The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
r
Authority jp D -
(0J&j
i
J
June 11, 1952.
CONFIDENTIAL
Dr. Adolph C.*‘
Mi H e r ,
2230 S Street, N. W.,
Washington, D. C.
Dear Dr* Miller*
In accordance with your informal request to me, there are
attached extracts from the minutes of the Board for the period just
prior to the bank holiday which relate particularly to the discus
sions leading up to the declaration of the* bank holiday. It is un
derstood that you have received a request from former President
Hoover for your recollections of what happened in this period and
you desire these extracts for the purpose of refreshing your memory
of what occurred so that the statement of your recollections which
you give to President Hoover will be factually accurate.
As you know, the minutes of the Board are held in strict
confidence. The attached extracts cover a period when you were a
member of the Board and they are furnished to you as a former mem
ber of the Board. Because of the confidential character of the
minutes, it will be appreciated if you will take such steps as may
be necessary to assure that they will be restricted to the purpose
for which you have requested them and that neither the extracts nor
copies thereof will leave your possession.
Sincerely,
S. R. Carpenter,
Secretary.
Enclosures
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
px).
(0 5 0 1
SUN 1
1952
i t-f / U
XI# 1952.
C s O * *ft'
*t'/i #
(
Dr* Adolph C. Hilar,
2230 S 9tr#ot, *. V*9
Washington, 0, 0*
D#ar Dr*
Im teeonUziet with your inforaal request to *e, th#re are
attached extract# frcw the alantes of the Sotri for the period just
prior to th# b u k holiday which relate particularly to the discus
sions loading op to th# declaration of th# bank holiday* It la un
derstood that you have received a request from former President
Soover for your recollections of iihat happened is this period and
yon d##ir# th«a# extracts for th# purpose of refreshing your ssaory
of what occurred so that th# atatasaxKt of your recollections which
you gift to President Hoover will b# factually accurate.
As you know, th# sixmtaa of th# Board ar# hold in strict
confidence. Th# attached extracts cover a pariod whan you were a
*e*ber of th# Board and they ara furnished to you a# a forwer mm~
b#r of th# Board* Becauae of th# confidential character of th#
adjiutaa, it will ho appraciatad if you will tak# cadi staps a# nay
ba necessary to aasure that they will ha restricted to tha purpose
for which you have requested thaa and that neither th# #xtracts nor
copies th#raof will laav# your posaossion*
Sincerely,
S. &* Carpenter,
vSacratary*
MINUTES
:Uff/*MI
on
FOR. Fits8
B. a. H u ey
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
(0 5 0 1
»r n v n » S B C t i *
FEDERAL RESERVE BANK
OF D A L L A S
juNi0'3£p-/'
*?—
R . R . G IL B E R T
P R E S ID E N T
April 15, 19h7
Board of Governors of the
Federal Reserve System
Washington 2£, D. C.
Gentlemen:
This acknowledges the Board's letter of April
I9U 7 (S-968)j transmitting a copy of the Proclamation
issued by the President of the United States on April 8,
19U7.
It is observed that as a result of this Procla
mation it will no longer be necessary for State banks be
coming members of the Federal Reserve System to be advised
of the terms of the General License of December 31> 19^5*
or to be furnished with a copy thereof in the manner sug
gested in the Board’
s letter of January 29. 19U6. ^e shall
be governed accordingly.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
7v
F
e d e r a l
o f
R
C
e s e h y e
B
.'0- 10501
a n k
* b c »b nr
l e v k
files sectioi
JUNio'',y4?^
U- 7 0 ‘
April 11, 194-7
Mr, S. R. Carpenter, Secretary
Board of Governors of the
Federal Reserve System
Washington 25, D. C.
Dear Mr. Carpenter:
ased to have the Board's letter of
with copy of Proclamation issued
by the President of the United States on April 8,
1947, effective as of March 15, 194-7, excluding
member banks from the scope of the Presidential
Proclamations of March 6 and March 9, 1933, and the
Executive Order of March 10, 1933.
We note that in view of this Proclamation, it
will no longer be necessary for State banks becoming
members of the Federal Reserve System to be advised
of the terms of the General License of December 31,
194-5. We also note that the President’
s Proclama
tion includes the proviso "that no banking institu
tion shall pay out any gold coin, gold bullion, or
gold certificates, except as authorized by the
Secretary of the Treasury, or allow the withdrawal
of any currency for hoarding.”
President
J[J
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
X)» 10 5C) 1
BOARD OF G O V E R N O R S
D IK FILES SECTXQB
,
APR 1 0 1 9 4 7 ; #
□ F TH E
FEDERAL R E SE R V E SYSTEM
WASHINGTON 25. D. C.
/
•_
S~?6§ ~
_
A D D R E S S O FF IC IAL C O R R E S P O N D E N C E
TO T H E B O A R D
April 9, 1947.
Dear Sirs
For your information, there is enclosed a copy of a
Proclamation issued ty the President of the United States on
April 8. 19/i.7^ effective as of March 15, 1?47> excluding member
banks from the scope/ of the Presidential Proclamations of March
6 and March % 1933a /and the Executive Order of March 10, 1933*
%
This Proclamation has the effect of terminating the
present authority of the Secretary of the Treasury to issue reg
ulations requiring the licensing of member banks. It will be
recalled that the necessity for licenses in the case of individ
ual member banks was eliminated by a General License issued fcy
the Secretary of the Treasury on JPecember 31? 1945*. The present
Proclamation terminates the authority oT~the Secretary to impose
any restrictions upon the operations of member banks other than
those relating to payments in gold and withdrawals of currency
for hoarding.
In view of this Proclamation, it will no longer be
necessary for State banks becoming members of the Federal Re
serve System to be advised of the terms of the General License
of December 31* 1945> or to be furnished with a copy thereof in
the mannersuggested by the Board1s letter of January 29, 1946
(F.R.L.S. #3533).
' '
Very tr
bOO .
Encldsure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
..
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
X) »
(0 S O 1
S- 968-a
APRIL 8, 1947.
IMMEDIATE RELEASE
AMENDING THE PROCLAMATIONS OF MARCH 6 AND MARCH 9, 1933,
AND THE EXECUTIVE ORDER OF MARCH 10 , 1933, TO EXCLUDE
FROM THEIR SCOPE MEMBER BANKS OF THE FEDERAL RESERVE SYSTEM
BT THE PRESIDENT OF THE UNITED STATES OF AMERICA
A PROCLAMATION
WHEREAS on March 10, 1933? the President of the United States, in pur
suance of the program to permit resumption of banking operations following the
Bank Holiday Proclamations No. 2.039 of March 6 and No. 2040 of March 9? 1933*
respectively, issued Executive Order No. 6073 which, among other things, au
thorized the Secretary of the Treasury to permit any member bank of the Federal
Reserve System and any other banking institution organized under the laws of
the United States to perform any or all of their usual banking functions except
as otherwise prohibited; and
WHEREAS on December 30, 1933? the President of the United States issued
Proclamation No. 2070 which excluded from the scope of the said proclamations
of March 6 and March 9? 1933? and the Executive order of March 10, 1933? all
banking institutions which were not members of the Federal Reserve System; and
WHEREAS by December 30, 1933? the Secretary of the Treasury had acted
upon all requests for licensing of member banks of the Federal Reserve System; and
WHEREAS on -December 3-1? 1945? the Secretary of the Treasury issued a Gen
eral License to transact normal banking business to all banks thereafter author
ized to begin business by the Comptroller of the Currency and to all State banks
thereafter admitted to membership in the Federal Reserve System, and thereby
dispensed with the requirement of an individual license for each new member bank
of the Federal Reserve System; and
WHEREAS it is no longer necessary, 'or in the interest of government in
ternal management, for the Secretary of the Treasury to license the transaction
of normal banking business:
NOW, THEREFORE, I, HARRY S. TRUMAN, President of the United States of
America, acting under and by virtue of the authority vested in me by section
5(b) of the Trading with the Enemy Act of October 6, 1917? 40 Stat. 415? as
amended, and section 4 of the act of March 9? 1933? 4& Stat. 2, and by virtue of
all other authority vested in me, do hereby, in the interest of the internal
management of the Government, proclaim, order, direct, and declare that the said
proclamations of March 6 and March 9? 1933? and Executive order of March 10,
1933? as amended? are further amended to exclude from their scope banking insti
tutions which are members of the Federal Reserve System: Provided, however,
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DECLASSIFIED
■.f
Authority jp
(Q S O j
-2-
S-968-a
that no banking institution shall pay out any gold coin, gold bullion, or gold
certificates, except as authorised try the Secretary of the Treasury, or allow
the withdrawal of any currency for hoarding.
This proclamation shall become effective as of March 15, 1947.
IN WITNESSS WHEREOF, I have hereunto set my hand and caused the seal
of the United States of America to be affixed,
DONE at the City of Washington this seventh day of April in this year
of our Lord nineteen hundred and
forty-seven, and of the Independence
(SEAL)
of the United States of America the
one hundred and seventy-first.
HARRY S. TRUMAN
By the President:
DEAN ACHESON,
Acting Secretary of State
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority ^ A)* 10 -^ 1
IN FILES SECTION
R i J. 1S4?
S'
Dear Sir*.
For your information, there is enclosed a copy of a
Proclamation issued by the President of the United States on
April 3, 1947, effective as of March 15, 1947, excluding member
' banks from the scope of the Presidential Proclamations of March 6
and March 9, 1933, and the Executive Order of March 10, 1933*
This Proclamation has the effect of terminating the
present authority of the Secretary of the Treasury to issue regu
lations requiring the licensing of member banks. It will be re
called that the necessity for licenses in the case of Individual
member banks vas eliminated by a General License issued by the
Secretary of the Treasury on December 31, 194-5* The present
Proclamation terminates the authority of the Secretary to impose
any restrictions upon the operations of member banks other than
those relating to payments in gold and withdrawals of currency
for hoarding.
In view of this Proclamation, it will no longer be neces
sary for State banks becoming members of the Federal Reserve System
to be advised of the terms of the General License of December 31,
1945, or to be furnished vlth a copy thereof in the manner suggested
by the Board*s letter of January 29, 1946 (F.R.L.S. #3533)*
Very truly yours,
Idi
S. R. Carpenter,
Secretary.
Enclosure
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
(^HHHslim
•i A/9/4.7
F
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
X)♦ 10 S O 1
TV
10 1
/
JARD OF GOVERNORS
DF THE
FE D E R A L R E SE R V E S Y S T E M
Office Correspondence
To______ Board of Governors__________
P ram
Mr. Hacklev
REC'D IS FTUTS SECTION
^ 1 619 47 ^
Date April 8. 1947
Subject * P-roGlflTTwtion of the President
terminating procedure for licensing
member banks.________________________
The President of the United States today issued a Proclama
tion which has the effect of terminating the present authority of the
Secretary of the Treasury to require licenses of member banks, effective
as of March 15, 1947.
The authority of the Secretary of the Treasury to license
member banks was based upon Proclamations of March 6 and March 9, 1933, an
Executive Order of March 10, 1933, and provisions of section 4 of the
Emergency Banking Aet of March 9, 1933- Honmember State banks were ex
cluded from the scope of those Proclamations and that Executive Order by
a further Proclamation of December 30, 1933* By a "general license* dated
"December 31, 1945> the Secretary of the Treasury made it unnecessary for
member banks to obtain individual licenses. The Proclamation issued by
the President today excludes member banks from the scope of the Proclama
tions and Executive Order issued in March 1933, except that all banking
institutions are still made subject to the prohibition against paying
out gold or allowing the withdrawal of currency for hoarding.
The new Proclamation is in substantial accordance with a recoup
mendation made by the Federal Advisory Council in 1945, with which the
Board expressed its concurrence in a letter to the Secretary of the Treas
ury dated October 31, 1945*
FOR circulation
The Proclamation does not terminate the emergency declared by
the 1933 Proclamations; and the Secretary of the Treasury continues to
FirsttoMrP^Sj|}££| technical authority to issue regulations restricting the transaction
. of a banking business by member banks. Such regulations, however, may
Hr. RansomaiRh.,^ ^ S8a^| only with the approval of the President. Accordingly, today* s
Mr. Szymcziak^ls^te^lai^tion effectively terminates the authority of the Secretary of the
Mr. Draier^ \/
to impose any restrictions upon the operations of member banks
Mr. Evans*__ Votfier than those relating to payments of gold and withdrawals of currency
an__ hoarding
purposes.
Mr. Vardaman
UggThoarding
purposes.
Mr. Clayton
Mr. Thurston
Mr. Morrill
Mr. Carpenter Jk^l
Mr. Ilamn>ynd___.
Mr. Sherman
Mf.iLaMknLc..^._
60 f.
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DECLASSIFIED
Authority
<0- (0 5 0 1
'U
tft FILE? **"non
A P R 1 1 1947^5
IMMEDIATE RELEASE
xmrzriWT:
AMENDING THE PROCLAMATIONS OF MARCH 6 AND MARCH 9, 1933,
AND THE EXECUTIVE ORDER OF MARCH 10, 1933, TO EXCLUDE
FROM THEIR SCOPE MEMBER BANKS OF THE FEDERAL RESERVE SYSTEM
BY THE PRESIDENT OF THE UNITED STATES OF AMERICA
A PROCLAMATION
WHEREAS on March 10, 1933, the President of the United
Statesy in pursuance of the program to permit resumption of banking
operations following the Bank Holiday Proclamations No. 2039 of
March 6 and No. 20^0 of March 9, 1933, respectively, issued Executive
Order No. 6073 which, among other things, authorized the Secretary
of the Treasury to permit any member "bank of the Federal Reserve
System and any other banking institution organized under the laws of
the United States to perform any or all of their usual banking func
tions except as otherwise prohibited; and
WHEREAS on December 30, 1933, the President of the United
States issued Proclamation No. 2070 which excluded from the scope
of the said proclamations of March 6 and March 9, 1933, and the
Executive order of March 10, 1933, all banking institutions which
were not members of the Federal Reserve System; and
WHEREAS by December 30, 1933, the Secretary of the Treasury
had acted upon all requests for licensing of member banks of the
Federal Reserve System; and
WHEREAS on December 31, 19^5, the Secretary of the Treasury
issued a General License to transact normal banking business to all
banks thereafter authorized to begin business by the Comptroller of
the Currency arid to all State banks thereafter admitted to membership
in the Federal Reserve System, and thereby dispensed with the require
ment of an individual license for each new member bank of the Federal
Reserve System; and
WHEREAS it is no longer necessary, or in the interest of
government internal management, for the Secretary of the Treasury to
license the transaction of normal banking business:
NOW, THEREFORE, I, HARRY S, TRUMAN, President of the
United States of America, acting under and by virtue of the authority
vested in me by section 5(b) of the Trading with the Enemy Act of
October 6, 1917? ^0 Stat. ^15, as amended, and section k of the act
of March 9, 1933,
Stat. 2, and by virtue of all other authority
vested in me, do hereby, in the interest of the internal management
of the Government, proclaim, order, direct, and declare that the said
proclamations of March 6 and March 9, 1933, and Executive order of
March 10, 1933, as amended, are further amended to exclude from their
scope banking institutions which are members of the Federal Reserve
System: Provided, however, that no banking institution shall pay out
any gold coin, gold bullion, or gold certificates, except as author
ized by the Secretary of the Treasury, or allow the withdrawal of any
currency for hoarding.
This proclamation shall become effective as of March 15,
19^7.
n ?
(OVER)
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DECLASSIFIED
Authority p x ) . (0 5 0 1
,
-
2
-
IN WITNESS WHEREOF, I have hereunto set my hand and
caused the seal of the United Stated of America to "be affixed*
DONE at the City of Washington this seventh day of
April in the year of our Lord
nineteen hundred and forty(SEAL)
seven, and of the Independence
of the United States of America
the one hundred and seventyfirst.
HARRY S. TRUMAN
By the President:
DEAN ACHESON,
■Actirig Secretary of State
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
^ A)-
( 0 SC) j
"»J!>» m a a c n S
7 S AH 51947 ^
Mr. Robert D.^l#Heureux,
Legal Consultant,
Committee on Basking and Currency,
United States Senate,
Washington, D. C.
My dear Mr. L'Heureux:
This is in response to your letter of February 4, 1947| to
Chairman Sccles requesting an opinion as to the advisability of re" talning, amending or terminating certain lavs which you specify In
your letter. The statutes in question are those contained in sec
tion 5(b) of the Trading with the Enemy Act, as amended, in section 4
of the Act of March 9, 1933, and in the Act of April 15, 1943.
Section 5(b) of the Trading with the Baemy Act, as amended,
In the opinion of the Board, should be retained in the law. Although
this section is operative only during time of war or otfeer period of
national emergency, it has been on the statute books since 191? and
it cannot now properly be considered special war or emergency legisla
tion. It is the basis for the foreign funds control exercised by the
Treasury Department and for the authority of the Alien Property Cus
todian; and it vests the President with other broad authority for use
in time of emergency. It is presently also the basis for regulations
of the Board of Governors relating to consumer credit, sinee authority
to prescribe those regulations Is derived from executive Order No. 8843
which was Issued pursuant to this statute. The Board expects at a later
date to ask the Banking and Currency Committees of Congress to consider
whether legislation, independent of section 5(b), should be enacted to
continue authority for consumer credit regulation on a permanent basis;
and the possible permanency of such authority, therefore, does not de
pend on section 5(b). Nevertheless, it is the Board's view that, be
cause of the other broad powers given by the section and the Important
operations carried on under it, It is Important that the section be per
mitted to continue in effect.
Section 4 of the Act of March 9, 1935, the so-called Emergency
Banking Act, provides in effect that during such emergency period as the
President may prescribe no member bank of the Federal Reserve System
shall transact any banking business except to the extent permitted by
regulations of the Secretary of the Treasury with the approval of the
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
U r , Robert D. L'Heureux
U- 10501
-£*
Pre.iideat. Although tha emergency period proclaimed by the President
on March 6 , acd Marsh 9, 1935# at the tiasc of the Bank Holiday, haa
sever beea ten&iaated by specifio action of the President, the .■Secre
tary of the Treaauary About a year ago i&med a geaeral licesae au
thorising the tr*m»actioa of a normal banking h unities® b-v ill aew
&aRb*r baaka* Member baaka dieting prior to that ti»e bed beaa
givea individual licensee to carry on baakio# buai«ee£. Aa a praatieal natter, therefore, aectioa 4 of the Act of March 9, 19??, haa
fully aerred ita purpoaa.
The let of April IS, 1943, provided that, until si* month*
after tha oeaaaticm of hoatilitiee aa deterwined by proclamation of
the President or eoacusTeat reaolutioa of Con^rea*, ao-celled war loan
flepoait aecouata ariaiJB$ fro* aubecrlptioas to l&itad strata* Goveraaeat
aecuritie* should not be aubject to renerre requirement* on th* booka
of member banka or subject to aaaaa^mantR for Federal Bepocit Xaauraaee
Corporation inauraace oa tha booka of iaaured banka. Tha President iaaued a Proclamation on Bacwiber 31, 1 94 0 , declaring tha cee^etioa of
hoatilitiea, and aa a raault tfeaaa provialone of tha law will auto*
watiaally terminate os Jana 3 0 , 1 9 4 7 . Tha exemption of war loan de
posit a fxom raaarra requirement* m « strictly a wartime aseaaure designed
to facilitate tha Government *» huge financing program •during tha war and
tha need for tha exemption no longer exiata. Accordingly, in tha boar**a
opinion, no legislation on this subject la now needed.
There ia one additional statute ahieh we w o u H Ilka to mention
in thia connection. ffca exlating authority for tha purahaae of &overa~
meat aaauritiaa by tha Federal koaarra hanka directly from tha Halted
Statee, subject to tha limitation that tha amount of aocuritiea «o pur*
cheeed and held by tha Federal keeerre Banka aha11 not exceed $5,000,000,000,
is contained in a proviao which wee added to section 14(b) of tha Federal
K a a w e Aot by title IY of the Seeond far Powers Act. it will expire on
?Ut9h 31, 1947, or aueh earlier data aa at? be deeigaated by tha Oongraaa
or tha PreaiAant. Until 1925 there was no limitation upon the authority
of the Faderal kaaarve Banka to »ake aueh oirect purehaaea of Oovern»eat
eecuritiee, While it haa bean uaad only occaeionally, tha authority haa
for approval
proven to be a uaeful and coavenieat m©chanlea to facilitate Treaaury
aad to affaot tawporary adjuatme&t® in the money aarket. Ac*
SuiZ oor4iaglyf the Board oa February 1Z, 1947, reaoaaaaadad to tha Chairmen
Mr. Ransomiite-..™— fltf-^ha I>aakla^ aad €urraaoy Oomitteaa of the Senat® and Houae the eaaat*
4r.szynczak^i
of lofialatioa sakiiog persaaeat thia authority for direct purehaaea
^
fxoi
tha Oaited State#*
M r. D r a p e r ..
_Ml. ikYiAtiHH' p w m . m w
i'^ r.tv a n s .
Tary truly youra.
Mr. Yarciamau
U
u
.
y
^
TI6i.•<>eooooooe^oo
f^TKS 013.
M r . C ia y to n
me*
Th;«rsto
MA.R 3- 1947
Vr ft
If you -i."’--
:ni1<1 i
Mr-,.
GrBV:lim
j|e/26/47
S* E* Carpeater,
Se
Reproduced from the Unclassified I Declassified Holdings of the National Archives
____________________ __________ _
DECLASSIFIED
Authority
pd- lOSOj
f
Ur,
I’
i F T P 3 S^CTldiI
I
Hobert r* ',*?.ett:reux
&194?
-8-
President, Although V.t> emergwc oy period proclaimed by the President
o» ilarch 6 , and Mares 9, 1935, at the ties® of the Ban* Holiday, hat
naver bees terminated by specific action of the President, the Secre
tary of the Treasury about a .year ago issued a general license au
thorising the transaction of a normal banking business by ell new
member banks. Member banka existing prior to that tin# had been
given individual licenses t© carry on banking business. As a prscf
tical flatter, therefor®, section 4 of the Aet of ASarch 9, 195*3,
ofi ao iftyortanfta to da v_ and |n a ffa g t l^ a n a b a u la tr a s t u t e ? A
cor d i E & i y T O sect ion nlgflit well be twiTBinfltW7 ~W t ts»
doea
'not ieet-tna* it ia Im^urla^t ^ITelhiif ui not it la repealed at this
tlmn._________ -
The Aet of April IS, 1943, provided that, :mtil six month*
after the cessation o f hostilities is determined by proclamation of
the President or concurrent resolution of Congress, so-called war loan
deposit accounts arising from subscriptions to United States Government
securities should not be subject to reserve requirements on the books
of-member banks or subject to assessments for Federal deposit Insurance
Corporation insurenee on tbs books of Insured banks. The President is*
sued a Proelanation on Deae&ber SI, 1946, »a«laring the cessation of
hoatilltles, and as t* result these provisions of the lav will auto
matically tsrainate on June 30, 1946* The exemption of war loan da*
posits from reserve requirements was etrictly a wartime measure assigned
to facilitate the Government*« hu&e financing program during the war and
the need for the exemption no longer exists. Accordingly, in the Boa^d*s
opinion, no legislation on this subject is now needed*
There is one additional statute which we would like* to mention
in this connection. The existing authority for the purchase of Govern*
ment securities by the Federal Reserve Hanks direct!) from the United
States, subject to the limitation that the amount of securities so pur*
FOR APPROVAL
chased ana held by the Federal heeerve -Banks shall not exceed <'5,000,000,000,
r..«of
u. Mr..
in * proviso whidh was added to section 14(b) of the Federal
First
3 w » ^ , h e a e r v e Act by Title IV of the Second War Powers Act. It will expire on
Mr. RansotTfrjy.._kamsh 31, 194?, or such earlier data as nay be designated by the Congress
Mr. szymczaiuAj_i*r~ihe President.
