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Minutes for October 6, 1958 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, if you were present at the meeting, please initial in column A below to indicate that you approve the minutes. If you were not present, please initial in column B below to indicate that you have seen the minutes. A Chm. Martin Gov. Szymczak Gov. Vardaman Gov. Mills Gov. Robertson x Gov. Balderston xC/C4/3 Gov. Shepardson x / 2S65 Minutes of the Board of Governors of the Federal Reserve System on Monday, October 6, 1958. The Board met in the Special Library at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Balderston, Vice Chairman Vardaman Mills Robertson Shepardson Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Kenyon, Assistant Secretary Fauver, Assistant Secretary Thomas, Economic Adviser to the Board Young, Director, Division of Research and Statistics Marget, Director, Division of International Finance Hackley, General Counsel Masters, Director, Division of Examinations Farrell, Associate Director, Division of Bank Operations Conkling, Assistant Director, Division of Bank Operations Sammons, Associate Adviser, Division of International Finance Solomon, Assistant General Counsel Poundstone, Federal Reserve Examiner, Division of Examinations Items circulated to the Board. been The following items, which had circulated to the members of the Board and copies of which are attached to these minutes under the respective item numbers indicated, were a roved unanimously: Item No. Letter to Bank of America, New York, New York, regarding the reports of examination of its Beirut and Singapore branches. (With copies to the Federal Reserve Banks of New York and San Francisco) 1 Letter to the Presidents of all Federal Reserve Banks concerning disclosure of Wednesday member bank borrowings on the weekly statement of condition of the Federal Reserve Banks. 2 10/6/58 -2At this point Messrs. Farrell and Conkling withdrew from the meeting. Preliminary permit Chemical International Finance, Ltd., New York (Item No. 3. Prior to the meeting there had been distributed to the members of the Board a memorandum dated October 1, 1958, from the Division of Examinations recommending approval of an application from Chemical International Finance, Ltd., for a preliminary permit authorizing that corporation to exercise such of its powers as are incidental and preliminary to its organization. The memorandum pointed out that the Board on July 23, 1958, had approved and reserved for a period of six months the name "Chemical International Finance, Ltd." as the name of 4 eOrPOratiOn to be organized for the purpose of engaging in inter- national or foreign financial operations pursuant to section 25(a) of the Federal Reserve Act. The proposed financing corporation was to be °I'Ined by Chemical Corn Exchange Bank after organization, and counsel for the bank had submitted the Articles of Association and the Organization Certificate with the application. The Federal Reserve Bank of New York had recommended approval of the preliminary permit. The Legal Division had reviewed the Articles of Association and found them to conform to the requirements of section 25(a) and Regulation K. Following a brief discussion the Board unanimously approved issuance of the preliminary permit and transmittal thereof to the Chemical C°rn Exchange Bank through the Federal Reserve Bank of New York. Copies of the transmittal letter and permit are attached to these minutes under Item No. 3. 10/6/58 -3Proposed amendment to Regulation K. During the discussion of the above matter Governor Robertson raised the question whether any steps had been taken looking toward further consideration of amending the provisions of Regulation K which prohibit the name of an Edge Act financing corporation from being similar to, or identifying the corporation with, any bank in the United States with which it is affiliated. He pointed out that although the Board had agreed earlier to approve the name of the organization in the present case, the approval seemed to fly squarely in the face of the regulation. In response Mr. Masters indicated that no action had yet been taken in this direction but that his Division had the matter on its docket in the light of the Board's previous discussion. It was the consensus of the Board that this matter should be considered further at an early date. In this connection Governor Balderston asked the Secretary's Office to review the status in which the matter was left following the Board's previous discussion in July. withdrew At this point Messrs. Marget, Sammons, and Poundstone from the meeting. ana Re uest from the Housing Subcommittee of the Senate Banking CurrencY Committee for staff assistance. Prior to the meeting there had been distributed to the members of the Board copies of a letter dated October 2 from Mr. James B. Cash, Jr., Staff Director of the Housing Sla)committee of the Senate Banking and Currency Committee, requesting Participation by the Board in a study of the role of Federal programs in -4- 10/6/58 supplying mortgage credit sufficient to satisfy the demand for residential construction during the decade beginning in 1961. The Subcommittee hoped that the study would result in legislative proposals for consideration during the 86th Congress. The letter also stated that it was being written at the direction of Senator Sparkman, Chairman of the Housing Subcommittee. The letter expressed the hope that the Board's staff would prepare a monograph analyzing the relationship of credit terms to demand and need factors for private housing. The