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m v a m m k \ r*‘ JAN 11 1951 Bear Allani 1 reefer to recent conversations between the Federal Reserve Bank of New York and the Treasury Department regarding the possi~ bllity of obtaining the cooperation of the Hee fork banks in reporting export transactions in controlled commodities which, on the baa la of information available to the banka, would appear to suggest evasions of export controls* As you know, we are particularly eager to obtain cluoa which might lead to the detection of shipments which, although nominally destined to a friendly area, In fact are intended to be transshipped to some country under Soviet control or influence* In the course of the discussions X have referred to, the conclusion was reached that fruitful results might be obtained through a systematic and confidential approach to the banks by officials of the Maw York Federal Reserve Bank In association with officials of the Treasury De partment* It was also agreed that this approach would be more effective if the banks oould be assured that In future other Government agencies would, so far as practicable, resort to this channel for their contacts with the banks o n .this street. The ijepartmsnts of State and ^osnsorce agree that occasional and uncoordinated contacts with the ties York banks w i n not yield good results end accordingly' are quite prepared to rely on the Federal Reserve Bank of Hew York and the Treasury Department as the channel through which to obtain such information as the banks can provide respecting controlled exports, except where an inquiry is made relating to a particular export transaction concerning which the Washington agency has already obtained some information from some other source* These agencies believe that the systematic approach to the $ew York banks which we are contemplating w i H make a real contribution to the enforcement of export control* In the light of these developments, I shall appreciate it if you will initiate the approach to the Hew York banks* Xfe eliciting the support of the bankers, it would be appropriate to Inform them that every effort will be made to respect the confidential source of any information which they can provide, and to assure them that it is the declassified .0. 12065, Sec. 3-402 Intention of the interested Govemnent agencies, 00 far es practicable, to rely on the Federal Reserve Bank and the Treasury Uepartiaent as the channel through which such information will be obtained from them. Sincerely, Secretary of the Treasury Mr* Allan Sproul, President Federal Reserve Bank of Hew lork Hew Xork, Hew tork FAS:bb 1-11-51
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