Until 1938 there was no limitation upon the authority
Mr. Draper_____ M._$he Federal Eeserve Uanks to asks such direct purchase* of Government
securities* ihlle it has bsan used only occasionally, the authority has
Mr. Evans_______
_M_r . Vardaman______
.
proven
to be a useful and convenient mechanism to facilitate treasury
JL____
operations and to effect temporary adjustment a in the money market. AcMr. Clayton _
.. wrdingly, the Board on February IB, 1947, recommended to the Chairman
Mr. Thurston
---of~-thc Banking and Currency Committees of the Senate end House the enactIf you a p p r
c!easejj0j|^ 0£ l«gielation making permanent this authority for direct purchases
sniisai 3 ; ^
:
’
.TO from the United States.
Mr?. :-:C
SitkATlfcGU&it
Very truly yours,
kjuAl
GBV:lim
E/20/47
I
-*
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DECLASSIFIED
Authority
■'0- IQ 5 0 |
2/27/l|7
TO i
Mr. George
General G c t e i l p X H FXL23 SECTION
Board of G :>verno3pj^ g
Federal Reserve System
In line with your recent conversation
with Mr. O ’
Connell and my phone call to your
office this morning during your absence at
a meeting, I transmit herewith a copy of
our proposed report to the Senate Banking
and Currency Committee on certain emergency
and wartime statutes of Treasury interest
within the jurisdiction of that Committee.
The Committee requested this report under
S. Res. 3£.
The Committee is pressing us for
this report and we hope to get Budget clearance
on it today. I f .1 can be of any further
help on this matter, please call me.
vi *
Sfi • &A h
Stepnen J. Spingarn
Assistant General Counsel
Treasury Department
MB. SPINGARN
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AX (0 5 0 1
□ARD OF GOVERNORS
□ r THE
F E D E R A L R E SE R V E S Y S T E M
Office Correspondence
To_
Board of Governors
From-
Mr. Vest
February 20, 1947.
Subject: Lette]c* regarding certain
REC'D IN FILES SECTION
f ;iM 5 mt w
emerg >ncy aQgiBlatifia-3
'if/jjl_________ __ __
The attached letter) from the Legal Consultant of the Senate
Banking and Currency^omiti;ee asks for the Board’
s opinion on certain
temporary or emergency war legislation.
'One of the provisions in question is section 4 of the Emergency
Banking Act of March 1933, which provides in effect that during the
period of emergency proclaimed by the President no member bank shall
transact banking business exeept as permitted by the Secretary of the
^Treasury. Under this statute the Secretary until about a year ago
granted individual licenses to do business to each new member bank,
but on December 31, 1945, issued a general license authorizing the
transaction of business by all banks thereafter becoming members. There
appears to be no valid reason for the continuance of this statute and we
recently suggested this viewpoint to the Treasury. Mr. O ’
Connell, General
Counsel, was rather inclined to the contrary view but promised to send us
a copy of a tentative draft of a proposed letter which the Treasury would
write on the subject. This has not been received.
In the meantime the President has sent a message to Congress
listing certain emergency statutes which should be repealed and certain
statutes which should be retained and included section 4 of the March
1933 Act among those to be retained. Although it would appear to be
desirable to repeal this statute because it is practically obsolete,
the point does not appear to be sufficiently important to justify the
Board in taking a firm position at variance with that of the President.
Accordingly the attached draft of letter to the Legal Consultant of the
Senate Committee states that whether the statute is repealed at this
time is not very important.
The proposed letter also states the opinion of the Board that
section 5(b) of the Trading with the Enemy Act should be retained be
cause of operations under it by the Foreign Funds Control of the Treas
ury and by the Alien Property Custodian. The letter states that this
statute is presently the basis for our consumer credit regulations, but
it does not make the possible permanency of these regulations a reason
for the continuance of section 5(b), since permanent authority if ob
tained would be contained in a special statute.
/
1
Attachment
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority ^ .’D- 10 5 0 1
C H AR LES W . TO BC Y, N . H .v C H AIR M AN
C . DOUGLASS M IC K , D E L.
H O M ER E . C APEH ART, IND .
R A L P H E . F L AND E R S, V T .
H A R R Y P . C AIN , W A SH .
JOHN W . B RIC KE R , OHIO
JOSEPH R . M C C A R T H Y , W IS .
ROBER T F . W A G N E R , N . Y .
B URNET R . M AYB AN K , S . C .
G LE N H . T A Y L O R , IDAHO
J. W . F U LBR IQ H T, A R K .
A . W IL L IS ROBERTSON, V A .
JOHN S P A R K M A N , A L A .
RO BERT C . H IL L , C LE R K
Q l C n i k b s&iaies
REC'P XN PILES SECTION
51917
C O M M IT T E E O N B A N K IN G A N D CUI R E N C: yY
Mr. M a r r i n e r S. Ec cles, C h a i r m a n
Federal Reserve Board
W a s h i n g t o n 25, D. C.
M y d e a r Mr. Ecc le s:
Th e S e n a t e C o m m i t t e e on B a n k i n g a n d C u r r e n c y is
m a k i n g a s t u d y of a ll e x i s t i n g t e m p o r a r y a n d p e r m a n e n t
e m e r g e n c y and w a r time l e g i s l a t i o n (i nc l u d i n g l e g i s l a t i o n
w h i c h t e r m i n a t e s on or a f t e r a p r o c l a m a t i o n of the
c e s s a t i o n of h o s t i l i t i e s ) w h i c h falls w i t h i n the j u r i s
d i c t i o n of the s a i d co mm i t t e e .
T h e c o m m i t t e e w o u l d a p p r e c i a t e an e a r l y o p i n i o n on
the m e r i t s of the f o l l o w i n g l a w s at this time, i n c l u d i n g
a d i s c u s s i o n of the a d v i s a b i l i t y of ret ai n i n g , am en di ng ,
or e n d i n g the s p e c i a l w a r or e m e r g e n c y p o w e r s co nce rn ed .
K i n d l y d i s c u s s the same in the l i g h t of o t h e r l e g i s l a t i o n
if any, n o w p e n d i n g b e f o r e C ong re ss . A l S o p l e a s e a d d to
yo u r r e c o m m e n d a t i b n a d i s c u s s i o n of a n y o t h e r w a r or
e m e r g e n c y p o w e r a f f e c t i n g y o u r a g e n c y a n d w i t h i n the s c o p e
of this c o m m i t t e e Ts work, if that p o w e r is n o t i n c l u d e d
below.
" D u r i n g time of w a r or d u r i n g a n y o t h e r p e r i o d of
n a t i o n a l e m e r g e n c y d e c l a r e d b y the P r e s i d e n t , ,f h e m a y
r e g u l a t e t r a n s a c t i o n s in f o r e i g n e x c h a n g e an d the export, h o a r d i n g , m e l t i n g , etc., of g o l d or s i l v e r coin, b ullion,
or curr en cy, b y a n y p e r s o n s u b j e c t to the j u r i s d i c t i o n of
the U n i t e d S tates; a n d d u r i n g s u c h e m e r g e n c y p e r i o d as the
P r e s i d e n t of the U n i t e d S t a t e s b y p r o c l a m a t i o n nay p r e s c r i b e ,
m e m b e r ba n k s o f the F e d e r a l R e s e r v e S y s t e m are n o t to
t r a n s a c t a n y b a n k i n g b u s i n e s s , e x c e p t in a c c o r d a n c e w i t h
r e g u l a t i o n s of the S e c r e t a r y of the T r e a s u r y a p p r o v e d b y the
Pr e s i d e n t , a m e n d e d b y the F i r s t W a r P o w e r s Act, w h i c h
e x t e n d s the p r o v i s i o n fo r r e g u l at io n, etc., b y the P r e s i d e n t
to p a y m e n t s to b a n k i n g i n s t i t u t i o n s , a n d to transfe rs , w i t h
d rawals, or e x p o r t s o f of d e a l i n g s in, e v i d e n c e s of i n d e b t e d
n e s s or o w n e r s h i p of p r o p e r t y in w h i c h a n y f o r e i g n state, etc.,
h a s a n y i nt e r e s t ; a n d v e s t s f l e x i b l e p o w e r s in the P r e s i d e n t
to dea l w i t h the p r o b l e m s th a t s u r r o u n d a l i e n p r o p e r t y or its
o w n e r s h i p or control.
*oa
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
pd. 10501
2-
Mr, Marriner S. Eccles
March 9, 1933 (48 Stat* 1, sec* 2, ch. 2, sec*4)>
amended December 18, 1941 (55 Stat. 839, sec. 301).
Provision that subscriptions to certain United States
securities bp excluded from bank deposits for certain
purposes until 6 months after cessation of hostilities
(adding proviso to Federal Reserve A ct 12B (h), par. 1,
second sentence and last sentence of sec. 19)•
lApril 13, 1943 (57 Stat. 65, ch. 62).
/Kindly send your reply in triplicate.
By direction of the Chairman.
Very sincerely yours,
Robert D. L fHeureux
Legal Consultant
BDL:pb
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
^
Authority
?v
(0 5 0 1
Mr. Bray Hammond, Assistant Secretary
Board of Governors of the
Federal Reserve System
Washington, D . C .
Dear Mr. Hammond:
Acknowledgment is made of .your letter.o£..March 5 with
enclosure(S - 9 Q l and S-901-a) addressed to Mr. R. M. Gidney.
We will be governed by the opinion of the Board that it is
not necessary to advise the Secretary of the Treasury by
wire or letter as to the effective date of admission of a
State bank to membership in the Federal Reserve System.
Very truly yours,
1. D. Fulton
Vice President
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
^ A ).
10
SO )
IH* M A S
Mr* D* W* Woolley, Vice President and Cashier,
Federal Reserve Bank: of Kansas City,
Kansas City 18, Missouri*
Dear Mr* Woolleys
We understand from
.?•br^ary 18*
1946 , that It WiiS your practice, vixen authorized by the
Secretary of the Treasury to issue a license to a bank
approved for membership, to advise the Secretary by wire
when the license was issued and the bank admitted to
member snip, you assume that the Secretary of the Treasury
still wishes wire advice when a bank is admitted to member
ship and licensed under the general license Issued by the
Secretary of the Treasury on December 31, 1945» applyin
to "all State banks hereafter admitted to membership in the
Federal Reserve System",
It is understood that the wire advice to the
Seoretujy of the Treasury, to which you refer, was never
required by the Secretary but was furnished by most, if
not all, of the Federal Reserve Banks to indicate the
action taken under the specific authorisation In each in
stance* In the Board's opinion, the Issuance of the gen
eral license removes th© necessity for advising the
Secretary of the Treasury by wire or letter as to the ef
fective date of admission of a State ban* to membership.
Very truly yours,
M inutes
on
5 - 1(W 6
/
Bray Hammond,
Assistant Secretary,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
sT .
Authority ^ AX <0561
r
D IN FILES SECTION
K.
W
BOARD DF GOVERNORS
7 MAR’
6'
i n &
□ F TH
E
u r
FEDERAL R ESERV E S Y S T E M ^ /
WASHINGTON 25. D. C.
X
S-901
ADDRESS OFFICIAL ODRRCSPONDCNOE
TO THE BOARD
March 5, l%-6.
Dear Sir:
i_ /jS/1/ ip
The Board of Governors recently(received the follow
ing letter from one of the Reserve Banks:
"When a State bank is admitted to membership
in the Federal Reserve System we expect to send it
a copy of the general license issued ty the Secre
tary of the Treasury, furnished with the Board's
Ip+t.PT" s —aaa-jJ an u ary
IQhL, as suggested
in Board's letter S-8 %* dated January 29, 19A6.
which was enclosed with your letter _of.-J[a a u a ^ ^3Q^
19LLA We have formerly wired the Secretary of the
Treasury upon admittance of a State bank to member
ship in the System, advising that a license was
being issued in accordance with the telegraphic
authorization of the Secretary of the Treasury, and
informing them of the effective date of the bank’
s
admission to membership. It is assumed that the.
Secretary of the Treasury still desires us to wire
him when a State bank is admitted to membership in
the System, ”
A copy of the Board's reply is enclosed for your in
formation.
Very truly yours,
ll j
^
2
/
j'oray Hammond,
Ass! st.snt Secretary.
=>r*Tvrf.j
Assistant
.
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority ^ . 0 . (0 5 0 1
S-901-a
BOARD OF GOVERNORS Or THE FEDERAL RESERVE SYSTEM
March 5, 1946.
Federal Reserve Bank of
Dear Mr.
We understand from your letter of February 18, 1946,
that it was your practice, when authorized by the Secretary of
the Treasury to issue a license to a bank approved for member
ship, to advise the Secretary by wire when the license was
issued and the bank admitted to membership. You assume that the
Secretary of the Treasury still wishes wire advice when a bank
is admitted to membership and licensed under the general license
issued by the Secretary of the Treasury on December 31, 1945.>
applying to "all State banks hereafter admitted to membership in
the Federal Reserve System".
It is understood that the wire advice to the Secretary
of the Treasury, to which you refer, was never required try the
Secretary but was furnished by most, if not all, of the Federal
Reserve Banks to indicate the action taken under the specific
authorization in each instance. In the Board’
s opinion, the
issuance of the general license removes the necessity for
advising the Secretary of the Treasury by wire or letter as to
the effective date of admission of a State bank to membership.
Very truly yours,
(Signed)
Bray Hammond
Bray Hammond,
Assistant Secretary.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
-U- ( Q S O j
S- f o )
MAR 5
1941
Dear Sir:
The Board of Governors recently received the follow
ing lettor from one of the Reserve Banks:
•When a State bank is admitted to member
ship in the Federal Reserve Systera we expect
to send it a copy of the general license issued
by the Secretary of the Treasury, furnished with
the Boardfs letter S- 888, d&ted January 3, 1946,
as suggested in Board's letter S-894* dated
January 29» 1946, which was enclosed with your
letter of January 30, 19-46. We have foraerly
wired the Secretary of th& Treasury upon ad~
mittance of a State bank to membership in the
System, adTising that a license was being Issued
In accordance with the telegraphic authorization
of the Secretary of the Treasury, and informing
them of the effective date of the bank's admission
to membership. It Is assumed that the Secretary of
the Treasury still desires us to wire him when s
State bank is admitted to membership in the System*”
mation.
A copy of the Board's reply is enclosed for your infor
Very truly yours*
Bray Hammond,
Assistant Secretary.
%
*
■'
:! ■
:
T .
•
r
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority |p l)- (0 5 0 1
ROBERT V. FLEMING
tti
C HA R LES C. GLOVER, JR .
V IC E CHAIRMAN { J F T H E BOARD
P R E S I D E N T A ND CHAIRMAN O F THE BO A RD
POSTAL ZONE
13
February
25 , 19^6
IN R E P L Y I N G P L E A S E Q U O T E I N I T I A L S
Mr. Chester Morrill, Special Adviser,
Board of Governors of the
Federal Reserve System,
Washington 25, D. C.
Dear Chester:
Hlhank you so much for your courtesy
in sending to me Chairman Sccles1 letter of October 31.
addressed to the Honorable Fred M.Vinson, Secretary
of the Treasuly, relative to the elimination of the
licensing of national and. member banks. X am particu
larly d.esirous of having this for my files.
Sincerely yours
/
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority p x ) . 10501
t h
February 20, 1 % 6 .
Ur. Bobert V, Fleoing, president,
ilggs Hatdonal Bank,
Washington, D. C.
Dear Bob!
Following our talk over t&e telephone X had a
oopy »ade of our lottfgLflf
to Secretary
Vinson r«gardil^tH« lic«n«ing requirement applicable to
national and state meaber bonks, and I an sending it to
you herewith.
If wo can bo of any further service you know
that we will be glad to respond.
Sincerely yours,
Chester Uorrill,
Special Adviser.
m**
Enclosure
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
p \ ) . 10501
.ACTION
r-p
O
•
'
'
(
'
A
/
5fib ^ 4''^^'
i
•
Mr* T hom*
O ixi>.
February 20* 191*6
Seymour Karris* ?rospeotu*
Chandler Mors*
'-^
I have referred S*yatour Harri* * prosp*otu* to Sue Burr,
Boland Robinson and Piok ilua^rav*, the three per*or* who it seemed
to me were laost likely to hair* material and possibly time for thi*
sort of thing. Their independent reactions were in unanimous agree
ment. They found the project oonfu*ing, they were doubtful as to its
value* they lelt that we had little to contribute that had not already
been published in readily available fora and they felt that neither
they or any member of the staff had the time to put on such an enter
prise.
In the light of these reactions I have drafted the attached
letter for your signature.
I
_ ^ <
J . ,r-
CMiJf*
Attachment
<
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
^
(OS^l
F e d e r a l R e s e r v e B ais
OF
Ka n s a s C it y
February 18, 1946
Mr. Leo H. Paulger, Director,
Division of Examinations,
Board of Governors of the
Federal Reserve System,
Washington, D. C*
Dear Mr, Paulger:
When a State bank is admitted to membership
in the Federal Reserve System we expect to send it
a copy of the general license issued by the Secretary '
of the Treasury, furnished with the Boardrs letter
S-88&..xialgd January 3. 1946_jas suggested in Board's
Tetter S-894* dated January 29. 1946./ which was en
closed jatfcTyour letter of January 30. 1946. t We have
formerly wired the Secretary of the Treasury upon
admittance of a State bank to membership in the System,
advising that a license was being issued in accordance
with the telegraphic authorization of the Secretary of
the Treasury, and informing them of the effective date
of the bank’
s admission to membership. It is assumed
that the Secretary of the Treasury still desires us
to wire him when a State bank is admitted to membership
in the System
Very truly yours,
.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority \z\). ( 0 5 0 !
Mr. Bray Hammond, Assistant Secretary
Boa.rd of Governors of the
Federal Reserve System
Yfeshington 25, D. G.
Dear Mr. Hammond:
Receipt is acknowledged of the Boardfs
letter of January 29? S-894-*
We have had in
mind the desirability of calling to the attention
of banks becoming members, their status relative
to Treasury license and are pleased to note that
the Board approves of this.
Reproduced from the Unclassified I Declass f ed Holdings ot the National Archives
DECLASSIFIED
Authority
^ A)*
(0 5 0 )
SBB'D 331FTUBS
JAN 311946
M¥mumh7Am
V
f r u m p y 3©, 19461
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ft
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(Signed) Leo H. Paulger
g*#& Mi*.
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GSS: fa
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Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority ^ U- (0 j O j
y
#
•.!)1 WA'S.
+ 7()t
P
JAN 2 9 1946
Mr. C. £. Earhart, First Vice President,
Federal Reserve Bank of San Francisco,
San Francisoo 20, California.
Dear Mr. Earharti
This refers to your letter of January 10, 1948, with
respect to the issuance of a general license by the Treasury
Department authorising the transaction of normal banking business
by national banks hereafter authorized to begin business by the
Comptroller of the Currency and by State banks hereafter admitted
to membership in the Federal Reserve System.
The Board agrees with your suggestion that each State bank
hereafter admitted to membership should be notified that it is
operating under this general license end, accordingly, a letter is t
^ f
being addressed to all Federal Reserve Banks recommending that this
prooedure be followed.
• '
We have been informally advised by the Comptroller of the
Currency that no determination has as yet been made as to notifying
newly organised national banks of the general license but we under*
stand that whatever steps are desirable in this connection will be
taken by that office at the time of the authorisation of such banks
to begin business so that it will not be necessary for the Federal
Reserve Banks to call the matter to their attention.
Very truly yours,
tlNUTES ON
JAN 2 9 1946 * ^
\ Ii
Bray Hammond, ..
Assistant Secretary.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
l). ( 0 5 0 )
'■
^’
1
\
-A J .
V
Mr, C. £. Earhart, Fir*£ ?ioe Preiident.
Federal Seserrs Bank ot f m f r m soo,
Ssn Franeisoo 20, California.
Dear Mr. Sarharti
This refers to youiH fetter of January 10, 19.46* with
res peet to the lsftusnee o f i fnersl liesnse by the Treasury
Department authorising the traj [action of noraal banking business
by national banks hereafter ai
>rlsed to begin business by the
State banks hereafter admitted
Comptroller of the Currency a:
te Mmbership in the Federal
System.
youi\ suggestion that eaeh State bank
The Beard agrees w
hereafter admitted to member ip should be notified that it is operatlng under this general liesn e and, altoordlngly, a letter is b e i n g
addressed to a ll Federal Re rre BanksVeeomsMnding that this pro*
e C ontroller of the Currency authorises
eedure be followed. Sinoa
national banks to begin bus ess, i t is \eliered desirable to le a T e
notifying sunh newly organised bsnks.
te that of flee the matter
We hare been informally ad sed by the Controller *s of flee that no
determination has been mad as to notifying eaoh newly organised
national bank.
Tery tnUy yours.
S. R. Carpeiter,
Secretary,
F
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority p d .
(0501
I ?rt?-*> Tf T.17-
lfe*. R. R. Gilbert, President,
Peders 1 Ressrvs Bank of Della }
Dallas 13, Texas.
Dear Mr. Oilb«rti
This refers to your Istter o f January 9, 1946, suggesting
that a oopy of ths general license issued by ths Treasury Depart
ment authorising Stats banks here aft or admitted to membership in
ths Fsdsral Reserve System to transact normal hanking business,
bs furnishsd saoh suoh bank upon being admitted to membership.
Ths Board agrsss with this suggestion and, accordingly, a
letter is today being tdgrassea to a ll Federal Reserve Banks reoom~
sending that this procedure be followed or the bank be advised of
the terms of the general lioense.
Vary truly yours.
(Signed) Bray Hamffii.: nu
■pyy. T h & i & s Bray Hammond,
Assistant Secretary.
tMhttftfc ...... - /
• •
,i i i i i l i i u i c a
Leurd
M
r -
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
px).
IO S O I
v FILE?8
BDARD DF G D V E R N D R S
#
df the
FEDERAL RESERV E SYSTEM
/
/ *7
*
^
.............
—
WASHINGTON 25. D. C.
AD D R E S S OFFIC IAL C O R R E S P O N D E N C E
TO THE BOARD
w !S B &
January 29, 1946..
G ir d e d
Dear Sir:
As you were advised in the Bo&rdfs letter of January 3> 19^6 (S-888)« the Treasury Department has issued, a"”
"*
general license which grants all member banks authority to
transact normal banking business.
Following receipt of the Board’
s letter, two Fed
eral Reserve Banks suggested that it might be well to bring
to the attention of each State bank which in the future be
comes a member of the Federal Reserve System that it is
operating under this general license, Tbe Board is agreeable
to this proposal and, accordingly, it is suggested that State
banks becoming members of the Federal Reserve System be ad
vised of the terms of thi§ general license or be furnished
with a copy thereof.
Very truly yours,
fray Hammond,
Assistant Secretary,
'^ - 5
^
'LTO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS
\
I
FOB f i l e s
I L o u is e F. T h o m a so n
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority |p A)- (Q5Q|
!
*
VD
,
^ PILS5 '*■■■ ■
•V
H
' jj
^
i
8 - 9 ^ */
JAN 2 9 1946
Baaur Sir t
Am you wara adTiaad in tha Board* a la t tar o f
January 3, 1946 (3-888), tha Traaaury Dapartaaxxt hat iaauad
a ganaral iioanaa whioh granta a ll aaabar banka authority
to tranaaot normal banking buainaaa.
