Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, September 1, 1965, Volume 52, Part 9

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Minutes for

To:

Members of the Board

From:

Office of the Secretary

September 1, 1965.

of the
Attached is a copy of the minutes
em on
Syst
rve
Rese
ral
Fede
the
Board of Governors of
the above date.
statement
It is not proposed to include a
this set of
with respect to any of the entries in
ons required to
minutes in the record of policy acti
of the Federal
be maintained pursuant to section 10
Reserve Act.
regard to
Should you have any question with
will advise
you
if
the minutes, it will be appreciated
initial
se
plea
the Secretary's Office. Otherwise,
your
ing,
meet
below. If you were present at the
If
tes.
minu
the
Initials will indicate approval of
cate
indi
will
you were not present, your initials
only that you have seen the minutes.
Chm. Martin
Gov. Robertson
Gov. Balderston
Gov. Shepardson
Gov. Mitchell
Gov. Daane
Gov. Maisel

2SI
Minutes of the Board of Governors of the Federal Reserve System
on Wednesday, September 1, 1965.

The Board met in the Board Room at

9:00 a.m.
PRESENT:

Mr.
Mr.
Mr.
Mr.
Mx.

Balderston, Vice Chairman
Robertson
Shepardson
Mitchell
Maisel 1/
Mr. Kenyon, Assistant Secretary
Mr. Fauver, Assistant to the Board
Mr. Daniels, Assistant Director, Division of
Bank Operations
Mr. Kiley, Assistant Director, Division of Bank
Operations
Messrs. Ellis, Bopp, Scanlon, Galusha, Clay, and
Irons, Presidents of the Federal Reserve Banks
of Boston, Philadelphia, Chicago, Minneapolis,
Kansas City, and Dallas, respectively
Messrs. Treiber and Patterson, First Vice Presidents
of the Federal Reserve Banks of New York and
Atlanta, respectively; and Mr. Waage, Vice
President, Federal Reserve Bank of New York

Meeting on coin situation.

Pursuant to arrangements initiated

by the Board, Mr. Robert A. Wallace, Assistant Secretary of the Treasury,
was present to review with the Board members and Presidents various aspects
of the current coin situation and prospective developments, particularly
during the months immediately ahead.

Mr. Wallace was accompanied by Mr.

Frederick W. Tate, Assistant Director of the Bureau of the Mint.
A memorandum summarizing the discussion that occurred is being
placed in the Board's files.

1/

Withdrew following discussion of coin situation.

-2-

9/1/65

All those who were present for the discussion with Mr. Wallace
then withdrew except Governors Balderston, Robertson, Shepardson, and
Mitchell, and Mr. Kenyon, and Mr. Hexter, Assistant General Counsel,
entered the room along with Messrs. Egertson and McClintock, Supervisory
Review Examiners, Division of Examinations.
Discount rates.

The establishment without change by the Federal

Reserve Bank of Boston on August 30, 1965, of the rates on discounts and
advances in its existing schedule was approved unanimously, with the
understanding that appropriate advice would be sent to the Bank.
Circulated items.

The following items, copies of which are

attached to these minutes under the respective item numbers indicated,
were approved unanimously:
Item No.
Letter to Kingston Trust Company, Kingston, New York,
approving the establishment of a branch in the Town
of Ulster.

1

Letter to The Marine Trust Company of Western New
York, Buffalo, New York, approving the establishment
of a branch at Main Street and Transit Road, Town of
Clarence.

2

Letter to Girard Trust Bank, Philadelphia, Pennsylvania,
approving the establishment of a branch on Skippack
Pike, Whitpain Township.

3

Letter to Fidelity-Philadelphia Trust Company,
Philadelphia, Pennsylvania, approving the establishment of a branch on Skippack Pike, Whitpain Township.

4

4r)

t:,+t

-3-

9/1/65

Item No.
Letter to Myerstown Bank and Trust Company,
Myerstown, Pennsylvania, approving the establishment of a branch in the proposed Elco Shopping
Village.

5

Letter to The Exchange Bank and Trust Company,
El Dorado, Arkansas, approving the establishment
of a branch in Huttig.

