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X-4738

3 4 0

December 4, 1936.

T O

T H E FEDERAL RESERVE BOARD

SUBJECT: PRELIMINARY INFORMATION

EE

NOTES SECUBED

BY

ADJUSTED SERVICE

CERTIFICATES.

Dear Siri

Pursuant

to

action taken

a t t he

recent Governors' Conference,

Gov-

ernor McDougal designated Messrs. W. J . Davis, Assistant Cashier of the

Federal Reserve Bank of Philadelphia, George S. Sloan, Assistant Cashier

of t he Federal Beserve Bank of Richmond, and W. D. Gentry, Assistant Cash-

i e r o f t he Federal Reserve Bank of Dallas, to serve a s a committee t o c on -

f e r

wi th th is of f ice

i n

connection with

t h e

p repara t ion

o f

r egu la t ions

and ,

c i r c u l a r s r e l a t i v e t o t h e discount of notes secured "by adj us t ed service

c e r t i f i c a t e s . The Committee met in Washington on t he morning of Wednesday,

December igt

4

and f i n i s h e d i t s work on the af ternoon of Friday,

December

3rd,,

Pursuant t o t h e informal understanding arr ived a t during t h e

Governors', Conference, t hi s of f i c e , with

t h e

a s s i s t ance

and

very helpful

cooperat ion o f t he committee, proceeded t o prepare proposed regulat ions

on th is subjec t f o r submission t o t h e Federal Reserve Board and a d ra f t

of a

c i rc u l a r l e t t e r

to be

sent

b y

each Federal reserve bank

to

every

incorporated member o r nonmember bank in i t s d i s t r i c t . I t w i l l b e r e -

membered that t h e Director o f t he Veterans' Bureau h a d reques ted t he F e d -

eral Reserve Board

t o

obtain

t h e

cooperation

o f t he

Federal reserve banks

i n informing a l l banks as to the manner i n which loans might b e made

on a d j u s t e d s e r v i c e c e r t i f i c a t e s . In view of t h i s f a c t , t h e proposed

ci rc ul ar l e t t e r cont ains much. information

of a

general nature

f o r t h e

guidance o f banks in making loans on a d j u s t e d s e r v i c e c e r t i f i c a t e s , i n

addit ion to information with respect t o t h e rediscount of notes e v i -

dencing such loans.

I t i s

bel iev ed tha t th is l e t t e r will save much

correspondence on t he p a r t o f t h e Federal reserve banks b y answering

i n advance many questions which banks would otherwise a s k t h e Federal

reserve banks.

The opera t ing de ta i l s s e t o u t i n t h e c i r cu la r l e t t e r w i l l no t

comply

i n

every pa rt ic ul ar with

t h e

p r a c t i c e

i n a l l

Federal reserve

d i s t r i c t s , a n d i t i s expected that certain port ions o f t he l e t t e r , e s -

pec ia l ly those per ta i n in g t o "Method and Terras of Rediscount" and

"Collect ion of Rediscounted Notes a t Maturity" will have to be changed

toy

some

o f t h e

banks

i n

order

to

comply with th ei r pr ac ti ce s.

I t i s

hoped, however, that i n other respects t h e c i r cu la r s f ina l ly i s sued

by Federal reserve banks will be uniform i n s o f a r a s p rac t i cab le .

f e d e r a l r e s e r v e b o a r d

WASHINGTON

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t>

- 2 - X—4738

There a r e onelosod f o r your inf ormation pr eli min ary copies of

t h e vrvrious documents prepared jointly by t he committee and by th i s o f f i ce .

J t i s

important

to

note that these documents

a r e i n

tenta t ive form

and

a r e subjec t to change. The proposed regulation h a s n o t y e t been submitted

to the Federal Reserve Board f o r approval and may be changed before i t

i s f i n a l l y promulgated. Both t h e c i r c u l a r l e t t e r a nd t he r egu la t ion a r e

based

on t he

assumption that

t h e

Director

of the

Veterans' Bureau will

promulgate certain regulat ions;

an d

they will have

to be

changed

i f the

Veterans' Bureau declines to promulgate such regulations.

I t i s

expected that

t h e

Veterans' Bureau wi ll iss ue regu la -

tions covering loans on ad jus t ed se rv ice ce r t i f i ca t es w i th in a few days.

As soon a s that Bureau takes defini te act ion, t h e proposed regulat ions

of the

Board will

be

submitted

t o t he

Federal Reserve Board

f o r

approval

with such changes, i f a ny , a s a r e found to be necessary.

As

soon

a s t ho

Veterans' Bureau

a nd t he


have o f f i c i a l l y promulgated reg ula t io ns, copies of such re gu la t i on s,

together wi th f ina l draf t s o f t he proposed c i rc ular le t t e r a nd a l l t he

other documents enclosed, will b e forwarded promptly to each Federal

reserve bank-*

i n

order that each Federal reserve bank

may

take

t h e n e c -

essary steps to send t h e c i r c u l a r l e t t e r and enclosures t o a l l member

banks i n i t s d i s t r i c t a t t ho ea r l i e s t poss ib le da te - by December 15,

* i f

poss ible .

I t i s expected that t h e Director o f t he Veterans' Bureau

wi l l fu rn i sh to each Federal reserve bank a su f f i c i en t supp ly o f copies

of the adjusted compensation a c t , t h e amendment thereto, t h e r egu la -

t ions o f t he Veterans' Bureau, and any forms which may be approved b y

t h e Veterans' Bureau, to enable each Federal reserve bank to send a copy

of same to every bank i n i t s d i s t r i c t . The Federal Reserve Board, of

course , wi l l furnish a similar supply of copies of i t s r e g u l a t i o n s on

t h i s sub jec t .

I f

t h i s

i s

done,

i t

w i l l

b e

necessary

f o r t h e

Federal

reserve banks t o have printed only t h e c i r c u l a r l e t t e r , t h e au thor i za -

t ion to rediscount , and tho app l i ca t ion f o r rediscount .

