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141
BOARD OF GOVERNORS
OF" THE
FEDERAL RESERVE SYSTEM
S-578
WASHINGTON
ADDRESS OF"F"ICIAL CORRESPONDENCE
TO THE SOARD
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Novembrr 3, 1942
Dear Sir:
.. There is enclo::;ed for your information and guidance a
copy of a letter which the Board has received from the Navy Department dated October 31, 1942, identified by the number
J40PM10311008, signed by Mr. S. A. Mitchell, Chief of Finance
Section, regarding the insertion of Optional Condition (N) and
.of Optional Condition (L) in guarantee agreements executed on
behalf of th~~ Navy Department, and vri.th re,spect to a modification in the standa::. d form of authorization.
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In this connection, the Navy Department has requested
thr:; Board to advise the Fedoral Reserve Banl{s that on anu after
October 31, 1942, and until :I.nstructed to tho contrary by the
Navy Department, authorizations for the execution of guarantee
agreem.'mts will include a footnote, rnferring to the words "standard form dated May 14, l9L~2" wher:: they occur in the form of authorization, in the follov1ing language:
HSubjcct to thr: instruct:i.onG contG.ined in the
let tcr· of October 31, 19!,2. from the Navy iJf. pn.rt;ac:nt to
tb.e F<.;dc:ral £{;.;;serve Be.nks, Y/.lPMlOJll008. 11
Very truly yours,
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L. F. Bethea,
Asi>istant Sc:cretary.
Enclosure
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142
S-578-a
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NAVY DEPARTMENT
WASHINGTON
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No. 340PM10311008
October 31, 1942
From:
To:
E. L. Smead
S. A• Mitch ell
Subject:
Standard Form of Authorization
The Comptroller of the Currency has suggested that
optional condition (N) be included in all guarantee agreements
where the proceeds of the loan ·covered by the guarantee are to be
used for one or more specified purposes. Since the use of the
proceeds of loans guaranteed by the Navy DepartrrHmt is restricted
in practically ever-y instance, the Navy Department requests that
optional condi t:Lon (N) be included in all f:o"U'lrantee agreements,
alon1~ with the mandoto:rJ conditions.
Tl'\e Federal R.eserve Bank8 are requested not to include optional condition (L) unlest> the loan has been recommended
by the Federal Heserve Bank as being sound from a eredit standpoint, and unlE,ss the includon of such condition has had the
prior approval of the Navy Department. The Federal Reserve Banks,
as authorized on October 9, l%2, may include in the guarantee
agreement nny of tho:: optional conditions other than (L) which
may be desired ty the fi.nancinl~ institution.
The Federal heserve Banks are requested not to agree
to the inclt:.sion of language other than that which is substantially
contained in the ma.ndatory and optional conditions in the guarante<; agreement, as it is the desire of the Navy Department for the
g>larant1:.:;e agreements to be standard insofar as possible.
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The Navy Department l.s discontinuing the insertion
of instruction:3 with respect to the use or mandD.tory and optional
conditions in e.uthorizations as of this date. This letter is to
be included in future A-uthorizations to the Federal Reserve Banks
to guarantee in behalf of tho Navy Department, by reference.
(Signed) S. A. Mitchell
S. A. Mitchell
Chief of Finance Section
@FedFRASER