Following raoaipt of tha Board'a 1attar, two Pad*
oral Raaarra Banka auggaatad that i t sight ba wall to bring
to tha attention of aaoh Stata bank whioh in tha futura baaoaiaa a mambar of lha Padaral Raaarra Syataai that it la
oparating undar thia ganaral l i e a n a a . Tha Board la agraaabla
to thia propoaal and, accordingly, i t i a auggaatad t h a t Stata
banka baoooing mawbara of tha Fadaral Raaarra Syataa ba ad
T ia a d of th a tarna of thia ganaral lioanaa or ba furniahad
with a copy tharaof•
Vary truly youra,
(SHkiBiecI) Bray HammoBfi
JBray Hammond,
Assistant Saaratary*
TO THE PHESIBBKTS OP ALL FIDEUL RESERTX BAHKS
I I
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
Doar S i n
p d . (0501
,
L
/
As you woro adrliad
in tha Boam*s
letter of January 3,
1946 (S-868), the treasury! Departmsntjl** issued a general lioenso
whioh, among other things, W * a t s all State banks heroaftor ad
mitted to membership la the ^federa^ Reserve System authority to
\
/
\
/
tranaaot normal banking business/
\ /
It is auggeated that spate hanks becoming members of tho
A
Federal Reserve System be a d m s M of the terms of this goneral
license or be furnished a «/py t»proof, slnoe sueh banks may not
bo aware of its provision/*
Tory truly yours,
S\ 1. Carpenter,
Secretary.
TO 1E1 PRESIDElffS OF ALL FEDERAL RISERY3| BASKS
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
(0 5 0 1
-11301
B
O F
a n k
C L E V E X xA J S T 1J>
January 18, 194-6
Mr.'S. R. Carpenter, Secretary
Board of Governors
of the Federal Reserve System
Washington 25? D. C.
Dear Mr. Carpenters
Receipt is acknowledged of the Board1s letter
.1.946, s -e88jr*advising that the
Treasury has issued a general license authorizing
the transaction of normal banking business by
national banks hereafter authorized to begin
business by the Comptroller of the Currency and
by State banks hereafter admitted to membership
in the Federal Reserve System. We are interested
in having the general license and the letter
from Mr. Bell, Acting Secretary of the Treasury,
both dated December 31 > 194-5*
Of
We think this is very helpful, but we would
like to see efforts continued to remove the
necessity for any Treasury license.
¥ery truly vours,
Ray M. Gidney,
President.
I'XLISS
J '<rv J ■
:'*.It'
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
AX 10501
Federal R eserve Ban
O F
Ka n s a s C it y
January 14, 1946
Mr. Leo H. Paulger, Director,
Division of Examinations,
Board of Governors of the
Federal Reserve System,
Washington, D. C.
Dear Mr. Paulger:
The Board1s letter.. £-888+ dated January 3, .1946,
relates to the general license which was issued December 31,
1945, to all banks thereafter authorized to begin business
by the Comptroller of the Currency and all State banks
thereafter a dmitted to membership in the Federal Reserve
System. It is not just clear what information should be
given to a State bank when it becomes a member of the Federal
Reserve Siystem, and we shall be interested to learn the pro
cedure that should be followed.
Very truly yours,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
<!)♦ (Q 5C ))
Board of Governors of the
Federal Reserve System,
Washington 25, D. C.
The Board’
s letter S-888./referring to the issuance
of a general license by the Treasury authorizing the transaction
of normal banking business by national banks hereafter authorized
to begin business by the Comptroller of the Currency and by
State banks hereafter admitted to membership in the Federal
Reserve System, has been received.
We should be interested in knowing whether the
Comptroller of the Currency contemplates informing newly organized
national banks that they are operating under the above license.
If not, it appears to us that we should notify each such bank
that it is operating under this license, so that it will be
familiar with its terms.
lours very truly,
First Vice President.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority ^ AX (0 5 0 1
Board of Governors of the
Federal Reserve System
Washington 25, D. C.
Attention:
Mr. S. R. Carpenter, Secretary
Gentlemen;
This acknowledges the Board*s letter of January 3, 1946,
S-888, transmitting a copy of a letter from fir. D. W. Bell,
Acting Secretary of the Treasury, dated December 31, 1945, and
copy of the general license issued by the Secretary of the
Treasury authorizing the transaction of normal banking business
by national banks hereafter authorized to begin business by the
Comptroller of the Currency and by State banks hereafter ad
mitted to membership in the Federal Reserve System,
It occurs to us that it -would be advisable to transmit
copies of the general license to banks -which, in the future, be
come subject to its terms. It is felt that these new licensees
would be interested in the precise text of this instrument. We
shall appreciate the benefit of the Board’
s views regarding this
suggestion.
Air Mail
F O B
L o u !33 F .
F IL E S
•r'orn.son
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
ISr. Paulger:
Wia.% do you think should he done about
this suggestion from Mr, G ilbert?
_ ,C*D TS FILES ^
1
/ ‘
V‘
JAH311346.
1/14/46
10561
declassified
■>.
Authority
rI
EC
15 FILE*
ja n
'TI
a
Mr. Vest:
I agree with Mr* Gilbert
that banks admitted to membership
should be furnished a copy of the
license. Otherwise some banks, and
particularly a newly organized bank,
may not be aware of the teims of the
license or that it is revocable. I
would suggest, further, that all the
Reserve Banks be instructed to fur
nish a copy of the license to each
banks.
F O R . F IL B -S
L o u is ? F . T l'o m is o n
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority p x ) . 10501
* HBP’
B II f l M SEOflOi
BO ARD O F G O V ER N O R S
□ r THE
i u~/r\
L ./
FED ERA L R E S E R V E SYSTEM
x S-S8S
W ASHINGTON 25, D. C.
AD D RESS O FFIC IA L C D R R E S P O N O C N C E
TD THE BOAHD
January 3 , 194&.
Dear Sir:
Under date of October 31. - i m l the Board trans
mitted to tKe Secretary of the Treasury a copy of a letter
from Mr. Robert V. Fleming of the Federal Advisory Council,
recommending the termination of the present procedure for
the licensing of member banks; and the Board endorsed the
recommendation.
After consideration of this matter, the Treasury
has issued a general license authorizing the transaction of
normal banking business by national banks hereafter author
ized to begin business by the Comptroller of the Currency
and ty State banks hereafter admitted to membership in the
Federal Reserve System, For your information, there are
enclosed a copy of the general license'and of a letter from
Mr. D. W. Bell, Acting Secretary of the Treasury, both dated
December -31, 1945,]which were received by the Board today.
If there should be any further developments in
connection with this matter, we shall advise you.
Very truly your
S. R.VCarpenter,
Secretary.
_ a~.c-
Q’
JU
Enclosures 2
ICTORY
BUY
NDS
TO THE PRESIDENTS OF ALL FEDERAL RESERVE BANKS.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
10561
Authority
S- 888 -a
THE SECRETARY OF THE TREASURY
WASHINGTON
December 3-1> 1945
My dear Mr. Eccles:
Reference is made to your letter of October 31} 1945,
transmitting a copy of a letter received from Mr. Robert V.
Fleming of the Federal A d v i s o r y Council recommending the
termination of the present procedure for the licensing of
national banks and State member banks of the Federal Reserve
System, pursuant to the Presidential Proclamations of
March 6 , and March 9j 1933* and the Executive Order of
March 10, 1933.
This is to advise you that a General License, a copy of
which is enclosed, has been issued under Executive Order
No. 6073 of March 10, 1933* licensing all banks hereafter
authorized to begin business by the Comptroller of the
Currency or admitted to membership in the Federal Reserve
System, to transact normal banking business except as other
wise prohibited.
I trust that this license which eliminates the require
ment that each new member bank of the Federal System obtain
a license from the Secretary of the Treasury accomplishes
the result you desired.
Sincerely yours,
(Signed)
D. W. Bell
Acting Secretary of the Treasury
Mr. M. S. Eccles
Chairman, Board of Governors of the
Federal Reserve System
Washington, D, C 4
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
pd.
(0 5 0 1
S-888-b
December 31, 1945
GENERAL LICENSE ISSUED UNDER EXECUTIVE ORDER NO. 6073,
AS AMENDED, SECTION 5(b) OF THE ACT OF OCTOBER 6 , 1917,
AS AMENDED, AND SECTION L OF THE ACT OF MARCH Q. 1933.
A general license'to transact n o m a l banking business is hereby
granted to all banks hereafter authorized to begin business by the
Comptroller of the Currency, effective upon the date of such authori
zation, and to all state banks hereafter admitted to membership in
the Federal Reserve System, effective upon the date of such admission,
except:
(1)
to the extent prohibited in the Executive Order
of the President of the United States issued on
March 10, 1933, as amended tjy the Proclamation
of December 30, 1933, and by the Executive Order
of January 15, 1934 (see Extract printed on the
reverse of this license);
(2 )
to the extent limited or prohibited by any execu
tive order of the President or by regulations of
the Secretary of the Treasury,.
This license may be revoked in whole or in part by the Secretary
of the Treasury at any time.
(Signed) Fred M. Vinson
Secretary of the Treasury
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority p A ). ( 0 5 0 1
m '
JAN 3
1946
Dear Sir t
Under date of October SI, 1946, the Board transmitted
to the Secretary of the Treasury a oopy of a letter from Mr*
Hobart Y* Timing of the Federal Advisory Counoil, recommending
the termination of the present procedure for the licensing of
a m b e r baakej ead the Board endorsed the reoommendation*
After eonelderation of thia Matter, the Treasury haa
issued a general lieenae authorising the transaction of normal
banking business by national bank* hereafter authorised to be
gin business by the Comptroller of the Currency and by State
banks hereafter admitted to membership in the Federal Reserve
System. For your information, there are enclosed a oopy of
the general license and of a letter from Mr. D. W* Bell, Acting
Secretary of the Treasury, both dated December SI, 1946, which
were received by the Board today*
If there should be any further developments in
connection with this matter, we s h a l l ^ f i a w p ^ advise you*
Very truly yours,
INUTES ON
(^ignsd) j ,, it
JAN 3
I9 4 £
S. R. Carpenter,
Secretary*
Enclosures f
TO THE PRESIDERTS OF ALL FEDERAL RESERVE BANKS
fOS
OF
on
1
1-3-46
BEHAUFtf
Apprevsdi --•*
[
f o e FILES
L o u is e F. Thomason
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
a .
ip s o )
S- 888 -b
( EXTRACT FROM EXECUTIVE ORDER NO. 6073. AS AMENDED
Until further order, no individual, partnership, association,
or corporation, including any banking institution, shall export or
otherwise remove;or permit to be withdrawn from the United States
or any place subject to the jurisdiction thereof any gold coin,
gold bullion,; ■or gold certificates, except in accordance with
regulations prescribed by or under license issued by the Secretary
of the Treasury.
No permission to any banking institution to perform any banking
functions shall authorize such institution to pay out/any gold coin,
gold bullion or gold certificates except as authorized by the Secreta:
of the Treasury, nor to allow withdrawal of any'currency for hoarding.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
THE S E C R C tA R Y OF THE TREASU
<05Qi
fY
SLECfI) I I FXL1S5 JPSOElOI
7 1346
^
WASHINGTON
M r ? O ,
OEC 3 1
!$r dear Mr, Eccles
„
Reference is made to your letter of October,31^JL2kaJ
transmitting a copy of a letteF^icirvedTTFom Mr. Robert V.
Fleming of the Federal Advisory Council recommending the
tenaination of the present procedure for the licensing of
national banks and State member banks of the Federal Reserve
System, pursuant to the Presidential Proclamations of
March 6, and March 9, 1933 > and the Executive Order of
March 10, 1933*
This is to advise you that a General License, a copy of
•which is enclosed, has been issued under Executive Order
Ho. 6073 of March 10, 1933, licensing all banks hereafter
authorized to begin business by th© Comptroller of the
Currency or admitted to membership in the Federal Reserve
System, to transact normal banking business except as other
wise prohibited.
I
trust that this license -which eliminates the require
ment that each new member bank of the Federal System obtain
a license from the Secretary of the Treasury accomplishes
the result you desired.
Sincerely yours,
Actings*
Mr. M. S. Eccles
Chairman, Board of Governors of the
Federal Reserve System
Washington, D. C.
**,1
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority f c . i ) . ( 0 5 Q |
fiEC 3 1
1945
GSKERA.L LICENSE ISSUED UNDER EXECUTIVE C1DK 10. 6073,
AS AMENDED, SECTION 5(b) OF THE ACT OF OCTOBER 6 , 1917,
AS AMSKD5D, AKD SECTION U OF TIE ACT OF MARCH 9, 1933*
A general license to transact normal banking business is hereby
granted to all banks hereafter authorized to begin business by the
Comptroller of the Currency, effective upon the date of such authori
zation, and to all state banks hereafter admitted to membership in
the Federal Reserve System, effective upon the date of such admission,
except•
(1)
to the extent prohibited in the Executive Order
of the President of the United States issued on
March 10, 1933 * as amended by the Proclamation
of December 30, 1933, and by the Executive Order
of January 1 1 9 3 4
(see extract printed on the
reverse of this license);
(2)
to the extent limited or prohibited by any execu
tive order of the President or by regulations of
the Secretary of the Treasury*
This license may be revoked in whole or in part by the Secretary
of the Treasury at any time*
*T/.
Secretary
rea sury"
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
r*
Authority
10501
EXTRACT FROM EXECUTIVE ORDER NO. 6073, AS AMENDED
Until further order, no individual, partnership, association,
or corporation, including any banking institution, shall export or
otherwise-remove or permit to be withdrawn from the United States
or any place subject to the jurisdiction thereof any gold coin,
gold bullion, or gold certificates, except in accordance with
regulations prescribed by or under license issued by the Secretary
of the Treasury,
No permission to any banking institution to perform any banking
functions shall authorize such institution to pay out any gold coin,
gold bullion or gold certificates except as authorized by the Secretary
of the Treasury, nor to allow withdrawal of any currency for hoarding.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
Ip AX (0501
f
TREASURY DEPARTMENT
Washington
FOR R E L E A S E M O R N I N G N E W S P A P E R S ,
M onday, D e c e m b e r 51, 1945.______
:J4fc
Press S e r v i c e
No. V-184
/ 2 l/ 5/J
S e c r e t a r y V i n s o n t o d a y a n n o u n c e d that steps h a v e b e e n t aken
to p e r m i t all b a n k s h e r e a f t e r a u t h o r i z e d to b e g i n b u s i n e s s by
the C o m p t r o l l e r of the C u r r e n cy,
or a d m i t t e d to m e m b e r s h i p in
the F e d e r a l R e s e r v e System., to t ransact n o r m a l b a n k i n g b u s i n e s s
w i t h o u t o b t a i n i n g a spe c i a l l i c e n s e f r o m the T r e a s u r y .
S i n c e the b a n k h o l i d a y o f M a r c h 6, 1933, all m e m b e r b anks of
the F e d e r a l R e s e r v e S y s t e m have b e e n r e q u i r e d to be l i c e n s e d b y
the S e c r e t a r y of the T r e a s u r y ,
I n a s m u c h as the r e q u i r e m e n t s for
o r g a n i z a t i o n as a n a t i o n a l b a n k or for m e m b e r s h i p in the F e deral
R e s e r v e S y s t e m a d e q u a t e l y s a f e g u a r d the p u b l i c i n t e r e s t at the
pr e s e n t time,
i n d e p e n d e n t c o n s i d e r a t i o n of e a c h p r o p o s e d m e m b e r
b a n k by the T r e a s u r y is no l o n g e r n e c e s s a r y .
Accordingly,
t o d a y ’s a c t i o n c o n s t i t u t e s an a u t h o r i z a t i o n of
the S e c r e t a r y of the T r e a s u r y to n e w m e m b e r s of the Federal
R e s e r v e S y s t e m to t r a n s a c t n o r m a l b a n k i n g b u s i n e s s w i t h o u t
f u r t h e r l i c e n s e f r o m the T r e a s u r y D e p a r t m e n t ,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
A )» ( 0 5 0 1
(Draft of xkgr tod Preelasiitlo n to tormir
prooo*»ure . ^r licensing wwsbor banks)
t
I ^gC *p"iy'WtiTM 0 ^ ™ ™ *
r,
I
w
-
p m i D a r t 0f * K W I T “ s m "
DEC?
1946»
w
Whereas, by Preelas^tlQ ns lssusd by the President of the United
States on Maroh 6, !$9i and Karsh 9, 1985, a period of eaergenoy waa
proolained and a national basic holiday was deelsredj and by Executive
Order of the President issued on Nareh 10, 1833, pursuant to the Aet of
Ootober 6, 1917 (10 Stat* 411)* aa asended, and seetion 4 of the
Saergenoy Banking Aet of Mar eh 9# 1981* the Seoretary of tho Treasury
was author It ad by regulation to pensit any aosfeer bank of tho Federal
teserve Syatos to p orfora any or all of Ita usual banking funetioaa
and suoh banks v«r« required to obtain lioansas fro* tho Saorotary of
the Treasury in ordor to par for* oil usual and noraal banking funetlenaf
and
Ihereee* it is now dosirabla that tho preeedure for tho
licensing of bsaklng institutions to transaot a banking bus ins ss aa
neabers of tho Fodoral Reserve Syste* bo discontinued!
lew, therefore, lt Harry S. Truaaa* President of tho Uni tod
States* do horaby pro© lain, ordor, diroot and doolaro that tho Proa1ana*
tions of Mareh «, 1983, Xaroh 9* 1911 and Deeeaber &0, 19IS* and tho
Rxeeutive Ordor of Hareh 10* I9ilf and all orders and regulations issuod
pursuant thereto, are aaended* effeotive tho first day of January 1946,
to exelude from thoir soopo and application tho nooossity on the part of
any
institution of obtaining, or holding, a 1 is ansa fro* tho
Secretary of tho troaaury for tha trsnsaation of a banking bus inass
as it aenber of tha Fodoral ftosorro Syste* as horotoforo required by tho
Executive Ordor of Marsh 10, 19»§« Provided, however, that nothing in
m s proclamation shall bo interpreted as parnitting any suoh banking
Institution to pay out gold so In* geld bullion or gold oortlf loatas
except as authorised by tho Secretary of tho treasury.* or to allow tha
withdrawal of aaqf eurrsaey for hoarding, or as relieving any sush bank*
Ing institution fro* oeapllanee with any provisions of liar* executive
orders of tho President* or any rules, regulation* and lioansas lasued
thereunder# whloh relate to transactions or dealing with respeet to
gild* gold coin* gold bullion or g&ld certificates, or which rolata to
any transaotlons in foreign exchange.
IV W l f W S S iHSRIor, 1 have hereunto set ay hand and caused the
seal of tho flteited States to bo affixed.
Done In the City of Waahlngto this
day of Deeesfeer
In tho year of our Lord one thousand nine huntireTsaid forty-five, and
of tho Indepondonoe of tho United States the one hundred and seventieth.
By tho Presidenti
.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
(0501
■
j
tsemhatio*
or
noon sm s
prockdoii
FOR
i t s k k b u xt
i* v
10 '
ones
Tt M H R S 3801101
DEC?
1945
uckisim
or nuustrar
tho authority of tho Soorotary of tho froaaory to llooaao
a#ri»#r bank* v u originally dorIt #d fro* tho Pro#laaationa of the
Proaidait of Marah < and Marah 9* 1III# iaaaod uador aootioa 6(b) of
th# Trading vitii tho *n#agr ±ot* fboao Proolaaatlona, aftor doolariag
0 national aaargaaay and #laaing all banka, authorit#d tho 8#orotary
of tho froaoary to ptrail banking inatitutlona to parfora aajr or all
of tii# naoal banklag funationa.
Oft Mar#h 9# 19IS* tho authority of tho floor#tar7 of tho
Yroaaory woo ooafimod by low in th# laargaaoy Banking A#t. Sootion
4 of that Aot proTldo* that *dariag au#h awargaaoy poriod aa th#
Froaid#at of tho Unitod S to too by proolaaation aay proooribo, ao
" M i l or bonk of th# Fodoral I#i#rro Syotoa a h a U tranaaot any bonking
baaiaooo #®a#pt to «aah #jrt#at and aubjoot to aaoh rognlationa,
liadtatioaa and rootriationa aa aay bo froaotibod by th# Soorotary
of tho ■
froaonty, with th# approval of th# Praaidant."
Ob har#h 10, I M S , th# prooidoat iaau#d aa Exooatira Ordor
baa#d partly apon tho fradiag with tlko Bnoay Aat and portly opoa
a#otioa 4 of tho laargdaojr Banking Aot of Mnroh 9, I M S , Ondor that
Ordor* th# Soorotary of tho froaoary wao again antberlaod to pormit
acafe#r banka "to p#rfora any or all of thoir aooal banking faaationa,
0*0#pt aa othorwioo pr#hibitod*i bat tho Ordor f w t h o r provided that
aay aaafror bank dooiring to roopaa for baainoaa “aha1 1 apply* for a
liaoaao thorofor to tho Soorotary of tho froaoary, aaah llooaaoo to
bo iaaaod through th# Foddrai looorvo Banka ao a goat a of tho Soorotary
of tho troaoary# Thia iaoowtlwo Ord#r gar# to tho Stato bonking
aatfeorltio* powor to prooorih# regulation* p«raittiag Stato nonataabor
banka to porfora thoir aaaal bonking faaotioao*
On Doooa&or *0, 19*3, tho Fr#aid#nt loaned a farther Pro#le
ant ioa whieh ta a d td tho Preeliuatloaa of Mar oh • and Maroh 9, 1911,
and tho Kxeentiwe Ordor of Maroh 10, 1911, to exelade froa thoir aoofo
ail bon king inatltutiona whieh ar# not aaab#ra of tho F#doral R#a#rre
Syateie* ad that th# haaiking authority in aaoh State ahould th«r#aft#r
hare aalo roopoaoibility for aaoh banka* Thia Frooiaaatlon ln#lndod
a pr#Tia#f however* atating that m bank ahoald pay oat any goid # w # p t
aa anthorisod by tho Soorotary of tho troaanry* nor allow tho wlthdraeaal
of aay oarroaoy for hoarding, nor angago in foroign a*#hang# tranaaotiona ojc#opt aaoh ao aay ho for logitiaato aad a o m a i baainoaa r#^uir#aonta and for tho fulfillaaat of oontraoto antorod Into prior to
W*JMk «, m s *
iooordiagly, aaa^or banka ara tho only bonking inatittttlona
whiah aro now r#quir#d to obtain iioonaoo froa tho Soorotary of tho
froaaury in ordor to traaaaot a bonking b\iain#aa«
i
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority ^ D - (0 - ^ j—
Tha prooedure for requiring aeaber banks to obtain suoh
1loansas oould bo terainated by a now Proolaaation of tho President
amending tho Proolaaations of Mar oh 0 and Mar oh 9, 1933, and tho
Exooutiro Order of Meroh 10, 1933, to exolude froa their soopo and
applisation tho nooessity on tho part of any banking institution of
obtaining, or holding, a lleenae froa the Secretary of the Treasury
In order to transaot a banking business as a aeaber of the Federal
Reserve Systea. Suoh notion would not terainate the "eacrgoney”
deolared by the Proolaaations of March 6 and March 9, 1933, but
would limit the soopo of that eaergcney by providing that hereafter
the eacrgcney deolared by those Proolaaations shall have no applloation to the obtaining of licenses by aeaber banks froa the Seeretary
of the Treasury*
The teraination of the licensing procedure in the aanner sug
gested would have no effeet upon the authority of the Seeretary of
the Treasury to regulate, by li sens os or otherwise# the extent to whioh
aotoer banks (as well as other basks) any deal in gold or engage in
foreign exchange transactions. While those aatters were specifically
aentioned in the Executive Order of Mareh 10, 1933, they have since
been fully covered by subsequent Executive Orders of the President*
On January 16, 1934, the President Issued an Executive Order
emending the Proolaaations of Maroh 10 and Deeeaber 30, 1933, to
cliainatc froa both Proolaaations those provisions which prohibited
banks froa engaging in foreign exehenge transactional and on tho saae
day, the Preeident ieeuod another Executive Order completely covering
this aatter and authorising the Secretary of ths Treasury to grant
licensee and otherwise regulate transactions in foreign eaohange,
transfers of credit, and export of coin and currency. The latter
Executive Order was amended on April 10, 1940, and again on June 14,
1941, in order to effectuate the "freesing" of funds of belligerent
countries and to establish coaplete control of foreign funds in this
country*
As for the regulation of dealings in gold, the Gold Reserve
Act of January 30, 1934, specifically authorised the Seeretary of the
Treaeury to Issue regulations covering the acquisition, holding, trans
portation, iapertation, exportation, and earaarklng of geldf and under
that authority the Seeretary of the Treasury has issued detailed regula
tions, including provisions for the licensing of such transactions*
If, however, it is deeaed desirable to aake it clear that any
Proelanetlon of the President terminating the licensing procedure shall
not affect the Treasury*s authority to regulate and issue licenses with
respect to dealings in gold and foreign exchange transactions, a pro
vision to that effect sdght be included in any such Proolaaation as was
done in the Proolaaation of Beecaber 30, 1933*
12-5-45
F
IE'
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
^
(0501
fflo*D a n m bbcum
DEC 7 1945 1"'"
T )
5# l% 5.
