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BOARD OF GOVERNORS
OF' THE
FEDERAL RESERVE SYSTEM
R-884
WASHINGTON
ADDRESS OF"F"ICIAL CORRESPONDENCE
TO THE SOARD
September 17, 1941
•
De£>.r Sir:
•
At the re-quEst of l;J-. William A. Day, Vice
Cheirme.n of the Presidents' Conference, I
t;.m
sending
you here1vi th u copy of the Second Report of' the Committee .
on Handling U • S. Festal
•
l~oney
Ord.,rs, in ordE-r tho.t you
mny have an opportunity to review the rEport before the
next Presidents' Conference.
..
Very truly yours,
E, L. Smead, Chief,
Division of B~nk Op~rations.
Enclosure
TO THE; PRESIDENTS OF ALL FEDERAL RESERVE BANKS
EXCEPT SAN FRANCISCO
(Enclosure ~1th addressed copies only)
•
SECOND REPORT OF THE
COI\J1JTTEE
O~J
F.ANDLING OF U. S. POSTAL !{OHEY ORDERS
TO
THE CONFERENCE OF PRESIDENTS
OF THE F'EDEFJ>.L
RESI!~HVE
September 17, 191+1
•
•
,
•
•
BANKS
8?
SE-ptember 17, 19L1l
To the Conference of Presidents:
In its report dated Jul~r lt..-11, 1940, th•: Standir.g Com;
mi ttee on Collections recommended that a co:rnni ttee be appointed by
t!H: Conferf'!nce of Presidents to disc;uss with the Post Office Depart ..
ment the possibility of the ResPrvc
Bar~ks'
handling United States
postal money crc.ers undr:r the practice existing prior to August 1, 1934.
whereby money orders for the f'irst
~
days e.ftf'r issue could be present-
ed to any postmaster for payment without fee,
•
Under the practict' exist-
ine: since the.t d&t{;, tl:o Resenr;:; Banks can not collect out .. of .. tovm money
orders at local port offices v:i thout payment of fees equal to those
charged for issuing: the orders.
This recomm.cndution was approved at a
meeting of thE: ConfErence of Presidents hold on Scptcmbf;r
Z7 .-28, l9h0,
and the Committee appointed di scusse.d thE:· mutt<:r with the Post Office
a.nd Treasury Departments on Februe,ry 11, l9hl.
The follo•Nir:g recommE-nde. ti O!"H-' c.rr; containc d
~n
the report,
dated l>~arch lL~, 19!:-1, of the: Co:rnntittee on He.ndling of U. S. Poste.l !/oncy
..
•
•
Orders:
"·"'' ·..
"The Cor:uni ttet2 RECOI:;l;E!JDS thd e.ll Fedc:rcl Reserve Banks advise their memb<-r e.nd ncnmcr.~.ber c lec,ring
b~:;.nks thr:.t !:.fter
(a date to be fixed
by the Conference of Presid(:nts) ·the Reserve B[,r.ks will
not accept for collection and credit, either a.s cash i terns
or as noncash items, any United States postal money orders
except those that are drawn on or issued by a. post office
in a. Federa.l Reserve Ba.nk or Branch city or Washington,
•
•• ~
~·-
1-,.
•
88
- 2 D.C., including thos'"' drawn on or i ssuf"d by c. post ;
office in u. city Gdjf... cor:t to o. F'cdcrr.l Reserve Be.nkf or
Brc.nch city t.hr~t ce.n be collected locally by the Rc~crve
Bank or Brar:ch without thn p~•yrr:ent of & foe. Since the
purpose of money orders is to transrni t smnll sums of
money to pu~r~Do:'s in designr~ted ph:.ces, your Cornnd. ttce bcliev:·s thr.t the orders should be collected fran; tho
desigr:cd;ed post offices by the po.yeos cli:rcctl~r or through
thdr local barks.
