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F O R M M 1 S C L- 14. 2 0 M -9 1 B 4 FED ER A L RESERVE BAN K OF D A L L A S CIRCULAR N o. 4 4 . NOvember 2 2 , 1916 CONCENTRATION OP GOLD. TO THE MEMBER BANK ADDRESSED: Some days ago we forwarded you a copy o f th e address o f Hon. Paul M. Warburg b e fo r e the American Bankers* A s s o c ia t io n a t Kansas C i t y , in which he advocates and urges the c o n c e n tra tio n o f g o ld i n th e Federal R eserve Banks and ex p la in s the reaso n fo r th e p o s i t i o n he has ta k e n . As the p r in c ip a l fu n c tio n o f commercial bank i s to accumulate the s c a t te r e d funds o f i t s d e p o sito rs in order to be a b le to use the aggregate in exten d in g c r e d it accomodation where needed and thereby keep the w heels o f commerce m oving, so i s i t one o f th e p r in c ip a l fu n c tio n s o f a r e se r v e bank or system to accumulate the s c a t te r e d re se r v e s of the banks o f the coun try and h o ld th e a g gregate in re a d in ess to meet and supply the demands o f any s e c t io n or o f the N a tio n . The few g o ld c e r t i f i c a t e s which eash o f our member banks has i n i t s own v a u lt would not go f a r toward ta k in g ca re o f an emergency or sudden s t r a i n which may be put on i t during the readjustm ent which must n e c e s s a r ily take p la c e a f t e r the w ar, but the c o n c e n tra tio n o f a l l o f th e se in your F ederal R eserve Bank w i l l prove to be an e f f e c t i v e bulwark a g a in s t p o s s ib le sto r m s, and such c o n c e n tra tio n should r e c e iv e the a c t iv e support o f a l l banks, both member and non-member* To a s s i s t i n b rin g in g about t h i s c o n c e n tra tio n o f gold c e r t i f i c a t e s in the Federal R eserve Bank o f D a lla s and to enable us to assume a p o s i t i o n o f p re p a rd n ess WE WILL PAY THE TRANSPORTATION COST OF ALL GOLD CERTIFICATES SENT US FROM THEIR VAULTS BY OUR MEMBER BANKS WHEN SUCH SHIPMENTS ARE MADE BY REGISTERED MAIL AND INSURED UNDER OUR POLICY ACCORDING TO THE METHOD EXPLAINED IN OUR CIRCULAR NO. 4 3 , DATED NOVEMBER 1 , 1 9 1 6 . Under the p r o v is io n s o f the re c e n t amendment to the Federal R eserve A c t and th e r u lin g o f th e F ederal R eserve Board r e l a t i v e t h e r e t o , d e p o s its w ith the F ederal Reserve Bank in excess o f the re q u ired amount may be counted as a p a rt o f your v a u lt r e s e r v e , and as currency may be ordered from us by w ire a t any t im e , i t should work no hardship on any member bank to thus d e p o sit i t s h o ld in g s of g o ld c e r t i f i c a t e s w ith u s . A few banks have g iv en as a reason f o r not d e p o sitin g t h e ir v a u lt re se r v e s w ith us the f a c t th a t t h e ir p u b lish e d statem en ts would show such a sm all precen tag o f a c tu a l cash on hand, but t h i s o b je c t io n has now been overcome, as on the blanks which you have ju s t re c e iv e d from th e C om ptroller o f the Currency you w i l l f i n d , under Item 8 , th a t your v a u lt re s e r v e and your balance w ith th e F ederal R eserve Bank are to be combined and p u b lish e d as one ite m . Some o f our la r g e r member banks have a lre a d y a v a ile d them selves o f the p r i v i l e g e o f c a rr y in g a s u b s t a n tia l p o r tio n o f t h e i r req u ired v a u lt re serv e on d e p o sit w ith u s , and we are anxious to have each and every member i n the same c la s s . May we not count upon your c o o p era tio n and a s s is ta n c e alon g th e se li n e s ? Very r e s p e c t f u l l y , R. L. VAN ZANDT Governor. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
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