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FEDERAL RESERVE BANK O F NEW YORK
Fiscal A g e n t of the United States
r Circular No. 2 9 9 3 1
L August 23, 1945
J

INFORMATION REGARDING THE VICTORY LOAN
To all Banking Institutions, and Others Concerned,
in the Second Federal Reserve
District:

For your information we quote below the text of an announcement by the Treasury
Department released for publication on August 23, 1945, regarding the Victory Loan Drive.
Secretary V i n s o n announced today that the V i c t o r y Loan Drive will begin October 29, 1945
and that the goal is $11,000,000,000.
T h e Secretary said:
" T h e present Treasury balance is large but enormous obligations incurred in the achievement
of victory, including those for material and munitions already delivered and used, will drain this
balance quickly and additional funds will be needed early in December. Government expenditures
are being drastically reduced and this will continue vigorously. T h e aftermath of war, however,
carries grave responsibilities that must be met. A substantial army and navy must be maintained
until order is restored throughout the world. T h e cost of contract settlements, bringing our forces
h o m e , their mustering-out pay, hospitalization, care, and rehabilitation will be great and will
require large sums for which w e must plan n o w . "
T h e Secretary said that the m a j o r emphasis in the V i c t o r y L o a n D r i v e will again be on sales
to individuals. H e took occasion to stress the importance of saving on the part of individuals and
the wise investment of savings, and stated that although this is the last great public drive systematic saving through payroll deduction plans for the purchase of Series E bonds will be continued.
It is essential to the orderly continuance of the program that industrial plants, business establishments, and Federal, State, and local g o v e r n m e n t s with payroll deduction plans continue to
service those plans, Mr. V i n s o n said, and it is highly important that all authorized issuing agents
continue their bond issuing activities. T h e termination of the w a r should make no change in these
respects.
T h e g o a l and securities to be offered w e r e determined b y the T r e a s u r y after discussion with
various g r o u p s , including Chairmen of the State W a r Finance Committees, officials of the Federal
Reserve System, members of the American Bankers Association, representatives of insurance c o m panies, and other investment authorities.
Detailed information c o n c e r n i n g the drive f o l l o w s :
Of the $11,000,000,000 goal, $4,000,000,000 is to come f r o m sales to individuals and $7,000,000,000
f r o m other non-bank investors. Of the individual quota, $2,000,000,000 is to c o m e f r o m the sale of
Series E bonds. T h e securities which will be sold under the direction of the State W a r Finance
Committees are as f o l l o w s :
Series E, F and G Savings B o n d s
Series C Savings N o t e s
2^2% T r e a s u r y B o n d s of 1967-72, maturing D e c e m b e r 15, 1972
2 % % T r e a s u r y B o n d s of 1959-62, maturing D e c e m b e r 15, 1962
]/%% Certificates of Indebtedness maturing D e c e m b e r 1, 1946
T h e D r i v e for individuals will extend f r o m O c t o b e r 29 through D e c e m b e r 8. During the period
f r o m D e c e m b e r 3 through D e c e m b e r 8, subscriptions will be received f r o m all other non-bank
investors for the marketable securities.
The
and 21/2c/o b o n d s will be dated N o v e m b e r 15 and the certificates of indebtedness will
be dated D e c e m b e r 3, 1945, and will be sold at par and accrued interest f r o m those dates.
A l l Series E, F and G Savings B o n d s and Series C Savings N o t e s processed through the
Federal Reserve Banks between O c t o b e r 29 and D e c e m b e r 31 will be credited to the Drive.
T h e Treasury will request that there be no trading in the marketable securities and no purchases of such securities other than o n direct subscription until after D e c e m b e r 8.




(OVER)