"The Cornmi ttce D. lEo REC011<"B1-:DS the. t ell J'ed•2rc..l P.esvrve Bc,nks send their mc!l",ber and. nonrr:.ember clec,rinc bc.nks
o. ci:rcuh.r letter o.dvi sing them of the chc.nge in prl•ctic::~,
the dt~te of issuP o.nd the cff0ctive dc..te of the circuh:. r
to be the se.me for r.ll FedPrul RcSE:·rve Bt.:.nks. A suggested
uniform circulc.r is c.ttccched. The circult:.c:r indic::~tes that
all Foden.l F~eserve Bv.nks c.ro h•kinr:; the sc.r:l!' Lotion regc,rding thr:: collection of postol Loney orders cr.d else indicc.tes rcthfT fully th•:' r<:c..sons why the· Fed~rc.l RcservB Br;nks
r,r<:; di~continuing th0 h€;ndling ·of crc>rtt:.in raonc•y orders. tt
•
Ttc v.bove-n:entior:cd T''po:rt wLs subnitted ct the mooting of
the ConfE"rercc· of Fr,·sicl.onts held or l'.e.rch
17, l9lt.l,
Aft••:r considerf..-
tion t:n d dis cussi or., th:: Cor f'ere!;c(> of Fr:·ei dc,nte
•
•
"VOTED tb~t the report on 'HandlL·:.:· of U, S. foctc,l I\:oney
Ord<:rs• b< ref~rroc.'d to "th" Fn:sider:ts for study, [~fter which
tht: FrcsL·1 '2rh:: r·.r: to s'C':nd thr:ir views to th• Cho.i:nu~r. cf
the Conference, end tl%t if S1.'Ch views c.r~' in ccruerr.c·:nt the
:rcccr:;r:cr..ckti ons cf tb:· rq,ort be rr·tc.de ·:>ffecti ve, but if
such visV"S shcv: substcnti£1 dif'fcrE'nco action Ole tb: repcrt
be b .. lcn c t +;he next Confrc:rcr.cc of .Frcsid~:·rts, !t
The ninutos of th•:' next foll ov.d.ng: r;,ceti:r:g: of th,- Conference
•
•
•
''In~:.struc:h r.s no unifoiT1. c..g:n:·('J!if.nt 1Nc:.s obtcincd by
corresr,ondenec or the report of tbc; Cor-:r:.i ttee on Ht.ndling
of U. S. PostE.l l"onEy Ordc·rs, the subj<.'ct 'NLS reviewed ir..
c,ccordunce -~i. th the resolution adopted by the ConfE'rcnce on
~~;£;~rch 17, i9Ll. Aft\r ccnsiden.ti or: it wns
- 3 VOTED thc.t the substhr..ce of th0 rr-port be t:·.ccepted &:r..d tm.t th(" subj€ct mc..ttr::t, together with
tht=:' com"..E:nts, cri ticisrns und sugg:estior>.s mo.do by
Vf'.ricus Fed('r£cl R0S!'rvc Bcnks, be rf:ferred to tho
Cor:n-;ittee for rcvi.sior. of th,-· rcpcrt c..rr preser.tc-.ti on to the next Presidf'·r.ts' Conference fer fnrther c en si dorc ti cr.• ''
In reviewing tr•.c corrcsp\rdence rr-cE'i ved frcm thr:J Pre sidc:rts
of th!": FedE'rul Reserve
th~:,t
Bt~nks
with r<'-Spcct tc· thP report, it t-.FP<'t.rs
eight of thf: Rcsr.rv<" Berks--Boston, Nr:-·v: York, Richuond, AtlLntt,,
St. Levis,
1d.nr:~·c.polis,
Kt.:.nst:.s City end Dt.llcs--t,pprcvr.· the
~:,dcpticr
of
the Oor.J:li tt~?c' s nccmr.Jc-ndE.ticns vri. thout quc.lifict.tiol", c•.l though St.
lc.r ls-tb:r, ::.nd Nnv Y::.:rk thinks th(' circu.lt::,r ct..n be in:provcd.
report but &ore rL-thfr inclined
should not be
chang~d,
~;r:
Both of
thf· vi<.W thr..t thE?
thes~
prdier:~t
Two
pre.cticr.::
Bankr., however, believe that the
practice of the Reserve Banks shovl d be uniforn: and e.re willing to go
•
alonr vd th the other Federal Reserve B!ll':'ks if' the Connni ttee' s recommend&.tions sholild be adopted.·
OrtE.
Bank--Chicago--is in sympathy w·ith the
Ccrnrni tt€'c' s recomrr:endfiti ons, but i:n view cf present punch-card ex:rc-ri.,
ntents being
und(~rtaken,
does not want to make any ch&ng:c
& 4.;
this time.
The remfiininc Btnk••Cle:vela..l'J.d•-is opposed to r,:E;.king: any che.nge in its
pr,sent
practic(•-~nd
votes against adopting the Ccmmittce' s recorn:mendaticns.
The Re·s(•rve Bt..nks thr•.t seem to hav(.J sc,mu doubt abcut the
•
c~.rnmittee'
•
s r8comr,endati::->ns appt::&.!" to feel that mcr..b€r banks ar0 bE'ing
deprived of a. s0rvice.
lNhilE~ i.t :i:s true~ th&t the br:g11~s ·w}.i~h &re ncvr
collecting postal money orders thrcugh the Fede:rb.l Reserve System would
have to ma.ke other a.rra.ncements if.. the
~
.
