EXHIBIT I. Deposits with banks of proceeds of sale of war bonds and certificates. In connection with bonds and certificates issued under act of September 24, 1917, the following circular was issued by the Secretary of the Treasury, relating to the deposit of the proceeds of these war issues: TREASURY DEPARTMENT, To Federal Reserve Banks and other banks and trust companies incorporated under the laws of the United States or of any State: Any incorporated bank or trust company in the United States desiring to participate in deposits of the proceeds of bonds of the Second Liberty Loan and of certificates of indebtedness of the United States issued under the act of Congress approved September 24, 1917, should make application to the Federal Reserve Bank of its district, on Form Í hereto attached, and accompany such application by a certified copy of resolutions duly adopted by its board of directors, in Form J hereto attached. In fixing the maximum amount of deposits for which it will apply, the applicant bank or trust company should be guided by the amount of the payments which it expects to have to make, for itself and its customers, on account of allotments of such bonds and certificates, and, as well, by any statutory limitations upon the amount of deposits which the applicant bank or trust company may receive from any one depositor. Any application may be rejected or the applicant may be designated for a smaller maximum amount than that applied for. After receiving the recommendation of the Federal Reserve Bank, the Secretary of the Treasury will designate approved deposi taries. COLLATERAL SECURITY. Designated depositaries will be required, before receiving deposits, to qualify by pledging, as collateral security for such deposits, securities of the following classes, to an amount, taken at the rates below provided, at least equal to such deposits: (a) Bonds and certificates of indebtedness of the United States Goverment, of any issue, including bonds of the Liberty Loans and interim certificates or receipts for payments therefor; all at par. (b) Bonds issued under the United States farm loan act and bonds of the Philippine Islands, Porto Rico, and the District of Columbia; all at par. (c) The 3 per cent bonds of the Territory of Hawaii at 90 per cent of market value; and other bonds of said Territory at market value. (d) Bonds of any State of the United States, at market value; and approved notes, certificates of indebtedness, and warrants issued by any State of the United States, at 90 per cent of market value. (e) Approved bonds of any county, city, or political subdivision in the United States; and approved notes, certificates of indebtedness, and warrants issued by any county or city in the United States which are direct obligations of the county or city as a whole; all at 90 per cent of market value; but not including any such bonds which, at the date of this circular, are at a market price to yield more than 5 per cent per annum, nor any such other obligations which at the date of this circular are at a market price to yield more than 6 per cent per annum, if held to maturity, according to standard tables of bond values. 13034°-FI 1917-45 705 (f) Approved dollar bonds and obligations of foreign Governments (and of the dependencies thereof) engaged in war against Germany, issued since July 30, 1914, at 90 per cent of the market value thereof in the United States, and approved dollar bonds and obligations of any province or city within the territory of any such foreign Government or dependency, issued since July 30, 1914, at 75 per cent of the market value thereof in the United States. (g) Approved bonds, listed on some recognized stock exchange and notes, of domestic railroad companies within the United States; approved equipment trust obligations of such domestic railroad companies; and approved bonds and notes of domestic electric railway and traction companies, telephone and telegraph companies, electric light, power, and gas companies, and industrial companies, secured (directly or by the pledge of mortgage bonds) by mortgage upon physical properties in the United States and listed on some recognized stock exchange, all at 75 per cent of market value; but not including any such bonds or obligations which, at the date of this circular, are at a market price to yield more than 6 per cent per annum, nor any such notes which at the date of this circular are at a market price to yield more than 74 per cent per annum, if held to maturity, according to standard tables of bond values. (h) Commercial paper and bankers' acceptances, having maturity at the time of pledge of not to exceed six months, exclusive of days of grace, and which are otherwise eligible for rediscount or purchase by Federal reserve banks, and which have been approved by the Federal reserve bank of the district in which the depositary is located, at 90 per cent of face value. All such commercial paper and acceptances must bear the indorsement of the depositary bank or trust company. No security shall be valued at more than par. No State or municipal bond, obligation, or evidence of indebtedness shall be accepted if the State or municipality has made default in payment of principal or interest during the past 10 years. The right is reserved to call for additional collateral security at any time. The approval and valuation of securities is committed to the several Federal reserve banks, acting under the direction of the Secretary of the Treasury. The withdrawal of securities, the pledge of additional securities, and the substitution of securities shall be made from time to time as required or permitted by the Federal reserve banks acting under like direction. SECURITIES COMMITTEES. Each