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359 FEDERAL RESERVE BOARD WASHINGTON X-4S19 ADDRESS OFFICIAL CORRESPONDENCE TO THE FEDERAL RESERVE BOARD J u n e 15, 1 9 2 6 . SUBJECT: R e p o r t i n g v i o l a t i o n of c r i m i n a l s t a t u t e p r o h i b i t i n g u s e of w o r d s " F e d e r a l " , "Reserve", etc. Dear S i r : T h e r e i s e n c l o s e d h e r e w i t h f o r y o u r i n f o r m a t i o n a copy of a n A c t of C o n g r e s s w h i c h was a p p r o v e d a n d became a l a w on May 2 4 , 1S26, t o p r o h i b i t t h e o f f e r i n g f o r s a l e a s F e d e r a l Farm Loan Bonds, of a n y s e c u r i t i e s n o t i s s u e d u n d e r t h e t e r m s of t h e Farm Loan A c t , t o l i m i t t h e u s e of t h e w o r d s " F e d e r a l " , " U n i t e d S t a t e s " o r " R e s e r v e " i n t h e t i t l e s of p r i v a t e i n s t i t u t i o n s a n d t o p r o h i b i t f a l s e a d v e r t i s i n g by b a n k s The p r o v i s i o n s o f t h i s a c t n o t members of t h e F e d e r a l R e s e r v e S y s t e m . are as follows: 1. I t p r o h i b i t s t h e a d v e r t i s i n g or o f f e r i n g f o r s a l e a s F e d e r a l Harm Loan Bonds, of a n y s e c u r i t i e s n o t i s s u e d u n d e r t h e p r o v i s i o n s of t h e F e d e r a l Farm Loan A c t , 2. I t p r o h i b i t s t h e u s e of t h e word " F e d e r a l " o r " U n i t e d S t a t e s " o r a n y o t h e r w o r d s i m p l y i n g Government o w n e r s h i p , o b l i g a t i o n or s u p e r v i s i o n , i n a d v e r t i s i n g or o f f e r i n g f o r s a l e any s e c u r i t i e s not i s s u e d b y t h e U n i t e d S t a t e s o r u n d e r t h e p r o v i s i o n s of some a c t of Congress. 3. I t p r o h i b i t s any f i r m , p e r s o n or c o r p o r a t i o n doing a banking, loan, b u i l d i n g and loan, brokerage, f a c t o r a g e , insurance, i n demnity or t r u s t b u s i n e s s o t h e r t h a n the F e d e r a l Reserve Board, F e d e r a l Farm Loan B o a r d , F e d e r a l T r a d e Commission, o r a n y o t h e r d e p a r t m e n t o r independent e s t a b l i s h m e n t of t h e U n i t e d S t a t e s , or any F e d e r a l r e s e r v e bank, F e d e r a l l a n d bank, F e d e r a l r e s e r v e a g e n t , F e d e r a l Advisory C o u n c i l , o r a n y c o r p o r a t i o n o r g a n i z e d u n d e r t h e l a w s of t h e U n i t e d S t a t e s , to u s e t h e words " F e d e r a l " , "United S t a t e s " or "Reserve" as a p a r t of i t s name o r t i t l e . Firms, persons or corporations a c t u a l l y e n g a g e d i n b u s i n e s s u n d e r a name o r t i t l e i n c l u d i n g t h e s e words p r i o r t o t h e p a s s a g e of t h e l a w a r e e x p r e s s l y e x c e p t e d f r o m t h e p r o h i b i t i o n s of t h e a c t . 4. I t p r o h i b i t s any bank, banking a s s o c i a t i o n or t r u s t company w h i c h i s n o t a 'member of t h e F e d e r a l R e s e r v e S y s t e m t o a d v e r t i s e o r r e p r e s e n t t h a t i t i s a member of s u c h S y s t e m . - 2 - X-4619 5 . V i o l a t i o n of t h e p r o v i s i o n s of t h e law i s made a misdemeanor p u n i s h a b l e by f i n e o r imprisonment o r "both, a n d t h e i l l e g a l u s e of t h e words above s e t o u t , may b e p r e v e n t e d by i n junction. S i n c e t h i s i s a c r i m i n a l s t a t u t e v i o l a t i o n s of i t s p r o v i s i o n s