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W. P. G. HARDING. GOVERNOR - - - - , VICE GOVERNOR ADOLPH C. MILLER _cH_AR_LES _s_._HA-MLIN EX-OFFICIO MEMBERS 14j_.;)! WILLIAM G. MCADOO SECRETARY OF THE TREASURY CHAIRMAN JOHN SKELTON WILLIAMS COMPTROLLER OF THE CURRENCY J. A. BRODERICK, SECRETARY FEDERAL RESERVE BOARD L. C. ADELSON. ASSISTANT SECRETARY W, T. CHAPMAN, ASSISTANT SECRETARY W. M. IMLAY, FISCAL AGENT WASHINGTON ADDRESS REPLY TO FEDERAL RESERVE BOARD August 29,1918. x....llo3 Doar S~r: Sovoral inquiries havo b~on mado d~ring fow months as to possibilitias of simplifying the tho past pr~sont plan of opcmtion in han!iling rediscounts botwoon Fodjral Ro sorvo Bank a. Tho attached momorartd\Z!Il has boon proparod by tho. Statistical Divieionj and it w9ul4 bo app~ceiatod if ·..till pioaso givo tho tincios:'signod tko bonofit of your criticisms or sugg:Jstibnfl; prcforably br wire, y~u ~ X-ll63A August 27,1918. j_16 REDISCOUNTS BETINEEN FEDERAL RESERVE BANKS. Thoro. is submittJd bol$·N a plan for handling rediscounts botwoon Federal Reserve banks which it is believed Nill efioct as groat a saving in clorical work as is possible under tho present law~o (1) When ono Federal Roscrvc bank rediscounts tho paper of another it will bo necessary for tho discounting bank to endorse all papor and furnish tho rediscounting bank and tho Fodoral Rosorvo Board with a sta~o mont on Schodul,; BD - 4 or 7 shovdn~r tho id::mtification numb.Jr, tho name Of ,;ach rra:kvr 1 th.; dU.J dat..;; tho naturity ValU0 1 and tho ratO at WhiCh rodiscount::;d. (2) Cr~~it should bo given by tho rediscounting bank, in tho daily or by transf..;r if nocossary, for tho ontiro rraturity value of tho papor .i'ithout d.;duction for un:Jarnod discount. sottlJn~nt (3) Instoad of fis:uring discount on oach pioco of paper sJparat.Jly i t Nill be sufficient to calculate tho discount on tho ontiro amount for on .:; day and to crodit t:·u rvdiscounting bank daily, or a~ and as of cl~o of business oach Fri~by J ....lso con tho last day of each month Nith tho amount of discount tho:n accru:.-d; or discount rrily b-o accru,; d daily on tho sa:rr.o basis as interest is non a ecru:::~ on u.s. bonds and settL::rr~nt rr:ado botvvoon tho banks Nhon tho ndiscountod ·paper is rodoon:od or at such oth::;r tirr..o or tirnos as nay b.J agroJd upon. It Nill be assumed under this plan that tho papor is rodiscountJd for th..:~ entire poriod it has to run, although tho discountint" bank rray rodoJm th:; papor at any tin:o by n::.;rcly croditin!r tho rediscounting bank with thJ rraturity valu..:; of th~ paper plus tho amount of discount accrued., if any .. If tho paper is rcdc::rncd as above bvforo rraturity date tho Board should bo furnished with a statomont to tho of foct that paper rodiscountcd ,vith Bank "A" on a crivon date., as shown by Schedule No. dated was rodo~mcd on • (4) In case tho above plan is ado~ted , bookkoopin~ entries in connection with earned and unoarnod discount could .• bo rrado as folH~vs: By Discounting Bank: Debit unearned discount and credit either tho rediscounting bank or discount accrued on rodiscounts (liability itom), By Rediscounting Bank: Crodit oarnod discount and debit either tho discountin~ bank or Discount accrued on rediscounts (ass:Jt it:;m) .. It is of course assum.:>d that und::r this plan tho rJdiscounting Fodora.l Reserve bank vdll carry tho papor rediscounted on its books at its rraturity valuo rJg:ardloss of th.; p.Jriod for ·,vhich thu discounting bank may desire aCCOillllodation. In view of tho fact., howovor, that Federal Roscrv.:; banks file their bill holdings according to maturity datos it is thought. that vory little oxtra work ·,vill b..; nocossary in ordor to comply .vith tho rratur-ity classification shoNn on fonn 34.
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