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t 3 8 3
FEDERAL RESERVE BOARD
WASHINGTON
T O
T H E FEDERAL RESERVE BOARD
X-7169
June 6 , 1932.
Dear
S i r :
This refers to my l e t t e r s of May 7 and August 14, 1931,
with thei r respect ive inclosures , on the subjec t o f cashing
Government checks
and
warrants
"by
Fe de ra l re se rv e banks.
As you will remember, I addressed a memorandum to the
Federal Reserve Board under date o f Apri l 17, 1931, discussing
this subject i n d e t a i l an d recommending that i t b e r e f e r r e d to the
Governors' Conference; t h e Governors' Conference i n Apr i l , 1931,
r e f e r r ed t h e subjec t t o t h e Standing Committee on Col lect ions f o r
study a n d repor t t o t h e Fall Conference o f Governors; t h e Standing
Committee
on
Collections rendered
a
report under date
o f
August
10,
1931; and the
Governors' Conference
i n
December,
1 9 3 1 ,
r e f e r r e d
the
subjec t
t o t h e
Conference
o f
Counsel
o f
Federal reserve banks
f o r
considerat ion an d consul ta t ion wi th th e Standing Committee on
Collect ions a n d o f f i c i a l s o f the Treasury Department, with a view
to obta in ing a c l a r i f i c a t i o n of the appl icable provis ions of Treasury
Department Circular Ho. 176 .
F o r your further information i n this connection, I inclose
copies o f t h e following:
1 .
Le t t e r
o f
August
19 , 1931 ,
from
M r,
Robert
S .
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X-7169
t
3 8
Parker, Counsel
t o t h e
Federal
He
serve Bank
o f A t -
lanta , d iscuss ing my l e t t e r o f August 14 , 1931,
above referred t o ;
2 . Le t te r o f September 11 , 1931 , from Mr. A, 0 .
Agnew, Counsel
t o t h e
Federal Reserve Bank
of San
Francisco, a lso discussing
my
l e t t e r
o f
August
14 ,
1931;
3 . L e t t e r o f November 28 , 1931 , from M r, James 6 ,
McConkey, Counsel t o t h e Federal Reserve Bank of
S t . Louis, inclosing a memorandum which h e h a d p r e -
pared discussing
t h e
report rendered
by the
Standing
Committee
on
Collect ions
and my
l e t t e r
o f
August
14 , 1931;
4 .
Le t te r
o f
December
14 , 19 31 ,
which
I
addressed
t o
M r.
McConkey
i n
response
t o h i s
l e t t e r
o f
November
28 , 1931;
5 . L e t t e r o f January 6 , 1932 , from M r . J . P . Dreibelbis
o f t h e f i rm o f Locke, Locke, Stroud and Randolph, Counsel
t o t h e
Federal Reserve Bank
o f
Dallas , inclosing
a
f i l e
o f
correspondence concerning Treasury checks which were
i n -
volved
i n t h e
f a i l u r e
o f a
national bank
i n
Texas;
6 .
Le t te r
of
Juno
1 , 1932,
from
M r . J . S .
Walden,
J r . ,
Chairman of th e Standing Committee on Col lec t ions , d i s -
cussing t h e p o s s i b i l i t y o f holding a conference on th is
sub jec t ;
a nd
7. My
reply
o f
June
2 , 1932,
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I 385
X-7169
The
pressure
of
more urgent matters
h a s
rendered
i t
impossible
f o r me to
give considerat ion heretofore
t o t h e
question
of arranging a conference on th i s sub jec t , and I bel ieve i t w i l l be
impossible
f o r
t h i s o f f i c e
o r t he
o f f i c i a l s
o f t he
Treasury Depart-
ment
t o
p a r t i c i p a t e
i n
such
a
conference until sometime after
Congress adjourns; b u t I th ink we ought to have i t a t t h e e a r l i e s t
date convenient
t o a l l
concerned.
We
cannot make
a n y
d e f i n i t e
p lans un t i l
we
know when Congress will adjourn,
b u t I
shall appre-
c ia te
an
expression
o f
your views
a s t o t h e
time most suitable
a nd
convenient f o r such a conference.
Cordially yours,
Walter Wyatt,
General Counsel.
Enclosures*
TO
COUNSEL
OF ALL
FEDERAL OBSERVE BANKS.
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C O P Y
3 8 6
X-7169-a
COLQUITT, PARKER, TROUT MM & AEKWRIGHT
Attorneys a t Law
Sui te
1607
William-Oliver Bldg.
A t l an ta ,
Ga.
August 19 , 1931 .
PERSOML.
M r. Walter % a t t , General Counsel,
Federal Reserve Board,
Washington, D. C.
Dear Walter:
I have received your letter of August 1 4 t h , sent f o r
my personal and conf ident ia l informat ion and enclos ing a copy
of a le t ter which you have wri t ten t o t h e Chairman of the
Standing Committee on Collections concerning t h e Committee's
r epor t on t h e sub jec t of ca sh in g Government checks arid
warrants by Fe de ra l re se rv e banks.
I
approve most heartily
t h e
views
s e t o u t i n
your
l e t t e r , I have always felt that i f t h e matter were pu t up
t o t h e
Treasury Department
i n a
vigorous
way by the
Federal
reserve banks act ing
i n
concert ,
t h e
present conflusion would
b e
e l iminated.
As the
s i t u a t i o n
now i s , no
Federal reserve
bank knows whether a Government item i s act ual ly cashed or
paid when presented t o t h e bank f o r that purpose and charged
t o t h e Treasury account, a n d , i n f a c t , i t seems to me t h a t t h e
Treasury ha s no fixed policy about t h e ma t t e r . Sometimes
t h e p o s i t i o n i s taken that a check i s paid when cashed by
i t s f i sc a l agent and charged to i t s ac co un t. Sometimes
t h e opposi te pos i t ion i s assumed.
I b e l i e v e t h e matter i s o f suff ic ient impor tance t o
j u s t i f y a conference of counsel , par t icular ly s ince there
a r e doubtless other questions which could b e p r o f i t a b l y c o n -
s idered a t such a conference.
As
regards
t h e
payment
o r
cashing
of
Government
checks or war ran t s , t h e p o s i t i o n o f t he Federal reserve banks
i s rendere d even more un ce rt ai n by t he doubt which exists
a s t o whether o r no t such warrants a r e negotiable instruments.
There a r e many other interesting angles which ought t o have
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t 3 8 7 .
X-7169-a
COLQUITT, PARKER, TROUTMA2T
&
AEKWRIGHT
Continuation Sheet
M r. Walter Wyatt - #2 . 8-19-31.
cons idera t ion. My own view i s that when a Federal reserve
bank takes one of these warrants i n regular course of bus iness ,
pays o r cashes t h e same and charges t h e item t o tfce Treasury
account, t h e payment ought t o be regarded a s f i n a l u n l e s s , of
course, t h e instrument, upon receipt a t t h e Treasury, should
b e
found
t o be
forged
o r to
have been paid upon
a
gorged
endorsement o r unl es s the re ex is ts some othe r reas on why the
warrant
was not
properly payable upon presentation
a t t h e
o f f i c e o f the Federal reserve bank;
I t ru s t t h a t y ou will have a pleasant vacation and
know that yo u have earned very much more r e s t than you can
obta in in two or three weeks. I have n o t been away this
summer
and do no t
expect
t o g e t
away. That f a c t does
n o t ,
however, prevent
me
from preaching
t o
others
t h e
necess i ty
f o r vaca t ions .
With sincere personal regards, I am
Cordially yours,
(S ) Robt. S . Parker.
RSP/w.
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r 3 8 8
C O P Y X-7169-b
FEDERAL RESERVE
MM OF SAN
FRANCISCO
September
11 , 1931.
(CONFIDENTIAL)
Walter Wyatt,
E s q . ,
General Counsel,
Federal Reserve Board,
Washington, D. C.
Dear M r. Hfy-att:
Reference
i s
made
t o
your letter dated August
14 ,
t r ansmi t t ing
f o r m y
personal
and
confident ia l informat ion
copy of your le t te r wri t ten t o t h e Chairman o f t he Standing
Committee
on
Collections with regard
t o t h e
Committee's
repor t on th e subjec t of Cashing Government checks and
warrants
by
Federal Reserve Banks.
I
have only recently
ha d the
opportunity
of
examining t h e Committee's r ep or t. This I have done i n c o n -
ference with
t h e
o f f i c e r s
of
this bank.
I
agree with
t h e
major port ion of what you have to sa y in your le t te r of
August
1 3
(X-6944).
Cer ta in ly ,
t h e
Treasury circular should contain
a clear statement with regard t o t h e r e s p o n s i b i l i t y of
Federal Reserve Banks
i n
cases where payment
i s
stopped
on
checks f o r which immediate credit h a s been given. I believe
tha t
t h e
Treasurer should
n o t
recognize
any
stop-payment
order u n t i l f i r s t communicating with t h e Federal Reserve
Bank affected
t o
ascertain whether
o r n o t
c red i t
h a s
been
passed a n d i f s o , whether reimbursement c a n be obtained.
I also believe that a great deal o f t he d i f f i -
culty heretofore encountered could
b e
obviated
by
e l imina t -
i n g en ti re ly from paragraph 32 o f t he Treasury circular
a l l
re fe rence
t o
what
t h e
Federal Reserve Banks will
do
under given circumstances. I t seems to me t ha t such
reference merely confuses
t h e
s i t u a t i o n
a nd
leaves
i n
doubt
t h e capacity i n which such banks a r e ac t ing . I also
bel ieve tha t
t h e
Treasury Department should incorporate
i n i t s c i r c u l a r a clear statement t o t h e e f fec t tha t F e d -
eral Reserve Banks,
i n
handling Government checks
and
warrants , a r e ac t ing sole ly a s agents o f t he banks from
which such checks
a r e
rece ived,
and I
cannot
see why the
Treasurer should have
a n y
objec t ion
t o
making such
a
s t a t e -
ment.
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/ 3 8 9
X-7169-b
Walter %ratt, E s q . - 2 - September 11 , 1931.
M r. Clerk, t h e Deputy Governor of this bank, who
i s probably a s conversant with operating procedure as any
man i n t h e
system
and
whose ideas
on
subjects
of
this char-
a c t e r a r e extremely clear c u t , i s o f t h e opinion that a l l
r e fe rence t o payment of Government checks through clearing
houses should
b e
el iminated,
i n
order that
i t may be
ad di ti ona ll y cl ea r that such items wi ll
no t be
handled
f o r n o n -
member banks, directly o r i n d i r e c t l y . I think that t h e word
Cashing Government checks and warrants should b e eliminated
en ti re ly . Such items a r e n o t cashed i n fact except i n
t h e
case
of
items drawn
by
d isburs ing of f icers
of the
Govern-
ment . I do no t bel ieve that i t i s necessary o r advisable
that i n t h e Treasury circular Federal Reserve Banks b e
denominated either a s f i sca l agen t s o r depos i t a r i es of the
United States,
an d
that this dilemma, which
h a s
previously
existed, could b e obviated by making i t clear that i n hand-
ling Government checks and warrants Federal Reserve Banks
a c t only a s agents of thei r deposi to rs and not in any agent
capaci ty f o r t h e Government.
Cer t a in ly ,
t h e
circular should
b e
c l a r i f i e d
and
can be c l a r i f i e d , b ut I do no t bel ieve that th is wil l b e
accomplished until we have a n ab so lu te show-down wi th the
Treasury Department, i n which we make i t p la in that thei r
circular must b e prepared i n such form a s to offer adequate
p ro tec t ion
t o t h e
Federal Reserve Banks
and
that unless
t h i s i s done t h e banks will accept Government items only f o r
defe rred cr ed i t . This can be best accomplished, in my
opinion, through a conference with t h e Treasury of f ic ia l s
a t
which counsel
f o r t h e
Reserve Banks
a nd the
operating
o f f i c e r s
of
such banks
a r e
p resen t .
Of
course,
no
such
conference should b e held un t i l a preliminary conference
between Federal Reserve Bank officers and counsel h a s been
held i n order that when we meet ' n t h th e Treasury Department
we may be
agreed
a s to
what
we
want.
