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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 FROM - 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.
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