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Minutes for To: Members of the Board From: Office of the Secretary September 23, 1963 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. Mitchell 326fi Minutes of the Board of Governors of the Federal Reserve SYstem on Monday, September 23, 1963. The Board met in the Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Martin, Chairman Balderston, Vice Chairman Mills Robertson Shepardson 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. Noyes, Director, Division of Research and Statistics Mr. Koch, Associate Director, Division of Research and Statistics Mr. FUrth, Adviser, Division of International Finance Adviser, Division of International Hersey, Mr. Finance Mr. Katz, Associate 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. Bernard, Economist, Division of Research and Statistics Mr. Gemmill, Economist, Division of International Finance Money market review. There were distributed tables with regard to Tres._ -°11ry advance refunding operations and reported changes in money market illvestments abroad. Mr. Bernard commented on recent developments in the Government "e4rities market, with particular reference to the current Treasury advance 9/23/63 -2- refunding, after which Mr. Axilrod discussed changes in bank reserves, bank credit, and the money supply. Mr. Gemmill then reported on foreign exchange market developments. All members of the staff then withdrew except Messrs. Sherman, ICerlYcln, Young, Noyes, and Mattras and the following entered the room: Mr. Mr. Mr. Mr. Mr. Hackley, General Counsel Solomon, Director, Division of Examinations Johnson, Director, Division of Personnel Administration Harris, Coordinator of Defense Planning Conkling, Assistant Director, Division of Bank Operations Goodman, Assistant Director, Division of Examinations Mr. Leavitt, Assistant Director, Division of Examinations Mr. Sprecher, Assistant Director, Division of Personnel Administration Mr. Collier, Chief, Current Series Section, Division of Bank Operations Discount rates. The establishment without change by the Federal Re8erve Banks of New York, Philadelphia, and San Francisco on September 19, 196 of the rates on discounts and advances in their existing schedules 114 21r21. unanimously, with the understanding that appropriate advice 11(1/411- be sent to those Banks. Circly! i. ted or distributed items. or The following items, copies which are attached to these minutes under the respective item numbers dleated, were approved unanimously: Item No. tette.„ to First National City Bank, New York, New Tai approving the establishment of a branch In 'Pei) Taiwan. 1 3268 9/23/63 -3Item No. Letter to First National City Bank, New York, w York, approving the establishment of a °ranch in Dubai, Trucial State of Dubai. l Letter to Chester-Schroon-Horicon Bank, Chester11, New York, approving operation on a year' aund basis of its branch at Schroon Lake. 2 3 Itter to The First State Bank of Oxford, Oxford, 'Qabama, approving an investment in bank premises. 4 if.il!tter to Union Bank and Trust Company, Grand Rapids, lgan, approving an investment in bank premises • commenting on the bank's capital structure. 5 Letter to Texa Wharton Bank and Trust Company, Wharton, 6 S• / Waiving the requirement of six months' notice S te1 from membership in the Federal Reserve Letter to the Federal Deposit Insurance Corporation 'L• garding the application of Bank of the Mainland, atttle 'rque, Texas, for continuation of deposit insurance '=-' 1 membership in the Federal Reserve 'JYstemwithdrawal from Lett n er to the Federal Reserve Bank of Chicago approving - re,vlsion of the employees' salary structure at the head °trice. With reference to Item No. 8, it was noted that the proposed Cllic4g° salary structure revision had been discussed at the meeting on Sel3teniber 19, 1963, at the request of Governor Mitchell, at which time it /4a5 agreed that Governor Shepardson and the Personnel Division would lInciertake a study with regard to possibilities for dealing with problems eXPe-. 41eneed by the Reserve Banks in obtaining and retaining professional 1)ers011, in upper grade positions. It was understood at this meeting V23/63 -4- that the study would go forward, as agreed at the meeting on September 19, and that approval of the current Chicago proposal would not appear to Present a complicating factor. Messrs. Noyes, Johnson, and Sprecher then withdrew from the fleeting Report on competitive factors (Charleston-Spartanburg, South 9-242.1laa). There had been distributed a draft of report to the Comp- tl'oller of the Currency on the competitive factors involved in the Pl'clPosed merger of Piedmont National Bank of Spartanburg, Spartanburg, Soth Carolina, into The South Carolina National Bank of Charleston, Cha rleston, South Carolina. During discussion, it was agreed, at the suggestion of Governor R°bertson and with the concurrence of Governor Mills, that the conclusion of the report should be revised to indicate simply that the over-all "feet of the proposed merger on competition would be adverse, without 4ttemPting to express a judgment on the degree of the adverse effect. It 1/aa also agreed that the conclusion should be