Please understand that t h e foregoing a r e only my
personal views. I fee l ce r t a in tha t i f determined action i s
taken, something definite
and
s a t i s f a c t o r y
can be
accom-
pl i shed .
Very truly yours ,
(S ) Albert C. Agnew
Counsel.
ACA:MA
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C O P Y X-7169-c
3 9 0
FEDERAL RESERVE BAH
OF
ST. LOUIS
November 28, 1931
M r. Walter Wyatt, General Counsel,
Federal Reserve Board,
Washington, D. C.
Dear M r. Ifyatt
Enclosed you wi ll f in d copy of a memorandum I handed
Governor Martin on the subject o f t he repor t o f t he Standing
Committee on_Col1ec tions_on Cashing Government Checks and
Warrants . I am no t i n a pos i t i on t o know t h e d i f f i c u l t i e s the
operating Committee
had to
contend with
i n
meeting
t h e
legal
requirements suggested
by the
Counsel's Committee, nevertheless,
I do not
believe
t h e
Governors' Conference should
a c t on th e
report until these differences have been ironed out - and I so
advised Governor Martin.
I reg re t t ed tha t I could no t be here when t h e Committee
m e t in S t . Lo ui s. Upon Mr, Walden 's invi tat ion, I had made my
arrangements to be here , but was suddenly called upon to go with
one of the National Bank Examiners t o Corinth, Miss, t o pass on
t h e l e g a l i t y of an arrangement whereby t h e City of Corinth was
loaning one of the member banks i n t h e town certain bonds owned
b y t h e c i t y to be used a s c o l l a t e r a l t o t h e bank's borrowings from
t h e Federal Reserve Bank.
When
we
a r r ived
a t 9 : 0 0 a . m . , t h e
City Council were
a l l
assembled ready
t o
pass
any
ordinance
I
found necessary
f o r
them
t o
p a s s ,
i n
order
t o
give
t h e
bank
t h e
r igh t
t o u s e t h e
bonds
a s
c o l l a t e r a l w i t h t h e Reserve Bank. They signe d on the dot ted l ine.
I then prepared and had the Board of Directors of the
bank sign t h e necessary Resolut ion authorizing t h e pledging of
t h e bonds t o t h e Reserve Bank. We f in i shed i n time f o r t h e member
bank t o take these bonds 150 miles b y automobile t o Memphis, arrange
f o r t h e loan, a n d secure t h e necessary funds t o continue business the
next day as u s u a l , - oth erw ise , t hey would n o t have been able t o
remain open.
With kin de st r eg ard s,
Very truly yours,
(S) J a s . G. Mc
Conkey,
Counsel.
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3 9 1
C O P T ' X-7169-c-l
Itovember 27, 1931
M r. to. Mc C. Martin, Governor,
Federal Reserve Bank
o f S t .
Louis,
S t . Louis, Mo.
Dear i t r . Martin:
Refer r ing
t o t h e
l e t t e r subje ct Cashing
of
Government
Checks and Warrants by Fed era l Reserve Banks signe d by Mr. Walden,
Chairman
o f t he
Standing Committee
on
Collections, dated August
12 , 1931 , a nd the suggestions contained therein that, i f i n the
opinion
of the
several Counsel,
no
serious legal object ions
b e
found therein t h e report submitted b y t h e Committee under date of
t h e 1 0 t h , i t
would
be
submitted
t o t h e
next Governors' Conference.
The sub jec t of Cashing Government' Checks and Warrants has
been t h e source o f a great deal of correspondence passing between
t h e Reserve Banks of Richmond, Atlanta and Hew York, t h e Federal
Reserve Board
a nd the
Treasury Department, since
1922.
The
subject
was
discussed
a t a
Conference
of
Counsel
f o r
t h e Federal Reserve Banks with representative from t h e Treasury
Department, under date
of
June
10 , 1930, a t
which time
a l l t h e
members of the Standing Committee on Collect ions (except M r. At t e -
bery) were present. Ho definite agreement was reached a t th is
Conference, b u t t h e following Resolution was adopted:
RESOLVED, That t h e Chairman o f t he Governor's
Conference b e requested t o i n s t r u c t t h e Standing Committee
on Collect ions t o prepare a t e n t a t i v e d r a f t of a uniform
check co ll ec ti on ci rc ul ar embodying th er ei n
t h e
suggested
amendments t o Regulation J , t h e p repara t ion of such
t e n t a t i v e d r a f t
to be
made
i n
col laborat ion with
a
sub-committee of Counsel t o t h e Federal reserve banks
(such sub-committee t o b e appointed by Counsel to the
Federal Reserve Board
and of
which sub-committee Counsel
t o t h e Federal Reserve Board shall b e a member ex o f f i c i o ) ,
with
t h e
understanding that such tentative draft , when
prepared , shal l b e submitted t o t h e Federal reserve banks
f o r crit icism and/or approval pending t h e adoption by the
Federal Reserve Board o f t he suggested amendments t o
Regulation J . "
Under date of Apr i l 17 , 1931, Mr . Hyatt advised th e Federal
Reserve Board that since this subject
was so
closely iden t i f ied wi th
both t h e pract ica l opera t ions o f t he Reserve banks and their legal
l i a b i l i t i e s t h a t i t would b e advisable f o r t h e Conference of Governors,
which was to convene on Apr i l 27 , 1931, to r e f e r t h e matter back to a
special Committee of Counsel and operat ing o f f c i a l s f o r study and
r epo r t .
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3 9 2
X-7169-c-l
2
Governor Ma rt in .
M r.
Wyatt advised
me
under da te
of
Ju ly
22, 1930
that ,
a f t e r
a
talk with Governor Calkins, Chairman
o f t h e
Governor's
Conference, and Mr. Walden, he had named t h e Counsel f o r t h e
Atlanta, Richmond
and Hew
York banks sinc e they
had
developed
the
most
o f the
d i spu te between
t h e
banks
an d t h e
Treasury Department
o n t h e sub jec t . M r. Wyatt was an ex officio member o f the
committee.
The
Standing Committee
on
Collect ions
me t i n S t .
Louis
i n June 1931 . Hone o f t h e members o f the Counsel's Committee were
here .
I had
intended at tending
t h e
Conference,
h u t h ad
been ca ll ed
out o f the
City
on
legal matters
and was not
here when
t h e
Committee
m e t .
Under date
of
August
14, 1931, Mr.
Iftratt forwarded
to me
copy
of
l e t t e r
h e h ad
wr i t t en
M r.
Walden,
i n
which strenuous objec-
tions were interposed t o cer ta in par t s of the r e p o r t . Some of th e
object ions
I
th ink
a r e
well taken.
I t
would, therefore, appear
t o
me
tha t
t h e
quest ions
i s n o t
ready
t o b e
acted upon
b y t h e
Governor's
Conference i n t h e face o f the object ions offered by Mr. Htyatt - but
ra ther that
t h e
matter
b e
referred back
t o t h e
joint Committee
of
Counsel
and
o p e r a t i n g o f f i c i a l s ,
so
that these d i f f icu l t ies cou ld
b e
ironed
o u t
before
an y
f ina l ac t ion
i s
taken
b y t h e
Governor's Confer-
ence
.
Respectfully submitted
J a s . G . Mc
Conkey,
General Counsel.
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, 393
C O P T X-7169-4
December 14, 1931.
M r. James G. McConkey,
Federal Reserve Bank
o f S t .
Louis,
S t .
Louis, Missouri.
My
dear
M r.
McConkey:
I
have read with much interest your letter
o f
November
28 , 1931 ,
inc lo s ing
fo r my
information
a
copy
o f t h e
memorandum
which y o u h ad given t o Governor Martin on November 27 , 1931 , with
re fe rence
t o t h e
repor t
o f t h e
Standing Committee
on
Collect ions
on
cashing Government checks
and
warrants .
I am
ver y glad th at
y ou
think that some
of my
object ions
t o t h e
repor t
o f t h e
Standing Committee
on
Collect ions
a r e
well
taken,
and I am
very gra tefu l
f o r
your suggestion that
t h e
matter
should b e r e f e r r e d t o a joint committee of counsel an d operative
o f f i c i a l s ,
so
that these d i f f icu l t ies cou ld
be
ironed
ou t
before
an y
f i n a l a c t i o n
i s
taken
b y t h e
Governors' Conference.
I am
a f r a i d , however, tha t
y o u a r e
under
t h e
impression
tha t t h e Sub-committee of Counsel appointed pursuant t o t h e reso -
lution adopted
b y t h e
Conference
of
Counsel
f o r t h e
Federal reserve
banks
on
June
10, 1930, was
expected
t o
a s s i s t
t h e
Standing
Com-
mit tee on Collect ions i n dealin g with thi s su bje ct a n d that
t h e
f a i l u r e
o f t h e
Sub-committee
of
Counsel
t o
a t t end
t h e
meet-
i n g o f t h e
Standing Committee
on
Collections which
was
held
i n S t . Louis on June 23 , 1931 , and the consequent failure of the
repor t
o f the
Standing Committee
on
Collections
t o
conform
t o
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X-7169-a
r 2 -
my views and those of Counsel f o r some o f t h e Federal reserve
banks,
may
have resulted from some neglect
or
omission
on my
part, which i s n o t t h e case.
The resolut ion adopted by the Conference of Counsel
of the
Federal reserve tanks
on
June
10 , 1930,
which
i s
quoted
i n your memorandum t o Governor Martin, pertained solely t o t h e
r ev i s ion
of the
uniform provisions
of the
check col lect ion
c i r -
cu la r s o f t he Fed era l re se rv e banks so as to conform to the
amendments t o Regulation J which ha d been recommended "by the
Conference
of
Counsel.
I t had
nothing whatever
to do
with
t h e cashing of government checks and warran ts . The Committee
of Counsel which I appointed pursuant t o that reso lu t ion fu l ly
discharged
i t s
fu nc ti on s when
i t m e t
with
t h e
Standing Committee
on Collect ions in New York on or about August 1 , 1930, and ass i s t ed
i n t h e rev i s ion of the uniform provisions o f t he check collection
c i r c u l a r s
o f t he
Federal reserve banks which were adopted
and
promulgated b y t h e Federal reserve banks, on September 1 , 1930,
t h e date on which t h e Board's amendment t o Regulation J became
e f fe c t i ve . Having f u l l y performed
i t s
fun ct ion s, t ha t committee
went out of existence, s ince i t was no t created a s a standing
committee b u t only a s a committee f o r a specif ic purpose.
I t i s
true that , during
t h e
Conference
of
Counsel which
was held here i n June, 1930, we discussed with t h e Treasury
Department
t h e
provis ions
of
Treasury Circular
No. 176 and
succeeded i n inducing t h e Treasury Department t o amend those
po r t ions o f i t s ci rc ul ar which dea lt with t h e c o l l e c t i o n of
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. 3 9 5
X-7169-d
t3—
bank checks
"by the
Federal reserve banks
f o r t h e
Treasury Depart-
ment;
bu t you
will remember that
we
could
n o t
reach
any
agree-
ment either among ourselves
o r
w i t h o f f i c i a l s
o f t h e
Treasury
Department regarding
t h e
rev i s ion
of
those prov isi ons
o f the
Treasury cir cu la r which pe rt ai n
t o t h e
cashing
of
government
checks an d warrants b y t h e Federal reserve banks, and i t was
agreed
t o l e t
that matter remain
i n
abeyance indefini tely .
My
memorandum
of
Apri l
17 , 1931 ,
which resulted
i n t h e
ac t ion o f t h e Governors' Conference o f Apr i l 2 7 - 2 9 , 1 9 3 1 , r e -
f e r r i n g
t o t h e
Standing Committee
on
Collect ions
t h e
subject
of
t h e
cashing
of
Government checks
and
warran ts , s tar ted
a n
e n t i r e -
ly new chapter an d an e n t i r e l y new e f f o r t t o obtain amendments t o
t h e
provis ions
o f the
Treasury circular relat ing
t o t h e
cashing
of
Government checks
and
warrants;
and the
Sub-committee
of
Coun-
s e l which had been appointed pursuant t o t h e r e s o l u t i o n of June
10 , 1930 , had no
au tho r i ty
t o
deal with this subject ,
and was
n o t
requested
o r
inv i t ed
t o
at tend
t h e
meeting
o f t h e
Standirg
Committee on Collect ions or to assist that Committee in any way.
