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FEDERAL RESERVE BOARD WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE T O THE FEDERAL RESERVE BOARD June 21, 1924. SUBJECT: X-4099 Revised R e g u l a t i o n s Governing the u s e of Federal Reserve Leased Wires, Dear S i r : I n accordance w i t h the a c t i o n of the r e c e n t Governors 1 C o n f e r e n c e , the F e d e r a l Reserve Board has r e v i s e d i t s r e g u l a t i o n s g o v e r n i n g t h e u s e of the Federal r e s e r v e l e a s e d w i r e s , as f o l l o w s : 1* T e l e g r a p h i c t r a n s f e r s of funds w i l l b e a c c e p t e d from and p a i d t o member banks only* They must r e p r e s e n t bank b a l a n c e s and .can be made o n l y f o r round amounts, i . e . , m u l t i p l e s of 6100, The term "bank b a l a n c e " s h a l l be c o n s t r u e d t o mean an accumulation of funds comprising an e s t a b l i s h e d account c a r r i e d by one member bank w i t h another tnember bank* 2. The d e s c r i p t i v e data i n telegrams t r a n s f e r r i n g funds must be l i m i t e d t o the name of the sending member bank, name of i t s correspondent member bank r e q u e s t i n g the t r a n s f e r , name of the member bank r e c e i v i n g c r e d i t , and name of i t s correspondent member bank, 3* The F e d e r a l r e s e r v e c o d e , i n c l u d i n g t e s t word, mist b e u s e d f o r a l l messages i n v o l v i n g the t r a n s f e r of f u n d s and, i n the i n t e r e s t of econony, a l l o t h e r telegrams should be sent i n code when i t s u s e s h o r t e n s the message. U, In a d d i t i o n t o t h e u s u a l m a i l a d v i c e t o theHoemb e r b a n k r e c e i v i n g c r e d i t f o r t e l e g r a p h i c t r a n s f e r s of f u n d s , immediate a d v i c e by t e l e g r a p h y or o t h e r w i s e , should be g i v e n by t h e F e d e r a l r e s e r v e bank r e c e i v i n g the t r a n s f e r , except i n c a s e s where the c r e d i t e d member bank has s t a t e d t h a t other than the u s u a l mail a d v i c e i s unnecessary* .2- f. x-4ogg 5* Requests f o r t e l e g r a p h i c t r a n s f e r s of funds f o r consummation on date of r e c e i p t should not be a c c e p t e d by Federal r e s e r v e banks l a t e r than t h i r t y ( ] 0 ) minutes p r i o r t o the c l o s i n g hour of the Federal r e s e r v e bank t o which t r a n s f e r i s to be made. Any t e l e g r a p h i c t r a n s f e r s of funds r e q u e s t e d a f t e r such time w i l l be made a t the d i e c r e t i o n of the Federal r e s e r v e bank r e c e i v i n g c r e d i t * 6* The l e a s e d w i r e s s h a l l not be used f o r t r a c i n g or a d v i s i n g payment or non-payment of any non-cash c o l l e c t i o n i t e m s , nor f o r t r a n s f e r r i n g the proceeds t h e r e o f , 7* She l e a s e d w i r e s s h a l l not be used f o r r e c o n c i l i n g e x c e p t i o n s i n a c c o u n t s between Federal r e s e r v e banks, except where a l o s s might be i n v o l v e d . 8* Any l o s s r e s u l t i n g from n e g l i g e n c e on the part of t h e Federal r e s e r v e system i n the t r a n s m i s s i o n of telegrams t r a n s f e r r i n g funds over the l e a s e d w i r e s through r e l a y s t a t i o n s s h a l l be borne by the sending Federal r e s e r v e bank, u n l e s s r e s p o n s i b i l i t y can be d e f i n i t e ly - p l a c e d upon t h e Federal r e s e r v e bank to which the t e l e g r a m was addressed. 