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W, P. G. HARDING, GOVERNOR
PAUL II. WARBURG, VICI GOYIRNOR
FREDERIC A. DELANO
ADOLPH C. II ILLER
, CHARLES S. HAIILIN
WILLIAM G. IICADOO
IICI&TARY OF THI TIIAIUIY
CHAIRMAN
JOliN SKILTON WILUAIIS
I:OMPTROLUR OP fU CIIRR,&NCT
FEDERAL RESERVE BOARD
WASHINGTON
H. PARKER WILLIS, SECRETARY
SHIRIIAN P. ALLEN. AIST.SIECRITARY
AND FISCAL AGINT
ADDR&ea IIKP&.Y TO
FEDERAL RESERVE BOARD
X•865
Deazo Sir:
The Federal Reserve banks of Boston and New York are now
collecting cheeks on all banking towns in their respective dietrjcte.
The Federal Reserve Bank of Chicago has been able, within the last
few weeks, to add approximately five hundred banks in three hundred
towns to its par list.
It ia interesting to note the methods
which have been pursued by the Chicago bank which have produced this
good result, and for the information of your officers and directors,
copies of for.m letters and of special letters sent out by the Chicago
bank are enclosed herewith.
very truly yours,
Governor.
Enclosures.
The Chairman of the Board,
Federal Reserve bank of
I
t
x-sss:;o.a
Memorandum of procedure adopted by.the Federal
Reserve Bank of Chicago in the campaign for
~
conducted during october, November and December
points
191~.
·In this campaign we first directed our efforts to secure
par points_in the towns iri which there were two or more non-member
banks and no member banks, forwarding to the largest and strongest
bank in the town (preferably a state bank), letter attached hereto,
marked No. 1.
If no reply was received in the course of about two
weeks, a second letter was recehred in about ten days'· time, or if
a letter was received definitely declining to accept our proposal,
the
a~ove
.process was repeated on the second best bank in the same
town, until the tovms of two or more non-member banks had been thoroughly canvassed.
The results from thes.e letters were approximately
140 tovrns with 290 banks
~dded
to the par list.
We then directed our efforts toward the towns having only
one bank and that a non-member.
(ii~.
A letter was addressed to them
3, similar to No. 1), and if no reply was received, a follon=up
letter· (No. 4, simil"'r to No. 2) was forwardea in the course of about
two weeks, until we had been in touch with all of these
one-b~=tnk
The results from these letters were approximately 115 town::;, -,,;t L.1
banks added to the par list.
towt..<:J
11~
.
x-865-a
- 2-
we then aclc1ressec a letter (l!o.5) to our member b-=tnks
in towns where there were non-member banks not on the par list, following this letter up ih the course of a week or ten dqys with letter
No. 6.
The results from these letters atnounted to approxim'ltely 50
towns, with lOO b<tnks <tddecl to the par list.
It is estimated that the 11bove letters and correspondence
in connection therewith incidentally proved of materi11l assist'lnce in
securing about twenty-five
s
t11te Bank members in the
Feder~
Reserve
System.
Due to one of our Des Moines member banks declining to
continue to handle a large number of row11 towns at par, in an effort
to reduce its expenses and "float", it became necessar.y for us to conduct a camp11ign in the towns ,which h'1c: previously been handlec' for us
by the Des Moines member b11nk, in which campaign, by me':'l.ns of letters
similt:tr to the t:ttt<tched (Nos. 7 and 8) we were en"l.ble0 to est<J.blith
direct collection facilities with about 125 of the 150 row<~. t:mr..-3 i>lvolved.
''
.lll'l
-,r...
X-865-B
LETTER SENT TO
~B.AEKSTO\"JNS
Dear Sir:
We arc nov• collecting at par, checks on 8805 non-member
banks and on 7666 member baru~, or 16,471 in all, out of about
29,000, tho total number of banlcs in tho Unitotl s . . ates.
Non-member banlrn arc receiving tho advantages of the par
facili tios of tho Federal Reserve Banks through member bD.llk
correspondents in tho Reserve cities and collecting cantors.
We arc desirous of increasing our par list for non-member
bank checlrs in order that member bankS and non-member banks
also may receive directly or indirectly increased par facilities.
We wish, therefore, to establish a connection for the
collection of chocks on your t~vn. Will you kindly advise
us if it w"ld be agreeable to you to act as our collecting
agent and receive direct from us checks on the banks in your
town to be remitted for at par on da.y of receipt in Cl":ico.go
exchange, or we will receive in ~mont shipments of currency
upon· v7hich v;e will pay the transportation and insurance charges.
