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FEDERAL RESERVE BANK
OF NEW YORK
~
Fiscal Agent of the United States
["Circular No. 817~]
[_October 31, 1927 J
Securities Department
PURCHASE OF SECOND LIBERTY LOAN COUPON BONDS
To all Banks and Trust Companies in the
Second Federal Reserve District and Others Concerned:
The following statement was today made public by the Secretary of the Treasury:
OFFER TO PURCHASE BEGINNING TODAY, OCTOBER 31
Secretary Mellon, in again calling attention to the fact that Second Liberty
Loan bonds have been called for redemption on November 15, 1927, and will
cease to bear interest after that date, announced that for the convenience of
holders he has authorized the Federal Reserve Banks to purchase, at the option
of holders, Second Liberty Loan 4^4 per cent coupon bonds at 100 1/32 and
accrued interest to date of such optional purchase. Such purchases will be
made for account of the sinking fund. This offer will remain open during the
period beginning Monday, October 31, and ending Monday, November 7, and
will terminate at the close of business on the latter date without further notice.
It should be noted that coupon bonds only may be presented under this offer,
registered bonds being excluded because of the impossibility of discharging
registration after October 31 on any account except for redemption on
November 15. Second Liberty Loan 4 per cent bonds are not included in this
offer to purchase.
OFFER TO PURCHASE BEGINNING TUESDAY, NOVEMBER 8
Secretary Mellon further announced that he has authorized the Federal
Reserve Banks, beginning Tuesday, November 8, to purchase at the option of
holders Second Liberty Loan 4 per cent and 4^4 per cent coupon bonds at par
and accrued interest to the date of such optional purchase. Such purchases will
be made for account of the sinking fund. This offer will remain open until the
close of business Saturday, November 12, and will then terminate without
further notice.
The Federal Reserve Bank of New York, as fiscal agent of the United States,
will make such purchases accordingly. It will be noted that the offers relate only to
coupon bonds, registered bonds being excluded.
Very truly yours,
BENJ. STRONG,
v
Governor.
SPECIAL DEPOSITS OF PUBLIC MONEYS UNDER THE ACT OF CONGRESS APPROVED SEPTEMBER 24. 1917,
AS AMENDED
1927
Department Circular No. M
Revised
TREASURY DEPARTMENT,
OFFICE OF T H E S E C R E T A R Y
Division of Deposits
Washington, November 1, 1927.
To Federal Reserve Banks and other banks and trust companies incorporated under the laws of the
United States or of any State:
Department Circular No. 92, of April 17, 1919, is hereby revised so as to provide as
follows:
Any incorporated bank or trust company in the United States desiring to participate in
deposits of public moneys, as authorized by the act of Congress approved September 24, 1917,
as amended, should make application to the Federal Reserve Bank of its district.
Applications for deposits of public moneys under said act must be in Form H-5, hereto
attached, and must be accompanied by a certified copy of resolutions, duly adopted by the
board of directors of the applicant, in Form J-5, hereto attached.
Depositaries already qualified to a sufficient amount pursuant to Department Circular
No. 92, of April 17, 1919, will not be required to file new formal applications or resolutions,
but if they desire to receive or retain deposits after December 1, 1927, must so notify the
Federal Reserve Bank of the district in which they are located; and they will, by the acceptance
or retention of deposits after December 1, 1927, be conclusively presumed to have assented
to all the terms and provisions hereof, and to the retention of collateral security theretofore
pledged as collateral security hereunder. Depositaries heretofore designated, which have
been wholly inactive for a period of two years preceding the date of this circular, will be discontinued, and, in the future, the designations of all such depositaries which have not applied
for deposits hereunder for a period of two years will be automatically canceled. Depositaries
so discontinued may be redesignated at any time, upon full compliance with the terms of this
circular and upon recommendation of the Federal Reserve Banks.
In fixing the maximum amount of deposits for which it will apply, the applicant bank or
trust company should be guided by the amount of the payments which it expects to have to make,
for itself and others, on account of bonds, notes, and certificates of indebtedness of the United
States issued under authority of said act, and income taxes, as the case may be, and, as well, by
any statutory limitations upon the amount of deposits which the applicant bank or trust company may receive from any one depositor. Any application may be rejected or the applicant
may be designated for a smaller maximum amount than that applied for. After receiving the
recommendation of the Federal Reserve Bank, the Secretary of the Treasury will designate
approved depositaries.
