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EX·OJII'FictO MllM.ERS W. P. a. HARDING. GonMGa PAUL M. WARBURG, YICI eGYilULOR FREDERIC A. DELANO ADOLPH C. MILLER CHARLES S. HAMLIN WILLIAM G. McADOO SECRETARY OF THE TREASURY CHAIRMAN JOHN SKELTON WILLIAMS FEDERAL RESERVE BOARD COMPTROLLIR OF THE CURRENCY rl. PARKER WILLIS, SECRITAitY IH!RMAN P. ALLEN, ASST. iiCitETARY AND FISCAL AGENT WASHINGTON . ADDRESS REPLY TO FS:DEIRAL RESERVE BOARD March 19 # 1918. Dear Sir: The Board 1 s attention has been called to insistent ru.rnors that acceptances are being nade, and dj.scount.ed by Federal resArvA banks, which are not drawn in accordance with the provisions of the Federal Reserve Act or the regulations of the Board. It has been stated that there have been cases where the accepting banks have permitted customers, when the 5200 U. S. R. s. li~~t of credit granted under Section had bee.n reached, to draw; on the bank at ninety da.ys' sight upon the unwarranted statement that the acceptance was against a transaction involving the importation or exportation of goods,. and t:r..at in this way the bank has evaded the provisions of the law. The statement has also been ~ade that there are some cases where bar....ks, not finding it convenient to rr.ake cash advances, have caused customers to draw upon them and have accepted these drafts under the pretense that they were either eligible doz:r.estic acceptances., or acceptances connected with the importation or exportation of goods. Staten.ents to this effect have been n:ade to niembers of the Board as well as to members of Congress, and it is very important that the Board should ascertain the facts. You are therefore requested to bring this matter to the attention of your executive committee and Board of Directors and to X-819 X~·819 - 2- have the acceptances held by your bank closeJ.y scrutinizf)d in 'order that you rmy be inforrr.ed of the underlying tran5action in a.ny case where there rray be occcl:sion to suspect a disregard cf the law or regulations. The Board wisi.e:'3 to be in purchasing a.cceptances. gato the bJ.~is or or~.g:i.n advis~d as to you:r rules and :u:ethods Is it the Ci.:..s't.om of your bank to i1Pesti-- of transactions in cases of <\oub+.: ur do yo•l b1lY acceptances upon the statement by the acceptor or selJe:c that tl:,ey are basecl upon eligible transactiOns? V\'henever you rray feeL so1x:.e hesitation in requesting acceptor.s 1 upon your own initiati-.re, to give you the hec'9ssary inforn:ation 1 the Board will ass:i.st you., Jf you will indicate the paper concerning which there rray be doubt .• by requesting in writing that you furnish information re§arding these acceptances. Very truly yours 1 To the Chairo::an . . The Federal Reserve ~nk of
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