Very truly yours,

(Enclosures)

TO THE GOVERNORS OF ALL F.R. BANKS.

Walter Wyatt,

General Counsel.

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"

X-4758—a

(Tenta t ive draf t"subjec t to change. H ot fo r pub l i ca t ion in tnis form)

f

FEDERAL RESERVE BANK

OF

Circular

No.

_ _ _ _ _ 1925.

REDISCOUNT OF l-TOTES SECURED BY ADJUSTED SERVICE CERTIFICATES.

T o a l l Incorporated Banks in the

Federal Reserve District,

Under

t h e

provis ions

o f t h e

World

War

Adjusted Oon^eneiaticti*

A c t , ad jus t ed se rv ice ce r t i f i ca t es sha l l b e dated #8 of l i t day of

t h e month i n which t h e app l i ca t ions f o r §uch c e r t i f i c a t e s a r e f i l e d * W t

in no case before January 1 , 1925. Banks a r e author ized t o make loans

on the s e c u r i t y o f such ad jus t ed se rv ice ce r t i f i ca t es , b u t n o t before

t h e

expi ra t ion

of two

yea r s a f t e r

th e

date

o f t he

c e r t i f i c a t e .

Only

t h e

veteran named

i n t h e

c e r t i f i c a t e

can

lawfully obtain

a loan o n h i s ad jus t ed se rv ice ce r t i f i ca t e and n e i t h e r t h e benef i c i a ry

nor any other person than t h e veteran ha s a ny r i g h t s i n th i s r e spec t .

LOANS Oil ADJUSTED SERVICE CERTIFICATES.

Any na t io nal bank or any bank o r trust company incorporated

under t h e laws of any S ta t e , t e r r i to r y , possession o r t h e D i s t r i c t of

Columbia, hereinafter referred to as any

11

bank" , i s author ized t o loan

to any veteran upon h i s promissory note secured b y h i s a d j u s t e d s e r -

vice ce r t i f i ca t e (w i thou t t h e consent o f t he benef i c i a ry the reof ) any

amount no t i n excess o f t he loan value of the c e r t i f i c a t e a t t h e date

t h e

loan

i s

made. Each c e r t i f i c a t e contains

o n i t s

f ace

a

t a b l e

f o r

determining t h e loan value of the c e r t i f i c a t e .

Any

bank holding

a

note secured

by an

adjus ted service

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343

~2~ X-4738~a


may

s e l l

th e

note

to any

"bank authorized

t o

make

a

loan

t o

a veteran and de l iver t h e c e r t i f i c a t e to such "bank.

In

case

a

note secured

"by an

ad jus t ed s e rv i ce ce r t i f i c a t e

i s

sold o r t r a n s f e r r e d , t h e tank making th e t r a n s f e r i s required "by law to

n o t i f y

t h e

veteran promptly

by

mail

a t h i s

l a s t known po st of fi ce addres s.

Up

ad jus t ed s e rv ice ce r t i f i ca t e

i s

negot iab le

o r

ass ignable ,

o r

may

serve

a s

s ecu r i t y

f o r a

loan, except

a s

provided

i n

Section

502 of the

World War Adjusted Compensation A c t , which i s p r i n t ed on t he f a c e of each

ad jus t ed s e rv i ce ce r t i f i ca t e . Any neg oti at i on, assignment o r loan made i n

v i o l a t i o n of the provis ions of Sect ion 502 of the World War Adjusted Com-

pensat ion A c t i s void.

The law

provides t hat

th e

r a t e

of

interest which

a

bank

may

charge upon such loan shall

n o t

exceed

by

more than

2 $ p e r

annum

t h e

rate

charged

a t t h e

date

of the

loan

f o r t h e

discount

o f

90-day commercial

paper under section 13 of th e Federal Beserve Ac t by the Federal Reserve

Bank

o f t he

d i s t r i c t

i n

which

t h e

lending bank

i s

located*

The

Director

of the

United States Veterans* Bureau cannot

l a w -

fully make payment on any note secured by an ad jus t ed s e rv ice ce r t i f i ca t e ,

unless

t h e

note when presented

to h im i s

accompanied

by an

affidavit made

by an

o f f i c e r

of the

bank which made

t h e

loan, before

a

Notary Public

o r

other off icer designated

f o r t h e

purpose

by

r egu l a t i on

of the

Director ,

st at in g th at such bank

h a s n o t

charged

o r

co l l ec t ed ,

o r

at tempted

to

charge o r co l l ec t d i r ec t l y o r i n d i r e c t l y , a n y f e e o r other compensation

i n

respec t

of any

loan made upon

t h e

secur i ty

of an

adjusted service

c e r -

t i f i c a t e

by . the

bank

to a

veteran, except

t h e

in te res t au thor ized

by

law*

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- 3 - , X-4738-a ^

The

Emula t i ons

of the

Veterans

1

Bureau al so req ui re th at such

a f f i dav i t sha l l s t a t e :

( 1 )

That

t h e

person

who

obtained

t h e

loan evidenced

"by

such

note i s known to be the veteran named in the ad jus t ed s e rv i ce ce r t i f i -

cate securing such note, and

(2 ) That t h e "bank h as n o t i f i e d t h e veteran by mail a t h i s l as t

known post office address of any sa le , discount , o r rediscount of such

note,

RBDEliPTIOF OF CERTIFICATES BY THE DIRECTOR

OF THE VZTZ&&BS * BURMU.

I f t h e veteran does n o t p ay t h e loan a t i t s matur i ty t h e "bank

holding

th e

note

and

ad jus t ed s e rv i ce ce r t i f i ca t e

may a t any

time

a f t e r t h e matur i ty of the loan

f

"but n o t before t h e expi ra t ion of

s i x months after t h e loan was made, present them t o t h e Director of

t h e Veterans* Bureau. The Director may in his discret ion accept the


and

note

and pay the

bank

i n

f u l l s a t i s f a c t i o n

o f i t s

claim, t h e amount o f the unpaid pr incipal du e i t , an d t h e unpaid i n -

terest accrued

a t t h e

ra te f ixed

i n t h e

note,

up to the

date

of the

check issued to the bank.