If you accept this,ar~cngcmont you ~y print on all checks
dravm on your banlc 11 Col1cetiblo throur.4h tho Federal Reserve Bank
of C!:icago''' thus advertising tho fact to your customers and to
the l)Ublic that your choclrs are pe.id by your bank at their face
value.
We trust the :proposed crr["..lgcmont vlill receive your
favorable consideration and assure you that if you decide to
act as our collecting agent \70 shall endeavor to malce our relations mutually satisfactoryo
We enclose herein self addressed stamped envelo:;>o for
your re]?ly.
Yours very truly,
02.Shiero
X• 86Sc
FOLLOW-UP LETTER SENT TO TWO-BANK TOWNS
Dear Sir:
We do not· appear to have received a reply to our letter
to you of.
· ~ in which we requested y"our bank to act as our
agent for the collection and remittance at par inChicago exchange of
ehecks on your city.
In this connection, we are. pleased to advise that we have
received a very large number of favorable replies in.our campaign for
par points, and believe that i! will be 'but a short time until the
banks which do charge exchange in paying ~heir customers' checks, will
be considerably in the minority.
, The advan'tage to your institution of printing or stamping
on your checks "Collectible through the Federal Reserve Bank of Chicago",
thus advertising the fact to your customers and the public that your
checks are paid by your bank at their face value, is a factor to be
considered~
About s.eventy per cent of the checks rec.eived by the banks
:in this. district on the Federal·Reserve··par li·st,.are deposited with.
us·
by the Chicago bankt:~ and would, therefore, reach you in one latter each
day, instead of a large number of separate .cash letters, which you undoubtedly receive at present,· meaning a ·considerable sa:ving to your bank
in the matter of postajge, stationary atld la"bor in remitting in payment
of these letters;.·
·... We truet tpat . consid.era\ion of thiS broad stl'bj~ct will oa\ase
you to ·!avor us with your acceptance td o\ir _pt~pdsal.; and We hfe desitoUs
or adding the name ~f yoUr city io our par list.
Awaiting your reply, w.e remain,
Very truly yours,
Assistant Cashier.
•
x-865-D
LETTER ·~·miTTEN T\1c-BA:NK TO'd.NS IN IOWA (Des Moines)
Gentlemen:
\le have been coliecting cl1.ecks on the banlcs of your city at
par through one of our
1i1C111bo:L~
banl>;:S in Des Moines.
i7e arc clesirous, however, of e.rra.nging for a cdroct connection
for the collection of these items &mcc uri te to inquire if H will
be a.pooreea.ble to you to ac'c as our agent for
remittance at par in
Chica~o
t~he
collection aml
exchange .on day of receipt 9 of our
checks on your city.
¥our favorable reply will be .greatly
~prociatodo
Very truly yours,
Assistant Cashier.
X-865-E
LETTER >IRITTEN Ql\TE-B.Al'lli: TOWNS IN IO\'!A {Des Moines)
Gentlemen:
'7e have been collectinJ checlcs on your bank at par through
one of ou:c ms:ml:Je:r bcl1.ll:s in Des Hoines •
.le 2,rc c"'-esirous 9 lwrove1· 9 of arranging for a cUrect connection
fOJ:'
the collection of these items 2-nd \'lri te to inquire if it Will
be agreeable to
3~ou
to act c..,s our c..,gent for the collection anci.
remittc:..nce at par in Chicago exch2hge on day of
recei:;~t~
checks on your city.
Ver··· t:culy
you1~s,
Assistant
~Shier.
of our
X-865-F
S.AMPLE
Dear Sir:
·v·fe are in receipt of your favor of the
in
repl,y to our letter to you of
and note your statement that you have no Chicago account and ti~at you could only remit in Indiru~a:polis or New York exchange in payn:en t of our cash
letters.
It is our rigicL policy to accept only Chicago exchange,
or currency (we to/pay tlle cost of insurance <o~ne. t:r;-2ll.sportation on
the latter) in payinent of our cash letters. T~1is is tue to the
fact the.t we Cl~etlit the de~ositing barli: :for itei;ls on this castrict
on the basis of two days' time in \i\hich to receive l:la;yi>lent in
Chicago. You can readily understand, therefore, tl12-t vrere we to
accept your Inedana.polis or lifew York exclw.nge, it y;oulc':. necessitate
at least two and. four days addi tiona.l in 1fuic~1 to rec"Luce this :i!ayment to local exchange, and. it w·ill be ap-parent to you that this
i"IOUlC. necessitate an enonnous "float 1' in the aggregate.
i:Je trust that you will c:.ccept our proposc:,l should you agree
the.t it \VOuld be to your advc::mtage to ship currency, or com::?lete
arrangements for a Chicago account.
