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2433 X-17S FEDERAL RESERVE BANKS as FISCAL of AGENTS the UNITES STATES --- 0 O0 --- Suggested form of Circular embodying in structions heretofore sent out together with certain new matter. Arranged according to sub* ject matter and indexed for convenience of fis cal agents. — Office of M. C. ELLIOTT, Counsel, Federal Reserve Board. 0 O0 FEDERAL RESERVE BARKS *S FISCAL AGENTS OF THE UNITED STATES For the convenience of the fiscal agent and m answer to inquiries received, it is deemed advisable to analyze the services that the Federal reserve banks are called upon to per form as fiscal agents, and to explain m some detail the method of procedure to be followed. This necessarily involves some repetition of instructions heretofore issued but it will no doubt prove a convenience to the fiscal agents to have the general de tails embodied m one circular. THE ACT OF APRIL 24, 1917. The Act of April 24, 1917, provides among other things (a) For the issuance and sale of short-term Treasury certif icates of indebtedness bearing interest at not to exceed three and one-half per cent to an amount not to exceed two billion dol lars (b) For the issuance and sale of United States bonds bear ing interest at not to exceed three and one-half per cent to an amount not to exceed five billion dollars. (c) For the designation as Government depositaries of State banks and trust companies which subscribe to such bonds of cer tificates and for the deposit in such depositaries of amounts not to exceed the amount withdrawn from such banks or trust com panies and invested in such bonds and certificates of indebted ness plus the amount so invested by the designated bank or trust company. 2435 .... I N D E X..... ALLOTMENTS: Form - When instalment payments af*e made.... *• 17 When payment is madeain full ........ . 18 How made.... .............................. 7 Notice of .............................. 7 Report to Secretary of information necessary to enable him to make ................. 7 ANTICIPATED PAYMENTS: (See Payments) CERTIFICATES OF INDEBTEDNESS: Authorized by Act of April 2k, 1S17, ......... 1 May be used to pay for bonds ................ 2 Outstanding............ 2 Presented for payment at maturity............ 1^ DISPOSITION OF COLLECTIONS: Made by fiscal agent •••»'•»....... ............ 11 n n Treasurer of United States ........... lU FISCAL AGENTS: Applications of subscribers received from ...... Subscribers direct .................... Through Treasurer of United States ... Through Sub-agents ................... Books and accounts ....................... Duties of ............................ .. • Federal Reserve Banks as ....... 5 6 6 6 ^ *+ 2 INTEREST COMPUTATIONS: How adjustments are. made .;.<«.«<........•... 13 Rate .......... 12 Table of computatibns ..... *.... .......... l6 When interest begins to run........ .... »... .12 INTERIM RECEIPTS: How executed............................ Issued vitien............................. In negotiable form................ Must show........................... 7 7 7 7 INDEX, No. 2 LIBERTY BONDS! Amount that may he soli........... 1 n now offered... ........... % Authorized by Act of April 24, 1917-••• 1 Every United States citizen must be given opportunity to subscribe ......... Must be sold as popular issue ....... 2 2 No commissions allowed ............ Rate of interest ............ 2 2 PAYMENTS: Disposition of by fiscal agents - Cash .,i..................... 11 Certificates of Advice ....... ; 11 Certificates of indebtedness ... .. 11 Made to Treasurer - disposition of... l4 To whom made ............... **.... 9 What may be accepted ............ 10 Cash....................... 10 Certificates of Advice ......... 10 Certificates of Indebtedness .... 10 Bank drafts, money orders, etc.... 10 When due On individual $50 or $100 bonds .... 8 On other subscriptions ......... 9 When may be anticipated ........... 9 When notice of payment in advance not . required .................... 9 SUB-AGENTS: Agent for subscriber until subscrip tion accepted ................ Funds held by remain funds of sub scriber .......... National banks, State banks, trust companies, and other corporations and associations as ........... 