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FEDERAL RESERVE BOARD x gQg5 WASHINGTON address official correspondence t o t h e federal reserve board October 25, 1934 Dear Sir: For your information, there i s attached a copy of a telegram sent by the Board to Deputy Governor Rounds, of the Federal Reserve Bank of Hew York, with regard to the discount or purchase "by Federal reserve "banks of obligations evidencing industrial loans in which two or more commercial "banks participate. Very truly yours, ~%>RjiiA2Sh/ Chester Morrill, Secretary. Inclosure. To the Federal reserve agents at a l l Federal reserve "banks. 280 Copy X-8095-a TELEGRAM FEDERAL RESERVE BOARD WASHINGTON October 22, 1934 ROUNDS - NEW YORK Retel October 18. Board understands a p p l i c a t i o n s have been presented wherein two or more commercial banks desire to p a r t i c i p a t e i n providing working c a p i t a l f o r i n d u s t r i a l or commercial b u s i n e s s , each bank to o b l i g a t e i t s e l f to s a t i s f a c t i o n of Federal reserve bank f o r i t s pro rata part of a t l e a s t 20 per centum of any l o s s which may be sustained by such F e d e r a l r e s e r v e bark upon o b l i g a t i o n s of i n d u s t r i a l or commercial business acquired from such commercial banks. For example, i n case of equal p a r t i c i p a t i o n by banks A and B, i t i s understood that i n d u s t r i a l or commercial business w i l l make s i n g l e a p p l i c a t i o n but w i l l execute two separate notes, each equal i n amount to one-half of t o t a l extension of credit and payable to banks A and B, r e s p e c t i v e l y , and that Federal reserve bank w i l l discount or purchase one of such notes from bank A and other from bank B, each commercial bank o b l i gating i t s e l f f o r a t l e a s t 20 per centum of l o s s which may be sustained by Federal reserve bank upon o b l i g a t i o n acquired from such commercial bank. In such circumstances Board agrees with views of your counsel that Federal reserve bank may l a w f u l l y discount or purchase o b l i g a t i o n s i f other requirements of law are s a t i s f i e d . (Signed) Chester Morrill MORRILL.
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