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FEDERAL RESERVE BOARD WASHINGTON address official correspondence t o the federal reserve board X-6555 March 31, SUBJECT: Dear 1930. C o n v e r s i o n of Canadian Currency. Sir; • U n d e r d a t e o f November 7 t h e B o a r d a d v i s e d y o u t h a t i t h a d a p p r o v e d t h e r e p o r t of the Committee on Canadian C u r r e n c y , a n d e n c l o s e d w i t h i t s l e t t e r , X-6413, a copy of t h e C o m m i t t e e ' s r e p o r t , a l s o a c o p y o f t h e l e t t e r t o "be a d d r e s s e d t o m e m b e r "banks a n d o f t h e s t a t e m e n t t o b e r e l e a s e d to the p r e s s . On N o v e m b e r 1 5 t h e B o a r d s e n t y o u a t e l e g r a m m o d i f y i n g somewhat t h e p r e s s s t a t e m e n t a n d t h e l e t t e r t o be s e n t t o member b a n k s a n d o n November I S i t a d v i s e d y o u t h a t i t h a d v o t e d t o p o s t p o n e t h e e f f e c t i v e d a t e of t h e p l a n f o r t h e c o n v e r s i o n of C a n a d i a n c u r r e n c y i n t o U. S. f u n d s . This matter has again been reviewed and the Board has d e c i d e d t o make t h e e f f e c t i v e d a t e of t h e p l a n T u e s d a y , A p r i l 15, 1930. The p r e s s s t a t e m e n t w i l l b e r e l e a s e d b y the B o a r d a t 2 o ' c l o c k on t h a t d a t e a n d i t w i l l be a p p r e c i a t e d i f y o u w i l l r e l e a s e t h e s t a t e m e n t a t t h e same t i m e a t your bank and, i f you t h i n k a d v i s a b l e , a t each of y o u r branches, if any. You may f i n d i t a d v i s a b l e t o a m p l i f y somewhat t h e l e t t e r t o be s e n t t o member b a n k s b u t t h e B o a r d w o u l d s u g g e s t t h a t no c h a n g e s b e made i n t h e s t a t e m e n t t o be g i v e n t o t h e p r e s s . C o p i e s of t h e r e v i s e d p r e s s s t a t e m e n t and of t h e l e t t e r t o be s e n t t o member b a n k s a r e a t t a c h e d h e r e t o . Very t r u l y y o u r s , E . M. M c C l e l l a n d , Assistant Secretary. Enclosures. tfO GOVERNORS OF ALL F . R . BANKS. X—6555—a , SUBJECT: 1930. Canadian Currency. To M e m b e r B a n k A d d r e s s e d : Enclosed h e r e w i t h is a statement which the F e d e r a l Reserve Board and the Federal reserve banks and branches have g i v e n t o t h e p r e s s , r e l a t i n g to the c o n v e r s i o n i n t o U. S- f u n d s of C a n a d i a n p a p e r c u r r e n c y s p e n t i n t h i s country. I n a c c o r d a n c e w i t h t h i s s t a t e m e n t , y o u may i n c l u d e C a n a d i a n p a p e r c u r r e n c y i n y o u r s h i p m e n t s of U n i t e d S t a t e s c u r r e n c y p r o v i d e d t h e two k i n d s of c u r r e n c y a r e p r o p e r l y s e g r e g a t e d w i t h i n the package. C r e d i t f o r such c u r r e n c y w i l l be g i v e n f o r i t s f a c e v a l u e a n d w h e n t h e c o s t of c o n v e r s i o n i n t o U. S . f u n d s i s d e t e r m i n e d i t w i l l be charged to your r e s e r v e a c c o u n t . As b r o u g h t o u t i n t h e a c c o m p a n y i n g p r e s s s t a t e m e n t , t h e a v e r a g e c o s t d u r i n g t h e p a s t t h r e e y e a r s of c o n v e r t i n g C a n a d i a n p a p e r c u r r e n c y i n t o U. S. f u n d s , i n c l u d i n g b o t h exchange and shipping charges, has averaged l e s s than 1 per cent. X-6555-b F E D E R A L E S S 2 2 7 3 B O A R D STATEMEH? FOR THE PRESS For release Tuesday, A p r i l SUBJECT: 15, 1930. Canadian Currency. The F e d e r a l R e s e r v e B o a r d a n n o u n c e s t h a t a p l a n h a s "been w o r k e d o u t a n d w i l l h e p u t i n o p e r a t i o n f o r h a n d l i n g Canadian currency deposited with Federal reserve hanks, a t a minimum of t h e a c t u a l c o l l e c t i o n c h a r g e s i n c u r r e d h y t h e m . The d i s c o u n t on C a n a d i a n c u r r e n c y "brought i n t o t h e U n i t e d S t a t e s hy t r a v e l e r s has f r e q u e n t l y r a n g e d as h i g h a s 10 and sometimes even a s h i g h a s 20 p e r c e n t , a t p l a c e s r e This i s r e g a r d e d a s excessive and mote from the border line* h a s g i v e n r i s e t o some f e e l i n g i n C a n a d a , e s p e c i a l l y a s U n i t e d S t a t e s currency is g e n e r a l l y a c c e p t e d a t p a r in Canada. The F e d e r a l R e s e r v e B o a r d h a s t a k e n t h e s u b j e c t up w i t h the F e d e r a l reserve banks and they have agreed to o f f e r t h e i r f a c i l i t i e s t o member b a n k s f o r t h e c o l l e c t i o n a n d c o n v e r s i o n of Canadian p a p e r c u r r e n c y i n t o U n i t e d S t a t e s c u r r e n c y a t t h e c u r r e n t r a t e s of e x c h a n g e . The F e d e r a l r e s e r v e b a n k s w i l l a b s o r b t h e c o s t of s h i p p i n g C a n a d i a n p a p e r c u r r e n c y f r o m t h e member b a n k s t o t h e i r r e s p e c t i v e F e d e r a l r e s e r v e b a n k s but w i l l deduct an allowance to cover the a c t u a l exchange charges, and insurance and shipping charges, if any, from the F e d e r a l r e s e r v e banks to the p o i n t s of convert-ion i n t o U n i t e d States currency. The a v e r a g e c o s t d u r i n g t h e p a s t t h r e e y e a r s o f c o n v e r t i n g C a n a d i a n p a p e r c u r r e n c y i n t o U» $ . f u n d s , i n c l u d i n g both exchange and shipping charges, has averaged l e s s than 1 per cent. T h i s m e t h o d of h a n d l i n g CanSidian c u r r e n c y by t h e F e d e r a l r e s e r v e banks» w i l l i t i s hoped* r e s u l t i n s u b s t a n t i a l . r e d u c t i o n s i n t h e c o s t of c o l l e c t i n g t h i s c u r r e n c y . The Board f e e l s t h a t i f member b a n k s c o o p e r a t e i n t h i s m a t t e r b y e x t e n d i n g a s i m i l a r s e r v i c e to t h e i r customers, Canadian t o u r i s t s t r a v e l i n g i n t h i s c o u n t r y w i l l f i n d American m e r c h a n t s w i l l i n g to accept Canadian currency a t or near p a r .
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