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Dallas, Texas, January 10, 1942

To the Member and Nonmember Clearing Banks of the
Eleventh Federal Reserve District:

There is enclosed a copy of our Bulletin No. 10, which will
become effective on February 2, 1942, relating to the collection
of United States postal money orders.
This bulletin should be placed in the ring binder previously

Yours very truly,




This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (

JANUARY 1 0 , 1942



To the Member and Nonmember Clearing Banks
of the Eleventh Federal Reserve D istrict:

This is to advise that on and after February 2, 1942, this bank and other
Federal Reserve banks will not accept for collection from member or non­
member clearing banks, either as cash or noncash items, any postal money
orders that are not drawn on or issued by a post office in a Federal Reserve
bank or branch city, or Washington, D. C., or Fort Bliss, Texas. We will con­
tinue after February 2, 1942, to accept for collection as cash items money orders
that are drawn on or issued by post offices in the cities referred to above.
Consistent with the foregoing, direct sending member banks and non­
member clearing banks should not send to any other Federal Reserve bank, or
to any branch of another Federal Reserve bank, any postal money orders not
drawn on or issued by the respective post offices in the cities in which such
other Federal Reserve banks or branches are located.
For the information of member banks and nonmember clearing banks we
quote below paragraphs 1 and 2 of section 1429 of the Postal Laws and Regu­
lations, which section is contained in Title V III, Chapter 3, entitled “ Payment
of Domestic Money Orders.”
“ 1. Under such rules and regulations as the Postmaster General shall
prescribe, postal money orders may be issued payable at any moneyorder post office, and on and after the date upon which such rules and
regulations become effective all money orders shall be legally payable
at any money-order post office, although drawn on a specified office;
and as compensation for the extra labor involved in paying a money
order at an office other than that on which the order is drawn the Post­
master General is authorized to exact a fee of the same amount as
that charged for the issue of the order (act of June 16, 1934, Public,
No. 366, 73d Cong.).
“2. An original domestic money order shall be paid at its full face
value if presented at the office on which drawn or at the office of issue
at any time within the period of its validity, which is 1 year from the
last day of the month in which issued. For the first 30 days; after issue
any domestic money order issued in the continental United States (ex­
cept A laska), and drawn on an office located therein, may be paid for
its face value, less the fee prescribed by the law quoted above, at an
office other than that of issue or that on which drawn, provided the office
at which presented is located within the continental United States
(except A laska).”
Prior to August 1, 1934, when the revised Regulations of the Post Office
Department became effective, Federal Reserve banks could collect all postal



2 —

money orders at their local post offices without the payment of a fee, regard­
less of where such orders were issued or where they were payable. When the
Post Office Department revised its Regulations to provide a fee for cashing
any postal money order when presented at an office other than that of issue
or that on which drawn, Federal Reserve banks, as a general rule, began
sending money orders not drawn on or issued by postmasters in Federal
Reserve bank and branch cities to member or par nonmember banks located
at the points on which the orders were drawn or at which issued as cash items
for collection and remittance. This practice has not proved to be entirely satis­
factory since many member and par nonmember banks feel that they are en­
titled to make a charge for their services in presenting the money orders to
their local post offices for payment, and some banks have declined to handle
postal money orders for the Federal Reserve banks unless they are permitted
to make a charge for their services.
In view of these developments and since the pa}^ees or holders of postal
money orders can collect all of them from their local post offices, and such of
them as are drawn on or issued by their local post offices without the payment
of prescribed fees, there is no adequate reason why the Federal Reserve banks
should continue to receive for collection any money orders, other than those
(specified in the first paragraph of this bulletin) which can be cashed by the
Federal Reserve banks themselves for their member and nonmember clearing
banks free of fees or other collection charges.

The right is reserved to withdraw, add to, or amend at any time, any of
the provisions of this bulletin.

R. R. G IL B E R T