3 3 3 X-179 25437 -2 - TREASURY CERTIFICATES OF INDEBTEDNESS. The Secretary has already issued and sold Treasury certificates of indebtedness to the extent of approximately $700,000,000. The proceeds have been paid into the general fund of the Treasury and have been or are being disbursed. These certificates are held primarily by banks and trust com panies which will in all probability subscribe to Liberty Loan bonds, and the certificates will no doubt be used to a great ex tent to pay, in whole or in part> the purchase price of such bonds. ■ Liberty bonds. The Secretary is now offering to the public an issue of $2,000,000,000 in three and 6ftfe-half per ednt United Stated bonds, popularly known as Liberty bonds. These bonds must be disposed of without commission to any underwriting syndicate, and in order to market them the twelve Federal reserve banks have been appointed fiscal agents of the Government. FISCAL AGENTS. • The Act provides, in terms, that these bonds "shall be offered at not less than par as a popular loan under such reg ulations prescribed by the Secretary of the Treasury as will give all citizens of the United States an equal opportunity to participate therein * * * but no commissions shall be allowed or paid on any bonds issued under authority of this Act." As it is manifestly impracticable for the twelve Federal reserve banks to receive directly all subscriptions applied for by the public, it. is necessary to employ the services of agencies for this purpose. x-iv9 3 4 3 8 National "banks. State banks, trust companies, and other cor porations and associations in large numbers have offered to. assist the Government in selling thee* bonds, and the tender of their services has been accepted by the Secretary, For con venience, these associations and corporations will be referred to as sub-agents. Federal reserve banks acting as fiscal agents will be referred to as fiscal agents. SUB-AGENTS. Sub-agents are authorized to receive applications from the public and to file them with the fiscal agent either 0 in the name of the original subscriber or in the name of the sub-agent. While for convenience such associations are re ferred to as sub-agents, it is obvious that when they apply to a fiscal agent for an allotment of bonds they must aet as the agent of the subscriber until the subscription is accepted and the allotment is made. Funds delivered to any sub-agent by a subscriber remain the funds of the subscriber until the fiscal agent accepts them in payment or part payment of bonds subscribed for and allotted. On the other hand, when funds are received by the fiscal agent or by the, Treasurer of the United States, they are deposit ed in a government depositary by the direction of♦the Secretary and the United States becomes liable therefor. If such funds are received by a fiscal agent or by the Treasurer of the United States prior to allotment they are held in trust until the allot ment is made when they are credited as a payment on subscription 7~jl79 -4invfaich case they become the property of the United States and a part of the Treasurer's balance in the general fund. In considering .the several steps involved in the sub scription and sale of bonds, it is important to bear these dis tinctions in mind# DUTIES OF FISCAL AGENTS. The duties which each fiscal agent will be called upon to perform in connection with the sale of Liberty bonds may be briefly summarized as follows; (1) To receive and carefully record in subscription books opened for that purpose all applications from sub scribers in its Federal reserve district. (2) To allot to each subscriber such proportion of the amount applied for els the Secretary may direct and to execute and deliver notices of such allotments. (3) Upon payment in full of subscription to deliver, after allotment, interim receipts exchangeable for Liber ty bonds, when such bonds are ready for delivery. (4) Upon payment of installment due June 28th> to issue in terim receipts for bonds in exchange for notices of allotments. (5) To collect all installments as they severeilly become due and to deposit proceeds in the Federal reserve bank or other Government depositaries under direction of the Secretary. The interim receipt must accompany all payments made subsequent to its issue. I • (6) To make delivery of Liberty bonds in exchange for in terim receipts representing payments in full of sub scriptions. BOOKS AND ACCOUNTS OF FISCiL AGENTS. It will be necessary for each Federal reserve bank to open and maintain a separate set of books and acpounts in its capacity aa fiscal agent. m s y X 173 -5- It should bo borne in znind that in performing the services of- fiscal a^ent each bank is acting in a representa tive capacity as an agent for the United States GOvernmentf Transactions between the United States and its fiscal agent should not., therefore, be confused with transactions between the United States and the Federal reserve bank, acting as a Government depositary,. The fiscal agent, for example, should open an account with each subscxiber to Liberty Bonds in its district and an account with the Treasurer of the United States. The Federal reserve bank, as.a bank, will receive no deposits from subscrib ers as sudh but funds paid by subscribe.rs to the fiscal agent will be credited to the subscribers account and deposited by the fiscal agent in the Federal reserve bank to the account of the Treasurer of the United States. In such case the account of the Treasurer will be charged by the fiscal agent with the amount of deposit and the account of the Treasurer will be cred ited '.by the Federal reserve bank with the same amount. A general balance sheet showing accounts to be main tained by the fiscal agent appears as an exhibit on page ____ of this circular. APPLICATIONS FOR SUBSCRIPTIONS. # Applications for subscriptions may be received ( (a) through the Treasurer of the United States; (b) through sub-agents; (c) from subscribers direct. 