Hr. Bobort
j®/* f&fft **tion*X iiii!
fiNwii* M il
. I. ^
i&f*j4s
I tomfim&ag m r itltgriiont conversation, 1 an »«nd~
* B U d m . m & m r m i m n d a draft, of *
torw&aatiiig"tfco prtttdnrt fo r lim it in g
mmbrnr baak*. flm m fae* fro# to cioaX with t&oao a# Havia*
* * «*
»l*p ly tm ym r a«»iataaoo «ft4 to do at ye* tiliik
boat with %hm*
log
I t I t a ploaaur* to havo ym n ail upon tit ia tei» or
««T «Mx»r a t i l t r a t any tl*« that you udUh.
Siaoaroly /ours,
Ofcoatar W vrrlll,
% t c i a l A«tn»#r,
/3a.
E
Reproduced from the Unclassified I Declassified Holdings of the National Archives
d e c l a s s if ie d
Authority ^ ) J 0 5 0 ] _
IT.i* w as sscsio*
iiov 1 1945'
Honorable Fred M* Vinson,
Secretary of the Treasury,
Washington 25, D* C«
Dear Mr.„ Secretary*
There is transmitted herewith a cop/ of a letter dated
Qctpfeer ZZ+ 1945, addressed to the Board by Mr# Robert V. Fleming,
a member of th© Federal Advisory Council, recomending, on behalf
- of the Council the termination of the present procedure for the
licensing of national banks and State member banka of the Federal
Reserve System pursuant to Presidential Proclamations of March 6
and March 9, 1935, and Executive Order of March 10, 19??#
The Board of Governors feels that the licensing require
ment no longer serves any useful purpose and concurs in the recom
mendation made by the Federal Advisory Council*
One method by which the recommendation could be effectuated
would be the issuance of a proclamation by th# President expressly ex
cluding member banks from the scope of the Proclamations of Iterch 6
and March 9, 19??, and the Executive Order of March 10* 19??f and
also expressly proclaiming, solely for the purposes of the provisions
of section 4 of the Emergency Banking Act of March 9, 19??, a termination of the "emergency period * therein mentioned. Such proclamation
could include, if desired, a proviso similar to that in the proclama
tion of December ?0, 19?3* with respsct to nonmsmber banks, restrict
ing the payment of gold, the withdrawal of currency for hoarding, und
engaging in foreign exchange transactions*
The Board hopes thet you will concur in thin recommendation
and that appropriate steps may be taken for the early termination of
the licensing procedure*
i r4/a
f t . fl
Enclosure
HHH/mg
10/24/45
V
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority 'p £ > . ( 0 5 0 1
.aw.
I
I
n tins
bbciioI
orT?Ot94S
■' ■
8 |....[------ ||-|
|IIIIIII -I T-I
ri
V
1 .. ...........—
........
v im m tx c
5
1945“
'-;
October
I
'CnJ
Mr/ D. J„ Heedhaa,
c/o tfce i«»rl€«a Baakers Awsoci&tioa,
Tlf fifteeath Street, ».
Waehia^tou 5,
ۥ
De&r Seat
I
w&e away fro® the office during the past week
&ad haw# j«#t returned this morning In the aeaatiae
Qoor^e list looked o w j«*ur lofctej^isiar fc¥e oaS^r "iiggeo* /'v*'*
tions that he aad 1 have to iawk* are in tho eeeoad sad
third paragraph*. la those two paragraph* where the
words nm m m lm m t" are ueed we weald wuggast that yoa
*tsb*tiiiiie "the teralnatioa. *
there the phrase f,©aXy iaaofsr a*M occurs ia
the seooad paragraph aa4 the phrase Moaly ia regard to”
occurs ia the third paragraph w® would easiest the aufestitutioa of “
iaaofar as the$r relate to.fS
ieither of the®# *ugge*tioa* i* particularly
iaportaat* a* you will ob*ervef but we thought they
ai^ht he aa iaproveaeat.
With best regardsf 1 aa
Siacarely yours,
Special Adviser.
GM/vl
7
£
v
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority ^ <D. ( Q S Q |
|BECf2> I f
I
NOV 5
I
HIC'D I I FILES
j ^
L
OCT 3 01945
—
-------- -
MR. MORRILL
I hare bo farther suggestions
about this le tte r . In one or two places
I think the phraseology could be improved
but I do not know that i t is in order for
us to mention these.
The le tte r from Mr. Flemings/has
come in but w ill not be sent over to the
Treasury before October 29 at the earliest
as i t is being circulated to the Board mem
bers.
Regarding Sam Needham* s le tte r,
we could o f course reply by le tte r or simply
by telephoning him. Sam Carpenter and I
thought i t best to hold i t until you got
back as Sam Needham indicated that he would
not be back much before you would anyhow. ,
Attachment
10/24/45
■
SECflOI
1945
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
/
✓
O
I05Q I
BBC'S I I HIES SECII01
/
NOVI
M E MB ER S1945
f f i c e r s
E D W A R D E. B R O W N , PRESIDENT
19
4
5
Hill I HJwnTOl"
E. S P E N C E R , JR., DISTRICT N o .
J O ^ N C. T R A P H A G E N , DISTRICT N o . 2
W IL L IA M F U L T O N K U R T Z . DISTRICT N o . 3
J O H N H. M c C O Y , D ISTRICT NO, 4
R O B E R T V. F L E M IN G . D i s t r i c t N o . S
K E E H N W . B E R R Y , DISTRICT N o . 6
E D W A R D E. B R O W N . D ISTRICT NO. 7
R A L P H C. G IF F O R D , D ISTRICT N o . 8
J U L IA N B. B A IR D . D ISTRICT N o . 9
A . E. B R A D S H A W , D ISTRICT NO. 10
ED H. W IN T O N , DISTRICT N o . 11
G EO R G E M. W A L L A C E . DISTRICT N o . 12
cV. (L E S
C H A R L E S E. S P E N C E R , JR., VICE-PRESIDENT
W A L T E R L IC H T E N S T E IN , SECRETARY
FEDERAL ADVISORY COUNCIL
E X E C U TIV E C O M M ITTE E
( fe de ral
reserve sy ste m )
E D W A R D E. B R O W N
OFFICE OF THE SECRETARY
C H A R L E S E. S P E N C E R , JR.
J O H N C. T R A P H A G E N
c/o T H E F IR S T N A T IO N A L B A N K O F C H IC A G O
W IL L IA M F U L T O N K U R T Z
P. O. B O X A
CHICAGO 90, ILLINOIS
R O B E R T V. F L E M IN G
R A L P H C. G IF F O R D
jl/C
Washington, D. 6*
October 23, 1945.
Honorable Chester M orrill,
Special Advisor to
The Board o f Governors
of the Federal Reserve System,
Washington, D. C.
l|y dear Chester;
Referring to the action of the Federal Advisory
Cornell in requesting the Board of Governors to use its
good offices to have rescinded the license provions which
formed a part of the machinery for the closing and reopening
of the banks as covered by the proclamations of the President
larch 6 and larch 9, 1933, based upon the Trading with the
Enemy Act, and the Executive Order of March 10, 1933, based
upon both the Trading with the Ene^y Act and section 4 of
the Emergency Banking Act of March 9, 1933, X a® transmitting
herewith at the request of Mr, Edward E. Brown, Chairman, First
National Bank of Chicago, and President of the Federal Advisory
Council, a resolution adopted by the Federal Advisory Council.
Thanking you fo r your fine cooperation, I remain
lo u rsvsry sincerely,
Member, Federal Advisory Council
FOR- F I L E S
F. T h o m a s
L o u iS 9
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority ^ A ) - (0 S O |
ESC*I)
O
i
fficers
E D W A R D E. B R O W N . P R E S ID E N T
19
C H A R L E S E. S P E N C E R , JR., V IC E -P R E S ID E N T
W A L T E R L IC H T E N S T E IN , S
I I FILES SECTIC
ecretary
F E D E R A L A D V ISO R Y C O U N C IL
EX E C U TIVE C O M M ITTE E
(
federal
reserve
system
)
E D W A R D E. B R O W N
OFFICE OF THE SECRETARY
C H A R L E S E. S P E N C E R . JR.
JO H N C. T R A P H A G E N
c/o T H E F IR S T N A T IO N A L B A N K O F C H IC A G O
W IL L IA M F U L T O N K U R T Z
P. O.
R O B E R T V. F LE M IN G
R A L P H C. G IF F O R D
BOX
A
CHICAGO 90, ILLINOIS
Washington, D. C.
October 22, 19A5
4 5
MM
JLES E. S P E N C E R , JR., DISTRICT NO
J O H N C. T R A P H A G E N , DISTRICT N o . 2
W IL L IA M F U L T O N K U R T Z , DISTRICT N o . 3
JO H N H. M c C O Y , DISTRICT NO. 4
R O B E R T V. F L E M IN G . DISTRICT N o . 5
KE EH N W . B E R R Y . DISTRICT N o . 6
E D W A R D E. B R O W N , D i s t r i c t N o . 7
R A L P H C. G IF F O R D , DISTRICT NO. 8
J U L IA N B. B A IR D , DISTRICT N o . 9
A. E. B R A D S H A W , DISTRICT NO. 10
ED H .W IN T O N , D i s t r i c t N o . 11
G EO RG E M. W A L L A C E , DISTRICT N o . 12
The Board of Governors
of the Federal Reserve System,
Washington, D. G.
Gentlemens
At the meetings of the Federal Advisory Council held on September 16-17,
194-5, there was under discussion the question of the licensing of national banks and
state member banks of the Federal Reserve System, which licensing formed a part of the
machinery for the closing and reopening of the banks as covered by the proclamations
of the President of March. 6 and 9, 1933, under the Trading with the Enemy Act, and
from the Executive Order of March 10, 1933, based upon both the Trading with the Enemy
Act and section 4 of the Emergency Banking Act of March 9, 1933*
Since these proclamations were issued, on December 30, 1933 the President
amended the proclamations above stated to exclude from their scope such banking insti
tutions as were not members of the Federal Reserve System. All other banking institu
tions have, during the long period of years, remained under the license provision.
The Federal Advisory Council has unanimously adopted the following
resolution;
RESOLVED, that the Board of Governors of the Federal Reserve
System be requested to use their good offices in having the
license provision rescinded, preferably by proclamation of
the President in the form that released the nonmember state
banks from the license provision, or by such other appropriate
measures that will satisfactorily eliminate the license provision.
The Federal Advisory Council bases this request on the fact that this license provision
was part of the machinery for closing and reopening banks during the emergency created
at the time of the "bank holiday1* in 1933* It will soon be thirteen years since the
licensing provision was placed into force.
The national banks and state member banks
of the Federal Reserve System are all, according to the reports of the various supervis
ing agencies, now in excellent condition.
We do not see that there is any useful purpose in continuing this emergency
provision and as a member of the Federal Advisory Council, representing the Fifth Federa
Reserve District, I have been requested by Mr. Edward E. Brown, Chairman of the First
National Bank of Chicago and President of the Federal Advisory Council, to present this
resolution to you, with the request that you give this request your favorable consider
ation and endorsement.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority |p
AX 10501
I BSSIS‘J 3L ¥ILES 3ECTK
i t
THE AMERICAN BANKERS ASSOCIATION
719
FIFTEENTH
STREET,
N . W.
W A S H I N G T O N 5, D. C.
BE0fD I® ¥IL®5 SECTICl
•i0V 5
D E L O S d. N E E D H A M
G ENERAL
C O U N S E L
October 20, 1945
Mr. Chester Morrill, Secretary
Board of Governors of the
Federal Reserve System
Washington, D. C.
Dear Chesters
/
Am enclosing copy of the letter which I
read to you on the telephone yesterday. I made one
or two slight changes after I read it to you.
If you and George Vest will read this
letter and make any suggestions you have I will
appreciate it.
I don’
t expect to be in the office until
late next week as I am going out of town.
Yours sincerely,
DJN j TB
Enc.
1946^"
Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
(0 5 0 1
BEO'B u,
J it E S
SECTIOl
OCT 3 01945
October 19# 1945
loaerable Fred I. Vinson
Secretary of the Treasury
laahiagtoa,
C.
Beer Mr* Viaeoiu
t leaned certain
During the year 1933 Preaideat Boo
tio a s were tander
Proclamations dated Kerch 6 end 9 #
la
Hub the
autho rity ef the Trading with the
ted H are^D t 1 9 3 3 # which
P reild M t iasued an Ix ecu tire
Bneny k t> \B d Section 4
m e baaed ea hoth the
1933*
n et effect
e f the leergaitey
r aafter the au thority
ef theee Proclanatlens
machinery fo r licensing ef
vented la the President
B eeretaryo f the Treasury
hankn nader iiPt**** regnla
prenlfi'
advlaed i t
Federal
the Board
Bankers Association were
Fadn^al M viaory Couacil of the
favorable action retonnni'iril.fiit to
fed eral Reserve % iie a th a t the Board
te obtaining* through proper ohannela#
Proelaaatloas
the SnMRstlve
laeofhr' aa) the H aeaeing of asaber l i t tlf
Aneooiatioa a t a aeetiag la lev Xork ea Septcaber 2 S#
thdLa prohlaa and. ejppreprlate eetln a ane taken nathoiv
'Chalraan a f the Ceanlttee aa •Federal
tffft
the
'Geoaeol e f the Iseeniatlon ta ecwntmlnate n lih yon and ra**
th a t actlo a he tahen lay the Tioeeu rjr la effeatantin g
a m i*
a e a tje f the Proelaaatio&a and fineantlve $rdar heretofore lam ed la
193 3 <jdy la regard to the Hennaing ef banka* aeabere of the Feder
a l Reserve ' ..
la vlan o f the favorable banking oondltlaaa non existin g
throughout the n atlo a, the Aseociatioa la ef the opinion th a t th in
reyilreaon t eig h t v e il he rescinded. the banking etructure of the
oeuatry la known te he la a vary sound position and the roqalreaant
fo r a licen se in Ju at aa additional atap which doea not neea te he
neeeeeary a t th ia tia e .
I t la ear understanding th a t the ieauaaee
of lioennen to aeaber banks la a routine procedure«
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
pd. 1 0 5 0 1
Sonermfcl* rtrmd II. Vinton
Fi|« 2
d«ply » p p S S .^ ^ala• °0“*id*r‘ Uon *
.ill b.
Reproduced from the Unclassified 1 Declassified Holdings of the National Archives
DECLASSIFIED
Authority
S'
KEC > T* FTIJ3S SBCIluf
.w i 3 01945
IVlSiON
OK<221845,
NUMBER./ii
.0 » (0 5 0 }
A U T H O R IT Y - 0 ?
SECRETARY 0 7
T R E A S U R Y T O L X C B tS X M B S B IR
BASES
By Proclamation of Sarah 6V 1953, the Preaident declared
the period from March 6 to March 9, inclusive, to be a *bank holiday*,
end Authorised the Secretary of the Treeaury, *during auch holiday*,
with the approval of the President to permit any or ell banking insti
tutions to p e r f o m the usual banking functions. The Proclamation vat
based on the authority of the President under section 5(b) of the
trading with the Xnetty Aat of October 6, 1917, to •regulate, or fro*
hibit • • • by means of licenses or otherwise, any tranaactioaa in
foreign exchange and the export, hoarding, melting, or earmarkings af
gold or silver coin or bullion or currency*.
On March 9, 1983, the freaident iasuad a further Proclamation
continuing in effect the provisions of the Proclamation of Sarah 6
•until further proclamation by the President**
On the same date, the teergeney Banking Aat of Ifareh 9, 195*,
confirmed all act ion a taken by the President under the Trading with the
Sncay Aat and further provided, In aeatlon 4, that*
*• • • during such emergency period as the
President of the United Sts tea by proelamatlon
may prescribe, no member bank of the federal
Reserve System shall tranaaet any banking businaaa
except to such extent and subjeat to such regula
tio n , limitations and reatrlstlons as may ba
preaaribed by the Seeretary of the Treasury, with
the approval of the President**
On Sarah 10, 1955, the President issued an Executive Order,
baaed both upon the Trading witb the Snemy Act and the Imergency Banking
Aat* This Executive Order authorised the State banking authorities by
regulation to penalt nonmcmber State banka to perform uaual banking
functions exeept as otherwise prohibited and authorised the Seeretary of
the treasury "under such regulatlona a a he may prescribe* to peimit
member banks and national banks to perform any or all of their uaual
banking functlona* The Order further provided that member banka of the
Federal Reaerve System *deairing to reopen for the performance of all
usual and normal banking functions* should apply for a lloense* Xt was
stipulated that auah licenses would be issued by the Federal leeerre
Banka, as agenta of the Secretary of the Treasury, upon the approval
and lnatructlona of the Secretary*
Pursuant to this Ixeeutive Order, the President on Sarah IS
aanoaased a plan for the gradual reopening of member banks on Sarah IS,
14 ssd IS, through the laauanee of Ue e n s e s by the Secretary of the
Treaaury*
'Ay
r
F
CD
-2*
By a Proclamation dated December 30, 1953, the PresIdant
amanded the i reclamations of March 6 and *earch 9, 1933, ant? the
ixecutive Order of March 10, 1958, to exclude from their scope bank
ing institutions which ara not Members of tha Fadaral fieserve Systam.
However, tha .Secretary of the Treasury continued to issue licenses,
not only for tht reopening of member banka which had been closed
aurin*; the bank holiday, but also for tha organisation of any new
member bank or tha admisaion of any Stata bank to membership in tha
federal Keserve System.
Tha Secretary'a authority to require licensee for tha
opening of new member banks appears to be baaed upon his authority
"to permit" member banka to perform their usual banking functions.
Tb&t authority is derived from tha Praaident’ s Froelamations o f
u>arch 6 and inarch 9, 1959, which ware based solely on the Trading
with the Fneray Act, and from the Ixecutive Order o f March 10, 1938*
which was based on oth the Trading with the imamy Act and section 4
o f the Emergency Banking Act.
The Proclamation of &arch 9, 1955, continued in effect the
authority conferred upon the Secretary by the Proclamation of March 6
•to permit" member banka to perform banking functions, "u n til further
proclamation by the President". The authorit;; conferred by thesa
Proclamations could be terminated simply b.v a nev, Proclamation amend
ing those Proclamations by excluding member banks from their acopa#
However, such a new Proclamation merely amending tha
Proclamations of March 6 anr; March 9* 1988, and the Executive Ordar
of Mardt 10, 1958, would not affect the authority of the Secretary of
the Treasury to issue re&ulationa permitting member banka to perform
banking functions. This ie because section 4 of the Emergency anking
Act expressly confers that power upon the Secretary of the Treasury,
provided any regulations issued by him are approved by the Praaident*
The "ecretary of the Treasury, with the approval of tha
President, could of course rescind a l l regulations issued by him
under the Fmergancy Banking Act which require member banka to obtain
licenaee in order to do business.
However, the authority of t^ao Secretary of the Treasury undSr
section 4 o f the fcmergency Banking Act continue* only "during such
emergency period aa the Praaident of the United States by proclamation
r.ey prescribe", and, accordingly, his authority would ceass i f tha
President should 1bsue a Proclamation expressly terminating tha
"emergency period* referred tc in tnia section of the law. T1is could
be 'lone in such a way as to terminate the emergency period solely for
the purpose o f this section, and not generally*
1
I f the necessity fo r member banks obtaining licenses
from the Secretary of the Treasury in order to do business is to
be eliminated, i t could be dne by a proclamation o f the President *
terminating the e ffe c t o f his Proclamations o f March 6 and March 9,
193?, and his Executive Order of March 10, 1955, and alao terminating
the "emergency period* mentioned in aactlon 4 of the Emergency Banking
Act* However, it la not necessary to make such a sweeping termination
of these proclamations and a l l of their provisions In order to aeoompllah
this purpose. The purpose oould be accomplished by a proclamation o f
the President expressly excluding member banks from the scope of tha
Proclamations of March 6 and March 9, 1955, and the Executive Order o f
March 10, 1955, and alao expreasly proclaiming, solely fo r the purpose*
of the provisions of section 4 of the Emergency Banking Act, a termina
tion of the "emergency period” therein mentioned. Euch a reclamation
could retain the restrictiona on the paying out of gold, on the with
drawal of currency fo r hoarding, and on foreign exchange transactions,
to the extent desired, as was dons by the Proclamation of December 50,
1955, excluding nonmember banks from the varloua Proclamations of
&arch 1955.
9/18/45
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
T
Authority
pX ).
(Q 50j
jm*t> m FILES SECTION
JG 1 3 1942
i _ _ _ -----------August 12, 19t*2
The F ilet
John R,
Farrell
Last night Mr* Donald Thompson, Chief of the Division of
Research and Statistlss of the Federal Deposit Xnsuranoe Corporation,
aallad Mr. Conkllng and aeksd hi* If no had any infomation as to
whether any banks Indian tuoky reaained Optra during tho national
banking holiday in dafianoa of tho Praaidantial Ordar. ^
I oauld find nothing In tho files to lndioato that thoro
h i any suoh occurrence. I talked with Mr* Kennedy, who m s in
aativa charge of tho bank suspension rooards during
* fcnd with
Mr* Sloan of tho Examinations Division, who in 1955 **t
tha
Baarganisation Wrist on of tho Comptroller* s office, and naithar
of than had evar hoard of suoh an aoourranoe* Mr. Slaan did aantion
a story wWLeh, ho said, had boon widely olreulatod and whteh aay
hare given rise to tho sub jest inquiry* Ha doos not know whether
tha story Is faet or fietion, but it goes to tho offoot that a
national bank in tha mountain district of Virginia did not a van
know that a national banking haliday had boon praelalaad, and upan
being advised by tha Coaptroller*s office that it sight reopen far
busiaase replied that it had navar bean olosod.
1933
Mr* ThoKpaan* s information apparently waa not wary
spoolfis and his Inquiry aay hare arisen trwm an Instaaoa oannaatad
with aoaathlng ether than the national banking haliday* Far exaMple**
1. Thoro waa tha aaaa af a bank in Miaaleelppi, tha
Bank af Tupala, whieh waa balng subjoetod to a run In tha
latter part af 1950* this bank rafusad to olaaa and at tha
aaaa tdne annauaoed that it oould nat p e m i t tha withdrawal
af dapaalta exoapt at tha bank* a disaration and upan ita
own judgment. Mr* Bauaaand, In a memorandum of lovsmfeer 29,
1956 (see file kl}*) in oammantlng on this oasa^statas "tha
action of the bank waa illogal but it saana to hava suooaadad
in avoiding a suspension and tho eanaaquant lass bath ta tha
o— imlty and tha bank stockholders*.