COLLATERAL SECURITY
Designated depositaries will be required, before receiving deposits, to qualify by pledging,
as collateral security for such deposits, including interest thereon, securities of the following
classes, to an amount, taken at the rates below provided, at least equal to such deposits:
(a) Bonds, notes, and certificates of indebtedness of the United States Government, of
any issue, including interim certificates or receipts for payments therefor; all at par.
(6) Bonds and debentures issued under the Federal Farm Loan Act as amended, bonds of
Porto Rico, bonds and certificates of indebtedness of the Philippine Islands, and bonds of the
Territory of Hawaii; all at market value, not to exceed par.
(c) Bonds of any State of the United States, at market value, not to exceed par; and
approved notes, certificates of indebtedness, and warrants issued by any State of the United
States, at 90 per cent of market value, not to exceed par.
49946'—27
(d) Approved bonds of any county, city, or political subdivision in the United States;
and approved notes, certificates of indebtedness, and warrants with a fixed maturity issued by
any county or city in the United States, which are direct obligations of the county or city as a
whole, or which are payable from general taxes levied on all taxable property in such county
or city; all at 90 per cent of market value, not to exceed par; but not including any such
bonds which are at a market price to yield more than five per cent per annum, nor any such
other obligations which are at a market price to yield more than five and one-half per cent per
annum, if held to maturity, according to standard tables of bond values.
(e) Approved bonds, listed on some recognized stock exchange, and notes, of domestic
railroad companies within the United States; approved equipment trust obligations of such
domestic railroad companies; and approved bonds and notes of domestic electric railway and
traction companies, telephone and telegraph companies, electric-light, power, and gas companies, and industrial companies, secured (directly or by the pledge of mortgage bonds) by
mortgage upon physical properties in the United States and listed on some recognized stock
exchange; all at 75 per cent of market value, not to exceed par; but not including any such
bonds or obligations which are at a market price to yield more than six and one-half per cent
per annum, if held to maturity, according to standard tables of bond values.
(f) Commercial paper and bankers' acceptances having maturity at the time of pledge of not
to exceed six months, exclusive of days of grace, and which are otherwise eligible for rediscount
or purchase by Federal Reserve Banks, and which have been approved by the Federal Reserve
Bank of the district in which the depositary is located, at 90 per cent of face value. All such
commercial paper and acceptances must bear the indorsement of the depositary bank or trust
company.
(g) Customers' notes, drafts, and bills of exchange indorsed by a correspondent incorporated bank or trust company and rediscounted by the depositary bank or trust company, when
approved by the Federal Reserve Bank of the district in which the depositary is located, at 75
per cent of face value. All such notes, drafts, and bills of exchange must bear the indorsement
of the depositary bank or trust company.
(h) Notes and bills payable of a correspondent incorporated bank or trust company secured
by customers' notes, drafts, or bills of exchange to at least an equal amount, when approved
by the Federal Reserve Bank of the district in which the depositary is located, at 75 per cent
of face value. All such notes and bills payable must bear the indorsement of the depositary
bank or trust company.
No security shall be valued at more than par. No municipal bond, obligation, or evidence
of indebtedness, shall be accepted unless the municipality has been in existence for a period of
ten years. No state or municipal bond, obligation, or evidence of indebtedness shall be
accepted if the state or municipality has made default in payment of principal or interest
during the past ten years.
The right is reserved to call for additional collateral security at any time.
The approval and valuation of securities is committed to the several Federal Reserve
Banks, acting under the direction of the Secretary of the Treasury. The withdrawal of securities, the pledge of additional securities, and the substitution of securities shall be made from
time to time as required or permitted by the Federal Reserve banks, acting under like direction.
CUSTODY OF SECURITIES
All securities accepted as collateral security for deposits hereunder must be deposited
with the Federal Reserve Bank or branch of the district in which the depositary is located, as
fiscal agent of the United States.
HOW DEPOSITS ARE TO BE MADE
Each qualified depositary will be required to open and maintain or continue for the account
of the Federal Reserve Bank of its district, as fiscal agent of the United States, a separate account
for deposits to be made hereunder, to be known as the "War Loan Deposit Account."
Qualified depositaries may, if and to the extent from time to time hereafter authorized
by the Secretary of the Treasury, be permitted to make payment by credit, when due, of
amounts payable on subscriptions made by or through them for bonds, notes, and certificates
of indebtedness of the United States issued under authority of said act. In order to make
payment by credit, the depositary must, on or before the date when such payment is due,
notify the Federal Reserve Bank of the district of such intention and issue a certificate of
advice to such Federal Reserve Bank, stating that a sum specified has been deposited with
such depositary for the account of such Federal Reserve Bank, as fiscal agent of the United
States, in the War Loan Deposit Account. Such certificate of advice must be substantially
in Form K-2, hereto attached.
