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J 437s. .shir-gton, December 2, 19.15. DRAFT OF 1'iEMORAiJDUM SUGGESTED PY THE COMMITTEE ON CLEARING. ; -j ‘ ’ . The Federal vReserve Board will approve a system of intradi.-strict and inter-district clearing and collection of checks which.shall be based upon the following named principles, the details to be worked out by the Governors and Transit Managers of the various Federal Reserve Banks: First: The’system shall be upon, a voluntary basis'for ail /:jL-n.ber banks.Tn this connsction, it r.ay be pointed o*ut that ail clearing operations in this country have been developed heretofore on the volun tary principle and -inasmuch as;.the Federal Reservg System can hot handle, except on a voluntary basis, . items drawn against non-member banks; it is desirable that nothing be done to tear down whatever has already been established. No bank joining the System need bind itself to send items for collection or clearing by(the Federal Reserve Bank, but in joining the system, it agrees to remit at par for all items drawn against it sent in by other members. Second: their reserve deposits In order to give banks .an opportunity to know the amount of items which have been drawn against them, and in most cases to actually see the specific checks,and protect^1 . by mail or wire; the Board is willing to approve a system of two days* deferred debit and 'i credit. If, however, the Reserve Bank of any district prefers immediate debit and credit, the Board will ap prove such a plan. But the Board will not.approve a deferred debit extended beyond two days in any dis-*trict. 437 - 2 * For chocks of another district> a deferred time for debit and credit equal .to the one wav time be tween the Federal Reserve Cities of the two districts involved added to the two days* limit of the district v/ill be authorized; Third. If it v/ill facilitate the accomplishment of results the Board will approve a scale of penalty charges to apply on deficiency of reserves where reserves of member banks are depleted below the legal limit. Fourth: In order to facilitate clearing operations in cities and towns more than one day av/ay from the re serve bank, and thereby reduce "float", the Board will approve arrangements with clearing houses or with banks or individuals to act as agencies in the collection of items; Fifth: only . The Board v/ill approve accepting for collection,/ from member banks and with their indorsement, the checks of non member banks or bankers Sixth: If it will facilitate the getting in of reserves and thereby the handling of this problem, the Board is ready to act as provided in paragraph "e" of Section 11 of the Federal. Reserve Act, in the reclassifying of reserve and central reserve cities and in the naming of additional reserve or central reserve citiesj Seventh: stands ready where desired 1 The Board/ to approve a scale of charges which member banks may be authorized to charge their customers for t:ie collection of checks and the remitting of funds, such charges not to exceed actual, cost;..'_^ Eighth: Every member bank entering this voluntary clearance system shall be permitted to print upon its checks, in the form of a distinctive'design, mark, or seal, a legend read ing: i"collectible at par through the--- Federal Reserve Bail:". 'iiS
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