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Minutes for To: September 25, 1959 Members of the Board From: Office of the Secretary Attached is a copy of the minutes of the Board of Governors of the Federal Reserve System on the above date. It is not proposed to include a statement With respect to any of the entries in this set of minutes in the record of policy actions required to be maintained pursuant to section 10 of the Federal Reserve Act. Should you have any question with regard to the minutes, it will be appreciated if you will advise the Secretary's Office. Otherwise, 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. Szymczak Gov. Mills Gov. Robertson Gov. Balderston Gov. Shepardson Gov. King Minutes of the Board of Governors of the Federal Reserve System on Friday, September 25, 1959. The Board met in the Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr. Mr. Mr. Mr. Mr. Martin, Chairman Balderston, Vice Chairman Szymczak Mills Robertson Shepardson King Sherman, Secretary Riefler, Assistant to the Chairman Hackley, General Counsel Masters, Associate Director, Division of Examinations Mr. Landry, Assistant to the Secretary Mr. Hooff, Assistant Counsel Mr. Mr. Mr. Mr. Discount rates. The establishment without change by the Federal Reserve Banks of New York, Richmond, St. Louis, Kansas City, and Dallas 134 September 24, 1959, of the rates on discounts and advances in their eisting schedules was approved unanimously, vith the understanding that appropriate advice would be sent to those Banks. Items circulated to the Board. The following items, which had been circulated to the Board and copies of which are attached to these biliraltes under the respective item numbers indicated, were approved Item No. 1,-,etter Trust Company of the inohawl,to the Marine Midland est 4 Valley, Utica, New York, approving the Eib in Ilion, New York, -11ciAlishment of a branch uent to its merger with the Ilion National 13ank —Trus 4,4 t Company. 1 9/25/59 -2Item No. Letter to the Old Kent Bank and Trust Company, Grand Rapids, Michigan, approving an extension Of time within which to establish a branch in Cascade. 2 Letter to The Brazil Trust Company of Brazil, Indiana, Brazil, Indiana, approving the establishment of a branch at Franklin and Church Streets. 3 Letter to Elston Bank & Trust Company, Crawfordsiv3ille, Indiana, approving the establishment of a ranch at the Northwest Corner of Market and Green Streets. Messrs. Masters and Hooff withdrew from the meeting at this Point and Mr. Ralph A. Young, Director, Division of Research and St atistics entered the room. Government security dealer position data. Mr. Riefler reviewed the background of the problem created by the refusal of two dealers in Govrnment securities to make available their position figures in such 8eclArities prior to 1958 in order to enable Mr. Rouse, Manager, System °13en Market Account, to comply with a request of Senator Douglas, Chairman of the Joint Economic Committee, for such data as an outgrowth of the Committee's hearings in New York City in August. Mr. Riefler 4°ted that Mr. Rouse had informed Senator Douglas in a letter dated Sept ember 11, 1959, why the data could not be supplied, but that as l'esUlt of a further discussion at the September 22 meeting of the ?ecieral Open Market Committee, he (Mr. Riefler) had informed Mr. .V • C 11.4 9/25/59 -3- Knowles, Special Economic Counsel of the Joint Economic Committee Staff, that certain data might be supplied if a written request was received from the Chairman of the Joint Economic Committee. Mr. Riefler went on to say that Mr. Knowles had called him this morning to say that he could not go forward with the idea of asking Senator Douglas to request certain statistical adjustments be made in the available data since the Committee was not in a position to know that the adjusted figures would provide a series that would correctly reveal trends. He requested that the Federal Reserve make the necessary adjustments and send the resulting total position tigures to the Joint Economic Committee. Mr. Riefler said that he took the position that the Federal Reserve would not be willing to take responsibility for preparing and releasing data about which it haa serious doubts. Mr. Knowles responded that he disliked having to reloort to Senator Douglas that the System would not cooperate in tIlia manner, but that he apparently would have to tell him of the situation. Mr. Young suggested an alternative procedure that might be r°110wed in this case: namely, to inform the Committee that the liecent Treasury-Federal Reserve study of the Government securities 4341 ' 1cet had revealed the desirability of developing a regular flow of t4tiatios on the market and that the System currently was working on 9/25/59 -4- this