The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F e d e r a l R eserv e B oa rd,
W ash in gton , D. C,
Dear S i r s :
S u b je c ts
S e a t t l e S c h o o l D i s t r i c t W arrants
R e fe r r in g t o mir l e t t e r s o f .May 2 7 th and
June 3 d , we e n c lo s e copy o f l e t t e r from Mr. Frank S .
B a y le y , d a te d June 9 th , and co p y o f ou r r e p l y , d a te d
June 1 7 th , c o n t in u in g d i s c u s s i o n w ith r e g a r d t o th e
F e d e r a l R e se rv e Bank p u rch a sin g S e a t t l e S c h o o l D i s t r i c t
W a rra n ts.
Y ou rs v e r y t r u l y ,
E n c lo s u r e s
..
..
«•*-.
..
#
V
HA*
iv”
%
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Reproduced from the Unclassified I Declassified Holdings of the National Archives
<hm« 17* 1938
Mr# Frank 6* Bayley,
P res., Board o f D irectors,
School D istrict lumber 1,
Central Building,
S eattle, Washington.
Dear Sir* Baylays
V
I bare recalled and carefu lly considered the
contents o f your le tte r o f June 9, 1933 relative to your
application fo r the purchase o f School D istrict Warrants
by this hank. I have also read the le t t e r addressed to
you upon th is subject by Mr. Ira Clerk, Deputy Governor
o f th is Bank, and the memorandum opinion dated June £,
1935 addressed to Mr. Clerk by our counsel*
I can assure you that i t i s our d isposition to
be o f the utmost assistance to the cornualties embraced
within this D istrict during these somewhat trying times,
and that i f we could discover a way hy which we could take
the action which you request within the lim itations o f the
law under which the Federal Reserve Baziks operate, we
would do so* In view o f the opinion expressed by our
counsel* however, that the Warrants issued by the fch ool
D istrict are not e lig ib le fo r purchase by a Federal Reserve
Bank under the provisions o f the Federal Reserve Act and
the Begulations o f the Federal Beserve Board, I must adtis e you that we can not stake the investment which you
suggest.
I t seems clear to me that the instruments under
consideration are not o f the character referred to In
le ctio n 14 (b) of the Federal Heserve Act* They have no
d e fin ite maturity whereas the Act provides that Warrants
purchased must have a maturity from date o f purchase o f
not exceeding six months. It Is also provided that War
rants purchased must be Issued in anticipation o f the c o l
le ctio n o f taxes or in anticipation o f the receipt o f
assured revenues. Even the most lib e r a l construction o f
the instruments under consideration do not come within
that cla ssifica tion * While I t i s true that neither the
Federal Beserve Act nor the Begulatlons o f the Federal Be
serve Board s p e c ific a lly provide that Instruments o f the
character referred to in Section 14 (b) must be negotiable
ftr. Frank 8. Bayley
June 17, 1932
In form as well as In fact* you w ill readily understand
that th is Bank cannot invest I t s funds in instruments which
may beco*e subject to equities and rights o f s e t -o ff in
behalf o f prior parties* the foregoing i s agr aature con
clusion a fter having given the entire matter the most care
fu l consideration*
I aay say however, that a ll correspondence in
connection with this matter has been forwarded by copy to
the Federal Reserve Board. I f , in the opinion o f the Federal
Reserve Board or i t s counsel, the conclusions which we have
reached ia this natter are considered erroneous or unduly
technical, we w ill no doubt be so advised in which event
we shall be glad to give the Batter further consideration*
lou rs very tru ly,
Governor*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
SEATTLE PUBLIC SCHOOLS
O f f i c e o f th e S u p e rin te n d e n t
C e n tr a l B u ild in g
S e a t t l e , W ashington
June 9 th 1933
Mr. J . U. C a lk in s , G ov ern or,
F e d e ra l R eserv e Bank o f San F r a n c is c o ,
San F r a n c is c o , C a l i f o r n i a .
Dear Mr. C a lk in s :
I r e c e i v e d y o u r l e t t e r o f June 3 r d , s ig n e d by Mr. C le r k , Deputy G ov ern o r,
and a d d re sse d t o me as P r e s id e n t o f th e Board o f D i r e c t o r s o f S c h o o l
D i s t r i c t No. 1 , and w ish t o thank you f o r th e c o n s i d e r a t io n g iv e n t o ou r
a p p l i c a t i o n f o r th e p u rch a se o f S c h o o l D i s t r i c t w arra n ts by th e F e d e r a l
R eserv e Bank. N a t u r a lly , we a re much d is a p p o in t e d in th e c o n c lu s io n
re a ch e d in Mr. C l e r k ’ s l e t t e r , b u t i n v iew o f th e im p orta n ce o f th e m a tter
t o th e C it y o f S e a t t l e , we a re n o t d is p o s e d t o a c c e p t h i s l e t t e r as f i n a l .
You may r e c a l l th e somewhat famous remark o f Mr. John Ryan re g a r d in g
E lih u R oot as an a t t o r n e y .
Mr. Ryan s a id th e r e a s o n he l i k e d Mr. R oot
as a la w y er was b eca u se when o t h e r la w y e rs t o l d him what he c o u ld n o t d o ,
Mr. R o ot fou n d a way f o r him t o do what he wanted t o d o .
T h is a t t i t u d e
tow ards p r e s e n t day prob lem s has no f i n e r exam ple than t h a t o f P r e s id e n t
R o o s e v e lt who seems d e te rm in e d , where he d i s c o v e r s a p r e s s in g n e e d , t o
remedy i t , even i f in d o in g so he i s o b l ig e d to o v e r r id e th e t e c h n i c a l i t i e s
o f co n s e r v a tis m and th e ea sy answer t h a t i t c a n ’ t be d on e. We f e e l t h a t
th e p r e s e n t s i t u a t i o n o f S c h o o l D i s t r i c t No. 1 i n t h i s ' c i t y p r e s e n t s such
a need t h a t i t i s e n t i t l e d t o have th e m ost e a r n e s t c o n s i d e r a t i o n , r e g a r d
l e s s o f t e c h n i c a l i t i e s , p r o v id e d a s a f e , sound and p ro p e r b a s i s o f r e l i e f
can be d i s c o v e r e d .
We a re n o t i n c l i n e d t o argue about th e l e g a l o p in io n o f Mr. Agnew, b u t do
f e e l t h a t , g r a n t in g h is c o n c lu s io n t o be sou n d, i t i s s t i l l p o s s i b l e f o r
th e F e d e r a l R e se rv e Bank, in l i n e w ith th e G overnm ent’ s g e n e r a l a t t i t u d e
a t t h i s tim e , t o a f f o r d us r e l i e f w ith b o th p r o p r ie t y and s a f e t y .
I,
t h e r e f o r e , ta k e th e l i b e r t y o f making some comments on th e two o b j e c t i o n s
o r p o in t s w hich seem t o sta n d in th e way o f y o u r fa v o r a b le a c t i o n on our
p e titio n .
With r e f e r e n c e t o th e o b j e c t i o n t h a t ou r w arra n ts a re n o t is s u e d in
a n t i c i p a t i o n o f th e c o l l e c t i o n o f t a x e s , o r o f th e r e c e i p t o f a ssu red
re v e n u e , i t seems t o me th a t t h i s i s o b v io u s ly s u p e r - t e c h n i c a l .
The
S c h o o l B o a r d ’ s annual b u d get i s b a sed e n t i r e l y upon i t s a u t h o r iz e d ta x
l e v y , upon p r o p e r ty w it h in th e S c h o o l D i s t r i c t , and upon i t s p o r t io n o f
s c h o o l fu n d s c o v e r e d by th e County and S t a te t a x l e v i e s .
T hese two
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-
r-"
2
-
l a t t e r amounts a r e e s tim a te d f o r us try th e p r o p e r a u t h o r i t i e s o f th e
County and S t a t e , and l e v i e s a re l a i d on t a x a b le p r o p e r t y f o r th e
p u rp ose o f r a i s i n g them. We a re o b l ig e d by la w t o l i m i t our e x p e n d i
t u r e s t o t h e com bined sum o f th e s e t a x r e v e n u e s.
As a m a tter o f f a c t ,
th e ta x e s a re p a id in a t v a r io u s tim es d u rin g th e y e a r , a c o n s id e r a b le
p o r t i o n b e in g p a id in th e S prin g and a n o th e r c o n s id e r a b le p o r t i o n
w a itin g u n t i l th e l a t e F a l l .
B ecau se o f t h i s sp rea d in th e payment o f
th e t a x e s , th e D i s t r i c t i s g e n e r a l l y o b l ig e d t o g o on a s o - c a l l e d
"w arra n t b a s i s " in th e l a t e S prin g o r Summer. The w arra n ts v/hich a r e
drawn by th e D i s t r i c t a r e , a s you have o b s e r v e d , o r d e r s from th e County
T re a s u re r o f th e payment o f th e f a c e o f th e w arran t ou t o f s c h o o l fu n d s
a v a ila b le t h e r e fo r .
P le a s e remember th a t no w arran t i s drawn f o r an
amount in e x c e s s o f th e ta x e s l e v i e d and p a y a b le .
T h e r e fo r e , r e g a r d le s s
o f th e f a c t th a t th e w arra n ts do n o t say an yth in g on t h e i r f a c e t o th e
e f f e c t th a t th ey a re is s u e d in a n t i c i p a t i o n o f th e c o l l e c t i o n o f t a x e s ,
such i s o b v io u s ly th e f a c t .
T h is f a c t , i t seems t o u s , sh ou ld be
s u f f i c i e n t t o b r in g th e w arra n ts w ith in th e p r o v i s i o n s o f th e F e d e r a l
R e serv e A c t , S e c t io n 14 B. Vve assume t h a t th e Bank i s i n t e r e s t e d n o t
so much i n form as i t i s in s u b s ta n c e , b u t u n d ou b ted ly i t w ould n o t
a c c e p t w arra n ts no m a tter how th e y were la b e l e d i f f a c t s d id n o t su p p o rt
th e d e s c r i p t i o n g iv e n .
In our c a s e , th e f a c t s speak f o r th e m se lv e s and
d o com ply r;ith th e p r o v i s i o n s o f th e la w .
T h e r e fo r e , i t seemed t h a t th e
la c k o f d e s c r i p t i v e m a tter on th e f a c e o f th e w arran t s h o u ld be
im m a te r ia l. W ith in th e p a s t t h i r t y d a y s , King C ounty, W ash in gton , has
c o l l e c t e d o v e r seven m i l l i o n d o l l a r s o f t a x e s , a la r g e p o r t io n o f w hich
g o e s t o S c h o o l D i s t r i c t No. 1 , w itti an a d d i t io n a l s u b s t a n t ia l amount
com ing th rough he County and th e S t a t e .
F u rth erm ore, S c h o o l D i s t r i c t
No. 1 w i l l have c a l l e d f o r payment and redeem ed d h rin g th e months o f
May and June, a p p ro x im a te ly two m i l l i o n o f i t s o u ts ta n d in g w a rra n ts .
I t w i l l a l s o i n t e r e s t you t o know t h a t th e Banks o f t h i s c i t y have h e ld
and omned a t v a r io u s tim es s in c e January 1 s t 1933? as h ig h as te n
m i l l i o n d o l l a r s o f w arra n ts o f e x a c t l y th e same ty p e as u sed by S c h o o l
D i s t r i c t No. 1 .
A t o t a l o f f i f t e e n m i l l i o n o f s im ila r w arra n ts a re
h e ld by Banks th rou g h ou t th e S t a t e .
No Bank has e v e r s u f f e r e d a l o s s
on a cco u n t o f th e w arra n ts o f S c h o o l D i s t r i c t No. 1 .
As t o th e secon d o b j e c t i o n i n th e m a tter o f th e n e g o t i a b l e form o f th e
w a r ra n ts , we a re u n a b le t o f i n d , e i t h e r in th e p r o v i s i o n s o f th e F e d e r a l
R e serv e A c t , S e c t io n 14 B, o r i n th e p r in t e d r e g u la t io n s o f th e F e d e r a l
R eserv e B oa rd, b ein g R e g u la tio n E, S e r i e s o f 19^8, any d i r e c t sta te m e n t
th a t such w arra n ts must be in s t r i c t l y n e g o t i a b l e form .
In th e da ta
s u p p lie d t o th e S e a t t l e Manager o f th e F e d e r a l R eserv e Bank, a sta tem en t
was made th a t th e w arran ts were n o t in n e g o t i a b l e fo rm , hut vie d id p o in t
o u t t h a t , t o th e b e s t know ledge and in fo r m a tio n o f th e members o f th e
Board o f S e a t t l e S ch o o l D i s t r i c t No. 1 , no bank o r bona f i d e i n v e s t o r
in S c h o o l D i s t r i c t W a rran ts, such as a re is s u e d by S c h o o l D i s t r i c t No. 1 ,
had e v e r s u f f e r e d l o s s b e ca u se o f n o n -n e g o t ia b le form . Mr. Shawf s l e t t e r
o f May 1 7 , 1 9 3 3 , asked th a t in fo r m a tio n be s u p p lie d him th a t such w arrants
be n e g o t i a b l e " i n f a c t " and t h i s in fo r m a tio n we a ttem p ted t o s u p p ly .
- 3 -
^
In v iew o f th e v e r y o b v io u s and e n e r g e t i c d e te r m in a tio n o f th e F e d e r a l
Government t o b e h e l p f u l in c a s e s o f extrem e and w orthy need where
p r a c t i c a l and r e a s o n a b le m ethods o f d oin g so can be worked o u t , we
s t r o n g ly f e e l t h a t ou r c a s e d e s e r v e s r e c o n s id e r a t io n a t y o u r hands and
th e e x e r c i s e o f e v ery p o s s i b l e l i b e r a l i t y o f i n t e r p r e t a t i o n o f y o u r
r e q u ir e m e n ts , i n o r d e r th a t ou r need may be m et.
I f we were p r e s e n t in g
th e r e q u e s t unw arranted in f a c t , and u n s a fe i f g r a n te d , we m ight f e e l
d i f f e r e n t l y , but th e f a c t s above c i t e d seem t o us t o p o in t c o n c l u s i v e l y
n o t o n ly t o t h e d e s ir a .b il.it y o f f a v o r a b le c o n s id e r a t io n , out t o th e
s a f e t y o f th e Bank i n g ra n tin g th e same.
May we, t h e r e f o r e , ask th a t th e m a tter be e a r n e s t ly r e c o n s id e r e d ?
Very t r u l y y o u r s ,
Frank S. B a y ley
(s ig n e d )
P r e s id e n t , Board o f E d u ca tion
S e a t t l e S c h o o l D i s t r i c t No. 1 .
FSB:SB
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Ifa s o v a b lo SQ M O r T * BOH» p
% l t » i S ta to o S o n a ta ,
W a s h in g to n * $ « C *
TtftO T S o o a to r B o a o i
T o u r l o t t o r o f J a a o 3 0 a d d ro o a s d to
t o g o t h o r w it h
r a p ly ,
tte
la o lo s t ir o o , h a s b o o n r o f o r r s d t o
O m r a o r B la o k ,
t ills
o ffto o
fo r
A o l a d lo a t o d I n M r . B a y lo y + o l o t t o r t o y o o , o o p lo a o f
n a t o r l a l r e g a r d in g O s n o r a l O b lig a t io n W a r r a n ts o f S c h o o l
D l a t r l o t H o * l f S o a t t lo , H a s h ln g to n * a o r o fo r w a r d o d tq r h l» t o
O o Y o rn o r B la o k , and « • a r e r e t u r n in g h o r o s it h
t r a n s m it t e d a l t h
th o
ln o lo s n r o s
your lit t t r ,
T b l* a a t t o r m o ta k s n o p w it h
th o F e d e r a l R e a s n a
B a n k o f S o n f r a a o lo o o a a d o n J m m 3 t h o D e p u ty O o fs r n o r o f t h a t
te a k a d d r e o o e d a l o t t o r t o H r * B a y le y a b ls it r o a d o , l a
p a r t, ao
f o llo v a i
r f k r o u g b t t e M a n a g in g D lr e o t o r o f o a r S e a t t le
B n a a ii, w e t e t o b e o a f a m is h e d w it h a s p e o la s n
o f t t e o u t s t a n d in g • w a r r a n t s * t o a t ilo t i y o n a p p a r o n t ly x o f o r a n d s t ilo h th o lls s e r v e B a a k w a a
p e t it io n e d t o p m fe a o e * t h i a l a a t n a m t , o o
f i n d , t o a d la h iT S — iw t d r a f t d ra w a o n th o
T r e a s u r e r o f K in g C o u a ty . I t t e a b o o n p r o *
o o a to d f o r p a y a a n t b a t a o t d la o te r g e d te o a ix a o
o f m a t o f fn a d a *
• A t t&o t l a e o f o f f e r in g e u o h a w a r r a n t to t t e
M o r a l R e s e rv e B a a k v I t v o o H b o p a s t d u o a n d
w it h o u t a d e f i n i t e d a ta o f M a t u r it y *
• I t lo t t e
r a n ts ar o
F
o p la lo a o f oar C o tm o e l t h a t s u c h « f *
e l i g i b l e Jbr p u ro h a e e b y M o r a l
aot
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Honorable Honor T* Bom
-(E)
Reserve Board. We regret to lnfonn you,
thereforef that we cannot acquire them for
investment**
lor your information in this connection there is inclosed copy
of the Boardfe Regulation "I* regarding the purchase of warrants*
Tory truly yours,
(Signed) Chsster
Secretary*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
PARK TR A M M E L L '
D AVID I. W A L S H , M ASS.
M ILLA R D E . TY D fN O S , M D.
■a l l
D . S M ITH , S .C .
OEOl
M C G ILL* KANS.
RICHARD B . R U S S E L L, J R ., GA.
HOM ER T . BONE, W ASH.
HANKY FLOOD BYRD , VA.
W IL L IA M H. D JETER IC H , IL L .
F L A ., CHAIRM AN
F R ED ER IC K H A L E, M E.
JE S S E H. M E TC A L F , R .I.
PH ILLIP S L E E GOLDSBO ROUGH, MD*
H A M ILTO N F . K EA N , N .J.
JA M E S J . DAVIS, PA.
H ENRY W . K E Y E S , N .H .
HIRAM JOHNSON, C A LIF.
Qltmlcb
Senate
C O M M IT T E E O N
N A V A L A F F A IR S
ED AHEARN , C LER K
June 10, 1933*
v
Hon, Eugene R. B la ck , G overn or,
F e d e ra l R e se rv e B oard,
W ash in gton , D. C.
Dear G overnor B la c k :
I
am i n c l o s i n g a l e t t e r and d o cu
ments w hich I have r e c e iv e d from Mr, Frank S.
B a y le y , P r e s id e n t o f th e Board o f D i r e c t o r s , S e a t t l e
S ch o o l D i s t r i c t No, 1 r e g a r d in g t h e p u rch a se o f
c e r t a i n o u ts ta n d in g G en era l O b lig a t io n
W arrants
o f t h e F i r s t S ch o o l D i s t r i c t ,
I hope v e r y much
i t m i l be p o s s i b l e f o r y o u t o a u t h o r iz e t h e p u r
ch a se o f t h e s e W a rra n ts, ,
S in c e r e ly y o u r s ,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F e d e r a l R e se rv e B oa rd ,
W ash in gton , D. C.
D ear S i r s :
S e a ttle S ch ool D is t r ic t
W arrants
R e f e r r i n g t o y o u r . 1 fit t er -af Ihac- l g . and o a r s
o f th e 2 7 t h , we have to d a y resp on d ed t o Mr, Frank S .
Bav1
i Pr e s i d e n t o f th e F~n r i n f D A rsa tQ n o f th e
"E e a t t l fi
. t o th e e f f e c t t h a t th e
W arran ts w hich i t was p ro p o se d t o o f f e r th e F e d e r a l Re
s e r v e Bank o f San F r a n c is c o w ould n o t b e e l i g i b l e f o r
p u rch a se under t h e e x i s t i n g p r o v i s i o n s o f th e F e d e r a l
R e s e rv e A c t and r e g u l a t i o n s o f th e F e d e r a l R e se rv e
B oa rd ,
.s'
A c o p y o f o u r l e t t e r t o P r e s id e n t p a r l e y i s
e n c lo s e d , and a l s o a co p y o f ^ ja p in io n jjf ^ d o u n s e l Agnew,
Y ou rs v e r y t r u l y ,
f
Deputy Governor.
E n c lo s u r e s
Reproduced from the Unclassified I Declassified Holdings of the National Archives
S
—
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 s c o
ta M
3 , 1933.
H
P
S
C
r . F r a a k S . B a y le y ,
r e a id e a t , B o a rd o f D ir e c t o r # o f S c h o o l D i s t r i c t S o * 1 ,
e a t t le P a h lia S o h o o la ,
e n t r a l Baildiag,
Seattle, la a h ia g t o a .
Boar Hr* Bayley*
B a d e r d a t o o f W ay 1 3 , y o r a jfb r v a k ^ o d t o
« c o p y o f a r o s o lu t io a a d o p te d b y r a s r B o a rd o f
D ir e o t o r a r e q a e a tia g t h o F e d e r a l Reaervo B a a k o f S am
F r a a e la e o t o p a r o h a a o o o r t a ia O a ts ta a d la g g a a e r a l o b l i g a t i m
v a r r a a t * o f S o a t t lo S e h o o l D i a t r l o t I o . 1 *
Throagbthelaaagiog Director of our Soattlo firaaeh,
v o hare beta famished v i t h V s p e o ia e n o f the oatatandiag
•varraata1 to altioh y m appareatly refor and vhieh tho Roserve
Baak vaa petltioafid to parohMo. This iastroaoat, vo fiad,
ia ^a-dtgharaaaMat draft drav^ mi tha Treasurer of flag Coaaty.
It haa boaa presapted for pa^aeat bat aot discharged booanao
-'
/o f vaat of fteads. - .
(
At the tlae of offeriag soch a varraat to tho Federal
\ Reserve Bai^y It voald bo pest dao aad vithoat a defiaite date
X^f^tarlfc^/
It ia tho opiaioa of oar Counsel that soch varraat#
aro aot eligible for parOhase by Federal reservo baaka aador tho
provisioas of tho Federal Rosetrve Aot aad regalatioaa of the
Federal Reserve Board. Ve regret to iaform yoa, therefore, that
vo canaot acquire thea for iavostaeat*
Thoro la eaclosed a copy of a aeaoraadaa prepared b y
oar Cottaael, Mr* Albert C. igaov, which poiata oat the aalioat
featoroa about those varraata idiich loads to tho detoraiaatioa
of thia deelsioa*
Tours vary truly,
D e p a ty
B a d o s a re *
Goreraor.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
June 2 ,
Be :
MEMORANDUM TO:
MR. CLERK.
FROM:
MR. AGNEW.
1933.
S e a t t l e S c h o o l D i s t r i c t H o. 1 W a rra n ts - E l i g i b i l i t y f o r
P u rch a se by F e d e r a l H eserve
Bank o f San F r a n c i s c o .
I h a v e e x a m in e d t h e c o r r e s p o n d e n c e p a s s i n g
b e t w e e n y o u and t h e S e a t t l e B r a n c h r e l a t i v e t o t h e a b o v e
m a tte r, as w e ll as th e fo llo w in g co rre sp o n d e n ce :
L e t t e r d a t e d May 1 7 , 1 9 3 3 , a d d r e s s e d t o t h i s b a n k
b y A r t h u r M. H are o f t h e P r o s e c u t i n g A t t o r n e y f s
O f f i c e o f K in g C o u n t y , W a s h in g t o n ;
L e t t e r d a t e d May 1 9 , 1 9 3 3 , a d d r e s s e d b y D i e t r i c h
S ch m itz , V i c e - P r e s i d e n t , B oard o f D i r e c t o r s ,
S e a t t le B oard o f E d u c a tio n , t o th e S e a t t le B ran ch
o f t h is bank;
L e t t e r d a t e d May 1 3 , 1 9 3 3 , a d d r e s s e d b y F ra n k S .
B a y le y , P r e s id e n t , B oard o f D i r e c t o r s , S e a t t le
S c h o o l D i s t r i c t N o. 1 , t o G overn or C a lk in s ;
L e t t e r d a t e d May 1 7 , 1 9 3 3 , a d d r e s s e d by M r. M or
r i l l , S e c r e ta r y o f th e F e d e ra l R eserve B oard, t o
G overn or C a lk in s ;
and v a r i o u s o t h e r c o r r e s p o n d e n c e r e l a t i v e t o t h e
above m a tte r .
I t i s my o p i n i o n t h a t t h e w a r r a n t s i s s u e d b y
S e a t t le S c h o o l D i s t r i c t N o. 1 , p h o t o s t a t ic c o p ie s o f
s p e c im e n s o f w h ic h w e re s u b m it t e d w it h M r. S c h m i t z 1 l e t t e r
o f May 1 9 , 1 9 3 3 , a r e n o t e l i g i b l e f o r p u r c h a s e b y a
F e d e r a l R e s e rv e B ank.