2* Tha re wara many different praotioaa undar the
holidays praalaiaad by tha vmrieus Stataa* Far Inatanoa, in
Mlahigaa during tha State morateriu* banka wara pamlttad ta
raapan and taka naw dapaalta payable an demand provided suoh
daposi ts wara held aa trust dapaalta solely far repayment of
dapaaitara* It waa disoretlonary, however, with tha indivi
dual banka iihether they would roapan undar thaaa provision
'■ 13 .
Y
1
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
Tot
Tho F il© §
I ) ♦ (0 S O 1
*2 *
I advlaod Hr# Thoapaon Wmt v t had ao iaforwation aa
to any banks In Xsatueky raaaining opon during tha national bank*
iag holiday, and also mentioned to him tha othor posaibilltioa
oitod above. lo atatod that hi* quostlon roaultad t r m an inquiry
tho Coiporatlon had roooivod, and that vhiio ho had novar hoard of
suoh an inataneo tho naturo of tho inquiry was suoh that ha
aocdorod i f tha iaqoiror had knovladgo of a apaoific oaoo. In
tho ©ircumatanoos, ho thought i t boat to chock -with us.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority ^ AX 10SO ),
■ t.
rho'd in fxies m y n m f
1 i t94t
if
Mr* % « * •
..
Court d«6ltloB« ro M f l i o i
^Trading with Bnamy Act, aad p r o d
'order*, ole,, thereunder.
O a rd e d
there Aaaoofc forth below tho** court declaiona upholding
the oon*t itut tonality of **ctio® 6(b) of tho Trading with the AUHjQT
Act (federal Reserve Act pp* 1GB~16£) aad tho "bonk holiday" procla
mation** order* and regulations issued thereu&der* Soma of tho do*
olslon* not ad merely involve litigation in which such Act, proclama
tion*, etc. v woro portInant* containing no express judicial utteranco
ob the question of constitutionality or validity. Also, sons of tho
decisions involve such Act* proclamation*, order** ©to., aa thoy re
late to gold control, ate* However, it la believed that all tho
decisions not ad herein aro of interest a* indicating tho g*&*»«i ao" oeptance by tho court* of *uoh regulatory *oa«uroa*
fiflM tltirtioaaU tY flf
toAMmr* rminl
n if ■ nrUnra* glii<
Iaflialdtt ▼. £fl£xlA* 16 I* 8upp. $96 (0*0 * * M*T*# 1988)t
affirmed 09 I. (fcd) 1008 (C*C«A*, 2d, 1957), tho rooolver of a no
tional bank sued to recover aa aasooaneat on tho bank1 s aharoo
levied by tho Comptroller of tho Currency* aad the oaaa came up
on the receiver* * motion to dlsmls* throo separata dafanso* con
tained in defendant** anawar* The flrat dofonao alleged 'that
tha ordor* and statutes by virtue of which tho” bonk "was closed
* * * on Maroh 4, 1985* and the subsequent aeta and proceeding*
taken thereunder, wore unconstitutional* a* depriving defendant
of property without du* process of law* Considering tho provi
sion* of tho Hational Bank Aot under which this suit waa l a H l *
tuod, tha court *ald that nothing contained la such flr*t defoaoo
oan mitigate plaintiff'* right, tho "defanae 1 * clearly insuffi
cient In law**
A* to tho *oooad dafan*e it wo* claimed that if tho bonk
booame ineolvent, **uoh tmtolvoncy was duo to the Illegal aad u**
warranted act*
of tho Comptroller of the Currency * *
and not by reason of aay act* * * * on the part of tho41 hank, Its
officer** etc* Said the court: "Ho allegation* ar* *et forth
" ;
which can support tho general conclusion that in*olv*a*y was* **
"
O 0 jt0m la overruling such second defect** tho court* inter •lam,
J
I
u 1 q Tvl Crcgban
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* * The acts referred to are those which were
taken by the comptroller pursuant to tha federal emer
gency legislation and order® issued thereunder early in
1955* (Citing aectlon 5(b), Trading with the Enemy Act j
"Bank holiday* Drodaoationa of March 6 and 9, 19555 j and
Executive Order® 6073 and 6080, relating to {1) regula
tions of the Secretary of the Treaaury under which banka
mi$it reopen, and (2) the appointment of conservators for
banka not reopened.J * * * if it be assumed, arguendo,
that insolvency of the bank cauaed by alleged illegal
acta of the comptroller would conatitute a defense to
a cause of action aa herein set forth, it la anawer
enough that the acta of the comptroller referred to in
the second defense were not illegal. They were such
only If, an
cont«n<U, th« foregoing legt.Ution was not constitutional. Upon thia point I am in
complete aceord with tha holding in City of East Cleveland
v. Fidelity k Deposit Co. of Maryland (D.C.) 5 F. Supp. 812,
that there can be tio doubt aa to the validity of that legis
lation"!^ * **. (Underscoring supplied)
The third defenae rested merely upon the fact that insol
vency wee ^ue to matters beyond control of the bank, its officers,
etc. This, the court likewise overruled as being insufficient.
Smith et al, v. Wltherow, 102 F. (2d) 688, (C.C.A., 3rd,
1959), was also a suit by the receiver of a national bank to recover
an assessment levied by the Comptroller of the Currency on the shares
of such. bank. It appears that as a result of a run on the bank, tha
directors passed a resolution on February 20, 19555, restricting with
drawals of old deposits and segregating new deposits* Thereafter,
the bank never "reopened for the payment of deposits in ordinary
course." Ho lloanse to resume business under the Executive Order
of March 10, 1933 was granted the bank by the Secretary of the
Treasury; and on March 25, 1935, a conservator was appointed pur
suant to the Bank Conservation Act of Vareh 9, 1933, and on January
23, 1934, the receiver was appointed. The assessment in question
was levied March 27, 1934.
In defense it was averred that at the tiwe the conservator
m s appointed the bank was solvent and such appointment and the re
fusal of the Secretary of the Treasury to permit reopening were
disastrous to its business and assets "and in large measure were
responsible for the conditions* leading to the receivership, all
of wilch operated to deprive the defendants "of their property with
out due process of law and consequently released there from their
liability** A further and similar defense was made to impinge upon
"the action of the President in closing the bank and its subsequent
operation by * * * a conservator * * * since that operation resulted
in further loss."
F
B )
Y
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In affirming the Judgment below la favor of the receiver*
the oourt said that the evidence clearly disclosed a state of Insol
vency from and after the data of the aforementioned resolution fey
tha banlc1 a dir act ora. Continuing, tha court saldt
** * * It la not necessary for us to consider
whether Invalid govemmantal action with raapoot to the
Bank tm which It* creditors had no part would discharge
tha obligation of the stockholders to thoao oredltors,
sine a tha governmental action which was taken was un
questionably valid in vlaw of tha insolvency of the
Bank* But regardless of the technical Insolvency of
the Bank we are of opinion that the action taken by
the president and the Comptroller of the Currency with
respeot to It did not violate the constitutional r Iffeta
of the defendants*
•As we have seen* the Bank wao a govermaental I**
strmentality performing a vital public function sub*
jeot to governmental oontrol. Its closing by PreOl*
dentlal proclamation* wao a reasonable step to bo
taken in the financial emergency which then confronted
the country and was authorized by Section 8(b) of the
Trading with the loamy Act as amended by Section £ of
the Act of March 9, 19BB* * * * and by Sections 1 and
4 of the latter act, [affirming prior aet ion under
the Trading with the Sneggt Act* and prohibiting msmbor
banka from doing business except aa tho Secretary of
tho Treasury may permit* with the approval of the Pros*
I4 «rt] * * * .
T h l. l e g is la t i o n M « n m rttta rtlo a a l.
City of last Cleveland v. fidelity & Depoelt Co., D.C.>
8 ti Supp* Z12t Hanley t* Corwin, 8*C*t IB 1* Bupp.
59$ | affirmed £ Cir., §• f* Id 1$CC** {TJnderseoring
•applied)
|H addition, tho court held that the appointment of a ooo*
serrator was "likewise a reasonable stop to proteot the asset a of the
bank for both creditor* and stockholders* aid that tho legislation
providing therefor wao not unconstitutional*
U CUT fll ImI CIiYtlftaa ▼
* IlktiXli & fitaMlfr Ciu flf lanr-
JJUUX* 8 ?. Supp* £12 (D.O., Ohio* lt88)§the City sought recovery on
the depositary bond of a State bank because of the bank's refusal to
repay deposit** Snob rofnoal wao stated to bo *ba*od wholly upon
FDLE COPY
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Federal an<1 ©tate emergency legielation end orders Issued thereunder*
namely, section 5(b) of the Trading with the Incmy Act; section 4 of
the Act of March f * 1955 (operation Of member bank* tinder restrictions
Of the Secretary of the Treasury, etc.)\ Presidential "bank holiday*
proclamat ions( Sxeeutlve Orders relating to (l) the reopening of banks
On authorization of proper authority* and ( 2) the conserratorship of
banka not authorised to reopen $ and Ohio General Code sections 710107a and 710-8$a authorizing the superintendent of banks to order
suspension of payment and appoint bank conservators* It appears
that the super lot endent of banks had ordered the bank to suspend pay
ment and had appointed a conservator therefor* Th© surety on the
bankf s bond ooatended that the in ab ility of the bank to »ake repay*
meat operated to suspend* in similar manner* the surety*s lia b ilit y ,
this contention the court sustained* saying that * i f tha defense
here w ill release the bank from present lia b ilit y , it has the same
effect on the surety**
After referring to the statutes, orders, etc., set forth
above* the court oaidi *J think there can be no doubt flui to th*
v a lid ity of this legislation ** citing S ta ll
r t l . lltmmQM
GMbfaa. 172 8*1* 150* in whioh the court "considered and sustained
the v a lid ity of C®t«to] «wrgenoy banking legislation * * * at
tacked as unconstitutional** In deferring to the nature of the de
fense set up by the surety, the court saidt
■* # * I t is in no aease personal to the bank* al
though directed against the banlr and not against the
surety* The bank is forbidden to pay its depositors
and creditors. I t cannot aay that It w ill or w ill not
avail It s e lf of this defease* in other words* that it
will or w ill not* as it chooses* obey the law* fo r the
law being constitutional and valid* It must obey,*
Only oae decision was found which questions the validity o f
the "bank holiday" proolamined by the President on March t* 1955. How
ever* an examination of the deoisloa minimises its effect In this
connection. Thus, in AfltfrflttT it ll» *»
9<>*
(Miss, * 195#)* the bank sought cancellation o f dofendan^s olala to
realty and confirmation of t i t l e or for foreclosure of security against
realty. I t appears that defendant gare the bank a note for $700 se
cured by deed of truat Of oortain realty* ^pon default In payment*
auch realty was duly advertised for sale on March 6, 1955* and on
said date purchased by the bank for $7$. The bank alleged that i t
was the legal and equitable owner o f the land and entitled to a de
cree for the aforementloned r e lie f* such second foreclosure being
asked *tn the event the sale of March &* 1955 should be held invalid**
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In affirming the judgment for the bank, the court overruled
defendant1s coat ant Ion that the foreclosure of March 6 , 1955, was
▼old since made while the first Presidential •bank holiday" proclama
tion was in effect, sayingi
’
’
The Proclamation of the President was issued under
what he conceived to he an authority vested in him by vir
tue -of the provisions of See* 5(b) of the Aot of Congress
of October 6 , 1917, 40 Stat* 411* This was done under Sec*
5(b) of the Act known as the ’
Trading With The Enemy Aot *,
limited in its application to the period of the Vorld War,
Section 95 U*S*C*A*, Title 12, pp. 552, 555* The first
proclamation, Mo* 2059, issued on March 6 , 1955, was fol
lowed by his second proclamation, Mo* 2040, Issued on
March 9, 1955, after the Congress had passed an act on
that date, being Chap* 1 , (2, 40 Stat* 1, Sec, 95a, Title
12, U*3*C*A«, p. 561, granting auch authority, and ap
proving what had been done by the President in the
promises*
"An historical note is found on page 561, Title 12,
U*S*C*A*, as follows* *As originally enacted by Act of
Oct* 16, 1917, c* 106, § 5(b), 40 Stat. 415, this sec
tion formed a part of the Trading With The Mmay Act,
which was H a l t e d in its application to the World War
and therefore was Quitted from the Code, but printed
as an appendix to Title 50 U*S.C*A* By Act of Mar* 9,
1955, o* 1, f 2, 46 Stat* 1, the section was made ap
plicable to any war "or any other period of national
emergency declared by the President,”thus making it
general and pexmanent legislation**
"Thus it will be seen that although the banking
institutions of the United States, out of a commendable
spirit of co-operation in a time of economic crisis,
generally obeyed the Presidential Proclamation of March
6 , 1955, there was no authority In law for the issuance
of suoh a proclamation until March 9, 1955* We era at
the .opinion that even though a sale by a trustee on
M a r 6 . If fig» m U r fortaloiigi, ..ttraaataiaga thfrata*
Xqrt imallj iftTtarium afraulfl faa floaalflarafl m trtaaifltlBi toifciM
tfra . l a M M m l .Hr Iha fioagraaa
OB March 9, IfiMU, ,a£ ifra, PraaUaat** aetlaa In oloBlii
fht m a m w q b II aot.toaat tag stlsaifitlii ixract.a*
mfltrla* i n r e a l
had titaa I m m IIx Sana aa
MaSflfc
(Underscoring supplied)
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2a Addition, however, arid ia overruling the defease based
upon the Inadequacy of the price previously paid by tha bank at the
March $, 1958 §•!•» tha court said that t r m till tha facts *lt will
ha seen that the * * * bank has Ia a nanner paid all that tha lajid
was worth.* Continuing, tha court said that nere inadequacy o f price,
fraud or nnfnir advantage being absent , will not ha sufficient to war*
rant tha sitting aalda of tha sale.
ftililnai la ffftUh •lMttfc tianflar* nrftflmatloai* arfligi* ftcu- » i e s
As indicated above, tha following decisions are thosa In
which tho 11bank holiday* proclamations, orders, etc., wars part lnaat
hut Ia which tho court did not expressly pasa upon thair oonstlto~
t lonalitjr or validity. However, suoh deoislons nay bo considsred as
Involving implied judicial approval of suoh ragulatory natters.
i» fitartiflr ▼. n,"*i H*"k * T " irt «—
»■ xoa b*. m »
(L »., 1*86), tha b«M fiel«ry » f a trart aOmlalrtarad tjr tha bask
sought to reoover ineone derived fron sold trust. Funds of tho
trust had boon o«Msnlagiod with othor funds of tho bank, sow In tho
hands of a liquidating agent, and tho plaintiff was uaablo to trass
or identify tho funds claimed* fhis fact, together with tho *bank
holiday* proclamations of tho Governor and tho Preaidont and tho
ragulatlons of tho tJAltod States Treasury Department r sat rioting
payment of funds wara sot up in defense* Such eosnlngllng had oo*
ourrod prior to tho *bank holiday* and tho court hold that, uAdor
tho situation and laws of tho 8tatot this ehangod tho relationship
to dabtor aaA creditor. It was also point od out that tho plaiAtiff
had boon toAdorod 8 por cant of hor claim but that suoh was refused.
At this point tho oourt brlsfly sot out tho "bank holiday* orsat s
and indicated that tho bank was a member of tho Pod oral Reserve
System but was not licensed to reopen by tho Soorotary of tho Trees**
urr for normal bonking functions. Tho oourt than quoted United
States Treasury Dopartmant Regulation f? which permitted member
banks not so liooAsed to pay* UAdor cartain conditions, 5 por ooat
of depositors* claims* Said tho oourt]
•Haring bean plaood Ia tho o«togory of a depositor
or creditor of ths bask, the officers of the InstitutloA
were prohibited under the specific provisions of Beg*la»
tloA 87 from paying hor Cp&aintlff] in full. * * *
•It is onr opiAion that tho bosk officials properly
refused to hooor plaintiff* s demand for payment in full
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▼
. amaaaa (imrtr Ran*. » s.«. (24)
1070 (Mo.f 1956), a suit on the depositary bond of tha bank* It ap
peared that eaid bond was executed on May 5* 1951* for a period o f tiro
year** to secure county fund*. However, i t did not appear that the
bank actually *ede default in payment of county fuBdi until April 9P
1954* Plaint i f f contended that in »ar«h 1955, whil* eaid bond wee
in fu ll force and effect* the honk announced publicly that it would
not pay checks, etc* To thl® tha defendant countered with the etate*
m«nt that the court would take judicial not ice of the |>reeidefltial
*b*nk holiday* proclamations and the Inecutlve Order returning nonmember bank* to the control of the State banking authority* ale©
the similar note of the ftovernor o f Mieeourl* The court affinaed
thla Tie* and «al& that * l t i* apparent that tthe aforementioned
announcement o f the bank] * * * wee made* pursuent to *uch *bank
holiday*. In addition, the court eaid!
■In fact* such announcement of the bank could hare
no bearing on the aituotion
* 0 in view of the binding
character of the preclaSROtions of the Preeidettt and
Ooferwr**
The court pointed out that auch moratorium ended on March 11* 1951 ,
and that plaintiff had until May 5* 1955, on whioh to drew on the
bonk* Default* after that date would not reeult in liability to the
suroty on the aforoaentioned bond*
t* Bftrtit yanaagtaa tm I Tnut fin*, n n { 2d) 514
(Ot# of A*p»f
195T), the receiver of a national bank sued the
Truet Ooapany to recover a sum alleged to have been paid in violatlon of the *lawe and regulations governing the bank holiday in Mereh
1955* * It appear* that on March 5* 1955, one A obtained a cashier**
cheek for a sua on depoait with the national bank and on the eaae day
deposited *aid cheek with the defendant* Due to InaugusratIon Day and
the next day which wae Sunday* and the Preaidential «bank holiday*
proclamation* starting M©nd*y, March *, 1955* the national bank wae
never actually reopened for buainee* since the Secretary of the Treas
ury did not teeue it a license* Along with other sound 0 1*trict of
Oolwbia bank*, the defendant wae authorlned to reopen on March 14,
1955* However, pursuant to a genera! agreement among bank* result
ing from a meeting of the Washington Clearing House Association on
March 15* 1955, the defendant on the name day preeented the oaehier**
cheek to the national bank which paid ease. The claim of plaintiff
in this suit that payment of the check during the *benk holiday" per*
tod wae illegal* wae sustained by the court and reoovery allowed*
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la reaching its decision the tour* traced the events prior
to larch 6 , 1985, concluding that *Xt had plainly become imperative
for the president end the Congress to invoke measures far the protec
tion of * * * banks end their depositors** Iron thie point the court
traced the "bank holiday" proclamations, etc., end the enactment of
the Baergency Banking Act nf March 9, 1955* In conclusion the court
,
•aid that whether or not the national bank was insolvent at the time
of payment is imaaterlal *for in any event the payment was an infrac
tion of the rule prescribed by the Presidential Proclamation**
' Ib £ a x u z
CtlT at Xaalnr«. *s *• supp. iois (d .c ., s .y . ,
1989), « m n s » d IOC I. (2d) 69 (C.C.A., *4, 1989), affirm»d 60 S. C*.
79# (1940), the receiver of a national bank sought to recover the dif
ference between the amount which defendant city would receive as a 60
„ per cent dividend on deposits (paid to all general creditors) and the
amount actually paid to the defendant as indicated below* On March
4, 1988, the defendant had on deposit with the bank certain of Its
funds* On such date the Governor of Mew York, and on March 6 , 1988,
the President, proclaimed a "bank holiday** The bank was not per
mitted to restate normal business by the Secretary of the Treasuzy,
and on March 20, 1988, the Comptroller of the Currency appointed a
conservator followed by the plaintiff, receiver, on January 28, 1954*
The bank had pledged assets to seeure the deposits In question} and
after so d o s i n g but before the appointment of the receiver, the
bank honored checks (in amounts exceeding SO per cent of the deposits)
drawn by the city against such deposits to meat pay-rolls. The court
held that under the facto,the Ms* York and Federal laws, the bank wan
without authority to pledge assets for the deposits in question and
that each action was *lllagal end ultra vires.* The court also found
that the bank was insolvent on Marefc t, 1988} such being the ease,
the payments Joy the bank were prohibited by both the Motional Bank
Aet aad Regulation 9 of the Secretary of the Treasury issued pursuant
to Rneeutive Order of March 10, 1988* In this connection, and in
granting recovery as preyod, the court said!
