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F e d e r a l R e s e r v e B a n k OF DALLAS Dallas, Texas, August 31, 1964 Revision of Regulations and Bulletins Covering the Collection of Cash and Noncash Items To All Banks in the Eleventh Federal Reserve District: Enclosed are amendments to Regulations G and J of the Board of Governors of the Federal Reserve System^ effective September 1, 1964. It will be noted that the Board has revised the first two paragraphs of Section 207.3 of Regulation G and Section 210.5 of Regulation J and, in revising the latter, it has designated as paragraph (a) the heretofore undesignated first paragraph of Section 210.5 and has redesignated as paragraphs (b) through (j) the paragraphs previously designated as paragraphs (a) through (i). The purposes of these amendments are (1) to provide that Federal Reserve banks, as collecting banks, shall receive the same warranties from sending banks located in jurisdictions in which the Uniform Commercial Code is not in effect as Federal Reserve banks located in jurisdictions in which the Code is in effect give to banks to which they forward cash or noncash items, and (2) to make it clear that a Federal Reserve bank which sends cash or noncash items to another Federal Reserve bank makes the same warranties and agreements as are made by a member or nonmember bank which sends such items to a Federal Reserve bank. Also enclosed are revised and reprinted copies of this bank’s cash and noncash item Bulletins Nos. 8 and 9, dated and effective September 1, 1964, in which have been incorporated outstanding amendments thereto and the revised language of Section 210.5 of Regulation J (quoted in paragraph 9 of Bulletin No. 8) and Section 207.3 of Regulation G (quoted in paragraph 8 of Bulletin No. 9). Also incorporated are uniform amendments currently adopted by all Federal Reserve banks and nonuniform amendments of this bank, as enumerated below: Bulletin No. 8 The language of uniform paragraphs 26 and 31, dealing with the return of unpaid items, has been revised. A new uniform paragraph 38, having to do with bank name or designation on checks, has been inserted. Because of the redesignation of former paragraph (d) of Section 210.5 of Regulation J as paragraph (e), the references in paragraphs 25, 26, 27, and 31 to paragraph (d) have been changed to paragraph (e). Paragraph 30 has been revised to include a request that the dates of prior endorsements on unpaid checks be included in wire advices of nonpayment. A third footnote, pertaining to items payable in foreign currencies, has been added to page 1. Bulletin No. 9 A new uniform paragraph 24, with regard to passing credit for bankers’ acceptances and certificates of deposit, has been added. (over) This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) Paragraph 23 has been appropriately reworded in view of the content of new paragraph 24. In paragraph 25 (former paragraph 24) the $1,000 minimum amount specified for reserve account improvements on noncash items payable in other Federal Reserve districts has been deleted. A third footnote, pertaining to items payable in foreign currencies, has been added to page 1. Member banks are requested to file the amendments to Regulations G and J and the revised and reprinted Bulletins 8 and 9 in the ring binder of bulletins of this bank and regulations of the Board of Governors, and nonmember banks are asked to file them in the red binder containing emergency bulletins of this bank. Please remove and destroy the previously issued Bulletins 8 and 9 and amendments thereto. It will be appreciated if you will sign and return promptly the attached postal card, acknowledging receipt of these enclosures. Yours very truly, Watrous H. Irons President Enclosures (5) COLLECTION OF N O N CASH ITEM S A M E N D M E N T S TO R E G U L A TIO N G (1 2 C F R P A R T 2 0 7 ) ISSUED BY TH E BOARD OF GOVERNORS OF TH E FEDERAL RESERVE SYSTEM Effective September 1, 1964, paragraphs (a ) and (b ) o f Section 207.3 are revised to read as follow s: S E C T IO N 207.3 — T E R M S O F C O L L E C T IO N (a) Agreement of sending bank. Each member and nonmember clearing bank and each Federal Reserve bank which sends noncash items to a Federal Reserve bank for collection shall by such action be deemed: (1 ) to authorize the Federal Reserve banks to handle such items subject to the terms and conditions o f this part; (2 ) to warrant its own authority to give the Federal Reserve banks such authority; (3 ) to agree to indemnify any Federal Reserve bank for any loss or expense sustained (including but not limited to attorneys’ fees and expenses o f litigation) resulting from the failure o f such sending bank to have such authority, or resulting from such Federal Reserve bank’s guaranty o f prior endorse ments, or resulting from any action taken by the Federal Reserve bank within the scope o f its authority for the purpose o f collecting such non cash items, or resulting from any and all warranties given by the Federal Reserve bank, in respect o f such items, under the law o f any State applicable