C~Ir'Jl'ittee'
s
recow.end~ticne
·I
were adopted,_ it is quite evident· thu t tJ:lo ~:pres~n t;. ser~i ce is being
rendered at the inconvenience of· the. b~rik's .:to v~hich 'l:ho;:; money orders
are b"':ing se!l.t by tpe R~serv€• :9anks. fc:r cc."!'iection,. · It may be the.t
fully as many bLnks an inconvenic•nced by th~ collsQ,ticn cf pcst£tl mcney
c-rders thrcugh the Fedc·ral Reserve Syst!."IT. t.s are ·.·ben<~ri tted by the sor-
Th<" cnly suggesticns wtt;,h respect to spl':lcif'i.e changes in the
Committee's :repo1t r.::le.to to
r:C"m;;er.ber clc::e.. ring be.r:fs,
practice.
•
th~;
circular letter 'lll.'hich the Committee
f<.dvi~ing
The Col'l'lr:'.ittec he.s
thE:Jm of .. the :r-roposed
consider~d
chan~:~e
these· s-ugger;tions
~:md
in
recor..mends
that tr.e attached draf't of' circular be substituted for the draft 'attachccl -to its March 1.1..:., 191;l, report.
While no other changes in the
Co:rrm1i ttce' s report of J,:arch 11-., 19!:1, are recomaencied, tbe Cowd. ttee
again wishes to point Ol)t that the: present practice followed by the
several FcdE'ral Res€rve Be.n1:s with
resp~ct
to the co1lccti or. of postal
money orders is not uniform (see st&.tement attached to J•ilrch 11.!, 1941,
report).
If the recor,me>nda.tions of the Comr')i.ttee e.re not approved by
the Conference of Fresidcnts, it is sug;;ested that the: (.;onferonce consider v•hf'thc.r the method of handline; poste.1 monoy ord.ers should be made
uniform or left to th(,
•
di~crotion
of
c~ach
Feoc:ral Ros(';'rve Ba.n.kr
91.
- 5 Should this report
Pr€':sidents 1 Conference, it is
recelv~
favorable
su1~;ested
consid~ration
by the
that before the plan is put
into effect and member and nonrnm:ber clearing banks notified ther<'of,
formal approval of the Treasury Departrrent be obtained of the tEntative
arrangements worked out between tht- Commi tree- and th£ Treas;_,ry v.ri th
r~spect
to collecting raoney orders deposited with the Fed(:'re.l Reserve
Banks by Government agencies und offich:.ls ¥nick are not drawn on or
issued by
postmast~·rs
in
Fcd~:,re.l
ResC:'rvc Bank or Brt>.nch cities,
RespectfUU.y .Ubmi tted~
J. li. fdce
J. S, Walden, Jr,
E. L. Smead, Chairman •
•
FEDF~.L
RESFRVE BANK OF
(Circul~r No. 0000)
(
- ' 191.;.1)
COLLECTIOI-· OF
U. S. POSTAL Iv:ONEY ORDERS
TO ALL J:Ei BE:R J>J;D NONt.:E1'B:tR CLEARING BANKS:
This is to advise that on and aft<-r
-------------~
, 191.:.1, this Brmk
and oth<-r Ff;derc.l Res0rve Bcnl'.s will not accept for collection frorr. merJ.bte'r
or nonmembt.r clearine btmks, '.'i thcr E•s cash or noncash i ten;s,
ordr,rs the.t c.re not drawn on or issued by a post office in
Be.nk or Branch city, cr Washington, D. C., c.nd
after
post&.l money
F'od<:·ral Res·:;rve
t::.
-------
.......
~ny
We will continue
____...,..___, 19L•l, to accept for collection as ce.sh i toas money
orders thf:.t are drc.vvn on or i sE:ued b;r post offices in the cities refcrrt::d to
above.
Consistent with the f0regoing, direct ::.ondinc r.Kmbr•r br:..nks t:.nd nonmcmbr-;r
clP~C.ring;
bc.rJ1.-:s should net send to ('.ny C'ther Fedf·ral Rcst.rve B(lnk, or
to e.ny Brunch of another FrJdf'rt:.l Reserve
B~;.cnk,
r:.r.y postc.l I.'oney orders not
or i ssucd by the rcspPcti ve post offices in the r.:i th s in v:hich such
drc.vm
011.
other
Fcd-:on~l Rss~·rvc
B!;.rks or Brenchcs r.rr:· located.