come u n d e r t h e j u r i s d i c t i o n of t h e Department of J u s t i c e , You a r e r e q u e s t e d , t h e r e f o r e , t o r e p o r t t h e f a c t s i n a l l c a s e s of v i o l a t i o n s of t h i s law coming t o y o u r n o t i c e , t o t h e l o c a l U n i t e d S t a t e s D i s t r i c t A t t o r n e y a n d a l s o t o s e n d a f u l l r e p o r t of t h e matt e r t o t h e F e d e r a l R e s e r v e B o a r d . This r e p o r t t o t h e Board s h o u l d be made i n d u p l i c a t e i n o r d e r t h a t t h e Board may t r a n s m i t a copy t h e r e o f t o t h e Department of J u s t i c e , which may t h e n t a k e such a c t i o n a s i t c o n s i d e r s a d v i s a b l e i n each c a s e . Yours v e r y t r u l y , W a l t e r L. Eddy. Secretary. Enclosure. TO AIL FEDERAL RESERVE AGEITTS. 361 C O P I X-4619-a ( P u b l i c - Ho. 279 - 69th Congress) ( s . 2606) An Act To p r o h i b i t o f f e r i n g f o r s a l e a s F e d e r a l farm l o a n "bonds any s e c u r i t i e s n o t i s s u e d u n d e r t h e terms of t h e Farm Ldan Act, to l i m i t t h e u s e of t h e words " F e d e r a l , t ! " U n i t e d S t a t e s , 1 1 or " r e s e r v e , " or a combination of such words, t o p r o h i b i t f a l s e a d v e r t i s i n g , and f o r o t h e r p u r p o s e s . Be i t e n a c t e d by t h e S e n a t e and House of R e p r e s e n t a t i v e s of t h e U n i t e d . S t a t e s of America i n Congress assembled* That no bank, b a n k i n g a s s o c i a t i o n , t r u s t company, c o r p o r a t i o n , a s s o c i a t i o n , f i r m , p a r t n e r s h i p , or p e r s o n n o t o r g a n i z e d u n d e r t h e p r o v i s i o n s of t h e Act of J u l y 17, 1916, known a s t h e F e d e r a l Farm Loan A c t , a s amended, s h a l l a d v e r t i s e or r e p r e s e n t t h a t i t makes F e d e r a l f a r m l o a n s or a d v e r t i s e of o f f e r f o r s a l e a s F e d e r a l farm l o a n bonds any bond n o t i s s u e d u n d e r t h e p r o v i s i o n s of t h e F e d e r a l Farm Loan A c t , or make u s e of t h e word " F e d e r a l " o r t h e words " U n i t e d S t a t e s " or any o t h e r word or words imp l y i n g Government o w n e r s h i p , o b l i g a t i o n , or s u p e r v i s i o n i n a d v e r t i s i n g or o f f e r i n g f o r s a l e any bond, n o t e , m o r t g a g e , or o t h e r s e c u r i t y n o t i s s u e d by t h e Government of t h e U n i t e d S t a t e s or u n d e r t h e p r o v i s i o n s of t h e s a i d F e d e r a l Farm Loan Act o r some o t h e r Act of C o n g r e s s . S e c . 2 . That no bank, b a n k i n g a s s o c i a t i o n , t r u s t company, c o r p o r a t i o n , a s s o c i a t i o n , f i r m , p a r t n e r s h i p , or p e r s o n engaged i n t h e b a n k i n g , l o a n , b u i l d i n g and l o a n , b r o k e r a g e , f a c t o r a g e , i n s u r a n c e , i n d e m n i t y , or t r u s t b u s i n e s s s h a l l u s e t h e word " F e d e r a l , 1 1 t h e words " U n i t e d S t a t e s , " o r t h e word "reserve," or any combination of such words, a s a p o r t i o n of i t s c o r p o r a t e , f i r m , or t r a d e name or t i t l e o r of t h e name u n d e r which i t does b u s i n e s s : P r o v i d e d , however % That t h e p r o v i s i o n s of t h i s s e c t i o n s h a l l n o t a p p l y t o t h e F e d e r a l He s e r v e Board, t h e F e d e r a l Farm Loan Board, t h e F e d e