Full text of District Notices (Federal Reserve Bank of Dallas) : [Rediscounts to Provide Funds Float], [Circular No. 18-43]

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FORM MISCL. 14.

F E D E R A L RESERVE B A N K
OF DALLAS

6- 18 -2 0 M -1 476

Circular No. 43
Series of 1918.

August 20* 1918.

TO THE BANKS OF THE ELEVENTH DISTRICT:
Due to the large amount of "float” carried
by this bank for some time past, consisting principally of
mail transfers purchased from member banks, drawn on points
east, it has been necessary on several recent occasions, in
maintaining cur required reserve, to re-discount with other
Federal Reserve Banks for the purpose of providing funds suf­
ficient to carry the "float” mentioned.
These drafts, in process of collection (and
for which immediate credit is given to the member bank), ap­
proximate in total several millions of dollars, ranging at
times in excess of twelve million dollars.
With the heavy demands current upon the Feder­
al Reserve Bank from member banks at this time for currency
shipments of round amount, and loan accomodations regularly
arranged, unless the volume of "float" represented by pur­
chase of the mail transfers above mentioned is materially
reduced, it will be necessary to raise the discount rate at
which such transfers are taken to the re-disccunt rate which
the Federal Reserve Bank of Dallas pays when providing funds
to protect such "float,” this step having already been taken
by some of the other Federal Reserve Banks, The present rate
of 10$ per day per M. is figured at approximately 3•65%|
whereas a change, if effected at this time, would be in the
neighborhood of 4.75^.
This situation, however, is called to the at­
tention of the member banks believing that it will be their
desire, in order to obviate the necessity of increasing the
rate on transfers purchased from them at this time, to wire
any transfers of this character sold the Federal Reserve Bank
of Dallas wherever same is possible. Your co-cperation there­
in will meet with our appreciation accordingly.
Respectfully,

Governor

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