Payment of income taxes can not be made by credit. Out of the unexpended cash proceeds, if any, arising from the payment of income taxes, deposits may be made through the
Federal Reserve Banks, under direction of the Secretary of the Treasury, with qualified depositaries throughout the United States, as may be hereafter announced by the Secretary of the
Treasury.
All deposits and withdrawals will be made by the Federal Reserve Banks by direction of
the Secretary of the Treasury.
The amount deposited with any depositary shall not in the aggregate exceed at any one
time (a) the maximum amount for which it shall have been designated as a depositary, nor (6)
the aggregate amount of the collateral security pledged by it taken at the rates hereinbefore
provided.
WITHDRAWAL OF DEPOSIT
All deposits will be payable on demand without previous notice. Calls for withdrawals
of deposits with special depositaries will be made through the Federal Reserve Banks, and
depositaries will be required to arrange for payments of such calls in funds that will be
immediately available on the payment due date.
INTEREST ON DEPOSITS
Each depositary will be required to pay interest at the rate of two per cent per annum on
daily balances.
The right is reserved to amend or supplement or revise the provisions of this circular at
any time or from time to time.
•
A. W. MELLON,
Secretary oj the Treasury.
Form H-S— Division of Deposit!.
APPLICATION FOR DEPOSITS
To the Federal Reserve Bank of
, fiscal agent of the United States:
The undersigned bank or trust company, in accordance with the provisions of Treasury Department
Circular No. 92, revised, of November 1, 1927, and pursuant to due action of its board of directors,
hereby makes application for the deposit of public moneys with it from time to time under the act of
Congress approved September 24, 1917, as amended, the aggregate amount of such deposits not to exceed
at any one time $
; and assigns and agrees to pledge, from time to time to and with the
Federal Reserve Bank of
, as fiscal agent of the United States, as collateral security
for such deposits as may be made from time to time pursuant to this application, securities of the character
and amount required by said circular.
By
President (Vice President).
Street
City or town
State
Form J 5 -Division of Deposits.
RESOLUTIONS AUTHORIZING APPLICATION FOR DEPOSITS
I hereby certify that the following resolutions were duly adopted at a meeting of the board of directors
of the below-named bank (trust company), which meeting was duly called and duly held on the
day
of
, 192.., a quorum being present, and that the said resolutions were spread upon the minutes of
said meeting:
Resolved, That in accordance with the provisions of Treasury Department Circular No. 92, revised,
of November 1, 1927, this bank (trust company) makes application for the deposit of public moneys
with it from time to time under the act of Congress approved September 24, 1917, as amended, the
aggregate amount of such deposits not to exceed at any one time $
; and assign and agree to
pledge from time to time to and with the Federal Reserve Bank of
, as fiscal
agent of the United States, as collateral security for such deposits as may be made from time to time,
pursuant to such application, securities of the character and amount required by said circular; and
Resolved, That the president, or any vice president, or cashier, or assistant cashier, or secretary, or assistant
secretary, or treasurer, or assistant treasurer, of the undersigned bank (trust company) is hereby authorized
to make application, assignment, and agreement as aforesaid, and from time to time to deliver to and pledge
with said Federal Reserve Bank, or any custodian or custodians appointed by it, securities of the undersigned
bank (trust company) of a character and amount at least sufficient to secure such deposits according to the
terms of said Treasury Department circular, and from time to time to withdraw securities and to substitute
other securities and to pledge and deposit additional securities.
In witness whereof I have hereunto signed my name and affixed the seal of the
of
Cashier (Secretary).
Form K-J—Division of Deposits.
CERTIFICATE OF ADVICE
(Title of bank or trust company.)
(Location.)
(Date.)
, 192
I hereby certify that there has been deposited this day with the above bank (trust company), to the credit
of the Federal Reserve Bank of
, as fiscal agent of the United States, War Loan Deposit
Account, to be held subject to withdrawal on demand, the sum of
dollars, consisting of
payment for
D^ ,
/principal
$
Bonds...
1accrued interest
$
/principal
$
M +
iNoies
\accrued interest
$
certificates of indebtedness
{SSffiit^:::::::::::::::::::::::::::::: $::::::::::::::::::::
Total $.
(The depositary will forward this to the Federal Reserve Bank of
Cashier or Vice President.
)
(4)
D.S. GOVXBNMENT PRINTING OFFICE : 1927
@FedFRASER