to the Federal Reserve bank as a collecting bank; (4 ) to guar antee all prior endorsements on such items whether or not a specific guaranty is incorporated in an endorsement o f the sending bank; and (5 ) to warrant to the Federal Reserve bank, in respect o f such items, all such matters and things as the Federal Reserve bank shall warrant in respect thereof under the law o f any State applicable to the Federal Reserve bank as a collecting bank; provided, that nothing herein con tained shall, or shall be deemed to, constitute a limitation upon the effect o f any warranty by such sending bank arising under the law o f any State applicable to such sending bank as a collecting bank. (b) Federal Reserve bank as agent. A Federal Reserve bank will act only as agent o f the bank from which it receives such noncash items and will assume no liability except for its own negligence, its guaranty o f prior endorsements and its warranties under the law o f any State applicable to it as a collecting bank. CH ECK C L EAR IN G A N D COLLECTION A M E N D M E N T S TO R E G U L A TIO N J (1 2 C F R P A R T 2 1 0 ) ISSUED BY TH E BOARD OF GOVERNORS OF T H E FEDERAL RESERVE SYSTEM Effective September 1, 1964, the presently undesignated first para graph of Section 210.5 is designated as paragraph (a ), the present paragraphs (a ) through (i) o f Section 210.5 are redesignated as para graphs (b ) through ( j ) , respectively, and the presently undesignated first paragraph'1o f Section 210.5 and the present paragraph (a ) o f such section are revised to read as follow s: S E C T IO N 210.5 — T E R M S O F C O L L E C T IO N (a) The Board o f Governors of the Federal Reserve System hereby authorizes the Federal Reserve banks to handle such checks subject to the following terms and conditions; and each member and nonmember clearing bank and each Federal Reserve bank which sends checks to a Federal Reserve bank for deposit or collection shall by such action be deemed: (1 ) to authorize the Federal Reserve banks to handle such checks subject to the following terms and conditions; (2 ) to warrant its own authority to give the Federal Reserve banks such authority; (3 ) to agree to indemnify any Federal Reserve bank for any loss or expense sustained (including but not limited to attorneys’ fees and expenses of litigation) resulting from the failure o f such sending bank to have such authority, or resulting from such Federal Reserve bank’s guaranty of prior endorsements, or resulting from any action taken by the Federal Reserve bank within the scope o f its authority for the purpose o f collect ing such checks, or resulting from any and all warranties by the Federal Reserve bank, in respect o f such checks, under the law o f any State applicable to the Federal Reserve bank as a collecting bank; (4 ) to guar antee all prior endorsements on such checks whether or not a specific guaranty is incorporated in an endorsement o f the sending bank; and (5 ) to warrant to the Federal Reserve bank, in respect o f such checks, all such matters and things as the Federal Reserve bank shall warrant in respect thereof under the law o f any State applicable to the Federal Reserve bank as a collecting bank; provided, that nothing herein con tained shall, or shall be deemed to, constitute a limitation upon the effect o f any warranty by such sending bank arising under the law o f any State applicable to such sending bank as a collecting bank. (b ) A Federal Reserve bank will act only as agent o f the bank from which it receives such checks and will assume no liability except for its own negligence, its guaranty o f prior endorsements and its war ranties under the law o f any State applicable to it as a collecting bank. FEDERAL RESERVE BANK B U L L E T IN N O . 8 SEPTEM BER O F DALLAS 1, 1964 (Superseding Bulletin N o . 8, dated A ugust 7, 1961) COLLECTION OF CASH ITEMS T o the Member and Nonmember Clearing Banks o f the Eleventh Federal Reserve D istrict:1 Regulation J o f the Board o f Governors o f the Federal Reserve System (hereinafter referred to as Regulation J ), this bulletin and our Bulletin No. 8A prescribe the terms and conditions upon which we will receive and handle cash items for collection. Section 210.6 o f Regulation J provides that each Federal Reserve bank may promulgate rules not inconsistent with the terms o f the law or o f Regulation J, governing the details o f its operations in clearing and collecting checks and other cash items, and that such rules shall be binding upon any member or nonmember clearing bank which sends any check or other cash item to such Federal Reserve bank for collection or to any other Federal Reserve bank for the account o f such Federal Reserve bank for collection. This bulletin and our Bulletin N o. 8A are issued pursuant to this provision o f Regulation J. Unless otherwise stated, all references to the Federal Reserve Bank o f Dallas will include the head office and all o f its branches. IT E M S W H I C H W I L L B E A C C E P T E D A S C A S H IT E M S 1. The following will be accepted for collection as cash items: (1 ) Checks drawn on banks or banking institutions (including private bankers) located in any Federal Reserve district2 which are collectible at par in funds acceptable to the collecting Federal R e serve bank. The “ Federal Reserve Par List,” indicating the banks upon which checks will be received by Federal Reserve banks for collection and credit, is furnished from time to time and a supple ment is furnished each month showing changes subsequent to the last complete list. This list is subject to change without notice and the right is reserved to return without presentment any items drawn on banks which may have withdrawn or may have been removed from the list or may have been reported closed.3 'T h e provisions o f paragraph 15, paragraphs 24 through 30, and paragraphs 37 through 39, as well as those o f paragraph 9 with respect to remittance drafts, are appli cable not only to member and nonmember clearing banks but also to other par remitting nonmember banks to which we send cash letters. T his bulletin is accordingly sent to all member and par remitting nonmember banks in the Eleventh Federal Reserve District. 2F or the purposes o f this bulletin, any dependency, insular possession or part o f the United States outside the States o f the United States and the District o f Columbia shall be deemed to be in or o f such Federal Reserve district as the Board o f Governors may designate. "W e reserve the right to refuse to accept, either as a cash or a noncash item, any item payable in foreign currency. —2— BULLETIN No. 8 (2 ) Government checks drawn on the Treasurer of the United States. (3 ) Postal money orders (United States postal money orders; United States international postal money orders; and domesticinternational postal money orders). (4 ) Such other items, collectible at par in funds acceptable to the Federal Reserve bank o f the district in which such items are payable, as we may be willing to accept as cash items. W hen any such item is accepted as a cash item, we will give credit therefor in accord ance with the provisions o f this bulletin and our Bulletin No. 8 A ; and with respect to such item the “ T E R M S O F C O L L E C T IO N ” o f Section 207.3 o f Regulation G o f the Board o f Governors o f the Federal Reserve System, as set forth in our current bulletin relating to the collection o f noncash items, will apply as well as the relevant terms and conditions of this bulletin including paragraphs ( c ) and (e ) o f Section 210.5 o f Regulation J as set forth in this bulletin. 2. W e may receive cash items pre-encoded as to transit number-routing symbol and as to amount in magnetic ink in E-13B type and we may so encode cash items received by us. 3. The right is reserved to establish different closing times, and to require separate sorts and cash letters for items which we may be willing to accept as cash items and which are not suitable for processing on high-speed document handling equipment. 4. Items with passbook, certificate or any other document attached, and items with special instructions or requiring special handling must be sent to us as noncash collections, subject to the terms o f our current bulletin relating to the collection o f noncash items. W e reserve the right to return or to handle as a noncash collection any item which has been previously dishonored. 5. Checks drawn on or payable at a nonmember bank which is not included in the currently effective Federal Reserve Par List, referred to above, will not be received either as cash items or as noncash items by us or by any other Fed eral Reserve bank. 6. In the interests o f good banking, the indirect routing o f cash items is discouraged, and member and nonmember clearing banks should not send to us or to other Federal Reserve banks for our account, any items payable in other Federal Reserve districts, which bear the endorsements o f banks located in other Federal Reserve districts, in cases where it is evident that such items have been routed indirectly. T E R M S A N D C O N D IT IO N S O F C O L L E C T IO N 7. Every bank sending cash items to us or to another Federal Reserve bank direct for our account, by such act, will be understood to have agreed to the terms and conditions o f this bulletin, o f our Bulletin No. 8A, and o f Regulation J in effect at the time such cash items are received by the Federal Reserve bank. 8. Cash items payable in other Federal Reserve districts and forwarded for collection to the Federal Reserve banks o f such other districts either by us or — 3— BULLETIN No. 8 by our member and nonmember clearing banks for our account will be handled by such other Federal Reserve banks subject to the terms and conditions of Regulation J and o f the respective bulletins and time schedules o f such other Federal Reserve banks, and to the rules o f law applicable to such banks; but we will give credit for such items in accordance with our Bulletin No. 8A. 9. Section 210.5 o f Regulation J prescribes terms and conditions under which all Federal Reserve banks will handle checks as cash items for member and nonmember clearing