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Minutes for To: September 6. 19TT 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, 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 Chm. 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 Friday, September 6, 1957. in The Board met the Board Room at 10:00 a.m. PRESENT: Mr. Mr. Mr.. Mr. Mr. Balderston, Vice Chairman Szymczak Vardaman Mills Robertson Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Carpenter, Secretary Sherman, Assistant Secretary Kenyon, Assistant Secretary Johnson, Controller, and Director, Division of Personnel Administration Hackley, General Counsel Masters, Director, Division of Examinations Molony, Special Assistant to the Board Hexter, Assistant General Counsel Davis, Assistant Counsel Items circulated to the Board. bee, The following items, -which had circulated to the members of the Board and copies of -which are at- tached hereto under the respective item numbers indicated, were approved Item No. lajnter to The First National City Bank of New York vvrovin- a proposed temporary relocation of its ReAyo branch (For transmittal through the Federal serve Bank•of New York) 1 aptr to The First National City Bank of New York ---v-Lng the temporary relocation of its Caguas, kert oc.e° Rico, ico, branch. (For transmittal through the 2 Reserve Bank of New York) tett'Ir to the Federal Reserve Bank of Cleveland extenain -441g the time within which The Cleveland Trust shak-nY, Cleveland Ohio may establish a branch in er Heights, Ohio. 3 2462 9/6/57 -2Item No. Letter to the Comptroller of the Currency regarding :; 1 proposal to consolidate The First National Bank of erktmer, Herkimer, New York, and The Middleville vational Bank, Middleville, New York. 4 1).,,setter to the Federal Deposit Insurance Corporation ietarding the application of South Main State Bank, .°18ton, Texas, for continuation of deposit insurance withdrawal from membership in the Federal Reserve System. 5 etters to the Chairman of the Presidents' Conference lcIg-d the 6,7 President of the Federal Reserve Bank of ,Ilicago regarding the safekeeping of securities owned DY States and municipalities. Salary structure for officers at Boston Reserve Bank (Item There had been circulated to the members of the Board a file 11:2:—.§11 relating to a request from the Federal Reserve Bank of Boston for aPproval of an upward revision in the Bank's salary structure applicable to officers other than the President and the First Vice President. The recommendation of the Division of Personnel Administration was rav°rable, Governor Vardaman stated that he would be willing to go along /1.th the proposed salary structure on the basis that such action would be line with approval over the past several months of similar 8alarY structure revisions for other Federal Reserve Banks. He con- tirlU d. to feel, however, that the pattern of officers' salary administration at the Reserve Banks was bad and that the salaries had gotten (lilt Of line with services rendered. These comments by Governor Vardaman led to a general discussion "the reasons for and principles underlying the officers' salary 9/6/57 -3- administration plans at the Federal Reserve Banks which were approved by the Board in 1953, and also of the procedures followed in reviewing iricreases in officers' salaries during the ensuing years. This dis- cu881°n suggested that current procedures might permit an unduly large Prop ortion of the salaries of individual officers to move toward the upper extremes of the respective salary groups, and the view was ex- Pressed that it would be desirable for the Board to study to what extent such a trend might have progressed in order that any understandings that seemed necessary could be reached with the Reserve Banks. For the Purpose of review by the Board, it was suggested that the Division Of Personnel Administration submit a tabulation showing, for individual Officers, comparative salaries in 1950, in 1955, and at the present tInle, together with the maximum salary which could be paid to each (Ifficer under the applicable existing salary structure. Governor Robert- Son suggested additionally that the material submitted to the Board set f°1"th comparative salaries for the Presidents and First Vice Presidents, /41° are excluded from the officers' salary structures, as well as recomillsluied salary increases for Reserve Bank officers that had been