Very truly yours,
Assistant Cashier.
•
c865-G
Dear Sir:
\Jc are in. receipt . of your f<lVOr Of the - - - - - in reference to our letters to you of
·and.
________., in which ·we requested your bank to act as our
agent for th:e collection and remittance at :par in Chicago exchange of checlrs on your city, and the contents have been
carefully noted.
~1e advantages to your bank mentioned. in our t>~ letters;
the receipt by you of over seventy per ce:nt of your checks in.
the one letter from u·s each day, instead of the 1m..ny cash letters
which you now receive; the printing or staml:>ing on your checks
11 Collectible throul9;1 the Federal Reserve Bank of
Cllicagoi'# the
fact;.that you coulc~ ship to us .currency in :;;>aJ11nent of our letters;
the trans:;;>orta tion and insurance on these shipments
be paid by
us; are deciding factors in the uwny favorable replies received·
by us frbll1 banks which havb, prior to thiS time, .charged a
nominal ·rate of e~::change.
·
.
to
wre YI01.lld also be willing to e11close vd th each cash- letter·
sent you, a stan~d addressecc envelope :for your use in forvvarding your draft in :;,:>eyr"1ent, "1\hich vvo'Uld eliminate the ex:f>ense ·
to you of ?6stage and envelope.
W!e believe that your consid.era.tion of t~1e above vvill. cause
you to favor us with your acceptance of our request that your
ba:nlt: act as our agent :for the collection of checlts on your city.
Awaiting your
reply~
we remain
Yottrs very truly,
Assistant Cashier.
X-865-h
Dear Sir:
___
in reply to
We are in receipt of your favor of the
hand
your
statement
tbat
you
hav·e no
our letter to you of
Chicago account, but would be willing to remit at par in Detroit exchange,
has been duly noted by us.
...;......_~_
In this connec~ion, would advise that it is our rigid policy
to accept only Chicago exchange, or currency (we to pay the cost of insurance and transportation on the latter) in payment of our cash letters.
This is due to the fact that we credit the depositing bank for items in
this district on the basie of two days' time in which to receive payment
in Chicago. You can readily understand, therefore, that were we to accept your Detroit exchange, it would necessita:te at least two days additional in which t~ reduce this payment to local exchange, and it will be
apparent to you ttl.at this would necessitate an enormous "float" in the
aggregate.
We trust that you will accept our proposal, should you agree
that it would be to your advantage to ship currency, or complete arrangements for a Chicago account.
Very truly yours,
Assistant Cashier.
RH.EL
X-865-i
...;Pear Sir:
We are in receipt of your favor of the
in reply to
our letter to you of .
and note your statement th)a.t you ·ha.v.e:.
no Chicago account and that you could only remit in Indianapolis or
LaFayette exchange in payment of our cash letters.
We now write to inquire if it will be agreeable to you for us
to forward checks on your city t·o your Indianapolis· correspondent, we
first to receive their approval of this action, which approval has al~
ready been o'btained in a number of similo.'r instances.
YQur correspondent will remit to us at par in Chieago exchange
on day of receipt and will then forward the items to you.
Your favorable reply will permit·us to accept your
. furthering the par collection l)f .checks on non-member banks.
Very truly yours,
Assistant Cashier.
RH ..EL
servi~Jes
in
..
41=3
X-865-j
)
LETTER SENT TO ONE-BANK TOVillS
Dear Sir:
We are now colleCting .. at ~a:r • checks on 9165 non-member
banks and on 7722 member banks; or 16;887 in all, of which "total
3255 banks (1063 membe:r and 2192 non-member banks) are located in
this Federal Reserve district,
Noh'-member banks are receJ.v:mg the advantages of the par
facilities of the Federal Reserve Banks through member bank correspondehts in the Reserve cities and collecting centers.
We are desirous of increasing our par list for non-member
bank checks in order that member banks and non-member banks also
may receive •::irectly or indirectly increased par ficilities.
