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FEDERAL RESERVE BANK OF C HICAGO
GOVERNMENT B OND DEPARTMENT
CERTIFICATE S O F I NDEBTEDNESS DIVISION
ROOM 361-209 S O . LA S A L LE S T.
M. A , TRAYLO R
D IAl:CTOR 0 111' SALES
T Rl:ASURY CERTIFICATES OF INDll ■ TE D NESS

AD D RESS ALL. COMMUNICA ~
RELATIVE TO GOVERNMEN T ~

P.O. B O X BOS

CIRCULAR

No. 64.

February 21, 1918.

TO THE BANKERS OF THE
SEVENTH FEDERAL RESERVE DISTRICT:
The campaign for the sale of United States certificates of indebtedness, dated February
8th, due May 9th, of which fifty million was allotted to this District, closed Friday 15th,
and we are happy to report subscriptions received from approximately twenty-five hundred-,
totaling more than forty-three million dollars. Splendid as we feel this showing to be, Wiil
must not overlook the fact that there are in the District about thirty-five hundred banks who
did not subscribe, and that we did not place our full allotment. We should and must do
better next time.
In view of the fact that another offering of certificates is expected within the next few
days, and as there seems to be some confusion as to the proper method of making subscriptions along the lines of the recent telegram sent by Secretary McAdoo to all banks in the
country, we wish to offer the following explanation and suggestions.
As we understand it, Mr. McAdoo's desire is that all banks in the country subscribe for
certificates of indebtedness as they are issued from time to time until the total subscription
by each bank equals ten per cent of the subscribing bank's resources. His suggestion that
the sum of one per cent of the resources be set aside each week for ten weeks was merely
expressive of his idea of the simplest and easiest method of accumulating the desired ten
per cent, and did not mean that a subscription for one per cent should be actually filed with the
Federal Reserve bank each week for certificates.
Our conclusion is based upon the fact that offerings of certificates are not made each
week but each offering represents a separate and distinct issue, bearing a specific date and
maturity; that subscriptions to each issue close on a fixed date and when subscriptions close
on an issue no further subscriptions to that issue can be accepted, nor are subscriptions open
to other issues until such offerings are officially announced.
Hence our theory of the matter is that when an offering is announced, and you are
ad~sed the pro rata your bank should subscribe, which amount will be based on the total allotment to the Seventh District, you should subscribe your full quota allotted to you, whether
the amount be more or less than one per cent of your resources, and if you are in condition t o
meet the request of the Secretary of the Treasury, you should continue to subscribe your full
pro rata of each and every issue when and only when such issue is announced, until the total
of your subscription equals ten per cent of resources, provided, of course, your pro rata of the
total allotment to the District of all offerings made equals such amount.


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Federal Reserve Bank of St. Louis

The thought we most earnestly desire to impress upon you is that you regard each offering as an entirely separate and distinct proposition; that immediately upon being advised of
your pro rata of an issue, you subscribe the full amount without regard to other issues past
or future. What you may have subscribed to past issues, unless you have already taken
your full ten per cent, will not help put over the issue which may be before you, and the problem
of what to do with the next issue can be considered when we come to it.
With the advice of each offering you will be furnished with subscription and remittance
blanks. It will take but a few minutes to fill these out and return them with your check (or
credit advice if you are a depository bank) for the amount of your subscription, plus accrued
interest as can be determined by the figures accompanying each announcement. Please do
not delay until the day subscriptions close and then wire us, as we find that telegrams are
often confirmations of subscriptions previously placed, and they result in many duplications
and errors, which cause both the subscriber and the Federal Reserve Bank endless wor.ry
and confusion, all of which we wish to avoid as far as possible.
Remember always to study closely the subscription blank that you are about to sign;
see that the dates correspond with the offering before you; do not confuse the tax certificates
dated February 15th and due June 25th, and which are to be used for tax payments only
with the issues referred to in Mr. McAdoo's telegram, and generally known as the Liberty LoanAnticipation Certificates, as it is our understanding that holdings of tax certificates do not
count in the ten per cent the Department desires that you invest in the other class of certificates.
We have written you at much greater length than perhaps we should, but we are anxious
to put you in possession of all the facts as we understand them, and to answer some of the many
questions which we have received. We are enclosing list of County Directors in your state.
If there are any further points about which you desire information, communicate with the
Director of your County at once. In every way do everything you can to have your gun in
good order and your powder dry to the end that when the next order comes to go "over the
top" we can do so without delay and with absolute assurance of success. When that order
comes the glory of a complete victory or the shame of defeat will be up to you. We confidently await the result.


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Federal Reserve Bank of St. Louis

Sincerely yours,
M.A.TRAYLOR
Director of Sales
U. S. Certificates of Indebtedness.