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697 '.. tlo( OFFICIO MEMBIIR8 W. P. G, HARDING, GOVERHOR ALBERT STRAUSS, YICI GOVERNOR ADOLPH C. MILLER CHARLES S. HAll LIN HENRY A. MOEHLENPAH DAVID F. HOUSTON SICRITARY OP THE TREASURY CHAIRMAN JOHN SKELTON WILLIAMS COMPTROLLER OF THE CURRINCY FEDERAL RESERVE BOARD W. T. CHAPMAN, SECRETARY R. G. EMERSON,ASSISTANT SECRETARY ADDRESS REPLY TO FEDERAL RESERVE BOARD WASHINGTON W. M.JMLA.Y. FISCAL AGENT August 11, 1920. X-1993 .. SUBJECT: Collection of Bill of Lading Drafts Received Direct from Non-member Bar~ for Credit of Proceeds to Account of Member Bank. Dear Sir: The Federal Reserve Board has received an inquiry from a Federal Reserve Bank whether country bank correspondents of a member bank may, with the authorization of the member bank, send bill of lading drafts direct to the Federal Reserve Bank for collection and credit to the member bank•s account. The country bank correspondents referrad to are not members of the Federal Reserve System and do not carry clearing accounts with any Federal Reserve Bank. There is no provision of law authorizing a Federal Reserve Bank to receive items for deposit or collection from banks which are not members of the Federal Reserve System and which do not carry clearing accounts with the Federal Reserve Bank. Section 13 of the Federal Reserve Act, however, provides that a Federal Reserve Bank may receive on deposit from any of its member banks checks and drafts payable upon presentation and may receive for collection from any of its member banks naturing notes and bills.. Under this provision it would be leg;:tl for a Federal Reserve Bank to receive direct from a bank, even thougl1 tha. t bank is not a member and does not maintain a clearing account} checks and drafts or maturing notes and bills sent for the account of a member bank, provided~ the Federal Reserve Bank has received satisfactory notice from the member bank that the member bank has authorized the sending bank to act as the agent of the member bank in forwarding the items for the member bank's account. A somewhat similar arrangement has been approved whereby a member bank in one Federal Reserve District may send maturing notes and bills direct to a Federal Reserve Bank of another District for collection and credit to the account of the Federal Reserve Bank of the District in which the sending bank is located, although there is no provision of law which authorizes a Federal Reserve Bank to receive such i terns from a member bank located outside of its own District. For your information 698 X-1993 - 2 - there is enclosed herewith a copy of the Board's circular letter X-1838 and an opinion of Counsel X-1838 (a) enclosed therewith, both relating to the collection of maturing notes and bills in this manner. Notice from the member bank to the receiving Federal Reserve Bank that the member bank has authorized its correspondent to forward items direct to the Federal Reserve Bank for the account of the member bank should be specific 1 - - that is1 it should name the particular correspondent or correspondents of the member bank which are so authorized. Bill of lading drafts drawn upon individoo.ls, firms or corporations other than banks are not "checks and drafts" within the meaning of Section 13 of the Federal Reserve Act and should not~ therefore, b·e ,received by a Federal Reserve Ba..nk except for collection and credit when paid. · It should be urxierstood, of course, that a Federal Reserve Bank may at its discretion decline to receive for collection bill of lading drafts f orwa.rded to it by. a member bank through the agency of the member bank's correspondents which are not themselves members and which do not maintain clearing accounts. Very truly yours# Governor. Enclosures: TO GOVERNORS OF ALL FE:OERAL RESERVE BANKS COPY TO AGENTS. .. .. 699 ltX OPPICIO ME"BEM DAVID F. HOUSTON SICR&TARY OP THI TBIAIUIY CIIAIRIIAN JOHN SKELTON WILLIAMS FEDERAL RESERVE BOARD CoMPTROLLIR OF THI CUII.NCT W. P. G. HARDING, GOVIRNOR ALBERT STRAUSS, YICI GOYIINOI ADOLPH C. NILLEB CHARLES S. HANLIN HENRY A. NOEHLENPAH W. T. CHAPMAN, SICRnAIIY R. G. EIIERSON, ASSISTANT SICIITAIY ,ADDRESS REPL.Y TO W. N.INLAY, FISCAL AOINT WASHINGTON FE;DE;RAL RE:SE:RVE BOARD February 19, 1920 .. X·lS38 Subject: Dear Collection of Maturing Notes. Sir~ .... I Wl forwarding herewith a copy of a Iremorandum prepared by Counsel on the rig..'lt of a Federal Reserve Bank to collect : matw;ing notes and bills drawn upon fi.nns, individuals or cor... porations in its district other than merrber banks which are forwarded to it for collection by a rr.erriber bank of another district for the account of the Federal Reserve Bank of that other d~strict~ The Board at its meeting on February seventeenth approved this memorandum with'the understanding, of course, that under the terms of Section 13, eM1:. Federa:t Reserve Ba.':lk may in its dis... cretion decline to recei.ve fo:- collF;ction mataring notes and. bills which are forwarded to it by anothel~ JJeoeral Reserve Bank through the agency of one of its member banks. Very truly yours, Governor. To Chairmen of all F .R. ~ks except Dallas \, 700 Feb. 14, 1920 .. SubJect: Re: Collection of IV':aturing Notes. TO The Federal Reserve Board FROM Mr. Harrison, In a ruling published on page 467 of the YAy 1919 Bulletin, it is e~ plained that although a Federal Reserve :Bank may properly collect maturint;; notes and bills drawn upon firms, individuals or corporations in its district other then member banks, which are forwarded to it for collection by another Federal Reserve Bank, nevertheless no Federal Reserve Bank may perfonn this service directly for any rrember bank located outside of· its own District. The attached correspondence with Governor Van Zand t. presents for the consideration of ~He Eoard the ~uestion whether a Federal ReQerve ~ank may pnperly receive for coller.ltion maturing items forwarded direct to it from a member bank in another District, if they are forwarded for the acco\mt of the Federal Reserve Bank of that other District. Section l3 expressly authorizes a Federal Reserve Bank to receive maturing notes and bills payable within its District from any other Federal Reserve Bank. It seems, therefore, that if such items are forwarded to a Federal Reserve Bank by a member bank in anot:Qe.l" District for the account of its own Federal Reserve Bank they may properly be handled for collection JUst as if they had been forwarded directly by the Federal Reserve Bank of that other District. This service, however, should. not be performed unless the collecting Federal Re·serve Bank has rec.eived satisfactory notice from the other Federal Re~erve Bank that it has a~thorized its member bank or member banks to act as its agent in forwaro.ing maturing items of this character for collection and credit to its account. This a~ncy may be specific a.s to a :particular rr.ember bank or may be general as to all member banks of the District.if of of of It is believed that the development of this practice may be fownd advisable not necessarJ in the proper extension of the various collection facilities the Federal Reserve B~s and will no doubt permit of a considerable saving time and expense which would otherwise be incident to the ind.irec t routing maturing items through the Federal Reserve Banks of each district ... Respectfully, (SIGNED) George L. Harrison, General CoWJ.Sel.
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