I f t h e veteran dies before t h e matur i ty o f t h e loan, th e amount

of

unpaid pr incipal

and

unnaid in te re st accrued

u p t o t h e

da te

of

h i s death immediately becomes due and payable. I n such case,

or i f the veteran dies on the date t h e loan, matures o r within

s i x months thereaf ter , t h e bank holding t h e note a n d t h e c e r -

t i f i ca te sha l l , upon not ice

of the

death

of the

veteran,

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- 4 - - X-4738-a 3 4 5

present thorn to the Director of the Veterans

1

Bureau who sh al l thereupon

p ay t h e

bank

i n


o f i t s

claim

th e

amount

of the

unpaid

p r i n c i p a l and unpaid int er es t a t t h e ra te f ixed i n t h e note accrued u p

t o t h e date of the check issued t o t h e bank; except that i f , p r i o r to the

payment,

t h e

bank

i s

n o t i f i e d

by the

Director

of the

death

of the

veteran

and

f a i l s

to

p r e sen t

t h e


and

note

t o t h e

Director within

15

days af ter such not ice , interest shal l

be

paid only

up to the 1 5th day

after such notice.

I f t h e

ve te ran

h as n o t

died before

th e

matur i ty

o f the


and has

f a i l e d

t o p a y h i s

note

t o t h e

bank holding

t h e

note

and

c e r t i f i c a t e ,

such bank

a t t h e

matur i ty

o f the


may

p r e sen t

t h e

note

a n d c e r -

t i f i c a t e to the Director o f the Veterans

1

Bureau, who is thereupon required

by law to pa y to t he

bank

i n


o f i t s

claim

th e

amount

of

th e unpaid pr inc ipa l and unpaid interest a t t h e ra te f ixed i n t h e note

accrued

up to t he

date

of the

matur i ty

of the

c e r t i f i c a t e .

REDISCOUNTS WITH FEDERAL RESERVE BAMS.

Upon th e indorsement of any bank, which shall be deemed a waiver

of

demand, notice

an d

p r o t e s t

by

such bank

as to i t s own

indorsement

e x -

c lus ive ly , and sub j ec t t o regula t ions to be p r e sc r i bed by the Federal Re-

serve Board, any such note secured by an ad jus t ed s e rv i ce ce r t i f i ca t e and

held b y a bank i s made eligible f o r discount o r rediscount b y t h e Federal

reserve bank of the Federa l reserve d i s t r i c t i n which such bank i s

located, whether o r no t the bank offer ing t h e note f o r discount

o r rediscount i s a member of the Federal Reserve System and whether

o r n o t i t

acquired

t h e

note

i n t h e

f i r s t ins tance f rom

t h e

veteran

or acquired i t b y t ransfer upon t h e indorsement of any other

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X-473S-a

bank; provided that

a t

tlio time

of

discount

o r

rediscount such

no to o ^

O^fcO

has a matur i ty no t i n cxcess of nine months, exclusive of days of grace,

and complies i n a l l other respects with t h e p rov i s ions of the law and

t h e r egu la t ions of the Federal 2cservo Board.

5LIGIBILITY

FOR

ISDISCOWT.

In order to be e l i g i b l e f o r rediscount a t a Federal reserve bank,

any such note must:

1 . Arise out of a loan made by a bank to a veteran i n full compliance

with t h e provis ions of the World War Adjusted Compensation Act and the

r egu la t ions of the United States Veterans * Bureau;

2. Be

secured

by t he

ad jus t ed se rv ice ce r t i f i ca t e i s sued

t o t he

maker,

which certificate must accompany t h e note;

3. Be

he ld

b y t h e

of fe r i ng bank

in i t s own

r i g h t

a t t h e

time

i t i s

o f f e r e d f o r rediscount;

4. Be

negot iable

i n

form

and

otherwise

i n t he

form approved

by the

United States Veterans* Bureau;

5 .

Have

a

matur i ty

a t t h e

time

of

rediscount

n o t i n

excess

of

nine

months, exclusive of days of grace;

6 .

Evidence

a

loan

th e

amount

o f

which does

n o t

exceed

th e

lean value

of t he

ad jus t ed se rv ice ce r t i f i ca t e

f o r t h e

year

i n

which such loan

was

made;

7. Be payable with in te re st ac crui ng^a fter t h e da te o f t he note a t a

r a t e s t a t ed i n t he f ace of the note, which rate shall n o t exceed b y more

than 2 p e r cent p e r annum t h e rate charged a t t h e date of the loan f o r t h e

discount o f 90-day commercial paper b y t h e Federal reserve bank of the

Federa l reserve dis t r ic t in which t h e payee bank i s located;

8 . Bear th e endorsement o f t he bank offer ing i t f o r rediscount ,

which endorsement shall be deemed a waiver of demand, notice and p ro tes t

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- 6 -

X-4738-a

cy

such bcoik

as to i t s own

endorsement ex clu si vel y; 84L V

H. 3e

accompanied,

b y t h e

evidence

of

e l i g i b i l i t y r e q u i r e d

by the

Regulations

of the


and by

s6.ch other evidence

of

e l i g i b i l i t y a.s this bank may require ;

10. Be

accompanied

by

such a f f idav i t s

-m d

oth er evidence

a s

would

b e

required b y t h e Veterans' Bureau in the event •«. t h i s bank should apply to

t h e

Veterans' Bureau

f o r

payment

of the

note;

and

1 1 . Conply i n a l l other respects with t h e requirements of t h e law and

of the

r egu l a t i ons

o f the

federal Reserve Board.

INELIGIBILITY AS C0LLAT3RAL TO A BACK'S OTO HOTE.