modified to make clear that the proposed merger would expose the remaining local bank in 813artanburg to the competitive capabilities of the State's largest bank 14 addition to the competition already existing from the State's second largest bank. The report was then approved unanimously for transmission to the `43mptroller with the understanding that the conclusion would read 46 rcalows: 327 9/23/63 -5- Consummation of the proposed merger would eliminate the modest amount of competition existing between The South Carolina National Bank of Charleston and Piedmont National Bank of Spartanburg. While the proposed merger would not significantly alter South Carolina National's comPetitive position in the areas it currently serves, it would enhance its position as the State's largest bank both with respect to deposits and geographical coverage. It would also expose the remaining local bank in Spartanburg to the competitive capabilities of the State's largest bank in addition to existing competition from the second largest bank, and further concentrate banking resources in South Carolina. . The over-all effect of the proposed merger on competition would be adverse. Reserve city status of Helena. There had been distributed a aleillorandum from the Division of Bank Operations dated September 17, 1963, recoMmending favorable action on applications by the First National Bank etj1c1 rn__ 4-rust Company of Helena and the Union Bank and Trust Company, both or lielena, Montana, to maintain the same reserves against deposits as ELl'e required to be maintained by nonreserve city banks. The memorandum 41so re commended the termination of Helena's status as a reserve city. It was noted that on May 23, 1963, the Board had advised the Ner., -4. Reserve Bank of Minneapolis that it would have no objection to the .4, ' 4Q41k i s proposal to invite these two member banks (the only remaining 114'en" -'e city banks in Helena) to apply for permission to maintain reduced l'eeerves, The Division of Bank Operations had made an analysis of the e'acter of business transacted by the two banks, and it was the Division's viev that there were no unusual factors that would warrant requiring the 134114+ -0 continue to maintain reserve city bank reserves. The memorandum ,71 9/23/63 -6- also noted that neither the total demand deposits nor the interbank clePosits of the member banks in Helena came close to meeting the proPosed standards for determination of reserve cities that the Board had Nblished in the Federal Register in March 1961. The only apparent ' ereument for any banks in Helena being classified as reserve city banks /148 Helena's position as a Federal Reserve branch city. Since approval of reduced reserves for the two applicant banks /lenld result in the declassification of all member banks in Helena, the D417. 4-104 --Lon recommended that approval of the current requests be accompanied 1)r termination of the designation of Helena as a reserve city. This '4°111d be accomplished by an amendment to the 1947 Rule for Classification (It Reserve Cities, as amended, which would result in automatic termination the reserve city designation of any Federal Reserve Bank or branch 1:t.Y. in which all member banks had received permission to carry reduced reserves. (A form of amendment suggested for publication in the Federal Relister was submitted with the memorandum from the Division of Bank °1istions.) Traditionally, all Federal Reserve Bank and branch cities had been dp, 4 -s-Lgnated as reserve cities, but the Division of Bank Operations reit ballk that a city's classification should be changed when all of its S ceased to maintain reserve city bank reserves. The present ccen -s).on seemed an opportune time for the Board to consider adopting *4 a position. 3272 9/23/63 .7.. In comments made in amplification of the Division memorandum, Mr. °clikling reviewed the size and characteristics of business of the two 4131j-cant banks and indicated that on the basis of such an analysis would appear to qualify for permission to carry reserves required °rnonreserve city banks. However, the second question, relating to telVdnation of the designation of Helena as a reserve city, was more difficult. The Division of Bank Operations had no strong feeling on the slibiect, but the designation of a city as a reserve city seemed to carry with it the connotation of a city in which there were banks that carried reserve city bank reserves. If action should be taken to terminate the reserve city designation of Helena, the circumstances seemed to make this a good time for such action to be taken. the It seemed unlikely that same question would arise in the foreseeable future with respect to cther Federal Reserve branch cities. Governor Mills indicated that he agreed generally with Mr. Conkling's 411alYsi6. %.tyl S However, in the past a symbolic importance had attached to a designation as a reserve city, and this was tied in with local 8erkm„.4. He noted that Helena was the capital of the State of Montana 644 that local elements might not regard favorably the termination of the reeerv e City designation. To avoid possible criticism or representations to th e Board, he suggested that the Minneapolis Reserve