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FEDERAL RESERVE BOARD WASHINGTON X-3134 June 15' J 1921. SUBJECT: Interdistrict Settlement for Federal Reserve Notes Dear Sir: The Board has decided that the Federal Reserve Act does not permit the adoption of the recommendation made at the recent Governors 1 conference 1 tba. t in determining the amount of its own notes in circulation each Federal Reserve Bank be permitted to deduct all Federal Reserve notes held by it 1 i.e.} those of other Reserve Banks as well as its own. It has 1 however, approved the alternative suggestion that settlement for notes returned for redemption/ either to the bank of issue or to the U. S. Treasurer, be made through the Gold Settlement FUnd as of the day of shipment 1 and requests that this plan be put into effect as of July 1 1 1921. On and after that date 1 whenever one Federal Reserve Bank or branch forwards notes of.another Reserve Bank for redemption, it should so advise the bank of issue by wire in time for the telegram to reach the :tssvin3. bOnk. no~ lo.ter than 3 P.M. on the day the notes are shipped, giving in the new Federal Reserve telegraph code the serial n~ber and amount of the shipment) and indicating by the code words 11 CHUMMING 11 and "CHUMMY" (which code words should be added to the foot of page 48 of the new code book to follow the code word "CHUCKLING!'), whether the notes have been sh~pped to the bank of issue or to·Washington, respectively. Following are the forms of telegrams: CHUMMING Shipment No. was made today to the U. S. Treasurer, Washington, D. C., consisting of $ of Federal Reserve notes issu~d by your bank, Kindly credit this bank (or branch) in today 1 s clearing through the Gold Settlement Fund. CHUMMY Shipment No. _was made today to your ba.nkJ consisting of $ of Federal Reserve notes issued ~Y it. Kindly credit this bank (or branch) in today 1 e clearing through the Gold Settlement Fund. ... X-3134 -2- The bank of issue should include the amount of the shipment as given in the telegraphic advice, with other credits which it will pay to the shipping Federal Reserve Bank (or branch) in the current day's clearing through the Gold Settlement Fund. The amount of the shipment will then be taken up as. Federal Reserve notes on hand or forwarded for redemption, as the case may be. An analysis.of this subject indicates that the volume of notes of other Federal Reserve Banks which a given Reserve Bank will handle may not be sufficient to warrant daily shipments to or for the acco\Ult of each other Federal. Reserve Bank., and for this reason it will be necessary, in order to avoid confusion, to designate shipments by serial ni.unbers as follows: . . 1. Each Federal Reserve Bank (and branch which ships notes of another Reserve Sank for redemption) should use a separate series of numbers, beginning with 1 in all ~ases 1 to designate shipments of notes of each other Federal Reserve Bank. 2, A new series of numbers beginning with l should be adopted as of July l of every year. 3· Serial numbers covering shipment of notes should appear in the left-.hand margin of the advice of shipment (form 6338 in th~ case of notes f o·rwarded to Washington). 4. The U. S. Treasurer wili use the same serial numbers when acknowledging receipt of the notes to the issuing bank and agent. 5. The same series notes shipped to Washington bank. of a~ numbers shoulc\ be u13ed in designating those shipped direct to the issuing 6. One shipment to Washington may c~ntain notes of several Reserve Banks, provided the notes of each bank are wrapped in separate· packages. Very truly yours, R. G. Emerson, Assistant to Governor. LETTER SENT TO EACH FEDERAL RE~ERVE AGENT.
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