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Minutes for To: Members of the Board From: September 25, 1957 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. Glam. Martin Gov, Szymczak Gov. Vardaman Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Minutes of actions taken by the Board of Governors of the Federal Reserve System on Wednesday, September 25, 1957. The Board met in the Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Martin, Chairman Balderston, Vice Chairman Vardaman Mills Robertson Shepardson Mr. Carpenter, Secretary Mr. Kenyon, Assistant Secretary Mr. Thomas, Economic Adviser to the Board Mr. Johnson, Controller, and Director, Division of Personnel Administration Mr. Hackley, General Counsel Mr. Sprecher, Assistant Director, Division of Personnel Administration Mr. Harry H. Fite and Mrs. Gladys Rogers of Lester B. Knight & Associates, Inc. Items circulated to the Board. The following items, which had been circulated to the members of the Board and copies of which are ttached to these minutes under the respective item numbers indicated, " '4 e approved unanimously: Item No. Meta° tiojahdum from the Division of Personnel Administrai,ari recommending that arrangements be made for Asian sta4:nza inoculations for members of the Board's tetter to the Federal Reserve Bank of Boston approving E1 151/ Miustment of the salary structure applicable to em„Gyees. Lette,_ uu the Federal Reserve Bank of San Francisco intey„ no objection to the increased expense involved hos41clUsion of an additional benefit under the group Pitalization and surgical plan. 1 2 3 2695 9/25/57 -2Item No. Letter to the Federal Reserve Bank of Atlanta interposing no objection to the proposed listing for sale of the present Nashville Branch building. 4 Letter to the Federal Reserve Bank of Cleveland exending the time within which The Community Bank, viapoleon, Ohio, may establish an in-town branch. 5 Letter to Trust Company of Georgia, Atlanta, Georgia, ! PPrcving the establishment of a branch at Glenn Street -nd Stewart Avenue. (For transmittal through the Federal Reserve Bank of Atlanta.) 6 Letter to the Federal Reserve Bank of Chicago authoriz'waiver of a penalty incurred by Central National 1:k 7 and Trust Company, Des Moines, Iowa, because of a efi 'ciency in required reserves. 7 fetter to the Federal Reserve Bank of Chicago extendng the time within which Fidelity Bank & Trust Company, Nfldiananolis, Indiana, may establish a branch at 3900 Me Drive. 8 Letter to the Federal Reserve Bank of St. Louis approvsng an additional investment in bank premises by Paris alrings Bank, Paris, Missouri. 9 , -er to the Federal Reserve Bank of St. Louis extendthe time within which First-City Bank & Trust Comestablish an in-town ran b-4 chY, Hopkinsville, Kentucky, may .. 10 ter to the Comptroller of the Currency submitting an . ifavorable recommendation with respect to an applica. ' j °11 to organize a national bank in Brick Township, New : pj eY. (With a copy to the Federal Reserve Bank of a-La delphia.) 11 Letter 4.. 0 the Department of Justice furnishing informa3 vh," in connection with a study of executive powers would lapse if the national emergency proclaimed December 16, 1950, were terminated. 12 l -3- / /7 9 25 5 Studies of reserve requirements. There had been sent to the 'nembers of the Board copies of a memorandum from Mr. Thomas dated September 23, 1957, relating to inquiries from members of the Economic P°11cY Commission of the American Bankers Association and from the Commission's staff concerning the current studies of reserve requirelents by the Board's staff, particularly with respect to the Commis8ion's proposal for a revision in the existing requirements. The memo- suggested that it would be helpful in discussing the matter if the Board would authorize sending to the Chairman and staff of the C°mMission copies of two staff memoranda, prepared under the dates of lgust 9 and September 6, 1957, respectively. Al It was noted that these nlemoranda, which had been distributed to the members of the Board, //ere factual and objective studies and contained no recommendations or ill( lica.tions of recommendations as to the Board's position on the subject of reserve requirements. Following a brief discussion, Mr. Thomas was authorized to Illeate copies of the memoranda available to the persons mentioned. All of the members of the staff then withdrew from the meeting the Board received in executive session a report from Mr. Fite on a " the recent survey of the Board's paperwork which he and his associates 4 conducted pursuant to the action taken by the Board on July 10, 1957. " The meeting then adjourned. 