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973 FEDERAL RESERVE BOARD WASHINGTON October 23,1920. CONFIDENTIAL X-2038 Dear S i r : There are enclosed, herewith c o p i e s of t h e c o n f i d e n t i a l i n s t r u c t i o n s issued by t h e S e c r e t a r y of the Treasury under d a t e of October 19, 1920, with r e s p e c t to the exchange and redemption of United S t a t e s c o i n and the performance by F e d e r a l Reserve Banks of c e r t a i n other d u t i e s and f u n c t i o n s h e r e t o f o r e performed by t h e S u b - t r e a s u r i e s . The Federal Reserve Banks d e s i r i n g t o o p e r a t e under t h e s e i n s t r u c t i o n s should a d v i s e the Board, and upon n o t i f i c a t i o n from t h e Board t h e Treasury w i l l give the necessary s p e c i f i c i n s t r u c t i o n s i n each case and n o t i f y t h e T r e a s u r e r and A s s i s t a n t T r e a s u r e r concerned. Thei'e i s a l s o enclosed f o r your c o n f i d e n t i a l i n f o r m a t i o n a copy of a d e t a i l e d l e t t e r under date of October 19, 1920, from A s s i s t a n t S e c r e t a r y of the Treasury G i l b e r t to Governor Morss, of t h e F e d e r a l Reserve Bank of Boston, r e l a t i v e to the discontinuance of t h e Boston S u b - t r e a s u r y and t h e t r a n s f e r of c e r t a i n of i t s d u t i e s and f u n c t i o n s t o the Federal Reserve Bank cf Boston, which i t i s expected w i l l be accomplished on or about October 25th. Very t r u l y yours, Governor. Enclosures. To Chairmen of a l l F.R. Banks. X-203S a October 1 9 , 1 9 2 0 . : 974 CCPY Charles A- Morss, Esq. t Governor, Federal Reserve Bank, Boston,Mass. My dear Governor: I have a l r e a d y acknowledged, tinder date of September 27th, the r e c e i p t of the l e t t e r of September 22, 1920, s i g n e d by you and Mr. C u r t i s s , t r a n s m i t t i n g a memorandum a s to t r a n s f e r r i n g t o the Federal Reserve Bank c e r t a i n d u t i e s and f u n c t i o n s of the sub t r e a s u r y i n Boston, t o g e t h e r w i t h a statement of t h e d u t i e s which your bank w i l l be ready to perform when t h e t r a n s f e r i s made. You have already r e c e i v e d and are o p e r a t i n g under the S e c r e t a r y ' s general i n s t r u c t i o n s of August 3 0 , 1 9 2 0 , as to the h a n d l i n g of U n i t e d S t a t e s paper currency, and I am sending under separate cover c o p i e s of the new r e g u l a t i o n s governing the h a n d l i n g of U n i t e d S t a t e s c o i n and o t h e r m a t t e r s growing out of the d i s c o n t i n u a n c e of the sub t r e a s u r i e s . The s u g g e s t i o n s made i n the memorandum from the Federal Reserve Bank of Boston have a l r e a d y b e e n covered i n a l a r g e measure by t h e s e r e g u l a t i o n s , but I am g l a d t o take them up, t o the e x t e n t t h a t they are n o t a l r e a d y covered, i n the order i n which they appear i n t h e memorandum. You w i l l be f u r t h e r a d v i s e d by l e t t e r or telegram, of t h e e f f e c t i v e d a t e of d i s c o n t i n u a n c e of t h e Boston subt r e a s u r y , and of c o u r s e i f any d i f f i c u l t i e s a r i s e i n c o n n e c t i o n w i t h the a c t u a l d i s c o n t i n u a n c e and t r a n s f e r , they may be taken up d i r e c t w i t h the Treasury or through t h e Committee from the Treasury which w i l l be i n Boston t h i s week. I t i s the i n t e n t i o n t o a s s i g n t o the Federal Reserve Bank t h e space i n the F e d e r a l b u i l d i n g a t Boston now occupied by t h e sub t r e a s u r y , u n t i l such time a s t h e Federal Reserve Bank i s able to occupy i t s new b u i l d i n g , and t r a n s f e r s t o t h e new b u i l d i n g the work t o be performed by i t s f o r c e i n the -2Federal b u i l d i n g . X-2038 i 975 The use of the adding machines, t y p e w r i t e r s , s c a l e s ot weighing apparatus, washing machine and trucks w i l l be t r a n s f e r r e d t o the Federal Reserve Bank, t h i s equipment having been purchased out of f u n d s under the c o n t r o l of t h i s Department f o r the use of the sub t r e a s u r y . The f u r n i t u r e , including desks, c h a i r s , miscellaneous c a