Bank be asked to Nhris e the applicant banks in Helena of the effect that approval of their akoli cations might have on Helena's status as a reserve city. This would 327‘z-+ 9/23/63 -8- Permit a better evaluation of any sensitivity that might exist with regard to the proposed change in the classification of the city. In reply to a question, Mr. Conkling stated that he saw no imPortant reasons for the proposed change in classification of Helena even if there were no longer any bank in the city carrying reserve city bank reserves. While there might be a few technical problems from the standpoint of listings of reserve cities or other statistical presentatimns, they would not be insurmountable. There followed a brief further discussion as to whether, as 1°ng as a city remained a Federal Reserve branch city, there would be teeson for calling it a reserve city. While this discussion was inco nclusive, there was general agreement with the suggestion of Governor Mills that the President of the Minneapolis Reserve Bank be 1'N-11ested to ascertain from the applicant banks in Helena whether they ' l1°11341 desire approval of their applications to maintain reduced reserves it that would result in the termination of Helena's designation as a l'eeerve city, and to ascertain whether local banking and community sentiment would appear adverse to the termination of the designation. Messrs. Goodman, Leavitt, and Collier then withdrew and Messrs. ?411ver, Assistant to the Board, and Furth, Adviser, Division of InterIlati°nal Finance, entered the room. Gold vault facilities (Item No. 9). There had been distributed -tuclrandum from Messrs. Farrell, Solomon, and Harris dated August 15, 1963 , with regard to a request from the Federal Reserve Bank of New York 3274 9/23/63 -9- tor approval of proposed alterations to vault facilities. In accordance with the understanding reached at the meeting on July 10, 1963, those members of the staff had visited the New York Reserve Bank, the New York Assay Office, and the Silver Bullion Depository at West Point to exPlore possible solutions of the gold storage problem. As stated in the memorandum, the gold vault at the New York Reserve Bank was nearly filled to practicable capacity under existing Procedures. The vault held gold worth about $13 billion, most of it earmarked for foreign accounts. Holdings for each account were kept seParate, a procedure that did not permit maximum utilization of available space. The memorandum reviewed the Reserve Bank proposal for enl argement of its vault facilities along with other possible alternatives, aria suggested various advantages and disadvantages inherent in each of the Possible arrangements. In reviewing the several alternative possibilities considered Illthe memorandum, Mr. Solomon noted that each of them presented certain Prc3b1ellis• One possibility would be to invite the repatriation of gold by r oreign owners. The staff did not feel that it was in a position to eiraillate the impact of inviting a repatriation of earmarked gold, but thi s would no doubt involve important psychological factors, such as r°I.eign confidence in the ability of this country to solve its balance Of PaYments problem. 4 Keeping the gold in this country might also offer better Opportunity to recapture the gold involved whenever gold sales made by foreign countries. 3275 9/23/63 -10Alternatives to gold export involved, of course, the need to c011sider some form of additional storage space. The New York Reserve proposal for solving the problem was to convert an area adjacent t° the present gold vault to use for gold storage. It was estimated that the cost of such a conversion would be about $470 thousand. The Prqosed addition would be a full security vault and would have the a4ve4tage of providing all earmarked gold with approximately the same degree of protection. As another alternative, the same area could be 1/erted to the same use, through a different type of construction, at 4 sc3nevhat lesser cost, but this arrangement would provide a lesser degree °t security and might provoke questions of discrimination. From one standpoint the most efficient solution would be to ectablish a gold pool, which would eliminate the wasted space resulting tr°111 Partially filled compartments, but certain foreign central banks tlight be opposed to such an arrangement and there could be distinct iltch°10g1cal disadvantages, particularly at this juncture. The possibility or ilaing the Assay Office did not appear to be too satisfactory from a secur ltY control standpoint, and in any event the Director of the Mint 1414 stated that it would be difficult to have space there made available tor rederal Reserve gold storage. Still another alternative would be to use space at the United 4‘te-te 8 Bullion Depository at West Point. The Depository had a well- trai fled guard force and sufficient space might be made available to store 3276 9/23/63 -11- about $3 billion worth of gold. One advantage of this alternative would be the dispersion of gold between New York and West Point, which would reduce the risk inherent in New York City as a target area. A disadvan- tage m of using West Point was the possibility that foreign central