project with the Treasury. Retrospective statistics would also be developed in this program, but the entire project would take some time. Assuming the project were to be undertaken, the cooperation of the two dealers that had declined to supply back position figures might be obtained, although it might be necessary for the System to assume the cost (perhaps around $1,500) of getting the back figures. In reply to Governor Robertson's question as to whether the refusal of these firms to provide back figures was based solely on the cost of obtaining such information, Mr. Young replied that this 'was the stated reason but that there might be additional reasons why they did not wish to make their data available. During the discussion that followed, Governor Balderston eXPressed the view that the issue essentially was whether either the SYstem or the Joint Economic Committee wished to take the initiative tor questionable statistical series. He was bothered by the fact that the System, which was in a responsible position vis-a-vis the Government securities market, had not had complete information on de4lart' positions. Moreover, within a few months the System might be S tating publicly that complete reporting of the Government securities market was essential to the proper functioning of the System. Re Ilaa inclined to ask Mr. Young to talk with Mr. Knowles for the 111113ose of indicating that the System had in mind developing some 9/25/59 .5... measures, that that would, take some little time, and that in the meantime if the Joint Economic Committee wished to get a series based on adjusting available data, the figures would be prepared Provided, of course, Senator Douglas' Committee described the procedure to be used in making the statistical adjustments and providing the tabulation of the data contained appropriate footnotes regarding the adjustments. Governor Mills said that as he understood the suggestion, this vould still be making available figures that had been reported to the ?ederal Reserve Bank of New York in confidence, and he would not wish to make confidential figures available whether the procedure for adiusting the totals was suggested by Senator Douglas or not. At Chairman Martin's suggestion, it was understood that Mt. 1°114g should talk with Mr. Knowles in the light of this discussion and reloort back to the Board. Mr. Furth, Associate Adviser, Division of International Finance, ntered the room during the foregoing discussion. Gold collateral loan to Bank of Guatemala (Leallat.1). Ileterence was mmie to a telegram from the Federal Reserve Bank of 4ev York dated September 24, stating that the Bank of Guatemala, in letter dated September 11, 1959, asked the New York Bank for a seasonal collateral loan of $10,0001000. 9/25/59 -6In commenting on this request, Mr. Furth pointed out that the Bank of Guatemala had requested the loan for a term of three months, extendable in case some slight delay should occur in starting the export of coffee of the present harvest. He added that the economy of the country was fairly sound and that the last loan granted Guatemala had been in 1951 and to the best of his knowledge had never been drawn uPcla. The directors of the New York Reserve Bank had authorized the 1°a11, subject to the approval of the Board of Governors, but did not 1418h to make a commitment for automatic renewal after the three months' period had passed. It would, however, give consideration to a renewal at that time. It was then unanimously agreed that a wire (attached to these m inutes as Item No. 5) should be sent to the Federal Reserve Bank of Ne14 York approving the loan on the terms stated in the wire. All of the members of the staff then withdrew and Mr. W. 8raddock Hickman, Director of Economic Research, American Airlines, Inc .) entered the room for the purpose of meeting with the members or the Board. The meeting then adjourned. Secretary's Notes: Governor Shepardson today approved on behalf of the Board the following items: 9/25/59 142elqtEq121p. course Letter to Professor Edwin L. Stevens confirming verbal arrangements With the Division of Personnel Administration for conducting a 20-hour Discussion and Conference Leadership Course for members of the Board's staff at an honorarium of $500. Letter to the Federal Reserve Bank of New York (attached Item No. aPProving the Appointment of Lyman Brown III and Richard A. Duncan as eissistant examiners. Governor Shepardson noted today on, behalf of the Board the fifrag7f the application L. Evans, Statistical for retirement by Assistant in that Division, effective November 1, 1959. (Division of Research and Statistics) 6) BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. Item No. 1 9/25/59 ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD Bokrd of