banks. Such terms and conditions, and the terms and con ditions o f this bulletin and o f our Bulletin No. 8A , will apply to the handling o f all items which we accept for collection as cash items and to the handling o f all bank drafts and other forms o f payment or remittance which we receive fo r such items. The terms and conditions p rescribed by S ection 210.5 o f Regulation J are as follow s: “ ( a) The Board o f Governors o f the Federal Reserve System hereby authorizes the Federal Reserve banks to handle such checks subject to the following terms and conditions; and each member and nonmember clearing bank and each Federal Reserve bank which sends checks to a Federal Reserve bank for deposit or collection shall by such action be deem ed: (1 ) to authorize the Federal Reserve banks to handle such checks subject to the following terms and conditions; (2 ) to war rant its own authority to give the Federal Reserve banks such authority ; (3 ) to agree to indemnify any Federal Reserve bank for any loss or expense sustained (including but not limited to attorneys’ fees and expenses o f litigation) resulting from the failure o f such sending bank to have such authority, or resulting from such Federal Reserve bank’s guaranty o f prior endorsements, or resulting from any action taken by the Federal Reserve bank within the scope o f its authority for the purpose o f collecting such checks, or resulting from any and all warranties by the Federal Reserve bank, in respect of such checks, under the law o f any State applicable to the Federal Reserve bank as a collecting bank ; (4 ) to guarantee all prior endorsements on such checks whether or not a specific guaranty is incorporated in an endorsement of the sending bank; and (5 ) to warrant to the Federal Reserve bank, in respect of such checks, all such matters and things as the Federal Reserve bank shall warrant in respect thereof under the law o f any State applicable to the Federal Reserve bank as a collecting bank; provided, that nothing herein contained shall, or shall be deemed to, constitute a limitation upon the effect o f any warranty by such sending bank arising under the law of any State applicable to such sending bank as a collecting bank. “ ( b) A Federal Reserve bank will act only as agent o f the bank from which it receives such checks and will assume no liability except for its own negligence, its guaranty o f prior endorsements and its war ranties under the law of any State applicable to it as a collecting bank. “ ( c) A Federal Reserve bank may present such checks for pay ment or send such checks for collection direct to the bank on which they are drawn or at which they are payable, or in its discretion may for ward them to another agent with authority to present them for payment or send them for collection direct to the bank on which they are drawn — 4— BULLETIN No. 8 or at which they are payable. A Federal Reserve bank, or any agent to which such checks are forwarded by a Federal Reserve bank, may pre sent such checks pursuant to any special collection agreement not incon sistent with the terms o f this regulation or may present them through a clearing house subject to the rules and practices thereof. “ ( d ) A Federal Reserve bank may, in its discretion and at its op tion, either directly or through or from an agent, accept in payment o f or in remittance for such checks, cash, bank drafts, transfers o f funds or bank credits, or other forms o f payment or remittance, acceptable to the collecting Federal Reserve bank. The Federal Reserve bank shall not be liable for the failure o f the drawee bank or any agent to pay or remit for such checks, nor for any loss resulting from the acceptance from the drawee bank or any collecting agent, in lieu o f cash, o f any other form o f payment or remittance authorized herein, nor for the nonpayment of, or failure to realize upon, any bank draft or other medium o f payment or remittance which may be accepted from the drawee bank or any collecting agent. “ ( e) Any check which a Federal Reserve bank or an agent thereof presents to the drawee bank for payment or sends to the drawee bank for collection, and for which remittance or settlement is made by the drawee bank on the day on which it receives3 such check, may be re turned for credit or refund at any time prior to midnight o f the drawee’s next business day following such day o f receipt or prior to the time pro vided by applicable clearing house rule or special collection agreement, whichever is earlier, except that this paragraph shall not apply to checks presented over the counter. “ ( f ) Checks received by a Federal Reserve bank which are payable in its own district will ordinarily be forwarded or presented direct to the banks on which they are drawn, and such banks will be required to remit or pay therefor at par in such one or more o f the forms o f pay ment or remittance authorized under paragraph ( d ) hereof as may be acceptable to the Federal Reserve bank. “ ( g ) Checks received by a Federal Reserve bank payable in other districts will ordinarily be forwarded