In my memorandum of Apr i l 17 , 1931 , suggesting that
th is sub ject
b e
cal led
t o t h e
a t t e n t i o n
o f the
Governors'
Con-
f e rence ,
i n
order that
a
further effort might
b e
made
t o p u r -
suadc th e Treasury Department t o rev i se and q u a l i f y t h e p r o -
v i s ions
of
Sect ions
32 and 34 of th e
Treasury Department
Circu lar
No. 176 , as
amended September
2 , 1930 , so as to
def ine c lear ly t h e s t a tu s o f t h e Federal reserve banks i n
cash ing government warr ants
and
checks
and so as to
c l a r i f y
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;* 3 9 6
X-7169-d
the i r du t i es a n d r e s p o n s i b i l i t i e s i n doing s o , I suggested that
i t would b e appropr ia te f o r t h e Governors' Conference t o re fe r
t h e matter t o t h e Standing Committee on Col lec t ions , t o t h e
Conference of Counsel o r to some other appropriate committee f o r
f o r study an d r e p o r t . The Board presented my memorandum t o t h e
Governors' Conferonce, which referred t h e subject t o t h e
Standing Committee on Collect ions f o r considera t ion and report
without suggesting that a Committee o f Counsel should b e appointed
t o
a s s i s t
t h e
Standing Cor.xd.ttee
on
Collect ions
i n i t s
considera-
t ion o f t h e mat t e r . Af t e r t h e conference, both Governor Francher
and Mr.
St ra ter to ld
me
th at they thought
t h e
Governors' Conference
ought
t o
have arranged
f o r a
Committee
of
Counsel
t o
col laborate
with
t h e
Standing Committee
on
Collections
and
said that they would
suggest
i t t o M r .
Walden, Chairman
o f the
Standing Committee
on
Collections»
b u t I
understand they failed
t o
convey this suggestion
to Mr.
Walden.
I n
f a c t ,
I was not
consulted about
t h e
meeting
o f the
Standing Committee on Collect ions and d id no t know i t h a d been called
unt i l June 1 5 , 1 9 3 1 , when I received a le t ter f rom M r. Attobcry
which incidentally mentioned t h e fact that a meeting of the
Committee
h ad
been called
t o
consider that subject
on
June
23 ,
1931 . I immediately called M r. Walden on the telephone and
suggested that Counsel f o r some o f th e Federal reserve banks should
b e inv i ted t o a t t end t h e meeting; b u t h e said that h e d id n o t fee l
f r e e to do so without t h e consent o f t h e Committee, an d that t h e
time was too shor t f o r h i m t o obtain t h e Committee's consent and
arrange f o r t h e Counsel t o a t t end . He seemed t o feel that i t was
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3 9 7 .
X-7169-d
- 5 -
n o t
necessary
fo r any of the
Counsel
t o
a t t end
t h e
meeting
and
said that t h e report could "be submitted t o them f o r comment a f t e r
a t e n t a t i v e d r a f t had been pr ep ar ed . I to ld h im tha t I d id no t
bel i eve tha t t h i s would produce sa t i sf ac to ry re su l t s a n d h e r e -
plied that , inasmuch a s t h e meeting would "be held a t t h e Federal
reserve hank
o f S t .
Louis,
t h e
Committee could call upon
y o u f o r
any legal advice which i t des i r ed . A few days later h e invi ted
me to a t t end t h e meeting, "but the time was so short and I was so
busy that I was unable t o arrange to do so.
On
Ju ly
22, 1931, Mr.
Walden sent
me a
copy
of the
t e n t a t i v e d r a f t
of the
Committee's report
and
i n v i t e d
my
comments;
but I was extremely busy a t t h e time and had not had an opportun-
i t y t o send him ray comments when I received a final copy of the
repor t on August 12, 1931.
On
August
13, 1931, I
wrote
M r.
Walden
a
le t t e r express -
ing my disagreement with ce rt ai n por tio ns o f the Committee's
r e p o r t , a f t e r a very hurr ied considerat ion thereof , an d subse-
quently
I
sent copies
t o
Counsel
f o r a l l
Federal reserve banks
f o r
their informat ion.
I th ink tha t , i n prepar ing i t s r e p o r t , t h e Committee
f a i l e d t o apprec ia te cer ta in o f the l e g a l d i f f i c u l t i e s and dangers
growing
ou t o f the
ambiguity
o f the
provis ions
of
Sections32
and
34 of the Treasury Circular and al so misunderstood t h e legal effect
of their suggest ion that t h e Treasury Circular should show that
i n
cas hin g Government warr an ts
and
checks,
t h e
Federal reserve
banks a c t a s agents f o r t h e banks from which the y have rec ei ve d
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- 6 -
3 9 0
X-7169-a
such checks pursuant t o t h e terms of Regulation J . The Committee
apparently thought that t h e provis ions of Regulation J would
give t h e Federal reserve banks a l l o f t h e protection which they
need; "but I th ink th i s i s a mistake. Regulation J i s designed
t o
p ro t ec t
t h e
Federal reserve hanks against l iabi l i ty
t o t h e
holders of checks f o r f a i l u r e t o collect them; whereas what we
need t o obtain through a n amendment o f t h e Treasury Circular i s
a c l a r i f i c a t i o n o f the lega l r ight s , dut ies an d r e s p o n s i b i l i t i e s
of the
Federal reserve banks
i n
r e l a t i o n
t o t h e
Treasury Department
when they cash Government checks
and
warrants drawn
on the
Treasurer o f the United States. I n other words, Regulation J d e -
f i n e s t h e du t i e s o f t h e Federal reserve banks a s col lect ion agents
b u t i t does n o t undertake t o def ine thei r dut ies a s agents to pay
o r cash checks f o r t h e Treasurer o f the United States. I n my
*
opinion, t h e l a t t e r sub j ec t i s dea l t wi th very unsa t i s fac tor i ly
i n t h e Treasury Circular and I des i r e t o s e e i t c l a r i f i e d and
improved.
I
would like
t o s ee t h e
Treasury Circular amended
so as
t o provide that , i n cashing government checks and warrant s , t h e
Federal reserve banks a c t a s f iscal agents , thereby rel ieving
them o f a l l l i a b i l i t y when they a c t within t h e scope of the i r
au thor i t y and with ordinary care. I would also like to see a
provis ion Inser ted f ix ing
t h e
time when
a
Government check
sha l l b e considered t o b e f ina l ly pa id ; s ince I understand that
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x-7i69~a 3 9 9
- 7 -
t h e
Treasurer assumes
t h e
r i g h t
t o
stop payment
on
such
checks even after he ha s examined them, perforated them,
and entered them o n h i s hooks a s pa id . I also bel ieve that
t h e
provis ions
of
Section
34 o f t he
Circular should
h e
amended
so as to be
en t i re ly consis ten t wi th
t h e
theory that Federal
reserve banks a c t only a s agents i n cashin g such checks and
that they assume no l i ab i l i t y except f o r losses resul t ing from
a f a i l u r e t o exercise ordinary care o r t o a c t wi th in t h e scope
of the i r au tho r i ty . I realize, however, that I may n o t appre-
ciate some o f t ha p rac t i ca l d i f f i cu l t i e s i nvo lved i n t h e accom-
plishment
of
these ob jects ,
and I am not
wi l l i ng
t o
commit
mysel f def in i te ly to any speci f ic p roposal un t i l t h e subject has
been thoroughly threshed out in a joint meeting between the
Standing Committee on Collect ions a nd the Conference of Counsel
o r a Committee thereof.
While I have no t ye t rece ived o f f i c i a l no t i f i ca t ion
of the
act ion taken
a t t h e
recent Conference
of
Governors,
I
understand that t h e repo r t o f t he Standing Committee on Collec-
t ions was r e f e r r e d t o t h e Conference of Counsel f o r considerat ion
and consul tat ion with t h e Standing Committee on Collect ions and
o f f i c i a l s
o f t h e
Treasury Department, with
a
view
of
obtaining
a c l a r i f i c a t i o n of the applicable provisions o f t he Treasury
Department Circular No. 176 with respect t o t h e dut ies and
r e s p o n s i b i l i t i e s
o f t he
Federal reserve banks
i n
cashing Govern-
ment checks a n d warran ts . I believe that this should load to a
s a t i s f a c t o r y s o l u t i o n of t h i s d i f f i c u l t y ; but I am a f r a i d i t would
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4 0 0
X-7169-4
- 8 -
b e d i f f i c u l t t o arrange a joint meeting o f t he Conference of
Counsel f o r a l l Federal reserve banks and of the Standing
Committee on Col lec t ions a t which this subject could b e consid-
ered with sufficient thoroughness
t o
p roduce sa t i s f ac to ry r esu l t s ,
before some time next summer.
With apologies f o r t h e length of t h i s l e t t e r and with
best personal regards,
I am
Cordially yours,
(S )
Walter Wyatt,
General Counsel.
WW gc
-4
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C O P Y X-7169-e
LOCKE, LOCKE, STROUD & SAUDOLPH,
F i r s t Na tional Bank Build ing
DALLAS, TEXAS.
January 6 , 1932.
Walter Wyatt, General Counsel,
Federal Reserve Board,
Washington,
D. C.
Dear Mr. Wyatt:-
As requested i n your telegram I am enclosing
herewi th f i l e of correspondence concerning treasury
checks involved
in the
f a i l u r e
o f t he
Citizens
National Bank
of
Brownwood, Texas.
Sincerely yours,
(Signed) J . P . Dreibelbis .
JPD: g
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C O P Y
I 4 0 2
X-7169-e-l
December
29, 1931
Honorable G-. 0 . Barnes
Assistant Treasurer o f t h e United States
Treasury Department
Washington, D. C.
Sirs
Reference i s made to your le t ter of November 21 , 1931 , concerning
t h e following described checks:
Check jTo. Date Amount Payee Drawer Symbol
2595778 9-30-31 $160.83 Jos eph Hamilton A. Zaponne 70-001
108170 9-30- 31 100.00 Cl ar a Pa rr Achor a s
guardian of es t a t e
of Noah A. J . Achor H. E. Waters 11-519
1150388 9-28- 31 617.40 Char les $ . Bennett J . B . Shommer 99-220
We are
informed th at pla ns
a r e
well under
way
whereby
t h e
Cit izens
National Bank
of
Brownwood will reopen
or a new
bank will
b e
organized which will
succeed t o i t s a f fa i r s . E i ther p l an , of course , wi l l sa t i s f ac to r i ly d ispose of
these pa r t ic u l ar i tems.
Notwithstanding t h e foregoing, we think that i t i s n o t inappropr ia te a t
this t ime to d iscuss t h e subject generally with you and express t o you ou r views
i n regard t o t h e problems which present themselves to us in connection with the
general subject.
A f u l l unders tanding o f t h e posi t ion of this bank i n t h e handling of
these items
can
b e s t
b e
conveyed
to you by
placing before
you the
f u l l d e t a i l s
o f t h e
handling
o f t h e
par t i c u la r i tems l i s t ed .
Our
information
as to how the
items were handled
b y t h e
original deposi tary bank
and
also
b y
your of f ice
i s
l imi t ed
t o
such facts
a s a r e
made known
b y t h e
correspondence between this bank
a nd the
original deposi tary bank
and
between this bank
and
your of f ice .
How-
ever, most
o f t h e
per t inen t f ac t s
a r e
d isc losed
by
that correspondence.
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t 4 0 3
X-7169-e-l
Page
2
The
f i r s t
two of
those items were apparently deposited
in the
Citizens national Bank
of
Brownwood
n o t
later than October
1 , 1931 .