b i n e t s , e t c . , was purchased out of an a p p r o p r i a t i o n under the c o n t r o l of the Supervising A r c h i t e c t , and approp r i a t e a c t i o n w i l l be taken to have t h i s f u r n i t u r e assigned to t h e Federal Reserve Bank during i t s p e r i o d of occupancy of the q u a r t e r s in q u e s t i o n . As a l r e a d y i n d i c a t e d , the Secretary of t h e Treasury w i l l send a Treasury committee to Boston to make a f i n a l examination of t h e sub t r e a s u r y a t which r e p r e s e n t a t i v e s of the Federal Reserve Bark should be p r e s e n t , and to supervise the t r a n s f e r of cash and other a s s e t s to the Federal Reserve Bank On the question of expense, t h e Treasury accepts as a l r e a d y i n d i c a t e d the a l t e r n a t i v e suggestion t h a t the Government bear the expense of t r a n s p o r t a t i o n of United S t a t e s paper currency and United S t a t e s coin, on shipnents between the Federal Reserve Bank and Treasury o f f i c e s . Detailed provisions as t o such expenses appear in the currency r e g u l a t i o n s and the coin r e g u l a t i o n s . The Treasury n o t e s t h a t the Federal Reserve Bank now pays carrying charges on currency and coin shipped to and from member banks, and on currency shipments from non-member banks i n the d i s t r i c t i n payment of remittance l e t t e r s , and t h a t the Federal Reserve Bank proposes to continue t h i s s e r v i c e . In general, the Treasury f e e l s t h a t , inasmuch as the Federal Reserve Banks, i n a c t i n g under the r e g u l a t i o n s as t o the handling of United S t a t e s paper currency and United S t a t e s coin, w i l l be performing o p e r a t i o n s f o r m e r l y performed by Government o f f i c e s , i t i s of the utmost importance t h a t t h e o p e r a t i o n s be conducted i n such a manner t h a t no charge of d i s c r i m i n a t i o n , however u n f a i r , may be l e v e l l e d a g a i n s t the new system. As t o the d i s b u r s i n g accounts -3- 1 X-2038 c a r r i e d w i t h t h e sub t r e a s u r y by the l o c a l postmaster and the o f f i c e r s of the U n i t e d S t a t e s Courts, i t i s i m p o s s i b l e to g i v e f i n a l i n s t r u c t i o n s a t the moment, i n the absence of d e f i n i t e word from the A t t o r n e y General and the Postmaster General, .but i t i s hoped t h a t t h e s e a c c o u n t s may be t r a n s f e r r e d to the Treasurer o f t h e U n i t e d S t a t e s a t Washington. All other d i s b u r s i n g a c c o u n t s c a r r i e d w i t h t h e A s s i s t a n t Treasurer a t Boston w i l l b e t r a n s f e r r e d t o the Treasurer a t Washington. Any o u t s t a n d i n g "to order" g o l d c e r t i f i c a t e s n o t redeemed p r i o r to the d a t e on which t h e t r a n s f e r i s made, may be l a t e r p r e s e n t e d t o t h e Federal Reserve Bank i n Boston f o r payment, and s e t t l e m e n t made through the Gold S e t t l e m e n t Fund i f d e s i r e d , as i n d i c a t e d i n the c o i n r e g u l a t i o n s . The Comptroller o f the Currency h a s been c o n s u l t e d as t o the r e t u r n of t h e unused n a t i o n a l bank n o t e s now i n the c u s t o d y of t h e A s s i s t a n t Treasurer i n Boston, and i t i s e x p e c t e d t h a t t h e s e n o t e s w i l l be r e t u r n e d b e f o r e t h e t r a n s f e r i s completed. A l l uncurrent, l i g h t - w e i g h t and m u t i l a t e d c o i n , w i l l be shipped t o the Mint p r i o r t o t h e d a t e on which the t r a n s f e r occursv The i t e m o f $2456 c a r r i e d i n t h e Subtreasury a c c o u n t s as a shortage i n c u r r e n c y shipment made i n April 1$18, i s a matter between the Treasury and the A s s i s t a n t T r e a s u r e r , which w i l l n o t a f f e c t t h e Federal Reserve Bank. I t i s understood from Mr. Huddle son t h a t you do not d e s i r e a t t h i s time any pf t h e g o l d c o i n now i n t h e sub t r e a s u r y a t Boston, and arrangements have t h e r e f o r e b e e n made to have i t shipped p r i o r to t h e d a t e the t r a n s f e r i s made. Five hundred thousand d o l l a r s , ( $ 5 0 0 , 0 0 0 ) i n Standard s i l v e r d o l l a r s w i l l be r e t