r a l Trade Commission, o r any o t h e r d e p a r t m e n t , b u r e a u , or i n d e p e n d e n t e s t a b l i s h m e n t of t h e Government of t h e U n i t e d S t a t e s , nor t o any F e d e r a l r e s e r v e bank, F e d e r a l l a n d bank, or F e d e r a l r e s e r v e a g e n t f nor to t h e F e d e r a l A d v i s o r y C o u n c i l , nor to any c o r p o r a t i o n o r g a n i z e d u n d e r t h e laws of t h e U n i t e d S t a t e s , n o r t o any bank, b a n k i n g a s s o c i a t i o n , t r u s t company, c o r p o r a t i o n , a s s o c i a t i o n , f i r m , p a r t n e r s h i p , or p e r s o n a c t u a l l y engaged i n b u s i n e s s u n d e r such name or t i t l e p r i o r to t h e p a s s a g e of t h i s A c t . S e c . 3* That no bank, b a n k i n g a s s o c i a t i o n , o r t r u s t company which i s not a member of t h e F e d e r a l R e s e r v e system s h a l l a d v e r t i s e or r e p r e s e n t i n any way t h a t i t i s a member of such system or p u b l i s h or d i s p l a y any s i g n , symbol, or a d v e r t i s e m e n t r e a s o n a b l y c a l c u l a t e d to convey t h e i m p r e s s i o n t h a t i t i s a member of such s y s t e m . S e c . 4 , That any bank, b a n k i n g a s s o c i a t i o n , t r u s t company, c o r p o r a t i o n , a s s o c i a t i o n , f i r m , or p a r t n e r s h i p v i o l a t i n g any of t h e p r o v i s i o n s of t h i s Act s h a l l be g u i l t y of a misdemeanor and s h a l l be s u b j e c t to a f i n e of not e x c e e d i n g $ 1 , 0 0 0 . Any p e r s o n v i o l a t i n g any of t h e p r o v i s i o n s of t h i s A c t , or any o f f i c e r of any bank, b a n k i n g a s s o c i a t i o n , t r u s t company, c o r p o r a t i o n , or a s s o c i a t i o n , or member of any f i r m o r p a r t n e r s h i p v i o l a t i n g any of t h e p r o v i s i o n s of t h i s Act who p a r t i c i p a t e s i n , or knowingly a c q u i e s c e s i n , such v i o l a t i o n s s h a l l be g u i l t y 362 - 2 - X-4619a of a misdemeanor a n d s h a l l "be s u b j e c t t o a f i n e of n o t e x c e e d i n g $ 1 , 0 0 0 o r imp r i s o n m e n t n o t e x c e e d i n g one y e a r , or b o t h . Any such i l l e g a l u s e of such word or words, or a n y c o m b i n a t i o n of such words, or any o t h e r v i o l a t i o n of any of t h e 1 . ' 0 v i s i o n s of t h i s A c t , may "be e n j o i n e d by t h e U n i t e d S t a t e s d i s t r i c t c o u r t " p.vi$g j u r i s d i c t i o n , a t t h e i n s t a n c e of any U n i t e d S t a t e s d i s t r i c t a t t o r n e y , any f e d e r a l l a n d bank, j o i n t - s t o c k l a n d bank, F e d e r a l r e s e r v e bank, o r t h e F e d e r a l Farm Loan Board o r t h e F e d e r a l R e s e r v e B o a r d . S e c . 5 . That i f any c l a u s e , s e n t e n c e , p a r a g r a p h , o r p a r t of t h i s Act s h a l l f o r any r e a s o n be a d j u d g e d by any c o u r t of competent j u r i s d i c t i o n t o be i n v a l i d , s u c h judgment s h a l l n o t a f f e c t , i m p a i r , or i n v a l i d a t e t h e r e m a i n d e r o f t h i s A c t , b u t s h a l l b e c o n f i n e d i n i t s o p e r a t i o n t o t h e c l a u s e , s e n t e n c e , p a r a g r a p h or p a r t t h e r e o f d i r e c t l y i n v o l v e d i n t h e c o n t r o v e r s y i n which such judgment s h a l l have been r e n d e r e d . Approved, May 24, 1926.
@FedFRASER