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FEDERAL RESERVE BAMK OF 1IEW YORK March 22, 1933. Walter % a t t , E s q . , General Counsel, F e d e r a l Reserve Board, Washington, D. C. Dear Walter: I enclose a copy of l e t t e r dated March 15, 1933, which Deputy Comptroller Gough wrote to me, and a copy of my r e p l y dated March 18, with r e f e r e n c e to a check f o r $14,000 deposited "by Mr. A. Drey f u s s i n the Harriman National Bank & Trust Company of Hen York. I have discussed t h i s question on t h e telephone w i t h Mr. Anderson twice and I t h i n k he intends to d i s c u s s i t with you. It seems to me t h a t the banking h o l i day should be t r e a t e d l i k e any other h o lid a y and should not prevent t h e t r a n s a c t i o n s which were p e r m i t t e d w i t h i n the terms of the r e g u l a t i o n s from having t h e i r n o r mal e f f e c t upon the r e l a t i o n s h i p between banks and t h e i r d e p o s i t o r s and between banks and t h e i r correspondent i n s t i t u t i o n s . I hope v e r y much t h a t t h e C o m p t r o l l e r ' s o f f i c e w i l l not take any p o s i t i o n to the contrary f o r i t would not only be unsound i n p r i n c i p l e i n my opinion, but would be obviously u n f a i r and embarrassing to F e d e r a l Reserve Banks and other banks which, i n t h e i r e f f o r t to cooperate i n the general p l a n , c a r r i e d on the l i m i t e d t r a n s a c t i o n s p e r m i t t e d by the Treasury r e g u l a t i o n s during the h o l i d a y , Encs. F a i t h f u l l y yours, (Signed) Walter S. Logan, Deputy Governor and General Counsel. 462 Xj™3X"ci c 0 p Y TESA.STJHY DEPARTMENT WASHINGTON Comptroller of t h e Currency March 15, 1933. Walter S. Logan, E s q . , Deputy Governor and General Counsel, Federal Reserve Bank of Hew York, Hew York, Hen York. Dear S i r : Mr. A. Dreyfuss of Men York C i t y , deposited a check i n t h e amount of approximately $14,000.00, drawn on a Rochester , New York, Ban1:, to h i s c r e d i t i n the Harriman National Bank and Trust Company of Hew York on March 1 . As you know, the Harriman n a t i o n a l Bank and Trust Company was agent f o r c o l l e c t i o n under t h e Hew York Law and t h e Conservator of the Harriman n a t i o n a l Bank and Trust Company a d v i s e s t h a t Mr. Dreyfuss i s not i n any way i n d e b t ed to h i s bank. We understand t h a t t h i s check was forwarded f o r c o l l e c t i o n through the Federal Reserve Bank of Hew York and c r e d i t e d to t h e account of the Harriman National Bank and Trust Company. Mr. Dreyfuss a s s e r t s t h a t he was r e f u s e d permission to draw a g a i n s t t h i s p r o v i s i o n a l c r e d i t i n t h e Harriman n a t i o n a l Bank and Trust Company of March 3, h e n c e . i t would a p p e a r , t h a t t h e r e l a t i o n s h i p between t h e bank and . Mr. Dreyfuss was t h a t of p r i n c i p a l and agent when t h e S t a t e Bank Holiday became e f f e c t i v e on March 4 and continued d u r i n g t h e p e r i o d the bank operated under t h e P r e s i d e n t ' s proclamation u n t i l the a p pointment of a Conservator. We a r e i n c l i n e d to the view t h a t the proceeds of t h i s item should be surrendered to Mr. Dreyfuss i f and when they come i n t o the hands of the Conservator. May we r e q u e s t a statement of the d i s p o s i t i o n proposed to be made of the balance standing to t h e c r e d i t of the Harriman n a t i o n a l Bank and Trust Company and whether or not t h e Federal Reserve Bank a s s e r t s the r i g h t t o apply the p r o ceeds of t h i s item i n r e d u c t i o n of any indebtedness due i t by the Harriman N a t i o n a l Bank and Trust Company. Yours very t r u l y , (Sgd) E. W. Sough Deputy Comptroller L-31-b 463 FEDERAL RESERVE BAH OF HEW YORK March 18, 1933. Comptroller of the Currency, Washington, D. C. Attention; Mr. Crouch, Deputy Comptroller. Dear S i r : Receipt i s acknowledged of your l e t t e r of March 15, 1953, with r e f e r e n c e t o a check f o r $14,000 deposited by Mr. A. Dreyfuss i n the Harriman National Bank & Trust Company of Hew York. On March 1, 1933, we received a check f o r $14,000 i n t h e cash l e t t e r dated February 28, 1933, of the Harriman Rational Bank & Trust Company. This check was numbered A140, dated March 1, 1933, and was drawn by W. 17. Kneath to the order of A. Dreyfuss on the Security Trust