6

Letter to Bank of Leighton, Leighton, Alabama,
approving the establishment of a branch in
Sheffield.

7

Reports on competitive factors.

There had been distributed a

draft of report to the Comptroller of the Currency on the competitive
factors involved in the proposed merger of The First National Bank of
Blackstone, Blackstone, Virginia, into The Fidelity National Bank,
Lynchburg, Virginia.
The conclusion of the draft report contained a sentence to the
effect that consummation of the proposal would expose the remaining bank
in Blackstone to the direct competitive capabilities of a substantially
larger bank.

Governor Mitchell questioned this sentence, which he

thought implied that one looked with disfavor on any form of competition
in the Blackstone community except the sort of competition now existing
between the two relatively small banks located there.

In actuality, if

one of the banks was replaced by a branch of a larger competitive institution, the community would be better off in some respects.

He realized

that the Board many times had included in its competitive factor reports
a sentence of this kind, but he did not favor it.

9/1/65

-4Governors Balderston and Shepardson indicated that they agreed

with the philosophy reflected in Governor Mitchell's remarks, following
which Mr. Hexter suggested that perhaps part of the difficulty had to
do with the manner in which the sentence was phrased.

An alternative

would be to point out that consummation of the proposal would change the
nature of banking competition in Blackstone to some extent, in that a
bank now competing locally with another bank of comparable size would
thereafter be in competition with a branch of a substantially larger
bank.
Governor Robertson indicated that he would not object to a
revised sentence of the kind suggested by Mr. Hexter.
Accordingly, unanimous approval was given to the transmittal to
the Comptroller of a report containing a conclusion in the following
form:
Because of the distance between offices of The Fidelity
National Bank, Lynchburg, Virginia, and The First National Bank
of Blackstone, and the number of offices of other banks in the
intervening area, there is no competition between the two banks
which would be eliminated by the proposed merger. Consummation
of the proposal would change, to some extent, the nature of
banking competition in Blackstone; Citizens Bank and Trust
Company of Blackstone, which now competes locally with First
National Bank of Blackstone, of comparable size, would thereafter be in direct competition with a branch of a substantially
larger bank.
There had also been distributed a draft of report to the Comptroller of the Currency on the competitive factors involved in the proposed merger of The Stanwood State Savings Bank, Stanwood, Michigan, into
First National Bank of Big Rapids, Big Rapids, Michigan.

2825
-5-

9/1/65

There being general agreement with a suggestion that the overall
competitive effects of the transaction be described as "not adverse"
rather than "not significantly adverse," unanimous approval was given
to the transmittal to the Comptroller of a report containing a conclusion
in the following form:
First National Bank of Big Rapids and The Stanwood State
Savings Bank have been closely affiliated through common ownership and management for many years, and there is no effective
competition between them. Consummation of the proposal would
foreclose potential competition between them should the relationship terminate, but the overall competitive effects of the
transaction would not be adverse.
The meeting then adjourned.
Secretary's Notes: On August 30, 1965,
Governor Shepardson approved on behalf of
the Board memoranda recouwending the following actions relating to the Board's staff:
Reinstatement following military service
Bernard A. Thomasson as Digital Computer Systems Operator (Trainee),
Division of Data Processing, with basic annual salary at the rate of
$4,930, effective August 30, 1965.
Transfer to permanent status
James E. Miller, Operator, Tabulating Equipment, Division of Data
Processing, with basic annual salary at the rate of $4,630, effective
August 30, 1965.
On August 31, 1965, Governor Shepardson
approved on behalf of the Board the
following items:
Letter to the Federal Reserve Bank of Richmond (attached Item No. 8)
approving the appointment of Ronald E. Lewis as assistant examiner.