turned cl°141 by the Board during the period referred to by Governor Vardaman. kior Balderston proposed attaching copies of any letters from the tIcard to the Reserve Banks regarding salary administration practices as to ,L, ""uch the Board had raised a question. At the conclusion of the discussion, it was agreed that the tiNri c)n of Personnel Administration would submit information of the 21.M 9/6/57 kind mentioned as promptly as possible. With this understanding, the recommended revision of the officers' salary structure at the Federal Reserve Bank of Boston vas approved unanimously. "at A copy of the letter to the Bank pursuant to this action is attached to these minutes as Item No 8 Discount rates. Telegrams to the following Federal Reserve Banks approving the establishment without change on the dates indicated ct the rates of discount and purchase in their existing schedules were N221:2!aLl. unanimously: Minneapolis New York Philadelphia Cleveland Chicago Kansas City Dallas September September September September SepteMber September September 3 5 5 5 5 5 5 It9I4itment of staff for field examining force. Governor Roberts on referred to difficulties encountered in recruiting and maintaining a staff of appropriate calibre on the field examining force "the for -ivision of Examinations and suggested that there be submitted consideration at the next meeting of the Presidents' Conference a 111'°13°88.1 under which persons would be selected for employment by the resPective Banks and then assigned to the Board's staff for a period of Ilel.haPs three years, following which the employee, if he so desired, 14 "1ld have the privilege of going back to the Reserve Bank by which he 44 been employed. This would be with the understanding, of course, thatthe Board would pay the employee's salary during the period that he vas assigned to its staff. A plan of this kind, Governor Robertson 9/6/57 -5- said) would allow the Reserve Banks to select persons they considered desirable and, by holding out to applicants an opportunity to leave travel status after a stated period, might increase the availability of stronger candidates for the examining staff. Governor Vardaman suggested a possible variation pursuant to which the respective Reserve Banks would assign regularly to the Board's field staff an agreed upon number of men from their own staffs for a rairlialinn period of perhaps two years, with the understanding that the Pers°ns assigned would have had at least one year of service at the Ilank. The principal reasons for his alternative suggestion were that he doubted whether the Reserve Banks should be obliged to hold positions fc)r Persons whose performance they had not had an opportunity to observe elld that he felt such a procedure would do more to insure the quality Qr Personnel_ assigned to the Board's field staff. Governor Balderston discussed the progress of the fellowship Pr°gl'am which the Board had approved for trial at the Federal Reserve I8ank Of Chicago and noted that, in giving its approval, the Board had Ilielltioned the desirability of utilizing the program for the selection d development of personnel in various categories. He suggested that it might be possible to work out a plan under which persons selected a. program of this kind could be assigned to the Board's field start as a part of their training. At the cOnclusion of further discussion concerning the problem Or sta. ffing the examining force, it was understood that the Division 246(3 9/6/57 Of -6- Personnel Administration would submit a memorandum on this subject 'which the Board could consider sending to the Presidents' Conference for study and discussion at the next meeting of the Conference. questions presented by Hamilton National Associates under the ing Company Act (Item No. 9). As discussed in a memorandum -----S-,Lfold 8anl fl*am Mr. Davis dated August 30, 1957, copies of which had been sent to the members of the Board, Hamilton National Associates, Inc., of Chattanooga, Tennessee, had asked through the Federal Reserve Bank of Atlerits. (1) whether a bank holding company might, without the Board's 41)Pr"a1, receive bank stock dividends or participate in stock splits, na.