This
da te
v/e f i x by th e
endorsement
on the
back
o f t h e
items
i n
qu es ti on . They
were received b y this bank on October 2 , 1931 , i n the cash l e t t e r o f t he
Citizens National Bank dated October
1 , 1931 , t he
let ter total ing $804.48.
I n
accordance with
o u r
usual pr ac ti ce , immediate cr ed it
was
given
upon these two it ems . That i s t o s a y , t h e funds became subject to immediate
withdrawal,
a nd in
th is respec t
y o u a r e
advised that
a t t h e
c lose
o f
that
day's business
t h e
Citizens National Bank
h a d
drawn
i t s
balance with
u s
down
to t h e sum of
$43.02.
The
l a s t
o ne o f t h e
three items mentioned above
was
apparent ly
d e -
pos i t ed i n t h e Citizens national Bank on October 3 , 1931 , such date being the
date
o f t he
ba nk 's endorsement. October
4
f e l l
on a
Sunday,
and on
October
5
t h e
item
was
rece ived
i n t h e
cash le t te r
o f t h e
Citizens National Bank dated
October
3 ,
that l e t t e r to ta li ng $813.90. This item
was
likewise passed
to the
c re d i t o f t he Citizens National Bank, a nd the funds represented thereby became
immediately available
f o r
withdrawal.
We
have
no
knowledge
a s to the
circumstances under which
t h e
items
were deposited with
t h e
C it iz en s Nati onal Bank oth er than
i s
r e f l e c t e d
by the
correspondence with t h e examiner i n charge. We were advi sed , however, on
October 16 , 1931, by Ernest Lamb, t h e examiner i n charge, that t h e records of
that bank showed that
t h e
parties mentioned deposited these checks
f o r
credit
a nd
tha t
i n
each instance they
h a d
checked against their balances before
the
suspension of the ba-ik. We assume, t he re fo re , t ha t t h e Brownwood bank gave
immediate credit
f o r t h e
items
a nd
permitted
t h e
depos i tors
to
withdraw funds
agains t
t h e
items,
in so f a r a s
they desired
to do so.
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Xr-7169-e-l
The
f i r s t
two of
these items were forwarded
to
your o f f i c e with
our
t r a n s c r i p t
of
October
2 , a nd the
l a s t
was
forwarded
to
your o f f i c e with
our
t r a n s c r i p t
of
October
5 . We
havo
no
knowledge
as to
when these items reached
your off ice .
Our
experience
i s
th at items mailed he re
on a
given
day
reach
•Washington upon
t h e
t h i r d
day
t h e r e a f t e r .
At any
r a t e ,
we
assume that
t h e
f i r s t
two
items reached your office
n o t
later than October
6 and
tha t
t h e
las t
item reached your office
n o t
l a t e r than October
9 .
These da te s
a r e
f i x e d
by the
perfora t ions p laced
o n t h e
items
i n
your office.
The
Cit izen s nat ion al Bank f ai l ed
to
open
on
October
6 , 19 31, a nd we
assume that
i t wa s
with knowledge
o f
th i s fa i lu re tha t
t h e
various payees,
themselves
o r
through
t h e
drawers
o f t he
various items, requested your office
t o
decline payment.
Under date
o f
October
7 , 1931 , t h e
f i r s t
two
items were returned
to
us by
your office with advice that payment
o f t he
items
was
being declined
i n
compliance with
t h e
requests dated October
6
from
t h e
drawer
an d
payee,
respectively; under date of October 9 , 1931 , t he third item was re turned to us
b y your office with advice that payment o f t he same was being declined in com-
pliance with t h e request dated October 7 , 1931 , from t h e drawer. Being unab le
t o e f fec t co l l ec t ion o f these items from t h e examiner in charge, we returned
them
to
your office under date
o f
October
17 , 1931.
On October 28 , 1931 , t h e items were again returned to us by your
o f f i c e . In t h i s l e t t e r we were advised that i n t h e case o f checks which a r e
deposited f o r c o l l e c t i o n i t i s t h e p ra c t i c e o f t he Comptroller o f t h e Currency
t o charge t h e depositor 's account an d re tu rn t h e checks to h im i f h i s balance
will _iermit such action, an d tha t i f t h e depos i tor ' s ba lance i s less than the
amount o f t h e check, t h e bank i s t h e owner o f t he check to that extent a nd the
check i s re tu rned t o t h e depositor upon repayment o f t h e difference between h i s
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* 4 0 5
Page 4 X—7169—e—1
balance a nd the amount of the check. I t was suggested, also, that o u r c o r -
respondents should be advised that checks received in your off ice a r e perfora ted
with t h e date and assembled f o r ident if icat ion purposes before clearance o r
examination,
and
such perforation does
n o t
s ign i fy that
a
chock
h a s
been paid.
Following t h e r e c e i p t o f t h e items from you, we forwarded them to
t h e examiner in charge, together with a copy of your le t ter to u s . The examiner
again returned them
to u s , and we
wrote
you
under date
of
November
9 , 1931,
quot-
i n g i n i t s e n t i r e t y t h e l e t t e r of the examiner which accompanied t h e items.
You now suggest to us tha t a s the fa i l ed bank 's deposi t t i ck et
s t a t ed de f in i t e ly tha t
i t was
a c t i n g
a s
agent
f o r t h e
deposi tor
i n t h e c o l -
l e c t i o n
of
checks,
i t i s
your understanding that, unless
t h e
Federal Reserve
Bank h a s a l t e r e d i t s p o s i t i o n o r extended additional credit i n r e l i a n c e o r
fai th upon t h e supposi t ion that t h e deposit i n fact belonged t o t h e bank,
i t now h as no r i g h t t o offset proceeds of these items against t h e indebted-
ness owing
t o i t b y t h e
failed bank.
Leaving f o r t h e presen t th e l e g a l , a s well a s t h e equi tab le fea tures
of the case, i t seems to us tha t a great deal of the d i f f i c u l t y i n these cases
i s brought about by a l ack of understanding upon t h e p a r t of this bank, a s well
a s i t s
correspondents,
a s to the
circumstances under which
a
Government check
o r warrant may be considered paid.
We have car ef ul ly considered t h e provis ions of Circular % . 176 of
t h e
Treasury Department, particularly with respect
t o t h e
payment
of
Govern-
ment checks and warran ts , and while i t i s c le ar there from th at such items
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£ .406
5
X-7169-e-l
s h a l l
b o
considered, paid only after examination
b y t h e
Treasury Department,
t h e quest ion o f what action o n t h e p a r t o f t h e Treasurer shall amount t o
ayment i s left unanswered. I t seems to us obvious that a t some p o i n t i n
t h e handling o f a pa r t i cu l ar i tem some sp ec if ic o r d e f i n i t e a c t o n t h e par t
o f t h e Treasurer should const i tute payment, b u t t h e c i r c u l a r i s e n t i r e l y
s i l e n t on tha t po in t , s o f a r a s we a r e able t o d i sce rn . I n o the r 7, ords, i t
appears t o u s t h a t t h e r e a l and f ina l ques t ion i s approached from a negative
ra ther than a po si t i ve viewpoint . While w e a r e advised as to what will n o t
const i tu te payment , w e a r e n o t informed aa to what will.
We do
observe from
t h e
c i rcu la r tha t
t h e
Treasurer reserves only
t he
usua l r igh t
o f t h e
drawee
t o
examine, when re ce iv ed ,
a l l
Government checks
and
warrants cashed
b y
Federal reserve banks.
We
assume that
t h e
purpose
of the
word usual
i s t o
r e s e r v e
t o t h e
Treasurer
t h e
same r ig h t t ha t
a
commercial
ins t i tu t ion do ing , t h e same ch ar ac te r o f business would have. We als o note
t h a t t h e c i rcu la r p rov ides tha t t h e Treasurer reserves t h e r i g h t to examine
t h e items when re ce iv ed . From t h e language o f t h e c i r c u l a r i t i s o u r under-
standing that
t h e
Trea sur y Department inte nded ther eby
t o
represent that upon
r e c e i p t
o f a
check
o r
warrant
i t
would examine
i t a nd a c t i n
regard
t o i t
wi th-
i n t h e
same time required
o f a
commercia l ins t i tu t ion
>
doing
t h e
same ch ar ac te r
of
bus iness ,
o r
c e r t a i n l y w i t h i n
a
reasonable
a n d
def in i te t ime.
We, of course , r ea l i ze tha t t h e p e r f o r a t i o n o f t h e i tems, i n i t s e l f ,
does n o t const i tute payment i n t h e absence o f o the r f ac t s and circumstances.
n the other ha©d, i t i s a circumstance which c a n be taken into considerat ion
i n determining whether o r n o t payment h a s been made,
a l l , t h e ul t imate ques t ion i s one of fac t .
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( 407
X-7169-e-l
Page 6
Without reference t o t he handling o f th e pa rt ic ul ar i tems described
i n
t h i s l e t t e r ,
we do
feel that
i f a
commercial bank
ha d
rece ived
an
item, credit
f o r which had already been passed t o t he depositor, held i t f o r over twenty-four
hours ,
and
p e r fo ra t e d
i t
with
i t s
cancellation stamp, there
a r e f ew
courts that
would n o t hold that t h e item was paid o r accepted.
Returning t o t he legal aspects o f the pa r t i cu la r cases , a s evidenced
by t he ava i l ab le fac t s , we recognize, of course, t h e genera l propos i t ions a s -
ser ted by you in your le t te r of November 21, 1931, and while we agree that t he
r i g h t s o f t he p a r t i e s may be f i x e d by contract evidenced by provis ions incor-
pora ted i n t he depositary bank's deposit s l ip, we fee l tha t , b y t h e same token,
t h e bank may, by i t s ac t ion or by special contract , create a d i f f e r e n t r e l a t i o n -
ship.
I n
these pa r t ic ul ar cases ,
so we a r e
advised,
t h e
depositary bank
gave immediate credit f o r t h e items and permitted t h e various depositors to
withdraw ag ai ns t them. That the y
d i d n o t
withdraw
a l l o f t h e
funds evidenced
by
these items
was
probably because they
d i d n o t
des i re
to do so . At any
ra te ,
i t i s ou r
opinion that
t h e
Citizens National Bank
o f
Brownwood,
by
giving
immediate credit without restriction, bought t h e items in question and created
t h e r e l a t i o n s h i p o f debtor and creditor, ra ther than that of pr inc ipa l
and agent . In this connection, your attention i s d i rec ted t o t he case of City
of Douglas v . Federal Heserve Bank of Dal las , 271 U. S. 4 89 .
As to th is bank 's pos i t ion in the t ransac t ion be ing a l te red , i t
seems to us that every time i t rece ives a Government check o r warrant and
passes immediate credit to the forwarding bank, i t changes i t s p o s i t i o n . As
a matter o f feet, i t i s because we a re constantly changing o u r p o s i t i o n by
paying
o u t
funds
and
crea t ing credi ts subjec t
to
immediate withdrawa l tha t
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Page
7
» 4 0 0
X-7169-e-l
t h e
question gives
us so
much concern.
In
conclusion,
we a r e
hoping that under
t h e
circumstances
you
will conclude that
t h e
various payees have
no
claims except
a s
agains t
t h e
depositary bank
i n
which they chose
to
deposit their funds,
a n d ,
accord-
ingly, we a r e herewith returning t h e items.
Yours very truly,
Governor
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4 0 9
C O P Y X-7169~e-2
C O P Y
LETTERHEAD OF THE TREASURY DEPARTMENT, WASHINGTON
O f f i c e o f t h e Treasurer o f the United States
I n
reply ing quote in i t i a l s
AWS: C
November 21, 1931.
Mr. L. G. Pondrom,
Assistant Cashier,
Federal Reserve Bank,
Dal las , Tex.
REGISTERED MAIL
S i r ;
Receipt o f your l e t t e r of November 9 i s acknowledged, forwarding
three checks, described below, drawn
on
t h i s o f f i c e
and
returned when
p r e -
sented
f o r
payment because
o f
drawers'
and
payees' req ues ts
due to t he
f a i l -
ure of The
Citizens National Bank
o f
2rov/nwood, Texas, a f t e r
t h e
deposi t
of
t h e checks there and before they were presented t o t h i s o f f i c e f o r payment:
Check
No.
