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Minutes for October 26, 1962 To: Members of the Board From: Office of the Secretary Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement With respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. Otherwise, please initial below. If you were present at the meeting, your initials will indicate approval of the minutes. If You were not present, your initials will indicate only that you have seen the minutes. Chin. Martin Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Gay. Mitchell VC7_1(3-- Minutes of the Board of Governors of the Federal Reserve SYEtem on Friday, October 26, 1962. The Board met in the Board 11°014 at 1000 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Martin, Chairman Robertson Shepardson King Mitchell 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. Noyes, Director, Division of Research and Statistics Mr. Harris, Coordinator of Defense Planning Mr. Koch, Associate Director, Division of Research and Statistics Mr. Brill, Adviser, Division of Research and Statistics Mr. Holland, Adviser, Division of Research and Statistics Mr. Furth, Adviser, Division of International Finance Mr. Mattras, General Assistant, Office of the Secretary Mr. Eckert, Chief, Banking Section, Division of Research and Statistics Mr. Yager, Chief, Government Finance Section, Division of Research and Statistics Mr. Axilrod, Senior Economist, Division of Research and Statistics Mr. Goldstein, Economist, Division of International Finance 01221212.111et review. Mr. Yager discussed developments in the 111 ,ument securities market, following which Mx. Goldstein reported on 4 W26/62 Cent developments in foreign exchange markets. Mr. Axilrod then "ft*nted on bPnk credit and related matters, in which connection there was distributed a table summarizing monetary developments du/bi4.41g. the four-week period ended October 24, 1962. It was underst°0d. that copies of the analysis presented by Mr. Axilrod would be Ine 'de available to the members of the Board for their further review. Defense planning. In light of the Cuban situation, Mr. 48‘tria presented a progress report on developments in connection " 1 1 Pederal Reserve defense planning. All members of the staff except Messrs. Sherman, Kenyon, ?kW° and Mattras then withdrew and the following entered the 0011: Mr. Hackley„ General Counsel Mr. Leavitt, Assistant Director, Division of Examinations Mr. Thompson, Assistant Director, Division of Examinations Discount rates, The establishment without change by the 4-4,1. Reserve Barks of New York, Cleveland, Richmond, Atlanta, No, St. Louis, and Dallas on October 25, 1962, of the rates (41418eounts and advances in their existing schedules was approved ki1144401sly0 with the understanding that appropriate advice would be ' 14 to 4 those Banks. _Circulated item. The following item, a copy of which is tt hed to these minutes as Item No. 10 was approved unanimously: 10/26/62 I:atter to Federation Bank and Trust Company, New York, New York, ;T)roving the establishment of a branch on Strang Avenue, ' 4 urckigh. of the Bronx. Nichols Investment Corporation (Item No. 2). There had beell distributed a memorandum from the Division of Examinations liated October 25, 1962, submitting a draft of proposed letter t° Nichols Investment Corporation, Terre Haute, Indiana, granting a determination that the corporation was not a holding company 4irr11iate except for the purposes of section 23A of the Federal Reserve Act. The memorandum pointed out that two brothers, George 0. ''441 John G. Nichols, awned 90 per cent of the stock of the Riell°16 Corporation, which company awned 10 small loan companies 41clag With 52 per cent of the stock of the Farmers and Merchants / 1 440nal Bank of Monticello, Monticello, Indiana. It was brought (Alt ' also, that the same two brothers owned 100 per cent of the .1;c'ek of Kimball Agency, Inc., Kimball, Nebraska, an insurance 4Rencv 4 and insurance brokerage business which owned over 50 per cent Ot the stock of The American National Bank of Kimball, Kimball, ile131‘48ke— Kimball Agency, Inc., had received on November 22, 1961, 4 determination that it was not a holding company affiliate except t°1" the Purposes of section 23A. In discussion, Governor Robertson said that although this QaEle 4PPeared to fall within the Board's policy applicable to soone-bank cases, this was a situation where he doubted seriously 10/26/62 that the rule was appropriate. He pointed out that the two brothers tI qUestion controlled two banks through different companies and that tillic4igh the Nichols Corporation they combined small loan activities Irith banking operations. In reply to a question, Mr. Thompson affirmed that it was 11°88ib1e for one individual or a group of individuals to own a number °t "mPanies each of which owned one bank, and for each such company t° Obtain a section 301 determination. Such determinations, he 14semtght out, are made for the companies concerned and do not go to °114111 banking. The proposed letter to Nichols Investment Corporation was th141 .%P.E2y21, Governor Robertson dissenting. A copy of the letter le a ttlx4*ed as Item No. 2. rt on co etitive factors Westminster-Manchester There had been distributed a draft of report to the Federal 41410eit Insurance Corporation on the competitive factors involved the proposed merger of Manchester Bank, Manchester, Maryland; The Carrro, ' 144. Trust Company, Manchester, Maryland; and Carroll County IlikticnIal Bank, Westminster, Maryland. There being no objection, the report was approved unanimously 14° ttansmittal to the Corporation. The conclusion therein read as -"MVS: 41 10/26/62 _5.. The proposed merger would add substantially to the resources of the largest bank in the area and would eliminate competition between the two banks involved. It would also expose Hampstead Bank of Carroll County to competition from a much larger bank. (The report brought out that The Carroll Trust Company had been (310nized recently as a means, necessary under State law, of securing tlillst powers for the State bank that would result from the proposed 4:er. It had no significance from a competitive point of view.) The meeting then adjourned. Secretary's Note: Governor Shepardson today approved on behalf of the Board the following items: 110. Letter to the Federal Reserve Bank of Atlanta (attached Item Z-z3.2.) approving the designation of four employees as special-4-Lstant examiners. Letter to the Federal Reserve Bank of St. Louis (attached Item approving the appointment of James H. Martin as assistant xatiner. Memoranda from appropriate individuals concerned recommending the, ' °110wing actions relating to the Board's staff: °int/neat .Nt,MarY Janice Krummack as Economist, Division of Research and 4 etica, with basic annual salary at the rate of $6,675, effective the ' ate of entrance upon duty. tance of resignation 001-eraan Bado, Chauffeur, Division of Administrative Services, eTte,.... 