(2) whether such a company might exercise, without the Board's 1313rO1ia1 y rights to purchase its proportional part of new stock issued by banks in which the holding company already owns stock. For reasons 4e7e1°Ped in the memorandum, the opinion was expressed that receipt of barik stock through a stock dividend or stock split, assuming no change 111 the class of stock, would not require the Board's prior approval, but th. , a purchase of bank stock through the exercise of rights would seer', - up re quire prior approval, except where the exceptions set forth 14 section nf DO.) of the Bank Holding Company Act are applicable. There 14as submitted with the memorandum a draft of letter to the Federal Rese— 'Ye Bank of Atlanta which would take such a position, and it was aUggested that the Board's interpretation be published in the Federal Reserve Bulletin. In commenting in support of the views expressed in the 246 9/6/57 -7 inemorandum from Mr. Davis, Mr. Hackley referred first to the question °f stock dividends or stock splits and said that, although some argument Illight be made that such transactions required Board approval because here as no specific exclusion in the Act, any construction other than that made in the memorandum would appear to do violence to the purposes ' elld intent of the statute. As to the exercise of rights, however, the situation was quite different because in that case the stockholder's v°11intary action could result in an increase in the holding company's Pl'oportional interest in the bank. In some cases involving a stock dividend, there might be nothing that the stockholder could do to predeclaration of the dividend, and even if the Board's prior approval Ilera re quired, the factors pertinent to stock acquisition that the 844.11 is required by the Act to consider would not have applicability. AS tO the exercise of rights, the Board had already taken the position in another situation that the exercise of rights to acquire stock of nonbanking company would be an acquisition of additional ownership, e.nd he felt that the same principle should be applied in the case of tock of a bank. Mr. Hackley concluded by saying that he thought the P°81tion taken in the memorandum was a reasonable and proper construction c)r the statute. While it was possible, of course, that the Department Of JUstice would take a different view, he felt that the possibility was 14 reMote, and he could see nothing in this position which would give 118e to any question. There followed a discussion of certain questions raised by 24138 9/6/57 -8 Governor Mills which were intended to clarify the fact that the requirement of prior approval for the exercise of rights in bank stock was not meant to suggest that in most cases the requested approval would not be granted. It vas pointed out that submission for prior approval seemed inanclat°rY under the language of the statute because the holding company l°111d voluntarily pay additional funds for the extra shares and mould -equire" the additional stock even under a narrow meaning of that term. Luring the discussion, a distinction was drawn between the question ric41 before the Board and the proposed acquisition of shares of Conti- Gin Co. by Trust Associates. Company of Georgia and Trust Company of Georgia As mentioned previously, the Board had held in that case that the exercise of rights by a bank holding company to purchase add tic Of l shares in a nonbanking company -would re-present an acquisition additional ownership. However, since a nonbanking subsidiary was 1111relved, the acquisition would be subject to the prohibitions of section the Bank Holding Company Act. Governor Mills suggested that this distinction be made clear in an Published interpretation relating to the current questions. Governor Robertson agreed with the interpretations made by the legal Division, but questioned the adequacy of a published interpretation d allggested the possibility of an amendment to the Board's Regulation Y, 844 H°1ding Companies, at an appropriate time. Governor,Robertson also questioned whether it was necessary, 14 eaeh letter of interpretation under the Bank Holding Company Act, to 2469 9/6/57 -9- conclude with the statement that the Board's interpretation might not be ibliowed by the Department of Justice if it should have occasion to consider the matter. Agreement was expressed by the Legal Division that the inclusion Of the paragraph did not seem necessary in this particular case, and also that it might not be necessary to bring the situation to the attention of a bank holding company after responding to the particular c° PanYls initial request