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W. P. G. HARDING, GoVERNOR
PAUL M. WARBURG, VICI GOVIRNOR
FREDERIC A. DELANO
ADOLPH C. MILLER.
(A~: ,0
CHARLES S. HAM~
()/
WILLIJ •: ~McADOO
SEC!"
':.J
l:Y OF THE TREASUiiY
CHAIRMAN
JOHN SKE:t: ON WILLIAMS
COMPTROLLER OF THE CURRENCY
H. PARKER WILLIS, >SECRETARY
SHERMAN P. ALLEN, ASST. SECRETARY
FEDERAL RESERVE BOARD
AND FISCAL AGENT
WASHINGTON
ADDRESS REPLY TO
FEDERAL RESERVE BOARD
August
12,~
191S.
X-1121
Dear Sir:
At the suggestion and
~pon
invitation of the Feder,al
Reserve Bank of Cleveland_, an infonral. meeting was held on August
7th1 at the office of the Federal Reserve Board to
Reserve Exchange drafts.
dis~:Uss
Federal
The meeting was attended by representa-
tives of six Federal Reserve Banks.
The recon:rnendations rr.a.de.1 a.
eopy of which is inclosed with this ietter, have been considered
and approved by the Board.
(1) . Federal Reserve
JJchanse Dmfts.
Ef feci;ive September 3rd, the limit of drawings of such
dl"afts shall be increased from $2p0 to $5,CCC.
Federal Resen-a
~Banks l)aytng E~change drafts of other Federal Reserve Bartktj will
be permitted to deduct the amount paid fram the total credits re-
•
...
ported in the Gold
Settle~nt
clearing for the day.
The daily tran...
script, forNarded to each Federal Reserve Bank 1 should shaw the items
credited for the day and a deduction therefrom of the Exchange· drafts
paid for ita aceount.
The net credit should agr9e with the figures
reported in the Gold Settlenent clearinge.
•.
-a(2)
X-1121
'!'he Board deems it desirable for the Reserve Banks
to adopt the recommendation of the Oommittee 1 that all Reserve BanKs
give imnediate credit for Clearing House items on the day such it_en:s
i,
are received from other Federal Reserve Banks., the ·balanceQ so credited to be included in the credit balances reported for settlement
throu~ the Gold Fund clearings.
'!'he actual payment for such balances
would then be rr.ade on the same day as settlement is received by the
paying Federal Reserve Ba.nk for the checks and
(3)
~ther
items it collects.
With respect to the reconmenda.tion that a more detailed
analysis be uade of the 'float 1 situation (i. e., the extent to which
.&r!iDe~~te credit has been given upon uncollected items) there is in(.
. ~;~.jg". t'··~~;.
.·.( •.
•.
hi~sed hereWith a memorandum prepared by the Statistical Division
'based upon the infonration which it has at hand.
The Board is willing
·to have a more detailed study of this question uade, but to do so will
require a call for the necessary data from each Federal
Re~erve
Bank
and it is believed that such study could best be nade at the different
Fede~l
Reserve Banks.
Very truly yours,
Governor.
-~
J.L .::·
~
.·.
:
.fj:.J;
Inclosures.
~--;y
..
~
:-.-:· :
80
X-1121-a.
\
t
81
Wa.shington1 August 7, 1918.
Federal Reserve Board,
Washington, D. C.
Gen tlerren:
~
{
At a meeting held in the Treaaury DepartJD.ent Building in the
Board Room of the Federal Reserve Board, August 71 1918, at which the
following were present:
Mr. M. J. Fleming, Asst. Cashier, Federal Reserve Baxlk,
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
Cleveland.
s. H. Hendricks, Cashier, Federal Reserve .Bank, ·
New York.
Pierre Jay, Federal Reserve Agent,
New York.
F. J. Carr, Asst. CaShier, Federal Reserve Bank;
Chicago.
Chas. A. Peple, Deputy Governor, Federal Reserve Bank,
Richmond.
Thos. Gamon, jr., Asst. Cashier, Fe~ral Reserve Bank,
Philadelphia.
c. C. Bullen, Cashier, Federal Reserve Bank, Boston.
It is recommended to the Federal Reserve Board that the
limit for the drawings of Federal Reserve exchange drafts be increased
from $250 to $5,000 and that Federal Reserve Banks holding Federal
Reserve exchange drafts of other Federal Reserve Banks be permitted
to deduct such Federal Reserve exchange drafts from the total credits
reported to the Federal Reserve Board in the Gold Settlement lUnd each
day.
.\.
\
In order to bring about a. daily settlement for clearing house
items, it is recommended that all Federal Reserve Banks give immediate
credit for clearing house items the day received from other Federal Reserve B:lnks, without regard to the tilre of .a.a.y received, inasmch as the
balance so created is reported to the Gold Settlement Fund at the close
of business but is really settle:d the f ollcwing day when the checks
have been collected.
It is voted that the Federal Reserve Board be asked to cause
a more detailed analysis of the "float" sitUation in eCl'ch Fedem.l Reserve Bank to be made, for such period as the Board may deem advisable,
in order that there Dy be a more exact knowledge as to what constitutes
a large amount of 0 floa.t 11 now appearing in the statement of the Federal
Reserve system a.nd in order that each Federal Reserve ~nk rray study in
a more deta.Ued way methods of eliminating its own 11 floa.t".
Respect.f\llly,
M.;
J. FLEMING.
@FedFRASER