Date
Amount
Payee
Drawer
Symbol
1 , 1 5 0
,388
9—28— 31
$617.40
Charles E. Bennett
J . B . Schommer
99220
2,595
,778
9-30-31
160.83 Joseph Hamilton
A. Zappone
70001
108
,170 9-30-31
100.00
Clara Earr Achor
B. E. Waters
11519
as Gdn. of Est .
o f Noah A. J . Achor
I t appears that when t h e checks were returned you acknowledged r e -
ce ip t o f them under da te s o f October 10 and 13 and wrote that you ?ere return^-
i n g t h e checks t o your endorser and as soon as you received an y information
regarding them you would advise this office.
The payee o f t h e f i r s t check above, Mr. Bennett , telegraphed and
wrote
to
t h i s o f f i c e
on
November
3 ,
tha t
h i s
check
h ad
been returned
to him
and he
req ues ted th at stoppage
b e
l i f t e d .
I n h i s
l e t t e r
h e
s ta ted tha t
h e
had redeposi ted t h e check in The First National Bank o f Brownwood. On Novem-
b e r S , h e telegraphed that complications h a d a r i s e n and requested renewal
of stoppage.
The payee o f t h e second check, Mr. Hamilton, wrote on October 16,
t ha t t h e examiner i n charge o f the fai led bank refused t o r e tu rn h i s check
al though t h e payee h a d tendered t o t h e examiner t h e amount o f t h e di f fe rence
between h i s bapk balance an d t h e amount of this check.
The
fa i l e d bank ' s deposi t t i cke t s t a ted def in i t e l y tha t
i t wa s a c t -
i n g a s
agent
f o r
depos i tors
i n t h e
col lec t ion
of
checks.
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4 1 0
Page
2
X-7169-e-S
Under date
of
October
1 7 ,
yctu re tu rn ed
t h e
three checks
t o
this
off ice wi th
a.
cooy
o f a
le t t er f rom
t h e
examiner
o f the
failed bank dated
October
15, in
which
h e
returned
t h e
checks
to you and
s t a t ed
i n
-oart:
ii we a r e no t in
pos i t i on
to
give
you
au thor i ty
t o
charge
t h e
account
of
The
Citizens National Bank
of
Brownwood with
t h e
checks.
On
October
2 8 , t h e
checks were again sent
t o y ou f o r
re tu rn
to the
receiver o f t h e failed bank with information as to the practice approved
b y t h e Comptroller o f the Currency f o r handling such checks when deposited
f o r co l lec t ion .
With your letter
of
November
9 , you
again forwarded
t h e
checks
and
quoted
a
le t t er f rom
t h e
Receiver
i n
p a r t
a s
fol lows:
11
' A t t h e
time these
checks were returned
to me
with your le t t e r
o f
November
2nd , i t was my
thought
that
I
could have
t h e
payees reimburse
me the
difference between
t h e
amount
of the
checks
a n d t h e
amount standing
t o
thei r cred i t
o n t h e
individual
ledger, which would enable
me to
make
a
debit against
t h e
account, which
would close each o f t h e accounts, and you in turn debit t h e credi t balance
of The
Citizens National Bank
o f
Brownwood, Texas . Upon inves t iga t ion ,
I
f ind that you have closed t h e account of The Cit ize ns Nati onal Bank on your
books, an d i t i s presumed t h e amount was applied a s a c red i t on the r e d i s -
counts of subject bank with you , although I have never been advised to that
e f f e c t .
As you a re
aware,
I am n o t in a
pos i t i on
t o
draw drafts against
credit balances with other banks
i n
order
to
reimburse
y o u t h e
amount
o f the
checks involved, therefore,
I am
re tu rn ing
t h e
checks herewith
an d a s k
that
you
please acknowledge receipt
o f
same.
1
" You
also sta ted ; Regarding
t h e
balance standing
t o t h e
c red i t
of The
Citizens National Bank
o f
Brownwood
on our
books, referred
to in Mr.
Lamb's let ter ,
we
advise tha t t hi s balan ce
h a s been applied on the indebtedness of The Citizens National Bank cf Brown-
wood
an d t h e
subject bank does
n o t
show
any
balance
t o i t s
c r e d i t
a t t h e
present t ime.
As
understood
by
t h i s o f f i c e
t h e
failed bank acted
a s
agent
f o r
co l l ec t ion
of out of
town items deposited until collection
was
e f fec t ed .
The agency relationship continued until t h e fai led bank received t h e p r o -
ceeds from i t s subagent. Where an agent makes a deposit, even in h i s own
name, o f funds belonging t o h i s p r i n c i p a l , t h e bank, although unaware of the
beneficial ownership
o f
such deposit cannot offset such deposit against
an,
indebtedness owing
b y
such agent
t o t h e
bank, where
t h e
bank
h a s n o t
al tered
i t s
pos i t i on
o r
extended
an y
addi t ional cre d i t ,
i n
re l i ance
o r
faith upon
t h e
supposition that
t h e
deposit
i n
fact belonged
t o t h e
ag en t, numerous
decisions sustain this view.
I t thus appears that t h e payees of these checks own the proceeds
except t o t h e extent that t h e failed bank permitted withdrawals against
t h e deposi ts , unless t h e Federal Reserve Bank after t h e r e c e i p t o f these
items changed i t s p o s i t i o n t o i t s detriment. No information a s to this
f e a t u r e
i s
contained
i n t h e
f i l e .
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A
i 4 1 :
X-7169-e-2
Page
3
The checks a r e again ruturned to you herewith and unless your
bank can he shown to have changed position t o i t s detr iment af ter receipt
of the checks, i t would appear t ha t your o f f s e t t i n g them ag ai ns t a n i n -
debtedness owing to you by th e fai led bank may not be upheld upon your
fur ther considera t ion .
Respect fu l ly ,
G. 0. Barnes (Signed)
Assistant Treasurer .
Inclosures.
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4 1 2
C O P Y
X-7169-0-3
C O P Y
LETTERHEAD
OF THE
FEDERAL RESERVE BANK
OF
DALLAS
November 23, 1931
Mr. G. 0.
Barnes
Assistant Treasurer
of th:>
United States
Treasury Department
Washington,
D. C.
S i r -
Under date of November 9, we forwarded you t he
following described Treasury warrants:
number Amount Drawn
t o t h e
order
o f :
1,15 0,388 $617.40 Char les
F .
Bennett
108,170 100.00 Clara Fa rr Achor
2,59 5,778 160.83 Joseph Hamilton.
We do not
appear
to
have received
an
acknowledg-
ment covering these items
and
shal l appreciate
i t i f you
will advise
u s
whether they have reached your office.
Respectful ly
L. G.
Pondrom
Assistant Cashier
LGP:HH
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C O P Y
4 1 3
X-7169*>e-4
C O P Y
LETTTEH3AD OP THE FEDERAL RESERVE 3A H OF DALLAS
November 9, 1931
M r. G-. 0 .
Barnes
Assistant Treasurer
o f t h e
United States
Treasury Department
Washington,
D. C.
S i r -
I n
rep ly
t o
your let ter
of
November
4 ,
i n i t i a l e d AWS-C,
we ret urn Tre asu rer 's check Mo. 1,150,383, f o r $617.40, drawn to
t h e
order
of
Charles
F .
Bennet t , referred
t o
therein, together with
warrant fo r $100 , No . 108,170, drawn t o t h e order o f Clara Farr Achor,
Guardian
o f t h e
Es ta t e
o f
IToah
A. J .
Achor,
an d
warrant
No.
2,595,778,
f o r $160,83, drawn t o t h e order of Joseph Hamilton, which checks were
mentioned
i n
T r e a s u r e r ' s l e t t e r
of
October
28.
Our
action becomes necessary
i n
view
o f
le t ter today
r e -
ceived from
M r.
Ernest Lamb, na t ion al Bank Examiner
i n
charge
o f the
Citizens National Bank of Brownwood, returning these warrants t o u s ,
which
we
quote below;
With further reference
t o t h e
three checks drawn
on the
Treasurer o f the United States f o r $ 1 0 0 , $160.83, and $617.40,
payable
t o
Clara Pharr Achor, Joseph Hamilton,
an d
Charles
F .
Bennett, respectively, about which there h a s been so much c o n -
t roversy ,
I am
re tu rn ing
t h e
checks herewith.
"As you
were previously advised
t h e
payees
o f
these checks
deposited t h e items in The Citi zens Nationa l Bank pr io r t o i t s
suspension, received immediate credit
f o r t h e
items against which
cr ed it each payee h ad checked prior t o t h e suspension of business.
At the
time these checks were returned
to me
with your le t t e r
of
November 2n d, i t was my thought that I could have t h e payees re?-
imburse
me t h e
di ff er en ce between
t h e
amount
o f t h e
checks
and
t h e
amount standing
to
thei r cred i t
o n t h e
individual ledger,
which would enable
me to
make
a
debi t against
t h e
account, which
would close each
o f t h e
accounts,
and you in
turn debit
t h e
credi t
balance of The Citizens National 3ank o f Brownwood, Texas.
Upon investigation, I find that you have closed t h e account
of The
Citizens National Bank
on
your books,
a n d i t i s
presumed
t h e amount was applied a s a c r e d i t on the rediscounts o f subject
bank with
y o u ,
although
I
have never been advised
t o
tha t e f f ec t .
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Page
2
Xs7169»e=4
i'Afc
you ard
atfare,
1 am n o t iti i
pos i t i on
tb
diraw drafts
ag ai ns t c re d it balances wi th oth er banks i n order t o reimburse
y o u t h e amount o f t h e checks involved, th er ef or e, I am r e -
turning
t h e
checks herewith
and
ask . t ha t
you
please acknowledge
r e c e i p t o f same.
Regarding
t h e
balance standing
t o t h e
credi t
o f t h e
Ci t izens
National Bank o f Brottnwood on our books, referred to in Mr. Lamb's
l e t t e r , we advise th at t hi s balance h as been applied o n t h e indebted-
ness
o f t h e
Citizens National Bank
of
Brownwood
an d t h e
subject bank
does n o t show an y balance t o i t s c red i t a t t h e present time.
We sh al l await your fu rt he r advice i n connection with these
warrants and wi ll thank you to acknowledge their receipt.
Respec t fu l ly
L. G. Pondrom
Assistant Cashier
LGP:HH
Attachments
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fr
4 1 5
C O P
X-7169-e-5
C .6 ^ Y
LBTI5REEAD
OF THE
TREASURY UBPASTCTfS, fASHIKGTOK
November 4, 1931
Off i ce of Treasurer o f t he United States
I n
replying quote initials A7S-C
,
Cashier,
Federal Reserve Bank,
Dallas, Texas.
S i r ;
Reference
i s
made
t o
off ice let ter dated October
9 ,
1931 , r e l a t i v e t o check ITo. 115,388, dated September 28 , 1931,
drawn on t h i s o f f i c e to the order of Charles F . Bennett f o r
$617.40
by J . B .
Schommer, symbol 99-220, payment
o f
which
check was declined when presented f o r t h e reason that th e Citizens
Hational Bank of Brownwood, Texas, i n which th e item had 'been d e -
posited, subsequently closed.
Inasmuch a s t h e check was re turned by the rece iver o f
t h e fai led bank to t h e payee and as you do not appear to have
entered credi t i n t h e Treasurer 's account f o r this i tem, i t wi l l b e
great ly apprecia ted
i f you
will communicate with your indorser with
a view of obta in ing t h e amount involved.
Respect fu l ly ,
G. 0.
Barnes (Signed)
Assistant Treasurer .
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C O P Y
C 0 E Y
f 4 1 6
X-7169-8-6
LSttSRHklAD Of TS6 FEDEELAL RESERVE BANK OP DALLAS
November 9, 1931
Mr.
Ernest Lamb
National Bank Examiner
Citizens National Bank
Brownwood, Texas.