for an interpretation under the Act. On the °ther hand, it was felt that the warning language might have some value in correspondence on controversial questions or in corresponding with a 8taller bank holding company whose knowledge of the situation seemed tore doubtful. During the discussion, Governor Robertson suggested the possi- bility - of sending to the Department of Justice copies of letters from the -ru in response to requests for interpretations under the Bank Ii°1ding Company Act. However, after comments had been made adverse to sUch a procedure, he withdrew his suggestion. In a further comment on the question relating to the exercise Of rights, Mr. Hexter pointed out that where a bank holding company Ig°Uld, after the proposed acquisition of shares, own more than five per eent Cq* the bank's outstanding voting stock but where the holding company doet, qo not own or control a majority of the voting shares, the provisions ot the Bank Holding Company Act would in some cases prohibit the exercise Of ri -&Ights covering shares in a bank located in another State, and the toar.3 q therefore would be precluded from taking favorable action. 9/6/57 -10Thereupon, unanimous approval was given to a letter to the Pederal Reserve Bank of Atlanta in the form attached as Item No. 9, vith the understanding that the interpretation contained therein would be sent to all Federal Reserve Banks in edited form and would be 1311blished in the Federal Reserve Bulletin. At this point all members of the staff except the Secretary 'withdrew from the meeting. Governor Balderston referred to a memorandum dated September ' 5 1957) from Mr. Young, Director of the Division of Research and Statistics in which the latter stated that the annual meetings of the AMell.can Statistical Association will be held in Atlantic City on September 10-13, 1957, and it was proposed that in recognition of the active interest of members of the Division's staff in such professional ation activities and in view of the benefits of staff participa- ti°4, authorization be given to Messrs. Frank R. Garfield, Kenneth B. Willielne, Louis Weiner, Charles Yager, Clayton Gehman, Milton Moss, Az tillAr L. ' Broida, and Edward R. Fry to attend the meetings at Board exand that Miss Wilellyn Morelle be authorized to attend on an ctric4 -leave basis but at her own expense. Mr. Young's proposal was approved unanimously. Mr. Johnson came back into the meeting and, at Governor Balderston's eciLleet) commented on the recommendation of the Interdepartmental tttho " apnic Wagd Board to its member agencies that there be a further inere se in the existing pay schedule for printing grade positions. Mr. 9/6/57 -11recommended (1) that the Supervisor of the Duplicating and Mail Section of the Division of Administrative Services be placed in all appropriate Wage Board grade as a substitute for the previous policy of compensating this position at a flat rate of $200 per annum above the maximum annual rate for the highest graded Wage Board position Ilnder his supervision, and (2) that in accordance with the existing cY of the Board, approval be given to the new printing grade pay schedule recommended by the Interdepartmental Lithographic Wage Board alicl to increases averaging approximately 4 per cent in the salaries of 16 e mployees as shown below, effective September 8, 1957: Name and title Pre: " . Alklin Taylor, Supervisor ; 4)111as V. Brank w. Kopfman, Assistant Supervisor Constable, Photographer (Offset) ee L. Moffett, Operator (Offset Press) j.°8ephw. Wright, Photographer (Offset) NeiRobert Surguy, Clerk (Composition) son S. Dyson, Bindery Worker ni4;aiborne Johnson, Operator (Offset Press) IlialPh A. Sherrod, Photographer (Offset) ricen Barnes, Bindery Helper and Operator (Mimeo) Berry, Foreman Operator (Mimeo) lie*ert w. Bundy, Operator (Duplicating Devices) -Lion Wood, Operator (Duplicating Nara Devices) L. Hargett, Operator (Mimeograph) bezi Nee P. Lane, Operator (Mimeograph) rd Cross, Multilith Offset Press Operator P Annual Salary Rate From To $6,357 5,866 5,720 5,720 5,720 5,720 5,304 5,450 4,805 $6,469 6,074 5,949 5,949 5,949 5,949 5,512 5,658 4,971 4,035 4,035 4,222 4,222 3,827 3,994 3,827 3,598 3,598 3,994 3,786 3,786 3,453 3,619 2474,. 9/6/57 -12The recommendations were considered in the light of the reasons for the Board's existing policy with respect to Wage Board determinations and the various questions raised by such a policy. At the conclusion of the discussion, Mr. Johnson's recommendatiOn.. were approved unanimously. 