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F E D E R A L RESERVE BOARD WASHINGTON X-3047 February 15, 1921. SUBJECT: Returned Treasury Items. Dear S i r : There i s e n c l o s e d h e r e w i t h c o p y of a l e t t e r from A s s i s t a n t S e c r e t a r y o f the Treasury G i l b e r t t o t h e Deputy Governor o f t h e F e d e r a l R e s e r v e Bank o f New York, g i v i n g t h e method o f p r o c e d u r e i n c o n n e c t i o n with, i t e m s drawn on t h e T r e a s u r e r o f t h e U n i t e d S t a t e s , p a i d by t h e F e d e r a l R e s e r v e Bank o f Hew York, and f o r w a r d e d t o t h e T r e a s u r e r , and s u b s e q u e n t l y f o u n d t o h a v e b e e n r a i s e d , or t o bear f o r g e d endorsements, e t c . , and r e t u r n e d b y t h e T r e a s u r e r t o t h e F e d e r a l R e s e r v e Bank o f New York. 3he T r e a s u r y a d v i s e s t h a t t h e T r e a s u r e r of t h e U n i t e d S t a t e s i s p r e pared to extend t h i s p l a n to other Federal R e s e r v e Banks. Very t r u l y y o u r s , R. G. Emerson, A s s i s t a n t t o Governor. Enclosure TO CHAIRMEN OF AIL FEDERAL RESERVE BANKS EXCEPT NEW YORK. COPY X-3047a January 2 7 , 1921, Dear Mr. Case: I r e c e i v e d your l e t t e r o f December 3 1 , 1 9 2 0 , w i t h f u r t h e r r e f e r e n c e t o t h e q u e s t i o n of i t e m s drawn on t h e T r e a s u r e r o f t h e U n i t e d S t a t e s and r e t u r n e d by h i m t o t h e F e d e r a l R e s e r v e Banks, 1 h a v e a l s o r e c e i v e d a l e t t e r f r o m Mr, H a r r i s o n , d a t e d J a n u a r y 1 5 , . 1 9 2 1 , e n c l o s i n g a c o p y of a l e t t e r o f December 3 0 , 1 9 2 0 , t o t h e Manager o f t h e l o c a l Branch a t B u f f a l o , w h i c h d e f i n e s the procedure under which i t i s proposed t o handle items returned by t h e T r e a s u r e r . The m a t t e r i n q u e s t i o n h a s b e e n c a r e f u l l y c o n s i d e r e d by t h e T r e a s u r y and p a r t i c u l a r l y by t h e T r e a s u r e r o f t h e U n i t e d S t a t e s , whose a c c o u n t i s o f c o u r s e a f f e c t e d . I think that th$t q u e s t i o n h a s now r e d u c e d i t s e l f i n l a r g e measure t o one o f procedure. The i t e m s i n v o l v e d seem t o f a l l u n d e r t h r e e d i s t i n c t c l a s s e s , namely: (1) Checks which t h e T r e a s u r e r r e j e c t s p r o m p t l y upon f i r s t e x a m i n a t i o n on a c c o u n t of any i r r e g u l a r i t y . Checks f a l l i n g w i t h i n t h i s c l a s s would normally i n c l u d e , f o r e x ample, unsigned checks, checks i n which t h e s i g n a t u r e o f t h e drawer i s d i s c o v e r e d upon f i r s t e x a m i n a t i o n t o be f o r g e d , c h e c k s payment o f which h a s b e e n s t o p p e d , e t c . (2) Checks which b e a r f o r g e d i n d o r s e m e n t s , and c h e c k s which h a v e b e e n r a i s e d o r b e a r o t h e r m a t e r i a l a l t e r a t i o n s which do n o t a p p e a r on examination. (3) Checks i n r e s p e c t t o which a q u e s t i o n a r i s e s on t h e f a c t s a s t o t h e T r e a s u r e r ' s rig&t t o r e c l a i m , a s , f o r example, checks b e a r i n g a f o r g e d s i g n a t u r e of t h e drawer n o t d i s c o v e r e d upon f i r s t examination. VHhen c h e c k s o f c l a s s ( 1 ) a r e r e t u r n e d I assume t h a t i m m e d i a t e c r e d i t w i l l be g i v e n i n t h e T r e a s u r e r ' s a c c o u n t . The s e c ond p a r a g r a p h o f Mr. Bounds' l e t t e r o f December 3 1 , 1 9 2 0 , t o t h e B u f f a l o Branch d o e s n o t make t h i s q u i t e c l e a r , b u t I assume t h a t t h e r e i s no d i f f e r e n c e of o p i n i o n a s t o items of t h i s d h a r a c t e r . 