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C i r c u l a r No. 400]
September 15, 1921. J

National Banks not Required to Apply for Permission to
Purchase Stock in Edge Corporations.
To all Member Banks in the Second
Federal Reserve District:
According to a recent decision of the Federal Reserve Board, it no longer requires
National banks to obtain its permission before purchasing stock in Edge Corporations.
The text of the Board's decision, under date of September 8, 1921, withdrawing its former
ruling on this subject is sent to you for your information as follows:
" T h e Board has ruled heretofore that any national bank which
desires to invest in the stock of a corporation organized under the provisions
of Section 25 (a) of the Federal Reserve Act must make application to the
Board for permission to subscribe to such stock. T h a t ruling was not intended as an interpretation of the law b u t was promulgated as a matter of
regulation based upon practical considerations. Upon careful consideration
of the practical value of this requirement in the light of experience, the Board
has decided to withdraw this ruling and will no longer require National banks
to obtain the Board's permission before purchasing stock in Edge Corporations. I t should be remembered, however, t h a t National banks are required
by the terms of Section 25 to apply for and obtain permission of the Federal
Reserve Board before investing in the stock of international banking or
financial corporations organized under State law; and that the aggregate
amount of stock held by any national bank in all corporations engaged in
business of the kind described in Sections 25 and 25(a) of the Federal Reserve
Act must not exceed 1 0 % of the subscribing bank's capital and surplus.

Very truly yours,


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