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935 EX O F F I C I O W . P . G . H A R D I N G , GOVERNOR ADOLPH C. MILLER M E M B E R S DAVID F.HOUSTON C H A R L E S S . HAMLIN SECRETARY OF THE TREASURY CHAIRMAN JOHN SKELTON WILLIAMS COMPTROLLER OF THE CURRENCY A D D R E S S REPLY TO FEDERAL RESERVE BOARD HENRY A. MOEHLENPAH FEDERAL RESERVE BOARD WASHINGTON E D M U N D P L ATT W . T. C H A P M A N , SECRETARY R. G . E M E R S O N , ASSISTANT SECRETARY W . M. IMLAY, FISCAL AGENT October 12, 1920. X2026 Dear S i r : I have r e c e i v e d a l e t t e r dated. September 27, I920, from A s s i s t a n t S e c r e t a r y of the Treasury G i l b e r t , with r e g a r d t o t h e recommendations which the S e c r e t a r y ' s Committee en t h e Revision of Currency Designs h a s submitted con6eming tii6 l e g e n d s t o appear h e r e a f t e r upon t h e f a c e of Federal Reserve n o t e s aild N a t i d i a l Bank n o t e s and F e d e r a l Reserve Bank n o t e s i n l i e u of those which a t p r e s e n t appear on the backs t h e r e o f . The S e c r e t a r y ' s Committee contemplates a p l a n which w i l l p r o v i d e f o r u n i f o r m backs f o r each denomination of paper c u r r e n c y i s s u e d by o r under t h e a u s p i c e s of t h e S e c r e t a r y of the Treasury, i r r e s p e c t i v e of t h e c h a r a c t e r of the i s s u e . To accomplish t h i s the l e g e n d s now a p p e a r i n g on t h e backs of the v a r i o u s i s s u e s Bust be t r a n s f e r r e d t o t h e f a c e s and as the space a v a i l a b l e on t h e f a c e s i s somewhat r e s t r i c t e d the Committee b e l i e v e s t h a t t h e l e g e n d s should be shortened i f p o s s i b l e . A s s i s t a n t S e c r e t a r y G i l b e r t has r e q u e s t e d t h e views of t h e Federal Reserve Board and t h e F e d e r a l Reserve Banks r e g a r d i n g t h e r e v i s i o n s suggested by t h e Committee. The views of the Comptroller of the Currency have a l s o been r e q u e s t e d . While i t i s e v i d e n t t h a t b r e v i t y of phraseology i s n e c e s sary,- i t seems t o t h e Board q u i t e e s s e n t i a l t h a t t h e p h r a s e o l o g y of the A c t s of Congress involved should be f o l l o w e d wherever p o s s i b l e , u n l e s s the n e c e s s i t y f o r b r e v i t y p r e v e n t s . With r e s p e c t to Federal Reserve n o t e s the f o l l o w i n g legend now appears on the backs t h e r e o f : T h i s n o t e i s r e c e i v a b l e by a l l N a t i o n a l and Member Banks and Federal Reserve Banks and f o r a l l Taxes, customs and o t h e r p u b l i c dues; i t i s redeemable i n gold on demand a t the Treasury Department df t h e United S t a t e s i n t h e C i t y of Washington, D i s t r i c t of Columbia, or in. gold or l a w f u l money a t any Fede r a l Reserve Bank. The Committee recommends i n l i e u t h e r e o f t h e f o l l o w i n g : T h i s n o t e i s r e c e i v a b l e by t h e Government f o r a l l p u b l i c dues and by a l l F e d e r a l Reserve Barks and Member Barks on a l l accounts; i t i s redeemable i n 2 - X-2026. gold on demrjad a t the Treasury Department i n Washington or i n gold or lawful money a t any Federal Reserve Batik. I t w i l l be noted t h a t the p r e s e n t legend f o l l o w s almost word f o r word the p r o v i s i o n s of Section 16 of the Federal Be serve Act a u t h o r i z i n g the issuance of these n o t e s . The legend proposed hy the S e c r e t a r y ' s Committee shortens the second clause and r e words the f i r s t c l a u s e . The f i r s t clause reworded does not reduce the space. I t would seem t h e r e f o r e t h a t the o r i g i n