Full text of Minutes of the Board of Governors of the Federal Reserve System : Meeting Minutes, September 10, 1959, Volume 46, Part 9

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08

Minutes for

To:

Members of the Board

From:

Office of the Secretary

September 10, 1959.

Attached is a copy of the minutes of the Board of Governors
of the Federal Reserve System on the above date.
It is proposed to place in the record of policy actions
required to be kept under the provisions of Section 10 of the
Federal Reserve Act an entry covering the item in this set of
minutes commencing on the page and dealing with the subject referred to below:
Page 1

Approval of a discount rate of

4 per cent at the Federal Reserve
Banks of New York, Cleveland, Richmond,
Chicago, St. Louis, Kansas City, Dallas,
and San Francisco; and agreement to approve
the same rate for any other Federal Reserve
Bank advising of the establishment of such rate.
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
Chairman Martin
Governor Szymczak
Governor Mills
Governor Robertson
Governor Balderston
Governor Shepardson
Governor King




Minutes of the Board of Governors of the Federal Reserve System
on Thursday, September 10, 1959.
PRESENT:

Mr.
Mr.
Mr.
Mr.
Mr.

The Board met in the Board Room at 3 p.m.

Balderston, Vice Chairman
Szymczak
Robertson
Shepardson
King
Mr. Sherman, Secretary
Mr. Solomon, Director, Division of Examinations

Regulation U.

At Governor Balderston's request, Mr. Solomon

commented with respect to the matters that might be presented to the
Board by representatives of the New York Clearing House Association
on September 11, 1959, concerning the Board's proposed interpretation
of the meaning of "carrying" under section 221.3(b)(1) of the Board's
Regulation U.
Thel'e followed a brief discussion of questions that might be
taken up with the Clearing House representatives in the event it seemed
desirable to seek their views on possible alternative provisions in the
proposed interpretation.
At 3:30 p.m. Messrs. Molony and Fauver entered the room.
Discount rates.

The Secretary reported receipt of advices from

seven Federal Reserve Banks (New York, Cleveland, Richmond, Chicago,
St. Louis, Dallas, and San Francisco) of actions by their directors to
fix a discount rate of 4 per cent per annum on advances to member banks
secured by United States Government obligations under Section 13 and on
other advances and rediscounts under Sections 13 and 13a;of 4-1/2
per cent on advances under Section 10(b); and of 5 per cent on advances




9/10/59

-2-

to individuals, partnerships, corporations other than member banks
under Section 13 of the Federal Reserve Act, all to be effective
subject to approval by the Board of Governors.

One of the Federal

Reserve Banks indicated that this action by its directors had been
taken in order to bring the discount rate more closely into line with
existing market rates.

In addition to the recent advances in interest

rates, factors entering into the action were the broad and heavy demand
for bank credit, reflecting general strength in the economy; concern
over the risk of upward price tendencies; and the continuing adverse
balance of payments.
Following general discussion of the actions taken by the
directors of the Reserve Banks and of the procedure that might be
followed in announcing action to be taken by the Board with respect
to the rates, the establishment of the rates submitted by the Federal
Reserve Banks of New York, Cleveland, Richmond, Chicago, St. Louis,
Dallas, and San Francisco was approved unanimously, effective September

11, 1959, with the understanding that an announcement of this action
would be handed to the press for release at 4:00 p.m. EDST today,
that appropriate advice of the action would be sent to all Federal
Reserve Banks by wire, and that the customary notice would be filed
With the Federal Register.
In taking the above action, the Secretary was authorized to
enter in the minutes approval of rates within the pattern established




-3-

9/10/59

at these seven Banks if advice of similar action was received from any
of the other five Reserve Banks.

This authorization contemplated that

in each case a press release would be issued in the usual form, notification would be sent to all Federal Reserve Banks and branches, and a
notice would be published in the Federal Register.
Secretary's Note: Shortly following the meeting
advice was received from the Federal Reserve Bank
of Kansas City that the directors of that Bank also
had acted today to fix rates of discount similar to
those approved for the other seven Banks effective
September 11, 1959, and, in accordance with the
understanding at this meeting, advice of approval
of the rates so fixed was sent to the Chairman of
the Kansas City Bank.
With this addition, the rates approved for the
Federal Reserve Banks of New York, Cleveland,
Richmond, Chicago, St. Louis, Kansas City, Dallas,
and San Francisco, effective September 11, 1959,
were as follows:
On discounts for and advances to member
banks under Sections 13 and 13a-14 per cent; on
advances to member banks under Section 10(b)-4-1/2 per cent; on advances to individuals,
partnerships, and corporations other than member
banks under last paragraph of section 13--5 per cent.
The meeting then adjourned.




