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W. P. G. HARDING. GoYIRNOif PAUL M. WARBURGi, VJC:I GOYIJI.JtOR FREDERIC A. DELANO ADOLPH C. MILLER CHARLES S. HAMLIN WILLIAM G. McADOO SEC:RITARY OF THI TRIASURY CHAIRMAN JOHN SKELTON WILLIAMS COMPTROLLJR OF THI CURRIN~Y FEDERAL RESERVE BOARD WASHINGTON H. PARKER WILLIS, SECRETARY SHERMAN P. ALLEN, ASST. iiCRI.TAJI.Y AND FISCAL AGINT ADDRESS R.IEPLY TO FEDERAl. RIISERYIE aO-'ItD DIVISION OF REPORTS AND STATISTICS MJjJCO April 6, 1918 X-87l.A Dear Sir: The 11 War Finance Corporation" Act which was signed by the President on April 5, provides among others that no stamp or tax shall be required or imposed upon a promissory note secured by bonds or obligations of the United States issued since April 24, 1917, or secured by the pledge of a prorr.issory note v>'hich itself is secured by the pledge of such bonds or obli~tions: Provided, That in either case the par value of such bonds or obligations shall equal the amount of such note. In view of the above change in law it will no longer be necessary to affix revenue stamps to member banks'ยท collateral notes secured by Liberty Loan bonds or U. S. Certificates of Inde bte dne ss. It is suggested, therefore, that the practice of purchasing Liberty Bonds and Certificates of Indebtedness under so-called repurchase agreerr~nts be discontinued and that such borrowing by merr.be:t" banks oe rrade on their own prorr,issory notes secured by such bonds and certificates. Paragraphs 1 and 2 of our letter X-795 of March 12 rray also be disregarded and the new code words on form 34 "BUCK" and 11 BOON" rw.y be elirr.inated as soon as the bonds and certificates now held under repurchase agreements mature. Future borrovdngs secured by War obligations should be reported on schedules of 11 Bills discounted--members" - BD 4 and against n:emorandum items 11 MAZE 11 and "MiST" on Form 34 as rr~mber banks' collateral notes or custorr~rs' paper secured by Liberty bonds and certificates of indebtedness. Discounts of conn.ercial paper taken under repurchase agreertent rr.ay be reported as heretofore in accordance with instructions found in the last paragraph of our ~imeograph letter X-795 of _March 12. Very truly yours, Secretary. Federal Reserve Agent,
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