View PDF

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.


r Circular No. 3 0 1 1
October 5, 1945


To all Banks and Trust Companies in the
Second Federal Reserve

The Office of Contract Settlement is concerned about the delay on the part of war contractors in presenting claims resulting from the cancellation of war contracts, and has requested us
to transmit the following message to the commercial banks in the Second Federal Reserve

" T h e victorious conclusion of the Japanese War was immediately followed by mass terminations of
war contracts. Approximately $24,000,000,000 in outstanding commitments was reported by the
contracting agencies as canceled during the month of August. The backlog of canceled commitments
pending settlement on August 31 was $36,000,000,000. Furthermore, since the amount of canceled
commitments involved in some of the August cancellations could not be immediately determined and
must await a review of contract deliveries and since some additional terminations will probably be made
in September, it is anticipated that at least $40,000,000,000 in outstanding terminated commitments
will be pending settlement on October 1, representing some 105,000 individual terminations.
In order that this vast backlog of canceled contracts may be settled with reasonable dispatch, an
immediate substantial increase in the settlement rate must be achieved over the recent monthly average
rate of $1.4 billion representing 6,500 individual settlements. The contracting agencies are well prepared to handle this increased load. It is obvious, however, that contracts can be settled no faster than
claims are presented, and consequently that the first move in achieving the all-important increase in
this settlement rate is up to the contractors themselves.
The increasing pressure on the military services to release personnel is a factor that must not be
overlooked. This applies to those engaged in contract settlement work just as much as other branches of
the service. The present well-trained and competent settlement staffs cannot be held indefinitely by the
Services, and while replacements will be found as needed, preparation and filing of claims at the earliest
possible date will assure contractors of the benefit of negotiation and settlement with experienced
Service personnel.
In compiling and presenting their claims with the greatest possible dispatch, war contractors will
not only be aiding themselves, but also assisting the industrial economy as a whole to achieve full reconversion from a war to a peacetime basis. Probably no group is more aware of this fact than the
commercial bankers. A concerted effort on their part to emphasize to their customers the importance
of fast filing of claims and thus obtaining a quick honorable discharge from war production would be
most timely. Our purpose in writing you is to enlist the aid of the Federal Reserve System in presenting
this thought to its member banks throughout the country and requesting their assistance.''

We should appreciate it if you would cooperate with the Office of Contract Settlement and
urge each of your customers that has claims under canceled war contracts to prepare and file
such claims at the earliest practicable date.




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