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FEDERAL E3333RVE BANK OF N l f OTK ( C i r c u l a r No. 1189) (March 1 9 , 1933, ) ISSUED BY THE SECRETARY OF THE TEEASIfftY I3ND3F THE PRESIDENT'S PRO CLAMATIONS DECLARING im> CCNTOTUBTG- A K m HOLIDAY To A l l Braking I n s t i t u t i o n s i n t h o Soccnd F e d e r a l Reserve D i s t r i c t : For your i n f o r m a t i o n , and supplementing our p r e v i o u s c i r c u l a r s on t h i s s u b j e c t , we quote belcr; t h e t e x t of i n t e r p r e t a t i o n No, 11 which t h o Federal Reserve Board h a s advised us h a s been i s s u e d by t h e S e c r e t a r y of t h e T r e a s u r y , under t h o P r e s i d e n t ' s p r o c l a m a t i o n s of March 6 and 9 , 1953, d e c l a r i n g and c o n t i n u i n g a bank holiday. For convenience i n r e f e r e n c e we r e p r i n t r e g u l a t i o n 12 t o which i n t e r - pretation 11 refers. 12 Regarding issuance of certificates against sound assets. "Clearing house associations and other associations organized to provide an adequately secured medium of temporary exchange, are hereby permitted to issue certificates against sound assets of banking institutions, such c e r t i ficates to be deliverable by each institution to i t s creditors and depositors on a pro rata basis, provided, however, that no such certificates shall be issued before Friday, March 10, 1933, without the consent of the Secretary of the Treasury addressed to the Clearing House or other association proposing to issue such certificates, and further provided that this permission may be revoked in the event that a national plan to meet the existing emergency i s proposed by the Secretary of the Treasury if in his opinion the success of such plan would be inconsistent with the operation of the certificate plan." Interpretation No. 11 "Regulation No. 12 i s not to be construed as permitting a banking i n s t i tution, open for normal and usual functions under license of the Secretary of the Treasury, to require depositors to accept clearing house certificates or other evidences of claims against assets for a l l or any part of any withdrawal requested." The Federal F.eserve Board has also informed us of an advice by the Comptroller of the Currency, which i s given below following a reprint of Regulation No. 7, to which the advice refers. 7 Authorizing special trust accounts, etc. "Deposits heretofore received by any banking institution pursuant to agreement or legislative authority providing for segregation and for repayment without restriction may be paid on demand. Any banking institution which was lawfully engaged in the business of receiving deposits prior to March 6, 1953, may create special trust accounts for the receipt of new deposits which shall be subject to withdrawal on demand without any restriction or limitation and Regulations Issued by the Secretary of the Treasury Under the ( Cir cular" No .1189) President f s Proclamations Declaring and Continuing a Bank Holiday (Mcrch 19, 1935. ) 7 Authorizing special trust accounts, etc. (Continued) shall be kept separately in cash or on deposit in Federal Reserve Banks or invested in obligations of the United States. Federal Reserve Banks may open special accounts on their books for their member bonks and temporarily for nonmember banks and may receive in such spociol accounts the proceeds of new deposits received by such banking institutions. In making deposits with the Federal Reserve Bank pursuant to this regulation the depositing bank shall in the case of each deposit indicate to the Federal Reserve Bank by symbol or otherwise that the funds so deposited represent new deposits made under t h i s regulation. Upon receipt cf such deposits such Federal Reserve Bank shall credit the same in the special account of the depositing bank herein provided for and shall hold the stale solely for the repayment to such bank. Federal Reserve Banks shall permit the withdrawal of any part or a l l of such new deposits by the depositing benk v;ithout restriction provided that the depositing bank shall in such order or request for withdrawal indicate to the Federal Reserve 3ank by symbol or otherwise that such withdrawal i s to be made from such special account, provided however that no banking institution shall pay out or permit the withdrawal of any gold or gold certificates." "Office of Comptroller of Currency advises that, notwithstanding appointment of conservator for national bank under conservation act, deposits received by such bank prior to appointment of conservator in special trust accounts created under tho provisions of regulation No. 7 of the Secretary of the Treasury issued i.iarch 6, 1933, may be withdrawn upon demand without restriction or limitation to the full extent of the amount of cash, Federal Reserve Bank balances and proceeds of United States obligations in which such deposits have been kept separate or invested in accordance with the provisions of said regulation No. 7." We quote below the text of regulation No. 27, dated March 18, 1933, which the Treasury Department has advised us today has been issued by the Secretary of the Treasury under the President's proclamations of March 6, 1933, raid of M~rch 9, 1933, declaring and continuing a bank holiday, .and the executive order of March 10, 1933, Regulation 27 "Any state banking institution which is a member of tho Federal Reserve System and which is not licensed by the Secretary of the Treasury to reopen for the perfomrm.ee of usual banking functions may, with the approval of the appropriate state authority having immediate supervision of such banking institution, permit withdrawals by depositors and make payments to creditors of such percentage of the amounts due to them (not exceeding 5 per cent) as i t may determine, provided that at or before the time of such withdrawal or payment it shall set aside and make available for such purpose a fund for the benefit cf and sufficient to pay to a l l depositors and creditors the percentage so determined. "This regulation shall not in any way affect any right created by regulation No. 7 nor limit or restrict any payment thereby authorized. Any right to authorize withdrawals or payments under the terms of t h i s regulation shall terminate upon the appointment of any conservator, receiver or other appropriate state official taking charge of the affairs of such banking i n s t i t u t i o n s . " Regulations Issued by the Secretary of the Treasury Under the (Circular No% 1189) President's Proclamations Declaring and Continuing a Bank Holiday (March 19, 1933. ) As we are advised of the issuance of further regulations and interpretations by the Secretary of the Treasury under the President's proclamations declaring and continuing a bank holiday xie will forward the text thereof to banking institutions in this d i s t r i c t . George L. Harrison, Governor*
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