13ay A copy of the revised printing grade schedule is attached hereto as Item No. 10. The meeting then adjourned. Secretary's Notes: Governor Balderston, acting in the absence of Governor Shepardson, today approved on behalf of the Board a letter to the Federal Reserve Bank of New York approving the appointment of Ronald E. Long, George F. Rice, and John L. Young as assistant examiners. A copy of the letter is attached hereto as Item No. 11. Pursuant to recommendations contained in memoranda from appropriate individuals concerned, Governor Balderston also approved on behalf of the Board today the following items affecting the Board's staff: eases, effective September 8, 1957 Division Basic annual salary To From Research and Statistics A e rleY A. Barham, Clerk-Stenographer tci: Z1 ed P. Johnson, Economist D. Kalachek, Economist 8teza Lutz Clerk-Typist eY J. Sigel, Economist 14 j. -0-km J. Smith, Economist °en R. Winter, Jr., Clerk $3,415 6,605 5,980 3,175 10,535 5,980 3,755 $3,500 6,820 6,115 3,260 10,750 6,390 3,840 91 1-4k) r 9/6/57 -13- Sai --zztELI.licreases, effective September 8, 1957 (continued) Name and title Division Basic annual salary From To Examinations j°1,, 1111 P. Donovan, Assistant Federal A Aeserve Examiner findrew Pi Thompson, Supervisory Review Examiner $5,440 $5,575 11,395 11,610 3,285 2,860 3,855 3,370 2,945 4,010 Administrative Services William E. Hardy, Messenger f!nroe A. Nickens, l' Messenger Charles R. Norris, Head Messenger AccePtance of resignation Emogene F. Frymier, Clerk-Typist, Division of Examinations, effective October 4, 1957. On August 12, 1957, the Board approved a letter to the Chairmen of all Federal Reserve Banks, with copies to the Presidents, concerning the participation of branch directors in the discussion of policy matters, with the understanding that the letter would be sent in the month of September. The letter, of which a copy was included with the minutes of August 12, was sent under date of September 6 195 2474 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 1 9/6/57 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD tttt ,1.** September 6, 1957 George S. Moore, Executive Vice President, The First National City Bank of New York, 55 Wall Street Ilew York is, New York. Dear Mr. Moore: Reference is made to your letter of August 13, 1957, , u-Lw'flitted through the Federal Reserve Bank of New York, regardthe removal of your Tokyo, Japan, Branch from No. 4, 2-chome„ emachil Chiyoda-ku, Tokyo to temporary quarters at No. 10, c )4°me, Marunouchi, Chiyoda-ku, Tokyo, approximately 1300 yards m your existing location. You state that your bank owns the building in which the 1?ranch operates, but the land is owned by and leased from er ' 11131shi Estate Company Limited, that Mitsubishi is desirous of adeiTng a modern office building on the site which also includes yo;„!tL'ing Property awned by it, and that Mitsubishi has requested th:: uank to sell to Mitsubishi your existing building in order Mitsubishi may demolish it and erect a large office building, 1,„:" of which will be space for your Tokyo Branch. When completed uaZI" Portion of the building will be sold back to you for a like lint, together with a lease for 99 years on the land. It is understood that negotiations are under way which, Your tank expects will result in an offset arrangement, whereunder Your •ank will lease back to hitsubishi the fourth, fifth, and be. 4, floors of your space in the building at a figure which will on :::;11-1a1 to the rental your bank will have to pay under the lease to 'ne land. It is further understood that Mitsubishi has agreed terr°Yide, at no cost to you, temporary quarters, and that the on na`s-t-Ve schedule is for the temporary quarters to be occupied bec,Jetober 10, 1957, with return to permanent quarters about forerIber 1958. You state that this is a very advantageous move Your bank 5s to you. you will secure much better quarters at no cost HOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Georg„e S. 1.100re On the basis of the information furnished, the Board of vernors approves the removal to temporary quarters. Please advise the B oard in writing, through the Federal Reserve Bank of New York, 1411 10„en banking operations are commenced at the temorary location and resumed at the regular location at No. 4, 2-chomel Otemachi„ Chin : 0-3reda-ku„ Tokyo. It is understood, of course, that the locations ITProved will not be changed without the prior approval of the Board oi Governors. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary. 2475 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Item No. 2 9/6/57 WASHINGTON 25. D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD September 6, 1957 George S. Moore, Executive Vice President, The First National City Bank of New York, .)) Wall Street, Nati York 15, New York. Dear Nr. hoore: Reference is made to your letter of August 13, 1957, transmitted through the Federal Reserve Bank of New York and received by the b board of Governors on August 20, advising that the premises occupied Your Caguas, Fuerto Rico, branch require alteration and that on g113t 17 it would be necessary for the branch to move and occupy ternquarters in space vacated by Banco de Ponce at Nunoz Street ner of Ruiz Belvis Street. I 4 It is understood that the temporary quarters are about two block away from the existing branch location at 65 Betances Street, earlia-s am- s, that the cost of alteration in the existing premises will tocmint to approximately a4,000; and that it will take about two months It omplete, after which the branch will return to its former quarters. porls noted that, as there are no usable vault facilities in the tenlocation, all cash and books of record will be moved from the tZlell Premises vault to the temporary location every morning and reeach evening under the custody of armed guards. On the basis of the information furnished, the Board of Governors ,, aPproves the removal to temporary quarters. Please advise the 130 baau in writing, through the Federal Reserve Bank of New York, when str ing operations are resumed at the regular location at 65 Betances netet* It is understood, of course, that the locations approved will ue changed without the prior approval of the Board of Governors. Very truly yours, (Signed) Merritt Sherman Yierritt Sherman, Assistant Secretary. 247 BOARD OF GOVERNORS ft**4 PP*40 OF THE Item No. 3 FEDERAL RESERVE SYSTEM 9/6/57 WASHINGTON 25, D. C. AODRE9 OPFICIAL CORRESPONOENCO TO THE BOARD September 6, 1957 Mr. Paul C. Stetzelberger„ Vice President, Federal Reserve Bank of Cleveland, Cleveland 1, Ohio. Dear Mr. Stetzelberger: In view of the information submitted in your letter of August 20, 1957, and the Reserve Bank's favorable recommendation, the Board of Governors further extends until December 9, 1957, the time within which The Cleveland Trust Company, Cleveland, Ohio, may establish a branch at the northwest corner of Warrensville Center and Farnsleigh Roads, Shaker Heights) Ohio, under the authorization contained in its letter of April 24, 1956. Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary. 24 BOARD OF GOVERNORS ,p.4,1ti**74 'ItmtiVo OF THE Item No. 4 FEDERAL RESERVE SYSTEM 1, 1.* 9/6/57 WASHINGTON 25, D. C. 4.t ADDRESS OFFICIAL CORRESPONDENCE 6411,110Y1 TO THE BOARD September 6, 1957 Comptroller of the Currency, Treasury Department, Nhshington D. C. 25, Attention Mr. L. A. Jennings, Deputy Comptroller of the Currency. Dear Sir:: . The proposal to consolidate The First National Bank Herkimer, Herkimer, New York, and The Middleville National Bark3 u th rliddleville, New York, under the charter and title of A _e former, to which reference is made in your letter of TNIIst lit, 1957, does not appear to come within the purview °r_the Bank Holding Company Act of 1956. However, the enclosed 44formation may be helpful in your consideration of the matter. Of Very truly yours, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary. Enclosures BOARD OF GOVERNORS OF THE Item No. 5 FEDERAL RESERVE SYSTEM 9/6/57 WASHINGTON 25, D. C. ADDREss orvioiAL CORRESPONDENCE TO THE BOARD September 6, 1957 The Honorable H. E. Cool:, Chairman, Federal Deposit Insurance Corporation, Washington 25, D. C. Dear Mr. Cook: Reference is made to your letter of August 221 1957, concerning the application of South Main State Bank, Houston, Texas, for continuance of deposit insurance after withdrawal from membership in the Federal Reserve System. Although no formal demand for additional capital has been presented, efforts have been made for more than four years, through conferences and correspondence, to convince the directors Of the need for additional capital. No other corrective programs have been urged upon the bank or agreed to by it which the Board Of Governors believes should be incorporated as conditions to the continuance of deposit insurance. Very truly yours, (Sicned) Merritt Sherman Merritt Sherman, Assistant Secretary. 