublin by the Federal Reserve Bank of Richmond as of
January 25, 1965 and May 3, 1965, the following question
was submitted in writing to Mr. Evans: 'List loans,
advances, and other extensions of credit made since last
examination for accommodation of others than those whose
names appear on bank's records or on notes or credit instruments in connection with such loans, advances and extensions.'
Mr. Evans' written response to the above question was on each
occasion, 'None'."
In the circumstances attending this matter and for reasons
-Alar
to those for which the Board, in its letter of October 4, 1965,
aranted access by First Virginia Corporation to the confidential portions

The First Virginia Corporation

of the January 25 and May 3, 1965, reports of examination of the
Bank of Dublin, the Board now grants to First Virginia Corporation
permission to quote Item 15, and the response thereto, for the purPoses and in the manner indicated in your letter.
Very truly yours,

Secretary.

BOARD OF GOVERNORS

Item No. 7
10/25/65

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
AOORICHS

arriciAL

CORAIMPONOIENCE

TO THE ROAR°

October 25, 1965.

James B. McDonough, Jr., Esq.,
MacFarland, Ferguson, Allison and Kelly,
612 Florida
Avenue,
O. Box 1531,
J.ampa, Florida. 33801
Dear Mr. McDonough:
Further reference is made to your letter of August 13, 1965,
wherein you
request that the Board make available to you copies of the
PPlications filed by the First National Bank of Tampa and the Union
°ecurity and Investment Company,
both of Tampa, Florida, for approval
the acquisition of 80 per cent or more of the voting stock to be '
kssued by Second National Bank of Tampa, Tampa, Florida, a proposed
new
1-3ank.
The Board has approved your request and has directed its staff
have copies of the applications reproduced. When complete
d, the
!
eProduced copies will be forwarded together with a statemen
t
of the
'
138t to you for such
reproduction.
to

Very truly yours,
(Signed) Merritt Sherman

Merritt Sherman,
Secretary.

C
I

Item No. 8
10/25/65

BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

October 22, 1965

Mr. Alfred Hayes, President,
Federal Reserve Bank of New York,
New York, New York. 10045
Dear Mr. Hayes:
In accordance with the request contained in
your letter of October 20, 1965, the Board approves the
appointment of William H. Braun, Jr. as an examiner for
the Federal Reserve Bank of New York, effective today.
Very truly yours,
(Signed) Elizabeth L. Carmichael

Elizabeth L. Carmichael,
Assistant Secretary.

itZ ii-71„,)
t

BOARD OF GOVERNORS

k

Item No.
10/25/65

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS

arruciAt. CORRESPONDENCE
TO THE BOARD

October 25, 1965

The Honorable Charles L. Schultze
Director
Bureau of the Budget
20503
Washington, D. C.
Dear Hr. Schultze:
We are forwarding herewith the following schedules for 1964,
1965 and 1966, for use in making a presentation on a memorandum basis
of data on the financial operations of the Board of Governors in a
separate section of the 1967 Federal budget document.
1. Salaries and Expenses by object classification
2. Program and Financing
3. Personnel Summary
4. Revenue, Expense and Retained Earnings
5. Balance Sheets
There is also enclosed a brief summary statement of the
slc legislation under which the Board operates, its program, and
its financing.
It should be noted that 1965 and 1966 data have been taken
from preliminary budgets submitted by our operating divisions. These
uudgets will be reviewed by the Board and should any significant
changes result from this review, revised tables will be submitted.
Members of the Board's staff have worked with representatives
of the Bureau in developing the above statements, and it is understood
that they contain the type of data desired.
Very truly yours,

(Signed) Merritt Sherman
Merritt Sherman
Secretary.
ExIclosures