Neither

a

member bank

nor a

nonmember bank

may

borrow from

a

Federal

reserve bank

o n i t s o y n

promissory note secured

by

notes

o f

veterans

in

turn

secured

by

ad jus ted se rv ice ce r t i f i ca tes ; because ne i ther

t h e

federal Reserve

Act no r the

World

War

Adjusted Compensation

A ct

au thor izes

t h e

Federal

r e -

serve banks

to

make such lo an s. That pr ov is io n

of

Section

13 of th e

Federal

Reserve A ct which authorizes Federal reserve banks to make loans to member

banks

f o r

per iods

n o t i n

excess

of 15

days

on the

promissory notes

of

such

member banks req ui re s t ha t suc h'n ote s must

b e

secured

by

paper e l ig i b le

f o r

rediscount o r f o r purchase by Federal reserve banks under t h e provis ions of

t h e

Federal Reserve

Act or by

bonds

o r

notes

of the

United St at es . Section

502 of th e

World

War


A c t

which authorizes Federal

reserve banks

t o

rediscount notes secured

b y

ad ju s t ed s e rv i ce ce r t i f i c a t e s

i s n o t

made

a

pa r t

o f the

Federal Reserve

A c t .

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3 4 8

- 7 ~

X-4738-a

MEgBPD

A1TD

TEHI.,3

OF

RZSISCOIJM

1

.

P r io r to the rediscount of any paper a cert if ied copy of a resolution

passed by t he board of d i rec to rs of the offering bank with th e Seal of the

bank affixed, authorizing

t h e

p rope r o f f i c i a l s

to

rediscount, mast

be

f i l ed

with

t h e

Federal reserve bank.

I t

wi l l

no t be

necessary

f o r

member banks which

have filed such a resolut ion i n connection with rediscounts to f i l e any ad-

di t ional resolut ion in connection with notes secured b y adjusted service

c e r t i f i c a t e s .

Before rediscounting any such notes f o r a n y nonmember bank, t h i s

bank will require such nonmember bank

t o

f u r n i s h

t o i t

such information

a s

this bank may consider necessary i n order to s a t i s fy i t s e l f as to the condi-

t ion o f such bank and the a d v i s a b i l i t y of making rediscounts f o r i t . Blank

appl ica t ions f o r rediscount wil l be supplied by this bank upon request.

A l l

such notes offered

f o r

rediscount should

b e 1

i s t ed

on the ap-*

pl ic at io n form provided and the application signed by a duly authorized

officer. Full information must b e furnished a s provided on t he form.

Upon acceptance f o r rediscount by t he Federal reserve bank the

proceeds

of

such note s wi ll

be

c redi ted

to the

reserve account

o f t he

bank,

i n t he case o f a member bank, and , in the case of a nonmember bank, the

Federal roserve bank will remit by check o r , upon request, will credit

t h e account o f a designated member bank located i n this Federal reserve

d i s t r i c t

fo r t he u s e and

c red i t

of tHe

nonmember.

The

r a t e

of

discount deducted

by

this bank will

be t he

same

a s that deducted by i t in rediscounting SO day notes isgiod f o r commercial

purposes.

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- 8 -

X-4733-a

COLLECTION

OF

REDI3 COUNTED BOTES

AT

MATURITY.

.

In the case of nomber banks, t h e usual procedure will "be to forward,

f o r

co l l ec t i on

a l l

notes secured

by

ad jus ted , se rv ice cer t i f i ca tes

t o t he

banks discounting such notes, several days

i n

advance

o f

thei r matur i ty.

Such notes will

be

charged

t o t he

member bank's account when

due

without

no t i ce , i t being assumed that o n t h e maturi ty date t h e member bank will

provide funds i n excess of i t s required reserve to meet t h e notes .

In t he

case

of

nonmember banks, notice

of

approaching maturity

wi l l

be

forwarded

t o t h e

discounting banks approximately

t e n

days

i n

advance o f t he matur i ty o f each note, and the discounting banks will b e

required

to

place funds

i n t h e

hands

o f t h e

Federal reserve bank

to pay

them, which funds must

be

ava i lab le

on the

date

of

matur i ty

o f t he

notes .

FURTHER INFORMATION ECLOSSD.

F o r your information there a r e enclosed th e following:

1. The

World

War


A c t .

Sections

501,

502 and 504 deserve th e spec ia l a t t en t ion of banks which contemplate

making loans on t he s ecu r i t y o f ad jus t ed s e rv i ce ce r t i f i ca t e s .

2 . The Ac t of

Ju ly

3 , 1926,

amending

t h e

World

War


A c t .

Section

503 a s

amended

b y

t h i s

A c t

deserves special a t tent ion.

3. The

Regulations

of the

Veterans' Bureau with respect

to

loans

on

ad jus t ed s e rv i ce ce r t i f i ca t e s .

4 .

Copies

o f

forms

o f

n o t e s , a f f i d a v i t s ,

e t c . ,

approved

b y t h e

Veterans'

Bureau.

5. The

Regulations

o f t he

Federal Reserve Board with respect

to the

rediscount

o f

notes secured

b y

ad jus t ed s e rv i ce ce r t i f i ca t e s .

7/17/2019 frsbog_mim_v25_0340.pdf


350

X-4?38~a

6

m

A

prop osed form

of

reso lu t ion

to "be

adopted

"by

"banks authorizing

th e

endorsement

a nd

rediscount

of

such notes,.

7>

Copies

o f

form

of

appl ica t ion

to

this Federal reserve bank

f o r

rediscount

of

such notes*

Very truly yours,

7/17/2019 frsbog_mim_v25_0340.pdf


(Tentat ive draft subject to change. Not fo r pub l i ca t ion i n this form)

X-4738-b

FEDERAL RESERVE BOARD.

REGULATION M, SERIES OF 1326

REDISCOUNT OF NOTES SECURED BY ADJUSTED SERVICE CERTIFICATES.

SECTION

I .

STATUTORY PROVISIONS.

