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FEDERAL RESERVE BOARD WASHINGTON A D D R E S S OFFICIAL CORRESPONDENCE TO T H E FEDERAL RESERVE B O A R D X-7459 June 19, 1933. SUBJECT: B a s i s f o r Issuance of F e d e r a l Reserve Bank Stock. Dear S i r : One of t h e F e d e r a l Reserve Agents r e c e n t l y r e q u e s t e d a d v i c e from the F e d e r a l Reserve Board as to whether a Dank whose s u r p l u s i s impaired "by d e p r e c i a t i o n on s e c u r i t i e s , i n a p p l y i n g f o r a d d i t i o n a l Federal Reserve Bank s t o c k on t h e B o a r d ' s Form 56, should make such a p p l i c a t i o n on t h e b a s i s of t h e amount of i t s s u r p l u s as c a r r i e d on i t s "books or on t h e amount of i t s unimpaired s u r p l u s • He a l s o i n q u i r e d whether, i n a case where t h e "bank's c a p i t a l s t o c k i s i m p a i r e d , a p p l i c a t i o n f o r a d d i t i o n a l F e d e r a l Reserve Bank s t o c k on t h e B o a r d ' s Form 56 should "be "based on t h e amount of i s s u e d and p a i d i n c a p i t a l s t o c k of t h e bank or on t h e amount of i t s unimpaired c a p i t a l s t o c k . The F e d e r a l Reserve Agent -vas advised t h a t , w h i l e any impairment i n t h e c a p i t a l s t o c k or s u r p l u s of a bank should be c o r r e c t e d as soon as p o s s i b l e , t h e Board f e e l s t h a t f o r p u r p o s e s of d e t e r m i n i n g t h e amount of F e d e r a l Reserve Bank s t o c k f o r which a bank should subs c r i b e i t s a p p l i c a t i o n should be based on t h e amount of t h e i s s u e d X-7459 2 *"* and paid i n c a p i t a l stock of t h e bzrnk t o g e t h e r with the amount at which i t s s u r p l u s i s c a r r i e d on the books of the bank r a t h e r than on the "basis of the b a n k ' s unimpaired c a p i t a l stock and s u r p l u s . A t t e n t i o n was c a l l e d to the f a c t t h a t the Board's Form 56 r e f e r s only to paid i n c a p i t a l stock and the Agent was advised t h a t i f i n any case the surplus of the applying bank i s impaired the word "unimpaired" a f t e r the word "surplus" i n Form 56 may be crossed o u t . I n t h i s conncction i t was noted t h a t i t i s contemplated t h a t the word "unimpaired" as used i n Form 56 w i l l be omitted from that form when i t i s necessary t o r e p r i n t the form. Very t r u l y yours, Chester M o r r i l l Secretary LETTER TO ALL FEDERAL RESERVE AGENTS EXCEPT PHILADELPHIA.
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