Company, Rochester, Hew York. We forwarded t h e check f o r $14,000 i n our cash l e t t e r dated March 1 t o t h e S e c u r i t y Trust Company, and on March 3 we r e c e i v e d and c o l l e c t e d through the Hew York Clearing Eouse the Security Trust Company's r e m i t t a n c e d r a f t f o r t h e $14,000 item and a l l other items included i n our cash l e t t e r w i t h t h e exception of t h r e e small items which were r e t u r n e d unpaid. On March 3 we gave c r e d i t to the Harriman n a t i o n a l Bank & Trust Company, Hew York, i n i t s r e s e r v e account on our books f o r the $14,000 item and other items included i n the same c a s h l e t t e r . The c o l l e c t i o n of the $14,000 item was, t h e r e f o r e , comp l e t e d on March 3 and on t h a t d a t e the r e l a t i o n s h i p of the Harriman Hational Bank & Trust Company to the d e p o s i t o r of the item changed from t h a t of agent t o d e b t o r , and i t would seem t o me c l e a r t h a t the d e p o s i t o r i s not e n t i t l e d to r e c e i v e the proceeds of t h e i t e m . Your l e t t e r h a s , however, r a i s e d i n my mind t h e question of whether t h e s i t u a t i o n would be any d i f f e r e n t i f the c o l l e c t i o n of t h e r e m i t t a n c e d r a f t had not been completed on March 3 , but had been completed subsequently during the bank h o l i d a y . In my opinion t h i s would not make any d i f f e r e n c e . You w i l l r e c a l l t h a t Regulation Ho. 8 i s s u e d by t h e Secret a r y of the Treasury under t h e P r e s i d e n t s proclamation d e c l a r i n g a bank holiday p r o v i d e s as f o l l o w s : "Where settlement f o r checks charged by drawee i n s t i t u t i o n s to the drawers accounts on i t s books on or b e f o r e March 4 , 1933, i s i n complete, settlement may be completed where such s e t t l e m e n t does not involve t h e payment of money or c u r r e n c y . " 464 L—31—Td 2 Comptroller of t h e Currency 3/18/33. In accordance with t h i s r e g u l a t i o n most of t h e r e m i t t a n c e d r a f t s which we r e c e i v e d on March 4, 1933, and which were, of course, i n s e t t l e m e n t of checks charged to the accounts of t h e makers or drawers thereof on the "books of the r e m i t t i n g hanks on or b e f o r e March 3, 1933, were p a i d during the following week while a l l "banks were o p e r a t i n g under t h e S e c r e t a r y ' s r e g u l a t i o n s . I do not t h i n k t h a t the hank h o l i d a y , any more than any other h o l i d a y , operated to t e r m i n a t e the agency r e l a t i o n s h i p "between the d e p o s i t o r and the depositary hank. Consequently, I b e l i e v e t h a t with r e s p e c t to an item i n process of c o l l e c t i o n when t h e "bank h o l i d a y "began, the agency r e l a t i o n s h i p would continue u n t i l changed to t h a t of debtor and c r e d i t o r upon payment of t h e r e mittance d r a f t i n accordance with Regulation Ho. 8 . At t h e opening of b u s iness on March 13, 1933, on which date we understand the Conservator of the Harriman n a t i o n a l Bank & Trust Company was appointed, t h e balance i n the r e s e r v e account i n f a v o r of t h a t i n s t i t u t i o n on our books was $992,248.30, and the i n s t i t u t i o n was indebted to us f o r a t o t a l of $1,388,500 secured by $1,041,000 f a c e amount of Government s e c u r i t i e s and approximately $347 ,500 f a c e amount of e l i g i b l e p a p e r . I t i s apparent from these f i g u r e s t h a t even without the e l i g i b l e paper we could l i q u i d a t e t h e indebtedness of the Harriman n a t i o n a l Bank & Trust Company by t h e s a l e of the Government s e c u r i t i e s and by o f f s e t of a p a r t of i t s r e s e r v e b a l a n c e , and s t i l l leave a c r e d i t balance of approximately $645,000 i n f a v o r of t h a t i n s t i t u t i o n i n i t s r e s e r v e account. Under the circumstances, t h e r e f o r e , we a r e not r e a l l y i n t e r e s t e d i n the d i s p o s i t i o n of the proceeds of t h i s p a r t i c u l a r item of $1,400, except t h a t i t might be considered a precedent i n other c a s e s . Very t r u l y y o u r s , Walter S. Logan, Deputy Governor and General Counsel. Copy sent to Mr. John F. Anderson, O f f i c e of the Comptroller of the Currency.
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