2440 (a) .Applications received by *:he Treasurer will be transmitted to the fiscal agent of 'xle district from which . the application is received. The |original application | will in each case be transmitted and all such applications should be treated as if filed directly with the fiscal ! agent. (b) All applications received, by sub-agents may be consolidated and included in one application filed -by the i sub-agent. In such aase the sub-lagent should keep an ac curate record of all applications received by him and should i be prepared upon request of the fisbal agent to furnish any details desired, including the namep and addresses of subi scTibers, the amount and denomination of bonds applied for, § and the amount tendered with each application. Unless.the fiscal agent should call for the names of subscribers the i application may show merely the number and amount of the several subscriptions and particularly the number of subi scribers which have applied for one bond of the denomination of $50 or of $1 0 0 . (c) Applications received direct should be recorded in the name of the subscriber. ALLOTMENTS. The subscription books of each fiscal agent should be closed at ____ o'clock on June 151th. Applications received z-l?9 - 7• - after this time 3kod?d be returned T.o the subscriber after allot ments have been made* As scon as p^aci:cable after the books are closed each fiscal agent should report to the Secretary by wire the total amount of subscriptions, applied for and the num ber and amount of the several subscriptions, e.' g. 1,000 of $5,000, 1,000 of $1,000, 1,000 of $500. This report should show specifically the number of individual subscribers applying for one $30 bond and the number of such subscribers applying for one $100 bond* This report should be promptly confirmed by letter* Upon receipt of this information the Secretary will give full directions as to allotments to be made* As soon as this information has been received from the Secretary each applicant should be sent a notice of allotment. This notice should show (a) the amount of bonds allotted to sub scribers, (b) the date and amount of installments to become due* (c) how payments may be made and should contain a statement to the-effect that the notice must be exchanged for an interim re ceipt when the installment due on June 28 is paid* INTERIM RECEIPTS, Upon payment of installment due on June 28, the fis cal agent must deliver in exchange for the notice of allotment sent to each subscriber an interim receipt. This receipt will bear the engraved signature of the Secretary and must be counttersigned by a duly authorized officer on behalf of the fiscal . agent* It should show (a) the amount of bonds to which the sub scriber will become entitled upon payment in full of subsctip 2442 X-17? - 8- 2443 tion price: (b) amount paid by the euoscriber to date of issue; (c) the date of maturity and amount yf future instalments; (d) the rate of interest and date frcm vhich such interest runs, and should contain a statement to the effect that upon payment of last instalment the receipt may be-exchanged for Liberty Bonds. Where subscription is paid in full after allotment interim re ceipts, exchangable for Liberty Bonds, when such bonds are ready for delivery, should be issued on form approved for that purpose. A H interim receipts will be issued in negotiable form payable to bearer unless the Secretary deems a variation of this rule necessary. WHEN PAYMENTS BECOME DUE. Individual subscriptions for one bond of the denomina tion of $50, or of.$100. of the denomination of $50 An individual subscriber to one bond or of $100, may, at his option, make payment in full at the time that his application is filed. When such payments are received by the Treasurer at Washington; or by the fiscal agent, a non-negotiable receipt may be issued therefor exchangeable for a Liberty Bond by the fiscal agent. It will not be necessary in such case to issue any other notice of allotment or any interim receipt. When such payments are made to .sub-agents, the sub-agent may, at its option, transmit them direct to the fis.aal agent and procure non-negotiable receipts in its own name or.