banks Illignt have a more secure feeling if their gold were held at the New York Reserve Bank; thus, questions might arise as to the selection of gold tor storage at West Point. Earmarked gold could also be stored in the observation passageway 8urrounding the present vault. However, this would make it awkward for workers to handle the gold, the passageway being only three feet wide. The Bank might be forced to use this space until the gold storage problem Igas resolved, but it would prefer to use the space only in emergency situations. In summary, Mr. Solomon expressed the view that a decision on this matter could not be made solely on the basis of cost considerations, or even on the basis of the availability of reasonably attractive physical facilities. In the last analysis, the matter must be decided on the gli°Unds of psychological effects, and in that respect there was the Itest ion whether the Board would want to substitute its judgment for th4t Of the management of the New York Reserve Bank, which had evidently stUdied the matter quite comprehensively. Mr. Solomon added that when the case for additional gold vault r4cilities was presented by the New York Reserve Bank, in writing and orally, 10Aor I 9/23/63 -12- it was presented almost entirely on the basis of constructing an additional gold vault. The New York Bank was interested in the additional vault not only st°rYs 4 Actually, it appeared that this was not an entirely complete a gold vault but as one that might conceivably be used for various 1)11rPoses. tor the Also, part of the cost of the proposed construction would be purpose of strengthening the undergirding to support the vaults On higher levels. 8inCe This would be the first significant vault renovation the Reserve Bank was constructed some 4o years ago. Mr. Harris commented that a basic problem to ponder in reaching a deo-aion was the extent to which there might be an increased demand OX gold gold, storage space at the New York Bank. The question was whether the demand had already reached a peak and whether the Bank would be provi(ling, through additional facilities, for the storage of a volume of 8°14 1rith which it would never have to contend. If there was sufficient (Illestion in this regard, further consideration might be given to utilizing the Passageway surrounding the present gold vault, particularly for the stc/l'age of gold that tended to remain inactive, such as gold held for the In ternational Monetary nand. Mr. Furth noted, in this connection, that if the balance of Pe. hts deficit could be expected to diminish sharply, the gold outflow like„ "lae could be expected to diminish sharply. Whether this could be Pected to occur, the Board was in a position to judge as well as anyone else. Under certain assumptions, the storage space in the passageway be sufficient; under other assumptions, it would not. 9/23/63 -13Chairman Martin stated that he was impressed, in the analysis Presented by the staff, that the gold vault at New York was an asset to the System as a show place; also, that little improvement had been Illade to the Bank's vaults since the date of original construction. The improvements proposed by the New York Bank in the vault area would seem illstifiable in the longer run, quite apart from the gold storage problem. %that basis alone, he was disposed to accept the judgment of the Bank. In reply to a question, Mr. Harris stated that the $50 thousand estimated cost of moving some of the gold to the West Point Depository e°vered only the initial transfer. Costs of further movements could be kept to a minimum, he noted, if the gold placed at West Point were to be for the most part such gold as was relatively inactive. Further discussion related to the construction features of the llits at the New York Bank and factors contributing to the security of ' lire fctli held at that point. Reference also was made to the rate of U. S. losses in recent years and the probable adequacy of the contemplated 84clit1ona1 facilities over a period of time in the light of that experience. Governor Robertson then stated that he was not concerned about the ProPosed addition to the New York vault. He was concerned, however, ab°14 the wisdom of having all earmarked gold located at the New York Reaer7e Bank rather than dispersing some of the holdings outside New lork City. As far as the depository at West Point was concerned, he Iliriderstood that Mr. Harris did not feel that there was any serious fault 3279 9/23/63 t° rtmi with it from a security standpoint. migtt be substantial, but they could be held down by placing relatively illactive gold at the depository. tQ Transportation costs be one of psychology. The principal question, then, seemed On that basis, he would accept the proposal t the New York Bank because this was not a time to be taking chances vsYchological factors. However, implementation of the current 14'°P°8a1 should not preclude the Board and the Reserve Bank from conaidel'ing at an appropriate time the movement of some of the exaxi out of tTew 11. , 4°rt City to West Point purely as a civil defense precaution. Other members of the Board also expressed the view that the DI'clI)Osal of the New York Reserve Bank Should