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:REPORT OF GOVERNORS OF FEDERAL RESERVE BANKS
TO FEDERAL RESERVE BOARD COVERING RECOMMENDATIONS
FOR I~ROVEMENT IN SERVICE AND DISTRIBUTION OF
EXPENSES OF THE FEDERAL RESERVE LEASED WIRE
SYSTEM.
The comadttee appointed at the recent conference of Governors, to consider
ways and means for improving the leased wire service and to provide, if possible,
a more equitable division of the expense of the system, asked for suggestions
along these lines fraw the Federal Reserve Eanks and the Federal Reserve :Board,
and after considering carefully all suggestions received, respect~ully submits
the following recommendations:
IMPROVEMENT IN SERVICE
(a) Only fast and experienced operators should be employed.
(b) To facilitate prompt routing and delivery of ~essages
received, each message should indicate the department
for whose attention it is intended in the receiving
bank a.nd also the departn.ent in the sending b.mk for
whose attention reply, if any, should be directed.
(c) The custom of using the words "quote, stop, period,"
etc. , should be discontinued through the use of ordinary
punctuation in preparing Oa.PY· for which sy.wbols are
understood by all operators, as per copy attached.
(d) Brevity should be observed in wording telegrarus, and
in no case should the wire be used when the ruails would
serve the s~e purpose. Each office should arrange for
a. careful censorship of all mes.sages sent, with a view
of eliminating unimportant telegrams and unnecessary
words ..
(e) That the wire service of the System shall be lindted
to messages between Federal Reserve Banks, their
branches, and departments of the govern~t.c~ercial
messages 1 and messages dgned by member banks, cannot
be sent over the wires of the System without violation
of the Interstate Commerce Law(f) Wire transt:ers of funds through the Federal Reserve
:Banks shall be strictly limited to those ordering
payments ·Or credits to banks or bankers. Direct
payments bf Federal Reserve Banks to individuals,
firms, or corpora.t ions other than banks will not be
permitted) but such transfers can be effected through
their banks •
For example:
A message requesting one Federal
R~serve
:Bank to deposit with another bank a certain sum of
money for the account. of an individual, firm, or cor-
http://fraser.stlouisfed.org/
poration
Federal Reserve Bank of St. Louis
is proper and will be handled; on the other
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X-1596
hc:md, a request for a Fedel"'"l Reserve Bank to pay direct
to an individual, firm, or cor:poration other than a bank
or banker, funds over its own counter, or otherwise, will
not be l:i.andled..
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(g)
One transfer of funds should constitute a message, for if
several are included, an inaccuracy in the test word delays
them all. The time limit fixed for the acceptance of transfers for current execution should be strictly adhered to except
in extreme cases. This would guarantee that credits would be made
on day of receipt.
(h)
That all telegrams between .Federal Reserve Banks involving
the payment of moneys or tr~sfer of funds shall be identified
by consecutive numbers, one set of such consecutive numbers
to apply to the usssages sent to each other Federal Reserve
:Bank, respectively. That the first word of each weaaage shall
be a code word, indicating the consecutive number of the
message; and t~t the last word of each wessage shall be a
code test word, in determining.which one factor shall be the
consedutive number indicated by the first code word of the
message. Tb.d.t the remaining factors in deterwining the last
test word shall consist of items A,D,E,Fr ca.rd G of the formula
for determining test words now in use between Federal Reserve
Eanks. That as an additional safeguard to the above, the item
A (the correspondent ts index number) shall be changed by the
Federal Reserve Bank on receipt of advice fran the Federal
Reserve :B<:m.k of Chicago, to reach each bG:I.Ilk at least three
days before the change shall became effective. That these
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a.dvices sbt::i.ll be sent under confidential cover, by registered
mail, addre~sed to the Governors of the respective Federal
Reserve'Ba.nks.
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{i) In the opinion of this €~ittee, the t~e has now come when,
for the protection of Feder~l Reserve :Banks and their mewbers,
a special code system with individual test wards for ea.ch
member should be devised for use with Federal Reserve :Banks
and their members and betwe""' --t Federal Reserve :Banks, at least
in all instructions given blw·«ire involving the transfer or
payment of funds, ·and this Co!llt..J.ttee recOD.li.o.~ends that:
A COI!lll4ittee be appointed by the GOvernors in conference, to
consider and prepare a code that will be comprehensive as to
all matters of transfer af funds, the delivery of securities~
and such other matters as they Illi:J¥ deem ne·cessary••
(J)A manual outlining the pla.n of operation of the System shall
be :prepared for the guidance of operators ani for the information of others concerned with the handling of telegrC:W.~s ..
This manual, or set of rules, would embody the general instructions under which we are operati~g. and it is reco~~-,
that the Feder~l Reserve :Bank of Chicago, which is res:ponsi'b l~
for the operation of the system, be charged with the :prepa.ra
tion of the same.