9 . Telegrams must be worded as c o n c i s e l y a s p o s s i b l e . T e l e grams should not be s e n t when communication by mail w i l l s u f f i c e * For the purpose of e n f o r c i n g t h e s e r e g u l a t i o n s , p r o v i s i o n should be made i n each Federal r e s e r v e bank so t h a t any misuse of the l e a s e d w i r e s w i l l be brought to t h e a t t e n t i o n of a d e s i g n a t e d o f f i c e r f o r r e f e r e n c e t o the o r i g i n a t i n g department, or, i n the case of incoming messages, t o t h e sending Federal r e s e r v e bank# The above r e g u l a t i o n s are intended t o govern the u s e of the l e a s e d w i r e s by the Federal r e s e r v e banks, The f o l l o w ing c l a u s e s should be i n c l u d e d by a l l Federal r e s e r v e banks i n t h e i r c i r c u l a r s t o member banks r e l a t i n g t o t e l e g r a p h i c t r a n s f e r s of f u n d s , The Board understands each Federal r e s e r v e bank w i l l i s s u e a new^ c i r c u l a r l e t t e r t o i t s member banks on J u l y 1 , 1924, making e f f e c t i v e as of J u l y 15, 1924, the new r e g u l a t i o n s governing w i r e t r a n s f e r s of funds f o r the account of member banks. 1, T e l e g r a p h i c t r a n s f e r s of funds w i l l be made f o r and p a i d t o member banks o n l y . 2 e T r a n s f e r s of bank b a l a n c e s in round amounts, t h a t i s , m u l t i p l e s of $100, w i l l be made over the Federal r e s e r v e l e a s e d w i r e s . Such t r a n s f e r s w i l l be made w i t h o u t c o s t t o member b a n k s . The term "bank balance 1 1 s h a l l be construed t o mean an accumulation of funds comprising an e s t a b l i s h e d account maintained by a member bank w i t h i t s Federal r e s e r v e bank or w i t h another member bank. x-4099 .- 3 3- T r a n s f e r s of proceeds of i n d i v i d u a l c o l l e c t i o n items w i l l not be made over t h e l e a s e d w i r e s , 4 . The d e s c r i p t i v e data i n telegrams t r a n s f e r r i n g bank b a l a n c e s mast be l i m i t e d t o the amount t o be t r a n s f e r r e d , name of t h e member bank to r e c e i v e c r e d i t and, when n e c e s s a r y , name'of i t s correspondent member bank and name of member bank w i t h which request o r i g i n a t e s . 5- The Federal r e s e r v e banks maintain, a t l a r g e e x p e n s e , a l e a s e d w i r e system over which a heavy volume of important communications p a s s e s between Federal r e s e r v e banks and b r a n c h e s . Member banks a r e r e q u e s t e d t o c o - o p e r a t e w i t h u s i n attempting t o avoid over-crowding t h e l e a s e d w i r e s by not making r e q u e s t s f o r t e l e g r a p h i c t r a n s f e r s of small amounts, or t h o s e which can be made a s w e l l through t h e m a i l s . 6 , The f o r e g o i n g r e g u l a t i o n s r e l a t e t o b a l a n c e s over t h e Federal r e s e r v e l e a s e d w i r e s . a l s o make t r a n s f e r s of funds f o r any purpose and mercial t e l e g r a p h w i r e s , Such t r a n s f e r s w i l l be member banks o n l y , but may be f o r the u s e of any or c o r p o r a t i o n . t h e t r a n s f e r r i n g of bank Federal r e s e r v e banks w i l l any amount over t h e coma c c e p t e d from and p a i d t o bank, i n d i v i d u a l , f i r m , 7• The c o s t of a l l telegrams between Federal r e s e r v e banks t r a n s f e r r i n g funds over the commercial t e l e g r a p h w i r e s w i l l be charged t o the member banks f o r which t h e t r a n s f e r s a r e made. Member banks should rprepay the c o s t of telegrams r e q u e s t i n g such t r a n s f e r s , and t e l e g r a m s t o member banks a d v i s i n g c r e d i t w i l l be sent " c o l l e c t " . 8 . The Federal Reserve Bank of w i l l u s e due d i l i g e n c e and car-- in t h e t r a n s f e r . of funds by t e l e g r a p h t o the r e c e i v i n g F e d e r a l r e s e r v e bank f o r c r e d i t t o t h e account of the payee bank, but w i l l not be r e s p o n s i b l e f o r e r r o r s or d e l a y s caused by circumstances beyond i t s c o n t r o l . Very t r u l y y o u r s , J . C. NOELL Assistant Secretary. TO BE SENT TO GOVERNORS OF ALL BANES.
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