9 25/57 / -4Secretary's Notes: Pursuant to recommendations contained in memoranda from appropriate individuals concerned, Governor Shepardson approved on behalf of the Board on September 23, 1957, the following items affecting the Board's staff: lee ' P1oyment after maternity leave Rose C. Cassedy as Statistical Assistant in the Division of Research and Statistics, with basic annual salary at the rate of $4,480, effective October 61 1957. 1 .i.c..,S2ztance of resignation Barbara H. Murphy, Clerk-Typist, Division of Examinations, effective October 31, 1957. 1 12ILE2 of retirement Liston P. Bethea, Director, Division of Administrative Services, effective December 31, 1957. Governor Shepardson approved on behalf of the Board on September 24, 1957, a letter to the Federal Reserve Bank of New York approving the appointment of John W. Shute and William D. Young as assistant examiners. A copy is attached hereto as Item No. 13. Pursuant to the recommendation contained in a memorandum from the appropriate individual concerned, Governor Shepardson today approved on behalf of the Board acceptance of the resignation of Patricia A. Latona, Operator, Key Punch, Division of Administrative Services, effective September 25, 1957. 2698 BOARD OF GOVERNORS or THE FEDERAL RESERVE SYSTEM )()ke Correspondence ,o of Governors fro I "t lgon of Personnel Administration l Item No. 1 9/25/57 Date September 161 1957. Subject: Asian Influenza Inoculations It is recommended that authorization be given the Division of Per sonnel Administration to make arrangements through the Board's examining for i sician, Dr. Frederic D. Chapman, for Asian influenza inoculations ! I ° following Board employees: the Health Service Unit (4 peo)le: nurse, su ; bstitute nurses, and maid) and all Cafeteria employees (22 people). Ise inoculations would be considered mandatory, with the provision that 13 110j , . 2 4 any employee be advised in writing by his physician that he should " °e given the vaccine, he would be excluded from the inoculation program. t 4 It is further recommended that authorization be given the Division 0rsonnel Administration to make arrangements for Asian influenza 1. th:',culations for other members of the Board's staff on a voluntary basis, avnnumber being conditional upon the amount of vaccine that will be $Vable for this Purpose. If sufficient vaccine is not available for all perl:d eMplOYeeS, it is possible that enough may be obtained for 40 to 50 0n8 in addition to those already specifically designated, in which case itY groups will have to be established. , 1)- 1/1%lzrThe feasibility of arranging for an Asian influenza inoculation 'm for all Board employees has been discussed with Dr. Chapman, the 130ard *, 8 Physician. We have also been in contact with the District Asian 111 Lenza Advisory Committee to obtain information concerning the availablail r of vaccine, the establishment of priority groups, and other problems ila ction with planning a mass inoculation. Although Dr. Chapman has been contacting various drug companies r(31' the past tkr, two weeks in an effort to obtain vaccine for this program, so obta'.'e has received no vaccine. He feels it is very doubtful that he could et„,ln a sufficient supply to provide inoculations for the Board's total coi;''fl although he has placed a request for this amount. However, he is , car iclent that before the end of the month he will receive enough to take °f the employees in the Health Service Unit and the Cafeteria. The line()Yees in the Health Service Unit are designated as a priority group in Aziariwith the priority designations that have already been suggested by the The Influenza Advisory Committee to private physicians and institutions. to t !ain reason for including the substitute nurses in this program is due r present state of health of the Board's regular nurse, which is re(Ilt le shrin?; more than the normal amount of sick leave. The Cafeteria staff er14:F.ge3ted because it is believed food handlers might easily transmit ' other employees. to 2699 'rot Boar of Governors -2 If an additional amount of vaccine is available to enable Dr. 1 Chapman to give inoculations to a group of 40 or ;0 Board employees, t categories that can be used be necessary to establish priority • 48 Criteria for clesignatin(:: which members of the Board's staff should be ti.,Iverl first consideration in this program. It is suggested that the st4 8t priority group be the Board Members and all members of the official etiaff• If there is sufficient vaccine to take care of additional , „P_,J-0Yees, each Division Head will be requested to submit names of indi' 4 'ullals on his staff who should receive first preference. While it is difficult to give a firm estimate of the cost of the kw Program, Dr. Chapman has advised that, on a group basis, it will be , 'd-mately 1. for each person inoculated, which would include the o ) c`sf° ' The of the vaccine and othr materials as liell as the doctor's fee. es3st per person will be somewhat higher if only a small number are 110'aculated. If it is possible to plan an inoculation program for all bit employees, with the inoculations being given in the Board's building '" Chapman, he has estimated that the total cost for this type of p,,r• 10 ?500. No provision was made in the 1958 t",.ralll Would be approximately ; '''et for this expense. 