-in the name of the subscriber, or it may include such subscrip tions in its own application. If such subscriptions are included in its own application it must pay for and deliver to the sub scriber the bond applied for as soon as such bonds are ready for X-175 -,.9 delivery by the fiscal agent* OTHER SUBSCRIPT JON5. All other subscriptions shall bo payable as follows: Two per centum on date application is filed with the fiy&al agent. Eighteen per centum on June 28, 1917* i • Twenty per centum on July $0, 1917- Thirty per centum on August 15* 1$)17• Thirty per centum on August 30/ 1917Individual subscribers to one bond of the denomination of $5 0 , o.r $100, may make payments in foregoing instalments at the option of the subscriber. ANTICIPATED PAYMENTS. On or after allotment subscribers at their ofttion aay, make payment in full at any time before August 30, 1917, and without previous notice, provided, the allotment does not exceed $10,000 or payment is to be made in Treasury certificates of in debtedness* When the allotment exceeds $10,000:;and payment, is not made in Treasury certificated of indebtedness, the Subscriber must file written notice with the fiscal agent not less than two weeks in advdnce of payment specifying the date, upon which pay ment is to be made. / HOW PAYMENTS SHOULD BE MADE. Payments should be-made to the fiscal agent by subscrib ers located in the Federal reserve district served by such fiscal agent. Subscribers who have filed subscriptions with the Treasurer at Washington may, however, at their option make payments to the - j * - 10 m - Treasurer. WHAT MAY BE RECFIVFD IN PAYMENT, Fiscal agents may receive in payment of subscriptions (a) Cash - 1 . e. gold, gold certificates, Degal tender notes of the United States, silver, silver certificates, national bank notes. Federal reserve notes and Federal reserve bank notes* (b) Treasury certificates of indebtedness issued under authority of the Act approved April 24, 1917* will be accepted at par m payment of the two per cent instalment required when application is filed. Where such certificates are presented to the fiscal agent in payment of bond subscriptions prior to June 15th, accrued interest to June 15 th should be paid to the subscriber by cashier's check drawn by the Federal reserve bank after allotments have been made* Pending allotment such certificates of indebtedness should be kept by the fiscal agent m the safe-keeping or custody department of the bank, separate and apart from the assets of the bank but subject to the same system of control* After allotments have been made the fiscal agent should deliver such certificates to the Federal reserve bank crediting the subscriber's account with the face value thereof* The Federal reserve bank should thereupon credit the account of the Treasurer in the Treasurer's general balance with the face value of the certificate and should charge the account by a like amount, forwarding the certificate to the Treasurer 3445 2446 -ii. as a warrant £o.;: credit at face value plus accrued interest theretofore paid by cashier’s checks* Certificates of indebtedness should also be received by the fiscal agent in payment of Subsequent instalments* In such case they should be accepted as equivalent to cash pay ments at par plus accrued interest computed to date of pay ment. and should be deposited in the Federal reserve bank and treated in the same manner as a Treasury warrant except that the Treasurer's balance in the Federal reserve bank should be first credited as if cash had been deposited and should be immediately charged as if the cash deposited had been used to pay the certificates of indebtedness and accrued in terest* (c) Bank drafts, checks, postoffice money order or express company money order* be certified. All checks received must When items received are payable in the Federal reserve city of the fiscal agent they should be immediattely collected and placed to the credit of the subscriber. When drawn against other Federal reserve banks they should be collected through the Gold Settlement .Fund and credited to the subscriber. When payable elsewhere than in the Fed eral reserve city of the fiscal agent, they should be. accepted for collection only and credit should be given the subscriber only after actual collection- and for S ‘ > -12- I > X-l'i'9= this amount actually collected- All exchange and collection charges must he borne by tho subscriber* (d) ; Certificates c-f advice issued oy a designated Government de- . positarv on Treasury Form No- 1, under authority of Treasury Circular No. 79, as supplemented)by Circular Ke« 81- Such certificates > 1 may be accepted only when tendered by the issuing bank in payment of subscriptions filed by it for its own account or for the ac count of its depositors* Payments of subscriptions filed with the Treasurer at Washington may be made to the Treasury in the same mannerDISPOSITION OF PAINTS MATE TO FISCAL AGENTS* (a) All cash received} including the proceeds of ail items collected by -the fiscal agent} should first be