My o p i n i o n i s p r e d i c a t e d u p o n t h e
fo llo w in g :
Reproduced from the Unclassified I Declassified Holdings of the National Archives
V
-2-
PROVISIONS OF FEDERAL RESERVE ACT:
S e c t io n 1 4 (b )
F e d e r a l R e s e r v e B an ks -
o f t h e F e d e r a l R e s e r v e A c t em pow ers
" t o b u y and s e l l
w a r r a n t s w it h a m a t u r it y fr o m
d a t e o f p u r c h a s e o f n o t e x c e e d i n g s i x m o n th s ,
is s u e d in a n t ic ip a t io n o f th e c o l l e c t i o n o f ta x e s
o r in a n t ic ip a tio n o f th e r e c e ip t o f assu red
r e v e n u e s b y any * * * d i s t r i c t , p o l i t i c a l s u b d i v i s i o n
o r m u n i c i p a l i t y * * * s u c h p u r c h a s e s t o b e made i n
a c c o r d a n c e w i t h r u l e s and r e g u l a t i o n s p r e s c r i b e d b y
t h e F e d e r a l R e s e r v e B o a r d . 11
REGULATION OF THE FEDERAL RESERVE BOARD:
R e g u la tio n E o f th e F e d e r a l R eserv e B oa rd ,
g o v e r n in g t h e c o n d i t i o n s u n d e r w h ic h t h e t a x a n t i c i p a t i o n
w a rra n ts r e f e r r e d t o i n S e c t i o n 14 o f th e F e d e r a l R e s e rv e
A c t may b e p u r c h a s e d b y F e d e r a l R e s e r v e B a n k s , p r o v i d e s
( S e c t i o n I I I ) t h a t w a r r a n t s may b e p u r c h a s e d p r o v i d e d t h e y
a re is s u e d i n a n t i c i p a t i o n o f t a x e s o r r e v e n u e s liiic h a re due
and p a y a b l e o n o r b e f o r e t h e d a t e o f m a t u r it y o f s u c h w a r
ra n ts.
T h i s c o n d i t i o n , a s t o t h e t a x e s and r e v e n u e b e i n g
due and p a y a b le o n o r b e f o r e t h e m a t u r i t y o f t h e w a r r a n t *
may b e w a iv e d b y t h e B o a r d i n s p e c i f i c c a s e s .
NEGOTIABILITY OF THE WARRANTS:
T he w a r r a n t s r e f e r r e d t o , and u p on w h ic h t h i s
o p in io n i s p r e d i c a t e d , a r e c l e a r l y n o n -n e g o t ia b le i n fo r m .
T h ey c o n s t i t u t e d r a f t s draw n b y t h e S c h o o l D i s t r i c t o n t h e
tr e a s u r e r o f th e co u n ty .
T h ey a r e e x p r e s s l y made p a y a b le
" o u t o f any m oney i n t h e g e n e r a l o r s p e c i a l s c h o o l fu n d n o t
o t h e r w i s e a p p r o p r i a t e d .®
T h ey f u r t h e r p r o v i d e t h a t i n t e r e s t
at
p e r annum s h a l l b e a l l o w e d fr o m t h e d a t e t h e w a r r a n t
i s r e g is te r e d u n t il i t i s c a lle d .
The s p e c im e n s s u b m it t e d
c o n t a in upon th e r e v e r s e s id e t h e r e o f t h e f o l l o w i n g le g e n d :
5%
" P r e s e n t e d and n o t p a i d f o r w ant o f f u n d s .
A pr 5 -1 9 3 3
GEO. G. WITTENMIER
T r e a s u r e r , K in g C o . , W a sh ."
•
Reproduced from the Unclassified I Declassified Holdings of the National Archives
/
-3 -
A d m i t t e d l y , t h e s e in s t r u m e n t s a r e draw n o n t h e s c h o o l fu n d
i n t h e h a n d s o f t h e t r e a s u r e r and i t i s u n d e r s t o o d t h a t
t h e y w i l l n o t b e p a i d u p o n p r e s e n t a t i o n i f t h e fu n d i s i n
s u ffic ie n t*
T h i s i s e v i d e n c e d b y t h e f a c t t h a t an e x p r e s s
p r o v i s i o n i s made f o r t h e paym ent o f i n t e r e s t fr o m t h e d a t e
o f p r e s e n t a t i o n u n t i l p a y m e n t.
|
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I h a v e c a r e f u l l y e x a m in e d t h e l e t t e r d a t e d
May 1 7 , 1 9 5 3 , a d d r e s s e d t o t h i s b a n k b y M r. H are o f t h e
P r o s e c u t i n g A t t o r n e y s O f f i c e , K in g C o u n t y , W a s h in g t o n .
M r. H are * s a rg u m en t i n s u b s t a n c e i s t h a t w h i l e t h e w a r r a n t s
a re a d m itte d ly n o n -n e g o t ia b le i n fo rm , th e y a re n e g o t ia b le
i n f a c t and a r e s u b j e c t o n l y t o t h e d e f e n s e a r i s i n g o u t o f
w ant o f c o n s i d e r a t i o n a s b e t w e e n t h e d ra w e r and t h e p a y e e o f
th e w a rra n t.
I am u n a b le t o a g r e e w i t h M r. H are i n t h i s
c o n c lu s io n .
H is o p i n i o n i s p r e d i c a t e d u p o n t h e f o l l o w i n g
c a s e s w h ic h h e c i t e s :
i
I
FIDELITY TRUST COMPANY v s . PALMER.
2 2 W ash. 4 7 3 ; 6 1 P a c . 1 5 8 .
CITY OF MARKUS v s . OFNER. 1 0 3 W ash. 4 7 8 ;
175 P a c . 3 1 .
I
1
!
WOODWORTH v s . SCHOOL DISTRICT MO. 2 .
1 0 3 W ash. 6 7 7 ; 1 7 5 P a c . S S I .
The c a s e s a b o v e r e f e r r e d t o h o l d i n s u b s t a n c e
t h a t w h i l e a w a r r a n t o f t h e k in d m e n t io n e d may b e n o n n e g o t ia b le in fo rm , i t i s n e g o t ia b le in f a c t ; th a t i s , i t
p o s s e s s e s q u a l i t i e s o f n e g o t i a b i l i t y i n s o f a r a s t h e man
n e r o f t r a n s f e r o f t i t l e i s c o n c e r n e d and i s , t h e r e f o r e ,
n o t s u b je c t t o e q u i t i e s a s b etw een p r i o r p a r t i e s e x c e p t
t h a t i t i s o p e n t o any d e f e n s e w h ic h m ig h t h a v e b e e n made
t o t h e c l a i m u p o n w h ic h i t i s f o u n d e d .
M r. H a r e , h o w e v e r ,
f a i l s t o c i t e l a t e r d e c i s i o n s r e n d e r e d b y t h e Suprem e C o u r t
o f t h e S t a t e o f W a s h in g t o n , i n w h ic h t h e t h e o r y s e t f o r t h
in th e c a s e s a b ove c i t e d i s q u it e d e f i n i t e l y r e p u d ia te d .
I r e fe r
p a r t ic u la r ly to th e fo llo w in g c a s e s :
[
BANK OF CALIFORNIA v s . NATIONAL CITY COMPANY.
2 4 4 P a c . 6 9 0 ; 1 3 8 W ash. 5 1 7 .
BANK OF CALIFORNIA v s . NATIONAL CITY COMPANY.
2 5 1 P a c . 5 6 1 ; 1 4 1 W ash. 2 4 3 .
JONES v . AMERICAN SAVINGS BANK & TRUST CQ.
247 P a c . 1 0 1 7 ; 1 3 9 W ash. 5 9 8 .
K
-4'
MANKER v s . AMERICAN SAVINGS BANK & TRUST CO, .
2 3 0 P a c . 406;. 1 3 1 W ash. 4 3 0 .
HARPER & SON v s . PACIFIC POWER & LIGHT CO. .
2 5 5 P a c . 949> 1 4 3 W ash. 4 5 6 .
A tte n tio n i s
a ls o d ir e c t e d
to
th e ca se o f -
MARYLAND CASUALTY CO. v s . GRASS HARBOR COUNTY.
2 9 3 P a c . 441> 1 5 9 W ash. 3 5 6 .
T he l a t t e r c a s e , w h i l e n o t d i r e c t l y i n p o i n t , i n d i c a t e s t h e
e x t e n t t o w h ic h t h e r i g h t o f s e t - o f f m ig h t b e e x e r c i s e d
a g a i n s t in s t r u m e n t s o f t h e c h a r a c t e r u n d e r c o n s i d e r a t i o n .
W h ile i t i s t r u e t h a t i n t h e c a s e s c i t e d b y
M r. H a r e , t h e Suprem e C o u r t o f W a s h in g to n had t a k e n t h e
som ewhat a n o m a lo u s p o s i t i o n t h a t in s t r u m e n t s n o n - n e g o t i a b l e
i n fo r m m ig h t b e c o n s i d e r e d f o r som e p u r p o s e s a s
n e g o t i a b l e i n f a c t , t h e same c o u r t i n t h e c a s e l a s t a b o v e
c i t e d r e p u d i a t e s t h i s t h e o r y and h o l d s d e f i n i t e l y t h a t
in s t r u m e n t s o f t h i s c h a r a c t e r , b e i n g n o n - n e g o t i a b l e i n fo r m
and n o t i n c o m p li a n c e w i t h t h e N e g o t i a b l e I n s t r u m e n t s A c t ,
a r e n o n - n e g o t i a b l e f o r a l l p u r p o s e s and s u b j e c t t o any and
a l l e q u i t i e s as b etw een p r i o r p a r t i e s .
In th e ca se o f BANK OF CALIFORNIA v s . NATIONAL CITY COMPANY.
1 4 1 Ufash. S 4 S ; 2 5 1 P a c . 5 6 1 ,
t h e c o u r t u s e s t h e f o l l o w i n g l a n g u a g e , w h ic h i s i l l u s t r a t i v e
o f th e p o s i t i o n ta k e n i n th e o th e r c a s e s r e fe r r e d t o :
BI n t h e M anker c a s e , i t was h e l d t h a t ,
i n o r d e r f o r an in s t r u m e n t t o b e n e g o t i a b l e , i t
m ust c o n fo r m t o t h e r e q u ir e m e n t s o f n e g o t i a b i l i t y
l a i d down i n t h e U n ifo r m N e g o t i a b l e I n s t r u m e n t s
A c t o f t h i s s t a t e , and t h a t a n in s t r u m e n t w h ic h
does
n o t s o c o n fo r m i s n o n - n e g o t i a b l e i n e v e r y
sen se.
In o th e r w ord s, th a t th e r e a re no
tw o
s t a n d a r d s o f n e g o t i a b i l i t y ; t h a t an in s t r u m e n t i s
n e g o tia b le
f o r a l l p u rp oses o r n o n -n e g o tia b le
f o r a l l p u r p o s e s , d e p e n d in g u p o n w h e th e r i t m e a s u r e s
up t o t h e r e q u ir e m e n t s o f t h e a c t .
P r io r d e c is io n s
o f t h i s c o u r t w e re r e f e r r e d t o i n t h e M anker c a s e a n d ,
-5-
i n e f f e c t , r e v e r s e d i n s o f a r a s t h e y m ig h t
i n d i c a t e th e a d o p tio n o f th e t h e o r y th a t t h e r e a re
tw o s t a n d a r d s o f n e g o t i a b i l i t y a n d , i n s o f a r a s
t h e d e p a r tm e n t o p i n i o n i n t h i s c a s e i n f e r e n t i a l l y
r e v i v e d t h a t t h e o r y , t h a t la n g u a g e i s now w ith d ra w n
fr o m t h e o p i n i o n * 11
T h e c o u r t i n t h i s d e c i s i o n a d o p t s and f o l l o w s
t h e d e c i s i o n i n t h e M anker c a s e , and w h i l e t h e f a c t s i n
t h a t c a s e a r e n o t c o m p a r a b le t o t h o s e now u n d e r c o n s i d e r a
t i o n , t h e t h e o r y l a i d down i n t h e F i d e l i t y T r u s t Company
c a s e and t h e o t h e r s c i t e d b y M r. H are i s d e f i n i t e l y r e
p u d ia te d .
I l l u s t r a t i v e o f t h e d e f e n s e s w h ic h may b e r a i s e d
t o w a r r a n t s a d m i t t e d l y n o n - n e g o t i a b l e i n fo r m i s t h e c a s e o f
ADAMS COUNTY v s . RITZVILLE STATE
1 5 4 W ash. 1 4 0 ; 2 8 1 P a c . 3 3 2 ,
BMK.
i n w h ic h c a s e , t h e b a n k h a v in g p u r c h a s e d t h e w a r r a n t s i n
g o o d f a i t h was d e n i e d t h e r i g h t t o r e c o v e r t h e r e o n a s
a g a i n s t t h e c o u n t y b e c a u s e t h e w a r r a n t s were* i s s u e d a g a i n s t
a padded p a y r o l l .
T h e n o n - n e g o t i a b i l i t y o f t h e in s t r u m e n t s
and t h e r i g h t o f t h e c o u n t y t o d e f e n d f o r l a c k o f c o n
s i d e r a t i o n was a d m i t t e d .
The w a rra n ts h e r e u n d er c o n s id e r a t io n h ave no
d e f i n i t e m a t u r i t y and b e i n g draw n a g a i n s t a s p e c i f i c fu n d
and p a y a b l e o n l y o u t o f any m oney i n s u c h fu n d n o t o t h e r
w is e a p p r o p r i a t e d a r e c l e a r l y n o n - n e g o t i a b l e i n la w a s w e l l
as in f a c t .
NON-COMPLIANCE WITH SECTION 1 4 OF THE ACT;
T he in s t r u m e n t s u n d e r c o n s i d e r a t i o n d o n o t , i n
my o p i n i o n , co m p ly w i t h t h e p r o v i s i o n s o f S e c t i o n 1 4 ( b ) o f
th e F e d e r a l H eserve A c t .
T h e in s t r u m e n t s t h e r e i n r e f e r r e d
t o a r e t h o s e nw i t h a m a t u r it y fr o m d a t e o f p u r c h a s e o f
n o t e x c e e d i n g s i x m o n th s11.
T h ese w a rra n ts have n o m a t u r it y .
The a c t a l s o p r o v id e s t h a t w a rra n ts e l i g i b l e f o r p u rch a s e
m ust b e ni s s u e d i n a n t i c i p a t i o n o f t h e c o l l e c t i o n o f t a x e s
o r in a n t ic ip a t io n o f th e r e c e ip t o f assu red reven u es8 .
T he
in s t r u m e n t s h e r e u n d e r c o n s i d e r a t i o n a r e n o t s o i s s u e d b u t
a r e i n e f f e c t d r a f t s draw n o n s c h o o l f u n d s i n t h e h a n d s o f
th e co u n ty t r e a s u r e r .
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-6-
RIGHT OF SCHOOL DISTRICT TO ISSUE TAX ANTICIPATION WARRANTS:
A t y o u r r e q u e s t , I h a v e e x a m in e d t h e W a s h in g to n
s t a t u t e s and am u n a b le t o f i n d t h e r e i n any p r o v i s i o n
w h ic h w o u ld a u t h o r i z e s c h o o l d i s t r i c t s t o i s s u e t a x a n t i c i
p a t i o n w a r r a n t s t o m eet c u r r e n t e x p e n s e s .
P ow er t o i s s u e
t a x a n t i c i p a t i o n w a r r a n t s was g r a n t e d t o s c h o o l d i s t r i c t s
b y S e c t i o n 1 , p a g e 2 9 7 , Laws o f 1 8 9 5 ( S e c . 5 6 2 4 , R e m in g to n ’ s
R e v is e d S t a t u t e s ;.
T he a n n o t a t o r o f t h e R e v i s e d S t a t u t e s
s t a t e s t h a t t h e c h a p t e r was i n t e n d e d t o b e r e p e a l e d b y
C h a p te r 2 5 7 o f t h e Laws o f 1 8 9 7 ( p a g e 4 4 8 ) b u t t h a t t h e
t i t l e o f t h e a c t o f 1 8 9 7 o m i t s m e n t io n t h e r e o f .
C on seq u en t
l y , so th e a n n o ta to r s t a t e s , t h i s ch a p te r i s r e ta in e d in
f o r c e a s t o a l l c o r p o r a t i o n s t h e r e i n named e x c e p t s c h o o l
d is tr ic ts .
I t i s p re su m e d t h a t t h e e x c e p t i o n o f s c h o o l
d i s t r i c t s i s p r e d ic a t e d upon th e l a t e r a d o p tio n o f th e
s t a t u t e s p e c i f i c a l l y r e g u l a t i n g s u c h d i s t r i c t s and d e f i n
i n g t h e i r c o r p o r a t e p o w e rs (R e m in g t o n 1s R e v i s e d S t a t u t e s ,
S ec. 4694, et s e q .) .
I h a v e c a r e f u l l y e x a m in e d t h e g e n e r a l s t a t u t e s
g o v e r n in g s c h o o l d i s t r i c t s and d o n o t f i n d t h e r e i n any
p r o v i s i o n w h ic h e i t h e r d i r e c t l y o r b y l e g a l i m p l i c a t i o n
c o n fe r s upon s c h o o l d i s t r i c t s th e r i g h t t o I s s u e t a x
a n t ic ip a t io n w a rra n ts.
I t i s my o p i n i o n t h a t i n t h e S t a t e
o f W a s h in g to n s c h o o l d i s t r i c t s d o n o t h a v e s u c h p o w e r s .
I t i s n o te d , h ow ever, th a t under th e p r o v is io n s
o f S e c . 4 9 4 1 , R e m in g to n 1s R e v i s e d S t a t u t e s , t h e B o a rd o f
D i r e c t o r s o f a s c h o o l d i s t r i c t i s g i v e n p ow er t o b o r r o w
m oney and i s s u e n e g o t i a b l e c o u p o n b o n d s t h e r e f o r f o r t h e
p u r p o s e o f f u n d i n g o u t s t a n d i n g i n d e b t e d n e s s and f o r o t h e r
p u rp oses.
L i m i t a t i o n s a r e p l a c e d u p o n t h e am ount o f money
w h ic h may b e s o b o r r o w e d and t h e c o n d i t i o n s u n d e r w h ic h
t h e b o n d s may b e i s s u e d .
P e r h a p s , t h e d i f f i c u l t y i n w h ic h
t h e S e a t t l e S c h o o l D i s t r i c t f i n d s i t s e l f m ig h t b e r e
lie v e d th ro u g h th e e x e r c is e o f th e
p r i v i l e g e s g iv e n under
th is s e c tio n .
I t w o u ld seem t h a t b o n d s s o i s s u e d ,
n e g o t i a b l e i n f o r m , w o u ld c o n s t i t u t e an a v e n u e o f c r e d i t
n o t o th e r w is e a v a i l a b l e .
We h a v e n o t y e t r e c e i v e d t h e 1 9 3 3 S e s s i o n Laws
o f W a s h in g t o n .
My i n v e s t i g a t i o n o f t h e r i g h t o f s c h o o l
d i s t r i c t s t o i s s u e t a x a n t i c i p a t i o n w a r r a n ts d o e s n o t ,
t h e r e f o r e , c o v e r s t a t u t e s a d op ted a t th e l a s t s e s s io n o f th e
L e g is la tu r e .
C o u n s e l.
ACA:MA
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F e d e r a l R e se rv e B oa rd,
W ashington, D. C.
Dear S i r s :
Under d a t e o f May 1 3 t h / Mr* Frank S . B a y le y , P r e s id e n t o f th e
Board o f Pi r e c t o r s o f
T”
™V4T"TU^ ^
F e d e r a l R e s e r ^ e ^ o a r d and F e d e r a l R eserv e Bank o f San F r a n c is c o r e g a r d in g
th e p u rch a se o f w arra n ts o f S e a t t l e S c h o o l D i s t r i c t No. 1 .
I t a ppears th a t S e a t t l e banks w ere c a r r y in g a p p ro x im a te ly
1 3 ,0 0 0 ,0 0 0 o f th e s e w a rra n ts and had d e c l i n e d t o exten d t h e i r h o ld in g s ,
p r o b a b ly due t o th e u n c e r t a i n t y o f t a x c o l l e c t i o n s .
A change has ta k en
p l a c e , h ow ever, in t h a t th e D i s t r i c t i s su p p osed t o have c a l l e d f 8 0 0 ,0 0 0
in w a rra n ts f o r payment May 2 1 s t , and w i l l c a l l an a d d i t i o n a l f 8 0 0 ,0 0 0 ,
June 1 0 t h .
The S e a t t l e C le a r in g House A s s o c i a t i o n has v o te d t o ca sh a l l
w a rra n ts t o be is s u e d June 5 th and 1 2 th , a g g r e g a tin g a p p r o x im a te ly f l , 0 0 0 ,0 0 0 ,
as w e l l as th e rem a in d er o f th e w arra n ts o u t s ta n d in g .
The s i t u a t i o n has d e v ia t e d from a s o l i c i t a t i o n o f th e F e d e r a l
R eserv e Bank t o o f f e r im m ediate r e l i e f t o an i n q u ir y .b o t h by th e S c h o o l
D i s t r i c t and th e S e a t t l e C le a r in g House b a n k s, as t o w hether th e F e d e r a l
R e s e rv e Bank would p u rch a se such w a rra n ts i f no o t h e r o u t l e t were a v a i l a b l e .
I t sh ou ld b e m entioned t h a t th e s e w a rra n ts a r e m erely demand
d r a f t s ( c h e c k s ) , drawn on th e C0u n ty T re a s u re r b y th e S c h o o l D i s t r i c t and
marked p a y a b le
11o u t o f any money i n th e c e n t r a l o r s p e c i a l
S c h o o l Fund n o t o t h e r w is e a p p r o p r ia t e d .11
The w a rra n ts now under d i s c u s s i o n a re is s u e d t o t e a c h e r s , f o r
i n s t a n c e , and b e a r on t h e i r f a c e th e sta tem en ts
5%
"In terest at
par annum a llo w e d h ereon
from d a te r e g i s t e r e d u n t i l c a l l e d . *
C o in c id e n t w ith the d a te o f th e w a rra n t, t h e r e i s stamped on i t s
re v e rse s id e :
"P r e s e n te d and n o t p a id f o r want o f fu n d s
___________________ d a t e .
G eo. W. W ittenm yer
T r e a s u r e r , K in gs C ounty, W a sh in g ton .1’
Reproduced from the Unclassified I Declassified Holdings of the National Archives
fe d e r a l R eserv e Board - - 2
May 2 7 , 1933
A c c o r d in g t o th e Chairman o f th e F in a n ce Committee o f th e
Board o f E d u c a tio n , th e S c h o o l D i s t r i c t has n o t power t o is s u e and o f f e r
f o r s a le t a x a n t i c i p a t i o n w a r r a n ts .
However, t h i s w i l l be more f u l l y in
v e s tig a te d .
The w a rra n ts u n der d i s c u s s i o n a re n o n - n e g o t i a b le , have no
d e f i n i t e d a te o f m a t u r it y , and, t h e r e f o r e , we f e e l t h a t in t h e i r p r e s e n t
form th e y a r e n o t a d e s i r a b l e in v e stm e n t f o r th e F e d e r a l R eserv e Bank.
B e fo r e re s p o n d in g t o P r e s id e n t B a y le y , we d e s i r e C ou n sel
(who i s a t p r e s e n t o u t o f town) t o i n v e s t i g a t e some l e g a l p o in t s i n re g a rd
t o th e is s u a n c e o f w arra n ts by W ashington S c h o o l D i s t r i c t s .
When r e p l y
i s made t o P r e s id e n t B a y le y , a co p y w i l l be forw a rd ed t o th e F e d e r a l Re
s e r v e B oa rd .
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Mr, C h e s te r M o r r i l l ,
S e c r e t a r y , F e d e r a l R eserv e B oa rd ,
W a sh in gton , D. G.
Dear Mr, M o r r i l l :
you
In your., l e a ^ LJ^ J t e L l Z t h f
e n c lo s e d cop y o f a r e s o l u t i o n and o t h e r m a t e r ia l
su b m itted t o th e Board b y Frank S . B a y le y , P r e s i
d e n t o f th e Board o f D i r e c t o r s o f S e a t t l e S c h o o l
D i s t r i c t No. 1 , w h ich we a re r e t u r n in g f o r y ou r
f i l e s as re q u e s te d *
Under d a te o f May 1 5 th we r e c e i v e d
a s i m i la r l e t t e r from Mr* B a y ley w ith e n c lo s u r e s ,
and im m ed ia tely t o o k s t e p s t o d e te rm in e th e l e g a l
i t y , e l i g i b i l i t y and a c c e p t a b i l i t y o f w arran ts
w hich i t was p ro p o se d would be o f f e r e d t o th e
F e d e r a l R e se rv e Bank f o r p u rc h a s e .