2700 BOARD OF GOVERNORS '11} oottt. K11 ., OF THE Item No. 2 9/25/57 ck' FEDERAL RESERVE SYSTEM WASHINGTON 25. O. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE HOARD September 25, 1957 e° IDENTIAL (FR) A. Erickson, President, 8''eral Reserve Bank of Boston, °8ton , Massachusetts. u te4r Mr. Erickson: In accordance with your letter of August 29, 1957, the Board of G°1rern maximum salaries for the ? , re.1 - rs approves the following minimum and Reserve c4tve grades of the employees' salary structure at the Federal Q7 'of Boston effective October 9, 1957: Grade ---.... Minimum Salary - 1 $2,080 2 2,100 Maximum Salary $2,640 2,830 3,140 2,320 3,480 2,580 4 3,820 2,830 5 4,250 3,150 6 4,730 3,500 7 5,230 3,870 8 5,860 4,340 9 106,610 4,890 7,470 11 5,530 3 12 13 14 15 6,210 6,980 8,080 9,360 16 10,340 8,390 9,420 10,900 12,600 13,960 to the employees, other The Board approves the payment of salaries for the grades in whdch the positions specified thOificerg, within the limits : 440a re spective employees are classified. It is assumed that all employees as a result of the struc141.04 841aries are below the minimum of their grades e 444 .knarease will be brought within the appropriate range as soon as practicabl ilcIt later than December 31, 1957. thati 2701 Erickson It is understood that the increases in salaries under this new salary 4111 ctUre will result in some excess in expense for the current year over the , ‘"Itilt budgeted. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary. 2702 BOARD OF GOVERNORS OF THE Item No. 3 FEDERAL RESERVE SYSTEM 9/25/57 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD September 25, 1957 AIR MAIL Mr. R. H. Morrill, Vice President, Federal Reserve Bank of San Francisco, San Francisco 20, California. Dear Mr. Morrill: This is to inform you that the Board of Governors interposes no objection to the assumption by the Federal Reserve Bank of San Francisco and its branches of the increased expense involved in the adoption of the in-hospital medical benefit Which is being added to your present Blue Cross Surgical Policy as outlined in your letters of July 30 and August 20, 1957, addressed to Mr. E. J. Johnson. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assiscant Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 4 9/25/57 ADDREBS OrrICIAL CORRESPONDENCE TO THE BOARD September 25, 1957 11r. la:Icahn. Bryan, President, Federal iteserve Bank of Atlanta, Atlanta Ge orgia. De hr. Rryan: In response to your letter of August 27 regarding the ilroPosal to list the present Nashville Branch building for sale at a Price of )160,000, the Board has no suggestions to offer. You report that the Executive Committee of the Bank believes that it would be well to sell the property prior to e n1 2 Pletion,and occupancy of the new building which is now under i‘ "on struction. This is a matter of business judgment which the 0,,,ard does not question. A recent appraisal resulted in an et market value of :,:i;85,000, and estimates of representatives he leading real estate companies in Nashville ranged from 1.75 0 -)300 to 4175,000. In the circumstances, the Doard has no jection to the proposed listing of the property at 4,1601000. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM l'..4 WASHINGTON 25, D. C. , V":4.... li* ..,;...' • is Item No. 5 9/25/57 AOOMs5 OFFICIAL CORHESPONOIENCE TO THE soARo 4oksktkt* September 25, 1957 Mr. Paul C. Stetzelberger, Vice President, Federal Reserve Bank of Cleveland, Cleveland 1, Ohio. Dear Mr. Stetzelberger: In view of the circumstances outlined in your letter of September 17, 1957, the Board of Governors further extends until March 20, 1958 the time within which The Community Bank, , Napoleon, Ohio, may establish a branch at 409-413 South Perry Street, Napoleon, Ohio, under the authorization contained in its letter of April 30, 1956.. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary. 2 05 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No 6 9/25/57 ADDRESS OrFICIAL CORRESPONDENCE TO THE BOARD September 25 1957 Board of Directors, Trust Company of Georgia, Atlanta 2, Georgia. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Atlanta, the Board of Governors of the Federal Reserve System approves the establishment of a branch by Trust Company of Georgia, Atlanta, Georgia, at the southeast corner of Glenn Street and Stewart Avenue, Atlanta, Georgia, provided the branch is established with.. in one year from the date of this letter and the necessary Permit is obtained from the appropriate State authorities prior to the date of its establishment. Very truly yours, (signed) Merritt Sherman Merritt Sherman, Assistant Secretary* BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D C. Item No. 7 9/25/57 ADORC55 OrriCIAL CORRESPONDENCE TO THE nnARD September 25, 1957 Mr. Laurence H. Jones, Cashier, Federal Reserve Bank of Chicago, Chicago 90, Illinois. Dear Mr. Jones: This refers to your letter of September 5, regarding the Penalty of $624.25 incurred by the Central National Bank and Trust Company, Des mines, Iowa, on a deficiency in its required reserves for the reserve computation period ended August 28. It is noted that the member bank relied on the balances Shown in your Bank's statement for its reserve position during the Period and did not reconcile its accounts until notified that a small deficiency existed but was being waived under Paragraph E of the instructions in the Board's letter S-1123; that upon reconciliation the bank discovered an erroneous credit of $400,000 to its account by your Bank, at which time it immediately notified your Bank of the error; that the correction of this error increased the n1ount of the average deficiency to an amount above the 5 per cent tevel that could be waived under Paragraph E; and that the subject Ink's reserve record has been very good over the years. ' In these circumstances, and in view of your recommendation, the Board authorizes your Bank to waive the assessment of the Penalty in this case. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary. 4 270' BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 8 / 9/25 57 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD September 251 1957 Mr. W. R. Diercks, Vice President, Federal Reserve Bank of Chicago, Chicago 90, Illinois. Dear Mr. Diercks: 9, Reference is made to your letter of September Bank 84 Trust 1957, submitting the request of the Fidelity na, for an extension of time Company, Indianapolis, India Meadows Drive, Within which to establish a branch at 3900 ntered in Indianapolis, Indiana, owing to delays encou ng program. starting the branch buildi n submitted After consideration of the informatio ds to and your favorable recommendation, the Board exten the establishment February 13, 1958, the time within which 's letter of of the branch, which was approved in the Board March 13, 1957, may be accomplished. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary. BOARD OF GOVERNORS OF THE Item No. FEDERAL RESERVE SYSTEM 9 9/25/57 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD September 25, 1957 Mr. Geo. E. Kroner, Vice President, Federal Reserve Bank of St. Louis, St. Louis 2, Missouri. Dear Mr. Kroner: Reference is made to your letter of September 9, 1957, submitting the request of the Paris Savings Bank, Paris, Missouri, for approval, under the provisions of al section 24A of the Federal Reserve Act, of an addition in bank premises. investment of 6.,370.67 After consideration of all available information, the Board of Governors concurs in the Reserve Bank's recof ommendation and approves the additional investment by Paris Savings Bank, Paris, 46,370.67 in bank premises Missouri. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary. )9 BOARD OF GOVERNORS ,kejlt1 1 0 4 CO 4r. 4 4, OF THE %op_ Item No. 10 9/ 25/57 FEDERAL RESERVE SYSTEM * , 4 le WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD September 25, 1957 Mr. Geo. E. Kroner, Vice President, Federal Reserve Bank of St. Louis, St. Louis 2, Missouri. Dear Mr. Kroner: As recommended in your letter of September 9, 12, 1957, the Board of Governors extends to November 1957, the time within which First-City Bank & Trust branch Company, Hopkinsville, Kentucky, may establish a Clarksville Road and a adjacent to the corner of New the proposed extension of Morning Side Drive within , Kentucky. corporate limits of Hopkinsville Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary. BOARD OF GOVERNORS 40*** OF THE FEDERAL RESERVE SYSTEM ft. Item No. 11 9/25/57 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD September 25, 1957 Comptroller of the Currency, Treasury Department, Washington 25, D. C. Attention Mr. Hollis S. Haggard, Chief National Bank Examiner. Ileel' Mr. Comptroller: This will acknowledge receipt of a letter from your office dated June 12, 1957, enclosing copies of an application to organize national bank in Brick Township, New Jersey, (P. 0. Breton Woods, tLy "e Jersey), and requesting a recommendation as to whether or not le ` application should be approved. The report of investigation of the application made by an ecalniner for the Federal Reserve Bank of Philadelphia indicates that 2 Ile Z, subject application should not be approved. It is the