•The Presidents Proclamation of March 6* 1988, Mo*
8059, * * • provided that the Secretary of the Treaausy,
with the approval of tho Preoldent, under an adopted
regulation, had power vto penult any or all of such bank
ing institutions to p o r f o m any or all of the usual bank
ing functions.* An Xxecutlve Ordor of the President of
March 10, 1985, Mo. 6078, {issued pursuant to section
8(b) * Trading with the lnany Act, aa emended, and sec
tion 4 of the Aet of March 9, 1988, permitting member
banks to transact business under regulations of tho
Secretary of the Treasury, with the approval of the
R e p r o d u c e d fr om th e U n c la s s if ie d
f©l
I D e c l a s s if ie d
Mr* Wyatt
H o l d i n g s of th e N a t i o n a l A r c h i v e s
^ _____________ _ _ _ _ _ ___________ __________
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*9*
President, *to*3 * * *, continued the *tatu* of bank* aa
In th* Proclamation aforaaaid, with certain modification*
here iaaaterial* tfodor the authority of th© Proclamation
and Bkaeutiv* Order aforaaaid, tha Saoretary of tha Treas
ury adeptod leffulatioa Ho# 9, which, among other things,
provided that ’
Aj^r Matiooal or at at* banking institution
may •*«rcie« Its usual banking functions to such extettt
aa it* situation shall permit and aa shall be absolutely
neaessary to moot th* need* of it* co w u n l ty for food,
m*dioin*, oth*r necessities of Ilf*, * * * for th* payman* of usual salari** and wag**; for n*o***ary curr*nt
•xpansas and for th* purpos* of maintaining •ajloyment,
and for other siailar essential purpose*,
*
provided
(S) no national banking aaeociation •hall «ng*g* 1a any
transaction u*d*r thl* Section which 1* la violation of
any 7*d*ral law * * *# lech banking institution and It*
directors and officer* will bo h*ld strictly accouatabl*
for th* faithful p*rfoi*anc*, with th* spirit and purpo**, a* wall a* tha latt*r of this regulat ion.* If th*
bank wa * las© It ©at whan thas* pay roll cheek* w*r* paid,
payment was in violation of th* etatut*, (Titl* 12f ***»
91, U*8,C*t * * • R*v. Stat* f 5242) and paymant of suofc
checks was prohibit ad; otharwi** thsy w*r* permitted payments."
la AafAiratMi ▼* Kljaa a m u AxmUftaot Ca>. 9 7 * Supp. 91*
(D*C», 7a, , 1954), th* reoeiYer of a national bank *®ught to r**ov*r
pr*f*r*ntlal payments allagad to hay* r**ult*d from payment by th* bank
of pay roll eheok* drawn by d*f*ndant during tha "bank holiday" pro
claimed by th* Pr*«id*«t a* of *ar«h l # 1.955* Th* admitted fast* dieeloaad that it was purouamt to regulation of th* i*or*tary of tha Trea*ury (permitting exerci*e of banking function* durln# *ba*k holiday*
wh*r* n*****ary) that tha bank honored th* cheek* In question. Th*
bank n*v*r reopened *ft*r th* »baak holiday* and on March 25 , 1958, a
oonserrator was appointed, followed by plaintiff, receiver, on B***mber
S, 1958* Th* plaintiff *ub**qu*ntly d**lar*d a 50 por c*nt dividend to
depositors and in this suit seek* to reoover 50 par cent of th* amoral
of th* afor«aantlon*d oheoka* Th* d*f*adast oont*nd*d that tha data
of 4**oiv*«uy wa* fixed as of Hareh d, 1955, dat* of th* "bank holi
day* proolamati©n» Bowev*r, th* court, in d*mying plaintiff1* motion
for jirigment, ®ni<i that *the Presidential Proclamation * * * was net
a declaration of insolvency of all banks * * * and It cannot so ba
held dotamlnatlT* of th* lnsolT«ney of this bank* * * * ft would
*a*tt * * * that in a permitted paym*nt of thl* oharaoter, th* appoint* m % of th* o<»s*rTator * *
would b* mor* cl*arly indioatiw* of
insolTonoy, *
*Ch«tJ th*t i* a fact whloh must b* pror*d,*
R e p r o d u c e d fro m th e U n c la s s if ie d / D e c l a s s i f i e d H o l d i n g s of th e N a t i o n a l A r c h i v e s
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JBtfcat
ttUt §§£I T
t o o 94 r* (2d) 9B6 (c *c .a .,
8rd, 195$) is apparently a subsequent deciaion ta the original o u t
O f Anfa«-h«td» T. Mla« aafrtT Apnllanc* Co.- 9 I. Sapp. 918 (B.C.,
Pa, , 1954) , noted above, In which plaintiff, receiver, waa denied
aotion for Jadgmeat. In allowing recovery of tha alleged preferen
tial payments, tha court said*
•Tha President* a Pro<slaaatioa closed all benks, sol*
vsat aa wall aa insolvent* for such banka aa wer* solvent
aad'capable of carrying on aortal banking operations, war*
it not for tho bank holiday, Treasury Regulation Ko. 10
permitted some activity} namely, payment for necessities
and for pay roll purposes* Tha axeaption waa nada for
tha purpose of easing tha restriotioas on banka which
could carry on except for tha bank holids^y* Thar a waa
no Intention through tha promulgation of Treasury Bsgalation »o. 10 to allow a bank which waa insolvent or In coatoiplatloaa of inaolvency to make payment a in coatraveatioa
of tha proviaiona of tha Wational Bank Act, 12 U,S,C.A*
| 91. Tha trial court has found upon tha evidence that
the baak waa In contemplation of insolvency on Kerch I,
lt®$* The bank waa therefore prohibited fro* making the
paymeata to the appellant # not by reason of the President's Proclamation, but beeauae of it* financial atatas
at the time*la II ri fianil IftBlE ft tra*l fia»» 182 So. 578 (La., 1954), one
V sought to have hie deposit in the baak applied by setoff against his
Indebtedness to the baak oa hie note. The bank* a aeaber of the Tederal Reserve Systsm, d o s e d pursuant to the "bank holiday" proolematioaa aad waa not licensed to reopaa by the Seeretary of the Treasury*
It is poiated oat that os Karol* 1®* 1951, the Seeretary* by regulation
pursuant to *the President*s proclamations declaring aad eoatta&iaf
the natioaal bank holiday*, authorised maaber baaks aot so reopened te
sake 0 per esat payaeats to depositors and creditor** Pursuant there
to, W received 8 per oeat of his deposit t but upon the 4ue date of his
note, larch £7, 198S, the bank refused to allow the setoff requested,
©©steading that such was prohibited by the President*s •baak holiday*
proclamations and the aforsmentioned Treasury regulation* trader the
State law the court held that normally the desired setoff would have
occurred* and in holding that W was entitled to the relief desired*
hia deposit being in excess of the amount of his note, the court
said thati
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•It Is clear, therefore, that •th* paring mit of
deposits* prohibited by federal action 1* ler*led solely
at th* pay lag oat of aotual monojr* and not at such fic
titious payment* a* arise from »*ttl*nent of account*
between banker aad depositor toy th* universal la* of co»pensatlon, or e*t*off, which takes plae* toy mere operation
of lav, aad aot tor th* withdrawal of actual fund* from th*
b*fltkS«*
V
also contended that to consider th* aforementioned Tr*aeury
regulation as prohibit lag th* d**lr*d setoff "would deprive him of hi*
property * * * la violation of tho * * * Federal Coast Ittitlon#* On
this *«or* th* court said that *uch contention was without merit sines
*w* ar* aot of tho opinion that tho regulation of th* Secretary of tho
Treasary ha*9 or was intended to have, aaoh *ff**tv fo r r*asoas al
ready a**lgn*d,*
Jeilst *• flnn i m i ™*1 "*”
lr ** r, s»pp. tit P.O., *.j.,
1989), involved a *uit against th* r*c*lv*r of th* national bank to
raoover the cost of o b t a i n adT*rt islng* Th* toaak was d o s e d pursuant
to Presidential "toaak holiday1* proclamations, a conservator was ap
pointed on March 25, 1988, followed toy th* r*c*iv*r on D*c«nb*r 1,
198*. On e*rtaln days tootw*«n March IS and March £8, 1958, tho*o adv*rtl*«*sftts w*r* published and, In subatano*, "th*y w*r* all dlr**t*d
toward th* oon**rr*tloa of tho a***ts of th* toaak aad th* w*lfar* of
all parties in lntoroat * * * aad dlscloso an earnest endeavor * * *
to prevent a oondltlon of chaos and as woll to roinforoo any weakness
which might toe disclosed In the toaak*s financial structure."
the receiver urged that upon the toaak* s closing aador tho
aforementioned proclamations *the officer* of th* toaak w*r* stripped
of all pow«r to otollgato tho toaak or cause Its assots to to* llatol*
*n their contractual commitments.” Za granting r*eov*ry th* court,
int*r alia* said*
■Th* specific issu* with which ws ar* h*r*
c*ra*d to*ars upon th* interpretation to too given tho
tax** *toaaklng transactions* and 'banking business.1
It would seem that these t * m * should too given thoir
usual and generally accepted moaning and shoald aot bo
liberally construed except Insofar as appllcatol* to th*
sp*o$fio purpo*** of th* proclamation la preventing th*
•fill th*r*ln sought to bo avoided, Obviously* thoso
proclamations did aot intend that offloor* aad agents
of toaaks should deceit their r**p*otive Institutions,
thus abandoning t h m la th* midst of tho financial
stoxm* nothing in th* proclamation relieved th* of*
flc*r* of bank* from d*ing all in th*ir powor to par**
toot their Institution* from noodles* loss*11
F
L
s>
Y
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Dealaiona relating to told transactions^ n a m a li, etc^
These decisions a ll involve, inter a lia , section 5(b) o f the
Trading with the Bumy Act and orders, e tc ., Issued thereunder, aa such
matters ralata to restrictions on the possession or holding o f gold oolns,
etc ., payment a in gold, and dealings with nationals o f foreign countries.
la M O T ! ftBfttt«HKorwraUaft»■,a&&* ▼* Ififii&t 85 i , (Ed) 2?5
(C.CJU, 2ad, 195$)f cart* den, 56 0. Ct. 946 (1956), tha Korporatton
sued to compel the defendant , it a bailee of United Stataa gold coin,
for tha return o f aaid gold. An Injunction pendente l i t e to enjoin
defendant from turning aaid gold over to the United Stataa, or its
- agent, was denied, and p la in tiff appealed. After the passage o f the
laergenoy Banking Act of March 9, 1955, p la in tiff deaired to tranafer
the gold held for i t by defendant to p la in tiff*a domicile in Switzer
land; but the Treasury Department denied defendant an export license
under the authority of Ixeoutive Order o f April 20, 1955, issued pur
suant to seat ion 5(b) o f the Trading with the £n*my Act, as amended.
Thereafter, application for a license under the Gold Reserve Act of
1954 and Treasury Regulations thereunder, to have the gold transferred
to the Federal Reserve Bank of Hew fork in custody for the Banfue Mationale Suisse, was also denied; and defendant was ordered to transfer
said gold to the federal Reserve Bank fo r the account of the United
States, Subsequent requests o f p la in tiff o f a similar nature were
also refueled, resulting in this suit.
Inter a lia , p la in tiff contended that "Neither the Act o f
March 9, 1955, nor any regulation valid ly made thereunder affected
the complainant1s right to hold or export the gold* and that " I f the
Gold Reserve Aot o f 1954 be applicable * * * , the relevant provisions
are unconstitutional, beoause (a) * * * improper delegation o f le gis
la tiv e power; and (b) thsy take * * * complainant1s property without
due process o f law * *
In affirming the judgment below adverse to p la in tiff, the
court, inter a lia , quoted from section 5(b) o f the Trading with the
Saemy Act, as amended by the Act o f March 9, 1955, and also from Sec
tion 11( h) o f the federal Reserve Act (section 5 o f the Act o f Xareh
9, 1955), and concluded with the statement that "The above aot was
held constitutional by the Supreme Court in" ff§m m ▼* .
294 U.S. 240, and Sort* v* JL£*t 294 U .f. 517, (actually involving the
Joint Resolution of June 5, 1955 and section ll(n ) o f the federal Re
serve A ot)• The court also held that even i f seotion 11(a) o f the
federal Reserve Act "were limited to acquiring gold from an owner within
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the Ufcitttd State#,* clearly section 5(b) Of the Trading with the Bne»y
Act, as Amended, and the aforement ioned Executive Order of April ^G,
1951, i*sued thereunder, were -not. m limited **and thus jmetified the
denial of an expert license to a foreign o n e r who would be obliged
to oos*« here in order to obtain delivery * * * or to tct through m
agent ^withim*'1* the United States, In any event* the coiirt eaid that
the Gk>ld Reserve Act of 1954 precluded plaintiff in the premise*,
Such Act,-eaid the court, wae not unconstitutional aa an unlawful
delegation of authority to the gfecret&ry of the freaeuiri «ad» **&der
the authority Of 'iTprt^ v, United Staten f 294 U.S. 817, pwtjnt to
p la in tiff "for the gold coin at ‘
the dollar face amount* * *
would
he lawful compensation * * * . According!y*. we think that there wee
no ground for bringing ft suit in equity. Nor do we gee that there
&m he recovery at lew * * *"
Msmm ▼.
4
iu Cq», *** u.s. zm (1935),
actually hold# that the Joint Resolution of /me 6, 1955, declaring
gold claufles in obiRations to be again** public policy, and providing for die charge of such obligati one on payment, dollar for dollar,
of legal tender coin or currency at the tine of payment, ie valid
and ©onetltntional a* applied to pre~e*iffting nonfederal obligation#*
In arriving at such holding, however, the court eaid that
such teaolution "was one of a eerie# of measure* relating to the oar*
r#noy* These measures disclosed not' only the purpose of the Oongre#e
but a!#o the situation which e*i#ted at the ti*se the * * * Resolution
was adopted * * **" In thie oonneetioni the court pointed out that
under section 5(b) of the trading with the *&«By Aftt of October 6,
lilt, the President declared a "bank holiday* beginning March 8,
1955, and that at the seme time the Seoretary of the Treasury, with
the President*8 approval, issued Instruction# to the fnited Statee
treasurer "to make payment* in gold * # * only tinder license issued
by the Seoretary,* Subsequently, Congress passed the Emergency Bank*
ing Aet Of Mareh 9, 1955, affirming prior Executive action and broad
ening,. by amendment, power* under the trading with the Inen^r Aet and
by eeotion U fa ) ft* the Federal Reserve Act, gave the Seoretary of
the Treasury power to require delivery of gold coins, etc. It 1# them
pointed out that the president, by order, authorised the reopening of
bank* and by thi* .and other orders further regulated transaction*,
etc. tm gold* The Act Of Hay 12, 1955, authorised the President to
f ix the weight of the gold dollar, "then,* *aid the court, "followed
the Joint Reeolution of June 5, 1955," and subsequent Executive Order*,
soae issued under the authority.of the trading, with the ttetmy Act, a#
emended, relating to gold transactions, etc. "On January 50, 1954,
the Congress pae#ed the *Gold Reserve Aftt Qt 1954 * * * which * * *
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rat i f led and confirmed a i l the aetlone, regulations and orders taken
or mada lay the President and tha Secretary of the Treasury uader tha
Act of Xarch 9, 1953* or uadar * * * tha Act o f May 12, 1958 [at® .]
* * *• Oa January 31, 1954, tha Presldeat issued hia proclamatioa*
fixin g the weight o f tha gold dollar* At thia point t tha court aaidt
•We have aot attempted to summarize a ll tha provi•ioaa of these measures* Wa are aot conceraed with thair
wisdom* The questloa before the Court la oae o f power,
aot o f policy. Aad that question touches tha v a lid ity
o f these measures at hut a single point; that Is , la re~
la tio a to the Joint Resolution denying effect to *gold
Glauses* la existing contract a* Tha resolutloa must,
however, he considered la its le g is la tiv e setting aad
la tha ligh t of other measures la pari materia.11
x» I n ▼' tta lfd Stataa. m 0.8. 880 (1955), tba p la in tiff,
ownar of a Unit ad Stataa bond (faoa aaouat 110,000) providing fo r m meat of principal aad iaterest "ia tfaitad States gold cola o f the pres*
eat staadard value* sued to recover for aa alleged loss resulting from
defendants refusal to redeem said bond **except by payment o f 10,000
dollars la legal tender c u r r e n c y * S u o h refusal was "based oa the
Joiat lesolutioa o f * * * June 5, 1918* providlag, la part, that
every obligation, including those o f the Ualted Stat as, heretofore or
hereafter incurred, shall be discharged **upoa payment, dollar fo r dol
la r, la any cola or ourreacy which at the time o f payment is legal
taader for public aad private debts*** The court sustained p la in tiff*s
coat eat ioa that, as applied to these facts, such Resolution was me ou
st i t ution&l, saying!
•We coaclude that the Joiat F©solution * * * , la
so far as it attempted to override the obligatloa created
by the bond la suit, waat beyond the congressional power.*
However, ia holding that defeadaat had not suffered any dam
age fo r which he was entitled to recover, tha court made the following
observation:
** * * Before the change in the weight Of the gold
dollar ia 1954, gold coin had beea withdrawn from circula
tion. The Congress had authorized the prohibition o f the
exportation of gold cola aad the placing o f restrictions
upon traasactloas ia foreign exchange* Acts o f March 9,
1955, 48 Stat. 1 [a»ergency Banking R elie f Act, $ 2,
amending Trading with the laemy Act , | 5(b), 12 xr*6*C*A.
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| 95a]{ January 50, 1954, 48 Stat, 55? (Sold Reserve
Act of 1954* { 12, 51 TJ.S*C*A* f 824] * Such dealings
could bs had only for limited purposes and under 11*
cease* Xxsoutlve Ordere of April £0* 1955 (Ho* 6111) ,
August 28, 1955 (No* 8280), and January 15, 1954 (No*
8580), 12 TX*S*C*A* | 95 note] Regulations of the Soars*
tary of tha Traasury, January 50 and 51, 1954* That
aotlon tha Congress was entitled to taka by Tlrtua of
its authority to doal with gold oola as a medium of o»»
ohaaga* Aad tha raatralat thus impossd upoa holdors of
gold sola waa lncldeat to tha limitations whloh iaharad
la thalr ownership of that ©ola aad gavs thsm ao right
of aatloa**
Continuing, tha court saidi
** * * We eaaaot say, la view of tha conditions
that exieted, that tha Goagreee having this powar exer
cised It arbitrarily or eaprloloualy, Aad tha holdar
of aa obligation, or bond, of ths United States, pay*
abla la gold oola of ths foxmer standard, so far as
tha raatralat upoa the right to export gold oola or to
aagaga la tranaaotlons ia foreign exchange is concerned,
waa la ao bottor easa thaa tha holdar of gold sola it*
self*
•In ooasldorlag what damagea, If any, tha plain*
tiff has suatainad by tha allogad braaah of his bond,
it la haaea Inadmissible to a a s m a that h# waa entitlad to obtain gold sola for raeouras to foraiga
markets or for dealings la forslgn exchange or for
othar purpoaaa contrary to tha control over gold oola
which tha Goagreaa had the powrto exert, aad had exerted,
la Ita monotaxy regulation. Plaintiff*a damages could
not bo aaaoaaod without rsgard to tha intaraal economy
of tha country at tha time tha allagad braaah o#$w*e&*”
Ths court aonelndad by saying that *the payment to tho plains
tiff of ths amount which ha demands C$1 *89 *|a tha present curraaay f«»
ovary dollar provided by the bond9] would appear to constitute, not a
reooupaeat of loaa in any proper aenae, but aa unjustified enrichment*”
*a Argonaut Mlalag fit* UtitUca» 78 i, (2d) 584 (c *c .a ., 9th,
1955) , the company aought to enjoin defendant, limited States Attorney,
from prosecuting plaintiff for violating aa Executive Order under see*
5(b) of the Trading with the Xnaay Act, aa amended, aad an order of
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the United States Treasury Department under section 11(a) o f the federal
Reserve Aot, both relating to the possession, etc, o f gold* I t appears
that the p la in tiff owned certain gold and that pursuant to the Executive
Order mentioned above* a return thereof was nade to the Secretary of
the Treasury who refused to grant p la in tiff a license to hold or dispose
of said gold* It also appears that* pursuant to the aforementioned order
o f the Treasury Department * p la in tiff tendered said gold to the Secre
tary o f the Treasury who refused to pay *th® then prerailing market
price o f #54*06 per ounce * * ** tout * * * offered the arbitrary price
o f #20*67 per ounce * * "* alleged to be a denial o f "just compensa
tion** P la in t iff sp ecifically alleged that the foregoing statutes
aad orders "are unconstitutional aad void*, and sought r e lie f under
the rule "that a criminal prosecution under an unconstitutional statute
w ill be enjoined when that is essential to the safeguarding o f property
righ ts."
The court held that p la in tiff*s allegations did not bring it
within the aforementioned rule* Said the court*
•** * * Aside from the statement of general and un
supported conclusions, the case presented by the b i l l was
the ordinary one of a criminal prosecution which would af
ford appropriate opportunity for the assertion of appel
lant* s rights* So far as the b i l l disclosed* nothing
more than a single prosecution was in contemplation* a
point which the d is tric t attorney emphasised by his dis
claimer, on the hearing below* o f a*y intention to in sti
tute any further prosecution against appellant until his
rights* constitutional or otherwise* had been adjudicated
in the pending criminal proceeding*1"
In garbs* t . United States. 114 7* (2d) 5 {C*C*A*, 9th* 1940)*
cert* den* 61 S* Ct* ITS (1940)* the defendant was indieted and convicted
o f w illfu lly * etc* acquiring United States gold coins without procuring
a license in accordance with the Executive Order issued under seation 5(b)
o f the Trading with the Snemy Act * as amended* Such Order forbade the
acquisition o f United States gold coins except under license; provided*
that collectore o f rare and unusual coins may acquire* without a license,
gold coins having recognized special value to collectors o f rare and un
usual coins* Such Order also adopted the penal provision o f the afore
mentioned Aot* Defendant contended that under the United States Treas
ury Department regulation issued pursuant to section 4 o f the Gold Re
serve Aot o f 1954* he had a right to acquire such coins without a l i
cense and that such Act aad regulation repealed the Trading with the
Sneay Act and the Executive Order mentioned above* The aforementioned
Ft
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Treasury ragulatIon provided that gold oolns of recognixed special
value to collectors o f rare and unusual oolns may k* acquired without
a Ho ana# therefor* In overruling thle position and affirming tko
conviction, th# court, Inter a lia , said that th# Trad tog with ths Snwy
Act covers jxnalsimattt for doing cartain prohibitad acta wfail* tha Qold
Reserve Act turns its attention to the praotioal aattar of getting th#
gold into tha poasession o f the United Stataaj tha two Acts aa applied
to this case are not conflicting and thus no such contention *s to ropeal can be austalned.
In EttTftM v. gttltl fittill, 114 T, (2d) 696 (C.C,A., 9th,
1940), the defendant wan indictod for alleged violations of aootlon
5(b) of tha Trading with tha X&oqr Act, an amsaded, and aact ion 5 of
tha Gold Reserve Act of 1954, It appears that defendant "not being
a person permittod t© acquire gold bullion by any regulation Issued
by the Secretary of tJae Treasuiy and approved by the President * * *,
did * * * wilfully * * * acquire certain gold bullion * * *** De
fendant contended that "the Trading With The Insny Act, as amended,
ioas not make It an off«n»e to acquir# gold bullion* and that til#
Gold Reserve Aet does not prescribe a criminal penalty. The court
indicated that the lattor position
bo ooncedod, b«t that by
Ixeoutlve Order issued under section 6(b) of the Trading witb the
Insny Aot, as amended, does corer gold bullion* In holding the la*
dlctne&t to be sufficient to charge an offanaa denounced by the
Trading with the Xnamy Act and the Executive Order lasued thereunder,
the oourt oeid that section IS of the Oold loserve Aot of 1954 *•»preealy ratified a ll orders issued by the president undor the not of
March 9* 1 9 W # (which amended section 6(b) of the Trading with the
Jnawr A et), Including, necessarily fth# Executive Order in question]
*
Hence we find no difficulty in holding that order is m l i d
and effective] and as has boon soon it prohibits tha acquisition of
gold bullion [ « * * J * * **•
In Pulley v. Halted Stateer U 4 J. (2d) 696 (C.C.A,, 9th,
1940), tha defsmdant was convicted of conspiring to acquire or to
transport gold in violation of the Gold Reserve Act of 1954* The in
dictment was intemdsd to charge an offense under the federal orininal
statute covering conspiracies to o w a i t offenses against tha United
States, etc. Also, the Indictment oiaracteriaed the acquisition and
transportation of gold as being in violation of the Hold Reserve
Act of 1984 and the Treoaury IDepartment regulation® thereunder, Bern*
ever, ths court held that sinoe the Indlctmoat evidenced the pleader’
s
delusion that "every unlicensed acquisition or transportation of gold
violates" such Act and regulations, such Indictment was lnsufflolsst.
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Til* court pointed ©ut that conceding this* th* 0nit*d S t a t o contends
that th# indictment charged a conspiracy to violate sootion 5(b) of the
Trading with the Eneny Aot , as amendedt and Ix*outiv* Order issued there
under* Howeverf in rejecting thia contention aad reversing th# eonvi ca
tion* the court h*ld that such Act and £x*outive Order *r*lat*, not to
gold, as such* bat t© gold coin* gold bullion and gold certificat*e,
neither of which is mentioned in the indictment."
atenert ▼, jBa.Uai.1! Cnurt ar liM in r* 46
*2*
(Calif.* 1955) * raised th# quest ion as to whether th# delivery of a
cheek (subsequently cashed) to the Justice of the peace constituted
a sufficient security for the issuance of a writ of atteohaicat* Under
th© California law it was provided that In cueh oases the Jmsticee
could accept * in lieu of sureties* "an equal s u b of money in Unit#d
States gold coin**
In holding that the for agoing security was adequate in tha
cirowutanoee, th# court said that "an objection based upon failure
to dopes It geld coin* was not available* since by Ixeeutlve Orders
issued under section 5(b) of the Trading with the Snemy Act and see**
tioa U ( n ) of the federal Reserve Act "tha use of gold coin for such
purposes was prohibited and made impossible**
S tftjg lirrllrrt IrtiaM t Bfca*. rtfl. ▼. £utiJU, 59 p. ( u )
(Calif.* 1956) * involved a suit by the ban* for pesseesion of realty*
It was oontsaded in defense that the sal# at which bank sought to ecquire the preperty was a nullity due to Illegality of the notioe
thereof* Such notice stated that th* sale would be at public auction,
etc* ••for eaeh (payable in United fitat*bGold Coin at time of Sale)f•*
This defense tree based on the fact that at th* tim* of eel*, February
16, 1954* th* Inecut ive Order (pursuant to seat ion 5(b) of the T r a d
ing with the Knoay Act, as amended) and orders of the Treasury Depart
ment forbade transactions in gold, etc*
The court held that suoh notice was not invalidated as claimed,
since under th# Joint Resolution of June 5* 1955, it was provided that
"every obligation
* * shall b* discharged upon payment £ia} * * *
legal tender** This leg!slation, in effect, struck from such notioe
the provision relating to payment in gold*
T b fn r.