2480 BOARD OF GOVERNORS OF THE Item No. 6 FEDERAL RESERVE SYSTEM 9/6/57 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD 't qt.)* September 6, 1957 ** H. G. Leedy, Chairman, Conference of Presidents, c/0 Federal Reserve Bank of Kansas City, iCansas City 6, Missouri. ipeex Mr. Leedy: Enclosed is a copy of the Board's reply of this date to a letter from the Federal Reserve Bank of Chicago regarding the safekee lI Lug of certain securities awned by an instrumentality of a State government. The Board feels that consideration of this matter digestS the desirability of a System review of the general confaci°48 under which Federal Reserve Banks should provide safekeeping i-es for securities of any kind owned by States and municipalities. Ct theIt will be appreciated if you will have this topic placed agenda for consideration by the Conference of Presidents. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Seci..etary. ItlIcIoeure BOARD OF GOVERNORS OF THE Item No. 7 9/6/57 FEDERAL RESERVE SYSTEM WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE SOAR° September 61 1957 Mr. Carl E. Allen, President, Pederal Reserve Bank of Chicago, Chicago 90, Illinois. Dear Mr. Allen: Reference is made to Assistant Vice President Carroll's lettwv. • -- of August 12 regarding the propriety of your Bank continuing ha'N1 in of the International Bank for Reconin;t• tction safekeeping bonds and Development which are owned by the State Annuity and ustment Board of the State of Wisconsin. eubstant Although the United States Government has, as you know, a inte ial participation in the activities and direction of the Bank, securities issued by the Bank are not obligations secin.' 44united States Government and therefore would not qualify as and;"ies which Federal Reserve Banks may hold in safekeeping for States -1130 1-c 611ries as authorized by the Board's letter of April 2, 1943, As was set forth in that letter the use of Reserve Bank facilitiAe. 1041zor the safekeeping of Government securities owned by State and parti governments was largely a war-time measure designed to encourage to t atien in Treasury financing. Actually, the practices with respuct looX Permissible provisions of the Board's letter have varied with the chan ' situations at the individual Reserve Banks. In the light of thatT circumstances since the matter was last considered, the Board feels Syzt 'Lie question raised by your Bank suggests the desirability of a pro,74 review of the conditions under which Federal Reserve Banks should arici'de safekeeping facilities for securities of any kind owned by States mun icipalities. Iteserv Since this is a matter of policy which affects all Federal feran, e Banks the Board has referred it to Mr. Leedy, Chairman of the Confer f.:e of Presidents, with the request that he place it on the agenda " nsideration by the Conference. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. cc: ltr. H . G. Leedy C 0, ., 2482 BOARD OF GOVERNORS 4011t4-04, OF THE FEDERAL RESERVE SYSTEM .„ Item No. 8 9/6/57 WASHINGTON 25, O. C. 4 v. 4 ,.3 ADORERS OFFICIAL CORRESPONOENCE TO THE SOAR° Sep ember 6, 1957 CFR) Mr. Robert C. Sprague, Chairman, '.4ecleral Reserve Bank of Boston, toston 6, Massachusetts. Dea.r Mr. Sprague: The Board of Governors has approved effective inimediat 1 e 4, the adjustments proposed in Mr. Erickson's letter or str,Zust 28, 1957, for the minimums and maximums of the salary pea:"Ure of the Officers' Salary Administration Plan of the Reserve Bank of Boston as follows: Group A B C D Minimum Max $16,000 $22,500 19,000 16,000 13,500 13,000 11,000 9,000 Very truly yours, (S ed) S. R. Carpenter S. R. Carpenter, Secretary. 