for collection to the Federal R e serve bank o f the district in which such checks are payable; Provided, however, That, where arrangements can be made satisfactory to the col lecting bank or agent and to the Federal Reserve bank of the district in which such checks are payable, any such checks may be forwarded for collection direct to the bank on which they are drawn or at which they are payable, or may be forwarded for collection to another agent with authority to present them for payment direct to the bank on which they are drawn or at which they are payable. All such checks shall be handled subject to all the terms and conditions o f this part. “ 3A check received by a drawee bank on a day other than its business day, or received on a business day after its regular business hours or during afternoon or evening periods when it has reopened (or remained open) for limited functions, shall be deemed to have been received on its next succeeding business day.” — 5— BULLETIN No. 8 “ ( h) W ith respect to any check sent direct by a member or non member clearing bank in one district to a Federal Reserve bank in an other district, the relationships and the rights and liabilities existing be tween the member or nonmember clearing bank, the Federal Reserve bank o f its district and the Federal Reserve bank to which the check is sent will be the same, and the relevant provisions o f this part will apply, as though the member or nonmember clearing bank had sent such check to the Federal Reserve bank o f its district with its endorse ment and guaranty o f prior endorsements and such Federal Reserve bank had sent the check to the other Federal Reserve bank with its endorsement and guaranty o f prior endorsements. “ ( i) Bank drafts received by a Federal Reserve bank in payment o f or in remittance for checks handled under the terms o f this part shall likewise be handled for collection subject to all the terms and conditions o f this part. “ ( j ) The amount o f any check for which payment in actually and finally collected funds is not received shall be charged back to the for warding bank, regardless o f whether or not the check itself can be re turned. In such event, neither the owner or holder o f any such check, nor the bank which sent such check to the Federal Reserve bank for collection shall have any right o f recourse upon, interest in, or right of payment from, any reserve balance, clearing account, deposit account, or other funds o f the drawee bank or o f any bank to which such checks have been sent fo r collection, in the possession o f the Federal Reserve bank. N o draft, authorization to charge, or other order, upon any re serve balance, clearing account, deposit account, or other funds of a paying, remitting, or collecting bank in the possession o f a Federal R e serve bank, issued for the purpose o f settling items handled under the terms o f this part will be paid, acted upon, or honored after re ceipt by such Federal Reserve bank o f notice o f suspension or closing o f such paying, remitting or collecting bank.” GOVERNM EN T CHECKS 10. United States Government checks will be handled in accordance with, and subject to the provisions o f, Treasury Department Circular No. 176 in effect at the time such items are received by u s ; and with respect to matters not covered by such circular, the provisions o f Regulation J, this bulletin and our Bulletin No. 8A shall be deemed applicable to all Government checks. Credit for Government checks will be given in accordance with our Bulletin No. 8A and will be subject in all cases to examination and payment by or on behalf o f the Treasurer o f the United States. 11. Section 25 o f Treasury Department Circular No. 176 (Title 31, Code o f Federal Regulations, Chapter II, Subchapter A , Section 202.25) relates to the handling and payment o f checks drawn on the Treasurer o f the United States received at Federal Reserve banks. Copies o f this section will be fur nished upon request. POSTAL M O N EY ORDERS 12. Postal money orders will be handled in accordance with an agree ment made by the Postmaster General, in behalf o f the United States, and —6— BULLETIN No. 8 the Federal Reserve banks as depositaries and fiscal agents o f the United States pursuant to authorization o f the Secretary o f the Treasury; and with respect to matters not covered by such agreement, the provisions of Regulation J, this bulletin and our Bulletin No. 8A shall be deemed applicable to all postal money orders. Immediate credit will be given to member and nonmember clear ing banks for postal money orders as provided in our Bulletin No. 8 A and simultaneously with such credit we will debit the amount o f such money orders against the general account o f the Treasurer o f the United States under such symbol numbers as may be assigned by the Treasurer o f the United States. Said agreement further provides in effect that no claim fo r refund or otherwise with respect to any money order debited against the general account o f the Treasurer o f the United States and delivered to the representative o f the Post Office