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f Circular No. 3 4 0 4
U December 20, 1948


Amendment No. 2 to Regulation W of the Board of Governors of the
Federal Reserve System

To Registrants under Regulation W
in the Second Federal Reserve District:

The Board of Governors of the Federal Reserve System has adopted Amendment No. 2
to Regulation W, effective Jan u a ry 1, 1949. F o r your inform ation we quote below from a
press statem ent issued by the Board of Governors relating to this amendment, and released
for publication on December 18, 1948:
The Board of Governors of the Federal Reserve System has adopted an amendment to
Regulation W— Consumer Instalment Credit—which will release from the scope of the regula­
tion articles priced just under $50 in localities having sales taxes which make the price to the
purchaser exceed $50. Hitherto certain articles which sold for $50 or more only because of
the inclusion of the applicable sales tax were subject to the regulation.
The amendment, which becomes effective January 1, 1949, was adopted to reduce operat­
ing difficulties in the trade, particularly for those merchants serving areas which include
some localities with and others without sales taxes.

A printed copy of Amendment No. 2 to Regulation W is enclosed. A dditional copies
may be obtained upon request.

A l l a n S pr o t jl ,



Regulation W is hereby amended in the following respects, effective
January 1, 1949:
By inserting after “ $50.00” in Part 1 of the Supplement to Regu­
lation W the following language and footnote reference:
“ exclusive of any applicable sales ta x 5” ,

and by adding the following footnote to Part 1 of the Supplem ent:
“ “ The exclusion of sales taxes in this p a rt of the Supplem ent does not
affect the use of the term ‘ cash price ’ elsewhere in the regulation. ‘ Cash price ’
as defined in section 8(h)(7) generally includes applicable sales tax es.”



Fiscal A gent of the United States

December 21, 1948

Exchange for United States Savings Bonds of Series E
To Incorporated Banks and Trust Companies and Other Financial Institutions
in the Second Federal Reserve District Qualified to Make Payments in
Connection with the Redemption of United States Savings Bonds:

We have been requested by the Secretary of the T reasury to bring to your attention his
public statem ent concerning the paym ent at m aturity of United S tates Savings Bonds of Series
D-1939, beginning on Jan u a ry 1, 1949. A copy of the statem ent is printed on the reverse side
of this letter.
Any individual (natural person), named as owner or coowner of m aturing bonds in his
own right, has the option of receiving paym ent of the m aturity value in cash, or of exchanging
his bonds for United States Savings Bonds of Series E, registered in his own name in any
authorized form of registration. Any Series E bonds issued in exchange for bonds of Series
D-1939 will not be subject to the lim itation on holdings prescribed fo r Series E bonds on
original issue. The exchange may be made at any time a fte r the m aturity of the Series D
bonds, but an owner who desires to preserve the continuity of his investm ent should present
his m aturing bonds in the month in which they m ature and make the exchange at th at time.
The Secretary wishes each institution, which is qualified both to pay and to issue savings
bonds, to receive m aturing Series D bonds and to issue Series E bonds in exchange therefor,
when so requested by the individual owner or coowner. Series E bonds may be issued in any
authorized denominations, the issue price of which is fully covered by the proceeds of the
m aturing bonds presented, or such lesser amount as the owner or coowner may direct. Any
rem aining balance should, of course, be paid to such owner or coowner.
The original registration stubs of Series E bonds issued in exchange for Series D bonds
should be marked in the lower left corner, as follow s:
Rubber stamps to be used in im printing this notation on the stubs were sent to all qualified
paying agents in this D istrict in January , 1948. A dditional stam ps will be furnished by us
upon request. Stubs bearing this notation may be included in the same transm ittal letter
with stubs of bonds issued against regular cash payments. The m aturing bonds received in
exchange should be stam ped with your paym ent stam p and handled in the same manner as
any other paid bonds.
R egistered owners of Series D bonds, other than individuals, are not eligible to purchase
Series E bonds, and theref ore may not exchange their m aturing bonds as provided above. Quali­
fied paying agents are authorized to pay only those savings bonds registered in the names of
individuals; any bonds bearing other forms of registration should be sent to us fo r redemption.
A dditional copies of this letter will be furnished upon request.

A llan S proul,

(o v e r)


Monday, December 20, 1948.
Secretary of the Treasury Snyder today reminded bond holders and bond buyers generally
of the fact that the Treasury is urging individuals to buy more savings bonds as a means of
combating inflation.
The campaign to increase the sale of savings bonds is being stimulated in various ways. In
furtherance of this campaign, the Secretary has decided to permit individual holders of the
Series D-1939 savings bonds, which start maturing January 1, 1949, to reinvest the proceeds,
as they mature, in the Series E savings bonds which are currently on sale, without regard to
the annual limitation. This can be accomplished through the established payment and issue
procedure, and the Series E bonds so acquired will be exempt from the $10,000 (maturity value)
annual limitation on holdings of Series E bonds. Holders will be permitted to reinvest any
part of the proceeds of their maturing bonds up to such denominational amount as the pro­
ceeds will fully cover. Since Series E bonds may be purchased only in the names of individuals,
only those Series D-1939 savings bonds held by individuals will be eligible for this privilege.
Any agent qualified to pay savings bonds, which is also an issuing agent, can accomplish
this exchange through the simple procedure of redeeming matured bonds registered in the
name of an individual owner or coowner, and applying the proceeds to the purchase of new
Series E bonds. The bonds may also be exchanged, of course, at any Federal Reserve Bank or
Branch, or at the Treasury Department.
The new bonds will be dated as of the first day of the month in which the matured Series
D-1939 savings bonds are presented for payment. In order to preserve the continuity of the
investment, individual holders of the maturing bonds should present them for exchange dur­
ing the month in which they mature.
The Secretary took occasion to express appreciation for the splendid response of the people
of the country to the Treasury’s savings bond program. He also expressed his confidence that
people will divert their spending dollars to savings bonds to the fullest extent, in recognition
of the check which this action has against inflationary pressures.

Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102