*«<■"«* 20 H.T.8. (8<) «X9 (1940), Hair*
of th* deceased* Raaberg, through the Consul aaaeral of loreey* claim
that their distributive shares from the estate should be paid over to
suoh Consul on their behalf. Such heirs, however, resided in Morwayj
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but the Consul sought to Justify such distribution under the terms o f
a treaty with Norway* In forbidding such a ttrib u tio n tha court
point ad out that tha claim might ba disposed o f on tha ground that
ftu&dar present conditions [German occupation o f Norway] ha [tha Consul]
doas not possass powar to transait to tha distributaas [under such
tre a ty ]» since he is not racognizad by the authority which has con
tr o l, o f tha territory in which th*y [h airs] reside," However, the
court said that an additional consideration compels the same result*
Thus, the court pointed out that in 1940 section 8(b) o f the Trading
with tha IInemy Act, as amended, was further amended so as to author*
ize the President to regulate or prohibit dealings, etc*, in property
in which any foreign state or a national or p o litic a l subdivision
thereof has any interest, by azqr person within the United States*
The court also pointed out that this 1940 amendatory legisla tio n
also confirmed the Executive Order o f April 10, 1940, and regulations
thereunder, which prohibited, without a license, transfers o f the type
herein desired. The court held that such Executive Order "prohibits
In unmistakable terms the payment o f the distributive shares * * *
either to the Norwegian nationals themselves or to the Consul * * *
on their behalf**
In Barafiia ▼» national City Bank of K u Tort. U H.Y.S. (2d)
69 (1940), tha plaintiff, a law Toric lnportar of Belgian ruga aought
to replevy shipping documents relating to a certain rug shipment* The
contract between the parties called fo r payment in Belgian francs;
and the vendors1 bank in Belgium wrote defendant that such shipping
documents should be made available to p la in tiff upon collection by
the defendant o f a sight draft fo r the sale price o f the rugs shipped,
credit to be given accordingly* Upon notification o f receipt o f the
shipping documents by defendant, p la in tiff applied for and received
a license from the United States Treasury Department in accordance
with Executive Order o f January IS, 1954, issued under section 8(b)
o f the Trading with the En«ny Act, as amended, permitting p la in tiff
to make payment in the necessary amount o f Belgian frames to defend*
ant m behalf o f the Belgian vendor* Subsequently, this license was
amended so as to require the Belgian francs to be held in an account
in defendant bank "in which a national o f Belgium has a property inter*
est within the meaning o f the Executive Order
* of April 10, 1940,
as amended**
Defendant*s refusal to turn over the shipping documents on
p la in tiff*s tender o f the Belgian francs was based primarily upon the
fact that the amendment to the license forbade a tender o f payment
within the intent o f the sales contract*
F IL E COPY
R e p r o d u c e d fr om th e U n c la s s if ie d / D e c l a s s if ie d H o l d i n g s of t h e N a t i o n a l A r c h i v e s
DECLASSIFIED
A uthority |T- 0 • (0 5 C) |
#01
Mr. Wyatt
-20-
|a graatin* plaintiff* • m o tio n Tor Judgment, tha court hald
that tha ooatraotiag part la* B*u*t ba da*ra#d to hart daalt with #ach
#tfc#y lit ooat*a^latioa of tha axiatanoa of thaaa raatrlotioaa uad ar
tha laws of th# E A l t M Stataa, to t,ha #*t#at that au«b r# « tr lo tloot
aad asy aubaa<iueat euteadnfinta tharaof
* * might affaat tha uaa or
trauaiaaioa o f tha procaoda o f tha aale whan oonaunoatad ia thia
country by th# dalirary of th# marchaadlaa .aa agaloat pay*ant ia th#
form agr##d upoa batwaaa tha partiaa la thair contract."
RaapactfUlly,
Jaro»a V* Shay
J~WS;umm
GEMHAl CGUIiijtxi>UtlUo
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority
(0501
sRBO'D IH miss Z
August 8, I9I4I
Mr. Wyatt
Mr.^hay
Coattltutlonality o f
^bank holiday" proclaaation*, eto
The oonetitutioniility of the Presidential "bank
holiday** proclamation and ordert, the regulations issued
thereunder and tha lav upon which all such matteri wara bated,
hat baan sustained in several daeitlont of tha Fadaral courts.
Thut , in a tuit by tha receiver of a national bank
to recover an attesement upon tha bank*t thares, tha substance
of ona dafanta wat tha unoonatltutlonality of tha Presidential
"bank holiday" proolaaiationt and tha Bxeeutive Ordara relating
to (1) regulations of tha Secretary of tha treasury undar which
bankt might reopen, and (2) tha appointment of oontarratort for
book! not reopened. In overruling tuah defense, tha court hald
that "there ean ba no doubt at to tha validity* of tha mattert
alleged to ba uneontti tutl onal . Banley v» Corwin, 15 F. Supp.
396
C*# X. T*i 193^)* afflme2TBy the (Sirouit Court of
Appeals in 89 F. (2d) 1008 (1937).
In a tuit tijdlar to tho ona jutt not ad* tha thara*
hoi dart of tha dafonet national bank sought to attablith a
deprivation of property without due proeett of law retulting
largely from the Presidential "bank holiday" pro el ana ti on 1 and
tha fixeeutlve Order relating to regulation! of the Secretary of
the Treaaury under whloh bankt sight be reopened* Bowever, the
court ruled againtt the thareholdert tlnee tuah Presidential
aotlon "wat a reaeenable ttep e • e authorited by" elatute which
"wat conttltutlonal«" Smith at al. v. Withe row, 102 F.(2d) 638,
(C.C.A., 3rd, 1939).
In another deeltlcn, tha court held that the inability
of a State bank to sake repayment of depotitt oauted* in part,
by the Pretidentlal "bank holiday* proclamation! and the ixeoutlve
Ordere relating to (1) tha reopening of bankt on authorisation of
the proper authority, and (2) the contervatorthlp of bankt not
authorited to reopen, operated to discharge the turoty on the bank*t
depotitary bond* Said the court» "there can be no doubt at to the
validity of thlt legitlation"i it wat "conttltutlonal and valid."
City of Satt Cleveland v. Fidelity k Deposit Co. of Maryland,
5 r. g u p p v ^ i gr^iir/sT: Qhi*r m rr-—
----------- —
JWS/nlg
OFriiife,
Dictated by..........
Respectfully,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority p x ) .
(0 5 6 |
..m n x z h s e c tio n
Y *1 'i ^>45*
Hay 13* 19^0
Files
Mr. Sraead
tfoder tho present requ iraaonts of tha Treasury*
Federal f i i s e m banks have to obtain authority from the
Seeretary of the Treasury for the issuance of a license
to State banks upon admittance to msobership in the Federal
Reserve System* Sinoe formal admission to membership has
to be deleted at times until tal© graphic or other advice
is reeeived from the Treasury Department authorising the
Federal Reserve bank to issue the license* and sinoe the
granting of sueh authority appears to be largely a matter
of form, I asked Under Seeretary Bell whether there mas
axqr objection on the part of the Treasury to giving the
Federal Reserve banks blanket authority to issue licenses
to existing State banks upon their admission to membership
in the Federal Reserve System* I understand that this
matter was referred to Treasury counsel*
Shortly before his leaving the office for a fm
days. Hr* Bell asked Mr* Heffelfinger to tell me that the
Department preferred not to make any changes at this time
in existing procedure* Mr* Heffelflnger stated that Mr*
Bell thought this question might be reopened for consider*
atien at a later date.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
Authority ^ .'0 ♦ 10 S O }
F e d e r a l R e s e r v e B a n k o f S a n Fr a n c i
: ^
May 11, 194.0
f
Mr. Leo Paulger,
Care of the Board of Governors
of the Federal Reserve System,
Washington, D. C.
Dear Leo:
k.
I am sorry iy was necessary for you to
draw to our attention jthat we had inadvertently
recoiranended to the Secretary of the Treasury the
issuance of a license to the Placer County Bank,
Auburn, prior to the approval of membership by
the Board of Governors.
I can assure you it will not occur again,
Yours very tfuly,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
,
Authority p x ) .
(0 5 0 1
"'D IN FILES SECTION
M A Y 3 -1940, >!'■> a
_____
Qttrt/sff
*"'*
IS 4 0
Baar Ira*
*
? M a is as Infoimal mot a* and I hops that you will
r#ply in fciad* Xou mil! raaall tfeat laat fall a* had soma
oorraspo&da&ea ragardiag tha prooadura in aor.neatloa with
tha laauaaoa ©f #.io**aaa to itata baAMa Joining tha Syats®
and that in my lattar o f Oetobar 2 0 # atatad that it ama fait
•that tha raoommaadation. ©f a' t**arva baak to tha Sacratary
of tha Traasury r©«ar4img tha ismaaoa of a lieaasa shomld
follow, rathar than pracada, approval ©f aa application for
maabarahip** ?hia is tha praoadura followed by all of tha
othar *ad©ral Baaanra Banks# I notioa, howavar, that yon
forwardad your raooafiaaftdatton to tha Saoratary of tha fraaamry ragarding tha lsausnca of a lloonaa to tha Flaoar County
Bank, A&ba:ra> California, at about tha
tima that you
forwardad tha asabsrship applioatton of tha baak to tha
Board* Aooording to our f ile s , tha iacoama© of tha liaaaa©
«ii author!xad by tha Traaaary ©& April 1?* Isom thia diatamo©
it aamas that soaabody along tha lisa overlookad our pravioua
aorraapoadaac®, particularly ay 1sttar o f Ootobar 20. la that tha
oasa?
Biaoaraly,
Lao E* Paulgar
Mr* I m Clark*
XFadaral Rasarva Bank of Safi Frame!so©f
Sam fraaotsoo, California*
RFL:owb
/
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority ^ A )» IQ 5Q |
TV
REC'D in files section
MAY3 -1 9 4 0
Hi a ft
^
April 11, 1940 •
Secretary of the /Treasury,
Washington, D. C/
Dear *Sir:
We have recommended to the Board of Governors
of the Federal Reserve System that the Placer County Bank,
Auburn, California, be admitted to federal Reserve member
ship. We unqualifiedly recommend that it be granted a
license and that such license be delivered by us to the
Placer County Bank upon admission to membership without
the formality of filing an application. We await your reply.
Very truly yours,
Isigned)
Ira Clerk
f Read over the phone by Clarence Smith, assistant National
Bank Examiner.)
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority p d .
(Q 5 Q I
f
Under pressat practise m m State ssmher hanfce are retire#
to be lieenaed Hr the Secretary of the Treasury. While not entirely
clear, the authority of the Secretary of the Treasury in r t q t d t i a g
that licenses be Issued to State member ban^a is probably derived
from tlie Executive Order of Marah 10,
la September 1939 I ....
raised this fmamtioii infernally with Hr* Sherbondy, am attorney in ;
the general counsel's office of the Treasury* At that time he inti*
sated that the staff of tim Treasury had considered eliminating tie
raqmircmaa* of licensing member banks but stated, that im H e w of
the present laternational situation, it would be unfortunate to m i s *
question ms to tlie right of the Secretary of the Treasury to re
quire lisenses for State banks upon admission to membership im the
fhe practice of lieensing new State member hanks originated
as follewsi
Im Kay 1333 & Federal Beeerve ban& inquired of the Secretary
of the Treasury whether a State talk, whieh has heem authorized hy
State authorities to perform any aad all of its usual hanking functions,
except as otherwise prohibited, aad vhish is later admitted to mmnbership is the Federal Reserve Systws, is required to secure a lleense
from tha Secretary of the Treasury authorizing it to continue performance
of sueh functions* The treasury replied as f o l l o w
■State bank upon admission to membership In Federal
Reserve gystaa mast secure lleense froa the Secretary of
Treasury to perform all usual and normal hsnldlag functions
axttept as otherwise prohibited. Under stand Federal Reserve
Board only admitting to membership sueh hanks able to
operate without restriction* Lieense will he Issued upon
your recommendation**
A copy of this reply was furnished to the Board whieh in turn
transmitted it to all. Federal Reserve hastes (Trans, 1804, Hay 24, 1333).
Tha Board* a correspondence in corniest ion with this .point appears to have
been lost*
The procedure for licensing nmw State member banka by the
Secretary of the Treasury i* as follows: After a State h&afc malcas ap
plication far membership in tho % s t s m the Federal Beserve hank either
writes or wires to the Secretary of the Treasury reeom-mendimg that a
lieense he issued to the hash in question when it has been admitted to
membership. This telegram or letter is referred to an Assistant Chief
Reproduced from the
Unclassified I Declassified Holdings of the National Archives
d e c l a s sif ie d
National Bank Examiner ia the o ffic e o f the Comptroller of the Currency
where a le tte r is prepared for the signature o f the Acting Secretary o f
the Treasury addressed to the federal Reserve bank directing such bank
to issue a license to the bank la question " i f and when a ll conditions
of membership have been completed and the bank has been admitted to the
Federal Reserve System.”
*The Executive Order of March 10, 1933 reads in part as follows:
virtue o f the authority vested in me fcy section
5(b) of the Act of October 6, 1917 (40 Stat, L ., 411) as
amended by the Act o f March 9, 1955, and by section 4 of
the said Act of March 9, 1953, and by virtue of a ll other
authority vested in me, I hereby issue the following Execu
tiv e order.
•The Secretary o f the Treasury is authorized and em
powered under such regulations as he may prescribe to permit
any member bank of the Federal Reserve System and any other
banking institution organized under the laws o f the United
States to perform any or a ll o f th eir usual banking functions,
except as otherwise prohibited.
*
*
*
*A11 banks which are members o f the Federal Reserve
System, desiring to reopen for the performance of a ll usual
and normal banking functions, except as otherwise prohibited,
shall apply for a license therefor to the Secretary of the
Treasuxy. Such application shall be file d immediately through
the Federal reserve banks. The Federal reserve bank shall
then transmit such applications to the Secretary of the
Treasuiy. Licenses w ill be Issued by the Federal reserve
bank upon approval of the Secretary of the Treasury. The
Federal reserve banks are hereby designated as agents of the
Secretary o f the Treasury for the receiving o f application
and the issuance of licenses in his behalf and upon his in*
structions."
Section 4 o f the Act o f March 9, 1955 provides in part as fo llows:
*Xn order to provide for the safer and more e ffective
operation of the National Banking System and the Federal He*
serve System, to preserve for the people the fu ll benefits of
the currency provided for by the Congress through the National
R e p r o d u c e d fr om th e U n c la s s if ie d / D e c l a s s i f i e d H o l d i n g s o f t h e N a t i o n a l A r c h i v e s
DECLASSIFIED
A uthority ^ A ) - 1 0 5 0 1
Banking
and tha Federal Reaarre
and t# re~
U m interstate caaaarce
tha bartaa* and obatructioaa
revolting tra m tha receipt o p an unaound or
baaia
of depoaite aubject in withdrawal "Igr ahaaii* tiring Btiefc
*»ergea>cy p#rlod aa tha Pr#»id«it of the United Stataa
Igr $I<a&£a*»tii3n May praaeribe, no member bank of the
$«$*&*& fiaaerve S y e t m shall transact asy banking baainaan except to
extent and aubject to sueh regula
tion** liadtationa w A I reatriettona aa- wap ba preaeribed
by the Secretaiy a# the Treaanxy, with the approval «f
Hm* 'f»a#idaii&**
toft
The doubt aa to the authority of fha Secretary
tha Treasury
«na3l liaanaaa i# baa ad upon 'tha fact that ha has not iaauad
aif regulation* on the aubjeat ‘
Nrfth 'tha approval of tha Preaideat*.
H s U * however. «#«iM ba done If it waa anticipated that his authority
w onl& be d r u m in queation im connection with a proapective caae.
wdHtdniCi)&hitkL'§utrn^
Dictatedk t„
AtCC: ah.: mmcd
fro m th e U n c la s s if ie d / D e c l a s s i f i e d H o l d i n g s of th e N a t i o n a l A r c h i v e s
DECLASSIFIED
A u t h o r it y
D -
(0 S O }
Jo— ary IT,
1940
Qos— rofttl— with Mr, Charloo
W* C»lIijoi r* liooaL*iac of
Tko Filoo
ifer. %«fct# saaoral C— oooX
ihi I'fv
Ckarloa W. Calli**, n u ill| l< ft lo*al r t y r m r t a t l w «f'tko
Baak of A w r U t I* T. A t* A., of *aa fr m i w t
••ll** —
m tk*
tki • aormiag n l *# ka4 * i w i m ’
t t l o ^ tko mNltiiii
or itftlak 1» M l forth bol— i
m -*
Ifcr, C*1 U » « otorto4 ky ooariog tkast ko « t t M O— * *frOo loga!
*#*$— ** Eo aai4 that kl* opioi— ho4 ho— rm qomata4 — 'tko qwooti—
ahothar it i• i t M m r j for • nwv ttato boa* applying for aoafrtfraki* In
tho Fo4or*l Itiw r n iyat— to. afetaia a Xi*oa— t W » tk* Saacotory of tk*
rt'o***
1 t*X4 hi* that tho ■■■— r t# tho
1* *y*0** 3* axproaoaA
oaaao — ryrioo « U w m t U to k m akoro tk# lo*al r f d m m t i»* I o*$*
C*«ta4 that ho M
W i t t H S(b) of tko Tratta* wltk tk* r>— y Aot mb *.
«*«ti— 4 or tk* rurtiiiy Eoofciat Aot *f
*,
Bo oad4 tkht bo h*4 tk—
«r* hi* «ad h*4 alr**4y r — A tt— ■
I th— fMfc — t* QTplaln tk*t» *a4or tho pro»1— tloam 1w m 4 by tho
f>r*oii— * at tko tiw* of tko baak h©114ay — 4 ok&ok kaw* *>*t y*t i>M«
rimhtl *r ro^*oX*d, aoofcor baotiba *ro farbi Ad— to traooar> Mgr ba>*t*>a*a
oxoopi to tko oat— t po— ittod by ll»oao«« l«owo4 % tko 3aoratory *C
tk* Trooottrj.
Boar4
■r, Collloj *aqpro*o*4 on-prioo at tkio aa* laqmirad ahothor tko
off**** * £t«t# talk for ■— * orrfilp «1 tkoot * lif o^ o hovij^
oobM
boon la — ! ♦
X rof11o4 D o t tko 0our4 oolObA opyowo o bosk fov ■oofeorokJL^
prior to tb* 1 looooaa of * llooaooi M l tkot # lo ynotloo, o boak lo aot
fi*Mt»toA *# ooo^Ioto it* onkorokip o t i l it k«* aWtil— i * U m a o t r m
tko ^o*ro»*iy of tk* f r m m m t f *
CellljM tkoo o * M d f l tkfct, if tko
m -,
ko« to (#t * lio— o
fro * tk* ooorr tory of t^^ Troooory# it ai^kt mo w oll work tko w t t « r « t
witii tk* Soorotary lo tko f i r ^ plaoo Mkt tkot tko b u k "ooolAa't *ff«r4
to pvt lt o o lf ont oa o 11j*> mmd. m tko riok of lo aio ( it* iopooit I s w r *
<114 ooi p*4at ovt to 1^#. Collioo tk »t a M M b o r lmo«ro4
bonk ioo* not oooi to bov* « liooeoo, too— oo k# oickt kovo — tr— 4
it a* o au«o*tl— that tho bonk ik— 14 r#*r$o*i*o a* 4k it— okar Wok.
farthor— r*# X k*4 oapllaitljr atorto4 tkat *— aibor b—
;i,
^H.Oot
.
.
,K-"j fhyJJuL
... i/;Vt!: f
um
■ '•■
R e p r o d u c e d fro m the U n c la s s if ie d / D e c l a s s if ie d H o l d i n g s of th e N a t i o n a l A r c h i v e s
DECLASS]^
Authority
l) -
(
Q3
0j
._____ _________ :____
to obtain l l i > w *m i X f«lt that ha
t* W ab la t* raaah kin c*»
aaeolualaoa or at l « u t M k » hi* omm iiiqulrla* about mmmmibmr inoorod
Ifc** C o lli** %b** m U 4 to knew U m axaat » aaha*1aal atapa by
ofclah a 11a— o 1* laraad and afeathar tfc* la a rd 's r*f«la tla o a or
tlc M « f — aharahlp r^ p d r* » * » ly *fe itto d 9tcto baaka to obtoia U o w m m .
I
did not bava th* datail* at 17 fingortipa, bot oaafarrad with
Mr. ffla^flald aad o*llad Mr* Colllm* book aad adviaad bl* a* folia** *
fkoro ia aotfciM* In tha Board*• racolatiaaa ar ooadltlaoa of a*»>
barahip requiring Stato a a ^ a r books ta afctaia liaa&aaaf bat tha »**rd ha a
ls««tod gonoral iMtruatiaaa to tha rodcral I m w w baak* andor wfciofe tbay
do J**fe iaaua rotforal l«|«n« basic rtaak ta oowfy adadttad Stato baaka totill «ooh bamka hava obtaioad lloaaaae. 1 tali hi* that, aftor th* feootfd
haa appranrad a book far aoMb*r>hl|i, tha Padoral fiooorto baak talofcrapha
tha ^aaratary af tha Troaoary raoo— anilaft that a lioatxaa ba looood ta
th* bonk* ajad tha $aor*tary aoada tha Fadaral Eoaarvo bank % tolocra$fci*
rayly atrthariilat It ta iaoao * liaanaa to th* baak# a* a$0*t for tho
Saarartory of th* Traoaury. tha Fadoral Jtooor** bamk will aat laaao th*
lateral kaaarva book rtook aafcil th* laanaaaa af tha llaoaoo baa boon
aatharlaad*
1
t*ld Ife* Colli** that tha Todoral Roo*rv* bank* hava no
blanka* authority ta looao aoch llaaaaaa a* adnata far th* S*orotory af
th* fraaoary bet laaoa tfeaa caOj apaa apaalfl® aotharlaatlo* by th* $ooro~
tary la aaafe Individual aa*a.
Mr. Collin* tbaa m h w M ,
"That oOfta It 0? ooaplataly*.
Mr. Collin* had rayaitai a aapy af kofalation 1 in it* lataat
roviood far* and, aftar arrahgiMC f«t him to M a d to thi« afflaa 4*r a
oopy, tha ooavaraatlan «** taridaatad.
Woltor ^ t t ,
Jaaaral Coonaal.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
DECLASSIFIED
Authority
]yA )*
10501
REC'D IN FILES SECTION
LICEKSItG POUTER Q3T SECRETARY OF THE TREASURY
'
SEP 1 8 1942 „
m m A NEW STATE OTMTffiR BAIK
rfh,
*1 -7 0 .
Presidential Proclamation of March 6. 1955.