483 BOARD OF GOVERNORS OF THE " 4:0 FEDERAL RESERVE SYSTEM Item No. 9 9/6/57 WASHINGTON 25, D. C. ADDRESS OFFICIAL CORRESPONDENCE TO THE BOARD September 6, 1957 Mr. Malcolm Bryan, President, pederal Reserve Bank of Atlanta, Atlanta 3, Georgia. Dear Mr. Bryan, This refers to Mr. Denmark's letter of July 8, 1957, with , c1°8ures e An relating to questions raised by Hamilton National n8so • Inc., Chattanooga, Tennessee, a bank holding company. Tjle er Presents, in effect, questions under the Bank Holding burf anTcanY Act as to (1) whether a bank holding company may receive the stock dividends or participate in bank stock splits without exe,!?ard'e prior approval, and (2) whether such a company may without the Board's prior approval, rights to subscribe 0 stock20w stock issued by banks in which the holding company already ". us Neither a stock dividend nor a stock split results in any , t chan, pan ." in a stockholder's proportional interest in the issuing comaott I. anY increase in the assets of that company. Such a transcont-n would have no effect upon the extent of a holding company's °1 of the bank involved; and none of the five factors required by j 844"e Act to be considered by the Board in approving a stock acqui( anc 0/1 would seem to have any application. In view of the objectives 4121111306es of the Act, the word "acquire" would not seem reasonably to 4410 lude transactions of this kind. On the other hand, the exercise by a bank holding company Of the cota. „ right to subscribe to an issue Jf additional stock of a bank 1110 result in an increase in the holding company's proportional 414:14T.78t in the bank. The holding company would voluntarily pay ad,,di:'°nal funds for the extra shares and would "acquire" the 0ve'24onal stock even under a narrow meaning of that term. Moreexercise of such rights would cause the assets of the ellg company to be increased and in a sense, therefore, the "etzl exp °r extent" of the bank holding company system would be 2484 Mr, Malcolm Bryan -2- In the circumstances, it is the Board's opinion that of bank stock by means of a stock dividend or stock !tilt) assuming no change in the class of stock, does not require el Board's prior approval under the Act, but that (2) purchase of stock by a bank holding company through the exercise of rights does require the Board's prior approval, unless one of the exuePtions set forth in section 3(a) is applicable. (1) The Board recognizes that certain additional questions eiaA , u'Ulg to the application of section 3(d) and section 11 of the ; I?:sare suggested by Ur. Denmark's letter and its enclosures, but u s that the facts presented are insufficient for the Board to give its views at this time, particularly since no direct applica'"' for its approval has been made. It will be appreciated if you will advise Hamilton National Inc., of the Board's views as expressed in Associates, this let. Very truly yours, (Signed) S. R. Carpenter S. R. Carpenter, Secretary. 24_85 PRINTING GRAob BASIC PATXREJUU * Note: Item No. 10 9/6/57 ; and Lail h].8 schedule applies to those positions in the Duplicatin: Offset work: phic lithogra of kinds g Section that perform the followin n, Operatio t Photosta ion, Composit Printing, Offset Photography, uffset supere immediat the to and n, Operatio Illimeograph Operation, bindery visor of those positions. 3 Step 1 Step 2 Step 0,454 $2,579 $2,704 2 2,642 2,787 2,933 3 2,850 3,141 14 3,037 2,995 3,203 5 6 3,245 3,411 3,578 3,411 3,598 3,766 7 3,619 3,806 3,994 8 3,806 4,014 4,222 9 10 4,014 4,222 4,430 4,202 4,430 11 4,410 4,6313 4,846 4,659 4,867 5,096 5,034 50242 5,283 5,512 5,179 5,450 5,720 5,366 5,658 5,949 5,574 5,762 5,866 6,157 60074 6,261 6,366 6,469 6,802 ae 12 13 4,597 4,784 4,971 114 15 16 17 18 19 20 5,949 6,136 3,370 6,573 September 23, 1956) schedule supersedes the pay scale effective Incumbents of positions subject to this pay schedule are eligible for ranges on the Progreso step increases within particular salary following basis: (6 months) satisfactory tal:_aanncement to Steal, after 26 weeks 1. Step service in months) satisfactory (18 weeks t2I1Ovancement to Step 3) after 78 service in Step 2. (This 24_86 BOARD OF GOVERNORS 4*****4 0 OF THE OW 4441 444441, FEDERAL RESERVE SYSTEM tt% Item No. 11 9/6/57 WASHINGTON 25. D. C. ADDRESS orrtctokt. CORRESPONDENCE TO THE BOARD September 6, 1957 Mr. H. H. Kimball, Vice President, Federal Reserve Bank of New York, New York 45, New York. Dear Mr. KiMball: In accordance with the request contained in your letter of August 30, 1957, the Board approves the appointment °I Ronald E. Long, Georpe F. nice and John L. Young Es i\Tew 7ork. ,,ssistant examiners for the Federal Reserve -13nnk lease advise as to the dates upon which these. appoilititcatE, are Made effective and as to the salary rate of Hr. Youn:. Very truly rcurs, (Signed) Merritt Sherman Merritt Sherman, Assistant Secretary.
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