We s h a l l com m unicate ? fith th e Board
as soon as th e in fo r m a tio n r e q u e s te d th rou g h ou r
S e a t t l e o f f i c e has b een r e c e i v e d , and f i n a l r e p l y
i s made t o Mr. B a y le y .
Y ou rs v e r y t r u l y ,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
SEATTLE SCHOOL DISTRICT NO* 1
STATUS OF GENERAL FUND
AS TAKEN FROM MONTHLY STATEMENT AS OF MARCH 5 1 . 1 9 3 3
3 1 , 1932
5 1 , 1935
U n c o l l e c t e d T a x e s:
| 3 ,0 6 2 , 6 0 0
1 .3 * 9 1 1 ^ 2
*• $ 8 4 8 ,4 0 0
INCREASE
C o.
Treas.
C ash B a l a n c e :
51,
51,
1932
1935
7 6 4 ,7 0 0
8 4 7 .3 0 0
INCREASE
3 1 , 1952
3 1 , 1955
W a rra n ts O u t s t a n d i n g :
1 ,6 1 2 ,0 0 0
1 ,5 7 6 ,2 0 0
5 .3 5 7 .5 0 0
INCREASE
D ed u ct:
1 ,7 8 1 , 1 0 0
I n c r e a s e i n C ash B a la n c e -
1 .6 1 2 * 0 0 0
INCREASE FOR YEAR ENDED MARCH 5 1 , 1 3 5 5 i n CURRENT OVERDRAFT -
RECEIPTS AND EXPENSES
GENERAL FUND - NINE MONTHS ENDING MARCH
A ctu a l R e c e ip ts -
a ll
1952
# 1955
sou rces
81*
1 9 5 2 -1 9 5 5
5 ,2 7 2 ,8 0 0
5 * 2 4 8 .9 0 0
DECREASE
1332
1955
A ctu a l E xpenses
2 5 .9 0 0
4 ,2 4 2 ,2 0 0
5 .4 8 0 . 1 0 0
DECREASE . . . . . . . . . . . . . .
E x c e s s E x p e n d it u r e s o v e r R e c e i p t s
it
it
it
*
-
# D i s c o u n t t a x d a t e e x t e n d e d by a c t i o n
t o May 1 5 t h .
1932
1933
1 6 9 ,1 0 0
7 6 2 ,1 0 0
1 9 6 9 ,4 0 0
2 3 1 ,2 0 0
o f le g is la tu r e
fr o m M arch 1 5 t h
Reproduced from the Unclassified I Declassified Holdings of the National Archives
For Details See Schedule A
Statement C
SEATTLE SCHOOL DISTRICT NO. 1
M&reli
.......... , 193...1
Statement of Expenditures and Receipts, M o n t h of....................
GENERAL FUND
CURRENT MONTH OF
.Msroh.......m
l
19 758 69
266 5 ®
3
932 67
3 6 0 35
13
5
23 13
19 * 2
35
59 29
2 2 a 1*3
12
B. I N S T R U C T I O N :
11. Salaries Supervisors and Directors
12. Other Expenses Supervisors and Directors
13. Salaries— Principals, Vice-Prin. and Clerks
14. Other Expenses
15. Salaries Teachers
(a) High
(b) Junior High
(c) Grade
(d to 1) Specials
'’
*'-'16. Books
17. Stationery and Supplies
18. Other Expenses
667
18
2
455
14
11
* 5 *7
1 5 *7
63
36
87
87
32 119 70
2 710 *5
** 063 58
1
9 13
356
1
3 9 * 20
1
m s
i* q
2
17
11
06
*7
3 76*
*9 5
4
T O T A L AUXILIARY
F. M I S C E L L A N E O U S :
40a. Edison Full Time School
40b. Part Time School
40c. Opportunity School
42a. Luther Burbank School
42b. Martha Washington School
43. Rent Sundries
44. Moving Portables
45. Other Expenses
5*
76
*6
xU
56
8 I 65
22
4*3 279
80
36
70
2J
TOTAL MISCELLANEOUS
I
P. Y", C f t !'-
General Property Taxes
State Apportionment
County Apportionment
High School Apportionment
Smith Hughes
High School Bonus
Miscellaneous
TOTAL RECEIPTS
Cash on Hand (County Treasurer)
Warrants Outstanding (Our Books)
Lay
300 966
*7
1 * 9 970 65
5 6 882 00
5 *3 7 39
37 7 2 * So
3 782 7 *
2 6 * 095 50
1 105 36
5 S3
950
3 51 65*
1 300
00
00
30
00
1 973
258
95
918
31
02*
3 2 653
7 m i
20
*57
97
353 0 5 *
119 710
1 6 9^0
5 2 10 0
24 4 5 0
13 6 2 3
15 67*
2 *5 4
*3
%\
116 639 17
798 598 08
95 9 * 2 80
10 724 41
1 * 2 7 * 11
80
2 560 Ife
1
633
7
Ql| 54
117
35
5
19
/OJ
**?
77*
980
12 8 1 *
5 ?31
00
00
00
00
00
6*
65
97
7?
30
79
W
* *2
59 > -35s
104 oso
00
3 3 « 5 0 00
16 591 87
7 200 00
— 3 925 00
1 *9 025 00
5 * 802
4Q
* 9 1 683 29
A teO...Q&.
*8 2
61 755
1 3 * 819 9*1
233 50
7 1 * 00
71
0C
«oi
S 000 00
1 3 2 0 QQ
1
00
■i.g 9Q&
1? 569 20
l*-50 ^
13 $7 1 39
6 k50 77
£0 1 Oc,
J 97
1 1 37£ 2 5
1 766 67
5 000 00
-3- g ? * 35
5 9QQ QQ
2 720 51
1 791 81
5S 7.-'i 1 *
36 607 * 8
2 0 0 * 0 63
29 227 99
18 663 85
48 056 30
2 7 3 0 * So
8 65
357
78
2 * 2 2 0 1 SO
026
078
*5
I5 480 187 49
797
10 886 35
586 82
5 102 *9
02* 85
25
98
9*
30 728 *5
65 796 10
30 1 670 77
2 0 1 7 5 62
18 8 2 1 86
* 0 7 6 12
1 * 875 13
27? 962 57
319 60 0 42
91 686 00
3 * 5 0 00
3 * * 3 6 8 983 9 *
5-57
62
370 740 23
736 5 *3 39
*
1
I*
6 <94
22 7 3 5 0 1
4 420 3 2
7 2 508 38
67
j
*1
230 0 13
*2 9 7 1 2 99
207 359 0 5
17 071
2 7 1 6 3*
27 930 83
15 9 2 6 35
80 1 5
2 2 7 9 39
JL 108 19
\
32 * 6 2
1 3 *3
930 581
118 71
* 000 00
7 13 $5
70
3 5 6 60
1 0 2 1 3 08
19 3 02
6*0 57
6
960
1 1 136
5s /'•, 1 h
181 *sq
1 1 8 96 7 9
3 209 57
6 7*9
15
13 3 602 26
* * * 7 ? 1 n7
17
80
9 8*0
23 * 1 5
16 *10 82
28 680
27
97* 5*
396 7 6
106 83
* 1*6 86
11 666 20
20 3 9 2 0 2
38 779 30
25s 13
199 1 5
96*
500 00
000 00
5 3 6 0 00
70
60
00
12 0** 89
Qh 6 5 9
___ M 6B5 * 1
35 895 17
20
18
*6 0 7 1 20
283 013 27
9 * 758 50
28
260 4 3
57
100 00
35 976 28
26 208 7 *
991 39
3 268 265
l 576 15
61
76
5 0 0 00
10 3 9*0 *7
1 300 7 5
7*
E. A U X I L I A R Y AGENCIES:
35. Health
37. Transportation
38. Insurance
RECEIPTS
175
is
58 6*8 6*
1 1 635 2 1
8 292 *6
TOTAL MAINTENANCE
T O T A L EXPENDITURES
3 * 989 59
77 *1 1 89
8 S9 8 *
685 279 *0
235 950
8* 263
2 3 0 29
10 592 5 1
TOTAL OPERATION
G. P R O P E R T Y I M P R O V E M E N T S : Q({ p i t ; 1 :
Interest on Warrants
Interest on Assessments
312 5 1
78 6 279 28
2 0 2 911 25
1 7 * *26 77
1 6 2 1 3 6 00
29
D. M A I N T E N A N C E :
27. Buildings and Grounds
28. Equipment
29. Repair Shop
32. Other Expenses
756 78
1 0 16 50
109 269 81
28 293 82
158 885 27
2 1 6 7 6 SO
1 288 7 *
2 079 17
94 1 6
3 5* 638 93
5 2 6 0 20
12 370 00
10 550 97
5 90 0 57
2 *9 5 25
<ii® S ) 1* Jo
337 28
T O T A L INSTRUCTION
50 0 0 0
2 5 3 17
2 5 888 6 7
21
ZJ0 1 9
93
0?
191 70
1 3 500 00
5 *5 * * *
09 | X1 9 6 3 * 25
2 9 o 5r (*
C. O P E R A T I O N :
20. Wages
21. Fuel
22. Water
23. Light and Power
24. Janitors Bldg. Supplies
25. Stock R o o m
26. Other Expenses
026 59
u.76 * 3
'.82 20
5 m
i
3 1 19 6 07
2 1 5 7 6 35
3 308 95
367
*
9
070 1 3
8
It
* 0 10
500 00
569 02
6 6 3 75
T O T A L ADMINISTRATIVE
Stock
UNEXPENDED
BUDGET
BUDGET
Items O&lj
A. A D M I N I S T R A T I V E :
1. Secretary’
s Office
2. Comptroller’
s Office
3. Election and Census
4. Legal
5A. Rent
5B. Operation and Maintenance W h s e and Shop
6A. Supplies
6B. Bldgs. and Grounds
7. Superintendent of Schools
8. Enforcement of Compulsory Education, Etc.
9. Retirement Fund
10. Other Expenses
'i. ’ 5
TOTAL FOR SAME
PERIOD
LAST YEAR
.... 9.... MO.
TO. March 3I» 3
I PERIOD OF
EXPENDITURES
tjBsrres*
]T TOTAL FOR CURRENT
151 722 *4
.ii
38 623
;
113
15*
82
7 *1 837 18
3 1 6 0 06 30
2 0 736 99
18 537 *3
3 900 00
58 6 6 3 59
ji ?1? 8 3 6 31
7 6 * 7'\? 9S
I 57S S3 2 SRT
O,
92
#■» <
30
73
17 679
20 117
&Q
i 625 80S 1
990 279 19
716
776
7^ 1 06
00
'so 0 6 6 00
ia 000 00
k 000 00
7 0 . 7 5 0 00
j a?5
19
1
619 5~f5 *
197 6jl
4?^ 364 2
89
9 S0
Reproduced from the Unclassified / Declassified Holdings of the National Archives
DISTRIBUTION OF THE SCHOOL DOLLAR
1 9 3 3 - 1 9 3 4 BUDGET
SEATTLE SCHOOL DISTRICT NO. 1
S e a ttle ,
W a s h in g to n
Reproduced from the Unclassified I Declassified Holdings of the National Archives
SEATTLE SCHOOL DISTRICT NO. 1
UISTEIBUTION -"'F EACH $1000.00 TAXES LEVIED
1933 - 1934 BUOGET
AOCOUMTY TAX REFUND
S Q'.'ZO insurance —
$3.70 s a la r ie s
qf supervisors
$509.50 - INSTRUCTION
\
Oetails of Instruction
fo-ao
6- £ t
3«Z0 Salaries c-f Supervisors
39. J Salaries <f Principals,
Vice-Principals 6c Clerks
447.40 Salaries of Teachers
6.20 Textbooks 6c Book Repairs
11.70 Supplies
.90 Miscellaneous Expenses
'*0
^ #6.5 0 AUXILIARY AGEhOtS
$43.90 vocational. Schools
, V §>8-SO INSTITUTIONAL care
v $ 1.50 HI5CEUm*N£OUS
"" if$.10 PROPERTY JMPROVEWEWTS
’\
$ 6.20 TCXT BOOKS
% #90 M iSCEU.ANI.Ouy
'i
Reproduced from the Unclassified I Declassified Holdings of the National Archives
NOTES EXPLANATORY OF DISTRIBUTION OF 1935-54 BUDGET CHART
SEATTLE SCHOOL DISTRICT #1
Revenues for operation of the Seattle Public Schools are obtained
Largely from three tax sources, namely:
state apportionments, county
apportionments, and local tax levies on property in Seattle School
District #1.
In addition, other revenues such as receipts from tuition
high school bonus, etc., are estimated at $102,695 for next year.
The expenditures of the District are for two distinct purposes,
namely:
(l) fixed charges, such as bond interest and redemption, and
(2) current operating expenses.
Fixed charges such as are represented by bond interest and bond
redemption are inelastic, and during periods of lowered assessed valua
tions and falling off in tax collections are a serious drain upon
revenues for current operating expenses.
A comparison of the budget charts for the current school year and
for 1933-54 shows the proportional amounts of the school budget for
fixed charges and for current operating expenses; also where retrench
ments have been made and their extent.
Debt Service - $966,182.97, or 14.78% of total budget.
Increase - $4,421.41 over 1932-53.
(Interest on Bonds - $556,284.25; Increase,
(Bond Redemption
- $580,000.00; Decrease,
(Insurance Fund
- $ 27,180.66; Increase
(County Tax Refund - $ 2,718.06; Increase
$18,420.00
$14,000.00
§
1.28
.15
Bond interest and bond redemption are included under the head of
Debt Service on the chart and represent 14.32% of the total budget for
1933-34.
From 1918 to 1929 the school population increased from
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Seattle Public Schools Budget Chart - 2
43,329 to 66,545.
This rapid increase in number of pupils necessitated
the construction of additional housing facilities.
During the period
from 1920 to 1929 building operations in the nature of replacements
and new plants exceeded those for the total previous period of the
Seattle schools1 existence.
The total increase in enrollment from Sep
tember, 1917, to June, 1932, amounted to 27,530 or 63.54$.
That build
ings have not been constructed in excess of needs is evidenced by the
fact that many children are at present housed in portable structures.
Not being able to maintain a pay-as-you-go plan, bonds were voted by
the people to finance this building program, and these bonds are now
maturing and must be paid.
Bond Interest and Redemption Fund Reserve - $435,956.13, or 6.67$ of
total budget.
Decrease - $10,240.87 under 1932-33.
Failure of tax collections led to the establishment last year of
a bond interest and redemption fund reserve in order that future bond
interest and redemption payments might be protected and the possibili
ty of defaulting on bond interest payments and redemptions be avoided.
The amount of the bond interest and redemption to be paid next year
is $936,284.25.
The reserve of $435,956.13 brings the total of debt
service for bond interest and redemption and reserves for the same to
$1,372,240.38, or 20.99$ of the budget.
General Fund Reserves - $721,100.12, or 11.03$ of total budget.
Increase - $701,331.93 over 1932-33.
As a further protection of the financial credit of the District,
the sum of $654,165.31 is being set up as a reserve for warrant retire-
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Seattle Public Schools Budget Chart - 3
ment this y e a r . . The need for setting up this fund in the budget is
reflected in the fact that less than 75% of the taxes for 1932 were
collected.
In addition there is set aside for cancellation of taxes
$66,934.81, making the total General Fund reserve for uncollected
taxes $721,100.12, which, as stated a b o v e i s an increase of $701,331.9."
over 1932-33.
Thus the fixed charges for debt service and the reserves for u n
collected taxes, as given above, amount to $2,123,239.22, or 32.48%
of the total budget.
When to this is added $150,000, or 2.29% more of
the total budget, for interest on outstanding warrants, only 65.23% of
the budget is left for current operating expenses, including adminis
tration, instruction, operation and maintenance of the school plant,
and other services shown on the chart.
Current expenses represent
the elastic part of the budget and out of it the School Board has made
retrenchments which amount to $1,252,540.84 under the 1932-33 figure.
Through a comparison of the current items of expense shown on the
budget charts for 1932-33 and 1933-34 it may be seen where reductions
have been made.
Administration - $145,028.21, or 2.22% of total budget.
Decrease - $40,061.49 under 1932-33.
Reductions in General Control have been effected largely through
salary cuts, a reorganization of the business offices by consolidation
of departments, and the abolishment of one assistant superintendency.
Instruction - $3,329,794.13, or 50.95% of total budget.
Decrease - $1,038,089.81.under 1932-33.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Seattle Public Schools Budget Chart - 4
This item includes salaries of teachers, principals and super
visors, supplies, textbooks and book repairs, and miscellaneous ex
pense.
(a) Supervision - $24,153.34, or three-eighths of one per cent.
of the total budget.
Decrease - $17,429.66 under 1932-33.
Personnel of the supervisory staff has in the past two years
been reduced approximately 48$.
A recent nation-wide study, made by
the public schools of Des Moines, ^owa, of the average number of
pupils per person on the supervisory staff shows that Seattle employs
fewer supervisors in proportion to the number of pupils enrolled than
any city of like size reported upon.
This condition will be further
emphasized next year with the further reduction in the supervisory
staff contemplated in the 1933-34 budget.
(b) Teachers’ Salaries - $2,924,076.44, or 44.74$ of total budget.
Decrease - $904,590.20 under 1932-33.
The retrenchments in the department of Instruction have of
necessity been made, first, by decreasing the number of teachers and,
second, by reductions in teachers1 salaries.
Although the schools now
have the largest attendance in their history, the number of teachers
has been decreased by reassignment of duties as vacancies have occur
red during the past two years.
The result is that approximately 2000
more pupils are being served by 100 less teachers than in 1931-32.
Through successive cuts for the present and next year, the maximum
teachers * salaries have been reduced approximately 33-1/3$ under the
schedule for 1931-32.
below $1100.
No teacher receiving less than $1600 was cut
(See chart for 1933-34 salary schedule.)
The combined
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Seattle Public Schools Budget Chart - 5
result of reductions in teaching personnel and salary adjustments is
the budgeting of about 23.65$ less for teachers*
salaries in 1933-34
than in 1932-33.
(c) Textbooks and Book Repairs - $40,400.00, or about five-eighths
of one per cent, of total budget.
Decrease - $5,314.00 under 1932 - o c .
Textbook purchases will be virtually limited to replacements,
in order to make possible the decrease.
This rule must be adhered to
even though attendance increases.
(d) Supplies - $76,450.00, or 1.17$ of total budget.
Decrease - $15,236.00 under 1932-33.
Retrenchments in this item of expense are to be effected
through requiring children above the third grade to purchase a part of
their supplies,
such as pencils and tablets, which have heretofore been
supplied by the schools.
(e) Miscellaneous Expense - $6,150.00, or about one-tenth of one
per cent, of total budget.
Decrease - $2,450.00 under 1932-33.
Operation of School Plant - $477,926.05, or 7.31$ of total budget.
Decrease - $112,661.59 under 1932-33.
The decrease in the budget item for operation is made possible
for the most part through reductions in salaries of janitors and en
gineers, proportionate with cuts given other District employees.
Rigid economies in use of light, fuel and water, in which the
Board has had the cordial cooperation of its entire staff and which
have constituted a substantial reduction this year, will be continued
next year.
The consolidation of schools, which resulted in the aban
donment of several entire buildings, also is reflected in decreased
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Seattle Public Schools Budget Chart - 6
operating costs.
Maintenance of School Plant - $150,720.00, or 2 . 0 0 % of total budget.
Decrease - $19,525.00 under 1952-35.
Retrenchments here are made possible through wage reductions and
through keeping repairs to an irreducible minimum.
Auxiliary Agencies - $42,575.55, or about five-eighths of one per cent.
of total budget.
Decrease - $10,908.65 under 1932-53.
The reduction of $10,908.65 in the medical service is due almost
entirely to reductions in salaries of the school nurses and doctors.
Vocational Schools - $45,296.92, or about seven tenths of one per cent.
of total budget.
Decrease - $12,164.12 under 1952-55.
A part of the expense of the vocational schools is cared for by
subsidies from the Federal Government.
Parental Schools - $57,451.22, or about nine-tenths of one per cent, of
total budget.
Decrease - $17,950.18 under 1952-55.
The retrenchment in vocational and parental schools comes mainly
from salary and staff reductions.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
r
MAY I ;
Hr* male S* BayXey,
'
President, Board of Directors,
SeattXe School District Ho* X#
Central Building,
Seattle, Washington*
\
Boar Mr* Bayley:
Oovamor. Blaek has a a k a A m
to aslrnowlaAge
reoeipt of your letter of Itey 13 and the lnoXosures
transmitted therewith regarding General Obligation
Warrants of your school district*
Since the question
whether and to What extent under the law the federal
Reserve Bank of San Francisco should purchase sueh
warrants Is a natter primarily for the oonsideratlon
of its directors and offleers, X am transmitting a
oopy of your letter, together with the inolosures, to
the Governor of the federal Beserve Bank of San Fran
cisco for attention*
*
Very truly yours,
■*->-■5
.trr
Secretary*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
M r * 3 T o ltt I I * C a lk in s ^ O o w m o r ,
F o d o r a l B s s o r v o B a n k of S e a fsanoisoo,
8 m f r a n o is o o , C a l if o r n ia *
B o a r C k n ro rn o r C a lk in s t
I t e r y o u r in f o r m a t io n a n d o o n s ld o r a t lo n y o u w i l l f i n d
ln o lo s o d « o o p y o f a l o t t o r * J t t i l
F ra n k
S*
B a y l a y , B p o a ld o n t
S c h o o l D is t r ic t
Ko* 1,
o f t h o r e s o lu t io n
of tbo
lir e
1 3 - 1 9 5 3 , fr o m M r *
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of
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S o a t t lo W a s h in g to n , t o g a t h o r w it h
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t h o r o w lt h a n d th o o r i g i n a l * o f
th o o t h o r M a t e r ia l I n o lo s o d w it h h i t l o t t o r *
M r * B a y lo y U
o oopy
T h o r e o o lp t o f
l o t t o r b a a b o o n a o k n o w lo d g a d a n d h o h a a h o o n a d *
v ls o d t h a t t h o f ia * s t lo & w h o th o r a n d t o w h a t o x t o n t u n d o r th o
la v
t h o F o d o r a l r o a o r v o h a n k o h o u ld p u r o h a s o s u o ii w a r r a n ts i s
a a a t t o r f o r th o o o n s ld o r a t lo n o f t h o F o d o r a l R o a o r r o B a n k o f
S o n F r a n o is o o a a d t i a t t h i s a a t t o r h a a h o o n b r o o g it t o
it o
a t-
t o n t io n *
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to
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ln o lo s n v o s o f w h io h t h o o r ig in a ls
Tory M y
InoloWHPWtiB*
In *
I t w i l l a lo o h o a p p r o o la t o d
t r a n S K it t o d h o r o w ith *
ro o p o n d d l r o o t l y
M r* B a y lo y ’ s ao— m a lo a tlo n a n d o o n d t h o B o a rd f o r l t o
f o r m a t io n a o o p y o f y o u r r o p l y .
if
y o n w lU
yours,
Soorot&rr
a ro
Reproduced from the Unclassified I Declassified Holdings of the National Archives
S e a t t l e
P
u
b
u
S c h o o l s
c
O F F IC E O F T H E S U P E R IN T E N D E N T
C E N TR A L
S
e
a
t t l
e
:. W
B U IL D IN G
a
s
May 1 5 ,
h
i n
g
t o
n
1933
G o v e r n o r E u gen e R . B l a c k ,
F e d e ra l R eserv e B oard,
W a s h in g t o n , D . C.
My d e a r G o v e r n o r :
I am t r a n s m i t t i n g w i t h s u p p o r t i n g
s t a t i s t i c s a r e s o l u t i o n a d o p te d b y ou r B oard
o f D i r e c t o r s a t i t s r e g u l a r m e e t in g on
F r i d a y , May I S , r e q u e s t i n g t h e F e d e r a l R e s e r v e
B oard t o ta k e a c t i o n lo o k in g t o th e p u rch a s e
o f c e r t a in o u ts ta n d in g G e n e ra l O b lig a t io n
W a rra n ts o f t h i s s c h o o l d i s t r i c t .
F ed eral
R e s e r v e B anks h a v e s t a t u t o r y a u t h o r i t y t o
make s u c h a p u r c h a s e , an d we f e e l t h a t t h e
w a r r a n t s a r e a t h o r o u g h l y so u n d i n v e s t m e n t .
A p p r e c ia tin g you r good o f f i c e s
t h i s m a t t e r , I am
in
Y ou rs v e r y t r u l y ,
E n c lo s u r e s
F ra n k S . B a y l e y ,
/
P r e s id e n t , B oard o f D i r e c t o r s ,
S e a t t l e S c h o o l D i s t r i c t N o. 1 .
