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FEDERAL RESERVE BOARD WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE T O T H E FEDERAL RESERVE BOARD X-7285 November 4, 1932. SUBJECT: Shipment of Canceled Checks, e t c . , "by Express. Dear S i r : With f u r t h e r reference to the above s u b j e c t , which was the subject of the Board's l e t t e r of October 15, 1932, (X-7272), there a r e inclosed for your information copies of f u r t h e r correspondence, as follows: (1) Letter dated October 21, 1932, from the Governor of the Federal Reserve Bank of Cleveland and a copy of the inclosure r e f e r r e d to t h e r e i n . (2) Letter dated October 21, 1932, from the Governor of the Federal Reserve Bank of Dallas. Very t r u l y yours, Chester M o r r i l l , Secretary. Inclosures. TO GOVERNORS OF ALL F. R. BAMS. COPY X-7285~a FEDERAL RESERVE BAH OF CLEVEIAHD October 21, 1932. Mr. Chester M o r r i l l , Secretary, Federal Reserve Board, Washington, D. C. Dear Mr. M o r r i l l : In response to the "board's l e t t e r X-7272 of October 15, 1932, subject "Shipment of Canceled Checks, E t c , , by Express", we have to r e port that i t has been the p r a c t i c e of t h i s bank and i t s branches f o r many years to ship to the Treasury Department by express Government checks and warrants accompanied by the daily t r a n s c r i p t of the T r e a s u r e r ' s general account, as well as a limited number of bulky cash l e t t e r s to our member banks. The shipment of Treasury checks and warrants by express was begun a t the suggestion of the Federal Reserve Board contained i n i t s l e t t e r of November 30, 1918 (X-1296), and the shipment of bulky cash l e t t e r s by express was adopted as a measure of added p r o t e c t i o n a f f o r d e d by the special handling given express shipments, as well as the saving i n t r a n s p o r t a t i o n charges, which i s quite s u b s t a n t i a l on large packages. The volume of express shipments was not augmented a t the time the increased p o s t a l r a t e s became e f f e c t i v e . Our experience with the Post Office inspectors has been similar to that of Kansas City; i n July of t h i s year, an inspector from the Cleveland d i s t r i c t t o l d us that t h i s bank was v i o l a t i n g the p o s t a l laws by sending cash l e t t e r s to our member banks by express instead of by mail. He was informed t h a t our i n t e r p r e t a t i o n of the law indicated that we were withi n our r i g h t s i n using the express company for the shipment of checks, and that the adding-machine l i s t accompanying the checks was i n the nature of an invoice such as the Post Office Department approves f o r enclosure with parcel post shipments. In September of t h i s year, a Post Office inspector from the P i t t s burgh d i s t r i c t v i s i t e d our Pittsburgh Branch, c a l l i n g a t t e n t i o n to an a l leged v i o l a t i o n of the p o s t a l laws i n sending cash l e t t e r s by express and requested that the p r a c t i c e be discontinued. After conferring with our Pittsburgh Branch and obtaining d e t a i l e d information regarding the number of express shipments, a l e t t e r was received from the inspector estimating the amount of revenue of which the Post Office Department was deprived during the period from J u l y 6 to the time the matter was taken up with the branch, as not l e s s than $734.40. A copy of t h i s l e t t e r i s enclosed. KTo formal demand has been m&de by the Post Office Department f o r re-imbursement. Our Cincinnati Branch has had no communication from the p o s t a l aut h o r i t i e s on t h i s s u b j e c t . X-7285-a FEDEBA.L EESEHVE BAH OF CISVELAED Mr. Chester Morrill, Secretary Federal Eeserve Board, Washington, D. C. -a- October 21, 1932. We have been advised that a report regarding the p r a c t i c e of t h i s bank and i t s Pittsburgh Branch has been forwarded to the Post Office Department i n Washington. Very t r u l y yours, (S) F:S:K E. E. Fancher Governor. X-7285-b PITTSBURGH BRAHCH FEDERAL BE SERVE BAHK OF CLEVELAHD POST OFFICE DEPARTMENT OFFICE OF INSPECTOR. 1. C. KennedyInspector S Pittsburgh, P a . , September 24, 1932 Mr. F. E. Cobun Assistant Cashier Pittsburgh Branch Federal Reserve Bank Pittsburgh, Pa. Dear S i r : At a conference with you yesterday regarding the transmission of mail matter through express channels you s t a t e d that you sent an average of 30 l e t t e r s a day weighing 12 ounces or more to your c o r r e s pondent banks. The postage revenue on t h i s would be not l e s s than $10.80. The increased postage r a t e s went into e f f e c t July 6, 1932. There were 68 business days between the time of the increase i n r a t e s and the time that I called a t your o f f i c e and a t t h i s r a t e the Post Office Department was deprived of revenue to a minimum charge of $734.40, t h i s based on the assumption that each of the 30 l e t t e r s mailed daily by you weighed a t l e a s t 12 ounces and the amount estimated i s t h e minimum amount of revenue l o s t to the Post Office Department through the use of the Railway Express. Please advise i f t h i s estimate i s c o r r e c t . I am enclosing an o f f i c i a l l y addressed envelope requiring no postage f o r your use i n submitting a r e p l y . Very r e s p e c t f u l l y , L. C. KE1TNEDY (signed) Post Office Inspector 416 X-7285-c COPY FEDERAL RESERVE BANK OF DALLAS B. A. McKinney Governor October 21, 1932 Federal Reserve Bank Washington, D. C. Gentlemen: Attention of Mr. Chester Morrill This w i l l acknowledge r e c e i p t of your l e t t e r X—7272, dated October 15, 1932, subject: "Shipment of Canceled Checks, e t c . , "by Express." For your information,' we are a t t h i s time sending daily t r a n s c r i p t s of the general account of the Treasurer of the United States "by express, accompanied by paid vouchers. We are also forwarding by express daily cash l e t t e r s to twelve or f i f t e e n banking i n s t i t u t i o n s within the d i s t r i c t , as well as the Federal Reserve Bank Branch at Oklahoma City, a l l of which are now accompanied by l e t t e r s of t r a n s m i t t a l . Early i n September we had an experience here somewhat similar to that of the Kansas City Federal Reserve Bank. An inspector of the Post Office Department called upon us a t that time and inquired i f we were sending checks by express, accompanied by a p r i n t e d l e t t e r of t r a n s m i t t a l . Upon learning of our manner of handling such items, he obtained copies of a l l t r a n s m i t t a l l e t t e r s , which, according to our understanding, were to be r e f e r r e d to the Office of the Third Assistant Postmaster General f o r a d e f i n i t e r u l i n g . We had not, p r i o r to the r e c e i p t of your l e t t e r , heard anything f u r t h e r i n connection with the i n vestigation. We a r e a t t h i s time giving the matter consideration, and without f u r t h e r discussion with the Post Office Department, contemplate i n s t i t u t i n g a t an early date a plan which w i l l comply with the suggestion of counsel i n a manner that should p r o t e c t t h i s bank from any complaint on the p a r t of the Post Office Department. Very t r u l y yours, (S) B. A. McKinney Governor.
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