Under

t h e

terms

o f t he

World

War


A c t ,

loans may lawful ly he made to veterans upon their adjusted service c e r -

t i f i ca t es on ly

i n

accordance with

t h e

provis ions

of

Sect ion

502

thereof*

Any national hank, or any hank o r t r u s t company in co rp or at ed

under

t h e

laws

of any

Stat e, Terri tor y, possession,

t r t h e

D i s t r i c t

of Columbia i s au thor i zed , a f t e r t h e expi ra t ion of two years af ter t he

date o f t he c e r t i f i c a t e , t o loan t o a n y veteran upon h i s promissory

note secured

"by h i s

ad jus t ed se rv ice ce r t i f i c a t e ,

an y

amount

n o t i n

excess o f t he loan value o f t he ce r t i f i ca t e , which i s s t a t ed on the

face o f t he c e r t i f i c a t e . The law provides t hat t h e r a t e o f i n t e r e s t

charged upon

t h e

loan

by the

lending hank shall

n o t

exceed

by

more

than

2 p e r

cent

p e r

annum

th e

rate charged

a t t h e

da te

o f t he

loan

f a r

t h e discount of 90 day commercial paper by the Federal reserve bank o f

t h e Federa l reserve dis t r ic t i n which t h e lending bank i s located.

Upon

t h e

indorsement

of any

bank, which shall

be

deemed

a

waiver o f demand, notice and p r o t e s t b y such bank as to i t s own

indorsement exclusively,

and

sub jec t

t o

r egu la t ions

t o be

prescr ibed

by the Federal Reserve Board, any such note secured by an adjusted service


and

held

by a

bank

i s

made eligible

f o r

discount

o r

rediscount

with t h e Federal reserve bank o f t h e Federa l reserve dis t r ic t i n which such

7/17/2019 frsbog_mim_v25_0340.pdf


- 2 -

X-4738-b

•

"bank

i s

located, whether

or not the

"bank offering

t h e

note

f o r

discount

o r red i scount i s a member of the Federal Reserve System and whether o r

n o t i t

acquired

th e

note

i n t he

f i r s t i as tance f rom

t h e

ve te ran

o r a c -

quired i t "by t ransfer upon t h e indorsement of any other bauk; provided

tha t

a t t h e

time

of

discount

o r

rediscount such note

has a

matur i ty

no t

i n excess of nine months, exclusive of days o f grace, and complies i n

a l l

other respecfe with

t h e

provis ions

of th e law and th e

regula t ions

of

t h e

Federal Reserve Board.

SECTION

I I .

DEFINITIONS.

Within

t h e

meaning

o f

this Regulation

:

(a) The term " t h e A c t " shall mean t h e World War Adjusted Com-

pensat ion A c t ;

(b) The

term "Director" shall mean

t h e

Director

of the

United

States Veterans' Bureau;

(c) The

term "cert if icate" shall mean

an

ad jus ted serv ice

c e r -

t i f i ca te i s sued under t h e provis ions of Section 501 of the World War

Adjusted Compensation A c t ;

(d) The

term "veteran" shall mean

any

person

to

whom

a n a d -

j u s t ed s e rv i ce ce r t i f i ca t e

h a s

been issued

by t he

Director under

t he

provis ions

of the

#orld

War

Adjusted Comoensation

A c t ;

(e) The

term "bank" shall mean

a n y

national bank

o r a ny

bank

o r

trust company incorporated under t h e laws of any Sta t e , Ter r i to ry ,

possession

o r t he

D i s t r i c t

of

Columbia;

( f ) T he

term "note" shall mean

a

promissory note, ne go ti-

able

i n

form, secured

by an

ad jus t ed s e rvi ce ce r t i f i c a t e ,

and

7/17/2019 frsbog_mim_v25_0340.pdf


-i3*

X-4738-b

3 5 3

evidencing

a

loan mado

by a

bank

on the

secur i ty

o f

such cer t i f i ca te

i n

f u l l compliance with

t h e

provis ions

of tho

World

War

Adjusted Compen-

sa t ion A c t .

SECTION

I I I .

ELIGIBILITY.

I n order to be e l i g i b l e f o r rediscount a t a Federal reserve

bank,

a ny

such note mast:

( a )

Ar i se

out of a

loan mode

by a

bank

t o a

ve te ran

i n

f u l l

compliance with

t h e

provis ions

of th e Ac t and of any

regulation which

t h e

Bisec tor

may

prescr ibe ;

(b) Be

secured

by t he

ce r t i f i ca t e i s sued

t o t he

maker,

which certificate must accompany th e note;

(c ) Be

held

by the

offering bank

in i t s orm

r i g h t

a t t h e

time i t i s o f f e r ed f o r rediscount;

(d) Be

negot iable

i n

form

and

othorvriso

i n t h e

form

a p -

proved

by t he

Director ;

( e )

Have

a

matur i ty

a t t h e

time

of

rediscount

n o t i n e x -

cess of nine months, exclusive of days of grace.

( f ) Evidence a loan th e amount of which does n o t exceed

t h e

loan value

o f t h e


f o r t h e

year

i n

which such loan

was

made$

(g) Be

payable wi th in te re st accruing af t e r

t h e

da te

of the

note

a t a

ra te s ta ted

i n t h e

face

o f t h e

note, which rate mast

n o t

exceed

by

more than

2 p e r

cent

p e r

annum

t h e

rate charged

a t t h e

date

o f t he

loan

f o r t h e

discount

o f

90-day commercial paper

b y t h e


of t he

Federal reserve dis t r ic t

i n

which

th e

payee bank

i s

located;

7/17/2019 frsbog_mim_v25_0340.pdf


354.

- 4 -

x-4738-Vb

( h )

Be&r

t h e

endorsement

o f t he

,b&nk o-ffertag

i t f o r

r e d i s -

count

,

which endorsement shall

"be

deemed

a

waiver

of

demand, notice,

and

p r o t e s t

by

such bank

as to i t s own

endorsement exclusively;

( i ) B e

accompanied

by the

evidence

of

e l i g i b i l i t y r e q u i r e d

by

this Regulation

and

such other evidence

of

e l i g i b i l i t y

a s may- be r e -

quired

by t he


to

which

i t i s

o f f e r ed

f o r

r e d i s -

count; and

( j )

Comply

in a l l

othej* re sp ec ts with

t h e

requirements

of the

law and of

this Regulation.