Reproduced from the Unclassified I Declassified Holdings of the National Archives
,
RESOLUTION
WHEREAS, King County, Washington, School District No. 1,
Seattle, comprises the corporate limits of the City of Seattle, with
some additional outlying territory, and constitutes the legally
organized municipal district responsible for the operation of the
public schools within said district, attended by approximately
62,000 children, and
WHEREAS, the cost of operating said schools is met by funds
received from direct taxation against all taxable property located
within said district, and in addition by apportionments received
from the State of Washington and the County of King, and
WHEREAS, under State laws, expenses of the district are met by
the issuance of general obligation interest-bearing warrants which,
under ordinary conditions, are paid out of available funds, or if
funds are not available with the County Treasurer, have heretofore
been taken at par by the local banking institutions, and
WHEREAS, owing to local conditions and lack of prompt tax
collections, the district had outstanding as of March 31, 1933,
$3,357,300 General Obligation Warrants, with an offsetting credit of
$3,911,000 of uncollected taxes currently being collected, and in
addition had anticipated income due from State and County apportion
ments for the ensuing year of $2,313,000, thereby clearly indicating
ample resources for the prompt payment of the aforesaid warrants,
and
WHEREAS,
the Clearing House Association of the City of Seattle,
whose members have heretofore accepted Seattle School District
Warrants at par value, have now advised the Seattle Board of
Education that because of the substantial amount of School District
Reproduced from the Unclassified I Declassified Holdings ofthe NationalArchives
W arrants now c a r r i e d by th e S e a t t l e banks (a p p r o x im a t e ly # 3 ,0 0 0 ,0 0 0 )
t h e y ca n n o t u n d er sound ba n k in g p r a c t i c e a c c e p t a d d i t i o n a l w a r r a n ts
a t t h i s t im e , and
WHEREAS, su ch r e f u s a l by th e banks t o n e g o t i a t e a d d i t i o n a l
w a r r a n ts has c a u s e d much d i s t r e s s
t o th e t e a c h in g s t a f f ,
oth er
e m p lo y e e s , and tra desm en d o in g b u s in e s s w it h t h i s d i s t r i c t ,
and h as
g r e a t l y em b a rra ssed th e S c h o o l D i s t r i c t i n i t s n e c e s s a r y f u n c t i o n s
i n p r o v id in g e d u c a t io n f o r i t s
6 2 ,0 0 0 c h i l d r e n ; now , t h e r e f o r e , be i t
RESOLVED b y th e B oard o f D i r e c t o r s o f S e a t t l e S c h o o l D i s t r i c t
N o. 1 ,
t h a t th e F e d e r a l R e s e r v e B oard and th r o u g h i t
R e s e r v e Bank o f San F r a n c is c o and i t s
th e F e d e r a l
l o c a l b ra n ch i n S e a t t l e , be
r e q u e s t e d t o i n v e s t i g a t e th e f i n a n c i a l c o n d i t i o n o f S e a t t l e S c h o o l
D i s t r i c t N o. 1 , and upon su ch s a t i s f a c t o r y i n v e s t i g a t i o n ,
t h a t th e
F e d e r a l R e s e r v e Banks be r e q u e s t e d t o p u rc h a s e f o r t h e i r own
a c c o u n t , i n a c c o r d a n c e w it h P a ra g ra p h (b ) o f S e c t i o n 1 4 , o f th e
F e d e r a l R e s e r v e A c t as amended t o M arch 4 , 1 9 3 1 , a s u f f i c i e n t amount
o f th e o u t s t a n d in g l e g a l l y is s u e d G e n e ra l O b l i g a t i o n W arrants o f t h i s
S c h o o l D i s t r i c t so as to r e l i e v e
S ch ool D is t r ic t ;
and be i t
th e s e r i o u s s i t u a t i o n f a c e d b y t h i s
fu rth e r
RESOLVED, T hat a c o p y o f t h i s r e s o l u t i o n , w it h p r o p e r s u p p o r t in g
f i n a n c i a l d a t a , be fo r w a r d e d t o th e P r e s id e n t o f th e U n ite d S t a t e s ,
t o Mr. Eugene R . B la c k , G ov e rn o r o f th e F e d e r a l R e s e r v e B oard a t
W a sh in g ton , D. C .,
and t o Mr. J . U. C a lk in s , G o v e rn o r o f th e F e d e r a l
R e s e r v e Bank o f San F r a n c i s c o ,
w it h th e r e s p e c t f u l r e q u e s t t h a t
G ov ern or C a lk in s c o n s id e r th e m a tte r in h i s hands f o r a c t i o n and
r e p l y t o th e B oard o f E d u c a tio n o f S e a t t l e .
E.
May
B.
12,
Holmes,
1933
Secretary
S e a t t l e S c h o o l D i s t r i c t N o. 1 .
Reproduced from the Unclassified I Declassified Holdings ofthe NationalArchives
S e a t t l e
P u b l ic
S c h o o l ®
O F F IC E O F T H £ SUP ERIN T EN D EN T
CENTRAL BUILDING
S S A T T L E ,W A S H IN G T O K
May 12, 1935
fhe President,
The White House
Dear Mr, President:
Knowing your constructive achievements on behalf
of education as Governor of New York and encouraged by
your published expression of "faith in education as
the foundation of democratic government” and of the
need of our schools for "the appreciation and co
operation of all,0 the Seattle Board of Education has
directed me to forward you a copy of the resolution
unanimously passed by the Board today.
While it appreciates that in the midst of so many
weighty problems of the day you cannot devote the time
necessary to a study of this resolution, nevertheless
the Board realizes your capacity for prompt and decisive
action, and it respectfully requests that you refer the
enclosed resolution, together with the whole question
of relief for public schools by the Federal Reserve
Board under the provisions of Paragraph (b) of Section 14,
of the Federal Reserve Act as amended to March 4, 1931,
to the proper authority with suitable expression of your
desire that a thorough study be made in the interests of
the education of the boys and girls of this community
and of the Nation.
Yours respectfully,
Enclosures
President, Board of Directors,
Seattle School District No. 1.
Reproduced from the Unclassified I Declassified Holdings ofthe NationalArchives
RESOLUTION
WHEREAS, K ing C ou n ty , W a sh in g to n , S c h o o l D i s t r i c t N o. 1 ,
S e a ttle ,
c o m p r is e s th e c o r p o r a t e l i m i t s o f th e C it y o f S e a t t l e , w ith
some a d d i t i o n a l o u t l y i n g t e r r i t o r y ,
and c o n s t i t u t e s
o r g a n iz e d m u n ic ip a l d i s t r i c t r e s p o n s i b l e f o r
p u b l i c s c h o o l s w it h in s a i d d i s t r i c t ,
th e l e g a l l y
th e o p e r a t i o n o f th e
a t t e n d e d b y a p p r o x im a t e ly
6 2 ,0 0 0 c h i l d r e n , and
WHEREAS, t h e c o s t o f o p e r a t in g s a id s c h o o l s i s m et by fu n d s
r e c e i v e d fro m d i r e c t t a x a t i o n a g a in s t a l l t a x a b le p r o p e r t y l o c a t e d
w it h in s a id d i s t r i c t , and i n a d d i t i o n b y a p p o r tio n m e n ts r e c e i v e d
from th e S t a t e o f W ash in gton and th e C oun ty o f K in g , and
WHEREAS, u n d er S t a t e la w s , e x p e n s e s o f th e d i s t r i c t a r e m et by
th e is s u a n c e o f g e n e r a l o b l i g a t i o n
i n t e r e s t - b e a r i n g w a r r a n ts w h ic h ,
u n d er o r d in a r y c o n d i t i o n s , a r e p a id o u t o f a v a i l a b l e fu n d s , o r i f
fu n d s a r e n o t a v a i l a b l e w ith th e C oun ty T r e a s u r e r , have h e r e t o f o r e
b e e n ta k en a t p a r by th e l o c a l ba n k in g i n s t i t u t i o n s , and
WHEREAS, ow ing t o l o c a l c o n d i t i o n s and l a c k o f prom pt t a x
c o lle c tio n s ,
th e d i s t r i c t had o u t s t a n d in g as o f March 3 1 , 1 9 3 3 ,
$ 3 ,3 5 7 ,3 0 0 G e n e ra l O b l i g a t i o n W a rra n ts, w it h an o f f s e t t i n g c r e d i t o f
$ 3 ,9 1 1 ,0 0 0 o f u n c o l l e c t e d t a x e s c u r r e n t l y b e in g c o l l e c t e d ,
and i n
a d d i t i o n had a n t i c i p a t e d in com e due from S t a t e and C oun ty a p p o r t i o n
m ents f o r
th e e n s u in g y e a r o f $ 2 ,3 1 3 ,0 0 0 ,
am ple r e s o u r c e s f o r
th e re b y c le a r ly in d ic a t in g
th e prom pt paym ent o f th e a f o r e s a i d w a r r a n t s ,
and
WHEREAS, th e C le a r in g House A s s o c i a t i o n o f th e C i t y o f S e a t t l e ,
w hose members h ave h e r e t o f o r e a c c e p t e d S e a t t l e S c h o o l D i s t r i c t
W arrants a t p a r v a lu e , have now a d v is e d th e S e a t t l e B oard o f
E d u c a t io n t h a t b e c a u s e o f th e s u b s t a n t i a l amount o f S c h o o l D i s t r i c t
Reproduced from the Unclassified I Declassified Holdings ofthe NationalArchives
#2
W arran ts now c a r r i e d by th e S e a t t l e banks (a p p r o x im a t e ly # 3 ,0 0 0 ,0 0 0 )
t h e y ca n n o t u n d er sound b a n k in g p r a c t i c e a c c e p t a d d i t i o n a l w a rra n ts
a t t h i s t im e , and
WHEREAS, su ch r e f u s a l b y th e banks t o n e g o t i a t e a d d i t i o n a l
w a r r a n ts has c a u s e d much d i s t r e s s
t o the t e a c h in g s t a f f ,
oth er
e m p lo y e e s , and tra desm en d o in g b u s in e s s w it h t h i s d i s t r i c t ,
and h as
g r e a t l y em b a rra ssed th e S c h o o l D i s t r i c t i n i t s n e c e s s a r y f u n c t i o n s
i n p r o v id in g e d u c a t io n f o r i t s
6 2 ,0 0 0 c h i l d r e n ; now , t h e r e f o r e , be i t
RESOLVED b y th e B oard o f D i r e c t o r s o f S e a t t l e S c h o o l D i s t r i c t
N o. 1 , t h a t th e F e d e r a l R e s e r v e B oard and th r o u g h i t
R e s e r v e Bank o f San F r a n c is c o and i t s
th e F e d e r a l
l o c a l b ra n ch i n S e a t t l e , be
r e q u e s t e d t o i n v e s t i g a t e th e f i n a n c i a l c o n d i t i o n o f S e a t t l e S c h o o l
D i s t r i c t N o. 1 , and upon su ch s a t i s f a c t o r y i n v e s t i g a t i o n ,
F e d e r a l R e s e r v e Banks be r e q u e s t e d t o p u rc h a s e f o r
a c c o u n t , i n a c c o r d a n c e w it h P a ra g ra p h (b )
t h a t th e
t h e i r own
o f S e c t i o n 1 4 , o f th e
F e d e r a l R e s e r v e A c t as amended t o M arch 4 , 1 9 3 1 , a s u f f i c i e n t amount
o f th e o u t s t a n d in g l e g a l l y is s u e d G e n e ra l O b l i g a t i o n W arrants o f t h i s
S c h o o l D i s t r i c t so as to r e l i e v e
S ch ool D is t r ic t ;
and be i t
th e s e r i o u s s i t u a t i o n f a c e d b y t h i s
fu rth e r
RESOLVED, T hat a c o p y o f t h i s r e s o l u t i o n , w it h p r o p e r s u p p o r t in g
f i n a n c i a l d a t a , be fo r w a r d e d t o th e P r e s id e n t o f th e U n ite d S t a t e s ,
t o Mr. Eugene R . B la c k , G ov e rn o r o f th e F e d e r a l R e s e rv e B oard a t
W a sh in g ton , D. C . ,
and t o Mr. J * U. C a lk in s , G o v e rn o r o f th e F e d e r a l
R e s e r v e Bank o f San F r a n c i s c o ,
w it h th e r e s p e c t f u l r e q u e s t t h a t
G ov ern or C a lk in s c o n s id e r th e m a tte r in h i s hands f o r a c t i o n and
r e p l y t o th e B oard o f E d u c a tio n o f S e a t t l e .
E.
May
B.
12,
Holmes,
1933
Secretary
S e a t t l e S c h o o l D i s t r i c t N o. 1 .
Reproduced from the Unclassified I Declassified Holdings ofthe National Archives
SEATTLE SCHOOL DISTRICT NO. 1
STATUS OF GENERAL FOND
AS TAKEN FROM MOHTHT.Y STATEMENT AS OF MARCH 51. 1953
Uncollected. Taxes:
March 51, 1932
March 31, 1953
3,062,600
t 5.911.000
$
INCREASE .............. $ 848,400
Co. Treas. Cash Balance:
March 31, 1932
March 51, 1933
7£>4,7oo
847.500
INCREASE .............. 1,612,000
Warrants Outstanding:
March 31, 1932
March 31, 1955
1,576,200
5.557,500
I N C R E A S E .... ......... 1,781,100
Deduct: Increase in Cash Balance -
1.612.000
INCREASE FOR YEAR ENDED MARCH 51, 1955 in CURRENT OVERDRAFT -
169,100
RECEIPTS AND EXPENSES
GENERAL FUND - NINE MONTHS ENDING MARCH 51. 1952-1955
Actual Receipts - all sources
1952
# 1955
5,272,800
5.248.900
DECREASE ..............
Actual Expenses
1952
1955
4,242,200
5.480.100
DECREASE .... .........
Excess Expenditures over Receipts
«
«
«
»
—
1952
1955
25,900
762,100
#969,400
251,200
# Discount tax date extended toy action of legislature from Mareh 15th
to May 15th*
Reproduced from the Unclassified I Declassified Holdings ofthe NationalArchives
DISTRIBUTION OF THE SCHOOL DOLLAR
1933-1934 BUDGET
SEATTLE SCHOOL DISTRICT NO. 1
Seattle, Washington
Reproduced from the Unclassified I Declassified Holdings of the National Archives
SEATTLE SCHOOL 01STRICT NO. 1
DISTRIBUTION r,F EACH $1000.00 TAXES LEVIED
1933 - 193^ BUDGET
AO
O
COUNTY TAX REFUND
S Q-.'Za insurance
SE H E ^ \ f^ e u U A ^ O « ’T
*' 5.00.10 W ^ ^ / o u L t C T . O «
B ( ESTIt-IA-TlNS
$ 3. 70
SALARIES qf supervisors
\
$509.50 - INSTRUCTION
Details of Instruction
^0 Salaries of Supervisors
Salaries cf Principals,
Vice-Principals & Clerks
X''\447.40 Salaries .£ Teachers
\ 6.20 Textbooks & Book Repairs
11,70 Supplies
/ .90 Miscellaneous Expenses
/
P uf VY)
/
>5.5 0 AUXILIARY AGtnCieS
$6.90 vocational Schools
\
§ 8 .8 0 INSTITUTIONAL CARE
v $ 1.50 HfSCEUi^NEOUS
^ $ it-fO PROPERTY IMPROVEMEWTS
$ 6.20 TEXT BOOKS
£ .9 0 MISCELLANEOUS
Reproduced from the Unclassified I Declassified Holdings ofthe NationalArchives
NOTES EXPLANATORY OF DISTRIBUTION OF 1 9 3 3 -5 4 BUDGET CHART
SEATTLE SCHOOL DISTRICT #1
R even u es f o r o p e r a t i o n o f th e S e a t t l e P u b l ic S c h o o ls a r e o b t a in e d
l a r g e l y from t h r e e t a x s o u r c e s , n a m e ly :
s t a t e a p p o r t io n m e n t s ,
c o u n ty
a p p o r tio n m e n t s , and l o c a l t a x l e v i e s on p r o p e r t y in S e a t t l e S c h o o l
D is t r ic t #1.
In a d d i t i o n , o t h e r r e v e n u e s such as r e c e i p t s from t u i t i o n
h ig h s c h o o l b o n u s,
e t c .,
a r e e s t im a t e d a t $ 1 0 2 ,6 9 5 f o r n e x t y e a r .
The e x p e n d it u r e s o f th e D i s t r i c t a r e f o r two d i s t i n c t p u r p o s e s ,
n a m ely :
(2 )
(l)
fix e d ch arges,
such a s bond i n t e r e s t and r e d e m p tio n , and
c u r r e n t o p e r a t in g e x p e n s e s .
F ix e d c h a r g e s su ch as a r e r e p r e s e n t e d by bond i n t e r e s t and bond
r e d e m p tio n a r e i n e l a s t i c ,
t i o n s and f a l l i n g
and d u r in g p e r io d s o f lo w e r e d a s s e s s e d v a lu a
o f f in t a x c o l l e c t i o n s a r e a s e r i o u s d r a in upon
r e v e n u e s f o r c u r r e n t o p e r a t in g e x p e n s e s .
A co m p a ris o n o f th e b u d g e t c h a r t s f o r th e c u f r e n t s c h o o l y e a r and
f o r 1 9 3 3 -3 4 shows th e p r o p o r t i o n a l am ounts o f th e s c h o o l b u d g e t f o r
fix e d
c h a r g e s and f o r c u r r e n t o p e r a t in g e x p e n s e s ; a l s o w here r e t r e n c h
m ents h a ve been made and t h e i r e x t e n t .
D ebt S e r v i c e - $ 9 6 6 ,1 8 2 .9 7 , o r 1 4 .7 8 $ o f t o t a l b u d g e t .
I n c r e a s e - $ 4 ,4 2 1 .4 1 o v e r 1 9 3 2 -3 3 .
( I n t e r e s t on Bonds - $ 5 5 6 ,2 8 4 .2 5 ; I n c r e a s e , $ 1 8 ,4 2 0 .0 0
(Bond R edem ption
- $ 3 8 0 ,0 0 0 .0 0 ; D e c r e a s e , $ 1 4 ,0 0 0 .0 0
(I n s u r a n c e Fund
- $ 2 7 ,1 8 0 .6 6 ; I n c r e a s e
$
1 .2 8
(C ou n ty Tax R efu n d - $ 2 ,7 1 8 . 0 6 ; I n c r e a s e
.1 3
Bond i n t e r e s t and bond r e d e m p tio n a r e in c lu d e d u n d er th e head o f
D ebt S e r v i c e on th e c h a r t and r e p r e s e n t 1 4 .3 2 $ o f th e t o t a l b u d g e t f o r
1 9 3 3 -3 4 .
From 1918 t o 1929 th e s c h o o l p o p u la t i o n i n c r e a s e d from
Reproduced from the Unclassified I Declassified Holdings ofthe NationalArchives
S e a t t l e P u b l ic S c h o o ls B udget C h a rt - 2
4 3 ,3 2 9 t o 6 6 ,5 4 5 .
T h is r a p id i n c r e a s e in number o f p u p i l s n e c e s s i t a t e d
the c o n s t r u c t i o n o f a d d i t i o n a l h o u s in g f a c i l i t i e s .
D u rin g th e p e r io d
rrom 1920 t o 1929 b u i l d i n g o p e r a t io n s in th e n a tu r e o f r e p la c e m e n ts
and new p l a n t s e x c e e d e d t h o s e f o r th e t o t a l p r e v io u s p e r i o d o f th e
S e a ttle
s c h o o ls *
te m b e r, 1 9 1 7 ,
e x is te n c e .
The t o t a l in c r e a s e i n e n r o llm e n t from S ep
t o J u n e, 1 9 3 2 , am ounted t o 2 7 ,5 3 0 o r 6 3 .5 4 $ .
in g s h a ve n o t been c o n s t r u c t e d in e x c e s s o f n e e d s i s
That b u i l d
e v id e n c e d by th e
f a c t t h a t many c h i l d r e n a r e a t p r e s e n t h o u s e d in p o r t a b l e
stru ctu re s.
N ot b e in g a b le t o m a in ta in a p a y - a s - y o u - g o p la n , bon ds w ere v o t e d by
th e p e o p le t o f i n a n c e t h i s b u i l d i n g p rog ra m , and t h e s e bon ds a r e now
m a tu rin g and must be p a id .
Bond I n t e r e s t and R edem ption Fund R e s e r v e - $ 4 3 5 ,9 5 6 .1 3 , o r 6 .6 7 $ o f
t o t a l b u d g e t.
D e c re a s e - $ 1 0 ,2 4 0 .8 7 u n d er 1 9 3 2 -3 3 .
F a i l u r e o f t a x c o l l e c t i o n s l e d t o th e e s t a b lis h m e n t l a s t y e a r o f
a bond i n t e r e s t and r e d e m p tio n fu n d r e s e r v e in o r d e r t h a t f u t u r e bond
i n t e r e s t and r e d e m p tio n paym ents m ig h t be p r o t e c t e d and th e p o s s i b i l i
t y o f d e f a u l t i n g on bond i n t e r e s t paym ents and r e d e m p tio n s be a v o id e d .
The amount o f th e bond i n t e r e s t and r e d e m p tio n t o be p a id n e x t y e a r
is
$ 9 3 6 ,2 8 4 .2 5 .
The r e s e r v e o f $ 4 3 5 ,9 5 6 .1 3 b r in g s th e t o t a l o f d e b t
s e r v i c e f o r bond i n t e r e s t and r e d e m p tio n and r e s e r v e s f o r th e same t o
$ 1 ,3 7 2 ,2 4 0 .3 8 , o r 2 0 .9 9 $ o f th e b u d g e t.
G e n e ra l Fund R e s e r v e s - $ 7 2 1 ,1 0 0 .1 2 , o r 1 1 .0 3 $ o f t o t a l b u d g e t.
I n c r e a s e - $ 7 0 1 ,3 3 1 .9 3 o v e r 1 9 3 2 -3 3 .
As a f u r t h e r p r o t e c t i o n o f th e f i n a n c i a l c r e d i t o f th e D i s t r i c t ,
th e sum o f $ 6 5 4 ,1 6 5 .3 1 i s
b e in g s e t up a s a r e s e r v e f o r w a rra n t r e t i r e -
Reproduced from the Unclassified I Declassified Holdings ofthe NationalArchives
S e a t t l e P u b l ic S c h o o ls B udget C h art - 3
ment t h i s y e a r . . The n eed f o r
r e fle c te d
s e t t i n g up t h i s fu n d in th e b u d g e t i s
in th e f a c t t h a t l e s s than 75$ o f th e t a x e s f o r 1932 w ere
c o lle c te d .
In a d d i t i o n
th ere i s
s e t a s id e f o r c a n c e l l a t i o n o f t a x e s
$ 6 6 ,9 3 4 .8 1 , m aking th e t o t a l G e n e ra l Fund r e s e r v e f o r u n c o l l e c t e d
t a x e s $ 7 2 1 ,1 0 0 .1 2 , w h ich , as s t a t e d a b o v e ,
i s an i n c r e a s e o f $701,331.91:
o v e r 1 9 3 2 -3 3 .
Thus th e f i x e d c h a r g e s f o r d e b t s e r v i c e and th e r e s e r v e s f o r un
c o lle c te d
t a x e s , a s g iv e n a b o v e , amount t o $ 2 ,1 2 3 ,2 3 9 .2 2 , o r 3 2 .4 8 $
o f th e t o t a l b u d g e t.
When t o t h i s i s
th e t o t a l b u d g e t, f o r
i n t e r e s t on o u t s t a n d in g w a r r a n ts , o n ly 6 5 .2 3 $ o f
th e b u d g e t i s l e f t
tr a tio n ,
fo r
in s tr u c tio n ,
and o t h e r s e r v i c e s
added $ 1 5 0 ,0 0 0 , o r 2 .2 9 $ m ore o f
c u r r e n t o p e r a t in g e x p e n s e s ,
o p e r a t io n and m a in ten a n ce o f
shown on th e c h a r t .
i n c l u d i n g a d m in is
th e s c h o o l p l a n t ,
C u rre n t e x p e n s e s r e p r e s e n t
th e e l a s t i c p a r t o f th e b u d g et and o u t o f i t
th e S c h o o l B oard h a s made
r e tr e n c h m e n ts w h ich amount t o $ 1 ,2 5 2 ,5 4 0 .8 4 u n d er th e 1 9 3 2 -3 3 f i g u r e .
Through a co m p a r is o n o f th e c u r r e n t ite m s o f e x p e n s e shown on th e
b u d g e t c h a r t s f o r 1 9 3 2 -3 3 and 1 9 3 3 -3 4 i t may be se e n where r e d u c t i o n s
h ave been made.
A d m in is t r a t io n - $ 1 4 5 ,0 2 8 .2 1 , o r 2 .2 2 $ o f t o t a l b u d g e t .
