S. 860 and S. 1120 BILLS TO AMEND SECTION 19 OF THE FEDERAL RESERVE 38423 MARCH 23 AND 24, 1959 Printed for the use of the Committee on Banking and Currency UNITED STATES WASHINGTON: 1959 COMMITTEE ON BANKING AND CURRENCY A. WILLIS ROBERTSON, Virginia, Chairman J. W. FULBRIGHT, Arkansas HOMER E. CAPEHART, Indiana WALLACE F. BENNETT, Utah PRESCOTT S. BUSH, Connecticut J. GLENN BEALL, Maryland JACOB K. JAVITS, New York J. H. YINGLING, Chief of Staff II CONTENTS Page Balderston, C. Canby, vice chairman; Woodlief Thomas, economic adviser; and Ralph A. Young, Director, Division of Research and Statistics, Federal Reserve Board- Bell, Daniel W., American Bankers Association.. Gidney, Ray M., Comptroller of the Currency-- Helm, Harold H., Roy L. Reierson, and William C. Pierce, New York Kennedy, David M., committee on legal reserve requirements, Ameri- 222 Reierson, Dr. Roy L., New York Clearing House Association.. Wolcott, Jesse P., chairman, and Erle Cocke, Director, Federal Deposit Zweiner, Kenneth V., Beryl Sprinkel, and James J. Saxon, for the Letters, statements, memorandums, etc., submitted for the record by- American Bankers Association: Implications of bill for additional Association of Registered Bank Holding Companies: Letter on S. 1120_ Chamber of Commerce of the United States, Clarence R. Miles: Textual changes which would be made in section 19 by S. 1120__ Termination of the central Reserve city designation of St. Louis.. Proposed legislation for revision of Reserve requirements_ Compilation of Federal and State laws relating to reserves against National Association of Supervisors of State Banks: Letter on S. 1120_ Proxmire, William, a U.S. Senator from the State of Wisconsin: Statement on introduction of S. 860_____ Rockefeller, Nelson A., Governor, State of New York: Letter on Robertson, A. Willis, a U.S. Senator from the State of Virginia: Statement on introduction of S. 1120_ Saxon, James J., central Reserve city of Chicago: Memorandum urging revision of central Reserve city classification of Chicago___. Stratton, William G., Governor, State of Illinois: Letter on legislation_ MEMBER BANK RESERVE REQUIREMENTS MONDAY, MARCH 23, 1959 U.S. SENATE, COMMITTEE ON BANKING AND CURRENCY, Washington, D.C. The committee met, pursuant to notice, at 10:03 a.m., Senator A. Willis Robertson (chairman), presiding. Present: Senators Robertson, Frear, Douglas, Proxmire, and Muskie. The CHAIRMAN. The committee will please come to order. We are opening hearings today on S. 1120, which I introduced for Senator Fulbright, Senator Capehart, and myself, and S. 860, which was introduced by Senator Proxmire. S. 1120 and S. 860 would both authorize the Federal Reserve Board to permit member banks to include all or part of their vault cash holdings in their required reserves. S. 1120, in addition, would change the reserve requirements for demand deposits of central reserve city banks from the present range of 13 to 26 percent to a range of 10 to 20 percent, the same range applicable to reserve city banks. And S. 1120 would also give the Board more flexible authority to permit individual member banks in central reserve or reserve cities to carry reserves at the lower requirement levels currently applicable to reserve city or country banks. The Federal Reserve Board proposed these amendments, and the Comptroller of the Currency and the Federal Deposit Insurance Corporation have supported them. Without objection, I would like to insert in the record at this point a copy of each bill; Section 19 of the Federal Reserve Act; Copies of the statements which Senator Proxmire and I made when introducing the bills; A copy of the letter dated January 22, 1959, from the Board of Governors of the Federal Reserve System recommending the bill which became S. 1120 and a brief explanation of it; A copy of a report from the Federal Deposit Insurance Corporation on S. 1120, and a report from the Treasury Department, also on S. 1120; Copies of reports from the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and the Treasury Department, all on S. 860; and A copy of a letter from the Association of Registered Bank Holding Companies. Without objection, I should also like to insert in the record at this point a copy of a letter from Hon. John J. McCloy, chairman of the |