credited on the books l‘ of the fiscal agent to the acebunt of the subscriber making payments and should be charged tb the aocount of cash* S&ch cash should im mediately be deposited in the Federal reserve bank te the credit of the United States in tie Liberty Loan Bond Account* The cash ac count will thereupon be.credited- on the books of the fiscal agent and the account of the-Treasurer charged with the amount of such deposit 4 or) . Certificates of indebtedness received in payment should be credited to the account of the subscriber and charged to the account of the Treasurer of the United States- Guch certificates may be treated in the same manner as Treasury warrants and for warded to the Treasurer for credit to the account of the fiscal agent. The Treasurer will treau such certificates as if they had been paid in cash to « • X.-179 f » 2448 -13 the fiscal agent and the cash had been withdrawn by Treasury warrants to pay the matu-j.ng certificates of indebtedness* Where interest is paid by the Federal reserve bank to June 15th on certificates of indebtedness as hereinbefore provided, such cert-«flcaxes will be accepted by the Treasurer as Treas ury warrants at par and accrued interest to June 15th« (c) Where certificates of deposit on Form 1 are received in payment as hereinbefore provided, the subscriber should be credited on the books of the fiscal agent and the Treasurer of the United States charged with the corresponding amount* In such case no entry will appear on the books of the Federal re serve bank. INTEREST COMPUTATIONS. Liberty Bonds and interim receipts issued when sub scriptions have been paid m full, will m terms bear inter est from June 15, 1917, at three and one-half per cent on the principal amount of such bonds or receipts. In all cases where payment in full’is made after June 15, 1917, it will, therefore, be necessary to make in terest adjustments. In making such adjustments the fiscal agent should proceed as follows : Charge subscriber with interest at three and one-ljalf per cent on face amount of bond or interim receipt from June 15, 1917, to date that payment is made m full* i Credit subscriber with interest at same rate on pay- X*rl79* -14f merits made on or before June 15th from that date to date of full payment* If instalment payments have been made after June 15thf credit subscriber at same rate on each in stalment from due date of instalment to date of full pay ment if instalments were paid ofl or before due date* If instalments were paid and accepted after due date, credit subscriber with interest at same rate from date of deferred payment to date of full payment* Certificates of indebtedness tendered in payment on or before June 15th should be Credited to subscriber at face amount and the interest paid to June 15th by the fiscal agent as hereinbefore provided* Certificates of indebtedness tendered in payment after June 15th should be credited to subscriber at face amount and'accrued interest to date of payment* A table of interest computations prepared by this office,which should be used by fiscal agents in making interest computations,appears on page of this circular* MATURING CERTIFICATES OF INDEBTEDNESS NOT ' PRESENTED IN PAYMENT OR PART PAYMENT OF LIBERTY BONDS. Certificates of indebtedness issued under authority of the Act of April 24,1917, may be presented at maturity to the Treasurer of the United States or to any Federal reserve ibank for payment*.When presented to a Federal reserve bank, they should be #• 2450 -15- treated. as Treasury warrants and paid with interest ac crued to date of maturity and changed "co the general balance of the Treasurer of +-h3 United States* GENERAL Instructions issued by the Treasurer to Government de positaries designated under the Act of April 24, 1917, to trans mit funds to the Federal reserve banks will, whenever, practicable, be transmitted through the fiscal agent • Collections made by the Treasurer will be charged to the Treasurer's balance in the general fund and credit will be given to the Federal reserve bank of the district from which such pay ments were received. The Federal reserve bank will be authorized to charge the Treasurer's general balance with the amount col lected and to credit the Liberty Loan Account* In ary case in which the Treasurer receives in payment of subscription items which would ordinarily be sent through the Federal reserve bank for collection, such items will be for warded to the Federal reserve bank with instructions to collect and to credit the Liberty Loan Account with the proceeds* Form of notice of allotment and of interim receipts ' to be issued in case of full payment of subscriptions, as well as form to be'used where payments are made in instalments, will appear on pages and _ _ _ of this circular* Secretary of the Treasury*
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