be accepted. ilriar*lous a Accordingly, royal was given to a letter to the Federal Reserve Bank of tie.v 'c)rk in the form attached as Item No. 9. It was the view of the that it would not be necessary to transmit to the Reserve Bank a CoDy, ct the memorandum from Messrs. Farrell, Solomon, and Harris. Messrs. Harris, Furth, and Conkling then withdrew from the 4eetine. Foreign travel by Mr. Hersey (Item No. 10). Attached as Item is a copy of a memorandum dated September 20, 1963, from Mr. Young, khri. Ser to the Board and Director, Division of International Finance, tecolut ending that Mr. Hersey, Adviser in the Division of International be designated to give lectures during February 1.964 at the next Central Banking Course in accordance with a request from the 3280 9/23/63 Governor of the State Bank of Pakistan, that the necessary foreign travel be authorized, and that Mr. Hersey undertake certain additional foreign visits during his trip, with the understanding that another memorandum ' 401.11d be submitted in due course requesting approval of such additional traVel . In discussion, it was noted that it was proposed that Mr. Hersey Quid be a guest of the State Bank of Pakistan during his stay in that e°1-41trY, and that it was recommended that he be authorized to include in his travel voucher his actual out-of-pocket expenditures while in Pakistan, 14 lieu of the standard Government allowances. The view was stated that 144er' such a procedure there should be a requirement for the recording of etW. expenses, for review by the Board's Controller, and assurance was .1.11eti that such a procedure would be followed. Question was raised, however, aS tcl whether this method of reimbursement for expenditures would be preLae from the standpoint of all concerned, including Mr. Hersey, to .t4:stel on standard Government allowances. Accordingly, the recommendations in Mr. Young's memorandum were Unanimously subject to the understanding that the question of th.e 1. 5 asis of reimbursement to Mr. Hersey covering expenses incurred while l'Ilkistan would be reviewed by Mr. Young, Mr. Hersey, and the Board's ec)r1 tr°11er and worked out to their mutual satisfaction. All of the members of the staff except Messrs. Sherman, Kenyon, 414auver then withdrew from the meeting. 9/23/63 -16Appointment of director at Boston. It was agreed unanimously to ascertain through the Chairman of the Federal Reserve Bank of Boston whether John T. Fey, President of the University of Vermont, Burlington, Vermont, would accept appointment if tendered as Class C director of the 113ston Reserve Bank for the unexpired portion of the term ending ecember 31, 1965, with the understanding that if it were found that Mr. Fey would accept, the appointment would be made. Secretary's Note: Advice having been received that Mr. Fey would accept the appointment if tendered, a telegram advising him of his appointment was sent on September 25, 1963, the appointment being effective as of that date. Testimony on pending bills. Governor Mills raised a question rearding the tenor of the testimony to be given tomorrow by Chairman before the House Banking and Currency Committee concerning five Q Proposing greater latitude for banks and savings and loan associations their financial activities, and Chairman Martin described the position In• (311•each of the bills that had been agreed to at earlier meetings of the . i tOexc Governor Mills then said that he thought the draft of testimony rl t• he bill that would allow banks to engage in the underwriting of rev,. '-'nue bonds was an excellent presentation. Quite properly, he added, ther e was concern about the Comptroller of the Currency's recent intertion to the effect that if a State contracted to make payments into ' ete a. s Peeial fund to service the obligations of a revenue authority, this 3282 9/23/63 -17- /1 equivalent to pledging the full faith and credit of the State. " In the drafting of State and municipal laws, provision invariably was made tor a debt limitation but not for a tax limitation, the objective being to assure that the State or municipality could always tax sufficiently to service the debt. The question was whether a State or municipality c°414 contract to make good the aforementioned payments into special tlincls if such pledge would raise the debt limit beyond the constitutional ceiling. Also, there was the question whether State or municipal officials "lad contract and bind future officials who would subsequently hold the corresponding offices. These points would appear to strengthen the allgUnlents in the testimony on the revenue bond proposal. Governor Mills then said that he had prepared a paper reflecting his background thinking on the broad subject of the evolution of the banking laws, particularly in regard to loans and investments. In the "of objection, he proposed to send this to Chairman Patman of been the Rouse Banking and Currency Committee as a paper reflecting his (Go vernor Mills') personal views on the status and trend of developments in commercial banking. In was indicated that there would be no objection to the sending Or the paper referred to by Governor Mills. The meeting then adjourned. Secretary's Notes: On September 20, 1963, Governor Shepardson approved on behalf of the Board the following items: 3283 9/23/63 -18- Letter to the Federal Reserve Bank of Boston (attached Item No. 11) apnr -L.