184 X-3017a -2- Such c h e c k s w i l l be r e t u r n e d w i t h Form 6 5 3 7 , c o p i e s o f w h i c h a r e enclosed, IShen c h e c k s of c l a s s ( 2 ) a r e r e t u r n e d i t w i l l be s a t i s f a c t o r y t o t h e Treasury i f c r e d i t i n t h e T r e a s u r e r ' s a c c o u n t i s d e l a y e d by t h e F e d e r a l R e s e r v e Bank u n t i l a d v i c e i s r e c e i v e d from t h e member bank t h a t the i t e m h a s b e e n c r e d i t e d . Such c h e c k s w i l l . be r e t u r n e d w i t h Form 6 5 3 6 , c o p i e s of which a r e e n c l o s e d . I t i s und e r s t o o d , h o w e v e r , a s s t a t e d i n Mr. H a r r i s o n ' s l e t t e r o f J a n u a r y 1 5 , 1 9 2 1 , t h a t t h e c i r c u l a r u n d e r vtiaitih t h e F e d e r a l R e s e r v e Bank o f New York a c t s a s c o l l e c t i n g a g e n t f o r banks i n i t s d i s t r i c t w i t h r e s p e c t • t o w a r r a n t s and c h e c k s drawn on t h e T r e a s u r e r o f t h e U n i t e d S t a t e s w i l l c o n t i n u e t o r e s e r v e i n f a v o r of t h e F e d e r a l Reserve* Bank t h e r i g h t a t any t i m e t o c h a r g e back i t e m s r e t u r n e d by t h e T r e a s u r e r ; and the Treasury s t i l l r e s e r v e s the r i g h t u l t i m a t e l y t o i n s i s t upon c r e d i t i n such c a s e s u n l e s s i t d e v e l o p s upon f u r t h e r i n v e s t i g a t i o n t h a t t h e Treasurer h a s not the r i g h t t o reclaim. TShen c h e c k s of c l a s s ( 1 ) and ( 2 ) a r e r e t u r n e d t o t h e F e d e r a l R e s e r v e Bank t h e T r e a s u r e r ' s o f f i c e w i l l c h a r g e t h e T r a n s i t Account - A d j u s t m e n t s of t h e F e d e r a l R e s e r v e Bank - and h o l d f u r t h e r a d j u s t ments i n t h e a c c o u n t i n s u s p e n s e u n t i l t h e T r a n s i t Account A d j u s t ments i t e m i s c l e a r e d i n t h e t r a n s c r i p t of the F e d e r a l R e s e r v e Bank. When c h e c k s of c l a s s ( 3 ) a r e r e t u r n e d t h e y w i l l be f o r w a r d e d w i t h o t h e r i t e m s f o r c o l l e c t i o n and t a k e n up when c r e d i t e d , w i t h no i n t e r m e d i a t e c h a r g e on t h e books o f t h e T r e a s u r e r i n t h e a c c o u n t of t h e F e d e r a l R e s e r v e Bank. The T r e a s u r y w i l l on and a f t e r January 2 8 , 1 9 2 1 , h a n d l e t h e s e i t e m s i n t h e manner o u t l i n e d a b o v e , w h i c h I t h i n k i s s u b s t a n t i a l l y i n a c c o r d a n c e w i t h t h e p r o c e d u r e s e t o u t i n t h e l e t t e r of D e c ember 3 0 , 1 9 2 0 , t o the B u f f a l o Branch. The r e g u l a t i o n s o f t h e T r e a s u r y now i n e f f e c t g o v e r n i n g t h e payment of Government w a r r a n t s and c h e c k s , a s s e t f o r t h i n p a r a g r a p h s 2 9 - 3 1 of T r e a s u r y Department c i r c u l a r No. 1 7 6 , d a t e d December 3 1 , 1 9 1 9 , w i l l c o n t i n u e i n e f f e c t . Very t r u l y y o u r s , (Signed) S.P. GILBERT, J r . A s s i s t a n t S e c r e t a r y o f t h e Treasury. J. H. C a s e , Esq.. , Deputy Governor, F e d e r a l R e s e r v e Bank, New York, N. Y. http://fraser.stlouisfed.org/ « Federal Reserve Bank of St. Louis
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