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W . P . G . H A R D I N G , GOVERNOR A L B E R T S T R A U S S . VICE GOVERNOR ADOLPH C. MILLER CHARLES S. HAMLIN EX-officio memb ers CARTER GLASS SECRETARY OF THE TREASURY CHAIRMAN FEDERAL RESERVE BOARD J O H N SKELTON WILLIAMS COMPTROLLER OF THE CURRENCY J . A. B R O D E R 1 C K , SECRETARY L . C . A D E L S O N . ASSISTANT SECRETARY W . T . C H A P M A N . ASSISTANT SECRETARY w . M. I N L A Y . FISCAL ASENT WASHINGTON ADDRESS REPLY TO FEDERAL January 13,1919. X-1358 SUBJECT: D r a f t s made payable, or payable if d e s i r e d , a t a designated bank, Dear S i r : The Board has been in correspondence r e c e n t l y with several of the Federal Reserve banks regarding d r a f t s made payable, or payable if d e s i r e d , a t a designated bank, and you a r e requested t o inform the Executive Committee and t h e o f f i c e r s of your Bank t h a t i t i s the view of the Board t h a t Federal Reserve banks should be guided by the terms of Section 13, which provides t h a t they iray receive from any member bank and from the United S t a t e s , "deposits of current funds in l a w f u l money" * * * "or checks and d r a f t s payable upon p r e s e n t a t i o n , and >also, f o r c o l l e c t i o n , maturing notes and bills * * * The Attorney General of the United S t a t e s , in an Opinion rendered sometime ago, expressed the view t h a t because of t h e provision t h a t no exchange charges s h a l l be made a g a i n s t t h e Federal Reserve banks, these banks should not take any items which involve a payment of exchange by them. The Board i s of the opinion, t h e r e f o r e , t h a t Federal Reserve banks should r e c e i v e , on d e p o s i t , from member banks, any item, whether i t be a check or a d r a f t , which w i l l be paid on p r e s e n t a t i o n a t a bank without deduction f o r exchange, and t h a t they would be j u s t i f i e d in d e c l i n i n g to receive on deposit items which involve e i t h e r a delay in payment a f t e r p r e s e n t a t i o n or an exchange charge. By giving n o t i c e t o member banks, Federal Reserve banks can p r o t e c t themselves in t h e matter of p r o t e s t of dishonored items having a designated drawee and payable elsewhere "if d e s i r e d " . Counsel's opinion as to p r o t e s t of such items w i l l be t r a n s m i t t e d in due course, f o r your i n f o r m a t i o n . Kindly acknowledge r e c e i p t . Very t r u l y yours, The Chairman, Federal Reserve Bank, Governor RESERVE BOARD
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