Department as provided in said agreement (other than a claim based on the negligence o f a Federal Reserve bank) will be made against or through any Federal Reserve bank; that if the Post Office Department makes any such claim with respect to any such money order, such money order will not be re turned or sent to a Federal Reserve bank, but the Post Office Department will deal directly with the bank or the party against which such claim is m ade; and that the Federal Reserve banks will assist the Post Office Department in mak ing such claim, including making their records and any relevant evidence in their possession available to the Post Office Department. P R E P A R A T IO N O F C A S H L E T T E R S B Y S E N D IN G B A N K S 13. Instructions relative to sorting and listing o f items are set forth in our Bulletin No. 8A. ENDORSEM ENTS 14. All cash items sent to us, or to another Federal Reserve bank direct for our account, should be endorsed without restriction to the order o f the Federal Reserve bank to which sent, or endorsed to the order o f any bank, banker, or trust company, or endorsed with equivalent words or abbreviations thereof. Cash items will be accepted by us, and by other Federal Reserve banks, only upon the understanding and condition that all prior endorsements are guaran teed by the sending bank. There should be incorporated in the endorsement of the sending bank the phrase, “ All prior endorsements guaranteed” which may be abbreviated as, for example, “ P.E.G .” in conform ity with the A B A uniform transit instructions, or “ Pr. Ends. Gtd.” The act o f sending or delivering a cash item to us or to another Federal Reserve bank will, however, be deemed and understood to constitute a guaranty of all prior endorsements on such item, whether or not an express guaranty is incorporated in the sending bank’s en dorsement. The endorsement o f the sending bank should be dated and should show the American Bankers Association transit number o f the sending bank in prominent type on both sides. U N IF O R M IN S T R U C T IO N S R E G A R D IN G P R O T E S T A N D W I R E A D V IC E O F N O N P A Y M E N T 15. Federal Reserve banks will receive, handle and forward cash items subject to the following uniform instructions regarding protest and wire advice o f nonpayment except that United States Government checks will not be pro tested : — 7— BULLETIN No. 8 (1 ) P R O T E S T dishonored items o f $1,000 and over: (a ) that appear on their face to be drawn outside of the state in which payable, except those bearing on their face the A .B .A . no-protest symbol o f a Federal Reserve bank or o f a preceding bank endorser, or (b ) that bear on their face the legend, “ P R O T E S T R E Q U IR E D ,” o f a Federal Reserve bank or o f a preceding bank endorser. (2 ) D O N O T P R O T E S T items o f less than $1,000, or items o f $1,000 and over except those protestable under subparagraph (1 ). (3 ) D O N O T W IR E A D V IC E o f nonpayment of items of less than $1,000. (4 ) W I R E A D V IC E o f nonpayment o f all items o f $1,000 or over, except those not paid because o f missing, irregular or unsatisfac tory endorsement and those bearing on their face “ D O N O T W IR E N O N P A Y M E N T ” with the A .B .A . transit number of a Federal Reserve bank or o f a preceding bank endorser. Include in the wire advice of nonpayment the A .B .A . transit numbers or the names o f the two endorsers immediately preceding the Federal Reserve bank. (5 ) D O N O T P R O T E S T A N D D O N O T W IR E A D V IC E of nonpayment o f any check, regardless o f amount, endorsed by the Treasurer o f the United States, or endorsed for credit to the Treas urer o f the United States, or bearing on its face or in an endorse ment the legend “ This check is in payment of an obligation to the United States and must be paid at par. N .P. D o not wire non payment” or words o f similar import. (S E E P A R A G R A P H 30 W I T H R E F E R E N C E T O P R E P A R A T I O N O F W I R E A D V I C E S O F N O N P A Y M E N T .) 16. All Federal Reserve banks will receive, handle and forward cash items only in accordance with these uniform instructions, and any contrary or spe cial instructions noted on cash letters or otherwise transmitted with cash items will be disregarded. 17. I f a bank should desire to have any cash item handled by us or by any other Federal Reserve bank under any instructions differing from the uniform instructions given above, it will be necessary for such bank to forward such item as an individual noncash item, with the instructions noted in the letter of transmittal, for collection and credit when paid, in accordance with the terms o f our current bulletin relating to the collection o f noncash items. T E L E G R A P H IC C O S T S 18. Telegrams pertaining to payment, nonpayment or tracing o f cash items, or in connection with receiving or transmitting pertinent information or in structions, will be sent, to the extent practicable, over the Federal Reserve leased wires without cost to member and nonmember clearing banks. The