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FED ERAL RESERVE BAN K O F D A L L A S
F IS C A L . A G E N T O F T H E U N IT E D S T A T E S

Dallas, Texas, May 17, 1946

MODIFICATION OF VARIOUS DEPARTMENT CIRCULARS GOVERN­
ING ISSUES OF TREASURY BONDS RESTRICTED AS TO OWN­
ERSHIP BY COMMERCIAL BANKS WHICH ACCEPT
DEMAND DEPOSITS

To All Banking Institutions
in the Eleventh Federal Reserve District:
There is quoted below a press statement released by the Treasury
Department today with respect to an amendment to outstanding Treas­
ury offering circulars which will permit commercial banks to hold a limited
amount of the restricted bond issues for trading purposes:
“ In order to enable banks to render better service to individuals and
corporations wishing to buy or sell restricted Government secu­
rities, Secretary Vinson announced today that he had amended
Treasury regulations so as to permit commercial 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. The 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.
“ The change was made after consultation with Federal Reserve
authorities, who agreed that it would be helpful particularly to
small non-bank investors.”
A copy of Treasury Department Circular No. 787, which incorporates
the details and enumerates the issues affected, is reproduced on the reverse
side hereof.
Your attention is called to the fact that the amendment of the Depart­
ment’s regulations is not intended to permit banks to buy and hold addi­
tional bonds for investment or to create a trading account merely for the
bank’s own benefit. On the contrary, it is intended to facilitate transac­
tions by bank customers in cases where it is the bank’s practice to buy
and sell other issues of Treasury securities directly with such customers.
Yours very truly,
R. R. GILBERT
President

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