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BOARD OF GOVERNORS FEDERAL RESERVE SYSTEM Correspondence T0 Chairman Booles From Woodlief Thomas Date M*r<* k, 1*7 Subject; Commission on Treasury bill turnover Mr. Miller of the Hew York Federal Reserve Bank informs me that the System does not pay the dealers a commission on the bills which the dealers buy and sell to the System Account each week. The dealers agreed with the Treasury to perform these transactions without charge. Actually the dealers receive about |2.08 per 1 million dollars of bills so handled. This is because they purchase from the Treasury at a price of 99-905 100. They sell to the System at a price of 99*905208, which corresponds to the System buying rate of .375 P e r cent per annum. Transactions through the dealers range around 600 million to 800 million weekly. Thus the dealers receive each week approximately 1,500 dollars of so-called profit.