D e c r e a s e - $ 4 0 ,0 6 1 .4 9 u n der 1 9 3 2 -3 3 .
R e d u c t io n s in G e n e ra l C o n t r o l h a ve been e f f e c t e d
s a la r y c u t s ,
a r e o r g a n i z a t i o n o f th e b u s in e s s o f f i c e s
l a r g e l y th ro u g h
by c o n s o l i d a t i o n
o f d e p a r tm e n ts , and th e a b o lis h m e n t o f one a s s i s t a n t s u p e r in t e n d e n c y .
I n s t r u c t i o n - $ 3 ,3 2 9 ,7 9 4 .1 3 , o r 5 0 .9 5 $ o f t o t a l b u d g e t .
D e c r e a s e - $ 1 , 0 3 8 , 0 8 9 . 8 1 .u n d e r 1 9 3 2 -3 3 .
Reproduced from the Unclassified I Declassified Holdings ofthe NationalArchives
S e a t t l e P u b l ic S c h o o ls B udget C h a rt - 4
T h is ite m in c l u d e s
v is o r s ,
s u p p lie s ,
s a l a r i e s o f t e a c h e r s , p r i n c i p a l s and s u p e r
t e x t b o o k s and book r e p a i r s ,
and m is c e l la n e o u s e x
pen se.
(a )
S u p e r v is i o n - $ 2 4 ,1 5 3 .3 4 , o r t h r e e - e i g h t h s o f one p e r c e n t .
o f th e t o t a l b u d g e t .
D e c r e a s e - $ 1 7 ,4 2 9 .6 6 u n d er 1 9 3 2 -5 3 .
P e r s o n n e l o f th e s u p e r v i s o r y s t a f f h a s in th e p a s t two y e a r s
been r e d u c e d a p p r o x im a t e ly 48%.
th e p u b l i c
A r e c e n t n a t i o n - w i d e s t u d y , made by
s c h o o l s o f Des M o in e s ,
■‘•owa, o f th e a v e r a g e number o f
p u p i l s p e r p e r s o n on th e s u p e r v i s o r y s t a f f shows t h a t S e a t t l e em ploys
fe w e r s u p e r v i s o r s in p r o p o r t i o n t o th e number o f p u p i l s e n r o l l e d than
any c i t y o f l i k e
s i z e r e p o r t e d u p on .
T h is c o n d i t i o n w i l l be f u r t h e r
em p h a sized n e x t y e a r w ith th e f u r t h e r r e d u c t i o n in th e s u p e r v i s o r y
s t a f f c o n te m p la t e d in th e 1 9 3 3 -3 4 b u d g e t.
(b )
T e a c h e r s 1 S a l a r i e s - $ 2 ,9 2 4 ,0 7 6 .4 4 , o r 44.74% o f t o t a l b u d g e t.
D e c r e a s e - $ 9 0 4 ,5 9 0 .2 0 u n d er 1 9 3 2 -3 5 .
The r e tr e n c h m e n ts in th e d ep a rtm en t o f I n s t r u c t i o n h a ve o f
n e c e s s i t y been made, f i r s t ,
by d e c r e a s in g th e number o f t e a c h e r s an d,
s e c o n d , by r e d u c t i o n s in t e a c h e r s 1 s a l a r i e s .
A lth o u g h th e s c h o o l s now
h a v e th e l a r g e s t a t t e n d a n c e in t h e i r h i s t o r y ,
th e number o f t e a c h e r s
h a s been d e c r e a s e d by r e a s s ig n m e n t o f d u t i e s as v a c a n c ie s h a ve o c c u r
r e d d u r in g th e p a s t two y e a r s .
The r e s u l t i s
m ore p u p i l s a r e b e in g s e r v e d by 100 l e s s
t h a t a p p r o x im a t e ly 2000
t e a c h e r s than in 1 9 3 1 -3 2 .
T hrough s u c c e s s i v e c u t s f o r th e p r e s e n t and n e x t y e a r ,
te a ch e rs*
s a l a r i e s h a ve been r e d u c e d a p p r o x im a t e ly 3 3 - 1 / 5 % u n d er th e
s c h e d u le f o r 1 9 5 1 -5 2 .
b e lo w $ 1 1 0 0 .
th e maximum
No t e a c h e r r e c e i v i n g l e s s
than $1600 was c u t
(S e e c h a r t f o r 1 9 3 3 -3 4 s a la r y s c h e d u l e .)
The com b in ed
Reproduced from the Unclassified I Declassified Holdings ofthe NationalArchives
S e a t t l e P u b lic S c h o o ls B udget C h a rt - 5
r e s u l t o f r e d u c t io n s in t e a c h in g p e r s o n n e l and s a l a r y a d ju s tm e n ts i s
th e b u d g e t in g o f a b o u t 2 3 .6 5 $ l e s s f o r
t e a c h e r s 1 s a l a r i e s in 1 9 3 3 -5 4
than in 1 9 3 2 -5 3 .
(c )
T e x tb o o k s and Book R e p a ir s - $ 4 0 ,4 0 0 .0 0 , o r a b o u t f i v e - e i g h t h s
o f one p e r c e n t , o f t o t a l budge'c
D e c re a s e - $ 5 ,5 1 4 .0 0 u n der 1 9 5 2 -5 t
T e x tb o o k p u r c h a s e s w i l l be v i r t u a l l y l i m i t e d t o r e p la c e m e n t s ,
in o r d e r t o make p o s s i b l e th e d e c r e a s e .
T h is r u l e m ust be a d h ered to
even th ou gh a t t e n d a n c e i n c r e a s e s .
(d )
S u p p lie s - $ 7 6 ,4 5 0 .0 0 , o r 1 .1 7 $ o f t o t a l b u d g e t.
D e c r e a s e - $ 1 5 ,2 5 6 .0 0 u n d er 1 9 5 2 -5 5 .
R etren ch m en ts i n t h i s ite m o f e x p e n s e a r e t o be e f f e c t e d
th rou g h r e q u i r i n g c h i l d r e n a b o v e th e t h i r d g ra d e t o p u r c h a s e a p a r t o f
t h e ir s u p p lie s ,
such as p e n c i l s and t a b l e t s ,
w hich h a ve h e r e t o f o r e been
s u p p lie d by th e s c h o o l s .
( e ) M is c e lla n e o u s E xpen se ~ $ 6 ,1 5 0 .0 0 , o r a b o u t o n e - t e n t h o f one
p e r c e n t , o f t o t a l b u d g e t.
D e c r e a s e - $ 2 ,4 5 0 .0 0 u n d er 1 9 3 2 -3 5 .
O p e r a t io n o f S c h o o l P la n t - $ 4 7 7 ,9 2 6 .0 5 , o r 7 .5 1 $ o f t o t a l b u d g e t.
D e c re a s e - $ 1 1 2 ,6 6 1 .5 9 u n d er 1 9 3 2 -5 5 .
The d e c r e a s e in th e b u d g e t ite m f o r o p e r a t i o n i s made p o s s i b l e
fo r
th e m ost p a r t th ro u g h r e d u c t io n s in
s a l a r i e s o f j a n i t o r s and e n
g i n e e r s , p r o p o r t i o n a t e w ith c u t s g iv e n o t h e r D i s t r i c t e m p lo y e e s .
R i g i d e c o n o m ie s in u s e o f l i g h t ,
f u e l and w a t e r ,
B oard h as had th e c o r d i a l c o o p e r a t i o n o f i t s
e n tir e
in w h ich th e
s t a f f and w h ich
h ave c o n s t i t u t e d a s u b s t a n t i a l r e d u c t io n t h i s y e a r , w i l l be c o n t in u e d
next y ea r.
The c o n s o l i d a t i o n o f s c h o o l s ,
donment o f s e v e r a l e n t i r e b u i l d i n g s ,
a ls o
w h ich r e s u l t e d in th e ab an
is
r e fle c te d
in d e c r e a s e d
Seattle
Public
Schoo"
Budget
Chart
-
6
o p e r a tin g c o s t s .
M a in ten a n ce o f S c h o o l P la n t - $ 1 3 0 ,7 2 0 .0 0 , o r 2 .0 0 $ o f t o t a l b u d g e t.
D e c re a s e - $ 1 9 ,3 2 5 .0 0 u n d er 1 9 3 2 -3 3 .
R etren ch m en ts h e r e a r e made p o s s i b l e th r o u g h wage r e d u c t i o n s and
th ro u g h k e e p in g r e p a i r s t o an i r r e d u c i b l e minimum.
A u x i l i a r y A g e n c ie s - $ 4 2 ,5 7 3 .3 5 , o r a b o u t f i v e - e i g h t h s o f one p e r c e n t .
o f t o t a l b u d g e t.
D e c r e a s e - $ 1 0 ,9 0 8 .6 5 u n d er 1 9 3 2 -3 3 .
The r e d u c t i o n o f $ 1 0 ,9 0 8 .6 5 in t h e m e d ic a l s e r v i c e i s
e n tir e ly
t o r e d u c t i o n s in
due a lm o s t
s a l a r i e s o f th e s c h o o l n u r s e s and d o c t o r s .
V o c a t i o n a l S c h o o ls - $ 4 5 ,2 9 6 .9 2 , o r a b o u t s e v e n t e n t h s o f one p e r c e n t .
o f t o t a l b u d g e t.
D e c r e a s e - $ 1 2 ,1 6 4 .1 2 u n d er 1 9 3 2 -3 3 .
A p a r t o f th e e x p e n s e o f th e v o c a t i o n a l s c h o o ls i s
c a r e d f o r by
s u b s i d i e s from th e F e d e r a l G overnm ent.
P a r e n t a l S c h o o ls - $ 5 7 ,4 3 1 .2 2 , o r a b o u t n i n e - t e n t h s o f one p e r c e n t ,
t o t a l b u d g e t.
D e c re a s e - $ 1 7 ,9 3 0 .1 8 u n d er 1 9 3 2 -3 3 .
The r e tr e n c h m e n t in v o c a t i o n a l and p a r e n t a l s c h o o l s com es m a in ly
from s a la r y and s t a f f r e d u c t i o n s .
of
Reproduced from the Unclassified I Declassified Holdings of the National Archives
J U N a O (933
Mr* W. C. Harding, Secretary,
Roseburg Chamber of Commerce,
Roseburg, Oregon®
Dear Sir:
Receipt is acknowledged of your letter of June 19 , 1933
with further reference to the purchase of warrants by Federal re*
•erve bank®.
You state that such warrants have no definite matur
ity and that their payment depends on tax receipt* and you inquire
if $50,000 worth of euch warrants are sold, one-half of whioh
"should be paid* within six months, w hat would be the attitude of
the Federal Heserve Eoard with regard to the other half?
There is inclosed herewith a copy of the Federal Reserve
Board*s Regulation L, which sets forth the requirements as to ths
eligibility of State and municipal warrants for purchase by Federal
reserve banks.
You will note that the law requires that, in order to
be eligible for purchase by a Federal reserve bank, such warrants
must have a maturity from the date of purchase of not exceeding six
months, in addition to fulfilling certain other requirements*
War*
rants which have no definite maturity cannot be said to have a
maturity of not exceeding six months and, therefore, are not el igible for purohase by Federal reserve banks, even though it is
Reproduced from the Unclassified I Declassified Holdings ofthe NationalArchives
Mr* f
C. Bardins — 2
oxpoetod that thoy will ho rotirod within oix ■oaths out of tax
roooifts*
ton will nadorotand* of oonroo, that tho ollgihllity
and aeooptahility of warrant* ia partienlar eaooo i« a quoatioa to
ho dotoraiaod hy tho Fodoral rooono hank to whioh ouch warranto aro
offorod*
Yory truly yo»ro,
Chostor Horrill#
Soerotary*
Znelooaro<
GHC/WW/sad
Reproduced from the Unclassified I Declassified Holdings of the National Archives
ROSEBURO
CTAMB£R/COMM £RC£
Offices Medical Arts Building
ROSEBURG, O R E G O N
June I£ iE-eS
4HH SI 8 IS *
Mr, Chester Morrill
Secretary, Federal Reserve Board
Washington, D. C.
Dear Mr, Morrill:
Referring to vour lettor of Jnne 9th(to Senator Charles L,
kcilary, a copy of Tjhich he urns pleased to send to me which
I received this morning, clears the air very decidedly with
regard to this warrant question.
The warrants to which I refer are both city and county with
no especial maturity dates, but their maturity, of course,
will depend upon the receipt of taxation money. The question
that is in my mind in this connection is this: suppose fifty
thousand dollars worth of these warrants are sold, one half of
which amount should be paid within the six months period, rthat
would be the attitude of the Heserve Board on the other twenty
five thousand that would remain unpaid until further taxes were
paid in.
Might 1 have your answer to this question.
Very truly yours
W. C. Harding
Secretary
>■{<>)
!
» P'
■.....
..
.. I.-1NU
i thgffriclassified I Declassified Holdings of the National Archives
Honorable c* L» McHary,
Uhited States Sonata,
^
Washington, D* 0#
'• ^
Boar Sanator MoNary:
.Reference ia n»de to
Governor
Blaok and to tha lattar transmitted therewith dated May 8, addressed
to you by Mr* W. C. Harding, Secretary of the Roseburg Chamber of
Coaraerce, Roseburg, Oregon.
Mr, Harding stated, among other things,
in his latter that "our people are wondering why it is that our
bankers uho hare inadequate funds to take oare of our own small
country needs, and find it utterly impossible to take over these
warrants in any quantities,
cannot go to the Ifcdsral Reserve Banks
and borrow at least seventy five oents on the dollar on. them *****
The Federal reserve banks are authorised by section 14 of the M f
oral Reserve Act to purchase bills, notes, revenue bonds, and war*
rants with a maturity from date of purchase of not exceeding six
months, Issued in anticipation of the collection of taxes or in
anticipation of the receipt of assured revenues by any State, county,
district, political subdivision, or municipality in the continental
TMited states in accordance with rules and regulations prescribed
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Honorable C* L* MoKary * (2)
by the Federal Reserve Board and there la inclosed oopy of Regu
lation "I» which covers such purchases*
In view of the etatenent made by Mr* Harding inquiry
was made of the Federal Reserve Bank of San Francisco and a reply
hae been received stating that its records do not show that the
Federal Reserve Bank hae received any offering of Douglas County
Tax Anticipation Warrants and it does not know what particular
municipalities were referred to by Mr, Barding in his letter*
In the circumstances it is suggested that you advise Mr* Birding
that the Federal Reserve Bank of San Francisco will be glad to
consider the natter further upon request from any local bank which
wishes to sell to the Federal Reserve Bank warrants of the kind
that Mr* Harding has in Blind*
Hr* Harding*s letter is returned herewith*
Very truly yours9
te'tewd)
Secretary*
Inolosurea*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d e r a l R
eserve
Ba n k
of
S a n Fr a n c i s c o
June 1, 1933
Mr. Chester Morrill,
Secretary, Federal Reserve Board,
Washington, D. C.
Dear Mr. Morrill:
V
I)
h
Re Douglas County Warrants.
We are in receipt of your letter of May 20th, enclosing letter
from Senator McNary accompanied'T^one 'addressed to the Senator, under
date of May 8 th, by the Roseburg Chamber of Commerce, Roseburg, Oregon,
in regard to municipal warrants.
Mr* W. C. Harding, Secretary of the Chamber, reviews the situa
tion commonly confronting many political subdivisions which have found
themselves unable to meet current expenditures because of delinquencies
in tax payments on the one hand and curtailed outlet for their obliga
tions on the other. The Secretary says:
"Our people are wondering why it is that our bankers
who have inadequate funds to take care of our own
small country needs, and find it utterly impossible
to take over these warrants in any quantities, cannot
go to the Federal Reserve Banks and borrow at least
seventy five cents on the dollar on them” * * *
Our records do not show that this bank has received any offering
of Douglas County Tax Anticipation Warrants#
One of the difficulties invariably confronting us when assistance
of this character is sought is that the political subdivision seeking the
credit cannot issue the customary form of time obligation. It is quite
likely the case in this instance, although it has not been investigated
because we do not kno* to which municipality the Chamber has particular
reference.
So that you may know the situation, it should be explained that,
when Districts go on a "warrant basis, 11 such as Secretary Harding described
in the first part of his letter, it usually means, in these parts, that
demand drafts (checks or warrants, as you please) for disbursements
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Mr. Chester Morrill-- 2
.Tune 1, 1933
drawn on the Tressurer are unpfiM on presentation because of lack of
funds.
The Tree,stiror in such instances notes on the instrument the date
of presentation, following which the warrant carries until paid a stipulated
rate of interest.
In normal times, these orders are paid on presentation, as tax
receipts keep ahead of disbursements. Delinquencies, emergency laws post
poning the time of payment of taxes end, 5n some instances, the remission
of penalties, all have been contributory in reversing thifl order, thus
removing some attractiveness from this form of investment.
Instead of issuing disbursement warrants which cannot be paid on
presentation and for Tvhich the date of settlement is left undetermined, it
would be better if political subdivisions would borrow needed funds by
issuing negotiable notes having a definite maturity. This would seem the
proper solution, instead of modifying, as suggested by the Chamber, the
Federe! Reserve Act which already provides an adequate basis for Reserve
Banks aiding in municipal finance.
It would seem to us that States might consider taking measures
to relieve the small Districts from dependence upon small community banks.
In some manner obligations might be created which could enter the larger
markets more freely and on more favorable terms. The form of instrument
now created lends itself almost exclusively to local absorption because
there are uncertainties which m a t be closely watched by investors.
To
purchase warrants of the kind herein described, for instance, one must
be in constant touch with the position of the Treasurer so es to know
when payments of warrants can be effected. Quite coirsionly, these warrants
sre payable out of special funds, and are not general obligations of the
District as a whole. This, too, needs close supervision because if war
rants, for example, were issued against 1933 tax levies exclusively, they
could not be paid from levies of future years if collections of 1933 taxes
were to fall short of requirements.
There is no question about the need for better machinery to fi
nance political subdivisions, particularly the smaller ones. It seems to
us, however, that there is room for improvement in State laws governing
municipal finance, from which angle the problem should be approached.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
-
Mr* John U* Galkin*, Ooveraor*
lateral Beserre Bank of San Francisco
San Francisco* California*
Dear Governor Calkin* i
You will find inclosed a copy of a letter,dated
May 15, from Senator McHary, together with a oopy of the in*
closure transmitted therewith, consisting of a letter, dated
May 8 t 1933, from Mr* V* 0* Harding, Secretary of the Hose*
burg Chamber of Conaeroe9 Boseburg, Oregon, regarding city
and county warrants*
The Board will be pleased to have any
information and comments that you think would be helpful to
it in making a reply to Senator MoHary*
Very truly yours9
iMS
Secretary*
Xnclosures*
Cl
F
COPY
A/
Reproduced from the Unclassified I Declassified Holdings of the National Archives
CHARLES LJICNARY, OREGON
Chairman
CONFERENCE O F THE MINORITY
May 15, 1933
Honorable Eugene R. Black,
Governor, Federal Heserve Board,
Washington, D* C.
My dear Governor:
Inclosed is a letter from the Secretary of
the Roseburg, Oregon, Chapter of Commerce, Mfc* W. c.
Harding, containing a suggestion which I submit for
your consideration*
With your reply, I shall be very glad to have
the letter returned.
McN/KB
a
y
Reproduced from the Unclassified I Declassified Holdings of the National Archives
(Letterhead of)
ROSKBtma CHAMBER of COMMERCE
Roseburg, Oregon
May 8f 1935
Senator C* L« MCNary
Washington* I), C*
My dear Senatort
An acute situation 1* developing all over the United States, and I util
eonflne myself to a concrete measure that stares us In the f&ce right
hero looally in Douglas county* It is thisi for the first time in my
expertenoe both our city and oounty are on a warrant basis* This condi
tion has been brought about by the failure of people to pay their taxes*
This is no news to you, of course, because it is a condition that is
prevalent throughout our land* %> get rigfct down to the fundamentals
on this thing quickly, permit us to suggest that our people are wondering why it is that our bankers who have inadequate funds to take care
of our own small country needs, and find it utterly impossible to take
over these warrants in any quantities, cannot go to the Federal Reserve
Banks and borrow at least seventy five cents on the dollar on them, and
bring this money home to heir the local situation througi the crisis*
Our bankers tell us that it Is an absolute impossibility to make any
borrowing arrangement on these warrants in the Federal Reserve Banks
with the present set-up and the Interpretation that the Federal Reserve
places on matters of this kind* Assuming for the sake of argument that
the Federal Reserve Banking System is technically correct in this inter
pretation of the law that controls their action, might not a modification
of this act be brou^it about enabling them to become more elastic in
their rediscount methods*
In this connection, please permit us to emphasize one other thing that
in a very Short While will tend to make the entire situation throughout
the United States more aette than ever* It is this* the late economy
move in Veterans* Administration affairs is throwing a heavy additional
burden upon all counties, as it is compelling the several counties to
come to the financial relief of the families of Indigent soldiers* It
is estimated that our own Douglas county will be compelled to take up
during this next year an expense of $12,000 to pay for the keep of
people who should properly be the wards of the government* ?4ultlply
this by the numbers of counties in the United states both large and
small, and we would begin to get some idea of where the present program
is leading us all*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Senator MoNary - B
I realise full veil that ths administration through the Veterans* Bureau
has a large problem on its hands, and that order will probably be brougit
out of ohaoe within the next few month* 9 but I do present these two thoughts
to your attention for your own personal consideration as our valued United
States Senator*
Thanking yon most sincerely f o r the wire received last evening assuring
us of the opening of this home, and the many favors of the past, we beg
to remain,
Cordially yours
(signed)
w. c, m m im
W. C. Harding
S e c r e t a r y
WCKiwbh
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Mr* J. T7. Calkiat, Ctov«riiftr»
fidirtl taaarv* BauO
fc of $aa frasoltoo,
$a& lYaaoiseo, California.
Daor ^ m n r Oalidiiai
Beeelpt i»
o f My. Clerk18 lettar
of Asril 21, 1953, with rtfaraaoo to a lottor fro* Hr, $iaa»
Kirkwood, Principal of th* Molalla M e n Hifh Sohool, la rofMrd to Mhoo! w&rraat*.
la vlow of th* iafoxmtlon cont&iaa4
In Mr. Clark* t Iattar, a«! j s a r t i a a l a r l y i n vi«w of th« faat
that Hr. Kirkwood has baoa Invitod fey th* Portland branch of
your tattle to call
ant
tioemo* tho subject, It doe» not appaar
aacaooary that th* Board should atako fcny further reply to
Hr.
tir*woo4*« l«tt«r«
Very Irmly yo*rt,
{Signed) Chester Morrff
Chattaf Harrill,
Saeratar;/.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d e r a l R
eserve
Ba n k
of S an
Fr a n c i s c o
April 21, 1933.
Q ttm ® -
Mr* Chester Morrill,
Secretary, Federal Reserve Board,
Washington, D* G*
Bear Mr. Morrill:
With your letter of April 5. there was enclosed a copy of a
letter dated M a r U Q j , addressed to the Portland'Branch of the Federal
Reserve Bank ©f San Francisco by Glenn Kirkwood, Principal of the Molalla
Union High School, in regard to School Warrants*
fhe statement that "if district warrants were taJeen to the
Federal Reserve Bank for rediscounting, they would not get fifty cents
on the dollar, * asserted to have been made by an officer of the First
National Bank of Molalla, (the only bank in that town) was obviously
made off hand and was not the basis of any information obtained from the
Federal Reserve Bank, either through inquiry or experience.
To our knowledge, we have had no occasion to investigate the
eligibility or value of the warrants in question.
Because of the many Intricacies involved in the purchase of
warrants, we avoid, whenever possible, answering inquiries by corre
spondence. Inasmuch as Molalla is in close proximity to Portland, Mr*
Kirkwood was invited by the Portland Branch to call and discuss the sub
ject presented in his letter of March 15* However, he has not done so.
The warrants under discussion appear to have been issued by
Union High School, No. 4> of Clackamas County. The amount outstanding
at this time is approximately $25,000, of which the First National Bank
of Molalla holds #20,000. It should be agreed that this is quite a
substantial investment for a bank having a capital and surplus of
1 3 0 ,0 0 0 , particularly when the time of liquidation of the warrants is
somewhat indefinite. Usually we find, upon investigation, that warrants
of this character are non-negotiable and the time of payment indefinite*
The common practice is to draw the warrants on demand which, upon presen
tation, are stamped across their face, ^Presented but not paid for want
of funds*11
From the time of presentation until called for payment, the
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Mr. Chester Morrill,
Secretary, Federal Reserve Board
- 2 -
4--21-33*
warrants bear a stipulated rate of interest.
It has long been the practice of small municipalities, the
obligations of which have no more than local marketability, to depend
upon the community bank to absorb the warrants and carry them until
tax payments create a retirement fund.
