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F O R M M I S C L - 1 4.

20 M -9 18 4


Circular No. 49.
Nov. 7th, 1917.

We are in receipt of a letter from Hon. 1. P. G. Harding,
Governor, Federal Reserve Board, which we quote in full as follows:
"In order to facilitate the redemption of unfit currency shipped
to the Treasurer of the United States by various member and non-member
banks, and in order to provide a means for concentrating the gold supply by
eliminating as far as possible the issue of gold certificates in exchange
for unfit currency presented for redemption, the Treasury Department and
the Federal Reserve Board have agreed upon the following plan:
(1) The Treasurer, upon receipt cf unfit currency for redemption,
will place to the credit of the appropriate Federal Reserve Bank in the gold
settlement fund an equivalent amount of gold or gold certificates and will
advise the Federal Reserve Bank of the amount of that credit stating for
Y/hose account the deposit is made, and will also advise the member or nonmember bank for which the redemption is made to that effect. In certain cases
the Treasurer, instead of making the credit through the gold settlement fund,
may ship currency direct to the Federal Reserve Bank for the credit of the
bank desiring the redemption.
(2) The Federal Res erve Bank shall advise the member or non-member
bank for which the redemption is made that its account has been credited with
the appropriate amount and that it stands subject to its order. If the credit­
or bank desires currency and not merely a book credit, the Federal Reserve
Bank will make the shipment at the expense of the creditor bank, deducting
from the amount of the shipment all charges involved, in the same manner now
employed by the Treasury Department in making such shipments.
The Board understands that this plan is not intended to, and does
not revoke or supersede existing Treasury regulations relating to the redemp­
tion of unfit currency, but in view of the fact that it will tend to shorten
or even eliminate many shipments of currency, it is earnestly hoped that all
banks will co-operate in its development.
The Treasury Department will make
redemptions in the manner outlined herein unless a banc presenting currency
for redemption specifically states that it desires the shipment to be made
direct from the Treasury Department in the same manner as at present.
No change can be made in the matter of deposits by national banks
for reimbursement of their 5% redemption fund unless and until the Treasury
Department decides to issue new regulations on that subject."
Respectfully yours,


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