a i n e d and t r a n s f e r r e d t o you a l o n g w i t h the o t h e r c a s h a t the time the t r a n s f e r i s made. The g o l d c e r t i f i c a t e s c a r r i e d by the A s s i s t a n t Treasurer i n t h e S p e c i a l Fund are now b e i n g shipped t o Washington, and i t i s e x p e c t e d t h a t t h e y w i l l # a l l be t r a n s f e r r e d p r i o r to the date of the d i s c o n t i n u a n c e of t h e subtreasury • All balances carried in the sub treasury to the official credit Of former Comptrollers of the Currency will be transferred to Washington* With reference to the un-used stock of Federal Reserve notes now carried in the subtreasury, you are advised that the question of transferring this stock to the Federal Reserve Agent has already been taken up with the Comptroller of the Currency and definite instructions will be forthcoming in a few days. The un~issued bonds carried in the sub treasury will be transferred to the Federal Reserve Bank, Fiscal Agency Department. Provision is also made in the regulations for the custody of securities now carried by the subtreasury, which it is desired to transfer to the Federal Reserve Bank* The question of the responsibili ty of the Federal Reserve Banks in per* forming sub treasury functions is governed in large part by the regulations governing the handling of United States paper currency and coin and miscellaneous matters in relation to the functions now performed by the subtreasuries* Upon the discontinuance of the sub treasury, and transfer of the remaining cash, and other assets, the Federal Reserve Bank will be required, of course, to receipt only for currency, coin, etc., actually delivered to the Federal Reserve Bank- In general, the Treasury feels thst it is desirable from every point of view to have the Federal Reserve Banks perform the currency and coin functions as far as possible as a bank operation, and to keep down to the minimum sub treasury functions to be performed as fiscal agent of the United States. It will be the policy of the Treasury not to place the custody of the trust funds in the Federal Reserve Banks except to meet emergencies* Ihile the matter of cashing checks for disbursing officers desiring currency for pay-roll and other purposes is thought to be fully covered under Department Circular No* l?6 t dated December 31* the new regulations, copies of which are being sent under separate cover, contain a further paragraph on the subject X-2058 -5- i 9 7 8 I f t h e r e are any o u t s t a n d i n g r e c e i p t s cn a c c o u n t of redemptions and exchanges of currency o r c o i n a t the time the t r a n s f e r i s made, the n e c e s s a r y currency and c o i n w i l l be t r a n s f e r r e d t o the Federal Reserve Bank t o be h e l d i n i t s c u s t o d y and exchanged f o r the o u t s t a n d i n g r e c e i p t s when and as p r e sented; t h e r e f o r e a s e p a r a t e r e c e i p t w i l l b e taken f o r t h e a g g r e g a t e amount of o u t s t a n d i n g r e c e i p t s on account of redemptions and exchanges when the t r a n s f e r i s made. I t i s n o t e d t h a t your bank w i l l take over permanently the f o l l o w i n g employees: W i l l i s t o n Lincoln A l f r e d P. Rexford Thomas E.G. Robinson Thomas J . L a l l y Thomas L. Shepard J u l i a M. Lennon Mary E. Cameron John F. J a n n e s s y Mabel Guild Irene L. S t e b b i n s Thcmas F a r r e l l and f u r t h e r , $2,500 per annum #1 2,000 1,800 tt 1,600 Yf 1,600 ft 1,200 n 1,100 ?t 1,100 n 1,000 T* 1,000 tl 900 that under azi arrangement made w i t h Mr. Huddles on, you w i l l take over t e m p o r a r i l y , f o r a p e r i o d n o t e x c e e d i n g one y e a r , the f o l l o w i n g employees, w i t h the u n d e r s t a n d i n g t h a t the Department w i l l promptly endeavor t o make p r o v i s i o n f o r t h e i r employment e l s e w h e r e . C. Toland C.E. K e l s e y F . J . Small James F. Dwyer C>T- Woodman E . F . P . Hale(Miss) M.E. Leydon (Miss) TJP. White C.E. Anderson $ 2 , 5 0 0 p e r annum 2,250 2,000 1,600 1,600 1,600 1,500 1,200 " n 1,000 By d i r e c t i o n of the S e c r e t a r y : Respectfully, (Signed) S. P . GILBERT, JR. A s s i s t a n t S e c r e t a r y of t h e Treasury.
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