With diminishing bank deposits and increased tax delinquen
cies, (District No, 4- was 27% delinquent in 1932) together with other
uncertainties, it is only natural that banks should be less inclined
now to invest in warrants of the character tinder discussion.
Should Mr. Kirkwood c a H upon us, we shall be glad to do
what we properly can to help relieve the Molalla situation.
Yours very truly,
Reproduced from the Unclassified / Declassified Holdings of the National Archives
..3^..
Mr*
0 . Calkin*, flovornor,
lfedoral loaonro Bank of San Fraociaco,
9am Innelue, California*
Boar Oovornor Calkin a:
Incloood to a copy of a lot tor
from Mr.
Qlonn Kirkwood
of Mo 1*1la, Oroifioa, datod March IS, 1933, addrosaod to tho Hid*
oral Boaorvo Bank of 8aa ?ranci*oo, regarding the rediacounting
of oortain school varraata.
.t ^ r....
Sho lottor indicate* that copioa woro also aottt to
tho Soorotary of tho Tr«a*ury and to tho first national Bask of
Molalla*
It would bo approolatod If you id 11 adrlao tho Board
what roply, if aay, you hawo aado to thia lottor ia ordor that
tho Boar# »ay dotoralno whothor any fmrthar roply ahould bo a»da
by It*
lory truly yours*
Oho*ter Morrill
iocrotary
Inclo«ur«
Reproduced from the Unclassified I Declassified Holdings of the National Archives
M olalla
U n io n
H igh S c h o o l
CLACKAMAS COUNTY DISTRICT NO. 4
MOLALLA, OREGON
Mareh 13, 1933
Federal Reserve Bank of San Francisco
Fortor Building* Portland* Oregon
Dear Sirs*
Prompted by my own curiosity and the requests of several members
of my profession* 3 am asking for some information on the Federal
Reserve attitude toward school warrants as security for loans*
The looal bank has informed me that *lf district warrants were taken
to the Federal Reserve Bank for rediscounting, they would not get
fifty cents on the dollar*"
This statement in a manner throwing
the responsibility for non-cashing of warrants on the shoulders of
the Federal Reserve Bank* forms the real basis for m y query*
Before the reoent holiday* it has been the practice of the looal
bank to accept one large warrant, made out directly to the bank by
the district clerk* to cover the monthly school payroll*
It has
been generally understood that* in case the looal bank should be
in immediate need of funds, there warrants oould be re-disco anted
for cash with no trouble*
Wow, if this oould be arranged before the holiday* It is difficult
to see the reason for such a complete reversal of procedure*
If it
is true as the bank tells ua* that the warrants are worthless as
collateral at the Federal Reserve Bank, it naturally follows that
half the school districts
In the country will have their credit
withdrawn and will be unable to secure cash to meet their payrolls*
Are we to understand that such is the result of the national effort
to stabilise banking and the country's business'* Please favor me
With a reply at your convenience*
rjKiBMD
Copies tot
Secretary of Treasury at Washington u* C*
First National Bank
of Molalla
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e
of
J
ohn
P
C h air m a n
Ba n k
S a n Fr a n c i s c o
e rr in
o f th e
Board
A p ril 16, 1917.
Federal Reserve Board,
Washington, D. 0.
Bear S ir s :For your f ile s I enclose copy
of an opinion rendered by our Counsel
concerning the purchase of notes and
warrants from the City of Seattle.
Respectfully
JP:FK
Reproduced from the Unclassified I Declassified Holdings of the National Archives
T e l e p h o n e Do u g l a s 8 2 0
LAW O FFICES
G A V IN M C N A B
R I C H A R D P. H E N S H A L L
L U T H E R ELK IN S
A . H. J A R M A N
GEORGE W. MORDECAI
O L I V E R B. W Y M A N
N A T SCH M U LO W ITZ
GAVIN
MCNAB
M
er c h a n ts
S
N
an
a tio n a l
F
B
a n k
B
u ild in g
r a n c is c o
A p ril 13, 1917
?ederal
task e f San Franoiaoo,
t i lew Hontgoia&ry S tree t*
San Franoiaoo* Cal#
A tten tio n Mr, John ffe rrln . Cfcainsan o f the Beard.
Bear S irs
Sub^est: Pnroh&ae o f getea and
from the C ity o f S e a ttle .
I haw before me le tte r e o f Janaary M M from the
Bepartiaant o f Finance and the La® department o f th e C ity o f
S e a ttle in regard to th is © a ttar* an t ha*e again considered
exten ai'rely the m atters mentioned to ay la t t e r o f Janstary
16th and the other oorreapondenoe between year bank and the
C ity o f S e a ttle whieh has been ambaittad to me*
I have not been able to change my conclusions aa to
the le g a l a a tte ra set fo rth in sqt le t t e r o f ^anaary 16th
tot ferhepi I
m y o f the lean
1 .
to the notes;
Ihe state o f Washington — Hem. & M i l*
m9 aeo. 6118, e t s *f«
jpeferred to ia the
w Department o f S e a ttle , I th in k doea
Aa yam are already adriaed, the
o f the C ity o f S e a ttle already ®s3tee aa$le
fo r the issuance o f non-negotiable notea. fhe
s ta tu te in question provides fo r a form o f note whieh 1 ooneider
pager is nen-negotiable w ith in the
o f the la v merchant whan payable out o f a p a rtic u la r fund.
And ao am the bends o f js a n lo lp a litie e .
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Federal teeorre Bank
April 13, 1917*
She form o f not# provided
the s ta tu te in question
o a lle fo r la im & t out o f "any delinquent or an tic ip a ted revenues
from a l l eoureee when c o lle c te d .” 1 take i t th a t even i f there
were raoneye in the treasury from other sources than revenuee
Whloh wen delinquent or antlolpated. suoh moneys oould not b* re
sorted to to pay the aote. Shis la an sffeet the sama thing as
aonflning the resort to payment to a particular fund, the note
la not parable absolutely and at all events oat of any and a U
noneya belongIn* to the Olty, but only tut of revenues when
ooHooted. If there are nano soHooted, then the note is not
payable. M r these reasons, l still think the notes would not
be negotiable in the sens* of the Is* merchant.
Bat Just here I wish to mention the differwnoe between
negotiability and assignability. Any nets is assignable and san
be transferred by IndorMMnt, bat unless it is negotiable in
fosn it does not oarry with it the guaranties and warranties in
fato* of tit* holder whloh are provided by the law merchant.
Xf you took these aatee from tbs City of Seattle you oould
discount then and they oould be transferred to and through as
many hands as desired. Bat such transfers would not oarry with
than the w arrantiee ae to the genuinenees t re g u la rity o f
signatures, and guaranty of payment whan Ana *hlob flow from a
negotiable iaetroMnt. She chief adv&atage of having an instraM a t negotiable is th a t in the
o f on ixmooent Soldier fo r
value, without notioe, and before maturity, it is net subjsot
to setoffs, defenses and equities in finer of the mater or prior
indorsors, a seoond advantage is that its genuineness and pay*
sent are guaranteed by all prior indorsers.
X& the instance before os, before taking er paying the
net*, your bank would undoubtedly satisfy itself that the note
was regularly Issued sad binding upon the Oity. Your bank would
lie nsoed as the payee and would get it direct from the City and
not from say indorsers. Tour bank would have no Indorsers to
look to. Xf you sow fit ts disoount it to sons other bank, the
fast that it was net negotiable would be to your advantage and
set to your detriment, far they oould net hold yea liable for
irregularities whioh might exist la its execution er issuanee
o r fo r non-payment by the City. Xf, in order to dispose of it
to advantage, you wished to lend your support to it, Just as
if it wera a negotiable instraae&t, you oould readily do so by
•tamping your guaranty on the baek of it.
ffearo is nothing either In the statute or in the regula
tions of the federal Besom Board whiah requires a note to be
negotiable in order for y«u to aequire it; aad you would violate
no rule in tsklng suoh an inatnmeat.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
fe d e ra l R©serve Bank
A p ril 13# 1017.
1
am a fra id th a t ray former le t t e r on th is subject was
erroneously construed to moan th a t the no tee would not be le g a l
and binding o b ligatio ns upon the C ity .
Such notes, i f l e g a l l y
issued, would be p e rfe c tly binding* and the sale point which I
d ealt w ith in my formor le t t e r in respect to them was th e ir
n e g o tia b ility , knowing th a t o rd in a rily you do not take paper
unless i t is n eg o tiab le.
fhe reasons which lead you to take only negotiable
paper in ordinary eases seem to me to hare l i t t l e p ra c tic a l
force in a ease o f th is kind*
£*
nth
regard to the warrants:
Ehese warrants were not considered acceptable because
they matured before the taxes f e l l due. and so were not e lig ib le
under subdivision (b), section 1 , Regulation Bf Federal Reserve
Board, Series o f 1916, and you were advised th a t I eould not
fin d where the C ity was authorized to issue warrants maturing
a t a day c e rta in in the fu tu re , so as to f& ll due a fte r the taxes
became due* She corporation counsel o f S eattle in h is le t t e r
makes no re p ly to th is o b jectio n .
I have again gone over the
ch arter provisions o f S e attle In regard to the issuance o f
w arrants, and s t i l l there seems to me to be no a u th o rity fo r
issuing warrants having a fu tu re date o f m aturity* I t apparently
being contemplated by the ch arter th a t the warrants should be
paid upon demand, which means th a t they mature as soon as issued,
they are not objectionable merely because payable on demend
?
instead o f a t a fu tu re date, but s o le ly because they f a l l due
before the taxes become due, thus fa ilin g to comply w ith the
above mentioned reg u latio n o f the fe d e ra l Reserve Board* I f
the C ity atto rn ey o f S eattle can fin d any statu tes or a u th o ritie s
bearing upon th is question, I m s t i l l open to a change o f view,
but in the absence o f any such a u th o ritie s , I s t i l l th in k these
warrants are in e lig ib le , unless the above mentioned provision o f
Regulation B is waived by the Federal Reserve Board. But, i f i t
is desired to purchase these w arrants, the above mentioned
provision o f Regulation E should n o t. I th in k , stand in the way.
2he warrants are undoubtedly in the form which warrants u su ally
ta k e , and mature as warrants of a C ity u su ally m ature. As a
m atter o f ffeot, i t is very unusual fo r warrants to mature in any
eth er way than upon demand* And subdivision (b ) o f the Regulation
Reproduced from the Unclassified I Declassified Holdings of the National Archives
fateral B m m
Bank -4- April 18, 1917.
apaoittaally proTidae that thia particular raqairaaaat nay It*
w»iT*a to Qwlfi* oaaaa* Qkla olauee tsaa aviaantly aaaignaA
to raliava just Booh aitnationa as that vhloh now aonfronta
ae, and it m m n m to m thar* should b* no diffioulty In obtain
ing sooh a valvar.
Very truly youra,
®AVIH UoXAS.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Reproduced from the Unclassified I Declassified Holdings of the National Archives
272.
Pats
No, 7L,________
F E D E R A L
April 2 3 . 1917.
R E S E R V E
B O A R D
MEMORANDUM
______________________________________
F°r
At a meeting of the Federal Reserve Board on
___ April 23, 1917.__________ , the following matter
(as Chairman, Committee on S . j 1. Bank,
was referred to you(as member,
”
"
(as
the following minute v/as entered;
letter from federal Reserve /gent ^errin,
enclosing copy of an opinion of his counsel with
reference to the purchase of notes and warrants
of the city of Seattle v/as on motion referred to
the Committee on Operation of the Federal Reserve
Bank of San ?ranci sco."
Please return this memorandum with copy of
documents resulting from action taken., if any*
Date____________________ ____________
D o c u m e n t s ____
Signature.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e
of
J
ohn
C h air m a n
P
Ba n k >
S a n Fr a n c i s c o
er r in
o f th e
B oard
February
21 , 1917.
The Honorable W. P. G. Harding,
Governor, Federal Reserve Board,
Washington, D. 0.
Lfy dear Governor:
I have received your letter of
13th ing^.i regarding municipal warrants
and have given a oopy of it to the opera
ting department.
its suggestions.
JP:FK
VJ
We shall be guided by
2 1 191?
GOVERNOR’S OFFIC#
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Reproduced from the Unclassified / Declassified Holdings of the National Archives
M r* John Perrin*
Chairman of tha Board,
federal Reserve Bank,
San *rancisco# Calif.
Dear
Kr*
perrint-
The Board has given
«w~4e-yeur If ttar of January 17th
with which you sent a cojgr •fjR.Jawta Holab »s jjjttar of jaatiaiy''IftH ‘In
reference to warrants Issued by OmT City of siattii*'^ I quota below
Counsol #s opinion, in which tha Boaxd concur**
"The Board has heretofore oonsl stently adhered to ita policy of not
undertaking to pass upon tha legality of issue of any municipal securities.
There are so many technical quest loss involved that it would be I mpossible
for this office to give an opinion of value as to the legality of any issue*
To do so would require a careful analysis of the laws of the state in each
case and an examination of the records of the city or t o m Issuing such se
curities in order to determine whether the laws had been strictly and
technically coaaplled with*
You will recall that for this reason the Board
requires the opinion of recogBlsed counsel or of counsel for the city or
tom . issuing the securities as a condition precedent to their purchase by a
Federal Baser*® Basic*
I a&rea with counsel for the bank thatf assuming
that these warrants have been legally issued, it would be necessary for the
Board to waive that provision of 1*m regulation *iloh retires taxes to be
payable before the maturity of the warrant In order for the Federal Reserve
Bank of San *rancisoo to purchase any of these warrants**
The Board Is further of the opinion that a Federal Beserve Bank should
not biqr a non-ne^otiable warrant, and it would au{*gest further that in con
sidering the purchase of warrants issued by a municipality it would be well
t# ascertain what the sinking fund retirements are with reference to bonded
obligations of the Municipality end whether or not thsse requirements are
being complied with*
The Federal Beserve Bask of Cleveland several months
age purchased m m warrants of the City of Toledo, *hich were in proper form
and for the liquidation of which there w*a m assured revenue accruing within
six months, but it seems that certain sinking fund provisions had not been
eosgilied with and bond holders took steps to restrain the City treasurer
from paying out tax receipts for current obligations, the result being that
the Cleveland Bank did not receive reimbursement until after a new bond issue
Reproduced from the ^ c la s s ifie d I Declassified Holdings o n tw N a tio n a l Archives
"
X
orvMU I
•2-
bad beet* voted uj>on by the people of Toledo in the November election*
Very truly yours.
Governor*
\
Reproduced from the Unclassified I Declassified Holdings of the National Archives
ts
File Op-101-169
February 10, 191?.
My dear Mr. Used in:
From the attached file it appear# that Mr. Perrin
transmitted "for your f U w * copy of th# opinion -of Counsel
to the Ban* with reference t© the eligibility of temporary ob
ligations of .Seattle. Ton have eek-ed for an opinion of this
office on tha question coneidered.
It appears from the opinion of Couaeel, (i) that
there is serious doubt of the power of the City of Seattie
to discount its negotiable notes, (2) that the warrents do
not comply with the present reflations of the Board in that
th© taxes ere not payable before their maturity.
the Board 'mm heretofore consistently adhered to lte
policy of not undertaking to pass upon the legality of issue
of any municipal securities. There are so nany technical ques
tions Involved that it would be Impossible for this office to
give an opinion of value as to tae legality of any issue. To
do so would require a careful analysis of the laws of the State
in each case end an examination of tie records of the city or
town issuing each securities in order to determine whether t«*e
laws had been strictly and technically complied with. Ten
will recall that for this reason the Board requires the opinion
of recognised counsel or of counsel for the city or town issu
ing the securities as a condition precedent to their purchase
by a Federal reserve bank. 1 agree with counsel for the bank
that, assuming that those warrants have been legally isstied,
it would be necessary for the Board to waive th»t provision of
its regulation wMch requires taxes to be payable before the
maturity of the warrant in order for the Federal Beserve B*nk
of Sen Francisco to purchase any of these warrants.
Be spectfully,
Ron. Charles 3. laailin,
Federal Heserve Board.
MG£*C.
Counsel.
Dictated "byApproved “by -
Reproduced from the Unclassified I Declassified Holdings of the National Archives
’
**
/ b f
;
/'X
February 10, 1917.
My dear Judge:
Mr. Perrin has forwarded to the Board the attached
opinion of Mr. McNab, relating to the eligibility of certain
warrants of tbs City of Seattle., and Mr. Hamlin has forwarded
the fils to yon with a request for an opinion#
*
It seems to me that the Board in a case of this sort
should acospt the opinion of the Federal reserve bank counsel
inasmuch as it involves a considsration of certain looal stat
utes which arc not available for the use of this offie*.
As
far as I can sse, the opinion of Mr. McHab ssems sound, and
in view of the fact that Mr. Perrin has forwarded it merely
•for the files* of ths Board, it does not seem that any further
action by the Board is necessary.
It stems to m
that the prop
er thing tioeld be for the Board either to file the opinion
without further action; or if it desires to take any action,
merely to state to the federal lessrve Bank of San Francisco
that in eases of this sort it should be guided by the opinion
of its counsel. That is obviously what that bank thinks anyway.
Sincerely,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F e d e ra l R e s e rv e B o ard
W ash in g t o n
M .C .E L L iO T T
c o u n s e :l
F o liro a ry
10
,
1917
.
hv J o u ' h r . IJhiiilin t
Froi:; tho a tta c h e o f i l e i t opyota a fh a t a r . P e r r in
trao.a>dthai “f o r y o a r f i l e o *1 co u o f tLe o p in io n ox ^haoa-el
to the la.ihc >’:i h*;. ..-oforoooe to too c l:i j i v i a i t y o f ta a ja a a ry o l l i o a t iono o f o o a t t l^ .
You havo cto 's- f o r &n o p in io n o f t h is
o f f i c e on t'h, fd u o tio n c o n o ilo ro d .
I t s o o c a rs from
a a a a io s e r io u s V a M o f
to ;.i...cu-ui“t i ’:o n w+ i 1 1
nut coachy .'/itI; t * „ *
the.* tcce a a r c not j a a V i <
the c^, in io n o f Co-. xnool, ( i ) *
t'ha power o f the C it y o f Goa* 4
not^fe, (h ) th a t t kiO.* WC-i-rx a n t» do
■'* r o r n la t io ; a i o f tho Ti'cuitl in th:<t
jo f e r a t h e 5 v ru o to rity a
Tl a.< "Board h -s here bof ^ro cons in t e n t ly a h a r o - to i t s
p o lic y o f not -undert -.kin^ to p a 53 uyon t..a i d e a l i t y o f iooa^
o f any io o n ic ip o l ooc" ~ ■*s s . Thera axe ao ffiauy 'U,ehoic-.il ^aootio ra , in v o lv e S th a t x
a l l Tdo imuoG-.-ibln f o i I h 1 o f f i c e to
:>;yi yo an o p in io n o f \
* i* to toe. l e g a l i t y o f „ay i ?>o<>„&. To
do so oca I ■ i V ^ i i r o
c a r e f u l u n a ly ^ io o f the? i
, o f the Ctohe
in vOi ch e a a 3 _ah an oxaioino tio n o f t ^t, re co i'a o o f t.i:o c i t y o r
uu-'-u .irt-v :.iv; siuC;; aoc : i: i t io i i in o ra o r to ac
i m o o .iot.uOi
boon s t r i c t l y an-I t e c h n i c a l ly con.^ x
- i t o . You
■ x I-a. .* ;-L j. t 1.1» i \j.± t ii x t'’' x ■'o Li ^ ' L- - o. t. - t ■x .t. ■ i_. V' <.j^ i n i on
o f i\.:oa';nis£d counool o r o f eoonool f o r tiro c i t y o r 'coon io ro .ir., ti...'..- >!Ww .tfi tis.n 0.0 a conur tio n j^aoc'- o.3>.■t <<0 t j i u i r pu,r0 1i>&j
t v «i ? j'( o r a l rrovro":; hank.
I o.;-: roo v->ith c o :a i^ o l for- too b«.nk
t .1_ t } .-i.aOiiiiic’ t ■a'. ti.;c.;&■»>
ia. ,.i
00on Atfjasd.a/ itoisooci,
i t v/oaX.l ho noo\ f o r tho h o o ri io .-,ai\r^ th h . .a-uvloio o o f
it i- royiiiLAtion . h ic h rc .a iiro .;
lo bo x.a a lh v: h.-foro t^.to
ow.t; rit -v o f th.,„ . .u a a n t in o rd e r f o r tho F a l c r o i a ^ o r v o h.;ah
o f San F io m o iacc to puro>ja.oo any o f tht;0£ 'a a a o a it s .
.o or0 0 1fnl 1y j
r0n •
it a a m . t . in(
r , : : -]
r.-i.l
..h i
00 r v o L 0 ^,1r ‘I»
Reproduced from the Unclassified I Declassified Holdings o f the National Archives
A '-/ A.
/^.
& u*u<.
j^ t U
y
»
u j H ajLajl j Z z
.
UJ>*u £ZL~
sL a^E Z *
& ‘
£ o -u *l* l~*<u ~ 4 ,
7
u \
Reproduced from the Unclassified / Declassified Holdings of the National Archives
January £3, 1 9 1 7 .
Mr* John Perrin,
Federal .Reserre /gent,
San Fr&ncleoo, Calif.
_
JDear Sir:
This Is to acknowledge receipt of your letter
of January 17th, Imcloelng copy of an opinion of your
Oouneel concerning the eligibility of temporary ob~
n a t i o n s of Seattle.
Very truly yours.
Secretary
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FEDERAL R E S E R V E
BOARD
WAS HIN GTO N
January 24, 1917 •
Bear Judge Elliott;Will yon kindly look over th©
within papers as to the eligibility of
the temporary obligations of Seattle and
give me an opinion thereon.
1
Sincerely yours,
Judge illIt on C. Elliott,
Counsel, Federal He serve Board*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
No. 1039.
Janua
33, 1917.
FEDERAL RESERVE
BOARD
-------__--------MEMORANDUM
C^ t jU * * #
iJ^Y
/p -*
For Mr. Hamlin.
Under the regulations of the Board the
following matter.is referred to you as
Chairman,, Committee on
Member,
n
,T
Opinion of Counsel, Federal Reserve Bank,
of San Francisco, concerning the eligibility
of temporary obligations of Seattle.
Secretary.
These paperc are charged to 'you. If
they are sent ornt of your office., kindly noti
fy Secretary's |>ffice that the charge may be
cancelled.
memorandum to the SecrePlease/reft
nents resulting from actary withycopy
that it may he placed on the
tion takgfo, if
docket*
R E M A R K S
Date •
412-
Reproduced from the Unclassified I Declassified Holdings of the National Archives
- 3 3 3 . ^ 0 ^
Fe d e r a l R e s e r v e B a n k
of
J
ohn
P
C h air m a n
S a n Fr a n c i s c o
e r r in
o f th e
B oard
Jan uary 1 7 , 1 9 1 7 .
F e d e ra l H eserve Board,
W ashington, D. 0 .
S i r s :
Fo r your f i l e s , I hand you h e re w ith
copy o f an o p in io n o f our Counsel co n cern
in g the e l i g i b i l i t y o f tem porary o b lig a tio n s
o f S e a t t le .
.A
T
Reproduced from the Unclassified I Declassified Holdings of the National Archives
T elephone
D o u g la s 5 2 0
LAW O FF IC ES
G A V IN
M CNAB
OF
R IC H A R D P. H E N S H A L L
L U T H E R E L K IN S
A. H. JA R M A N
G EO R G E W . M ORDECAI
O L IV E R B. W Y M A N
N A T S C H M U L O W IT Z
GAVI N
MC NA B
M er c h a n ts n a t io n a l Ba n k B u il d in g
S an F r a n c is c o
Jan uary 1 6 , 1 9 1 7 .
F e d e ra l R eserve Bank o f San F ra n c is c o ,
25 le w Montgomery S tre e t,
San F ra n c is c o , C a l.
A tte n tio n Mr. John P e r r in , Chairm an o f the B oard.
Gentlem en:
lo u r le t t e r o f Jan uary 12 th a sk in g f o r o ur o p in io n
as to w hether w a rra n ts is s u e d by the c it y o f S e a ttle under
the p re se n t la w , as o u tlin e d by c e r t a in documents w hich you
e n clo se d , a re e lig ib le f o r p u rch ase by yo u r bank under the
F e d e ra l H eserve A c t, has been d u ly re c e iv e d .
I have examined the C h a rte r o f S e a ttle and the o th e r
documents subm itted and beg to re p o rt as fo llo w s :
1.
A r t ic le 4-, Pec. 25 (page 36) p ro v id e s ;
TEMPORARY 1QAIIS: The c it y c o u n c il,
a f t e r the taices have been le v ie d in any
y e a r, s h a ll have power to make tem porary
lo a n s in a n t ic ip a t io n o f the c o lle c t io n
o f uch ta x e s , such lo a n s to be a p p lie d
to the purposes f o r w hich such ta xe s have
been le v ie d and to no o th e r p u rp o se , and
such ta x e s s h a ll be in v io la b ly a p p lie d to
pay such lo a n s , TT
Under t h is S e ctio n the C it y o f S e a ttle has th e power
to borrow money.