2826
-6-

9/1/65

Letter to the Federal Reserve Bank of Dallas (attached Item No. 9)
approving the designation of David M. Harzmann and Tommy C. Sartin as
special assistant examiners.
Memorandum from the Division of Research and Statistics dated
August 26, 1965, recommending that per diem in lieu of subsistence
at the rate of $16 be paid to James L. Pierce, a "Visiting Professor"
appointed to an Economist position in the Banking Section, for time
in travel status while moving from New Haven, Connecticut, to Washington
and while returning to New Haven after completing the term of his
appointment.
Memorandum from the Division of Bank Operations recommending
acceptance of the resignation of Carol Lee Cordell, Secretary in that
Division, effective at the close of business August 26, 1965.
Governor Shepardson today approved on behalf
of the Board memoranda recommending the following actions relating to the Board's staff:
Transfer
Katherine M. Bulow, from the position of Secretary, Division of
Research and Statistics, to the position of Special Assistant Federal
Reserve Examiner, Division of Examinations, with an adjustment in basic
annual salary from $5,165 to $5,230, effective upon assuming her new
duties.
Acceptance of resignation
Wendy Michael Orr, Research Assistant, Division of Research and
Statistics, effective at the close of business September 3, 1965.

Assistant Secretary

9S77'
BOARD OF GOVERNORS
Item No. 1
9/1/65

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551

ADORICIIIII OFFICIAL COPIRESPONCICHCIC
TO THC 110A140

September 1, 1965.

Board of Directors,
Kingston Trust Company,
Kingston, New York.
Gentlemen:
The Board of Governors of the Federal Reserve
,
System approves the establishment by Kingston Trust Company
9W,
Route
of
side
west
the
on
Kingston, New York, of a branch
approximately 960 feet north of its intersection with Boice's
Lane, Town of Ulster (Unincorporated Area), Ulster County,
year
New York, provided the branch is established within one
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.)

2828
BOARD OF GOVERNORS

Item No. 2
9/1/65

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS

arricIAL COPtRIESPONDICHCIL
TO THE •OARD

September 1, 1965.

Board of Directors,
ern New York,
The Marine Trust Company of West
Buffalo, New York.
Gentlemen:
Federal Reserve
The Board of Governors of the
any
t by The Marine Trust Comp
System approves the establishmen
the
at
ch
bran
New York, of a
of Western New York, Buffalo,
Transit Road, Town of
and
et
intersection of Main Stre
Erie County, New York, proClarence (Unincorporated Area),
within one year from the
vided the branch is established
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

2S29

BOARD OF GOVERNORS

OF THE
FEDERAL RESERVE SYSTEM

Item No. 3
9/1/65

WASHINGTON, D. C. 20551
NOICNCIE
ADDRESS OFFICIAL CORRESPO
TO THE BOARD

September 1, 1965.

Board of Directors,
Girard Trust Bank,
Philadelphia, Pennsylvania.
Gentlemen:
l
The Board of Governors of the Federa
by
ishment
Reserve System approves the establ
lvania, of
Pennsy
,
elphia
Philad
Bank,
Girard Trust
in Township,
a branch at 1380 Skippack Pike, Whitpa
ed the branch
Montgomery County, Pennsylvania, provid
from the date of
is established within six months
this letter.
Very truly yours,

VQ,A2 e. iM
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.)

2830
SOARED OF GOVERNORS

Item No. 4
9/1/65

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ENCE

CORRESPOND
ADDRESS OFFICIAL
TO THE BOARD

September 1, 1965

Board of Directors,
Fidelity-Philadelphia Trust Company,
Philadelphia, Pennsylvania.
Gentlemen:
Reserve
The Board of Governors of the Federal
adelphia
-Phil
ity
System approves the establishment by Fidel
h on
branc
a
of
ia,
Trust Company, Philadelphia, Pennsylvan
ely
ximat
appro
73)
the north side of Skippack Pike (Route
b
DeKal
and
road
that
250 feet south of the intersection of
y,
Count
omery
Pike (Route 202), Whitpain Township, Montg
established within
Pennsylvania, provided the branch is
one year from the date of this letter.
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
d that the
(The letter to the Reserve Bank state
sion
exten
onth
six-m
a
ved
Board also had appro
h;
branc
the
lish
estab
to
of the period allowed
sted,
reque
be
d
shoul
and that if an extension
letter
the procedure prescribed in the Board's
wed.)
be
follo
d
shoul
46),
of November 9, 1962 (S-18