deadline for the paper was fixed at November 15, and it was indicated that this paper and others received on related topics would be published as a Committee document and would be distributed to interested Government agencies and to other interested persons both public and private. It was also pointed out that the technical papers would be the subject of a Subcommittee hearing late this year or early in 1959. Subsequently the staff of the Subcommittee would draft such legislative proposals as seemed to be indicated by public °Pinions expressed in the technical papers and the record of the hearings. of Research The letter noted that Mr. Ramsey Wood, of the Division and Statistics, was particularly well qunlified to discuss questions on credit terms and indicated that the Views expressed might be presented as those of the author or as the views of the agency, whichever the Board's preference might be. , 236. 10/6/58 -5Mr. Young led the discussion of this item by pointing out that the Board was left with little choice except to acquiesce in the request. The only real question in his mind was the very brief time schedule Provided. Fortunately, he said, much of the preliminary technical work had been done in connection with other projects. Also, it appeared that there might be some flexibility in the target date. Governor Balderston inquired whether the outline presented by the Subcommittee created any difficulties for the technical staff by the wording of the topics. To this Mr. Young replied that he had been informed that the topics were merely suggestive and not binding and that whoever of the Board's staff was assigned to the project would have considerdble freedom in selecting and preparing the material. Governor Vardaman cautioned that the indication in the SUbcommittee letter of the possibility of legislative proposals should Put the Board on notice that the material to be presented should be PrePared with extreme care. The fact that the monograph would be arrIong those discussed at a hearing reinforced that view. At some its Point, he said, it might be necessary for the Board to speak Own views on these subjects rather than merely presenting the views Of its staff. housing There was no question in his mind but that w°111d be a very live topic in the next session of Congress. 10/6/58 -6At this point Mr. Young observed that he had been assured by the Subcommittee staff that the hearing was intended to be purely on technical matters. He said he had informed Mr. Cash that the document submitted would probably represent the views of the Board's staff as a Whole even though the primary assignment might be to an individual staff member. He said he had pointed out that as an institutional matter documents of this kind prepared by staff members are widely reviewed. Governor Balderston then raised the question whether it was desirable to reply formally at this time to the letter from Mr. Cash or whether it would be better simply to advise him informally that the task would be undertaken. Governor Shepardson noted that the letter received by the Board had been phrased in general language and left an ()Pening for handling a reply or an assignment of the topics in whatever //ay the Board might deem most appropriate. Governor Robertson suggested that Mr. Young be authorized to c/111 Mr. Cash and inform him that the paper would be prepared. Later, when the document was completed and a letter was prepared transmitting it to the Subcommittee, the Board could cover its position in whatever way seemed most appropriate. There was unanimous agreement with Governor Robertson's suggestion. The meeting then adjourned. 2871 10/6/58 -7Secretary's Note: 'Governor Shepardson today approved on behalf of the Board a letter to the National Labor Relations Board, Washington, D. C., a copy of which is attached as Item No. 4, regarding extension of the detail to the Board of Governors of Charles W. Schneider, Hearing Examiner, for a period of six months from June 30, 1958. .41 Assistant Secretary 147 289 BOARD OF GOVER NORS OF THE 4101.tigt4,74,,, FEDERAL RESERVE SYSTEM A* ,Z4 Item No. 1 10/6/58 WASHINGTON 25. D. C. , ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD s e:Al. Fita& October 6, 1958 Mr. Henry A. J. Ralph, Vice President, Bank of America, 40 Wall Street, New York, New York. Dear Mr. Ralph: This refers to your letters of September 19, 1958, transmitted through the Federal Reserve Bank of New York, with further reference to the BoardIs letter of June 24, 1958, to Mr. Jesse W. Tapp, Chairman of the Board of Directors of your Bank, enclosing copies of the reports of examination of the Beirut, Lebanon, and Singapore, Colony of Singapore, branches Of Bank of America made as of March 4, 1958, and March 5, 1958, respectively, by examiners for the Board of Governors. It is noted that the reports of examination were referred to your Auditing and Examination Committee and executive officers and were reviewed by the Board of Directors. The Board is pleased to learn of the actions taken With respect to the comments, recommendations, and suggestions of the examiners. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No. 2 10/6/58 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS orrictAL CORRESPONDENCE TO THE BOARD October 6, 1958. Dear Sir: member bank The suggestion has been made that the amount of be set should date borrowings outstanding on the Wednesday statement Member of s Average i:orth on the Board's weekly release H.4.1, "Weekly nt of Stateme and Items Bank Reserves, Reserve Bank Credit, and Related is release this Condition of the Federal Reserve Banks," A copy of attached for ready reference. has been The weekly average figure for member bank borrowings on the , However shown separately on the statement since Hay 11, 1955, Pages showing the statement of condition of the twelve Federal Reserve "Discounts anks combined, the Wednesday figure is included in the item etc. gold, and advances," which may also include foreign loans on Treasury items Inasmuch as the one-day Wednesday figures for being shown already and member bank required and excess reserves are at the bottom of the first page, a better rrocedure would seem to be to add a fourth column to the first page of the release which would "related ?how Wednesday figures for all items. A copy of the proposed items,, page is attached for ready reference. weekly statement These revisions will be made in the Board's on the second Thursday following the date of this letter. Very truly yours, // Kenneth A. Kenyon, Asc. . ',ant Secretary, Attachments. TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 3 10/6/58 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD October 6, 1958 Mr. Clinton C. Johnson, Executive Vice President, Chemical Corn Exchange Bank, 165 Broadway, New York 15, New York. Dear Ur. Johnson: The Board of Governors has approved the Articles of Association and the Organization Certificate, dated July 29, 1958, Of Chemical International Finance, Ltd., and there is enclosed herewith a preliminary permit authorizing that Corporation to exercise such of the powers conferred by section 25(a) of the Federal Reserve Act as are incidental and preliminary to its organization. As you are aware, the Corporation may not exercise any of the other powers conferred by section 25(a) until it hos received a final permit from the Board authorizing it generally to commence business. The steps which must be taken prior to issuance of a final permit ore enumerated in section 3(c) of the Boardls Regulation K. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistent Secretary. rnclosnre October 6, 1958 of Governors of TT IS HEREBY CERTIFIED that the Board d in it the Federal Reserve System, pursuant to authority veste by section 25(a) of the Federal Reserve Act, as amended, has this on Certificate, day approved the Articles of Association and Organizati FINANCE, LTD. duly dated July 29, 1958, of CHEMICAL INTERNATIONAL CAL INTERNATIONAL filed with said Board of Governors, and that CHEMI of the powers conferred FINANCE, LTD. is authorized to exercise such preliminary to Upon it by said section 25(a) as are incidental and Governors of its organization pending the issuance by the Board of to commence the Federal Reserve System of a final permit generally said section 25(a) business in accordance with the provisions of of the and the rules and regulations of the Board of Governors Federal Reserve System issued pursuant thereto. BOARD OF GOVERNORS OF THE FmDERAL RESERVE SYSTEM By (Signed) Kenneth A. Kenyon Assistant Secretary (SEAL) BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 4 10/6/58 ADDRIESS OFFICIAL CORRESPONOCHCS TO THIC SOAR° October 6, 1958 National Labor Relations Board, Washington 25, D. C. Attention: J. Neal Tomey Gentlemen: Reference is made to the detail to the Board of Governors Of Mr. Charles W. Schneider, Hearing Examiner, GS-15, previously agreed to by you under letter dated December 10, 195O, and extended blor your letters of June 20, 1957, and December 12, 1957, respectively. Under the terms of Mr. Schneider's detail, he was made available to this Board for a six-month period beginning January 1, 1957, to preside at one or more hearings ordered to be held under the nk Holding Company Act of 195(3. It was agreed that the National Labor Relations Board would be reimbursed for Er. Schneider's salary !nd for any travel expenses involved, salary reimbursement to be made unlY.for the time in which Mr. Schneider was actuaLl:! engage° in conl!ection with the said hearings. Under the extension of Yr. Schneider's he was made available to this rloard for an additional six-month Period beginning January 1, 1958. Mr. Schneider's work on matters for this Board was not cornPlebed by June 30, 1958 and he is, in fact, now working on such matters, J 4-L through oversight his detail was not ofFicially extended beyond Uational Labe 30, 1958. This Board is aware of the workload of the Or Relations 3oard and would not assign any additional cases to Mr be Schneider. However, it would seem appropriate that his detail that from period 6.ultably extended from June 30, 1958, to cover the pate to the present, as well as a further reriod for completing his ° 428ent assignments with this Board. While it is difficult to predict tir Precise time that will be required for Lr. Schneider to complete ' fr8 Present assignments, it is believed that a period of six months c421 June 30, 1958 would reasonably be ne.ededo that the National Therefore, the Board of Governors requests such a period for detail 04,-Jr Relations Board extend Mr. Schneider's the as original 2tx months from June 30, 1958, on the same basis lq;Zil as set forth in a letter from this office, dated December 7, 4 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM National Labor Relations Board -2.- It will be appreciated if you will confirm this extension of the reimbursable detail in order that the necessary arrangements can made with the Civil Service Commission in connection with confirma141On of the extension of Mr. Schneider's services. Very truly yours, (Signed) Kenneth A. Kenyon Kenneth A. Kenyon, Assistant Secretary. 2877
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