-01ring the appointment of John J. Kannegieser as assistant examiner. a Letter to the Federal Reserve Bank of Boston (attached Item No. 12) 1)Proving the appointment of Howard G. Smith as assistant examiner. Letter to the Federal Reserve Bank of New York (attached Item No. 13) , roving the reappointment of Robert L. Lang as assistant examiner. , se Memorandum from the Division of Research and Statistics dated 18, 1963, recommending that Rose C. Cassedy, formerly Research ''s'8s1stant in that Division, be appointed to the Business Conditions ?etl°n on a temporary contractual basis effective to December 31, 1963, "1th compensation at the rate of $33 per day. Pursuant to recommendations contained in memoranda from appropriate individuals concerned Governor Shepardson today approved on behalf of the Board the following actions relating to the Board's staff: ointments a_ Dorothy Isabel Folsom as Draftsman-Trainee, Division of Research t'17! Statistics, with basic annual salary at the rate of $3,820, effective date of entrance upon duty. _Watkins Leigh Ribble, Jr., as Economist, Division of Research and 1st1es, with basic annual salary at the rate of $8,045, effective the date of entrance upon duty. Sala flree Stephana Prager, Statistical Clerk, Division of Research and Statistics, tr'°1 $4,135 to s4,390 per annum, effective September 29, 1963. 11Qee tance of resignation Acttv PhYllis Ann Carson, Clerk-Stenographer, Division of Personnel stration, effective at the close of business October 4, 1963. 1/1SecrTta ct BOARD OF GOVERNORS Item No. 1 OF THE 9/23/63 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRIEBPONDIENCE TO THE BOARD September 23, 1963 First National City Bank, 399 Park Avenue, New York 22, New York. Ge ntlemen: The Board of Governors of the Federal Reserve System nthorizes First National City Bank, New York, New York, pursuant LO Provisions of Section 25 of the Federal Reserve Act, to lish a branch in Taipei, Taiwan, and to operate and maintain '2tabtich branch subject to the provisions of such Section and of Regulation N. Unless the branch is actually established and opened for 81„,;"ess on or before October 1, 1964, all rights granted hereby 1 11 be deemed to have been abandoned and the authority hereby allted will automatically terminate on that date. ; Please advise the Board of Governors, in writing, through Reserve Bank of New York, when the branch is opened for b lnesal furnishing information as to the exact location of the ranch. the Fed Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. (The toe, -Letter to the Reserve Bank stated that the ot also had approved a six-month extension 444 "e tt_ periodallowed to establish the branch; the "e.t if an extension should be requested, or ,,Procedure pr-scribed in the Board's letter ' Iovember 9, 1962 (S-1846), should be followed.) 328.) BOARD OF GOVERNORS Item No. 2 OF THE 9/23/63 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFTICIAL CORRESPONDENCE TO THE BOARD September 23, 1963 hret National City Bank, 399 Park Avenue, New York 22, New York. Ge ntlemen: The Board of Governors of the Federal Reserve System authorizes First National City Bank, New York, New York, pursuant to provisions of Section 25 of the Federal Reserve Act, to ab lsh a branch in the city of Dubai, Trucial State of Dubai, thei to operate and maintain such branch subject to the provisions ' 4 such Section and of Regulation M. es! Unless the branch is actually established and opened for on or before October 1, 1964, all rights granted hereby be deemed to have been abandoned and the authority hereby 6rallted will automatically terminate on that date. busi, Please advise the Board of Governors, in writing, through the t, for 4'ederal Reserve Bank of New York, when the branch is opened b the usiness, furnishing information as to the exact location of branch. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. (The toe. letter to the Reserve Bank stated that the also hal3 approved a six-month extension or atid-':e Period allowed to establish the branch; at if an extension should be requested, the or .h,Procedure prescribed in the Board's letter "°vember 9, 1962 (S-1846), should be followed.) BOARD OF GOVERNORS Item No. 3 9/23/63 OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE SELARD September 23, 1963 Board of Directors, Chester-Schroon-Horicon Bank, Chestertown, New York. Gentlemen: The Board of Governors of the Federal Reserve System approves the operation by ChesterSchroon-Horicon Bank on a year-round basis of its seasonal branch at Schroon Lake, Essex County, New York. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. 1)1,11)1, Item No. 4 BOARD OF GOVERNORS 9/23/63 OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD September 23, 1963 Board of Directors, The First State Bank of Oxford, Oxford, Alabama. Gentlemen: The Board of Governors of the Federal Reserve System approves, under the provisions of Section 24A of the Federal Reserve Act, an investment in bank premises bY The First State Bank of Oxford, Oxford, Alabama, of /140,302. The amount approved includes $21,000 invested in land on which a proposed new building is to be located. 