Secretary's Notes: Pursuant to the understanding
reached at the meeting of the Board on July 15,
1959, Governor Shepardson today approved on behalf
of the Board a letter in the form attached to these
minutes as Item No. 1, to Dr. Gustavo Miron P.,
Presidente, Banco de Guatemala, with respect to the
detail of Ralph E. Holben to that Bank.

•

9/10/59




-4On the basis of a memorandum from the Division of
Personnel Administration dated September 9, 1959,
Governor Shepardson today approved execution of a
"certificate of availability of Federal employee"
certifying that the Board would not request a delay
if George G. Noory, analyst in the Division of Bank
Operations, should be called upon for active duty in
the Air Force of the United States.

or tary

BOARD OF GOVERNORS
OF THE

FEDERAL RESERVE SYSTEM
WASHINGTON 25. D. C.

Item No. 1
9/10/59

ADDRESS OFFICIAL CORRESPONDENCE

4;*
4.°
Vkt1W4i

TO THE BOARD

September 10, 1959

AIR NAIL
Dr. Gustavo Mir& P.,
Presidente,
Banco de Guatemala,
Guatemala City, Guatemala.
Dear Dr. Mir6n:
The Board of Governors of the Federal Reserve System
respect to
is prepared to enter upon the following arrangement with
de
Banco
the
to
r
advise
as
the services of Dr. Ralph E. Holben
Guatemala.
1. The Board of Governors will detail Dr. Holben
to
to the Banco de Guatemala for a period of one year
ic and
econom
on
r
advise
an
as
serve the Banco de Guatemala
l
centra
with
ned
concer
those
monetary questions, especially
's
Holben
Dr.
of
date
the
on
banking. The detail will begin
upon
departure from Washington for Guatemala, and will end
gh
Althou
date.
that
from
year
one
his return to Washington
ance
assist
and
advice
t
reques
to
ed
Dr. Holben will be entitl
period,
from the staff of the Board of Governors during this
and
ala
Guatem
de
Banco
the
to
solely
he will be responsible
ion.
direct
subject to its
2. The Banco de Guatemala will reimburse the Board of
follows:
Governors for the cost of Dr. Holben's services as




Amount for 52 weeks

Item
Salary
Retirement contributions
Group insurance contributions
Sick leave (13 days at $48.32
per day, less what may be used
during period of detail)
Allowance of $7 per diem in lieu
of expenses
Total

$12,563.20

816.66
42.25
628.16
2,548.00
:$16,598.27

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

Dr. Gustavo Mir6n P.,

- 2

Reimbursement will be made in United States dollars at
the end of each quarter, beginning three months after
the
Dr. Holben enters upon this detail, upon receipt by
a
of
ors
Govern
of
Board
Banco de Guatemala from the
statement of charges for the quarter.

3. In addition, the Banco de Guatemala will reim-

burse the Board of Governors for the cost of travel from
Washington to Guatemala City and return for Dr. Holben
and his wife, reimbursement to be made in United States
dollars upon receipt by the Banco de Guatemala from the
Board of Governors of a statement of the cost incurred.
of
4. In addition, Dr. Holben is entitled to 26 days
ed
expect
is
it
,
and
detail
ar
annual leave during this one-ye

an
that he will use this leave. If he should not do so,
be
will
day
per
additional charge at the rate of $48.32
the year.
made for a.ly annual leave accrued and unused during

please
If the foregoing meets with your approval, will you
of
behalf
on
letter
this
of
so indicate by signing the attached copy
ors.
Govern
of
Board
the Banco de Guatemala and returning it to the
n the
This exchange of letter; will constitute the agreement betwee
de
Banco
the
and
Board of Governors of thu Federal Reserve System
.
E.
Holben
Ralph
Guatemala with respect to the services of Dr.




Sincerely yours,

Merritt Sherman,
Secretary.