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• I l I . 558 W. P, G, HARDING, GDYIIMDR ALIIIIT STRAUSI, YICI GDYIRNOR ADOLPH C:. IIILLER CHARLES I. HAll LIN " ' OP'PICIO MKMa•11• IICRITARY or THI TRIAIURY CHA.IRIIAN JOHN SKELTON WILLIAMS FEDERAL RESERVE BOARD COMPTROLLIR OF THE CURRJNCY J. A. BRODERICK, SICRITARY W. T. CHAPMAN, AsiiiTA.NT SICRITARY W.II.IIILAY, PIICALAGRNT WASHINGTON ADDRK88 RaPLY TO FI:DI:RAI. RUI:RVI: BOARD NOT FOR PUBtlCAT!ON SUBJECT: X-1639 Automatic Routing of Checks with Indicated Time Allowance. ·Dear Sir: ... As explained in circular letter (x-1630) of July 29, 1919, the Board has determined to'discharge the duty imposed upon it by Section 16 of the Act to fix the charges which may be collected by the member banks upon cheCks deposited with them wh~ch are cleared througn the Federal Reserve Banks, and the charge which may be imposed for the clearing or collection servi.ces .rendered by the Federal Reserve Banks. No hasty action will be taken ~d ample notice wi~l b.e given in order that the banks and the public ma.y acconm:od.ate themselves to the change without inconvenience .. The schedule of charges will not be determined by the Board until after the .conference with Transit Managers on August l8th 1 which conference is, of course, open to any of the senior officers of any of the Federal Reserve Banks who may care to attend. The schedule to be fixed will I regulate the maxi~ charges, and no mamber bank will be required to inpose a charge if it prefers not to do so. It is the desire of the Board to simplify present operations, and in order to bring this about it will be necessary to have the coo:Peration of the member banks and the public, and the~efore the Bo~rd will not for the present undertake to place any limitation upon charges which may be made against checks drawn upon member banks and banks on the par list the routing of which is not clearly indicated on the face - I . 559 X-1639 of the checks, and the Board has no authority to regulate the charges which may be made against checks which are not collected through the Federal Reserve Bariks~ It ~s the desire of the Board to bring about a. very general use of the Federal Reserve collection symbol, Which, as has already been explained, will be a circle enclosing the letters F.R. and the numeral indicative of the district number of the Federal Reserve Bank. Branch banks will be indicated by the addition to the numeral of the letter A, B, C, or D, according to the seniority or order of establishment, of branches in a given district; for example, the symbol . 8 . should be imprinted or sta.rq>ed upon. all checks drawn u;pon bariks in the Philadelphia district, and the symbol · (~ ~ should be imprinted upon all checks of banks in the collection zone of the Cincinnati Branch of the Federal Reserve Bnnk of Cleve land. The Board is considering the establishment of a fixed rate of one and one-half cents per one hundred dollars per day which member banks may charge upon vroperly indicated checks. This is equivalent to a rate of five and four-tenths ~~r cent. per annum, which rate is. slightly in excess of the Federal Reserve Banks' ninety day rEl.te on rediscounts. It is important that every depositor of a member bank and the member banks themselves should be able to determine readily, without reference to a cumbersome par list, the time in t~ansit of every check. Every member bank is, of course, aware of the transit tina be tween its home town .~d the Federal Reserve Bank or branch of its district, and a table should be prepared by each Federal Reserve Bank giv!ng the transit time between the head office and each of the branches in the district to every other federal Reserve Bank and. branch. This could be printed on a small card which could be widely http://fraser.stlouisfed.org/ L_ __ ___ __ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ . ··--- --Federal Reserve Bank of St. Louis • . ,, . . .. 