1 It is understood that The First State Corporation, not yet organized, will be wholly owned by the bank and that The First State Corporation is to acquire the land Presently held by the bank and will construct the new building thereon to be leased to the bank. It is also luiderstood that the bank's investment in The First State Corporation will not exceed $50,000. Very truly yours, (Signed) Elizabeth L. Carmichael aizabeth L. Carmichael, Assistant Secretary. , , . .. .; Item No. 5 BOARD OF GOVERNORS ‘,....... ', ti, • • ,''' i,k--•• .. OF THE 9/23/63 FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE , TO THE SOAR() • RESt .• September 23, 1963 Board of Directors, Union Bank and Trust Company, Grand Rapids, Michigan. Ge ntlemen: The Board of Governors of the Federal Reserve System ev appro es, pursuant to Section 2/IA of the Federal Reserve Act, an jaw ex stment in bank premises, both direct and indirect, of not to oferd 0,500,000 by Union Bank and Trust Company, for the purpose is -eguiring a site and constructing new main office quarters. It or uncle rstood that an affiliated building corporation is to be b4ani2sd to own and operate the new bank premises and that all n°minal amount of the total cost of the project is to be : obt --fled by the building corporation from sources outside the bank. In view of the continuing expansion in volume of operathe present capital structure of the bank is believed to be forvw the desired level. The Board wishes to emphasize the need fullcie°nsideration of a program for providing additional capital s if future retained earnings are proportionately less than ure growth. tions Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. 1289 ' Item No.' 9/23/63 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD September 23, 19o3 Board of Directors, Wharton Bank and Trust Company, Wharton, Texas. Ge ntlemen: The Federal Reserve Bank of Dallas has forwarded to the 1!°: .1 r of Governors a letter dated August 19, 1963, signed by ;: sident B. C. Roberts, Jr., together with the accompanying inTution, signifying your intention to withdraw from membership mo,,,,,Te Federal Reserve System and requesting waiver of the sixnotice of such withdrawal. The Board of Governors waives the requirement of sixs rrZ 1 .hs notice of withdrawal. Under the provisions of Ina 208.10(c) of the Board's Regulation H, your institution ej l„acoomplish termination of its membership at any time within fr,"t months from the date that notice of intention to withdraw Ba;j1: membership was given. Upon surrender to the Federal Reserve inst,°f Dallas of the Federal Reserve stock issued to your will'ution, such stock will be cancelled and appropriate refund oe made thereon. retu It is requested that the certificate of membership be rfled to the Federal Reserve Bank of Dallas. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. -1 9() 3,; Item No. 9/23/63 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. ADDRESS OFF1CIAL CORRESPONDENCE TO THE BOARD September 23, 1963 The Honorable Jesse P. Wolcott, Director, Federal Deposit Insurance Corporation, Washington 25, D. C. Dear Mr. Wolcott: Reference is made to your letter of September 10, 1963, concerning the application of Bank of the Mainland, La Marque, Texas, for continuance of deposit insurance after withdrawal from membership in the Federal Reserve System. While there are no corrective programs that the Board of Governors believes should be incorporated as conditions to the continuance of deposit insurance, the bank has been urged to strengthen its capital and to review its current credit policies and collection Practices. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. 3291_ BOARD OF GOVERNORS Item No. 8 9/23/63 OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE aoARo September 23, 1963 CONFIDENTIAL (FR) Charles J. Scanlon, President, ederal Reserve Bank of Chicago, Chicago, Illinois, 60690 near Mr. Scanlon: tari„ The Board of Governors has approved the following minimum and ciii7:41 salaries for grades 10 through 16 of the salary structure appliNen t° employees at the Head Office of the Federal Reserve Bank of effective September 1, 1963: Minimum Maximum $ 6,180 6,780 ,450 127 13 8,270 14 9,200 15 10,330 16 11,560 $ 8,360 9,180 Grade 10 11 10,070 11,190 12,440 13,970 15,640 kni4-rriurn - The Board also approved an upward adjustment to $2,600 in the nge of grade 1, effective as of September 1. a4 re, The ranges approved are those fixed by your Board of Directors the vcIrted in Mr. Tucker's letter of August 30. It is understood that 9 wi'intlin of grade 1 and the minimums and maximums of grades 2 through liarch jemain unchanged from those approved by the Board effective 4-) 1962. th Salaries should be paid to employees other than officers within s ttire 44n-it , specified for the grades in which the positions of the respecS411113-10Yees are classified. All employees whose salaries are below e of their grades as a result of the structure increase should (34ght within appropriate ranges by January 31, 1964. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS Item No. 9 9/23/63 OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD September 24, 1963. 14t. Alfred Hayes, President, Federal Reserve Bank of New York, Ilew York 45, New York. bear Mr. Hayes: This refers to Vice President Bilby's letter of October 26, 1962, and to your letters of November 9, 1962, and March 22, 1963, concerning the proposed alterations to the gold vault facilities in the main building of the Federal Reserve Bank of New York. In view of the considerations set forth in your letters in your meetings with the Board regarding the proposal, the 1?atd authorizes your Bank to proceed with the project, as out41ned in Mr. Bilby's letter, at an estimated cost of $470,000, 41cluding architects and engineers' fees. Your Bank's conclusion that this construction would significantly affect the value of the building is noted. It j 14 uld, however, result in an improvement in the building, adding T1°1 value in an accounting sense, if not in terms of market value. chete is another, and perhaps more important, reason for not a ,tging to "Repairs and alterations" expense in a particular year t:atge nonrecurring item. This is that to do so would distort a'!e Per-square-foot cost of maintaining space in the building, f lice the formula for determining space charges to reimbursable oliseal agency operations includes in the base figure all costs atged to "Repairs and alterations" expense in the year. Accordplig1 Y, the Board feels that the expenditure should, under the charged either f_t°visions of the Accounting Manual on page 54, be ' ac). the allowance for depreciation on building or to the building ccount itself. Ot Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. Item No. 10 9/23/63 September 20j. 1963. To: Prom: Board of Governors Ralph A. Young Subject: Participation in SEANZA Central Banking Course It is recommended that Mr. A. B. Hersey, Adviser, Division °f International Finance, be designated to give the lectures at the SEANZA Central Banking Course in accordance with the request from 3. A. Hasnie, Governor, State Bank of Pakistan, in his letter to the e Chairman dated August 23, 1963, attached, and that for this v14"Pose the necessary foreign travel be authorized. We should also like to take advantage of Mr. Hersey's trip akistan to permit him to visit central banks and observe economic conditions in certain other countries. At this time, howe : a 4ever, it is not feasible to make specific plans; therefore, a suboicillent memorandum will be submitted to the Board requesting approval additional travel plans when these will have been prepared. t DI 4- A letter from the Chairman to Governor Hasnie has been Pt'ePared for use in the event the Board approves this travel. It will be noted from Er. Hasnie's letter that our nominee 1/°41d %tin, be a guest of the State Bank of Pakistan during his stay in that inei,"::Y• In view of this I recommend that Mr. Hersey be authorized to vhil ' ue in his travel voucher his actual out-of-pocket expenditures ' e in Pakistan, in lieu of the standard government allowances. Attechin enta. 3294 Item No. 11 9/23/63 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD September 20, 1963 Luther M. Hoyle, Jr., Vice President, PBederal Reserve Bank of Boston, "ton, Massachusetts. be a, — mr. Hoyle: In accordance with the request contained in your letter Qt SePtember 12, 1963, the Board approves the appointment of John Bank 'of Kannegieser as an assistant examiner for the Federal Reserve Boston. Please advise the effective date of the appointment. Very truly yours, • (Signed) Elizabeth L. Caichae1 Elizabeth L. Carmichael, Assistant Secretary. 3295 Item No. 12 BOARD OF GOVERNORS 9/23/63 OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONOENCE TO THE BOARD September 23, 1963. •-q9LIEIREELIALJEL Mt. Luther M. Hoyle, Jr., Vice President, federal Reserve Bank of Boston, Boston, Massachusetts. Dear Mr. Hoyle: In accordance with the request contained in your letter of September 12, 1963, and your telephone conversation in Mr. Leavitt, the Board approves the appointment of Howard G. to th as an assistant examiner for the Federal Reserve Bank of st°n. Please advise the effective date of the appointment. 4 It is noted that Mr. Smith is indebted to The Boston Five A_ c Cents Savings Bank, Boston, Massachusetts, a nonmember bank. o rdingly, the Board's approval of Mr. Smith's appointment is e /en with the understanding that he will not participate in any : 4amination of that bank until his indebtedness has been liquidated. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary. 32% Item No. 13 BOARD OF GOVERNORS 9/23/63 OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD September 20, 1963 litt. Howard D. Crosse, Vice President, !ederal Reserve Bank of New York, New York, New York. ear Mr. Crosse: In accordance with the request contained in Mr. Pierce's letter of September 13, 1963, the Board approves the reappointment of Robe of, rt L. Lang as an assistant examiner for the Federal Reserve Bank "ew York, effective October 1, 1963. Very truly yours, (Signed) Elizabeth L. Carmichael Elizabeth L. Carmichael, Assistant Secretary.
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