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FEDERAL RESERVE BOARD WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE TO THE FEDERAL RESERVE BOARD X-7229 August 16, 1932. SUBJECT: W e e k l y r e p o r t s on d i r e c t l o a n s . Dear S i r : There a r e i n c l o s e d h e r e w i t h , f o r your i n f o r m a t i o n , c o p i e s of l e t t e r s which the Federal Reserve Board h a s e x c h a n g e d w i t h t h e F e d e r a l R e s e r v e Bank o f Hew Y o r k w i t h regard to the weekly r e p o r t s r e q u e s t e d i n the Board's l e t t e r of J u l y 30, 1932, X-7221, r e l a t i v e to a p p l i c a t i o n s f o r d i s c o u n t s r e c e i v e d from i n d i v i d u a l s , p a r t n e r s h i p s and c o r p o r a t i o n s , under the p r o v i s i o n s o f the r e c e n t amendment t o s e c t i o n 13 o f the F e d e r a l R e s e r v e A c t . Very t r u l y y o u r s , Inclosures. TO ALL GOVERNORS. Chester M o r r i l l , Secretary. X-7229-a August 15, 1932. Mr. L. R. R o u n d s , D e p u t y G o v e r n o r , F e d e r a l R e s e r v e Bank o f New York, New York C i t y , New York. Dear Mr. Rounds: This w i l l acknowledge r e c e i p t of your l e t t e r of August 2 , and i n r e p l y y o u a r e a d v i s e d t h a t t h e B o a r d wou^.d l i k e t o have the r e p o r t r e q u e s t e d i n the l a s t paragraph o f i t s l e t t e r , X-7221, of J u l y 30, cover a l l formal a p p l i c a t i o n s f o r d i s c o u n t s by i n d i v i d u a l s , p a r t n e r s h i p s and c o r p o r a t i o n s w h i c h a r e n o t g r a n t e d "by t h e F e d e r a l r e s e r v e h a n k and a l l i n f o r m a l a p p l i c a t i o n s where t h e p a p e r i s p l a c e d w i t h a n o t h e r bank or t h e a p p l i c a n t i s d e f i n i t e l y a d v i s e d in w r i t i n g , t h a t the d i s c o u n t w i l l n o t b e made b y t h e F e d e r a l r e s e r v e b a n k . I t i s n o t e d from the second paragraph o f y o u r l e t t e r t h a t y o u may n o t p e r m i t t h e f i l i n g o f f o r m a l a p p l i c a t i o n s e x c e p t i n c a s e s where t h e r e a p p e a r s t o b e f a i r r e a s o n t o a s s u m e a l o a n might be g r a n t e d . The B o a r d u n d e r s t a n d s f r o m y o u r l e t t e r t h a t b e f o r e a n y a t t e m p t i s made t o d i s c o u r a g e t h e s u b m i s s i o n o f a f o r mal a p p l i c a t i o n , s u f f i c i e n t i n f o r m a t i o n w i l l be o b t a i n e d from t h e p r o s p e c t i v e a p p l i c a n t t o e n a b l e y o u t o d e t e r m i n e w i t h some c e r t a i n t y that the paper which the a p p l i c a n t proposes to o f f e r X-7229— 2 i s n o t e l i g i b l e and a c c e p t a b l e . — It is requested that f o r the time b e i n g y o u f u r n i s h the Board a r e p o r t c o v e r i n g a l l c a s e s where an a p p l i c a n t i s a d v i s e d i n w r i t i n g n o t t o submit a formal a p p l i c a t i o n , or where o t h e r than a r o u t i n e examination of t h e i n q u i r y was n e c e s s a r y t o d e t e r m i n e the f a c t s upon which the d e c i s i o n o f t h e F e d e r a l r e s e r v e b a n k was b a s e d . Very t r u l y y o u r s , ( S i g n e d ) 5 . M. M c C l e l l a n d , Assistant Secretary. 167 Co~py X-7229-b F e d e r a l R e s e r v e Bank o f New York August 2, 1932. Federal Heserve Board W a s h i n g t o n , D. C. A t t e n t i o n o f Mr* C h e s t e r M o r r i l l , S e c r e t a r y Dear S i r s : This w i l l acknowledge r e c e i p t of your l e t t e r X-7221 d a t e d J u l y 3 0 , 1 9 3 2 . We s h a l l b e g o v e r n e d a c c o r d i n g l y i n t h e p r e p a r a t i o n o f BD-4 s c h e d u l e s c o v e r i n g d i s c o u n t s g r a n t e d t o i n d i v i d u a l s , p a r t n e r s h i p s and c o r p o r a t i o n s . In the l a s t paragraph of your l e t t e r you have a s k e d f o r current information regarding d e f i n i t e applications f o r discounts ( n o t mere i n q u i r i e s ) « I t i s a s s u m e d t h a t i t i s y o u r w i s h t o r e c e i v e reports only w i t h regard to loans f o r which a c t u a l signed a p p l i c a t i o n s a r e m a d e . J u d g i n g f r o m p r e s e n t i n d i c a t i o n s many o f o u r a p p l i c a t i o n s w i l l b e i n f o r m a l a n d w i l l be d i s p o s e d o f b y i n t e r v i e w , a n d we b e l i e v e the Board would n o t d e s i r e i n f o r m a t i o n w i t h r e s p e c t t o such a p p l i c a t i o n s . I t a p p e a r s , h o w e v e r , t h a t we a r e a l s o l i k e l y t o r e c e i v e a numb e r o f i n f o r m a l a p p l i c a t i o n s w i t h r e g a r d t o w h a t m i g h t be c o n s i d e r e d b o r d e r - l i n e c a s e s and which, a f t e r i n v e s t i g a t i o n , would be i n f e r n a l l y t u r n e d down e i t h e r b e c a u s e i t a p p e a r e d t h e p a p e r w o u l d b e i n e l i g i b l e or f o r c r e d i t r e a s o n s . I t seems q u i t e l i k e l y from our e x p e r i e n c e thus f a r t h a t we may n o t p e r m i t t h e f i l i n g o f d e f i n i t e a p p l i c a t i o n s e x c e p t i n c a s e s where t h e r e appears to be f a i r r e a s o n to assume a l o a n might be g r a n t e d . S i n c e some o f t h e c a s e s t h u s t u r n e d down m i g h t a t l e a s t h a v e t h e a p p e a r a n c e o f e l i g i b i l i t y and m i g h t n o t d i f f e r g r e a t l y f r o m those f o r w h i c h formal a p p l i c a t i o n s would be r e c e i v e d , I have thought b e s t t o c a l l t h e m a t t e r t o y o u r a t t e n t i o n and t o i n q u i r e w h e t h e r o r n o t t h e B o a r d w o u l d c a r e t o be i n f o r m e d c o n c e r n i n g s u c h a p p l i c a t i o n s . Very t r u l y y o u r s , lal ( S i g n e d ) L. R. R o u n d s , Deputy Governor,
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