T o avoid unnecessary transfers of funds f r o m one locality to another, the T r e a s u r y again urges
that all subscriptions b y c o r p o r a t i o n s and firms be entered and paid f o r t h r o u g h the b a n k i n g institutions w h e r e funds are located. T h i s request is made t o prevent disturbance t o the m o n e y market
and the b a n k i n g situation. T h e T r e a s u r y will undertake, as in the Seventh W a r L o a n D r i v e , t o
see that statistical credit is g i v e n t o any locality f o r such subscriptions as the purchaser m a y request,
e x c e p t that subscriptions f r o m insurance c o m p a n i e s will be credited to the State of the h o m e office
as in the past. T h e T r e a s u r y appreciates the substantial c o o p e r a t i o n it has received in this
respect.
I n order to help in a c h i e v i n g its o b j e c t i v e of selling as m a n y securities as possible outside of the
b a n k i n g s y s t e m , the T r e a s u r y urges the c o o p e r a t i o n of all banking institutions in declining t o make
speculative loans f o r the purchase of G o v e r n m e n t securities, and in declining t o accept subscriptions f r o m c u s t o m e r s w h i c h appear to b e entered f o r speculative purposes. T h e acquisition of o u t standing securities b y banks on the understanding that a substantially like a m o u n t of the n e w
securities will be subscribed for t h r o u g h such banks, thus enabling them to expand their w a r loan
d e p o s i t balances, is regarded as an i m p r o p e r practice b y the T r e a s u r y . T h e Secretary will request
b a n k i n g institutions not to make such purchases. T h e T r e a s u r y is in f a v o r of the banks m a k i n g
loans to facilitate permanent investment in G o v e r n m e n t securities p r o v i d e d such loans are made
in a c c o r d with the joint statement issued b y the National and State Bank S u p e r v i s o r y Authorities
on N o v e m b e r 23, 1942.*
T h e T r e a s u r y requests that all n o n - b a n k investors refrain f r o m selling securities heretofore
acquired to obtain funds to subscribe f o r the securities offered in the V i c t o r y L o a n Drive. T h i s
request is not intended to preclude normal p o r t f o l i o adjustments. H o w e v e r , subscriptions b y insurance c o m p a n i e s and savings institutions will b e s u b j e c t t o limitations to b e announced later.
L i f e insurance c o m p a n i e s , s a v i n g s institutions, and States, municipalities, political subdivisions
and similar p u b l i c corporations, and agencies thereof, will be permitted to m a k e deferred p a y m e n t ,
at par and accrued interest, f o r the 2 * 4 % and 2 y 2 % marketable b o n d s allotted t o them, up t o
F e b r u a r y 28, 1946.
D u r i n g the period f r o m D e c e m b e r 3 t h r o u g h D e c e m b e r 8
f o r this p u r p o s e as banks a c c e p t i n g demand deposits, will be
portion of their time deposits in Series F and Series G Savings
b o n d s , and the % % certificates o f f e r e d in the D r i v e , under
Securities s o acquired b y the banks will not be included in
t o w a r d any quota.

c o m m e r c i a l banks, w h i c h are defined
a f f o r d e d an o p p o r t u n i t y to invest a
B o n d s , the
and 2 1 / 2 % T r e a s u r y
limitations to b e a n n o u n c e d later.
the D r i v e n o r will they be counted

C o m m e r c i a l banks will n o t b e permitted to o w n the 2 y 2 % o r the 2 % % marketable b o n d s
o f f e r e d in the D r i v e until within ten years of their respective maturity dates, e x c e p t as p r o v i d e d
above.
T h e special b o n d in m e m o r y of the late President Franklin D e l a n o R o o s e v e l t will first be available at the start of the V i c t o r y L o a n D r i v e , w h e n it will be on sale at all a g e n c i e s authorized to issue
U n i t e d States S a v i n g s B o n d s of Series E .
T h i s b o n d , in the d e n o m i n a t i o n of $200, t o be issued at $150, will constitute an additional
d e n o m i n a t i o n of Series E b o n d s , and will have the same terms and attributes as the other
denominations.

Your attention
announcement.

is called particularly

to the last eight paragraphs
ALLAN

of

the

above

SPROUL,

President.
* The joint statement referred to reads as follows:
T h e Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Board of Governors of the
Federal Reserve System, and the Executive Committee of the National Association of Supervisors of State Banks
made the following statement of their examination and supervisory policy with special reference to investments
in and loans upon Government securities.
1. There will be no deterrents in examination or supervisory policy to investments by banks in Government
securities of all types, except those securities made specifically ineligible for bank investment by the terms of
their issue.
2. In connection with Government financing, individual subscribers relying upon anticipated income may wish
to augment their subscriptions by temporary borrowings from banks. Such loans will not be subject to criticism
but should be on a short term or amortization basis fully repayable within periods not exceeding six months.
3. Banks will not be criticized for utilizing their idle funds as far as possible in making such investments and
loans and availing themselves of the privilege of temporarily borrowing from or selling Treasury bills to the
Federal Reserve Banks when necessary to restore their required reserve positions.




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