The power
o f the Secretary o f the Treasury to license member banks originated
with the Presidents Bank Holiday Proclamation o f March 6, 1933,
which was issued tinder section 5(b) o f the Act of October 6, 1917, and
which, after proclaiming a four-day bank holiday, provided in part as
m m
llDuring such holiday, excepting as hereinafter provided,
no such banking institution or branch shall pay out, export,
earmark, or permit the withdrawal or transfer in any manner
or by any device whatsoever, o f any gold or s ilv e r coin or
bullion or currency or take any other action which might
fa c ilita te the hoarding thereof; nor shall any such banking
institution or branch pay out deposits, make loans or dis
counts, deal in foreign exchange, transfer credits from the
United States to any plaee abroad, or transact any other
banking business whatsoever*
nDuriug such holiday, the Secretary o f the Treasury,
with th© approval of the President and under such regula
tions as he may prescribe, is authorized and empowered (a)
to permit any or a l l of such banking institutions to per
form any or a l l o f the usual banking fu n ctions,..."
Emergency Banking Aet o f March 9* 1933* — The Act of
March 9, 1933 approved and confirmed this Proclamation and amended
the statutory provision under which i t was issued. Section 4 o f the
Act o f March 9, 1933, provided in part?
MIn order to provide fo r the safer and more ef
fec tiv e operation of the national Banking System and
the Federal Reserve System, to preserve fo r the people
the fu ll benefits o f the currency provided fo r by the
Congress through the National Banking System and the
Federal Reserve System, and to re liev e interstate com
merce o f the burdens and obstructions resulting from
the receipt on aa unsound or unsafe basis of deposits
subject to withdrawal by check, during such emergency
period as the President of the United States by proclama
tion may prescribe, no member bank o f the Federal Reserve
System shall transact any banking business except to such
extent and subject to such regulations, limitations and
restrictions as may be prescribed by the Secretary o f the
Treasury, with the approval o f the President*..
http://fraser.stlouisfed.org/
19-0’
Federal Reserve Bank of St. Louis
/ r
- / A a *^
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DECLASSIFIED
,
Authority
-
(0 5 0 1
2-
President -IaI Proclamation of March 9, 1955» - On March 9,
1955, after passage of the Baergency Banking Act, the President issued
a Proclamation continuing the Proclamation of March 6 in effect until
further notice* The relevant provision of the Proclamation was as
follows:
w *** all the terms and provisions of said Proclamation
of March 6, 1955, and the regulations and orders issued there
under are hereby continued in full force and effect until
further proclamation lay the President
Executive Order of March 10. 1955* - On March 10, 1955, the
President issued an executive order which specifically stated that it
was based on section 5(b) of the Act of October 6, 1917 as amended by
" the Act of March 9, 1955, and on section 4 of the Act of March 9, 1955,
in addition to all other authority vested in the President* The other
relevant provisions of the Executive Order were as follows:
"The Secretary of the Treasury is authorized and em
powered under such regulations as he may prescribe to per
mit any member bank of the Federal Reserve System and any
other banking institution organized under the laws of the
United States, to perform aaay or all of their usual bank
ing functions, except as otherwise prohibited*
”
The appropriate authority having immediate super
vision of banking institutions in each State or any place
subject to the jurisdiction of the United States is author
ized and empowered under such regulations as such authority
may prescribe to permit any banking institution in such
State or place, other than banking institutions covered by
the foregoing paragraph, to perform any or all of their
usual banking functions, except as otherwise prohibited.
HA11 banks which are members of the Federal Reserve
System, desiring to reopen for the performance of all usual
and normal banking functions, except as otherwise prohibited,
shall apply for a license therefor to the Secretary of the
Treasury* Such application shall be filed immediately
through the Federal Reserve Banks* The Federal Reserve Bank
shall then transmit such applications to the Secretary of the
Treasury* Licenses will be issued by the Federal Reserve
Bank upon approval of the Secretary of the Treasury. The
Federal Reserve Banks are hereby designated as agents of the
Secretary of the Treasury for the receiving of application
and the issuance of licenses in his behalf and upon his in
structions.”
/
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States of State bank: entering the Federal Reserve System, From a review of the material quoted above it will be seen that the
reopening of any State member bank is specifically covered and, under
the Executive Order of March 10, 1933, such reopening requires a
license from the Secretary of the Treasury* The situation with re
spect to a State bank that wishes to enter the Federal Reserve System,
however, is not as clear* Is it required to obtain a license from
the Secretary of the Treasury?
Member banks "desiring to reopen”* - The provision of the
Executive Order of March 10, 1933, that specifically refers to licenses
is equally specific in referring only to member banks "desiring to
reopen". Since a State bank that wishes to enter the System does not
"desire to reopen”, it can well be argued that it requires no license.
In further support of such a conclusion it could be argued that such
*" a result would accord with the general purposes behind the bank holi
day and the related proclamations and executive orders*
Other provisions related to question* - It must be noted,
however, that the paragraph regarding banks "desiring to reopen" is
not the only one that must be consulted here*
It will be seen that the Proclamation of March 6, 1933,
which was continued in effect by the Proclamation of March 9, 1933, and
which is still in effect, contains a flat prohibition against any bank
carrying on any banking operations, and this prohibition is subject to
the condition that:
.the Secretary of the Treasury, with the approval of
the President and under such regulations as he may prescribe,
is authorized and empowered (a) to permit any or all of such
banking institutions to perform, any or all of the usual bank
ing functions ..."
It is to be observed, further, that section 4 of the Emergency
Banking Act of March 9, 1933, contains a similar general prohibition, so
far as member banks are concerned, which is subject to relaxation "by
the Secretary of the Treasury, with the approval of the President".
In view of these prohibitions, it would seem that the member
bank would have to get them relaxed, from some source, before it could
transact business. It may be noted, too, that both section 4 of the
Emergency Banking Act and the provision under which the bank holiday
proclamations were issued contain criminal penalties*
The Executive Order of March 10, 1933, may be pointed to as
the authority under which the Secretary of the Treasury, by means of
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individual licenses, grants the necessary relaxation of the prohibi
tions that are contained in the proclainations and in section 4 of the
Emergency Banking Act. In addition to the provision mentioned above
regarding member banks 11desiring to reopen”, the Executive Order of
March 10 contains a provision that:
"The Secretary of the Treasury is authorized and
empowered under such regulations as he may prescribe to
permit any member bank of the Federal Reserve System and
any other banking institution organized under the laws
of 'the United States, to perform any or all of their usual
banking functions * * * 11
Arguments against licensing power of Secretary of Treasury. - In the light of these provisions (and assuming their continued ef
fectiveness), it would seem that only three arguments could be of
fered against the power of the Secretary of the Treasury to license
a new State member bank* One argument might be that if the secretary
of the Treasury acts under section 4 of the ©sergency Banking Act his
action is invalid because he does not grant the license:
lf... to such extent and subject to such regulations,
limitations and restrictions as may be prescribed by the
Secretary of the Treasury, with the approval of the
President".
Another argument (and one similar to the first) might be that if the
license is issued directly under the authority given by the Proclama
tion of March 6, 1933 (as continued by the Proclamation of March 9,
1933) it is invalid because it is not issued by the Secretary of the
Treasury "with the approval of the President and under such regula
tions as he may prescribe”. The third argument (also similar to the
first) might be that if the Secretary of the Treasury acts under the
Executive Order of March 10, 1933 the action is invalid because he
does not act nunder such regulations as he may prescribe”.
Answers to arguments. — In so far as the first and second
arguments depend on lack of approval by the President, they would seem
to be effectively answered by the Executive Order of March 10, 1933,
which certainly seems to grant such approval. It would seem to make
no difference that such approval is granted in general terms rather
than in individual cases.
It is not clear whether the reference in the Proclamation
of March 6, 1933 to ’
’
such regulations as he may prescribe11 refers to
regulations by the President or by the Secretary of the Treasury. If
it requires regulations by the President it would seem to be satisfied
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by the Executive Order of March 10, 1933, If it requires regulations
by the Secretary of the Treasury the situation is not quite so clear,
but it probably would be satisfied by a statement which was issued by
the secretary of the Treasury in response to an inquiry and was set
forth in the Board’
s telegram of May 24, 1955 (Trans. 1804) to all
Federal Reserve agents. The correspondence relating to this telegram
has been lost, but the quoted advice from the Secretary of the Treasury
reads in part as follows:
wState bank upon admission to membership in Federal
Reserve System must secure license from the Secretary of
Treasury to perform all usual and normal banking functions
except as otherwise prohibited...
This statement by the Secretary of the Treasury also would
"seem to satisfy any need for regulations under the Executive Order of
March 10, 1953.
Of more fundamental importance, however, is the question
whether these various provisions for regulations require the issuance
of regulations or merely authorize such issuance* It may be noted that
all the provisions refer to regulations that »mayn be issued* Moreover
it would' hardly seem a reasonable construction which would require the
issuance of regulations even though they would serve no useful purpose.
In the circtaastances, therefore, it would seem to be the better view
to consider the regulations to be merely permissive rather than mandatory.
Conclusion that Secretary of the Treasury has license power
over new state member bank. - In view of the foregoing it seems proper
to conclude that the Secretary of the Treasury has the power to license
a State bank that is being admitted to the Federal Reserve System.
In addition, it seems important to consider what would be
the result if he did not have such power. If we assume that the bank
holiday proclamations are still in effect, such inability of the
Secretary of the Treasury to license a new State member bank would not
mean that the bank could enter the System without a license. It would
mean that the bank could not enter the System at all.
It will be recalled that under the Proclamation of March 6,
1955 (as continued by the Proclamation of March 9, 1953) and section 4
of the Emergency Banking Act of March 9, 1933, there is a general prohibi
tion against any member bank transacting business, and this prohibition
would apply to the bank unless it was relieved by a license from the
'Secretary of the Treasury. This aspect of the question would seem to be
important not only as a practical matter, but also in helping to under
stand and interpret the relevant proclamations and executive orders.
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Tr
CIVIL SAM3TI0KS AVAILABLE ASAD38T A MTIONAI RECVD IN FILES SECTION
GOTJWm-mhSUKES AVAILABLE TO THE BANK :nrvJ—,SEP 1 8 1942
>
4/0, _
Possible Action by Secretary of the Treasury
w
~ ~ '
: ................
^
v a.
Revocation of license* • The Secretary of the Treasury
could revoke the license which every member bank is refuired to j ,
have under the Presidential proclamations and executive orders p A Js tjy -f / t s
which were issued in connection with the 1933 Bank Holiday ant
' '
which are still in effect*
Each such license specifically provides that* "This
license may be revoked in whole or in part by the Secretary of the
Treasury at any time." The grounds for such revocation are not
specifically stated, and they apparently would be the general
grounds of preserving the soundness of the nation* s banking and
financial systems, protecting depositors, etc*, oh which the rele
vant statutes, proclamations and executive orders are based* It is
not clear whether the license could be revoked without giving the
bank a hearing, although it probably would depend upon the circum
stances*
Refusal to deposit United States funds in bank* - The
Secretary of the Treasury could withdraw all deposits of United
States funds from the bank and refuse to deposit more* This would
mean that all purchases of Government securities by the bank would
then have to be mad© for cash (or by check or draft) rather than by
the method now often used of giving book credit*
Possible Action by (Comptroller of the Currency
Appointment of a conservator* — Under section EOS of the
Baergency Banking Act of March 9, 1933, the Comptroller of the Cur
rency can appoint a conservator for a national bank ^whenever he
shall deem it necessary in order to conserve the assets”of the
bank* (This provision is permanent legislation contained in Title
II of the Act; the title that is designated the "Bank Conservation
Act*")
Appointment of Receiver. — The Comptroller of the Currency
can appoint a receiver for a national bank if he is ^satisfied of the
insolvency" of the bank, or if certain specific facts exist, such as
failure .of the bank to pay any outstanding judgment or to dispose of
shares of its own stock* The Comptroller is directed to appoint a
receiver for any national bank whose deposit insurance is terminated^
13L
OjfrTbjL.
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as indicated below* Whenever the Comptroller of the Currency appoints
a receiver to liquidate a national bank he must appoint the Federal
Deposit Insurance Corporation as such receiver unless adequate provi
sion has been made for payment of the bank's depositors*
Forfeiture of franchise for failure to comply with National
Bank Act* - Under section 93 of Title 12 of the U.S.C.A., the franchise
of a national bank may be forfeited, in a suit brought by the Comptroller
of the Currency, for failure to comply with the national Bank Act*
Such a suit is a legal proceeding rather than merely an ad
ministrative matter and. is brought directly by the Comptroller* Under
section 41(16) of Title 28 of the U.S*C*A*, the proper place to bring
the suit apparently would be the district where the national bank is
located*
Assessing shareholders to cover capital impairment* - Under
section 5205 of the Revised Statutes the Comptroller of the Currency
can require a national bank to assess its stockholders an amount neces
sary to make good any impairment of the bank’
s capital, and if stock
holders do not pay the assessment their shares may be sold at auction*
(Although the regular double liability on national bank stock has been
repealed, it is understood that the Comptroller's office takes the posi
tion that the provisions for assessments to cover capital impairment re
main in effect*)
Publication of examination report* - Under section 21 of the
Federal Reserve Act the Comptroller of the Currency can publish the re
port of his examination of the national bank or of an affiliate if his
suggestions or recommendations are not complied with within 120 days*
Ninety daysr notice of publication must be given.
Requiring bank to charge off items* - Without going so far
as to proceed against the bank for insolvency or even for a capital im
pairment, the Comptroller of the Currency may direct the bank to charge
off items which he believes to represent losses. There is no specific
statutory provision for such charge-offs except the general prohibition
against a national bank paying dividends in excess of available undivided
profits, and the Comptroller's authority on the subject and his means of
enforcing such authority are not entirely clear. Bowever, in Thomas v*
Taylor (1912) 224 U.S. 73, 82, the United States Supreme Court said that
failure of the bank to make charge-offs when so ordered "is a violation
of the law”, and the court held that persons who bought bank stock in
reliance on a statement of the bank that failed to reflect such ordered
charge-offs could recover damages from the directors. Furthermore, if
the Comptroller ordered the bank to charge off certain items as losses
and the bank later published a statement that was contrary to such order,
the officers and directors might be subject to criminal penalties for
publishing false statements*
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Possible Action by Board of Governors of the Federal Reserve System
Forfeiture of franchise for failure to comply with Federal
Reserve Aot» — Under section Z of the Federal Reserve Act, the franchise
of the national bank could be forfeited in a suit, brought by the Comptroller
at the direction of the Board of Governors of the Federal Reserve System,
for failure to comply with the Federal Reserve Act*
It should be noted that the provision provides for a regular
legal proceeding, rather than an administrative hearing, and that the suit
must be in the district in which the national bank is located*
Removal of officers or directors» — Upon certification by the
Comptroller of the Currency that an officer or director of the bank has
continued to violate the law or to engage in unsafe or unsound practices
after warning, the Board of Governors may, under section 30 of the Banking
Aot of 1953, remove the officer or director from office* Notice and op
portunity for hearing are required, and publicity is specifically forbidden*
Penalties for failure to divorce securities affiliate* — If the
bank refuses to terminate a n affiliation with a securities company, the
Board of Governors may, under section 20 of the Banking Act of 1933, assess
a penalty of $1,000 a day, recoverable by the Reserve bank of the district,
for each day of violation* The Reserve bank may collect the penalty by
suit or otherwise, and presumably could charge the bank’
s account* If
violation continues for six months after warning by the Board, the bank*s
franchise may be forfeited in the manner previously described*
Revocation of holding company*s voting permit* — If the hold
ing company affiliate of a national bank violates the Banking Act of 1933
or the agreement which it entered in order to obtain a voting permit, the
Board of Governors may revoke the voting permit, under section 5144 of the
Revised Statutes, after givii^ the holding company notice and an opportunity
to be heard*
After such a revocation^ no national bank controlled by the
holding company may receive Government deposits or pay any dividends on
stock controlled by the holding company* The franchise of all national
banks sa controlled may,-in the discretion of the Board of Governors, be
forfeited in the manner previously described*
Suspension from Federal Reserve credit facilities* — Under
section 4 of the Federal Reserve Act the Board of Governors could suspend
the national bank from the use of the credit facilities of the Federal
Reserve system if it finds that "undue use is being made of bank credit
for the speculative carrying of or trading in securities, real estate, or
commodities, or for any other purpose inconsistent with the maintenance of
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sound credit conditions.11 Reasonable notice and an opportunity for a
hearing are required* (Similar provisions are in sections ll(m) and
13 of the Federal Reserve Act.)
Possible Action by Federal Deposit Insurance Corporation
Termination of Deposit Insurance. — The Federal Deposit In
surance Corporation, after giving the Comptroller of the Currency an
opportunity to obtain correction and also allowing a hearing to the bank,
could terminate the deposit insurance of the bank for "continued unsafe
or unsound practices11 or for violation of law. When the national bankas
insurance is thus terminated, the Comptroller of the Currency must ap
point a receiver for the bank, and the receiver must be the Federal De
posit Insurance Corporation unless adequate provision has been made for
payment of the bankfs depositors.
Possible Action by Reconstruction Finance Corporation
Use of contractual powers* - If the Reconstruction Finance
Corporation owns stock in the bank or has loans to the bank, the Recon
struction Finance Corporation’
s contract gives it certain powers which
it might exercise over the bank.
Possible Action by Securities and Exchange Commission
Action to prevent violation of Regulation tf. - If the bank
violated the Board’
s Regulation U, Loans by Banks for the Purpose of
Purchasing or Carrying Stocks Registered on a National Securities Ex
change, the Securities and Exchange Commission could investigate the
matter and also could bring suit to enjoin the violation.
Suspension or termination of registration of holding company’
s
securities on exchange. - If a holding company of the bank has securities
registered on a national securities exchange and files false or misleading
reports with the Securities and Exchange Commission, the Commission may
investigate the matter and may suspend or terminate the registration of
the holding company’
s securities on the exchange. Such investigation
might extend to an investigation of certain matters involving the sub
sidiary national bank, (if the securities of the national bank were
registered on a national securities exchange the Commission*s power to
hold investigations and to suspend or terminate the registration of
securities would apply directly to the bank. However, only one bank, the
Corn Exchange Bank Trust Company of New York, has securities registered
on a national securities exchange. The few other bank stocks that are
traded on exchanges are traded under certain exemptions which have been
granted by the Securities and Exchange Commission.)
#
*
*
*
*
Possible Counter-Measures by the Bank
Suit to enjoin action by agencies. — In addition to simply
contesting whatever actions might be brought against it by the super
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vising agencies, the national bank might take the initiative and bring
suits against one or more of the agencies to enjoin such agencies from
carrying out threatened actions against the bank which are unlawful,
arbitrary or oppressive*
Under sections 41(16) and 110 of ^itle 28 of the U.S*G*A.,
as interpreted by the United States Supreme Court in First National Bank
v. Williams. (1919) 252 U.S. 504, the proper place for the bank to bring
such a suit to enjoin the Comptroller of the Currency would be the district
where the bank is located*
Suits by the bank attempting to enjoin any of the other agencies
probably would have to be brought in the District of Columbia* Certain
provisions in section 12B( j) of the Federal Reserve Act might raise some
question as to whether the bank could not sue the federal Deposit Insurance
Corporation in the district where the bank is located, but it is believed
that these provisions would be held to apply only to suits against the
Corporation in its capacity as receiver of a State bank rather than to
suits of the type here involved*
Leaving the National Bank System* — As a means of escaping
action by one or more of the Federal agencies, the bank might convert
into a State bank, and the bank might proceed to do this at the same
time that it was bringing suit against one or more of the Federal
agencies*
Since there is no specific statutory provision for the con
version of a national bank into a State bank, the usual procedure is
to transfer all the assets and liabilities of the national bank to a
State bank (either one already in existence or one established especially
for the purpose)* This would require a meeting of the stockholders of
the national bank*
The effect of the conversion, so far as concerns the bankfs
relations to the Federal supervisory agencies, would depend on whether
the bank converted into a State member bank, an insured nonmember State
bank, or a noninsured State bank. As indicated below, the Federal De
posit Insurance Corporation probably could prevent the conversion to a
noninsured State bank. However, the Federal authorities have very
limited power to prevent the national bank from converting to a State
member bank or insured no m e m b e r State bank, and such control as they
do have is the rather indirect power to prevent the State bank from
being a member of the Federal Reserve System or from having its deposits
insured, rather than the direct power to prevent the bank from leaving
the Ifetional Bank System. The effect of each such conversion and the
authority of the Federal agencies in the matter are indicated briefly
below.
Converting to State member bank. —
If the State bank to
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which the assets and liabilities were transferred wished to operate as
a State member bank of the Federal Reserve system, it would be subject to
the power of the Secretary of the Treasury to withhold or revoke the
license which all member banks are required to have. In addition, the
Board of Governors could refuse to permit the State bank to enter the
Federal Reserve System, or, if the State bank was already a member of the
System, it probably would be subject to a condition, of membership which
would require the approval of the Board of Governors before the State
bank could assume the assets and liabilities of the national bank.
_
~ So long as the State bank was a member of the Federal Reserve
System its deposits would be automatically insured, but the Federal
Deposit Insurance Corporation, after giving the Board of Governors an
opportunity to correct the matter and also allowing a hearing to the
bank, could terminate the bank's deposit insurance for "continued unsafe
or unsound practices" or for violation of law, and suoh termination would
require the Board of Governors to terminate the bank's membership in the
Federal Reserve System.
Converting to insured nonmember State bank. — By transferring
its assets and liabilities to a State bank that was insured, but was not
a member of the Federal Reserve System, the national bank could escape
the licensing power of the Secretary of the Treasury, could escape the
powers of the Comptroller (forgetting for the moment his position as a
director of the Federal Deposit Insurance Corporation), and eould escape
the powers of the Board of Governors of the Federal Reserve System.
However, the bank could not become an insured nonmember State
bank without obtaining the approval of the Federal Deposit Insurance
Corporation; and if it was already such an insured bank the Federal
Deposit Insurance Corporation, after giving the State banking authori
ties an opportunity to correct the matter and also allowing a hearing to
the bank, could terminate the deposit insurance of the bank for "con
tinued unsafe or unsound practices" or for violation of law.
Converting to noninsured State bank. — If the national bank
transferred its assets and liabilities to a State bank that was non
insured, the bank could escape the licensing power of the Secretary of
the Treasury, and the powers of the Comptroller, the Board of Governors,
and the Federal Deposit Insurance Corporation --- but the Federal
Deposit Insurance Corporation probably could prevent such a transfer.
The power of the Federal Deposit Insurance Corporation to prevent such
a transfer is not entirely clear, but the situation may be briefly
indicated.
Section 12B(v)(4) of the Federal Reserve Act requires every
insured bank to obtain the approval of the Federal Deposit Insurance
Corporation before transferring assets and deposit liabilities to any
noninsured bank. No particular penalty is provided for violation of
this provision other than the general penalty of terminating the
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-7offending bank1s insurance, which., obviously, would not fit the needs
of the case. However, a reading of the entire statute shows an inten
tion to have insured banks remain subject to insurance assessments and
to certain other responsibilities for two years after their insurance
is terminated* Furthermore, the Federal Deposit Insurance Corporation
is given general power to sue and be sued and is given specific authority
to bring suit to recover the insurance assessments that are due by anyinsured bank.
Accordingly, on reading all these provisions together it
would seem that if the national bank attempted to transfer its assets
to a noninsured bank without the approval of the Federal Deposit In
surance Corporation and thus to escape the two-year period provided by
the statute, the Federal Deposit Insurance Corporation might be able
to collect the assessments from the national bank on the theory that no
effective transfer had been made, or it might be able to collect the
assessments from the noninsured bank on the theory that in the circum
stances if the noninsured bank accepted the assets it took them subject
to the burden of paying the assessments, ^here would also seem to be
some possibility that the Federal Deposit Insurance Corporation might
be able to maintain a suit to enjoin the national bank from making such
a forbidden transfer of assets and liabilities to a noninsured bank*.
@FedFRASER