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FEDERAL RESERVE BANK O F NEW YORK F iscal A g e n t o f the U n ited States r Circular No. 3 0 8 9 T L M a y 1 7 , 1 9 4 6 MODIFICATION OF VARIOUS DEPARTM ENT CIRCULARS GOVERNING ISSUES OF TREASURY BONDS RESTRICTED AS TO OW NERSHIP B Y COMMERCIAL BANKS W HICH ACCEPT DEMAND DEPOSITS To all Banks and Trust Companies in the Second Federal Reserve District: At the request of the Secretary of the Treasury we transmit to you herewith copy of a statement released to the press for publication today. TREASURY DEPARTM ENT W ashington F O R IM M E D IA T E R E L E A S E , Friday, M ay 17, 1946._____________ In order to enable banks to render better service to ‘individuals and corporations wishing to buy or sell restricted Government securities, Secretary V inson announced today that he had amended Treasury regulations so as to permit com mercial banks to hold a limited amount of the restricted issues for trading purposes. The limit on holdings is 1 percent of demand deposits, excluding war loan deposits and interbank deposits, or $500,000, whichever is less. T he bonds so held shall be in addition to and shall be held in an account separate from the bonds of such issues which have been otherwise acquired. T he change was made after consultation with Federal Reserve authorities, who agreed that it w ould be helpful particularly to small non-bank investors. We wish to call your attention to the fact that this provision is not intended by the Treasury to permit banks to buy and hold additional bonds for investment or to create a trading account merely for the bank’s own benefit. On the contrary, it is intended to facilitate transactions by bank customers in cases where it is the bankas practice to buy and sell other issues of Treasury securities directly with such customers. Treasury Department Circular No. 787 which incorporates the details and enumer ates the issues affected, is reprinted on the reverse side. Additional copies of this circular will be furnished upon request. A ll a n S prou l, President. ( over) J M O D IF IC A T IO N OF VA R IO U S D E P A R T M E N T CIRCULARS G O VER NING ISSUES OF T R E A S U R Y BONDS RESTRICTED AS TO O W N E R SH IP B Y CO M M ERCIAL BANKS W H IC H ACCEPT D E M AN D DEPOSITS i?46, _T 0 D e p a r tm e n t C ircu la r N o . 7 8 7 ------ TR E A SU R Y DEPARTM EN T, O f f ic e H u reau o f th e P u b lic D e b t of t h e ~ W d s J lt7 lC / tO T lf Secretary, J\T& y 17^ J Ì9 4 6 . I. E N U M E R A T IO N O F D E P A R T M E N T C IR C U L A R S A F F E C T E D 1. The Department circulars modified by this circular and the Treasury bond issues which they govern, are as follows: No. 685)— 2i/2 percent Treasury Bonds of 1962-67 692) No. 701 — 2 y2 percent Treasury Bonds of 1963-68 No. 708 — 2 y2 percent Treasury Bonds of 1964-69 (dated A pril 15, 1943) No. 719)— 2 y2 percent Treasury Bonds of 1964-69 (dated September 15,1943) 724) No. 729)— 2 y2 percent Treasury Bonds of 1965-70 734) 740) No. 730)— 214 percent Treasury Bonds of 1956-59 735) No. 755)— 2 y2 percent Treasury Bonds of 1966-71 760) No. 768 — 2 y2 percent Treasury Bonds of 1967-72 (dated June 1, 1945) No. 769 — 214 percent Treasury Bonds of 1959-62 (dated June 1, 1945) No. 776 — 2 y2 percent Treasury Bonds of 1967-72 (dated November 15, 1945) No. 777 — 2 y± percent Treasury Bonds of 1959-62 (dated November 15, 1945) II. M O D IF IC A T IO N O F C IR C U L A R S 1. Each of the circulars enumerated in section I hereof provides that the bonds issued thereunder may not be transferred to or be held by commercial banks, which were defined for this purpose as banks accepting demand deposits, before various fixed dates, except to the extent and in the manner set forth in the governing circulars. These provisions are hereby modified to permit any such bank to hold, for the purpose o f facilitating transactions for the account of cus tomers, bonds issued pursuant to said circulars in an aggregate amount not to exceed at the close o f business on any day one percent of its demand deposits, excluding United States war loan deposits and interbank deposits, or $500,000, whichever is less. Such bonds shall be in addition to and shall be held in an account separate from those otherwise acquired pursuant to the pro visions of the offering circulars. FRED M. VINSON, Secretary of the Treasury