Dear M r. Lamb;
This will acknowledge receipt
of
your le t te r
of No-
vember
6 ,
enclosing
to us the
following described Treasury
warrants:
Number Name
of
Payee Amount
1,150,388 Charles F . Bennett $617.40
2,595,7 78 Joseph Hamilton 160.83
108,170 Clara Fa rr Achor
a s
Guardian
o f
t h e
Es ta te
of
Noah
A. J .
Achor 100.00
We are
quoting your letter
t o t h e
Treasurer
of the
United States today
and
sha l l
b e
pleased
t o
advise
you of any
further developments that might occur
i n
connection with these
checks.
Yours very truly
L . G-.
Pondrom
Assistant Cashier
LOP: EE
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O P Y
? 4 7
X-7169~e~7
t , 0 ' P Y
LETTERHEAD
OF THE
CITIZENS HATIOMAL BAlS
Of
BEOlOTOOD
November
6, 1931,
Federal Reserve Bank,
Dallas, Texas.
Gentlemen;
With further reference
t o t h e
three checks drawn
o n t h e
Treasurer
o f t h e
United States
f o r
$100.00, $160,83
and
$617.40, payable
to
Clara Ph arr
Achor, Joseph Hamilton
and
Charles
F .
Bennett respectively, about which there
h a s been so much controversy, I am re tu rn ing t h e checks herewith.
As you
were previously advised
t h e
payees
of
these checks deposited
t h e items in The Ci tize ns natio nal Bank pr io r t o i t s suspension, received
immediate credit
f o r t h e
items against which credit each payee
h a d
checked
p r i o r
t o t h e
suspension
of
business .
At th e
time these checks were returned
to me with your le t t e r of November 2nd , i t was my thought that I could have
t h e
payees reimburse
me the
difference between
t h e
amount
o f t h e
,checks
and
t h e
amount standing
t o
the i r c redi t
on the
individual ledger which would
enable
me to
make
a
debit against
t h e
account, which would cl ose each
of
t h e
accounts,
and you in
turn debit
t h e
credit balance
of The
Citizens
National Bank
o f
Brownwood, Texas.
Upon investigation,
I
find that
you
have closed
t h e
account
of
The
Citizens National Bank
on
your books
a nd i t i s
presumed
t h e
amount
was applied a s a c r e d i t on the rediscounts of subject bank with you,
although
I
have never been advised
to
tha t e ffec t .
As you a r e aware, I am n o t in a pos i t ion t o draw drafts against
credit balances with other banks
i n
order
t o
reimburse
you the
amount
of
t h e
checks involved, therefore,
I am
re tu rn ing
t h e
checks herewith
and
a s k tha t you please acknowledge receipt of same.
Respectful ly yours ,
Ernest Lamb, (Signed)
National Bank Examiner.
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4 1 8
X-7169-©r,§
C 0 P Y
LETTERHEAD OF THE FEDERAL RESERVE 3AM OF DALLAS
November
2, 1931
M r.
Ernest Lamb,
National Bank Examiner,
Citizens National Bank,
Brownwood, Texas.
Dear M r . Lamb:
We are
enclosing
th e
three checks drawn
on the
Treasurer
of the United States f o r $100,00. $160.83 and $617.40, which y o u f o r -
warded
to us in
your l e t t e r
of
October
1 6 t h
after having refused
to
accept thei r re tu rn . We a r e also enclosing copy o f a l e t t e r f rom the
Treasurer regarding t h e checks that i s se l f - exp lana to ry .
The
check drawn
to the
order
of
Clara Farr Achor
ag . Gdn. of
E s t . o f
Noah
A . J .
Achor should
"be
endorsed exactly
a s
drawn before
i t i s again presented f o r payment.
Please acknowledge receipt
of the
check
a n d
advise
u s r e -
garding t h e mat ter .
Yours very truly,
L . 6 . Pondrom,
Assistant Cashier .
LGP/S
s
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t 419
X-7169-e-9
C O P Y
LETTERHEAD
OF THE
EEEER&L KBSBBVB BANK
Of
nAT.TAR
November
5 , 1931
M r. Joseph Hamilton
P, 0 . Box 813
Brownwood, Texas
Dear
S i r :
This will acknowledge receipt
of
your le t ter
o f
November
4 ,
enc los ing Unit ed St at es Treasury check
Mo.
2595778, dated September
3 0 ,
d r a m
t o
your order
f o r
$160.83.
We observe th at y o u would have u s cancel o u r e n -
dorsement
i n
order that fu rt he r negotiat i on
o f the
check
may
b e
accom plishe d. This
i s t o
advise that certain matters
i n
connection with this particular warrant
a r e
s t i l l u nd er a d j u s t -
ment with
M r .
Ernest Iamb, Examiner
i n
Charge
o f t h e
Cit izens
national Bank
o f
Brownwood,
an d we a r e n o t a t t h e
present time
a t l i b e r t y t o cancel o u r endorsement. We have re tur ned t h e
warrant today t o M r . Lamb an d suggest that y o u call upon h im ,
and he
w i l l
b e
g lad
t o
fu l ly expla in
t h e
mat ter .
Yours very truly
I . 0 .
Pondrom
Assistant Cashier
LGP:HH
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t 4 2 0
X-7169-e-10
C O P Y
LETTERHEAD
OF THE
FEDERAL RESERVE BANK
OF
TIAT.T.AR
November 5, 1931
t
M r. Ernest Lamb
Examiner
i n
Charge
Citizens National Bank
Brownwood, Texas
Dear M r. Lamb:
Furthering
o u r
telephone conversation regarding
c e r -
tain Government warrants,
one of
these checks
f o r
$160.83
was
received b y u s today direct from t h e payee, Joseph Hamilton.
We a r e
w r i t i n g
M r.
Hamilton that
t h e
warrant
h a s
been returned
to you and
tha t
he
should
g e t i n
touch with
y ou
with further
reference
to i t s
payment.
We might st a te tha t h e h as asked u s t o cancel o u r e n -
dorsement
i n
order that
t h e
warrant
may "be
neg oti ate d. This,
o f course, we cannot do u n t i l t h e question now in controversy
i s
s e t t l e d .
Please acknowledge receipt
o f t h e
enclosure.
Yours very truly
L. G. Pondrom
Assistant Cashier
LGSPsHH
Attachment
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4 2 1
X-.7169-.eall
C O P Y
Post Office
Box 813,
Brownwood, Texas,
November 4 , 1931 .
Federal Reserve Bank
of
Dallas,
Dallas, Texas.
Gentlemen:
I am
enclosing check
No.
3,595,778 dated September
3 0 , 1 9 3 1 , f o r
$160.83, drawn
on the
Treasurer
o f t he
United
Sta tes t o t h e order o f t he undersigned by A . Zappone, symbol
70-001. Payment on t hi s check h a s been suspended.
I n accordance with instructions from th e Treasurer
o f t h e United States to have a l l endorsements cancelled before
redeposi t ing this i tem y o u a r e kindly requested t o cancel your
endorsement thereon
a n d
re tu rn
to
undersigned.
Yours very truly
Jose ph Hamilton (Signed)
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4 2 2
X-7169-Q-12
C O P Y
IJCTTERHEAD
0 1 THE
FEDERAL RESERVE BANK
OF
DALLAS
November
4 , 1931
M r.
Dean Bippetoe, Assistant Cashier
First National Bank
Brownwood, Texas
Dear
M r.
Bippetoe:
We r e f e r t o your l e t t e r o f November 3 , enclosing Treas-
u r y
warrant
N o.
1150388, drawn
t o t h e
order
o f
Charles
F .
Bennett
f o r
$617,40, requesting that,
i f i n
order ,
t h e
amount
b e
credited
t o your account.
As advised you over t h e telephone today, this warrant
i s i n
con tro ver sy, having been ret urn ed
to u s "by th e
Treasurer
o f
t h e
United States
f o r
reclamation through
t h e
Examiner
i n
Charge
of the
Citizens National Bank
of
Brownwood
on
account
of the
fac t
tha t
th e
payeee
h ad
requested that payment
h e
stopped
o n i t .
We
re turned
th e
warrant
to M r .
Lamb, Examiner
i n
Charge
of the
Citizens National Bank
a t
Brownwood
f o r
reimbursement,
a nd
th is mat te r i s s t i l l r e c e i v i n g M r. Lamb's co ns id er at io n. There-
fo re
we
r e t u rn
th e
warrant
to you a nd a s k
tha t
y o u g e t i n
touch
with M r. TjmWh so t h a t he may he present when y o u discuss t h e m a t -
t e r
with your depositor,
who we
understand
i s t h e
payee, Charles
F . Bennett.
Kindly favor
us "by
acknowledging receipt
o f t he
enclosure.
Yours very truly
L . G-.
Pondrom
Assistant Cashier
LGPjHH
Attachment
c c to M r .
Ernest Lamb
National Bank Examiner
c / o
Citizens National Bank
Brownwood, Texas
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4 2 3
X-7169-e-13
0 6 P Y
IS1TBEHELAD OF THE FIRST NATIONAL BASK, BROWNWOOD, TEXAS
November 3 , 1931 .
Federal Reserve Bank
i n
Dallas,
Dallas, Texas.
Gentlemen:
We enclose here in Adjusted Service Ce rt if ic at e loan check
b y J . 3 .
Schommer, Disbursing Clerk
on the
Treasurer
o f t h e
United
States, dated September
28, 1931, and
being numbered 1,150,388,
i n
th e sum of $617.40, payable t o t h e order o f Charles F . Bennett, 109
E .
Chandler, Brownwood, Texas.
Prior endorsements on th i s i tem indi cate s that i t w as d e -
pos i ted i n t h e Citizens National Bank of th i s c i ty on October 3 r d ,
by
payee,
b u t o n
account
o f t he
closing
o f
that bank, payment
was
requested
to be
stopped,
a n d t h e
item
h a s
consequently been returned
t o t h e payee, who has today wired th e Treasurer o f t he United States
a t
Washington,
a s
follows:
Lift stop payment against check #1150388
J . B .
Schooner
* disburs ing c le rk t o Charles F . Bennett $617.40, adjusted
se rv ice ce r t i f i ca te loan
and
confix® your action
t o
First National Bank, Brownwood, since check
has now
been returned to me by other bank.
11
I f i t i s now in
order
to pa y
this check,
we
w i l l thank
you to
c r e d i t
o u r
account
a n d
advise
u s
when finally paid,
i n
order
tha t we may pay the funds over t o t h e endorser of the check only when
we
have rec ei ved f i n al payment.
Yours very truly,
Dean Bippetoe (Signed)
Assistant Cashier.
Y-r
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X-7169-S-14
6 0 F Y
EBTTBEHEib Off THE TBEASUBY DEPARTMENT WASHINGTON
Off ice o f
Treasurer
o f t he
United States
I n
replying quote initials AWS:C
October 28 , 1931.
Cashier,
Federal Reserve Bank,
Dallas, l e x .
REGISTERED MAIL
S i r :
Herewith a r e returned checks received with your letter of
October 17 , wi vh inc los ur e from Ern est Iamb, na ti on al Bank Examiner,
Brownwood, Texas,
a s
fol lows:
of
Check H o. Symbol Amoint Payee
108,170 11519 $100.00 Clar a l a r r Achor as Gdn.
E s t . o f
IToah
A . J .
Achor
1,150,388 99230 617.40 Charle s
F .
Bennett
2,59 5,77 8 70001 160.83 Jos eph Hamilton
I n case o f checks which were deposited f o r c o l l e c t i o n i t
i s t h e p r a c t i c e of the Comptroller of the Currency to charge t h e d e -
pos i to r ' s accoun t
a nd
re tu rn
th e
checks
t o h i m i f h i s
balance will
permit such ac ti on .
I f t h e
deposi to r ' s balance
i s
less than
the
amount o f t he check t h e bank i s owner o f t he check t o that extent ,
a nd the check i s re turned to the depositor upon repayment o f t h e d i f -
ference between h i s balance a nd the amount of the check.
Please return
t h e
checks
t o t h e
rep resen ta t ive
of the
Citizens National Bank, Brownwood, Texas,
a n d
advise th is o f f ice
i n
d e t a i l a s t o h i s pos i t i on i f y o u a r e n o t reimbursed within a reason-
able time.
