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e

BOARD OF GOVERNORS
o r

THE

FEDERAL RESERVE SYSTEM

ffice Correspondence

From.

Mr» Thurston
Richard A, Misgrave (RflM

Date February 26, 19^6
Subject ; Supplementary Information
f o r OFA Testimony
..„„,..

At yesterday 1 s hearing b e f o r e the House Banking and
Currency Committee, Representative F r e d e r i c k C» Snith of Ohio
questioned the Chairman on the extent to which the present
bank holdings of Government s e c u r i t i e s had been dei<S^8d through
purchases i n the market from o t h e r h o l d e r s o r though d i r e c t
purchases from the Treasury«
He then asked t h i s question? !,lfifhat are the s t a t u t e s
under which the comnercial banks have t h e r i g h t to purchase
s e c u r i t i e s d i r e c t l y from the Treasury? Are there any s t a t u t e s
which i n d i c a t e t h a t the commercial banks cannot buy s e c u r i t i e s
d i r e c t l y from the Treasury o r that the Treasury cannot s e l l
s e c u r i t i e s d i r e c t l y t o the commercial banks?* The Chairman
said t h a t t h i s was a l e g a l matter which he would l i k e t o have
h i s l e g a l s t a f f answer * Representative Smith then requested
t h a t such an answer be prepared and i n s e r t e d i n the record*
and the Chainnan agreed t h a t t h i s would b e done»

\

W i l l y o u , p l e a s e , pass t h i s on t o whomever should
handle i t ?




February 27, I9I46.
Mr. Vest
FO
RM

-

Mr. Thurston

When the Chairman was on the stand day before
yesterday. Representative Smith of Ohio asked t h i s
question:
"What are the statutes under which the 00mmercial banks have the right to purchase securities
d i r e c t l y from the Treasury? Are there any statutes
which indicate that the commercial banks cannot buy
securities d i r e c t l y from the Treasury or that the
Treasury cannot s e l l securities d i r e c t l y to the commercial banks?"
The Chairman said that this was a legal matter
which he would l i k e to have his legal s t a f f answer.
Representative Smith then requested that such an
answer be prepared and inserted in the record, and
the Chairman agreed that this would be done.
Can you have an appropriate statement prepared?




E.T.