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M IS C L . 1 4 - 8 - 2 8 - 1 8
FEDERAL RESERVE BANK
OF DALLAS
NUMBER .FOUR
December lo ,
TO THE MEMBER BANK ADDRESSED:.
Our commu-nicatdon o f a •wed: ago d ireo to d your a tte n tio n to two
functions o f the F ederal Reserve BanK, inform ation concerning which w i l l be
given you from tim e to time as developments may warrant*
There has been no change in the fu n ction of rediscounting except
th a t we now, and w i l l u n t il fu rth er n o tic e , employ a ra te o f 5$ on paper
maturing w ith in t h ir t y days,
fo r that which may mature w ith in s ix ty
days and 6% fo r longer m a tu ritie s v
The other functions , that o f c le a rin g item s? is s t i l l being con*'*
sid e re d , but without a d e fin it e solution*. At the meeting o f the Council
o f Governors, the opinion ueemed to p r e v a il that le f o r e the h an dlin g-af
items v/ithin a d is t r a c t could be undertaken with any s a tis fa c tio n , the
problem o f arranging fo r the rm.ndling between themselves of a l l checks
drawn upon F ederal Reserve Banks, and the method o f s e t t lin g the resu lta n t
balan ces{ should be s o l v e d Tfn]ess such checks con he handled by the other
F ed eral Reserve Bunks,, the ‘c re d ita growing cut o f tnc acceptance o f items
w ith in the d i s t r i c t are not a v a ila b le to the member- as has already been
demonstrated during the time In which we hove been engaged in the lim ited
tr a n s it work now employed oy us* Upon this theory the Council o f Governors
appointed a sub-committee, o f f i v e to deal with the en tire sub je c t o f hand
lin g checks o f a l l Federal Reserve Banks between the tw elve in s titu tio n s ,
and the methods by which the balances created by such exenangos ibay be
s e ttle d # This committee is expected to i eport at the next meeting of the
Governors, which w i l l be he?a in Washington on January twenty second*, l?lyrIn the meantime; i t w i l l not be our p o lic y bo make any changes,
other than those which may be necessary, in the present method o f handling
t r a n s it items#
Between now and the adoption of the method which may be re
garded as permanent, the Federal Reserve Banks hove agreed among themselves
to handle fo r immediate c r e d it , at par, from member banks w ith in th e ir
re s p e c tiv e d i s t r i c t s , a l l items drawn on any F ed eral Reserve Bank,, I t w i l l
aid th is in s t it u t io n m a t e r ia lly l i f the member banks w i l l make f r e e use of
t h e ir drawings, a g a is t excess balances with us, in the sa le o f exchange
to th e ir customers, or the tr a n s fe r o f funds to Eastern and Northern p oin ts,
and we w i l l appreciate t h e ir g iv in g con sid eration to th is advantage*
We are d ea lin g w ith new problems,
be much confusion and misunderstanding, and
any c r itic is m o f a con stru ctive nature from
through the expression o f opinions may come
which are now unsettled#
concerning which there must
th e re fo re the o f f i c e r s welcome
any member, b e lie v in g that
th'e boot s o lu tio n o f the things
Very r e s p e c tfu lly ,
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
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