Your correspondent should
be
advised that checks received
i n
t h i s o f f i c e
a r e
perfora ted wi th
a
date
and
symbols
f o r
i d e n t i f i -
cation purposes before clearance o r examination and such perforat ion
does n o t s ign i fy tha t a check h a s been paid.
Respectful ly ,
W. 0.
Woods
Treasurer .
(Signed)
Inclosures .
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4 2 5
X-7169-e~15
O O P Y
LETTERHEAD
OF THE
PEBERAL RESERVE BANK
OP
DALLAS
October
17 , 1931 .
Hon. W. 0. Woods,
Treasurer o f the United States,
Washington,
3D. C.
Sirs
Reference
i s
made
t o
your le t ters
o f
October
7 th an d
October
9 t h
enclosing checks
a s
described below:
Check
N o .
Payee Amount
108,170 Cla ra Pa rr Achor,
a s
Guardian
of Esta te o f Noah A . J . Achor • $100.00
1,150,388 Charles
P .
Bennet t 617.40
2,595 ,778 Joseph Hamilton 160.8 3
The
mat ter
o f
obtaining refund
t o
cover
th e
checks
was
r e f e r r e d t o t h e National Bank Examiner i n charge o f t h e Citizens
National Bank, Brownwood, Texas,
and we are
today
i n
r e c e i p t
o f
a
l e t t e r f rom
h im ,
copy
o f
which
i s
at tached .
The
checks
a r e
enclosed
f o r
your disposi t ion
and we ask
tha t
y o u
please advise
us i f we can be of
fu r t he r as s i s t anc e .
Respectful ly ,
L . G>. Pondrom,
Assistant Cashier,
LGP/S
8
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4 2 6
X-7169~e~16
C O P Y
LETTEHHEJU) Of THE FEDERAL RESERVE BANK OF DALLAS
October
13 , 1931 .
Hon, W. 0.
Woods,
Treasurer o f t he United States,
Washington,
D. C.
S i r :
Receipt i s acknowledged of your l e t t e r of October
9 t h , 1 9 3 1 , initials AWS-C, enclosing check N o. 1,150,388, drawn
t o t h e
order
of
Charles
F ,
Bennett
f o r
$617,40,
on
which payment
h a s
been stopped because
t h e
bank
i n
which
i t wa s
deposi ted
ha s
closed*
We are re turn ing t h e check to ou r endorser and as
soon as we receive a n y information regarding i t y o u w i l l b e a d -
vised .
Respect fu l ly ,
L . 0 . Fondrom,
Assistant Cashier.
LGP/S
s
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X-7169-e-l?
4 2 7
0 0 P Y
LETTERHEAD
OP THE
TREASURY DEPARTMENT, WASHINGTON
Office of
Treasurer
o f t h e
United States
I n
replying quote initials AWS-C
October
9, 1931
Cashier,
Federal Reserve Bank,
Dallas ,
Tex.
REGISTERED MAIL
S i r :
There i s returned herewith check N o. 1,150,388 dated
September
28 , 1931 ,
drawn
on
th i s o f f i ce
t o t h e
order
of
Charles
3P. Bennett, f o r $617.40, b y J . B . Schommer, symbol No, 99230,
which
w as
l i s t b d
i n
your t ranscr ip t
o f t he
Treasurer's account
dated October
5 , 1931 .
Payment
i s
declined
a t
this time
in com-
pliance with request dated October 7 , 1931 , from drawer, who asked
that payment
b e
stopped because
th e
bank
i n
which
t h e
check
was
deposited
h a d
become insolvent.
Please return
t h e
check through
t h e
indorsers
to the
rece iver
of the
fai led bank
f o r
del ivery
t o t h e
payee
i f t h e c i r -
cumstances war ran t t h i s a c t i o n . Returned Check Cre dit Ticke t
No.
72194 i s in cl os ed , with which to enter c redi t i n t h e Treasurer ' s
account.
Respectful ly,
W. 0.
WOODS (Signed)
Treasurer.
Countersigned:
Asst. Chief, Accounting Division.
REBiNR
AC-152
4
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X-7169-e-18
d f i
LETTEBHEAD OF THE FEDERAL HE SERVE BANK OF DALLAS
October 10 , 1931 .
Hon. W. 0 . Woods,
Treasurer
o f t he
United States,
Washington, E. C.
S i r :
Receipt
i s
acknowledged
of
your l e t t e r
of
October
7 t h , initials AWS-C, enclosing check No. 2,595,778, drawn to the
order o f Joseph Hamilton f o r $360.83, on which payment h a s been
stopped because t h e bank i n which i t was deposited h a s closed.
We are re tu rn ing t h e check t o ou r endorser a n d a s soon
as we
rece ive
a n y
information regarding
i t y o u
w i l l
be
advised.
Respectful ly,
L. G-. Pondrom,
Assistant Cashier.
LGEP/S
s
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C O P Y
EETIEEHEAD OF THE ZEDBEAL RESERVE BAM 07 DALLAS
October
10 , 1931.
Hon. W. 0.
Woods,
Treasurer
o f t he
United States,
Washington,
T. C.
S i r :
Receipt i s acknowledged of your l e t t e r o f October
7 t h , initials AWS-C, enclosing check l io , 108,170, drawn t o t h e
order
o f
Clara Parr Achor
a s Gdn . o f Es t . o f
Noah
A . J .
Achor
f o r $100.00, on which payment h a s been stopped because t h e bank
i n
which
i t w a s
deposited
h a s
closed*
We are
re turning
t h e
check
to ou r
endorser
a nd a s
soon
as we
rece ive
any
information regarding
i t y o u
w i l l
b e a d -
vised.
Respectfully, .
1 . 6 .
Pondrom,
Assis tant Cashier,
LGP S
s
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4 3 0
X-7169-e-20
0 0 F Y
LEiTEBEEAD OP TREASURY DEPARTMENT, WASHINGTON
October 7, 1931
Off ice o f
Treasurer o f t h e United States
I n replying quote initials AWS-C
Cashier,
Federal Reserva Bank,
Dallas, Texas,
REGISTERED MAIL
S i r :
There
i s
returned herewith check
N o.
2,595.778, dated
September
30 , 1931 ,
drawn
on
th i s o f f i ce
t o t h e
order
o f
Joseph
Hamilton,
f o r
$160#83,
"by A.
Zappone, symbol
No.
70001, which
was
l i s t e d i n your t ranscr ip t o f t he Treasurer's account dated October
2 , 1931 .
Payment
i s
decl ined
a t
this t ime
i n
compliance with
r e -
quest dated October 6 , 1931 , from th e payee, who asked that p a y -
ment h e stopped because t h e bank i n which t h e check w as deposited
h a d become insolvent.
Please return t h e check through t h e indorsers to the
r ece iver of the fa i led bank f o r del ivery to the payee i f t h e c i r -
cumstances war ran t t h i s a c t i o n . Heturned Check Cred it Tic ket No.
47030 i s in cl os ed , with which to en ter cred i t i n t h e Treasurer ' s
account.
Respect fu l ly ,
W. 0. WOODS
Treasurer .
Countersigned}
Asst. Chief, Accounting Division.
F:BB
A0-152
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4 3 1
X-7169~e^21
C . 0 P Y
LETTERHEAD t) f THE TREASURY DEPARTMENT, WASHINGTON
Off i ce of
Treasurer o f t he United States
I n
replying quote initials AWS-C
October
7 , 1931.
Cashier,
Federal Reserve Bank,
Dallas, Tex.
REGISTERED MAIL
S i r :
There
i s
returned herewith check
N o.
108,170, dated
September' 30 , 1931, drawn on th i s o f f i ce to the order of Clara
Earr Achor
a s G dn . o f E s t . o f
Noah
A . J .
Achor,
f o r
$100.00,
by R. E . Waters, symbol N o. 11-519, which w as l i s t e n i n your
t r a n s c r i p t o f t he Treasurer
1
s account dated October 2 , 1931.
Payment
i s
decl ined
a t
this t ime
i n
compliance with request dated
October 6 , from t h e drawer, who asked that payment be stopped b e -
cause
t h e
bank
i n
which
th e
check
was
deposi ted
had
become insol-
vent.
Please return
t h e
check through
t h e
indorsers
to the
r ece iver of the fa i l ed bank f o r del ivery t o t h e payee i f t he
circ umst ance s warr ant t h i s a ct io n. Returned Check Cre dit Ticke t
N o.
47029
i s
inc los ed, with which
t o
en ter cred i t
i n t h e
Treasurer 's
account.
Respect fu l ly ,
W. 0. WOODS
Treasurer .
Countersigned:
Asst. Chief, Accounting Division.
AC-152 The check should be indorsed exactly a s drawn-
Clara Earr Achor a s Gdn . o f E s t . o f Noah A . J .
KMD:REL Achor, before i t i s again presented f o r payment.
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C . . P . * 1
X-7169-S-22
4 3 2
LETTERHEAD
o r THE
IBERAl BEE3RVE BANK
0 7
DALLAS
October 10 , 1931.
Examiner
i n
Charge,
Citizens National Bank,
Brownwood, Texas,
Dear
S i r :
There i s returned herewith check No, 108,170, drawn
t o t h e order o f Clara Farr Achor a s Gdn. of E s t . of Ivoah, A . J .
Achor,
f o r
$100.00, which hears
th e
endorsement
of -he
Citizens
National Bank, Brownwood, Texas,
o f
October
1 ,
1931,,
This check h a s been returned to u s "by t h e Treasury D e-
partment with
a
le t te r which,
i n
pa r t , reads
a s
follows;
Payment
i s
declined
a t
this time
i n
compliance with
request dated October
6 ,
from
th e
drawer,
who
asked that
payment
be
stopped because
th e
bank
i n
which
t h e
check
was
deposited
h a d
become insolvent.
Please return
t h e
check through
th e
indorsers
to the
rece ive r
o f t he
fa i led bank
f o r
del ivery
t o t h e
payee
i f t he
circumstances warrant th is act io n.
Under
t h e
circumstances please advise
u s i f i t
w i l l
be in
order
f o r u s t o
charge
th e
account
of the
Citizens National Bank,
Brownwood, Texas, t o cover.
Yours very truly,
L., Q-. Pondrom,
Assistant Cashier.
LGP/S
s
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X-7169~e«23 4 . 3 3
U p i
LStlEfiHEAD OT THE FEUEEAL RESERVE BAIJK OF DALLAS
October
13, 1931*
Examiner i n -Charge,
Citizens National Bank,
Brownwood, Texas.
Dear S i r :
There i s returned herewith check N o. 1,150,388, drawn
t o t he order o f Charles I . Bennett f o r $617,40, which bears t he
endorsement o f the Citizens National Bank, Brownwood, Texas, of
October
3 , 1931 .
This check h a s been returned to us by the Treasury D e-
partment with a le t te r which, i n pa r t , reads a s follows:
Payment
i s
dec l ined
a t
this time
i n
compliance with
request dated October 7 , 1931, from draw er, who asked that
payment b e stopped because t h e bank i n which t h e check was
depos i ted
h ad
become insolvent,
'•Please return th e check through t h e indorsers t o t he
rece ive r o f the fa i led bank f o r del ivery t o t he payee i f the
circumstances warrant th is act io n,
Under t h e circumstances please advise u s i f i t w i l l be in
order f o r u s t o charge t h e account o f the Citizens National Bank,
Brownwood, Texas, to cover.
Yours very truly,
L, Gr. Pondrom,
Assis tant Cashier.
LGP/S
s
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4 3 4
X-7169-e~24
6- 6 F Y
LETTERHEAD Of THE INDERAL RESERVE BANK OF DALLAS
October
1 0 , 1 9 3 1 .
Examiner
i n
Charge,
Citizens National Bank,
Brownwood, Texas.
Dear Sirs
There
i s
returned herewith check
N o.
2,595,778, drawn
t o t h e order o f Joseph Hamilton f o r $160.83, which bears the
endorsement o f t h e Citizens National Bank, Brownwood, Texas,
o f October 1 , 1931 .