But the C h a rte r does not seem to have p ro v id e d f o r
the e x e c u tio n o r issu a n c e o f a note upon such lo a n , o r
p re s c rib e d who s h a ll s ig n i t .
.'.liere a m u n ic ip a l c o rp o ra tio n
has been g iv e n the power to borrow money, i t i s conceded
th a t i t has the im p lie d power to is s u e an evid en ce o f
in d e b te d n e ss; but t h is does not mean th a t i t has th e r ig h t
to execute a n e g o tia b le p ro m isso ry n o te , alth o u g h i t may
is s u e a non -no g ot i a*bi e n o te . In the absence o f power to is s u e
Reproduced from the Unclassified / Declassified Holdings of the National Archives
F e d e ra l R eserve Bank
Ja n . 16*17*
a n e g o tia b le n o te , s p e c ia lly c o n fe rre d by c h a rte r o r s ta tu te ,
i t i s a d isp u te d p o in t w hether i t had the r ig h t to execute
such an in stru m e n t. In some S ta te s i t has been h e ld th a t the
power to borrow money im p lie s the power to is s u e a n e g o tia b le
n o te , and in many S ta te s i t i s h e ld th a t i t i s not im p lie d .
We have found no d e c is io n s o f the Supreme C ourt o f W ashington
u p h o ld in g any such im p lie d power, and, in the absence o f such
d e c is io n s , c o u ld not even h a za rd a guess as to what th e h o ld in g
o f t h is C ourt w ould b e.
5 M cQ u illa n on M u n ic ip a l C o rp o ra tio n s, § 2 16 1.
1 B illo n on C o rp o ra tio n s, 5th e d ., § 291;
v o l. 2 , § 8 73 .
U n less yo u r bank i s w illin g to acce p t n o n -n e g o tia b le
n o tes o r w a rra n ts , we sh o u ld sa y th a t the c h a rte r ought to be
amended so a s to s p e c if ic a lly c o n fe r the power to is s u e n e g o ti
a b le n o te s and p re s c rib e the f o r m a lit ie s f o r e x e cu tin g them.
2.
Under A r t ic le 9 o f the C h a rte r, the C it y o f S e a ttle
is s u e s w a rra n ts f o r the payment o f i t s c u rre n t debts and
exp en ses, w hich w a rra n ts, by th e language o f such A r t ic le ,
when d u ly is s u e d , a u d ite d and approved, seem to be le g a l and
b in d in g o b lig a tio n s o f the C it y , w hich i t i s the duty o f the
T re a su re r to pay upon demand, th a t i s , Im m ediately a f t e r th ey
a re re g is t e re d and d e liv e re d . In o th e r w ords, th e y m ature
im m e d iate ly.
As the ta x e s a re not due, w ith in the meaning o f
R e g u la tio n B , S e rie s o f 1916 , F e d e ra l R eserve B oard, u n t il
May 3 1 s t , th ey w i l l not m ature u n t il a f t e r the w a rra n ts m ature.
A cco rd in g to R e g u la tio n S , s e c tio n 1 , s u b d iv is io n b , th e ta x e s
must be due b e fo re the w a rra n ts a re due, u n le s s the p ro v is io n s
o f s u b d iv is io n b a re w aived by the F e d e ra l R eserve B oard.
I t has been suggested in the correspondence subm itted
to us th a t th e w a rra n ts c o u ld be made p ayab le a t a day c e r t a in
( le s s th an s ix m onths), and th a t the due day be a c c e le ra te d
by is s u in g a c a l l under A r t ic le 9 o f th e C h a rte r, w hich c a l l
c o u ld be made so as to com ply w ith the C h a rte r p r o v is io n s .
We can no t approve o f t h is scheme.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F e d e ra l R eserve Bank
-3 -
Ja n . 16 * 17.
There seem to be s e v e ra l o b je c tio n s to su ck w a rra n ts :
F ir s t . I f the w a rra n ts m ature im m ed iately, as seems
to be the c a se , then th e y a re not e lig ib le , u n le s s s u b d iv is io n
b , s e c tio n 1 , o f R e g u la tio n E , be w aive d , f o r th e rea so n th a t
the ta x e s a re not due b e fo re the w a rra n ts a re due.
Second. The C h a rte r does not seem to g iv e a u th o rity
to f i x the date o f m a tu rity o f the w a rra n ts a t a day c e r t a in
in the fu t u re .
3.
Of c o u rse , w a rra n ts o r n o tes whioh a re to be
p u rch ased by yo u r bank must com ply w ith the p ro v is io n s o f
R e g u la tio n S , S e rie s o f 19 16 . T h is re g u la tio n re q u ir e s ,
among o th e r t h in g s , th a t the C it y must have been in e x iste n c e
f o r ten y e a rs ; th a t ta x e s must f a l l due b e fo re the m a tu rity
o f such w a rra n ts o r n o te s ; th a t the C it y must not have
d e fa u lte d in the payment o f the p r in c ip a l and in t e r e s t o f any
bonded debt w ith in te n y e a rs ; th a t i t s bonded ind eb ted n ess
must n o t exceed te n p e r cent o f i t s ta x a b le p ro p e rty ; th a t
y o u r bank can not h o ld more than tw e n ty -fiv e p e r cen t o f the
t o t a l amount o f the o u tsta n d in g w a rra n ts, e t c ., etc*
r/e have n o t been fu rn is h e d w ith the date n e c e ssa ry
to say w hether the C it y o f S e a ttle can com ply w ith th e p ro
v is io n o f R e g u la tio n E , n o r do we u n d erstan d th a t we have been
asked f o r such an o p in io n . Of c o u rse , th ese m atters sh o u ld be
in v e s tig a te d .
To sum m arize;
<1} Your bank can make a lo a n p ro v id e d i t i s w illin g
to take n o n -n e g o tla b le n o te s . I t can buy up the w a rra n ts,
p ro v id e d th e F e d e ra l R eserve Board w i l l w aive the p ro v is io n s
o f s u b d iv is io n b , s e c tio n 1 , R e g u la tio n E , S e rie s o f 1916.
(2 ) U n le ss yo u r bank i s w illin g to ta ke n o n -n e g o tia b le
n o te s , th e n , in o rd e r tb re n d e r a lo a n under A r t ic le 4 , s e c tio n
2 5 , o f the S e a ttle C h a rte r, e n t ir e ly a c c e p ta b le , th e c h a rte r
sh o u ld s p e c ia lly c o n fe r the power to is s u e n e g o tia b le n o tes o r
o th e r s u it a b le e vid e n ce s o f in d eb ted n e ss and p re s c rib e the
f o r m a lit ie s f o r e x e cu tin g them.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
f*iR eserve
Bank
-4 -
Jan* 16f17*
(5) IfcXoss the w aiver o f the provisions o f subdivision b ,
section 1 , Regulation l f o f the fe d e ra l Reserve Board, oan
feo obtained, then, in order to re n te r warrants whioh a r t Issued
before May 31 acceptable (exoept as c o lla te r a l), the Charter
ought to oonfer tho power to Issue warrants having a d e fin ite
date o f la a tu rity reaohing beyond the date a fte r which taxes
oan not; roxoam imkpai d wl «jhot*.v a po.na«i»T&y#
?ovra v*iy truly,
eiTIH MoHAB.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
January 2, 1916.
*
Li,?. A x
%
'lea? Mr. Perrin:
fhe Federal Heserve Board hereby approves the
purchase by the Federal Beserve Ba»k ©f^aa Franci&oo of
$190,000 of warrants of the State of Mississippi, paya
ble January 10, 1917, an amount which Is in excess of
twenty^five per can tom of the total amount of eligible
warrants outstanding at the time the purchase was oade.
Tery traly yours,
Governor.
Mr. John Perrin,
Chairman, Board of Directors,
Federal Beserve Beak,
San Francisco, Calif,
GLH-C.
Dictated "by
A p p ro ve d
"by
,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
T Q IS M . 'rcsatV E BOARD HLE
F e d e r a l R e s e r v e Bani<
of
A d d ress
S a n Fr a n c i s c o
a l l co m m u n ica tio n s to
F e d e r a l Re s e r v e Ba n k
August
31 , 1916
Federal Reserve Board,
Washington,
D. C. ,
Sirs:
beg to acknowledge receipt of your telegram of
even date as follows:
"Board approves your purchase
Fifteen thousand Tax Anticipa
tion Certificates, Uintah School
District, as recommended in
telegram.”
Thanking you, we are,
Respectfully,
sy
Actiiig Deputy Governor
Reproduced from the Unclassified I Declassified Holdings of the National Archives
TELEGRAM
FEDERAL
RESERVE
BOARD
W A S H IN G T O N
£IX§*»
3«a
Boatti
mrnmlwm* Calif*
## yotjp yHhQ^BSi f l f t M B t&0&S*Xl4 tAX
UintAli
w$
irKinwiwriflort
y o w
AMiitHil Sftorefeoiy*
OFFICIAL BUSINESS
GOVERNMENT BATES
C h a r g e F e x >e r a l R e s e r v e
Board
SIFSS#lS6ltW i
Reproduced from the Unclassified I Declassified Holdings of the National Archives
^ P S T A L TEIJLGRAPH - C O M M E R C R L C A B LES
CLARENCE
lIVED a t
E V A N S B U IL D IN G
8 NEW YORK AV ENUE
S H I N G T O N,
D. C
TELEPHONE: MAIN 6600
H. M A C K A Y ,
Pr e s i d e n t
DELIVERY NO.
TELEDRA
The PostalTelegraph-Cabie Company( Incorporated) transm its and delivers th is m e s s a g e subject to the terms and c o n d itio n s printe d on the bacK ot th's b l a n k .
16W— 27834
DESIGN PATENT No. 40529
Z 3 4 5 ' .-iV
4 3 COLLECT
4^2
Pd ■
fi!K SANFRANCi SCO CAl AUG 3 0 - 1 6
FEDE^JL. RCSERVC
; BCAP.D
:
Ilsk ,
/ /
WAGhN
p e iw
• s s i on a m u E S T O )
to
p u r c h a s e f i fteen
A N T IC IP A T IO N CCRT.I Fi CAT EG
thousand
tax
U .jiTAH . SCtiGOL D. CTRI CT AUD COU.'JTV'
U T A h , FLOATING DEBT Th I RTY SEVEN 'THOUSAND DOLLARS TOTAL DE&T
S IX TY TH SEE THOUSAND ASSESSED-V ALU ATI ON Fi VC M IL L IO N
POPULATION OVER TEN THOUSAND
CALKi-KC ACT; l u
nEPUTY GOVERNOR.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
L-
Fe d e r a l R e s e r v e B
of
S a n Fr a n c i s c o
August 30,
1916
r i L B
SEP 6
1916
Federal Reserve Board
Washington,
D. C.,
Dear Sirs:
We wired you to-day? as follows, which we beg to
confirm:
“Permission requested to purchase
$15,000 tax anticipation certifi
cates Uintah School District and
County, Utah.
Floating debt
$37 ,000; total debt $63,000 .
Assessed valuation, $5,000,000.
Population over 10,000.n
The Uintah School District includes all of Uintah
County, Utah, and we are informed that its population is
11 ,616,
with an assessed
valuation in
1916
of $5,384,624.
The net bonded debt is $26,700; sinking fund, $441.43;
floating debt, including this issue, $37,428.28.
These certificates are issued in denominations of
$5 ,000, a total of $25,000, of which the $15,000 which we wish
to buy are due February 1, 1917, and $10,000 June 30, 1917.
They are certified
as eligible for purchase by this bank,
offered to net us 4$.
Yours respectfully
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F ed eral R eserve B
of
S a n Fr a n c i s c o
August 30,
1916
f i l e
SEP 6
Bhftnwal iiiwag— i
Federal Reserve Board,
Washington,
1916
D. C.,
Dear Sirs:
wirsd you to-day as follows, which we beg to
confirm:
"Permission requested to purchase
$15,000 tax anticipation certifi
cates Uintah School District and
County, Utah.
Floating debt
$37 ,000; total debt $63,000 .
Assessed valuation, $5,000,000.
Population over 10,000."
The Uintah School District includes all of Uintah
County, Utah, and we are informed that its population is
ll,6l6,
with an assessed
valuation in
1916
of $5 ,38^,62ty.
The net bonded debt is $26,700; sinking fund, $¥*1.H3;
floating debt, including this issue, $37 ,U2S.2 g.
These certificates are issued in denominations of
$5 ,000, a total of $25,000, of which the $15,000 which we wish
to buy are due February 1, 1917, and $10,000 June 30, 1917.
They are certified
as eligible for purchase by this bank,
offered to net us 4$.
Yours respectfully
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Re s e r v e B
n
Fr a n c i s c o
st
30 , 1916
FILE
SEP 6
1916
MenittmttBl
as follows, which we teg to
Please return to
Secretary’s office.
p
Rested to purchase
$15>000 tax anticipation certifi
cates Uintah School District and
County, Utah.
Floating debt
$37 ,000; total debt $63,000 ,
Assessed valuation, $5*000,000.
Population over 10,000.H
The Uintah School District includes all of Uintah
County, Utah, and we are informed that its population is
11 ,616,
with an assessed
valuation in
1916
of $5 ,3 S1+, 621+.
The net bonded debt is $26,700; sinking fund, $441.^3;
floating debt, including this issue, $37,^2S.2S.
These certificates are issued in denominations of
$5 ,000, a total of $25,000, of which the $15,000 which we wish
to buy are due February 1, 1917, and $10,000 June 30, 1917.
They are certified
as eligible for purchase by this bank,
offered to net us 4$.
Yours respectfully
JUC/M
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e B a n k
of
A d d r e s s
a l l
c o m m u n i c a t i o n s
t o
August 21,
F e d e ra l R eserve Bank
S a n Fr a n c i s c o
1916
Federal Reserve Board,
Washington,
D. C.,
Sirs:
We beg to acknowledge receipt of yours of August
enclosing confirmation of your telegram
for permission to purchase $40,000
approving our application
Jordan School District, Salt
Lake County, Utah, Certificates of Indebtedness.
icates are due
ber
1 st,
March 1, 1917, and will be delivered
or later, at a price to net us 4$.
Yours respectfully,
JUC/M
15th,
These
Certif
to us Septern
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e B a n
of
August 15,
A. Kains, G o v e r n o r
S an Fr a n c i s c o
1916
Federal Reserve Board,
Washington,
D.C.,
Sirs:
We beg to confirm our wire to you of August 14th, reading,
"Permission requested to purchase $40,000
of total outstanding of $SS,000 Jordan
School District, Salt Lake County, Utah,
Certificates of Indebtedness otherwise
eligible."
and to acknowledge receipt of and thank you for your wire of even date,
as follows:
"Tour request August Ikth purchase $U0,000
Jordan School District Certificates approved
by Board to-day.”
Tours faithfully
overnor
Foytn 40
TELEGRAM
FEDERAL,
RESERVE
,U
I
JCCHVE
BOARD
BOARD
W A S H IN G T O N
August 15» 1916*
<» .. ••■
Governor, federal Beseifre Bank, San Francis cov Cal*
Tour request August fourteenth purchase forty thousand
dollar* Jordan School District oertlf ioates approved by Board today.
Governor
f i if ®
AUG1 5 1916
OFFICIAL BUSINESS
RATES
Digitized forGOVERNMENT
FRASER
Char g e Fe d e r a l Reserve
Bo ard
ML
rn
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Reproduced from the Unclassified I Declassified Holdings of the National Archives
BOARD
SRAM
iERVE
j q t o n
Please return to
Secretary's office.
BOARD
/
MLE
Reproduced from the Unclassified I Declassified Holdings of the National Archives
......................
..
X
//
/
/
Anguat 1£, 19X$»
3
Honorable A* Xfeina9
Cknreraor* faderal Beaerra Benk9
San FTttnoieco, California.
Bear Governor minis
BneXoeed 1« oonflrtoation of toXagran* »ept to yon
to-day* static^ the %)proval of tha Board given upon ycrar requeat to pwrohaee #40fOOO Jordan School District* Sait Lake
Countjft Utali* certificate# of Jndebtedaeii*
&l a approval
m s given sufc.loot to tha federal Seaerve Aet and tha regnla~
tione of tie Board, and upon the st& tenant of the a*ittar
contained In your telegram of Au^ost X4th.
It !• of asale taaoe to the Board to have the maturity
and rata of earniaige gi r o «t»an you oan oonviaiently do thia#
Vary truly your*,
Governor.
SaeX oeure
^
Reproduced from the Unclassified I Declassified Holdings of the National Archives
zm u %
7C
W
S m « r B
TELEaRAM
1 m
mfe Sanfranciaco
3 3 3 .± ( l»
J
Cad if iug 14
;
1052*
B«s®pv« Board
V.
'. | :
•
Wash*
.
;:
I
'
•
K,
Permission requested to purchase forty
thousand of to till
ofeighty eight thousand Jord«t
School District SaltLafceCounty Utah:
ea^fieatea of indebtedness othorwiae altfifcl#
.
A Kains
Scnrr
Reproduced from the Unclassified I Declassified Holdings of the National Archives
C h air m a n
o f th e
Board
F e b ru a ry 28th 1916
F e d e ra l R eserve Board
W ashington D. C .
S i r s :
T h is w il l acknowledge re c e ip t o f X 9JK
telegram o f F e b ru a ry 26th g ra n tin g p e rm issio n to ex
tend our in vestm en ts under re g u la tio n F to about
th re e m illio n d o lla r s ($ 3 #0 0 0 ,0 0 0 ), a ls o p e rm ittin g
the e x te n sio n o f the lim it o f investm ent in Hew
Y ork C it y w a rra n ts by fo u r hundred thousand d o lla r s
(# 4 0 0 ,0 0 0 ).
Reproduced from the Unclassified I Declassified Holdings of the National Archives
< ^ /
^
2-— ‘
■...
si h
TELEGRAM
FEDERAL
RESERVE
W A S H IN G T O N
9«VfiU7 21, 1 9 M .
^
-3. ^
C. J.
Tt— <T T i
3a
Sk*
* * * * ««'*•« *•
t * w %rt*g*>»*
lt"lt ef t t m o m m t m m *
1$ fim nua** a«asyfci%i*» * *gt afrottt t l i w » n u o * **£!**#.*
« xt« 4 &*t$ in
Ifcrfc O tif ***&*&« fcf f w t
qttMtHi
-
»
•. &
t? /
tc;<~.<J
‘
J; is../;0
K-*- *»-v ks . , f s & i
OFFIGIAL BUSINESS
GOVERNMENT RATES
Ch ar g e Fe d e r a l Reserve
Board
s X m m m m tm fc#
*i*»*aa£ Wife*# m ft*
*■■
Reproduced from the Unclassified I Declassified Holdings of the National Archives
tre a s u ry gepartm jetxt
T E L E G R A M
31WU II 111 collect govt
Mk Sanfrancisco Calif feb
Fedirral Reserve Board
Washn
/*V
/
25 1916
/
/J^oV
/
Ynur 1aft tnr Fay - U IiagBiibjlafltoSB, fifteen/^uote the boarc
_
to permit the la&axsi Federal Reserve Bank of Sanfrancisco t o S ^ L ^ j
its investments for the present to an amount equal to
'Vy
twenty percent of members deposits or roughly three million dollars
instead of one and half million dollars end quote/Please
confirm as applying to present time at "twenty percent of
present 01 deposits in investments under regulation F stop. Also
please grant permission to exceed limit of HewYorkCity warrants by
four hundred thousand dollars as we have opportunity to purchase
three hundred thousand dollars additional today under present conditions sjpongly
recommend extension requested.
Shepfwrd Asst to Chairman
RECEIVED
FEi 25 1916
31°p
306p
Reproduced from the Unclassified I Declassified Holdings of the National Archives
I
1
IHrnrjr t v i n *
nr*
Am
0«ftrMr(
limrv* ftrnfe*
««* fraseift** California*
£ «p ly l *m
»ta t« the!
y©ar l# tt* r » f th* 4th instant, in ifeiili fm
irt*dY*rt**c# * « jr*«* | «H y «» !*«*« pw tiw «#«
m>4 t » l i nwrrwits in «x*£t» « f t!» U i i t ©f fiv* j?»r o*nt of y««r
d«jM>#iti, fl**# by t#fwX?iti«n f # to %Hi
« f f38#3«3#49t tta*
in vfeicli y«o r<N*u#«t th# mpprtvol by %fct 9t**ft ©f it** ^MNrtmw #f
t*0f9OtS«Si tf « l | Of «•» T#rk w r r M t», I b*« to
tlM **tt*r Hat bet* *r«*«*t«4 ft %*•
Jf#* til**
a*4 tut y ^ i m t w w i i .
s«or«»t*ry.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F e d e r a l R e s e r v e B ank
of
A d d ress a ll
S a n Fr a n c i s c o
co m m u n ica tio n s to
F e d e r a l R e s e r v e Ba n k
February 4th 1916
federal Reserve Board
Washington D. C.
S i r a :
We find that we hare inadvertently purchased warrants issued
by the City of Sew York in excess of the amount permitted by Regulation
f , paragraph 4* We now have on hand #121*182.19 (maturity value) City
of Hew York warrants, due June 6th# We purchased yesterday through a
broker #400*000 City of Hew York warrants due June 10th (maturity value
|403,089*58)*
The federal Heserve Bank of How York purchased, yesterday
#6,000,000 C ity of Hew York warrants, and, under an arrangement prev
iously made, we expected to receive as our allottment, six per cent of
this sum or #360,000*
However, in this particular instance, the fed**
eral Reserve Bank of Hew York allotted us #403,092*22? making our total
holdings of Hew York City warrants,
#927,313.99
five per cent of our deposits as of yeserday's date is
Excess holdings would therefore appear to amount to
888.961*50
# 38,362.49
Considering the high standard of the above investment and our need for
the additional income therefrom, we respectfully request your approval
of the above purchases.
Respectfully
* (maturity value)
Governor
Reproducedtom the UndassKed / DedassKed HoWngs ofthe NaionalArchives
(412)
\
Feb. 9, 1916*
• 303
FEDERAL RESERVE BOARD
MEMORANDUM
For Kr. Miller.
Under the regulations of the Board the
following matter is referred to you eiirougi the Chair
man of the Comnittee on Investments, as
Sfeg>jg«6i% Cofonittee on
l&rnber,
«
; « Operation of P. R. Banks;
(Che attacfcad letter, dated Feb. 4, of Go t .
Kains of Ssn Frsnoisco, re an excess purchase of
warrants.
/
tary with copy of documents resulting from action
taken, if any, that it may be placed on the docket,
R E M A R K S
Bate.
.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
?
7
D m t Mr* MPvitti*
Bfcla will
die rMtlpt tf yoor ,
letter »f Aagmt 20th enolotlng
■est
*£ *
tou Ik# t3hs p ftlair Bond, aid Hurt mu m OimBT,
■_„
^u^-srv.»r^=<■»-bfj,h'r^W-K>TTH-v;^rton^>f<v^!r^‘I'L^/S-O/^et'J^l-^
PIm m aiWNyt *y appreciation ef your
ceenrteey in the Matter*
liifgr raepeetfally.
Aa»i«t*nt Secretary*
Mr*
Mm
Perrin,
Federal a»#*rre igeot,
San littiivii, Calif*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
T E L E G R A M
11P0 MO 1? C o lle c t G©Tt
SM JEANCISCO G al,Aug 24 1915
F e d e ra l R eserve B eard
jsh
W ashington, D.C
Sp:~
00^
v*"
Telegram twenty t h ir d palm er le t t e r answered capy sent tw e n tie th
P e r r in , Chairman
225pm
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Reproduced from the Unclassified I Declassified Holdings of the National Archives
TELEGRAM
FEDERAL
RESERVE
/a
BOARD
WASHINGTON
Aqptst as, mi>.
WwQmrmA J i B W I A£Mk»«
Omm FXWm&wVOt VSU*»
K u g m ft u la & m m *
Tow
OFFICIAL BUSINESS
GOVERNMENT RATES
C h a r g e Fe d e r a l Res er v e
Bo ard
& i*» y m y»fc r«Mlv»d 9 * t a *
23
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e B a n k
of
J
ohn
P
C h air m a n
3
S a n Fr a n c i s c o
e r r in
o f the:
B oard
August 20th, 1915
Federal Reserve Board,
Washington, B.C.
S i r s :
Herewith are enclosed letter dated July 51st,
addressed to Mr. H. Parker Willis, Secretary, by Palmer
Bond h Mortgage Company; also, copy of ray reply thereto
in accordance with the request contained in your letter
of
11 th inst.