560 -J- distributed. Then there must be considered the time in transit from a Fedara~ Reserve Bank or b'ranch receiving checks on its district for collection to the . . banks u;pon which the checks are drawn.. This can readily be indica ted by the addition of a dash. and the number~· 1, 2, or 3, after the numeral which rep~e.,.. I I • - i Reserve Bank, thus the symbol sents the "'.. '"' awn upon banks in the Minne2polis district should be printed upon all which involve a. two day ~ime allowance between Minneapolis and the town \.:1a~:. · which the drawee bank is located. Checks drawn on banks in the collection zone of the Denver Branch of the Federal Reserve Bank of Kansas City (which was the second branch established in that district) and subject· to a one da;r time ., their face ·the symbol allowance out of Denver, In printing the symbol, the figure representing the time allowance should be printed· in distinctly smaller twa than the figure which indicates t~e district number of the Federal Reserve Bank. In case your batik is contemplating ~ readjustments of time allowances to towns in your district. the Board re~ests that you make these changes during the month of August, as i.t is hoped to begin the operation of the new plan about the first of September.. In actUal practice a member bank in f'i~ing time allowance would include (l) time to the Federal Reserve Bank or branch to which it is assigned,· (2) time between the Federal Reserve Bank or :branch o£ its district and the Federal Reserve Bank or branch of the district· to which the check is sent, and ·(3) • time be.tween that Federal Reserve Bank or branch and the bank upon which the I check is drawn. j 561 <r • .• The Board intends, after all details have been carefully worked out and public announcement made of the new system, to bring the symbols to the attention of bank printers and stationers throughout the country with the - vi~w of having the symbols printed UJ?On new orders for checks .. The Board believes that 1t would be a great convenience to the Federal Reserve Banks i.f all checks received by them should be self-routing in tlie manner above indicated, and in order to insure the fullest cooperation 1 t will probably be necessary in the course of a few months to re•tore the service charge, which was abandoned several months ago, with respect to all checks which have not the Federal Reserve collection symbol iii!Prdlnted o~ stamped upon them. This will force a discrimination in favor of checks so ' l indicated, and will, .in the opinion of the Board, result in pressure from depositors upon banks which have so far declined to have their names placed upon the 'par list. While the Board has determined that it rnu.st carry out the provisions of Section 16 above referred to, it will be glad to receive ar.I:Y suggestions, .. criticisms or comments which you rray desire. to' cia:ke regarding this plant and it would apprec.iate· your views as to the maximum charge which member banks ma, be permitted ~o make . on checks deposited with them which are collected through the Federal Reserve Banks. Very truly yours, Governor. tet~er to all Governors and copy to Federal Reserve Agents. ··--------------------- --~-~-- -- . ,..._9 · X-l!!j ···e. FOBM OF SPECIAL DEPOSIT SLIP . . ~ ~ ~ - . .": List on this sheet only checks bearing Federal Reserve Collection Symbol. 4 . .. .. - - - -- - - - - - - - - - - ---- . '!- - : 562·' • .. : DEPOSITED WITH : First National Bank .• . of Checktown Se})tewber 15,1919 .. : By Jones,Brown & COiq>any --------------- ~ ----------------------------~ ;~;it-;----"------------------Ch;;~;;-ii¢-Time. : Detail : per day per : ~s : . List Totals : $100 . ;. .. . : : -------------------------------------------- : . 29.6o: 1 .. . 54.80: . . " 124.90: : . 327 .. 60: : . 842.50: ... : . 162.90: 2,142.. 3(;) .32 . : 2 72'.21:. : . 5.00: : i ; ;, ~ . .. . ... 10.00! . ... 3 . . ·,4 : : : • 28.10: : . 1,856~82: • . 11.42: : 768.Q9: .... .• 962~00! :. : 2.19:" . : . 7.'14: : 21.40: .. 328.60: . J6.80: ... ·~ . . 96.io: : ·55 : • . : . 436.13: ·~ ...: 24. 70': 225.10: 345~90: : 4.. 781 .. 15: 1,28·: .26 : .21 1.28 .. : : ....'· . :========~========;=========~=~===============t : Total Note: : ; 4, 779-!'f: It is not intende.d ·to COJI!Plicate the work of the member banks and no rule will be fixed for any checks unless the de~ositor cooperates by doing his part in itemizing his checks on a S,Pecial deposit slip. The Board will merely afford depositors a means of securing minimum charges. Assum1ng that the ordinary charge on the above deposit would be 1/lOth or $4.78, it is for the depositor to decide whether the additional time· and labor in filling out the ~ecial deposit slip is worth the difference of $3.50 • • •
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