This check h a s been returned to us by the Treasury D e-
partment with a le t t e r which , i n pa r t , r eads a s fol lows:
Payment i s dec l ined a t this t ime i n compliance with
request dated October 6 , 1931 , from t h e payee, who asked
that payment
b e
stopped because
t h e
bank
i n
tzhich
t h e
check
w as depos i ted h a d become insolvent,
Please return
th e
check through
t h e
indorsers
to the
r ece ive r o f t h e fa i l ed bank f o r de l i ve ry t o t h e payee i f t h e
circumstances warrant this action.
1 1
Under t h e circumstances please advise u s i f i t w i l l be in
order f o r u s t o charge t h e account o f the Citizens National Bank,
Brownwood, Texas,
t o
cover.
Yours very truly,
L. G> Pondrom,
Assis tant Cashier .
LGPJS
s
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X-7169-e-25
4 3 5
A.
JO
P . I
LETTERHEAD OP teE CITIZENS NATIONAL BANK OP BBOWOTOOD, BBGWNWOOD, TEXAS
October 16* 1931.
Pederal Reserve Bank,
Dallas, Texas.
Gentlemen:
Receipt i s acknowledged of your letters enclosing Government
checks payable t o :
Clara Parr Achor,
a s
Guardian
o f
Es ta te
of
Noah A* J . Achor, f o r ——————————
Charles
P .
Bennett
-
- - - - - - - -
Joseph Hamilton - - - - - - - - - - - - -
which appear t o have been returned to you on account o f payment being d e -
cl ined i n compliance with request dated October 6 t h from t h e drawers, who
asked that payment
be
stopped because
t h e
bank
i n
which
t h e
checks were
de-
pos i ted h a d become insolvent.
The records o f this bank show that t h e parties mentioned d e -
posited these checks f o r c r ed i t and had checked ag ai nst t he i r balances
before t h e bank suspended. I n addition thereto each a n d a l l o f t h e
checks show t o be punctured paid by t he Treasury Department a n d , replying
t o your question i n t h e last paragraph o f your le t te r s , y o u a r e advised
that we take t h e po si ti on t ha t , based upon a l l t h e circumstances i n t he
case,
w e a re n o t i n
p o s i t i o n
t o
give
y ou
au thor i ty
t o
charge
t h e
account
of The Citizens National Bank of Brownwood with t h e chec ks. Ther efore ,
w e a re
re tu rn ing
t h e
checks
to you
requesting that they
b e
returned through
t h e regular order with a n y notat ion you may deem proper t o make.
Respectfully yours,
Er ne st Lamb (Signed)
National Bank Examiner.
$100,00
617,40
160.83
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436
Copy
X-7169-f
June
2 , 1932.
M r , J . S . Walden, J r . , Chairman,
Standing Committee
on
Collect ions,
Federal Reserve Bank o f Richmond,
Richmond, Virginia.
Dear
M r.
Walden:
I
have received
a n d
greatly appreciate your kind
l e t t e r o f June 1 , 1932, regarding t h e mat te r o f c a l l i n g a
meeting
of
Counsel
f o r th e
Federal Reserve Banks with
t h e
Standing Committee
on
Collect ions
t o
consider
th e
mat te r
of
cas hing government checks a n d warrants by Federal Reserve
Banks under
th e
terms
o f
Treasury Department Circular
No. 176.
I
apprec ia te
t h e
d i f f i c u l t i e s
of
ob ta in ing fu l l a t t end-
ance
a t a
conference
o f
this kind during
t h e
summer months,
a nd
I personally would prefer to hold th e conference i n t h e la te
summer
o r
e a r l y f a l l ;
b u t
Counsel
f o r one o f t h e
Federal Reserve
RariVp
h a s
a l ready ca l led
my
a t t e n t i o n
t o t h e
fact that many
of t he
courts which take recesses during t h e summer resume their terms
during
t h e
month
of
September,
a n d
this makes
t h e
months
of
September
a n d
October unusually busy months
f o r
some
of the
Counsel.
I t
L a y
b e
necessary , therefore ,
t o
hold
t h e
c o n fe r -
ence
n o t
later than August,
i n
order
t o
enable Counsel
t o
re turn
home i n time t o a t t end t o t h e i r l i t i g a t i o n . I n the circum-
s tances ,
I
s h a l l
a s k
Counsel
f o r
each
o f t he
Federal Reserve
Banks
t o
advise
me
when
i t
would
be
most convenient
to him to
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437
X-7169-f
Mr, J . S» Walden, J r . 2
attend such
a
conference
a nd 1
suggest that
you
make similar
inqu i r i es of the members o f your Committee and advise me of the
r esu l t s . Th i s i s t he only way that I know of whereby we can
a r r i v e
a t a
date convenient
t o a
major i ty
of a l l
those concerned.
I
wish
yo u
would also
be
giving some thought
to the
question of proc edu re. Undoubtedly, i t would be advisable f o r t h e
Counsel a n d t h e members of t he Standing Committee on Collections
t o
agree upon
a
def in i te pos i t ion before tak ing
th e
mat ter
u p
with
t h e o f f i c i a l s of the Treasury Department; bu t t he o f f i c i a l s o f
t h e Treasury Department may des i re to have some time t o study the
recommendations
o f t he
Counsel
a n d t h e
Standing Committee
on
col le c t ion s before they pa r t i c i pat e i n a conference. I t may be
necessary t o hold tw o conferences on the sub jec t ; bu t I think this
should b e avoided i f p o s s i b l e . I f a second conference i s found t o
b e
abso lu te ly necessary ,
i t
would seem
to me
tha t
i t
need
no t be
at tended b y a l l o f t h e Counsel a n d a l l o f t h e members of the Standing
Committee on Col lec t ions , b u t tha t t h e views of the Federal Reserve
Banks could
be
presen ted
b y a
small committee appointed
f o r
that
purpose. Apparently t h e Governors' Conference does n o t des i re
further recommendations
to be
submitted
t o
them
b u t
expects
the
Counsel a nd the Standing Committee on Collect ions t o take t h e matter
u p with t h e o f f i c i a l s o f t he Treasury Department, agree upon the
necessary changes
i n
Treasury Department Circular
176, and
report
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X-7169-f
M r . J . S . Walddn, tfrs 3
th e r e s u l t s . I have no fixed views about t h e matter, however,
and I s h a l l b e very glad t o receive any suggestions which you or
any of the o ther in te res te d par t i es may have t o o f f e r .
I have received t h e eight copies o f the repor t of the
Standing Committee on Collections which y ou sent me and have
obtained one additional copy from a member o f t he Board. I am,
therefore, sending copies t o Counsel f o r a l l t h e Federal Reserve
Banks except Chicago a n d Dal las , who I unde rst and from your
letter already have copies,
and Mr,
Wallace,
who can
obtain
a
copy from
y o u .
With kindest personal regards
a nd a l l
best wishes,
I am
Very truly yours,
4 3 8
WW/gc
Walter Wyatt,
General Counsel.
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4 3 9
.QoftV X-7169-g
Jede 1-4,1 fi serve Bank
Of Richmond,
June 1 , 1932 .
Uti
Walte r Wyatt, Genera l Counsel,
federal Reserve Board,
Washington,
D. C.
Dear M r . Ifyatt:
Your le t ter of May 36th, which was acknowledged by Mr.
Broaddus, was received during my absence from t h e bank which accounts
f o r m y delay i n rep ly ing .
x
I can fu l ly apprec ia te th e fac t tha t you have been burdened
with important matters
a n d
th a t
i t h a s
been impossible
f o r y o u t o
c a l l
a
meeting o f the counsel f o r t h e Federal reserve banks with t h e Standing
Committee
on
Collect ions
t o
consider
t h e
matter
o f
cashing Government
checks and warrants by Federal reserve banks, which was r e f e r r e d to the
counsel
by t he
Governors' Conference
of
December,
19 31 . I am
sure that
t he
o f f i c e r s o f the Federal reserve banks also have been burdened with work r e -
su l t ing pr incipal ly f rom t h e operations o f the Reconstruction Finance Corpo-
r a t i o n , a s I know this h a s been true i n my case.
I t w i l l b e agreeable with me to hold a meeting o f t he counsel
and Standing Committee on Collections during t h e summer a f t e r Congress a d -
journs ,
and I
presume that
one
time will suit about
a s
wel l
a s
another .
We
a r e almost certain, however, t o run into vacations a nd i t i s more than likely
that some
o f th e
members
o f the
Committee,
a s
wel l
a s
certain counsel,
may
n o t b e able to a t t en d t h e meeting unless they know o f i t f a r enough i n advance
t o arrange their vacation accordingly. You wi l l r e ca l l tha t i n t h e summer of
1930 when t h e Standing Committee on Collections w as considering t h e subject
o f a uniform cash collection circular i n consultation with a special committee
of
counsel
we
experienced
a
great deal
of
d i f f i c u l t y
i n
reaching
a n
agreement
on the f ina l r epor t and I was considerably delayed a n d inconvenienced because
c e r t a i n
o f t he
members present
a t o u r
f i r s t mee t ing s ta r ted
on
vacations
and
could no t be reach ed. While per son al ly I am perfect ly agreeable t o holding
t h e
meeting this summer,
a s
long
a s t h e
matter
h a s
already been delayed
f o r
qui te a while i t might b e adv iaa lk t o arrange a meeting during t h e ear ly f a l l
a f t e r
a l l of th e
counsel
and
members
o f the
Collection Committee have returned
from vacation. I t occurs to me that your work will be made very much easier
and you w i l l n o t b e subjected t o t h e s tra in that wil l a lmost cer ta in ly resu l t
i f you attempt t o have a n agreement reached before t h e summer i s over . I
w i l l be very glad t o communicate with t h e other members o f the Standing Committee
on Collect ions a s soon a s you l e t m e know i f you des i r e t o have t h e meeting
during th e summer months.
I am sending y ou under separa te cover eig ht c opie s o f the report
of t he
Standing Committee
on
Collect ions
t o t h e
f a l l
1931
Conference
of
Governor?,,
The topic under consideration i s t r ea ted a t t h e beginning o f t h e r e p o r t . Ifor
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4 4 0
X-7169-g
M r, Walter Wyatt> Geharal Cotinsdi» «4 & June 1 , 1932
Federal Heserve BoArd,
Washington; Dt Ci
supply of extra copies h a s been entirely exhausted.and I am sorry that I
am not able to send you t he number requ ested. When t h e repor t w as f in ished
i n August, 1931 , I sent a copy t o t he Governor o f each Federal Reserve Bank
with a letter dated August 1 3 t h , a n d I also sent a n extra copy to the
Federal Be se rve Banks o f Chicago, a n d Dallas f o r t h e u s e o f their counsel.
I also sent a separate copy t o each member o f th e Standing Committee on
Collect ions , represent ing t h e Federal Reserve Banks of New York, Phila-
delphia, Cleveland, Richmond a n d S t . Lou is . There a r e , therefore, seven
banks which should have
a t
l e a s t
tw o
copies
o f the
repor t
i n
t h e i r f i l e s .
I t does n o t seem to me t h a t i t w i l l be necessary f o r y o u t o send a copy t o
those banks represented
on the
collection committee since
I am
sure that
t h e committee members c a n l e t their counsel have their copies. I also sent
on
August
1 2 t h
seven copies
to Mr*
McClelland
f o r t h e u s e o f
members
o f t he
Federal Reserve Board a n d i t i s probable that you will find some o f these
i n t he
f i l e s
o f the
Board . When
th e
conference
met t he
f i r s t
o f
December,
1931 , I sent t o M r . S t r a t e r , c / o Federal Reserve Board, twelve copies f o r
t he u s e o f t he Governors attending t h e Governors' Conference. I t i s probable
that some
of
these were left
i n t h e
conference room
and no
doubt
yo u
wil l
be able t o g e t together a sufficient number o f copies to supply t h e counsel.
Awaiting your further advices, I am with high est perso nal
regards,
Cordially yours,
(Signed) J . S . Walden, J r . ,
Controller .
JSW:D