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. 207 DAVID F. HOUSTON II.CIITUY OP THI TIIAIUrt CHAIR II AM FEDERAL RESERVE BOARD JOHN SKILTON WILLIAMS C011ni0LLIR or THI CURII.IICY W. P. G. HARDING, GOVIIHOI ALBERT STRAUSS, YICI GOVIIHOI ADOLPH C. IIILLER CHARLES S. HAll LIN' HENRY A.IIOEHLENPAH W. T. CHAPMAN, SICRITAIY R. G. ENERSON. ASSISTANT SICR.IT.A.IY "DDREBB RII:PI. Y TO FEPERAL RESERVE BOARD Subje~t~ WASHINGTON W.II.IIILAY, FIICAL AUNT Regulation of Charges imposed by rmtrber :Banks against Customers for Collection of Checks through Federal Reserve Banke. Dear Sir:You are requested to advise the executive officers of your bank that the :Board has decided to carry out the duty wbieh is imposed upon it by a clause in Section 16 of the Federal Reserve .AGt, which reads as follows: "The Federal Reserve :Board shall, by rule 1 fiX the charges to be collected by the member banks from its patrons whose checks are cleared through the Federal 1\eserve Bank and the charge which may be imposed for the service of clearing or collection rendered by the Federal Reserve :Bank. tf The Board has already ruled tlw.t JJO service cba.rge will be imposed by the Federal Reserve Banks, and it now announces its purpose to fix the charges which ma7 be collected by member banks .t'rQID. their customers who deposit checks which are collected through the Federal Reserve Bank. This regulation will apply to all member banks alike, both in the large cities and in the country towns. The charges will be optional - that is, they may be imposed or not at the discretion of each member bank - but no member bank will be permitted to impose a charge higher than that authorised. by the Board. The Board will adopt the principle of allowing as a max-imum charge interest at the rate of per annum for the transit time involved in the cQllection of items. In general the state will be the unit, end each Federal Reserve Bank is requested to prepare a schedule of rates to be announced by the Board which shall be applicable to the members in each state, or in .the case of large states, to sections of states. It is assumed that l/lOth of 1% will be the ma:Kimum charge permitted and that application of the time in transit and siX percent interest rule will mean for near-by states rates of l/20th end l/4ot:n of 1%. 6% 208 X-1844 -2- Please request your executive officen to have the Transit Manager proceed at once to the working out of schedules in order that each member bank in eaeh state in your district JIJI:}"' mow JUst what the maximwn charge is that it may iml:Ose upon customers for collecting through the Federal Reserve :Bank checks which are payable in every other state in the l.h~on, and after these schedules have been approved by your ex.eeutive officers you are requested to have them forwarded to the :Board in order that a formal re@l.lation may be issued in compliance with the terme of Section 16 of the Federal Reserve Ae t, above quoted. Veey tNly yours, Governor. To Chairmen ot all F.R. :Banks ..
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