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FEDERAL RESERVE BOARD X-4602 WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE TO T H E FEDERAL RESERVE BOARD May 1 1 , 1926. SUBJECT: F o t e s of P a r e n t C o r p o r a t i o n s R e p r e s e n t i n g B o r r o w i n g s to b e Advanced t o S u b s i d i a r i e s . Dear S i r ; A c t i n g p u r s u a n t t o t h e r e q u e s t of t h e r e c e n t G o v e r n o r s C o n f e r e n c e t h e B o a r d h a s v o t e d t o p l a c e unon t h e p r o g r a m f o r t h e n e x t C o n f e r e n c e of G o v e r n o r s f o r t h e i r c o n s i d e r a t i o n , c e r t a i n q u e s t i o n s which h a v e a r i s e n w i t h r e g a r d t o t h e B o a r d ' s r u l i n g upon t h e e l i g i b i l i t y f o r r e d i s c o u n t of n o t e s of a c o r p o r a t i o n r e p r e s e n t i n g b o r r o w i n g s of f u n d s t o b e a d v a n c e d t o s u b s i d i a r i e s , w h i c h was c o n t a i n e d i n t h e B o a r d ' s c i r c u l a r l e t t o r of December 3 0 , 1925* X-4484. These, q u e s t i o n s w e r e r a i s e d i n a l e t t e r f r o m t h e Governor of t h e F e d e r a l R e s e r v e Bank of C l e v e l a n d a n d commented on i n a memorandum f r o m t h e B o a r d 1 s C o u n s e l , c o p i e s o f w h i c h were t r a n s m i t t e d t o a l l G o v e r n o r s w i t h t h e B o a r d ' s l e t t e r X-4560 of March 1 2 , 1925* P e n d i n g a r e c o n s i d e r a t i o n of t h e s e q u e s t i o n s b y t h e n e x t G o v e r n o r s C o n f e r e n c e a n d f o r t h e g u i d a n c e of F e d e r a l r e s e r v e b a n k s i n t h e m e a n t i m e , t h e B o a r d h o l d s t h a t n o t e s of a p a r e n t c o r p o r a t i o n r e p r e s e n t i n g b o r r o w i n g s of f u n d s t o b e a d v a n c e d t o s u b s i d i a r i e s w i l l n o t bo e l i g i b l e f o r r e d i s c o u n t a t a F e d e r a l r e s e r v e b a n k u n l e s s t h e y comply w i t h a l l of t h e c o n d i t i o n s l a i d down i n t h e B o a r d ' s c i r c u l a r l e t t e r of Decemb e r 3 0 , 1 9 2 5 . A c c o r d i n g l y , t h e n o t e s of a p a r e n t c o r p o r a t i o n t h e p r o c e e d s of w h i c h h a v e b e e n a d v a n c e d o r l o a n e d t o i t s s u b s i d i a r i e s , w i l l not be e l i g i b l e f o r r e d i s c o u n t , if the p a r e n t c o r p o r a t i o n a l s o makes a d v a n c e s t o o t h e r c o r p o r a t i o n s t h a n i t s own s u b s i d i a r i e s . Very t r u l y y o u r s , D. R. C r i s s i n g e r G o v e r n o r . TO ALL GOVERNORS.
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