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FEDERAL RESERVE BOARD WASHINGTON address official correspondence t o t h e federal reserve board X-7999 September 5, 1934 SUBJECT: Possible v i o l a t i o n s of the provisions of Section 21 of the Banking Act of 1933. Dear Sir: There i s inclosed herewith, f o r your information, a copy of a l e t t e r addressed by the Board to the Federal Reserve Agent at Dallas, with regard to possible v i o l a t i o n s of the provisions of Section 21 of the Banking Act of 1933. Very truly yours, Yf)<rvuJJZ Chester Morrill, Secretary. Inclosure. TO ALL FEDERAL RESERVE AG-EM'S. copy " 1.09 X-7999-a August 25, 1934 Mr. C. C. Walsh, Federal Reserve Agent, Federal Reserve Bank of D a l l a s , , Dallas, Texas. Dear Mr. Walsh; This r e f e r s to your l e t t e r of July 23, 1934, advising that on July 2, 1934, you wrote a l e t t e r to each of certain named unincorporated hanks in the State of Texas c a l l i n g i t s a t t e n t i o n to the provisions of section 21 of the Banking Act of 1933, and that you have not received r e p l i e s from any of them. You s t a t e that you are advising the Board of the status of these banks as shown by your records i n order that the Board may decide whether the f a c t s should be reported to the Department of J u s t i c e and that you are deferring making a report to the l o c a l United States Attorneys u n t i l you receive the Board's i n s t r u c t i o n s . I t may be said i n general that i n a case in which the f a c t s i n the possession of a Federal Reserve Agent show that a person or organization i s acting i n v i o l a t i o n of the provisions of s e c t i o n 21 of the Banking Act of 1933 he should make a report of the matter to the l o c a l United States Attorney and to the Federal Reserve Board for transmission to the Department of J u s t i c e , but unless the f a c t s within his knowledge are such as to make i t appear that a l l the e s s e n t i a l elements of a v i o l a t i o n of the s t a t u t e are present i t i s not believed that the matter i s one which should be reported. X-7999-a Mr. C. C. Walsh - 2 As stated i n the Board's l e t t e r of June 26, 1934 (X-7936), the Board does not f e e l that i t i s necessary under the law that Federal reserve "banks or Federal reserve agents maks an i n v e s t i g a t i o n i n order to determine what persons or organizations i n their respective d i s t r i c t s may be subject to the provisions of section 21 of the Banking Act of 1933, and the s t a t u t e does not impose any r e s p o n s i b i l i t y upon a Federal reserve bank or a Federal reserve agent to ascertain whether any such person or organization i s complying with the requirements of that s e c t i o n . However, i f the f a c t that a person, firm, corporation, a s s o c i a t i o n , business trust or other similar organization, not subj e c t to examination and regulation under Federal law, has engaged i n the business of receiving deposits since June 16, 1934, i s disclosed by the records of the Federal reserve bank or i n the performance of your duties and such person or organization has not submitted or offered to submit to examination either by the Comptroller of the Currency or by the Federal reserve bank, i t w i l l be appropriate for you to ascertain, i f practicable, from the State banking authorities whether such parson or organization i s subject to examination and regulation under State law. If a f t e r obtaining these f a c t s i t ap- pears that a v i o l a t i o n of the law has been committed by any such person or organisation, the matter should be made the subject of a report to the l o c a l United States Attorney and to the Federal Reserve Board for transmission to the Department of J u s t i c e i n accordance with the usual procedure. Likewise, i f i t i s d i s c l o s e d from the X-7999-a Mr. C. C. Walsh - 3 records of the Federal reserve tank or in the performance of your duties, that s i n c e June 16, 1934, a person or organization has engaged i n the "business of receiving deposits and a l s o that at the same time such person or organization has engaged i n the "business of i s s u i n g , underwriting, s e l l i n g or distributing s e c u r i t i e s , the matter should "be made the subject of a report to the United States Attorney and to the Board f o r transmission to the Department of J u s t i c e . In view of the statement i n your l e t t e r of July 33rd that i t i s p o s s i b l e that some of the "banks named therein may have d i s continued receiving deposits prior to June 16, 1934, or for other reasons are exempt from the provisions of the law, the Federal Reserve Board i s not transmitting copies of your l e t t e r to the Department of J u s t i c e and i t i s suggested that each of these cases "be treated i n accordance with the views above expressed. Very truly yours, (Signed) Chester Morrill, Chester Morrill, Secretary.
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