Respectfully
Chairman of the Board
Reproduced from the Unclassified I Declassified Holdings of the National Archives
B o n d a n d Mo r t g a g e C o
W A L K E R B A N K BUILD IN G
SALT LAKE CITV
J u ly 3 1,
1915.
Mr, H. Parker Willis, Secretary,
Federal: Reserve Board,
Washington, D. C.
Dear Sir:
' As purchasers of revenue notes and warrants in behalf of mem
ber "banks, we wish to he advised as to the interpretation of Federal
Reserve, Board of the introductory paragraph under the term "definition of net funded indebtedness ’1 on page three of circular No. 7,
series of 191 ?.
This sentence says that the gross indebtedness of the munici
pality shall be interpreted to include "the amount of any school dis
trict or other bonds which depend for their redemption upon taxes
levied upon property within the municipality”.
A literal interpretation of this clause in the case of
states and counties might be taken to require a complete financial
statement of every incorporated city, town, villa,ge and school dis
trict within the state or county.
The laws of Utah make no provision
for the- registration of such debts with the secretary of state or any
other official and it would be a practical impossibility to secure
the detailed data from the local officials of several hundred cities,
towns, villages, school districts and counties.
We wish to be advised:
|
1. - In the case of states, is the net debt to be figured on^
on the basis of direct obligations of the state, without regard to the
debts of cities, school districts and other public corporations within
its borders?
2. - In the case of counties, is the net debt to be figured
on the direct obligations of the county alone, without taking into
consideration the debts of incorporated cities, towns, villages and
school districts within its borders? In this connection it may be
stated that the constitutional debt limit for counties of Utah is 2%
of the assessed valuation, for school districts 4$, and for cities and
towns A% for general purposes.
•
3 . - In the case of school districts which include a number
of incorporated cities, towns and villages, is it required to take into
consideration the funded debt of these cities, towns and villages,
when in the aggregate they do not include the entire area of the
school district or any considerable part thereof?
We know that the fiQiiiaijtar"
the Postal Savings Depa*%ment has not placed any' such restrictions on state bonds, and it is
our understanding that the clause in question is applied literally
Reproduced from the Unclassified I Declassified Holdings of the National Archives
P a l m e r B o n d an .d M o r t g a g e C o .
W A L K E R B A N K B U ILD IN G
SALT LAKE CITY
-
2-
only in the case of incorporated cities, towns and villages or in the
case of school districts the voundaries of which co-ordinate with
that of the municipality.
We would, however, like a definite ruling
from the Federal Reserve Board so that banks purchasing these
securities will feel sure of what might occur in case they should
wish to turn these warrants over to the Federal Reserve Bank.
Very truly yours,
President.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e B a n
of
S a n Fr a n c i s c o
August 19 th , 191
j3
'er-
The H onorable Sherman A lle n ,
A s s is ta n t S e c re ta ry , F e d e ra l B eserve Board,
W ashington, D. C«
D ear
Mr A lle n :
I have today re c e iv e d from Mr E. B* Palm er, o f
Palm er Bond & Mortgage Company, S a lt la k e C it y , h is le t t e r
addressed to the Board under date o f J u ly 3 1 s t , and y o u r l e t t e r / ^
o f August 11th co n ce rn in g i t , w hich two le t t e r s were a p p a re n tly
en clo sed in e r r o r to Mr. Palm er,
The m atter w i l l have my a tte n tio n .
R e s p e c tfu lly ,
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F e d e ra l R e s e r v e Bank
of
J
ohn
P
C h air m a n
3
3
S a n Fr a n c i s c o
e r r in
o f th e
B oard
Aigust 16t 1915
The Honorable Sherman Allen
Ass't Sec'y Federal fieserve Board
Washington D. C.
Dear Mr Allens
Your le tte r of. the 11th instant has been
received referring to an inquiry of Mr E. B* fainter
president of the Palmer Bond and Mortgage Company
of Salt Lake City#
This letter has not yet been re
ceived and i t would perhaps be well for you to verify
the fact that i t was forwarded,
1 take note of Mr Harding's expression*
which you mention*
Ehis w ill guide us in consider
ing any suoh bonds*
With kind regards*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Ai^ust 11, 191S*
Hr. John Perrin,
Federal Reserv’d Agent,
San Francisco, Calif*
Bear Mr. Perrin
I have just forwarded to you, at the
direction of she Board, a letter bearing txpon the
inquiry of Mr* B. $• Palmer, President of tha
Palmar Boad arid Efortgage Coiapai^?, Salt
City*
Hr* Palmer aatea the definition of “not funded
indebtednessn, given in Begulation F« Series of
19 15 .
In snowing this letter to 2lr* Harding.
he suggests that it might be well to say to you in
this connection that there is a broad difference
school districts
and that if the Federal Besorre Bsnlt of San Francisco
were to tak» over any such bonds, the examination by
Counsel required under the regulation should be a
searching one*
With personal regards and good wishes, I
have tho h o n o r to be
Very respectfully
Assistant Secretary*
—
—
— —
—1
Reproduced from the Unclassified I Declassified Holdings of the National Archives
LOR
iagust XI, 1915.
Boar Sirs
T h a Federal Beserve Board la la receipt of the en
closed letter fro® £. B« i&l&er, President of tho Balmar Bond
and llortlsage Company, Waltoar Building, Salt IaJjb City, relating
to the construction of the definition of "not funded indebted^
m m
w, given In Herniation F, Series of 1915*
She letter hae beon refw e d to Counsel for the Board,
m o
m akes
the following cogent upon Iti
t o n are advised that the tena ‘taiieipality",
as used In this regulation, is .specifically defined
to m m n r8tate» county, district, political sub-di
vision, or municipality in tho oontinentai United
States, including irrigation, drainage, and reclama
tion districts**
In other words it refers only to
the state, county or distriot, etc*, the "bonds or
warrants of which are under consideration* f ith that
explanation in view it seems clear that the gross in
debtedness of a state, for Instance, includes only
the obligation® of that state and not of the political
sub-divisions located within its boundaries*
"She questions presented in your letter should,
therefore, be answered as follows:i 1}.
Tim net Indebtedness of a state is to be com
peted on the basis of the direct obligation®
of that state without regard to the debts of
cities, school districts and other public
dorporations within its borders*
|Z ).
I n the case of counties the net indebtedness
is to be conpited on the basis of the direct
obligations of the county with&nt considering
the debts of cities, towns or villages located
within its borders*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
(3) .
In the case of school districts th© net funded
indebtedness is aonpated on m 'oasis of the
obligations of that district without including
the o b l i o a t o f cities, towns or villages'
i&ich may be located within tho district* Shis
would seem to be so whether or not said cities,
towns or. Tillages include the entire are* of the
school district, it being understood that the
property located in such cities, towns and vil
lages is itself testable by the school district**
Counsel also directs attention to Paragraph 5 of the
letter which relates to the question of warrants of school districts,
and on this question sayss
^iere is no doubt in
mind about the answer to
this question except on th® more fundamental point whether
warrants of school districts are eligible for purchase by
Federal roaerve banias*
Kr* Jacobson reports that a number
of such warrants have already been bought by various banks,
and that no distinction lias been m d e between them and
those of any drainae® or reclamation district*
School
districts are not specifically oentioned in the act, bat
It v/ould seem that Section 14 (B) is broad enough to in
clude t h m on the same .ground that it does Irrigation
and reclaaation districts*
WI felt, however, that 2 should point out the dis
tinction between the two for your consideration.M
Shis matter rms laid beforo th© Board at a neeting held
yesterday and I am directed to contaanioato the substance of Counsel*®
statement to you, m
above, with tho request that after eaeaiaining
it you reply to Ur. Palmier directlyy returning M s letter for the
file© of toe Board with a copy of year answer*.
Tery respectfully.
Assistant Secretary*
Mr* J(te Perrin,
Ohairman, Board of Director*,
Federal Beserve Bank of San Francisco*
Bnclosures*
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Form
42,
R A L
R E S E R V E
O P 'F IC E
OF"
BOARD
COUNSEL
DATE:
August 9, 1915
SUBJE CT:
My dear Governor:
Attached is a suggested form of re
ply to the letter from the Palmer Bond and
Mortgage Company, Salt Lake City, which was
referred to this office for consideration,
and then to you for action as chairman of the
executive committee.
I would like to call attention to para
graph (3) which relates to the question of
warrants of school districts S / There is no
doubt in my mind about the answer to this
question except on the more fundamental point
whether warrants of school districts are eli
gible for purchase by Federal reserve banks.
Mr. Jacobson reports that a number of such war
rants have already been bought by various banks,
and that no distinction has been made between
them and those of any drainage or reclamation dis*
trict. School districts are not specifically
mentioned in theact, but it would seem that
Section 14 OB) is broad enough to include them
on the same ground that it does irrigation
and reclamation districts.
I felt, however, that I should point
out the distinction between the two for
your consideration.
'f
Respectfully.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
B.X-C
EMBERS
CHARLES S. HAM LIN. G o v e r n o r
FREDERIC A. D ELANO. VICE GOVERNOR
PAUL M. WARBURG
W. P. G. HARDING
ADOLPH C. M ILLER
WILLIAM G ^TcA D O O
S E C R R A R Y OF TH E TREASURY
CHAIRMAN
JO H N SKELTO N WILLIAMS
C o m p tro lle r o f t h e C u rre n c y
FEDERAL RESERVE BOARD
H . PARKER W ILLIS , SECRETARY
/Cd DRESS R EP LY TO
WASHINGTON
^DERAL. RESERVE BOARD
August 9, 1915.
6
i r
Your letter of Jul£ Jl, relating to construction
of tha
Iniiion oF~"ne t funded indebtedness” given
in Regulation F, Series of 1915, was duly received
and referred to the Board.
You are advised that the term "Municipality,n as
used in this regulation, is specifically defined to
mean "state, county, district, political sub-division,
or municipality in the continental United States, in
cluding irrigation drainage, and reclamation districta."
In other words it refers only to the state, county or
district, etc., the bonds or warrants of which are un
der consideration* With that explanation in view it
seems clear that the gross Indebtedness of a state,
for instance, includes only the obligations of that
state and not of the political sub-divisions located
within its boundaries.
fhe questions presented in your letter should,
therefore, be answered as follows
(1 ). the net indebtedness of a state is to be com
puted on the basis of the direct obligations
of that state without regard to the debts of
cities, school districts and other public cor
porations within its borders.
(2). In the ease of counties the net indebtedness
is to be computed on the basis of the direct
obligations of the county without considering
the debts of cities, towns or villages located
within Its borders.
(3). In the case of school districts the net funded
indebtedness is computed on a basis of the
obligations of that district without including
the obligations of cities, towns or villages
which may be located within the district. This
would seem to be so whether or not said cities,
towns or villages include the entire area of the
•Lirfr*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
E. B. Palmar
8-9
school district, it being understood that the property
located in such cities, towns and villages is itself
taxable by the school district.
Respectfully,
Secretary.
Mr. E. B. Palmer, President,
Palmer Bond and Mortgage Co.,
Walker Bank Building,
Salt Lake City, Utah.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
f
(
Fe d e r a l R e s e r v e B a n k
of
J o h n P e r r i n , C h a irm
S a n Fr a n c i s c o
an
May 19, 1915
Fedaral Reserve Board,
Washington,
D. C,
SIRS:
Receipt is acknowledged of your letter of 15th instant
advising that authority has besn given for this bank to extend
its investments in municipal warrants for the present
JP/M
to an
Reproduced from the Unclassified I Declassified Holdings of the National Archives
ssr
*****
Sirt
loor letter addressed to »r* iu 0* Miller*
manfcar of tb* Federal Reserve Board* under date
of m m 6* » & breast before t&e Beard at ita meet
Sag yestorday moralng*
fbt Board voted to permit thd Federal Re
serve Bask of $ m Fra&ciseo to extend its Invest**
snxittt fear tlie present* te m m m xm t equal to ZG%
af
asabers deposits, or, rankly* |3*000,000 iu-»
• t w d ox *i.fioo,®oe.
I hst* tfc* k M » r te k«.
BespectfalJy yours,
Seevetasy#
Mr* <$9&& p«ria,
Chsirmi * Board of Diractars t
Federal Heaerra Bank ef San Franci0 0 0 *
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e B o a r d
Wash
(
in g t o n
'
May
14, 19ltfjW 141
Dear Dr. Miller:
Upon my return I notice the appended
letter.
I think we should act favorably on
this and suggest you b ring it up for dis
cussion at a Board meeting today or tomor
row.
Dr. A. G. Miller
/
H&jr
11 ,
191* •
Kr« Joha F e rrla ,
Chaims* at the Beard a»d Fedsral Reserve Ag«nt#
Federal Reserve Bank #f Sa* ^raaeieee.
Sea sVaneieeo, California.
Oewr Hr* iNirrljft*
fe«r mete iif ih« Srd In*tent with copy of thepro posed
•Mudiist to the awnieipd indebtedness set ef faliforuia raising
the liait ef indebt*d*»se that
emit* is at haad.
wmy be
incurred is twenty-fir* per
The unwisdom of the asteoditimt is manifest* as
its speaeers trill doubtless in time leans with regrst*
hat* b*»e«
unmine,
It vsuld
hewei*er# fer th* Reserve Bear# to have beea
d r a w iffieially into tlie matter; amd
I sa gpatd that
yeu spared the
Board the necessity of refiieing la give aiviea on each matter# ax*
cept whan they bees** is concrete eases matters far tha Board*a
notion*
Kefereaoe te the lNmrd*s Hegulatioe t. Series 1§1$# will
diselese the Be»rd*» attitude.
It la there protided that warrants
of a municipality whesa net funded iadebtednass exceeds tea par
cent, of it* taxable property are net admissible te purchase by a
Federal Reserve Bank.
This ©f eewrse carries with it the implies*
tion that tern per cent. should be regarded ae the maximum limit up
te which obligation* sight properly ha incurred,
X am wondering
Reproduced from the Unclassified I Declassified Holdings of thp^yationaf"Archives
—
......
V':
-2-
hew the amendment, if passed at you definitely believed it would
be, will affect your position with reference to the purchase of
warrants.
I should doubt whether well administered municipalities
Mould care to exceed the tea per cent. limit,when fidvised that from
the point of view of good banking and finance as expressed in the
federal reserve system, this *ould
make their obligations ineligible.
Sincerely ,yoursg
A* c . m
P.
i& m
s.
Since dictating the above, clippings fro* the Saa
Francisco press have come to hand indicating that Governor Johnson
has vetoed the amendment.
1
am delighted.
A.
c. u.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
ftay 10, m s *
Mr* John Perrin*
Chairman of the Board and Federal Eeserve- Agent*
federal iteserve Bank of San Francisco,
£an Francisco, California*
Dear -Mr* Perrin i
tour not© of itay $th is at hand presenting considerations
’
Wftii«ti have led you to inquire of
mm
whether I think the Federal
l^eeerve Board would look with favor upon a request from your Bank
to allow it under prosent conditions to purchase warrante up to an
amount of #3 ,000,000*
1
appreciate the force of tho reasone w hi eh
have led you to your conclusion*
They saa» to me good ones, and 1
believe the federal lieserve Board will share your view*
Three «»e«*
burs of the Board are absent at the preterit time,* but on Thursday
next the executive ooiafclitee wifcl aeet and
1
ehall at once bring the
aatter to its attention and advise you telegraphically of its view*
Inhere ie no doubt that what the eowa&ttee reeonaends in thie matter
will have the $ansties of the Board when it «?*et*.
Zwtm requests
el*ilar to yours have already had the approval of the Board* where
it was satisfied that the increased investment in warrants would
not impinge upon funds that would otherwise find investment in diecount operations, »*»d such see^e very clearly to be your case.
Sincerely yours.
* . C. M LLEft
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e B o a r d
W ash in g t o n
May
M . C . E L L I C JTT
10th,
1915.
CO U N S E L
My dear T)r. Miller:In reference to the attached:
The only bearing
it has on the Federal Reserve Act is that such bonds would
probably be ineligible for purchase by Federal reserve
banks.
Regulation "Fn, Series 1915, provides in terms
that in order for such bonds to be eligible the net funded
indebtedness of the municipality must not exceed ten per
cent of its taxable property.
This is generally consider
ed the maximum that should be permitted and the more conservative houses prefer to handle bonds of municipalities
whose net funded indebtedness does not exceed seven or
eight per cent.
It might be advisable, therefore, to wire Mr.
Perrin that while the Board does not feel it proper to
make any suggestions as to State legislation, this amend
ment, if passed, might preclude the purchase of such bonds
by Federal reserve banks.
Very sincerely
Dr. A . C. Miller,
Federal Reserve Board.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
FED ER A L RESERVE BOARD
May 10, 1915.
Memorandum for the Counsel:
Will you look over copy of amend
ment attached to Mr. Perrin’s letter and
advise me whether you can find that it has
any bearing upon either the construction or
the administration of the Federal Reserve
Act?
So far as I can see, it is of very
remote interest to us, and therefore no
concern of ours.
Very truly yours,
M. C. Elliott, Esq.,
Counsel, Federal Reserve Board.
Reproduced from the Unclassified / Declassified Holdings of the National Archives
Fe d e r a l R e s e r v e Ba n k
of
'th
S a n Fr a n c i s c o
%
J ohn Pe r r in ,C
h a irm a n
May 5th, 1915.
V\
WARRANTS*
The Honorable A. C. Miller,
Federal Reserve Board,
Washington, D. C .
Dea r Professor Miller :
The regulations for the purchase of warrants limit us
to an amount equal to 10 percent of deposits from m e m b e r banks.
I heartily agree with the w i s d o m of this restriction
and fully recognize that the Federal Reserve banks more fully
comply with the fundamental purpose of their creation in confin
ing their investments almost w h o l l y to short time liquid paper.
However, it appears to me that various elements of the present
situation m ay justify a moderate digression from the obviously
sound general policy.
Some of these elements are as follows
There has b e e n such general liquidation that under
present conditions of curtailed business, there seems no
possibility of any important stringency during the coming
six months
Six months maturities purchased n o w mature in
November, the month in which the credit strain is normally
greatest.
The running off of November maturities would
consequently fortify at a time wh e n the need, if any, would
be greatest.
There seems to be a special defence for investments
in Municipal warrants payable at such a time.
Investments of a strictly commercial character would
possibly have the final payment more largely out of commercial
funds.
Municipal warrants, on the other hand, would be
payable out of tax receipts w hich naturally draw in a consider
able proportion of funds not normally used in commercial
channels.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
(
2)
The Honorable A. C. Miller. Washington. D, C .
The Federal Reserve System needs for its best development
a period of reasonable freedom fr o m political a t t a c k in order
that by the results achieved it m ay demonstrate, even to the
uninformed and the unthinking, its successful operation. While
earnings from a n economic viewpoint, are perhaps unnecessary and
should not be regarded as of primary consequence, yet it appears
to me that the desirability of reasonable earnings is of almost
primary importance as a means of inducing a favorable attitude on
the part of member banks, up o n whose co-operation the ultimate
success of the Federal Reserve System must rest, and as a means
of disarming public criticism w hich seems to address itself
chiefly to this non-vital point.
The public statement of the
fact that the Federal Reserve Bank of San Francisco is now earning
at a rate in excess of its expenses usually elicits applause,
even from bankers.
I have, however, always accompanied such
statement with the further statement that the present expenses
are at a rate less than one-fiftieth of 1 percent of the loans
and investments of member banks in this district.
It is of
course a trite saying that nothing succeeds like success, but it
is none the less true that there is cumulative force in a quick
demonstration of success. E v e n if the public standard of the
measure of success is unsound and uneconomic, yet if important
success can be demonstrated according to the public standard
without jeopardy, it appears to me that there is much to be said
in favor of striving for that success by w ay of winn i n g the
bankers and the public more fully to approval and co-operation
as a means to the fullest measure of success as gauged b y sound
and economic standards.
1
The foregoing outline the basis for a request to be
permitted to extend our investments in warrants this spring to an
amount equal to 20 percent of members deposits, rougEIynF37000f0 0 0 .
instead of $1,500,000.
Governor Kains and I have discussed this
matter and are in accord in presenting this tentaive request.
If you advise me that the Federal Reserve Board will look
with favor upon such a request but that before granting it, it would
be desired that the matter should first be approved.by our board of
directors, I will bring the matter up at our next meeting, May 18th.
-0.
Respectfully,
( / /f
//
£/
v/
//
r
Chairman of the Board.
p /s
Reproduced from the Unclassified I Declassified Holdings of the National Archives
F e d e ra l R e s e rv e B ank
of
J o h n P e r r in ,C
^ 3 3 ,1 0
>)
S a n Fr a n g i s c o
h a ir m a n
Kay 3rd,
1915.
The Honorable A. C. Miller,
Federal Reserve Board,
■7ashingto n , B . C .
Dear Professor Miller :
Herewith I enclose copy of a measure which has passed
both Houses of the California legislature and will become a
law, as I am told, unless vetoed by Governor Johnson tomorrow.
I
was requested to telegraph the Federal Reserve
Board submitting the facts and requesting an expression of
opinion as to the wisd o m of enacting such a law.
This I
declined to do, although having no doubt that your view would
be the same as my own, vis;
that the measure is exceedingly
unwise and will have an unfortunate effect upon the market for
California Municipal bends.
P /S
Reproduced from the Unclassified I Declassified Holdings of the National Archives
Amended la Assembly April 8, 1915.
Amended In Senate March 23, 1915.
SENATE BILL
No. 1057
IHP ADDUCED BY SENiTOH BHEKD,
January 29, 1915.
HBFEHKED TO
COMMITTEE
AN
ON MUNICIPAL CORPOMTIONS.
ACT
To Amend Section Four of an Act Entitled "An Act Authorizing
the Incurring of Indebtedness by Cities, Towns and Munici
pal Corporations for Municipal Improvements and Regulating
the Acquisition, Construction, or Completion Thereof’,
which became a Law under Constitutional Provision Without
the Governor's Approval February 15, 1901.
The people of the State of California do enact as follows:
1
2
3
4
5
6
7
8
9
10
11
12
1
2
55
4
5
6
Section 1. Section four of an act entitled "An act authorizlng the incurring of indebtedness by cities, towns and
municipal corporations for municipal improvements and regulating the acquisition, construction, or completion thereof,"
which became a law under constitutional provision without the
governor's approval February 15, 1901, is hereby amended to
read as follows:
V
Sec. 4. No city, town or municipal corporation shall incur
\
indebtedness for public improvements which shall in the aggregate exceed
of the assessed value of all
the ta:mMe-rSiariS^
of such city, town or
municipal corporation; nor shall any city, town or municipal
corporation incur, for public improvements other than for the
purchase or original construction of public works for supplying its inhabitants with water, an indebtedness which shall in
the aggregate exceed fifteen per cent of the assessed value of
all the taxable real estate and personal property of such city,/
town or municipal corporation.
Reproduced from the Unclassified I Declassified Holdings of the National Archives
y
L BE3CIJW DOARO FILEi
333. ±(i$)
iprll 6, 1915,
Dear i5ir«Your letter of April 2nd, giving details as to
the purchase of warrants by yoor bank, Is received*
.........
It Is noted that In the purchase of these war*
m t a you are telying upon the approval of the Counsel
of the Federal leserve Baals: thleh offers them to yocu
This is in accordance with the oral mj&erstan&ing of the
Board wltH the Federal reserve agents at the n&etlng
early in the year In Washington*
He apeetfully,
Secretary.
Mr* Jofcn Perrin,
Federal Beserre Agent,
3m Francisco, Calif*
Reproduced from the Unclassified I Declassified Holdings of the National Archives
/
Fe d e r a l R e s e r v e B a n k
of
J o h n P e r r in ,C
S a n Fr a n c i s c o
h a ir m a n
A pril 3, 1915.
Purchase of Warrants upon approval of Counsel
of another Federal feeserve feariFI
Federal Reserve Board,
Washington,
D. C.
S i r s :
Ve have been purchasing warrants and certificates
of indebtedness as well as acceptances through the Federal
reserve bank of New York.
As an illu stra tio n , #60 ,000 has
been apportioned to us of a purchase by them of $600,000 par
value, City
of Yonkers, New York 2 *?/&(> certificates of
indebtedness dated March 29, 1915, due August 26, 1915, on
a 2$% basis.
The Federal reserve bank of New York has sent us
certain certificates of the Municipal officers, etc., but we
are disregarding these and relying upon the approval of the
counsel of the Federal Reserve bank of New York in accordance
with my recollection of the conclusion reached in a verbal
discussion of this point at the last conference of the Federal
Reserve Board with Federal reserve agents.
It is my re
collection that it was then stated that i t would have the
approval of the Federal Reserve Board i f such purchases were
Reproduced from the Unclassified I Declassified Holdings of the National Archives
( 2)
Federal Reserve Board. Washington. D. C«
made by one Federal reserve bank upon the approva\ either of
its own counsel, or of the counsel of any other Federal reserve
bank.
If I am in error in regard to this, kindly advise me.
@FedFRASER