Directors, Marine Midland Trust Company 11, of the Mohawk Valley, vtica, New York. Ge/ Itlemen: Pursuant to your request submitted through the Federal Rese„ ther4-ve Bank of New York and subject to the circumstances described pro einy the Board of Governors of the Federal Reserve System ap— moZes the establishment by Marine Midland Trust Company of the Tar owk Valley, Utica, New York, of a branch at 4-8 East Main Street, yolzrnt New York, following consummation of the proposed merger of ank and Ilion National Bank and Trust Company, Ilion, New York. This approval is given provided: 1. Shares of stock acquired from dissenting stock— holders are disposed of within six months from the date of acquisition, and 2, The branch is established within six months from the date of this letter. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. 41 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON 25. D. C. Item No. 2 9/25/59 , OFFICIAL CORRCISPONOIENCC ADORES! TO THE BOARD September 25, 1959. Board of Directors, Old Kent Bank and Trust Company, Grand Rapids, Michigan. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Chicago, the Board of Governors of the Federal Reserve System extends the time within 'which Old Kent Bank and Trust Company may establish a bx:anch at the intersection of 28th Street S. E. and U. S. H?ghway 16 in the unincorporated community of Cascade, Mlohigan, to January 19, 1960, under the authorization contained in the Board's letter dated March 19, 1959. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS OF THE Item No. FEDERAL RESERVE SYSTEM 3 9/25/59 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD September 25, 19590 Board of Directors, The Brazil Trust Company of Brazil, Indiana, Brazil, Indiana. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Chicago, the Board of Governors of the Federal Reserve System approves the establishment of a branch at Franklin and Church Streets, Brazil, Indiana, by The Brazil Trust Company (3* Brazil, Indiana, provided the branch is established wIthin six months from the date of this letter. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. BOARD OF GOVERNORS eivatai", a44- CO OOp *4*4 OF THE Item No. 4 FEDERAL RESERVE SYSTEM 9/25/59 WASHINGTON 25, D. C. * ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD September 25, 1959. Board of Directors, Elston Bank & Trust Company, Crawfordsville, Indiana. Gentlemen: Pursuant to your request submitted through the Federal Reserve Bank of Chicago, the Board of Governors of the Federal Reserve System approves the establishment a. branch at the Northwest Corner of Market and Green Sureets1 Crawfordsville, Indiana, by Elston Bank& Trust Company, Crawfordsvil le, Indiana, provided the branch is established within six months from the date of this letter. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary. tit TELEGRAM BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM LEASED WIRE SERVICE Item No. 5 9/25/59 WASH I NGTON September 25, 1959 SANFORD -• NEW YORK Your wire September 24. Board approves granting of loan or loans on gold up to a total amount of $10 million by your Bank to the Banco de Guatemala on the following terms and conditions: 4. To be made up to 98 per cent of the value of gold bars set aside tn your vaults under pledge to you; 8. To be made in units of $1 million at any time on or before October 26; C. To mature in three months with option to repay at any time before maturity in units of $1 million; De To bear interest at the discount rate of your Bank in effect On the date on which such loan or loans are made. It is understood that the usual participation will be offered t° the other Federal Reserve Banks. (Signed) Merritt Sherman SHERMAN II I) 4 ( .1140. 14 BOARD OF GOVERNORS OF THE Item No. 6 FEDERAL RESERVE SYSTEM 9/25/59 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE HOARD 0 Int 044*,0" September 25, 1959 Mr, R. B. Wiltse, Vice President, Pederal Reserve Bank of New York, New York 45, New York. Dear Mr. Anse: In accordance with the request contained in your of September 23, 1959, the Board approves the apment of Lyman Brown III and Richard A. Duncan as aspi:tant examiners for the Federal Reserve Bank of New York. et.ttee advise the date upon which the appointments are made 'ective. lette 10,14 It is noted that Mr. Duncan is indebted to the Fair La wn-Radburn Trust Company, Fair Lawn, New Jersey, a paulnember bank, in the amount of approximately $202.50 : 111e on monthly instalments. Accordingly, the Board's °!al of the appointment is given with the understanding tha; ne will not participate in any examinations of that until his indebtedness has been liquidated. 4 Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Secretary.
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