Federal reserve bank is authorized to designate a committee, or committees, to be composed of experienced bankers, in such city or cities in its district as may be deemed necessary, to be known as the securities committee. Each securities committee shall consist of not more than three nor less than two members, who shall serve without compensation. It shall be the duty of such securities committee to examine the lists of securities tendered as collateral security for deposits and to transmit them promptly to the Federal reserve bank of the district with the committee's recommendation. CUSTODY OF SECURITIES. All securities accepted as collateral security for deposits hereunder must be deposited with the Federal reserve bank of the district in which the depositary is located or, by the direction and subject to the order of such Federal reserve rank, with a custodian or custodians designated by it, and under rules and regulations prescribed by it. HOW DEPOSITS ARE TO BE MADE. Each qualified depositary will be required to open and maintain for the account of the Federal reserve bank of its district, as fiscal agent of the United States, a separate account for deposits to be made hereunder, to be known as the "War Loan Deposit Account." Qualified depositaries will be permitted to make payment by credit when due of amounts payable on subscriptions made by or through them for Treasury certificates of indebtedness and for Liberty Bonds. In order to make payment by credit the depositary must notify the Federal reserve bank of the district by letter or telegram to reach it on or before the date when such payment is due, and must on said date issue a certificate of advice to such Federal reserve bank stating that a sum specified (in addition to all other amounts standing to the credit of said fiscal agent with such depositary) has been deposited with such depositary for the account of such Federal reserve bank, as fiscal agent of the United States, in the war loan deposit account. The unexpended cash proceeds, if any, of the sale of any issue of certificates or bonds will be deposited among the qualified depositaries as nearly as may be in proportion to the subscriptions made by and through them for such issue. All deposits and withdrawals will be made by the Federal reserve banks by direction of the Secretary of the Treasury. The amount deposited with any depositary shall not in the aggregate exceed at any one time (a) the maximum amount for which it shall have been designated as a depositary, nor (b) the aggregate amount of the collateral security pledged by it taken at the rates herein before provided. WITHDRAWAL OF DEPOSITS. All deposits will be payable on demand without previous notice. INTEREST ON DEPOSITS. Each depositary will be required to pay interest at the rate of 2 per cent per annum on the average daily balance maintained during the period of the deposit. Interest payments must be made when deposits are finally withdrawn, but not less frequently than quarterly. W. G. MCADOO, Secretary of the Treasury. Form H-Liberty Loan. APPLICATION FOR DEPOSITS. Act of September 24, 1917. To the Federal Reserve Bank of....... fiscal agent of the United States: The undersigned bank or trust company, in accordance with the provisions of Treasury Department Circular No. 92, dated October 6, 1917, and pursuant to due action of its board of directors, hereby makes application for the deposit with it of proceeds of the bonds and certificates of indebtedness issued and to be issued from time to time under the act of Congress approved September 24, 1917, the aggregate amount of such deposits not to exceed at any one time $......; and assigns and agrees to pledge, from time to time, to and with the Federal Reserve Bank of... as fiscal agent of the United States, as collateral security for such deposits as may be made from time to time pursuant to this application, securities of the character and amount required by said circular. I HEREBY CERTIFY that the following resolutions were duly adopted at a meeting of the board of directors of the below-named bank (or trust company), which meeting was duly called, and duly held on the......day of a quorum being present, and that the said resolutions were spread upon the minutes of said meeting: Resolved, That in accordance with the provisions of Treasury Department Circular No. 92, dated October 6, 1917, this bank (trust company) make application for the deposit with it of proceeds of the bonds and certificates of indebtedness issued and to be issued from time to time under the act of Congress approved September 24, 1917, the aggregate amount of such deposits not to exceed at any one time $.... and assign and agree to pledge from time to time to and with the Federal Reserve Bank of... as fiscal agent of the United States, as collateral security for such deposits as may be made from time to time pursuant to this application, securities of the character and amount required by said circular; and Resolved, That the president, or any vice president, or cashier, or secretary, of the undersigned bank (or trust company) is hereby authorized to make application, assignment, and agreement as aforesaid and from time to time to deliver to and pledge with said Federal reserve bank, or any custodian or custodians appointed by it, securities of the undersigned bank (or trust company) of a character and amount at least sufficient to secure such deposits according to the terms of said Treasury Department circular, and from time to time to withdraw securities and to substitute other securities and to pledge and deposit additional securities. IN WITNESS whereof I have hereunto signed my name and affixed the seal of the ...of..... Cashier (Secretary). |