SECTION

IV»

EVIDENCE

OF

ELIGIBILITY.

( a )

General.

- The


to

which

a

note

i s

offered

f o r rediscount must be s a t i s f i ed e i t he r by r e f e r ence to the note i t -

se l f *or otherwise that t h e loStn evidenced by t he note or any ass ign-

ment thereof complies

i n a l l

respects wi th

t h e

provis ions

of

sect ion

502 of the Act and t ha t th e note i s e l i g ib l e , f o r discount b y a Feder-

a l re se rv e bank under t h e terms of the l aw and the provis ions of this

Regulation.

^ A f f i d a v i t of Lending 3ank, ̂ - Any note offere d, t o a F e d -

eral reserve bank f o r rediscount must be accompanied by t he a f f i -

davit required

b y

Section 502(h)

@f the Act and the

regula t ions

of

$

t h e

Di rec tor ,

i n

farm approved

by the

Director, made

by an

o f f i ce r

a f t he

bank which made

t h e

loan, before

a

notary publ ic

o r

other

off icer designated f o r t h e purpose by regula t ion o f t he Director ,

s ta t ing that :

7/17/2019 frsbog_mim_v25_0340.pdf


855

- 5 - X-4738-b

• Such bank has no t charged, o r co l l e c t ed , o r attempted t o

charge

o r

co l l e c t

*

d i r e c t l y

o r

i n d i r e c t l y ,

a n y f e e o r

other comr-

pensa t ion i n respec t of any loan, made b y such "bank t o any veteran

under Section 502 of the A ct , except t h e in te res t au thor ized "by such

sect ion;

2. The person who obtained t h e loan evidenced b y such note i s

known to be the veteran named i n t he cer t i f icate securing such

note; and

3f That such bank h a s n o t i f i e d th e ve te ran by mail a t h i s

l a s t known pos t o f f i c e address of any sale , d iscount , o r rediscount

of such note by such bank, a s requi red by Section 502(b) o f t he Act#

( c ) A f f i d a v i t of Other Banks« - I f such note i s of fe red f o r *

rediscount by a bank other than t h e bank which made t h e loan there-*

o n , i t must also b e accompanied by an a f f i d a v i t of an o f f i c e r of

t h e offering bank and an a f f i d a v i t of an o f f i c e r of each other bank

which h a s sold, discounted o r rediscounted such note, which affi-

davi t shal l be in form approved b y t h e Director an d sha l l s ta te tha t

t h e bank of which t h e a f f i a n t i s a n o f f i c e r h a s promptly not i f ied

t h e veteran by mail a t h i s l a s t known pos t of f i c e address c f the

sale, discount or rediscount of such note by such bank, as,required

by Section 502(b) o f t he A c t ,

SECTION

7 .

APPLICATION ES3)IS00UIIT.

Every appl icat ion

f o r t h e

rediscount of 's uc h notes sha ll

be

made

on a

form approved

by the


t o

which such

A

7/17/2019 frsbog_mim_v25_0340.pdf


35(3

- 6 -

X-473S-0

note

i s

of fe red

an d

shal l contain

a


of the

offering bank

t o t h e e f f e c t t h a t , t o t h e "best o f i t s knowledge an d be l i ef , such

note arose out of a loan made i n full compliance with t h e provis ions

of the Act and the r egu l a t i ons o f the Di rec tor a n d i s e l i g i b l e f o r

rediscount under t h e provis ions o f Sect ion 502 of the Act and of this

Regulation#

SECTION

V I .

PROPER BANK

FOR

REDISCOUNT.

No such note shall be rediscounted by any Federal rese rve

bank f o r a n y bank n o t loca ted in i t s own Federa l reserve d i s t r i c t ,

except that such notes may be rediscounted b y an y Federal reserve bank

f o r a n y

other Federal reserve bank.

/

SECTION V l l , RATS OF REDISCOUNT.

The r a t e o f interest charged by any Federal reserve bank on

a n y such note rediscounted b y i t s h a l l b e t h e same a s that charged b y

i t f o r t h e red i scount o f 90-day notes drawn f o r a commercial purpose,

except that when such notes a r e rediscounted f o r another Federal reserve

bank t h e r a t e s h a l l b e that f ixed b y t h e Federal Reserve Board.

SECTION VII I . REDISCOUNTS FOR NONMEMBER BANKS..

No Fede ral res erv e bank sh al l redis cou nt such note s f o r a n y

nonmember bank u n t i l such bank

h a s

furn i shed

t o t h e

Federal reserve

bank such information as i t may reques t i n order t o s a t i s f y i t s e l f a s

to t h e condit ion o f such bank an d t h e a d v i s a b i l i t y of making t h e r e d i s -

count

f o r i t .

7/17/2019 frsbog_mim_v25_0340.pdf


857

(TENTATIVE DRAFT SUBJECT

TO

CHANGE.

NOT FOR

PUBLICATION

IN

THIS

FOB:)

X-4738-c

$

(Place) (Bate)

af te r da te , I promise to

pa y t o t he

order

of

(Name of Bank o r Trust Company ~

of

(City

o r

Town

a n d

State)

„ Dollars

f o r value received, wi th interest af ter date a t p e r ce nt . This

note

i s

payable

a t t h e

bank named above.

The

makers

a n d

endorsers

of

this

note waive pre sen tat i on, pr ot es t , a n d not ice of dishonor.

A s

co l l a t e r a l s ecu r i t y

f o r t h e

prompt payment

of

this note

I

have delivered

to and do

hereby pledge with

t h e

holder

of

this note

my

ad jus t ed s e rv i ce ce r t i f i ca t e

No.

dated

f u r t h e r i d e n t i f i e d

by No. A .