cost o f all such telegrams sent over commercial wires will be charged to the banks from — 8— BULLETIN No. 8 which the items were received, and commercial wire telegrams to such banks will be sent “ collect.” T I M E S C H E D U L E S A N D A V A I L A B I L I T Y O F C R E D IT S 19. W e publish and furnish to member and nonmember clearing banks time schedules showing when cash items will become available for reserve and withdrawal or other use by the sending banks after receipt by us. F or all items accepted as cash items the sending bank will be given immediate credit or de ferred credit, in accordance with such time schedules and as provided in R eg ulation J. Credit for letters containing items unassorted as to availability may be deferred for the longest period o f availability prescribed by our current time schedules with respect to any item enclosed, not to exceed two busi ness days. 20. Time schedules do not in many instances show the actual time required for collection, and advices received from us showing the availability o f credit for cash items cannot be considered as advices o f actual payment on the dates o f availability. Credit will in all instances be subject to receipt o f payment by us in actually and finally collected funds. 21. Immediate Credit. For all such cash items as are accepted for imme diate credit in accordance with our current time schedules, immediate credit will be given upon our books at full face value in the reserve account or clear ing account upon the day o f receipt, and the proceeds will at once be counted as reserve (in the case o f a member bank) and become available for withdrawal or other use by the sending bank; provided, however, that we may in our discretion refuse at any time to permit the withdrawal or other use o f credit given for any item for which we have not yet received payment in actually and finally collected funds. 22. Deferred Credit. For all such cash items as are accepted for deferred credit in accordance with our current time schedules, deferred credit will be entered upon our books at full face value, but the proceeds will not be counted as reserve nor become available for withdrawal or other use by the sending bank until the expiration o f the time specified in our time schedules, at which time credit will be transferred from the deferred account to the reserve ac count or clearing account and will then be counted as reserve (in the case of a member bank) and become available for withdrawal or other use by the sending bank; provided, however, that we may in our discretion refuse at any time to permit the withdrawal or other use o f credit given for any item for which we have not yet received payment in actually and finally collected funds. A I R T R A N S P O R T A T IO N 23. In sending cash items for collection, this bank uses available air trans portation facilities wherever such facilities offer a reasonable expectation of earlier presentment o f cash items or in those cases where earlier delivery facili tates the work o f the drawee bank or the receiving Federal Reserve bank or branch. IN S T R U C T IO N S T O C O L L E C T IN G A N D R E M I T T IN G B A N K S 24. Remittances for our cash letters should be made on the day o f receipt, at par in immediately available or acceptable funds. — 9— BULLETIN No. 8 25. W e will receive for credit or refund cash items which are returned to us by collecting and remitting banks in accordance with paragraph (e ) o f Sec tion 210.5 o f Regulation J, set forth in this bulletin under the heading “ Terms and Conditions o f Collection.” Such provision o f Regulation J does not mean, however, that any bank is required to follow the practice o f delaying the re turn o f unpaid cash items; and any collecting or remitting bank may continue to return unpaid cash items with its remittance on the day o f receipt. Each cash item returned unpaid should bear a notation clearly indicating the reason therefor. 26. Each bank returning cash items for credit or refund represents that such items are returned within the time allowed by paragraph (e ) o f Sec210.5 o f Regulation J ; and this bank may recover or revoke any refund, de duction or credit made, allowed or given by it for any item returned after the time allowed by Regulation J unless we are instructed not to do so by our sending bank, but any such recovery or revocation shall be without prejudice to the rights and obligations o f the returning and sending banks, as between themselves, in respect o f the item or any settlement or credit therefor. A bank may, however, return to us without entry a cash item which it has failed to return in time, with a request that we ask our sending bank to make refund therefor, in which event we shall make refund to the returning bank and charge our sending bank only if the latter specifically authorizes us to do so. 27. I f unpaid items are returned on the day o f receipt, they should be de ducted from and returned with the remittance for the cash letter in which the items were received. Those items for which remittance has been made on the day o f receipt and on which payment is revoked in accordance with paragraph (e ) o f Section 210.5 o f Regulation J may be returned the following business day and may be deducted from the remittance for the cash letter received on such following business day; however, if no cash letter is received on such following business day, the items should not be held but should be returned to us separately for credit or refund. The transmittal letter returning such unpaid items should be clearly marked R E T U R N IT E M L E T T E R and should not include other items. 