a l wording of t h i s clause should be continued since i t follows the wording of the Act of Congress* The secdnd clause i s p r a c t i c a l l y i d e n t i c a l except f o r the omission of c e r t a i n i r r e l e v a n t words and appears satisfactory. The Board, t h e r e f o r e , suggest*" the following legend: This note i s r e c e i v a b l e by a l l National and Member Banks and Federal Heserve Banks and f o r a l l taxes, customs and o t h e r p u b l i c dues; i t i s redeemable i n gold on demand by the Treasury Department in Washington or i n gold or l a w f u l money a t any Federal Reserve Bank. With r e s p e c t to National Bank n o t e s and Federal Reserve Bank notes the f o l l o w i n g i s the p r e s e n t legend a s i t appears on the back: This n o t e i s r e c e i v a b l e a t p a r i n a l l p a r t s of the United S t a t e s in payment of a l l t a x e s and e x c i s e s and a l l other dues t o the United S t a t e s except d u t i e s on imports and a l s o f o r a l l s a l a r i e s and o t h e r debts and demands owing by the United S t a t e s to i n d i v i d u a l s , corporations and a s s o c i a t i o n s w i t h i n the United S t a t e s except i n t e r e s t on the p u b l i c debt. In l i e u thereof the Committee recommends the f o l l o w i n g : This n o t e i s r e c e i v a b l e by the Government f o r a l l p u b l i c dues except d u t i e s on imports, and when so r e c e i v e d may be paid on any account except i n t e r e s t on the p u b l i c debt and f o r the redemption of the National Currency. Section 18 of the Federal Reserve Act provides t h a t Fede r a l Reserve Bank n o t e s s h a l l be of the same t e n o r and e f f e c t as National Bank n o t e s . Section $182 of the Revised S t a t u t e s as amende January 13, 1920, makes p r o v i s i o n f o r the terms and c o n d i t i o n s of * 937 - 3 X-2026 - such bank n o t e s . The p r e s e n t legend follows the phraseology of t h i s s e c t i o n with minor exceptions. I t i s evident that t h i s phraseologyi s n e e d l e s s l y voluminous and as b r e v i t y 1 s e s s e n t i a l i t i s -necessary to reduce i t s l e n g t h . The Board has c e r t a i n o b j e c t i o n s , however, t o the legend as proposed by the Committee, In order to comply with the p r o v i s i o n s of the Act of Congress in so f a r a s p o s s i b l e , i t seems advisable t h a t the l a s t clause should read "in redemption o f " i n s t e a d of of " f o r redemption o f " . Furthermore, there seems t o be no n e c e s s i t y f o r the i n s e r t i o n of t h e , c l a u s e "when so received". Section 5182 n e i t h e r e x p r e s s l y nor by i n f e r e n c e l i m i t s the r i g h t of the United S t a t e s to use National Bank n o t e s to pay o b l i g a t i o n s due to i n d i v i d u a l s only when such notes have been received i n payment f o r p u b l i c dues, e t c . The Board recommends t h e r e f o r e , t h a t the clause "when so r e c e i v e d " be omitted and t h a t the phrase "by the Government" be i n s e r t e d a f t e r the word "paid". The Board t h e r e f o r e suggests t h a t the new legend be as f o l l o w s ; This note i s r e c e i v a b l e by the Government f o r a l l p u b l i c dues except d u t i e s on imports, and may be p a i d by the Government on any account except i n t e r e s t on the p u b l i c debt and in redemption of the National Currency. Very t r u l y yours, Governor. To the Governors and Federal He serve Agents of a l l Federal Beserve Banks, to be submitted a t the Governors* Conference to be h e l d i n Washington on October 13, 1920. i
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