We wish, therefore, to establish a direct connection for
the collection of checks on your town. Will you kindly advise us if
it would be agreeable to you to act as our collecting agent and"receive direct from us checks on your bank to be remitted for at par
on day of receipt in Chicago exchange, or we will receive in payment
shipments of currency upon which we wi~l pay the transportation and
insurance charges.
If you accept this arrangement you may print or stamp on
all checks drawn on your bank "Collectible through the Federal Reserve Bank of Chicago 11 , thus advertising the fact to your customers
and to the public that your checks are paid by your bank at their face
value.
We trust the proposed arrangement will receive your favorable consideration and assure you that if you decide to act as our
collecting agent, we shall endeavor to make our relat~ons mutually
satisfactory a
We enclose herein stamped addressed envelope for your reply.
Very truly yours,
Assistant Cashier.
"
.
xes65-k
]fOLLOVI-UP LETTER SENT TO OllE-BAIJK TC\HJS
Dear Sir:
we do not appear to have received a reply to our letter
to you of """'"--~-.,...t in which we 1·equesten your bank to net as onr
agent for the collection and remittance at par in Chicago exchange of
cheeks on your city.
In this connection, we are please~ to arvise that we have
received a very large number of favor<~.ble replies from· banks which have,
prior to this time, charger, a nominal rate ()f exchange, indicating their
acceptance of the fact that the principle of making a charge in paying
their customers' checks is unjust.
The advantage to your institution of printing or stamping
on your checks ~tc¢lleetible through the Fe{:eral Reserve Bank of Chicago",
thus advertising the fact to your custome~s and the pubiic that your
ehecks are paid by your bank at their f~ce ~·~,lue, is 'l factor to be considered.
About seventy per cent of the checks receiver: by the b':lnks
in this district on the Feder<~.l R eserve par list, are C:eposited with us
by the Chicago banks and woulc, therefore, re~ch you in· one letter each
day, inste<~.c of a large number of separ'lte cash letters, which you undoubtedly receive at present, meaning a eonsider'lble saving to your bank
in the matter of postage, stationery and l<tbor in remitting in payment
of these letters.
·
We trust that consider<~.tion of this broac subject will C'luse
you to favor us with your accept~nce of our propos<tl: qs we are desirous
·of adding the n~me of your bank to~ pnr list.
AWiliting youi' I'eply, we rem!1in,
Very truly yours,
•
Assistant Cashier.
#-5
x-sss-L
LETTER viRITTEN :MEMBER BANKS
Dear Sir:
·,·le are now collccti:rcg at ;par~ choclts on 9345 7J.on-me:1)er
banks anC o:~·. 7736 member b<:ID.l{S 11 or 17,081 in all, of vmich total
3452 banks (1077 member c.:.ncL 2375 non-member bankS) are located.
in this Federal Reserve district.
We are desirous of increasing our ps.r list for non-member
bank checl~s in order that member banks may recci ve directly
increased par facilities.
'.le uish 9 there foro, to establish a direct connection for
the collection of non-member banl\: checks on yov.r town. ·rrill
you kincU~r advise us if it 1.ould be a&;recable to you to act as
our collecting agent and. receive C'drect from us checlcs on
non-member banlcs of your toYill to be remitted for at ~Jar on c1ay
of recei:?t in Chicago excl'E:ngo, or we will receive in :payment
shipments of currency ~"?on which vw will ?ay the transportation
and insurance charges.
·
Your co-operation in this matter will prove of considerable
assistance in furthering tl1e par collection of checks on nonmember banlcs.
7e enclose herein stanr_pcd ado.ressed envelope for your.
relJly.
Very truly yours,
Assistant Cashier.
X-865 ..m
FOLLOW-UP LETTER TO MEMBER BANKS
Dear Sir:
· We do not ap~ear to have received a reply
to our letter to you of
, in which we requested that you act as our agent .for the .collection and remittance at par in Chicago . ."exchange oh day of receipt, of
checks on the non-mekbei- banks of your city; or.as adVised, we will receive in payment shipments· of currency
upon which we will pay the transportation and insurance
charges.
In this connection, we are pleased to advise
that we have received a yery large number of favorable-replies from banks which have, prior to li;his· time, c·harged
exchange for the collection .of the non-member bank checks.
It is only through the greatfJst degree of co ...
operation on the part of the member banks that the Federal
Reserve par ·collection system, for the good of the member
banks, and indirectly for the good of ''the non-member banks
through thei~ member bank correspondents, can be perfected,~
Awaiting your reply, we remain,
Very truly yours,
Assistant Cashier.
@FedFRASER