For thF: inforF.c.tion of ncrr,ber bt\rks and nonmenbf'r clectring b::,nks we
qutte belov: pe.rc..t~rc<phs 1 urd 2
···f'
sectior ll..:.29 ·.~f 'th€ Pcrtc.l Lr:.vm L·.rd Hogulc.-
ti·~ns, which secti o• is contn.ined ir" '!'i tlc VIII, Chc.ptc•r ';),
of Domestic I<:cmcy
*
Entitlf d "P~·yment
Ord~'rs 11 •
Er,ch Fedcrs.l Reserve B::.:··.1c.'·shcv1d :i.n.s•:. rt herr~' th<: nt.Les cf' citic~:, if cr.y,
c~djt::,cent tc its h(:•Hd cffi.c~· t,.Dc'l })rt.nch cities en vrhJch Ticn-:·y orders ct..n
be ccll(~ctcd lee::: lly by -the R(•scrve Bc.r,lr: cr Brcnch w:i,. thot.:t th~· pt,ymcnt
cf c.. fee,
- 2 "Under such rules and re·gulations as the Pcstrnester General
shall prescribe, postal money orders may be issued payable at
any money-order poe-t office, and on and after the de.te upon
which such rules and regulations become effective all money orders
shall be legally payable at e.ny money-order post office, although
drawn on a specified office; e.nd as compensc. ti on for th(;; extrc.
labor involved in p!'..ying a r:toney order e..t an office other than th:;~t
on which the order is drawn the Postm&ster Generc.l is authorized
to exact ~L fee of the same e,mov.nt ~:<.s that charged for the issue of
the order (act of June 16, 19~4, Public, No. 366, 73d Gong.).
"2. An original domestic money order shall be p~;:.id £.. t its
full face ve,lue if presE:nted c t tho office on which drawn or at the
office of isr1Jc atony time within the prriod of its ve.lidity,·
which is 1 yr-:ar frorn the lc.st day of' the month in which issued, For
the first 30 days c,ftf'r issue f:<ny domestic money ord<'r issued in
the continentc.l United Stc.tcs (except Alask~:<.}, e.nd drEVINn on an of•
f'ice locuted th~:rein, !Jl£-Y be p£dd for its fc.ce value, less the fee
prescribed by the lf~W quoted above, <:ct e.n office other thc.n tho.t of
issue or thc,t en which dre.lNI!., provided the office ut which pres~~rt
ed is located vlithir:. the ·~ontinent~;:.l United Str~tes (excep-t AlO.ska.)."
Prior to August 1, 19~1!, whf:'n the :revised Re~lt.-'.tiom: of' the Post
Office Department bec&.mc cffect:i. vr.·, FeQE"rf;l Reserve Bt:>..nJ.:s eould collect ull
postnl money orders
~t
their locr.l post offices without the
p~:;ymcnt
cf c. fee,
regardless of whEre such orders v:r:r€ issued cr V1hc-·re they v;eore p!:cyuble.
1!'1hen
the Post Office Dep£-rttr.ent rcvis.,:d its R('gulo.ticmf to provide a fee for c£cshing r:.._11y pastel mcnE·y ord•r when pre sEn ted
issue cr
thc~t
14 t
an office other tht:n thr.t of
on 'Nhich dravm, Federc.l Reserve Be.nks, ns o. gene:rr.l rule, begnn
sendir>f r.:cney ordE·rs not drs:wn. on cr issued by postrr.t.stc::rs in F'cderul Hes<:rve
Bank
~nd
Brt..r:ch ci tivs tc member or
pt~r
nomnemb('r ben 1.rs loc1.<ted ;;,t the points
on which the orders wer(: druvvn or c.t which :i. ssu(q £..s cc..sh items fc.r collection
o.nd rcin'ttc.:ncc.
since muny
c.
~hurge
memb~-;r
This pructice h&s not provEn to bt' cnti rely sati sfa.ctcry
£;.nd ptcr
nomner,1b~r b~.;.l"J~:s
fce:J. thut they
c~re
entitled to me,ke
fer thdr S(:rvices il". prcPVt!.ting the money r::·rdors to their
offic<:'s fer pcyment, r:nd scms
bWl~s
locr~l
hs.ve declined tc handle postf',l mcncy
post
7'"
94
3 -
orders for the Federal Reserve Banks unless they are permitted to make ·
a charge for their services.
In view of these developments and since the payees or holders
of postal money orders can collect all of them from their local post
offices, and such of them as are drawn on er iEsued by their local post
offices without the payment of prescribed fees, there is no adequate
~~ason
why the Federcl Reserve Bs.nks should continue to receive for col•
leetion any money orders, oth<':r th~..n thoS(! (specified ~n the first pt;;.ragrs.ph of this· circul£:.r) which can be cashed by the F'ederal
themselves for thdr member
or other collection
~::.nd
Banks
nonmember cleuring bsnks free of feee
ch~rges,
Prf>sident
Res~'rve
@FedFRASER