This not e

may be

sold,

d i s -

counted

o r r e

discounted

a n d t h e

cer t i f i ca te p ledged herewi th

may be

t rans-

f e r r e d

i n

accordance with

t h e

provis ions

o f t he

World

War

Adjusted Compensa-

t ion

A c t . I f t h e

p r i n c i p a l

and

i n t e r e s t

of

this note

a r e n o t

pa id

a t i t s

matur i ty any bank hol din g t h is no te a n d c e r t i f i c a t e may, a t any t ime after

matur i ty

of the

loan,

b u t n o t

before

t h e

expi ra t ion

o f s i x

months after

t he

loan

was

made, pr es en t t hi s no te

a n d


t o t h e

Director

of the

United States Veterans' Bureau i n order t o secure payment of this loan, a s

provided

i n t h e

World

War


A c t .

(Signature of Veteran.)

( ,

( (Name o f veteran)

(

(S tr ee t Address

o r

Route Number)

Please pr int o r typewrite

name

a n d

address

of

veteran

here

(Ci ty o r Town a n d State)

7/17/2019 frsbog_mim_v25_0340.pdf


(TENTATIVE EBAIT SUBJEClTO CHAINS,-

SOT FOR

PUBLICATION

Of

THIS FOBli)

X-4738-d

AUTHORITY

FOR

REDJS COUNTING *0185 SSCUHED

BT

ADJUSTED

SERVICE CERTIFICATE WITH 4Hf ftCEBAl RES3HVB BANK

Q i - .

WHIB1A6, i t i s desired that th e officers of this tank

should, from time to time be able to rediscount e n i t * behalf veterans*<

notes secured

by

adjusted service certificates,

Mow,

therefore,

bo i t

W m W D ;

'

1 s t .

fiiat

the

Prosident. Vifce President

and

Cashier

aro,

and

each

or

either

of

thdm

i s ,

hereby authorized

to

rediscount with

the

Federal Reserve leak of , any such notes now

o?

hereskfter held

by

this tank, upon such terms

and at

sue* time

or

times as to h$gt « r. thee may me cm desirafcle.

2nd# That

tho

foregoing powers shall continue

and

remain

in

foroe until express notice

of

their revocation

has

been duly given

to

said Federal Reserve Bank

of .

I do hereby certify that the

foregoing

i s a

true extract faroa

the

tttimtes

of a

meeting

of the

Board

of

Directors

of the _

a quorum being present, held a t . the ____________

day o f . 19 *

In

witness whereof,

I

have hereunto

set any

hand

and

affixed

the

official e#m&

e f the

iaid Book this

day of

19 .

SEAL

7/17/2019 frsbog_mim_v25_0340.pdf


359

(TESTATIVS IEAPT SUBJECT

TO

CHiSfflB.

SOT fOR

tmiCATIOH

Iff

IEIS FOBM)

1-4738-c

APPLICATION

FOR

B1DISOOUST

OF

SOBS SECURED

BY

ADJUSTED SERVICE CIRTiriGATES.

i

To the federal Reserve Bank of .

The bank ef offers

herewith

th e

following Veterans' notes secured

by

adjusted service

certificates* duly endorsed

by It .

We agree that the Federal Reserve Bank of . •

may charge the amount ef the notes to our account a t their maturity,

•r , i f not a member of the Federal Reserve System, we promise to place

acceptable funds in the hands of the Federal Reserve Bank of ••

covering th e amount of each note, which funds shall be available on

^ • >

the day each note matures.

Our

endereement shall

be

deemed

a

waiver

ef

demand,

net ic e

and

protest.

I hereby certify that, to the beet of my knowledge and be-

l i e f , th e ntte or notes offered herewith arose out of a loan made i n

full compliance with th e provisions ef the World War Adjusted Com-

pensation Act and the regulations of the Direct*r of tfye United

States Veterans' Bureau and is eligible fo r rediscount with a'Federal

Reserve Bank under th e provisions of Section 502 of the World War

Adjusted Condensation Act and <<f the regulations of the federal Re-

:

1

serve Board.

(^President)

(

Cashier

J

7/17/2019 frsbog_mim_v25_0340.pdf


- 2 -

mo

X-4738-e

P l ease l i s t i n maturity order

DO NOT USE

MATURITY ; NAME OF VETERAN i ADDRESS : THIS COLUMN: AMOUNT

7/17/2019 frsbog_mim_v25_0340.pdf


361

(TENTATIVE tRAJT SUBJECT TO CHA1FGE. HOT FOE PUBLICATION IN THIS F0BM)X-4738-f

PROPOSED PROVISION OF REGULATION BY V2TERANS' BUREAU.

N» payment upon any note will "be made "by the Direc tor t o

any "bank under Se ct io n 502 , unless t h e note when pr es en te d to him

i s accompanied by t he a f f i d a v i t o r affidavits required "below;

1 . I f such no te h a s never been sold, discounted, o r r e -

discounted

by t he

bank which made

t h e

loan,

i t

s h a l l

b e

accompanied

by an a f f i d a v i t by an o f f i c e r o f such bank on form (A) , which

i s

male

a

p a r t

of

th is regula t ion.

2 . I f such no te h a s been sold, discounted o r r e d i s -

ceunted

by t he

bank which made

t h e

loan,

i t

s h a l l

b e

accompanied

by an a f f i d a v i t of an o f f i c e r #f such bank on form (B) . which.

i s

made

a

p a r t

of

th is regula t ion.

3 . I f

such not e

h a s

been sold, discounted

o r

rediscounted

by any bank o r banks ether than t h e bank which made t h e loan, i t

s h a l l

be

accompanied

by an

a f f i d a v i t

by an

o f f i c e r

of

each such

other bank on form (C ) which i s made a p a r t of th is regula t ion.

7/17/2019 frsbog_mim_v25_0340.pdf


(Tentative droit subject to change. Sot for publication in this form)

forago. (A) - X-4738-g 3 6 2

Sta t e of )

( SS i

County

of j

*» . being duly sworn depose

(Same of officer)

and any that I am an off icer, to wit

:

of the (Han. of

office)

(Nan*

of

b#ak

or

trust oo-pany) (City

or

torn

and

State)

which i s a bank inoorporated under the laws of . and I

further depose and aay;

(1 ) That th e said bank or trust company ha# not

charged,

or

collected,

or

atteopted

to

charge,

or

collect, directly

or indirectly, any fee or other compensation, in respect of this loan

or my

other loan made

by

euoh bank

to any

veteran under

the

provisions

of

Section

503 of the

VoxId Itof Adjusted Co-apensation

Act ,

except

the

interest authorize*

by

such section

a t a

rate

not

exceeding

by

more

than 2 per annum the rato charged at the dato of the loan for the d is -

count

of

90-day commercial paper under Section

13 of the

federal leserve

Act by the

Federal

Be

servo Bank

o f ^ tA i ch

(game

of

federal Reserve iBank)

is the Federal Beserve Bank of She

' ' (g o. of

federal Beaerv# District)

Federal Beserve District

i n

which

th e

said

,

of

bank

or

t a s t

located:

company)

(2 )

That

the

person

who

obtained

the

loan evidenced

by

th e attached note, secured by adjusted service certificate go.

d a t e d

further identifi ed

by go,. A •

i s

knovn

to be the

person named

in

such adjusted service cer ti fi ca te ;

and

(3) .

fhat

the

said 'made

7/17/2019 frsbog_mim_v25_0340.pdf


- 2 -

X-4738-g

t h e loan evidenced by the attached note to the veteran whose name i s

signed t o -such note and that such note h a s never "been sold, discounted

o r rodiscounted by the said

(Harae

of

bank

o r

trust company)

(Signature o f o f f i c e r )

Subscribed and sworn t o before me

t h i s

;

date

of

(Notary Public, o r o ther o f f icer

designated by the United States

Veterans Bureau.)

7/17/2019 frsbog_mim_v25_0340.pdf


(T15WTAIIV3 DRAFT SUBJECT TO CM&S. HOT FOR PUBLICATION I2T THIS FORM).

Form go . ( n ) X-4738-h

Stato of )

. ) SS:

County of )

I» , being duly sworn depose and say tha t I

(Mane of o f f i c e r ) '

ar.i an o f f i c e r , to w i t of th e

(Wane of o f f i c e ) (Wane o f bank o r trust company)

Jf

which

i s a

bank incorporated under

t h e

laws

of

(City o r town and State)

, and I further depose and say:

1 .

That

t h e

said bank

o r

trust company

h a s n o t

charged,

o r

col*.

l ec t ed , o r attempted to charge, a* c o l l e c t , d i r e c t l y o r i n d i r e c t l y , any

f e e o r

other compensation,

i n

r e spec t

of any

loan, made

by

such bank

to

any veteran under t h a p rov i s ions of Section 502 of the World War Adjusted

Compensation A c t , except t h e in teres t author ized by such section a t a ra te

by

n o t exceeding/rare than 2$ pe r annum t h e rate charged a t t h e date of the

loan f o r t h e discount o f SO day commercial paper under Section 13 of th e

Federal Reserve Ac t by the Federal Reserve Bank of

(Wane o f Federal reserve bank)

which

i s t h e

Federal Reserve Bank

of th e

(Wo. of

Federal Reserve District)

Federal Reserve District

in

which

t h e

said

(Warne

of

bank

o r

trust company)

i s located;

2* That t h e person who obtained t h e loan evidenced by t he

atta che d no te , secured by a d j u st e d s e rv i ce c e r t i f i c a t e Wo. dated

f u r t h e r i d e n t i f i e d

by Wo.A i s

known

to be the

person named

i n

such adjus te d service ce r t i f ic a t e ;

and

3 . That t h e veteran who obtained th e loan evidenced by the

attached note secured by ad jus t ed se rv ice ce r t i f i ca t e Wo.

dated fu r t he r ide n t i f i e d by Wo,A

was

prompt ly not i f ied

by the .

tha t

t he

(Warae of bank o r trust company)

7/17/2019 frsbog_mim_v25_0340.pdf


—2 — X-473§-

said note

i s

being sent

to the

(ITamo

of

tank

o r

trust company

to

whom

t he

note

i s

t ransfer red)

of , f o r

sale, discount

o r

rediscount .

(Signature

of

Off icer )

Subscribed

and

sworn

t o

before

me

t h i s

day of

(Notary Public,

o r

o ther of f i cer des ig-

na ted

b y t h e

United States Veterans'

Bureau.)

7/17/2019 frsbog_mim_v25_0340.pdf


(TENTATIVE DRAFT SUBJECT TO CHANGE, NOT 50R PUBLICATION IN THIS FORM.)

r o m H o .

Hi)

X

4738

1

S ta t e of J

)SS .

County of )

"being duly sworn depose and

(Name o f o f f i c e r )

s a y t h a t I am an o f f i c e r , to w i t - of th e

(Name of o f f i c e ) (Name o f

and I

fu r t he r depose

a n d s a y

t h a t

t h e

ve te ran

who

hank o r trust company)

obta ined t h e loan evidenced b y t h e attached note secured by ad jus ted se rv ice

c e r t i f i c a t e No# d at ed f a r t h e r i d e n t i f i e d by

Bo* A h as been no t i f ied b y t h e said

(Name of Bank o r t ru s t

•

t h a t

t h e

sa id note

i s

being sent

t o t h e

____________________

$oapany) (Name

o f

bank

o r

t ru s t

of , ,

company t o whom note was t r a n s f e r r e d )

f o r sa le , d i scoun t o r red iscoun t .

(Signature

o f

O f f i c e r . )

Subscribed and sworn t o b e fo re me

t h i s

da y of

(Notary Public , o r other

o f f i c e r d e s ig n a t e d

by

t h e United Sta tes V e t -

erans Bureau.)

Documents

frsbog_mim_v25_0340.pdf