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FEDERAL RESERVE BOARD WASHINGTON X-<~S74 Nove1::1ber 1, SUBJECT: ~923. Surrend ~r of Fadar3l Has~rve Bank Stock upon Reduction of Member Banks' surplus. Dear Sir:Certain inquiries have b.:;en :r.:oceivad concerning the Board's Circular IJetter X-3318, dat0d August 25, 1923, on the; abova subject, and it seerr;s advisa.bL3 to ex:pla.1n certain featu:res which were not directly consid orad in t:'lat latter. The purpose of ti:1e ar::andrr.<::v..t to tha .Doa.rdls Hegulation I, Series of 1923, omitting the rec;uir.:m:c.mt th3t r.~er.,ber banks rr:ust file a.pplications fo.r tha sur:rendeJ' of F0deral Reserve Ba.nk stock dhenave:r they make a. reduction in ;:;urplus, wa.io solely to make the regula.tion confo:rm mora closely to the provisions of tha la.w, a.s expla.ined in Circula_r Lettar X-3813. The Board understcmds that here to fore when mer.ber banlz.s h~:we :reduced their surplus, it has been the practice of the F'eder31 Reserva Ba.nks to advise such member banks that they r.:ust surrender stock under the circurr.stances. IJ:his practice should be discontinued, and in ca.ses Nhere merr:ber banks reduce their surplus, they should be invited by tha Fedet>al haset'Va :Be.nk to nake appliC9tion to su'~"rend3r the a.pp.ropria.te a.t:.ount of F3de:ral I-i.esarve Ila.nk stock. Tha r.:;arrbe:r bank should be ad•:isad, howave:r; tha.t the Fed0ra1 Hesarve :Boa.rd is of tha opinion tha.t there is no provision of law wl:icb r aqui r~,s the surrender of capital stack of Faderal Hase.rve Ba.nks upon tha rc.:duction of surplus by member ba.nks, and tha.t, therefore, the rrember banks may exerCise their. option in the ma.tter. . In the event a. member bank ·:vhich has :reuuced its surplus elects not to surrender a.ny of its stock :i.n the Federa.l l\ese:rve Bank., it will not be neces~a-JJ:· for you to advise the Fede:ral Reserve 3oa.rd, unless a. substantial ar.~ount of stock is involved ten shares or more -;- and such advice will be merely for the purpose of the Boa.rd 1 s .re co:rd s. Very truly yours, Wal ta:t' L. Eddy, Secre ta)'Y • TO ALL FEDERAL E.ESERVE .AGENTS.
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