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EX·OFP'ICIO MI!MBIIRS W. P. G. HARDING, GOVERNOR PAUL M. WARBURG, VICE CiiiOVIRNOR FREDERIC A. DELANO ADOLPH C. MILLER CHARLES S. HAMLIN WILLIAM G. McADOO SECRITARY OF THI TREASURY CHAIRMAN JOHN SKELTON WILLIAMS FEDERAL RESERVE BOARD COMPTROLLER OF THE CURRENCY WASHINGTON H. PARKER WILLIS, SECRETARY SHERMAN P. ALLEN, ASST. SICIIITAIIY AND FISCAL AGINT ADDRESS ft:B.PLY TO FEDERAL RESERVE BOARD DIVISION OF REPORTS AND STATISTICS X-867 April 2nd, 1918. My dear Mr. Elliott:I \nsh you-would kindly read this opinion carefully and make such suggestion~ From a cursor~r as to interpretation of it as you think proper. reading once, I juclge that state banlts are not required to remit at par to Federal Reserve do remit to Federal Reserve Barnes, ~~e Baru~s, but that if they Reserve Baruts are not permitted to pay them any exchangeo It perhaps is also a fair intel..._f)retation or coroHar~r of the opinion tl1at Federal Reserve Barucs are not justified in charging for the collection of checks. lif so, it is important to knov: it, because at the present moment the Board is debating the suspension · of all service charges by Federal Reserve Banks upon checks collected by them for their customers. Yours very truly, \ Sig'r.l.ed) F. A. J;elano. Mr. M. c. Elliott, Counsel. W. P. G. HARDING, GOVERNOR PAUL M. WARBURQ, VICE GOVERNOR FREDERIC A. DELANO ADOLPH C. MILLER CHARLES S. HAMLIN EX-OFJI'ICIO MEMBERS WILLIAM ~cADOO SEC~F THE TREASURY CHAIRMAN JOHN SKELTON WILLIAMS COMPTROLLER OF THE CURRENCY FEDERAL RESERVE BOARD WASHINGTON H. PARKER WILLIS, SECRETARY SHERMAN P. ALLEN. ASST. SECitiTAJIY AND FISCAL AGENT ADDRESS REPL vAo X-8~dftL1.t.sJ!:RvE BOARD DIVISION OF REPORTS AND STATISTICS April 3 • 1918. I have read the op~n~on of the Attorney General dated March 21, which relates to those provisions of the Federal Reserve Act which impose limitations on charges made by banks for collecting and clearing checks • , As I in-terpret the opinion. the Attorney General holds FirstThat Congress has recognized the right of all banks to make reasonable chatges for the collection or payment of checks and drafts arid remi.ssi6n therefor by exchange or otherwise. SecondIn so far as inetnber banks and banks which voluntartly clear through Federal reserve.banks are concerned, these charges are to be determined and regulated by the Federal Reserve Board, and in no case are to exceed ten cents per one hundred dollars. ThirdThat no member bank or bank which voluntarily cleo.rs through the Federal reserve bank, can make any charge against a Federal reserve bank. FourthAs a consequence i f a member, and which it cannot undertake any charge. That no Federal reserve bank can pay any charge. it receives a check drawn on a bank which is ncit does not clear through the Federal Rese-rve Banlt, to make the collection if the drawee bank demands FifthNone of the prov~s~ons of the Federal Reserve Act nave any application to banks which are not members of the Federal Reserve system and which do not voluntarily clear through the Federal reserve bank. Under this opinion it would seem that if the member bank or a bank which carries a deposit with the Federal reserve bank, -2receives items for collection from other such banks, it may, suljec'\ to regulations by the Federal Reserve Board, charge · a reasonable fee not to exceed ten cents per one hundred dollars for making the collection and. remitting' the proceeds. If, however, such a bank receives an item for collection from a Federal Reserve pank, it can make no charge against the Federal reserve bank.· Tho opinion does not d.ecide the following question which has been raised by the Committee of Five of the American Bankers' Association: Where member bank "A" sends an item for coliection to its Federal reserve bank drawn oi1 momber bank "B" and the Federal reserve bank forwards it to bank "B" with instructions to remit, granting that no charge can be nade against the Federal reserve bank, rtl£LY bank 'iB'' charge bank "A" for. the service of collection, on the ground that tho Federal reserve bank acts merely as the agent for bank "B" in forvvarding the item? In other words 1 it has been suggested that the statute intended to prOhibit a member bank from charg:i.ng a Federal reserve bank for the service of collecting items belonging to the Federal reserve bank, but was not intended to prohibit member banks from making a charge for the service of collecting items sent to such member bank by the Federal reserve bank acting as agent for another member bank. If we assume that no ch~rge can be made in any case in which an ·item is received by a member bank from its Federal reserve bank, it necessarily follows that all items cleared through a Federal reserve bank must bo settled for at par by the drawee bank and all items cleared through any other source than the Federal reserve bank are subject ~o a reasonable charge ~or collection under regulations of the Board. Respectfully) (Signed) k, c. Elliott Counsel. Mr. F. A. Delano, Federal Reserve Board.
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