'Ave at the close of business December 31, 1962. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 1 10/26/62 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD October 26, 1962. Board of Directors, Federation Bank and Trust Company, New York, New York. Gentlemen: The Board of Governors of the Federal Reserve System approves the establishment of a branch on the south side of Strang Avenue, 100 feet west of the intersection of Strang Avenue and Baychester Avenue, Borough of the Bronx, New York, New York, provided the branch is established within one year from the date of this letter. The capital of this bank has been somewhat below a desirable level for some time, and the Board notes that approval of the New York State banking authorities was conditioned upon the bank's providing an acceptable relationship of capital funds to modified risk assets Within a reasonable time. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. V BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 2 10/26/62 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD October 26, 1962. * George O. Nichols, President, "lchols Investment Corporation, 728 Wabash Avenue, Terre Haute, Indiana. Bear Mr, Nichols: your request, submitted through the Federal Rese • This refers to Governors of rve Bank of Chicago, for determination by the Board of n_ the Federal Reserve System as to the status of Nichols Investment Qrporation as a holding company affiliate. ' The Board understands that Nichols Investment Corporation is l rged in the business of furnishing management for, and arranging ei t y corporations which operate Aft Q‘licing for, its wholly-owned subsidiar icensed small loan companies; that the Corporation awns, for in, yes+ stock of paa,:ent purposes, 52 per cent of the outstanding shares of o, Indiana; Monticell kilcCers and Merchants National Bank of Monticello, or conown y, tzvthat the Corporation does not, directly or indirectl on other instituti thnt anY stock of, or manage or control, any banking —"Farmers and Merchants National Bank of Monticello. In view of these facts, the Board has determined that Nichols Lbje blIw ciallent Corporation is not engaged, directly or indirectly, as a b 4Iless in holding the stock of, or managing or controlling, banks, the in,g associations, savings banks, or trust companies within ten, and, amended; aee ing of section 2(c) of the Banking, Act of 1933, as ' company °12,,clinglY, the Corporation is not deemed to be a holding . att., Reserve kt'Late except for the purposes of section 23A of the Federal in Governors of oTA J and does not need a voting permit from the Board 4er to vote the bank stock which it owns. ' that If, however, the facts should at any time indicate engaged, this so tatt e Investment Corporation might be deemed to be reserves Board The the"should again be submitted to the Board. 1:1-ght to rescind this determination and make further determination ot 4, 'ule matter at any time on the basis of the then existing facts. f BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM George O. Nichols -2- 1!_articu1ar1y, should future acquisitions by or activities of the poration or its subsidiaries result in its attaining a position l'ithereby the Board may deem desirable a determination that the Corpora41)la is engaged as a business in the holding of bank stock, or the ,afriaging or controlling of banks, the determination herein granted mLaY be rescinded. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. 410 BOARD OF GOVERNORS OF THE Item No. FEDERAL RESERVE SYSTEM 3 10/26/62 WASHINGTON 25, D. C. ADDRESS °mow. CORRESPONDENCE TO THE BOARD' October 29, 1962 *. Geo. W. Sheffer, Jr., Chief Examiner, Federal Reserve Bank of Atlanta, Atlanta 3, Georgia. Dear Mr. Sheffer: In accordance with the request contained in Your letter of October 19, 1962, the Board approves the designation of the following employees as special assistant examiners for the Federal Reserve Bank of Atlanta for the purpose of participating in examinations of State member banks: George W. Allcorn James D. Richard Frank D. Young Mack K. Gross Appropriate notations have been made on our records of the names to be deleted from the list of ePecial assistant examiners. Very truly yours, (signed) Faizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. 411 BOARD OF GOVERNORS OF THE Item No. Z. 1026/62 FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD October 29, 1962 CONFIDENTIAL (FR) Mr. 0. O. Myrick, Vice President, Federal Reserve Bank of St. Louis, St. Louis 66, Missouri. Dear Mr. Myrick: In accordance with the request contained in Your letter of October 17, 1962, the Board approves the er appointment of James H. Martin as an assistant examin for the Federal Reserve Bank of St. Louis. Please advise the effective date of the appointment. It is noted that Mr. Martin will sell the twenty shares of stock of Mercantile Trust Company, St. Louis, Martin Missouri, a State member bank, owned jointly by Mr. and his wife, and that his wife, currently employed as a teller in that bank, will sever her connection with that institution. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary.
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