view of examiner that the proposed capital structure of the bank in the !,Luount of $150,000 would be inadequate in respect to the volume of 4 ` jPosits anticipated within the first three years of operation of cue Proposed bank. It would appear that not less than $250,000 in oaPital funds should be available at the opening of the bank. Secthe general character of the management of the bank is not La :vorable. With one or two exceptions, the organizers are unimP 4reasive as potential bank directors, and the proposed bank does appear to be a project with firm community support. Insuffi;J•ent or no financial data has been supplied to the examiner in iesPect to the personal financia7. status of the proposed organthe principal organizer, Mr. Phillip Bertrand, has and: led to supply the examiner with other required data. The of group and community interest is emphasized by the fact ri;at several of the proposed organizers have just recently withawn. Moreover, no prospective executive officer for the bank 1, 1 17 - been selected, and this, of course, is a serious deficiency the organization of the institution. 2711 Comptroller of the Currency - 2 Earnings prospects are relatively favorable if the substantial volume of deposits and loans anticipated by the organizers is realized. Based on a comparison with other local financial institutions and branches, the growth prospects of the proposed institution may be more limited than envisaged by the organizers, and in this event, the earnings may not be as favorable as indicated. While there may be a local need for banking services, it would appear that the convenience and needs of the community to be served by the proPosed institution might better be served by a branch of some nearby established bank. In view of the unfavorable factors, the Board of uovernors does not feel justified in recommending approval of the application. The Board's Division of Examinations will be glad to discuss any aspects of this case with representatives of your office if You so desire. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary. r BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 12 9/25/ 7 5 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD September 252 1957 14r. W. Wilson White, Assistant Attorney General, Office of Legal Counsel, Department of Justice, Washington 25, D. C. bear Mr. White: This refers to your letter of September 5, 1957, stating hat your Office has been requested by the Attorney General to make a study of what needed executive powers would lapse if the national eraergency proclaimed on December 16 1950 were terminated. ) Your letter states that 12 U.S.C. 249 appears to fall 141thin the jurisdiction of the Board and to be available during the national emergency declared December 16, 1950. That provision reads as follows: "After November 1, 1947, the Board of Governors of the Federal Reserve System shall not exercise consumer credit controls pursuant to Executive Order Numbered 8843, and no such consumer credit controls shall be exercised after such date except during the time of war beginning after the date of enactment of this joint resolution or any national emergency declared by the President after August 8, 1947." toThe national emergency declared December 16, 1950 appears be of the kind described in 12 U.S.C. 249. However, the D2fense ( '°Itiction Act of 1950, r.pproved September 8, 1950, specifically proj / ded in section 601 for the exercise of consumer credit controls, and tr regulation of consumer credit during this period was under e authority of section 601. The Board suspended its regulation of 11 2, sumer credit, effective May 7, 1952; and section 601 was repealed, L -,rective June 30, 1952. The Board has not exercised authority under , U.S.C. 249 during the national emergency, and the Board believes BOARD OF GOVERNORS Mr. W. Wilson White or THE FEDERAL RESERVE SYSTEM -2- that it would not be necessary to make any change in the provision if the national emergency proclaimed December 16, 1950 were te.rminated. There are no other powers within the Board's jurisdiction which depend for their existence on this emergency. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. 2713 BOARD OF GOVERNORS OF THE Item No. 9/ / 25 57 FEDERAL RESERVE SYSTEM WASHINGTON 25. O. C. ADDRESS crriciAL comucs•rirdoeNce TO THE •OAPIO September 24, 1957 Mr. H. A. Bilby, Vice President, Federal Reserve Bank of New York, New York 45, New York. Dear Mr. Bilby: In accordance with the request contained in your letter of September 20, 1957, the Board approves the appointment of John W. Shute and William D. Young as assistant examiners for the Federal Reserve Bank of New York. Please advise as to the date upon which the appointments are made effective. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary.