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C O P Y
For signature by
Underwriting Members
of Lloyd’s, London, only.
BANKERS' AND BROKERS’ POLICY.
Effected by
("In and Out" Form)
James Hartley Cooper & Co.,Ltd.,
Cowper's Court Cornhill,
London, E. C., and at Lloyd’s.
London,
1 5 th
May,
1 9 I6
*
IN CONSIDERATION of a premium of twenty shillings per cent now
paid to us by Federal Reserve Bank of _______ _____ hereinafter called
the Assured, on the amount underwritten cy us respectively (the receipt
of which we hereby acknowledge) and of the further premium (if any) to
|)e paid to us as hereinafter mentioned, We the undersigned each in the
proportion which the amounts hereby underwritten by us respectively bear
to the sum of Thirty thousand pounds - $1 5 0 ,0 0 0 - and each being liable
pnly in respect of any one loss to the extent of the amount underwritten
py him, hereby undertake and agree with the aaid Assured to hold them
harmless and indemnified for and during the space of Twelve Calendar
months, from noon of the ) ' day of___ 1, 191 _, to noon of the .
day
pf
.193_, from and against all such losses or damages as they the
said Assured including branches established or to be established may
during the said period suffer or sustain or discover that they have suf
fered or sustained in manner hereinafter mentioned (that is to say):1
1.
BY reason of any Bonds, Debentures, Scrip, Certificates,
Warrants, Transfers, Coupons, Bills of Exchange, Promissory Notes, Cheques
|3ank Notes, Specie, Currency, Coin, or other similar Securities, whether
payable to bearer or otherwise (not including title deeds of landed
property) in which they are interested or the custody of which they have
undertaken, and which now are or are by them supposed or believed to be
or at any time during the said period of Twelve months may be in or upon
their own premises or upon the premises of their bankers or in any recog
nized place of safe deposit in
_
______ or branches established or
to be established or lodged or deposited in the ordinary course of busi
ness for exchange, conversion, or registration with the issuers thereof,
or with any agent of such issuers, or with any persons employed to procure
or manage the exchange, conversion, or registration thereof, being (while
so in or upon such premises o*" so placed, lodged or deposited as afore
said) lost, destroyed or otherwise made away with by robbery, theft, fire,
embezzlement, burglary or abstraction, or taken out of their possession
or control by any fraudulent means or by means of credit established by
fraud whether with or without violence, and whether from within or with
out or whether by the officers, clerks and servants of the said Assured
or any other person or persons or by the negligence or fraud of the
said officers, clerks and servants.
wui.
X-l£6 ,
«
2
-
2.
BY reason of any securities of the description above specified
feeing lost, stolen, mislaid, misappropriated, or made away with, whether
by negligence or fraud of their officers, clerks or servants or any mes
sengers or otherwise, whilst in transit in their own hands or in the
hands of their officers, clerks or servants or any messengers between
any houses or places situate within ten miles from ^ _____ or branches
established or to be established, such risk or transit to commence on
every security or parcel of securities from the moment of the person into
whose hands the same may be delivered on behalf of the said Assured re
ceiving the same and to continue until the delivery thereof at destina
tion.
PROVIDED that the total liability of each of the undersigned in
respect of any one loss under this guarantee is limited to the amount under
written by him, irrespective of the total value of the securities com
prised in such loss and that in estimating the amount of such securities
so lost as aforesaid the value of the same shall be taken at the average
market price or value in._______ _on the day next after the discovery of
such loss or losses respectively (omitting Sundays and Holidays), and if
there be no market price or value for the same or any of them on such
day then the value thereof shall be the value as agreed between the re
spective parties or in the event of difference as ascertained by arbi
tration.
And further that upon any loss happening under this Insurance
(and subject to the due payment thereof) a futther premium calculated at
pro rata of the annual premium for the unexpired time on the amount of
such loss shall be payable by the said Assured to the undersigned and
that as from the time of the happening or discovery of such loss, and
even although the further premium may not meanwhile have been actually
paid, this Insurance shall be treated as renewed so as at all times during
the said period of twelve calendar months to continue as an Insurance to
the full extent of i>3 0 , 0 0 0 - $1 5 0 ,0 0 0 . notwithstanding any previous loss
which the undersigned may have paid or be liable to pay hereunder, the
true intent and meaning of these presents being that while the total
liability of each of the undersigned-in respect of any single loss is
to be limited to the amount underwritten by him, any number of separate
claims to that amount may either on the same or on different days arise
against him hereunder subject only to his right on the happening of any
loss to payment of the further premiums hereinbefore mentioned and pro
vided for.
Warranted free of all claim for losses not discovered within
the said period of twelve calendar months.
Warranted free of all claim for loss of any securities con
fided to the care of the said Assured, including branches established or
to be established, the nominal value and description of which have not
been ascertained by them before loss.
j* * -4
r
t p i ''
a --
- 3 -
* *
AND IT IS HEREBY AGREED that the undersigned upon payment of
of any loss hereunder shall become subrogated to all the rights and
remedies of the said Assured in respect of the securities for which a
a loss is paid and that immediate notice of any such loss shall be
given by the said Assured to Messrs* James Hartley, Cooper & Co., Ltd.,
of Cowper's Court, Cornhill, London, together with all such particulars
for the purpose of identification as may be in their power.
Whereas the said Assured has in force certain bonds guaran
teeing the fidelity of its officers and employees, it is hereby agreed
that this insurance in so far as it covers losses also covered by said
fidelity bond (or bonds) shall only be for the excess over and above
the amount recoverable under the bond (or bonds) of the officer or em
ployee through whose want of fidelity the loss occurs.
WAR
CLAUSE.
(Approved by Lloyd's Underwriters* Fire and Non-Marine Association)
This Policy does not cover loss or damage to the property
insured occasioned by war invasion hostilities acts of foreign
enemies civil war rebellion insurrection military or usurped power
or martial law or confiscation by order of any Government or public
authority.
Attaching to’and forming part of Policy
AMERICAN CURRENCY CLAUSE.
In consideration of an addition of 6$ to the premium,
which the Underwriters who have hereunto subscribed their names
hereby acknowledge to have received, it is declared and agreed
that in the event of loss under this Policy payment shall be made
in New York in American Currency.
In apportioning the loss, if
any, the Sum Insured by this Policy shall be calculated at the
rate of Five Dollars for every Pound Sterling.
5A/17-
E x -O f f ic io m e m b e r s
W. P. 6. HARDING, GOVERNOR
PAUL M. WARBURG, VICE G o v e r n o r
FREDERIC A. DELANO
ADOLPH C. MILLER
CHARLES S. HAMLIN
WILLIAM 6. McADOO
SECRETARY OF THE TREASURY
CHAIRMAN
JOHN SKELTON WILLIAMS
FEDERAL RESERVE BOARD
COMPTROLLER OF THE CURRENCY
H. PARKER WILLIS, SECRETARY
SHERMAN P. ALLEN, A^ST. SECRETARY
AND F ls ]$ ^ ^ G 0 t lt D S l' v
W A S H IN G T O N
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
May 9,
1917.
Dear Sir:
The Governors of the Federal Reserve Banks at their
conference in Washington on April Hth t o ‘.6th, 1917^ voted,
(Topic No. 23 - Surety and Fidelity Bonds of Federal Reserve
Banks):
"THAT the Federal Reserve Board be requested
to have a summary of its investigation into the
matter of surety and fidelity bonds held by the
Federal Reserve Banks made, and a copy forwarded
to each Eank for its consideration."
In accordance with this vote,and acting for the Com
mittee to whom this matter was referred, I hand you herewith
an analysis covering the salient features of the various bonds
held by the Federal Reserve Banks as disclosed by the informa
tion submitted to the Board.
It will be noted that while nearly all the banks have
fidelity bonds in standard form, as approved by the Insurance
Committee of the American Bankers' Association, but two of
them - New York and Chicago - have policies which cover losses
by fraud or forgery perpettated by parties not connected with
the Bank.