28.31
BOARD OF GOVERNORS

Item No. 5
9/1/65

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
ADDRESS

orrictikt. CORRICIPPONOCNCIL
TO THE BOARD

September 1, 1965

Board of Directors,
Myerstown Bank and Trust Company,
Myerstown, Pennsylvania.
Gentlemen:
e
The Board of Governors of the Federal Reserv
and
Bank
own
System approves the establishment by Myerst
branch in the
a
of
,
lvania
Pennsy
own,
Myerst
Trust Company,
on the south
proposed Elco Shopping Village to be located
College Streets,
side of U. S. Route 422 between Locust and
ed the
Myerstown,'Lebanon County, Pennsylvania, provid
the date of this
branch is established within one year from
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.)

214A2
BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM

Item No. 6
9/1/65

WASHINGTON, D. C. 20351

orrtalm. CORRICOPONDCNOC
TO THE •OARD

September 1, 1965

Board of Directors,
The Exchange Bank and Trust Company,
El Dorado, Arkansas.
Gentlemen:
The Board of Governors of the Federal
by The
Reserve System approves the establishment
Arkansas,
o,
Dorad
El
ny,
Compa
Exchange Bank and Trust
ing,
build
ny
Compa
r
Lumbe
of a branch in the Olin
lished
estab
is
h
branc
the
ded
Huttig, Arkansas, provi
letter.
within six months from the date of this
Very truly yours,
(Signed) Karl E. Bakke
Karl E. Bakke,
Assistant Secretary.
stated that the
(The letter to the Reserve Bank
extension
onth
Board also had approved a six-m
branch;
the
of the period allowed to establish
sted,
reque
be
and that if an extension should
letter
's
the procedure prescribed in the Board
wed.)
follo
be
d
of November 9, 1962 (S-1846), shoul

2S3.-t
BOARD OF GOVERNORS
•soocGo

FEDERAL RESERVE SYSTEM

.6
.0

Item No. 7
9/1/65

OF THE

••

WASHINGTON, D. C. 20551

1iuii

.E:

AODRESS OFFICIAL CORRESPONDENCE
TO THE BOARD

•.4ALRES.•
•.....•

September 1, 1965.

Board of Directors,
Bank of Leighton,
Leighton, Alabama.
Gentlemen:
The Board of Governors of the Federal Reserve
System approves the establishment by Bank of Leighton,
Leighton, Alabama, of a branch at 706 South Montgomery
Avenue, Sheffield, Alabama, provided the branch is established within one year 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.)

2834
BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20851
ADDRESS

Item No. 8
9/1/65
ornciAL. CORIIICEPONOENCIL
TO THIt ROAN!,

August 31, 1965.

Mk. John L. Nosker, Vice President,
Federal Reserve Bank of Richmond,
Richmond, Virginia. 23213
Dear Mr. Nosker:
d in
In accordance with the request containe
d
Boar
the
,
1965
Mk. Horigan's letter of August 26,
as an
approves the appointment of Ronald E.,Lewis
of
Bank
rve
Rese
ral
assistant examiner for the Fede
Richmond, effective today.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.

r
BOARD OF GOVERNORS
Item No. 9
9/1/65

OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON, O. C. 20551
ADORCIIIS

arriatAL

COMPICOPONDENCE

TO THIC SOAR°

August 31, 1965.

Mt. Thames R. Sullivan, Vice President,
Federal Reserve Bank of Dallas, .
Dallas, Texas. 75222
Dear Mt. Sullivan:
In accordance with the request contained in
ves the
your letter of August 27, 1965, the Board appro
n
Sarti
C.
Tommy
and
designation of David M. Harzmann
ve
Reser
al
Feder
the
as special assistant examiners for
Bank of Dallas.
Appropriate notations have been made of the
al assistant
names to be deleted from the list of speci
examiners.
Very truly yours,
(Signed) Elizabeth L. Carmichael
Elizabeth L. Carmichael,
Assistant Secretary.