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Recomr11end.ed that:
The Federal Reserve ~nk of Chicago shall be considered
as the managing center of the telegraph service of the
Federal Reserve :Ba.nks. a.nd tha.t the Federal Reserve :Board
be asked to issue a letter to that effect to the several
Federal Reserve Banks.
DISTRIBUTION OF EXPENSE
It is recoumend.ed that the expense of the system be prorated among the twelve
banks according to the number of words sent by each b~, instead of according to
the capital stock, the present method. Each bank"would reimburse itself in the
same manner as it now does, by charging one-half of its pro rata to the Treasury
Department as a part of the expense of fiscal agency operations~ The war Finance
Corporation would continue to reimburse the system for its telegrams figured at
government rate.
While the business sent by the Treasury Departruent does not represent one ...
half of the total volume of business sent over the wires, consideration must be
given to .the fact that all overhead expenses of the system, such as office rent,
clerical help. messenger service. etc, are borne by the banks, and only operators'
salaries and wire rental are prorated.
This plan would not only provide a. fairer diviai·on of the ex:pensey but would
t.end. th. rilake the banks exercise more care in eliminating unnecessary words in
sending tele~rams. This ruethod, if adopted, could be made effective without delay •
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. The attached reports show (1) the total number ~M classification of words
sent over the leased wires during the week ending .April 12th, (2} the division of
. the expense under the present and proposed plans of distribution.
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DIVISION OF EXPENSE OF THE LEASED WIRE SYSTEM
Schedule A
The following figures show the percentage of cost borne by each Federal
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Reserve Bank and the Treasury Departruent (1) under the present plan of distributing cost, i.e. apportioning the total cost a.ruong the twelve banks according to
capital stock, each bank cbarging the Treasury Department with one-half of its
share, cmd. (2) under the proposed pldn, i.e .. , a~portioning the total cost among
the twelve banks according to business done, each bank charging the Treasury
Department as in plan (l)•
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Percentage paid
under present method
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Boston
New York
Phila.delpbia.
Cleveland
Richmond
Atlanta.
Chicago
St.Louis
Minneapolis
!Qlnsas City
Dallas
San Francisco
Treasury Department
.0416
.1284
.0465
.0566
.0252
.0195
.0693
.0235
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Percentage paid
under proposed methOd
.016
.. 0857
.019
.04o3
.. 0423
.0185
.()566
.04o1
.. 0181
.0229
.0158
.0197
.0391
.0287
.50
.o677
.. 0589
.. 50
Total
Both of the ci.bove plans contemplate that the war Finance corporation will
reimburse the system for business chargeable to. it f1gure4l at government r ... te.
To arrive at the percentages shown under plan (2)• the total number of words
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sent during the week April 12th by each bank exclusive/ those pertaining to war
Finance Corporation, was used as a basis.
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REPORT BASED ON FIGURES RECEIVED FROM FEDERAL RESERVE
BANKS AND WASHINGTON SHOWING TCJrAL NUMBER AND CLASS!•
FI CAT I ON OF WORDS SENT OVER LEASED WIRE SYSTEM FOR WEEK
ENDING APRIL 12. 1919.
Schedule l3
Bank Business Fisca.l Agent
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Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
st .Louie
Minneapo lie
Kansas City
Dallas
SanFra.ncisco
Washington
Total
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6,680
37,460
7,570
16,176
16,871.
1,245
23,139
15,934
5l936
98,630
16,994
22,052
41,475
246,212
f28
2.712
War Finance
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g,184
676
1.481
877
1,511
1,423
1,220
1,026
1,631
804
1,653
1,157
1,426
2, 701
2,914
1,441
3,315
2,382
1 t~37
3,102
1,365
5,528
35! 747
11,~72
"1,653
9,801
20,388
21,208
9,9o6
27,530
20,447
8,177
33,385
19,516
29 ,oo6
89,194
65,326
26,857
338,395
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l3ank business is
Fiscal Agent business .193 " 1t
War Finance Business .0]9 " "
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tEASED WIEE SYMBOLS
Schedule C
i.
PN
I
End
DN
Interrogation
Begin cpote
ex
ca;pital letter
~
End
15
Small letter
~
Begin quote within quote
E5
Not abbreviated
QY
End
HX
Hyphen
ux
-
Dash
QN
.
DX
py
~
Begin parenthesis
Underline. or a.ll Cdops
NX
#
UJ
End of underline or caps
MM
Paragraph
KO
Colon
oso
"
"
t1
"
"
)
or )
%
SI
Semicolon
OUTO)
~
.A;posthophe
Asteris~
KQ
colon follo...;ed by quot.:a.tion
c OII:iil.IQ. dot dash dot dash
KX
Colon, dash
Period dot dot dash dash
indicated by xts
~ot
dot
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