This policy is known as Lloyds
Brokers' "In and Out" Form.
Bankers' and
The standard form of American
, .jO iW
I-nc-c
policy does not cover fraud or forgery unless committed ’'by or
with the collusion of one or more employees of the Bank.11
There is also attached hereto a memorandum covering
various points included in this analysis which are submitted
simply for the consideration of the Governors or of a Committee
which might be appointed to investigate this subject.
It might be possible to have a policy written for each
of the Banks by an American Company., or by "Lloyds”., which would
specifically cover frauds and forgery and which would eliminate
any clause which is ambiguous as to coverage, or which is not
satisfactory to the Banks, if it could be arranged so that all
of the Banks would get together and commit their joint interests
to some one agent or broker who would be authorized to act for
them in negotiating for such policies.
various Banks
It is doubtful if the
acting independently could obtain a policy from
different companies which would contain all the desirable features.
Very truly yours,
Enclosures:
X-126b.
M E M O R A N D U M
With reference to the attached analysis of insurance
policies of the various Federal Reserve Banks, attention is di
rected to certain features which might be considered in con
nection therewith:
Lloyds Bankers & Brokers "In and Out" form, carried
by the New York and Chicago Banks, (copy attached), in Provision
1, covers losses by fraud or forgery, whether by parties con
nected with the Bank or by outside parties*
One of the Federal
Reserve Agents, however, calls attention to a provision reading
as follows:
"Warranted free of all claims for loss of any
securities confided to the care of the said Assured,
including branches established or to be established,
the nominal value and description of which have not
been ascertained by them before loss."
He gives it as his opinion that in event of a hold-up of an
authorized messenger calling at a post office or an express
office for a package, this policy would not cover, even though
it were possible, through cooperation with the shipper, to
prove the value and contents of the package. Or, in event of
unauthorized persons, through fraudulent or forged orders, ob
taining packages as indicated above, the contents of which are
not known in advance, the policy might not give protections
Perhaps, however, it is the intent of the clause quoted
above simply to deny liability for alleged loss of securities
which might be deposited with the Bank for safe keeping, in which
event the Bank would probably have no means of knowing the value
of any packages so deposited.
This situation might be somewhat
similar to that of a safe deposit company which rents space to a
customer for the safe keeping of valuable papers or securities,
the contents of which the company has no knowledge and for which
it should not be held responsible.
This is a matter which
should be given careful consideration, perhaps by a committee of
counsel of the Eanks.
It wall be noted that Provision 2 of the
Lloyds policy plainly states that the company is responsible for
loss of securities while in the hands of messengers within ten
miles of the Bank or any of its branches.
X-126b
-
2
-
One of the Federal Reserve Banks has a policy which does
not cover ’’teller’s shorts".
While there should, of Course, be
no suggestion that a Bank would hold an insurance company respon
sible for ordinary teller's shorts, it is possible that, through
theft, there might be a considerable shortage in a teller's ac
counts, which should be covered.
While the majority of the bankers' blanket bonds cover
loss through robbery, theft, hold-up, etc., while the property
is in transit within twenty (20) miles of any of the offices
covered in the policy, a few of the policies limit this distance
to ten (10) miles. Uniformity in this matter ought to be easily
obtained.
Query: Should not the co-sur.eties, or underwriters,
sign the policies with the principal, as is done in the case of
the policy carried by the Federal Reserve Bank of Richmond? This
would add strength to the policy.
One of the clauses of the standard form as adopted by
the insurance committee of the American Bankers Association
states that the policy does not cover "any loss resulting from
the act or acts of any of the directors of the insured, other
than those employed as salaried officers,"
This clause should
have careful consideration in those Districts where the Deputy
Federal Reserve Agent is a Class "C" Director, is not a salaried
officer of the Bank, but has access to the funds in the possession
of the Bank, or the Agent.
5/ 9/17
@FedFRASER