28. Collecting and remitting banks should retain a description o f each item returned unpaid, which should include the amount, the name o f the drawer, the name o f the payee, the date o f our endorsement, and the name or A .B .A . transit number o f our endorser. Failure to retain such information might prevent establishing identity and effecting recovery in the event unpaid checks are lost while being returned to us. 29. The instructions set forth in paragraph 15 of this bulletin under the heading “ U N IF O R M IN S T R U C T IO N S R E G A R D IN G P R O T E S T A N D W IR E A D V IC E O F N O N P A Y M E N T ” are applicable to all items which we forward as cash items. 30. In furnishing wire advices o f nonpayment o f items o f $1,000 or over, collecting and remitting banks should include in the wire advice the amount o f the item, the reason for nonpayment, the date o f our cash letter in which the item was listed, and the A .B .A . transit numbers or the names o f the two endorsers immediately preceding this bank and the dates o f their endorse- — 10 BULLETIN No. 8 inents. W ire advices o f nonpayment should be furnished in a form similar to that which is used in the following specimen: Returning $1,513.24 insufficient funds yours 18th endorsed 37-2 17th and 88-4185 16th IN F O R M A T IO N T O S E N D IN G B A N K S R E G A R D IN G R E T U R N IT E M S 31. The attention o f sending banks is called to our “ Instructions to collect ing and remitting banks” to the effect that (a ) each bank returning cash items for credit or refund represents that such items are returned within the time allowed by paragraph (e ) of Section 210.5 o f Regulation J, and (b ) that this bank may recover or revoke any refund, deduction or credit made, allowed or given by it for any item returned after the time allowed by Regulation J unless we are instructed not to do so by our sending bank, but any such recovery or revocation shall be without prejudice to the rights and obligations of the re turning and sending banks, as between themselves, in respect o f the item or any settlement or credit therefor. W e do not undertake to examine all returned cash items to confirm that such items are returned within the time per mitted under the provisions o f paragraph (e ) o f Section 210.5 o f Regulation J. D IR E C T S E N D IN G O F C A SH IT E M S T O O T H E R F E D E R A L R E S E R V E B A N K S 32. Member and nonmember clearing banks, having a substantial volume o f cash items (exclusive o f Government checks and postal money orders) pay able in other Federal Reserve districts which they wish to collect through the Federal Reserve banks, are urged to apply to us for permission to send such items direct to the Federal Reserve banks and branches o f the districts in which such items are payable, for collection and credit to us. Appropriate instructions will be sent to the banks to which such permission is granted. 33. W hen in our judgment a member or nonmember clearing bank has a sufficient volume o f cash items payable in other Federal Reserve districts to justify direct routing, we reserve the right to decline to accept such items for collection unless they are routed direct to the Federal Reserve banks and branches o f such other Federal Reserve districts. R E IM B U R S E M E N T O F T R A N S P O R T A T IO N C O S T S 34. Each member bank which sends cash items direct to other Federal Reserve banks and branches, or to an office o f this bank other than the one at which its reserve account is carried, will be reimbursed by us for postage or other transportation costs, not including insurance, on all such direct sent items. Transportation costs on cash items delivered to us by member banks for consolidated shipment to Federal Reserve banks and branches will be paid by us. 35. Claims for reimbursement o f transportation costs on direct sendings should be filed with us by the tenth day of the month following the month in which such costs were incurred, using Form TR -115, a supply o f which will be furnished upon request. 36. Each direct sending member bank is requested to give constant atten tion to methods of shipment and to change a method in any case in which ship ment can be made at a low'er cost without loss of time in presentment. In cases in which we pay the transportation costs, we reserve the right to require a — 11 — BULLETIN No. 8 change in method o f shipment in any situation where, by the use of another method, presentment can consistently be made more promptly, or at a lower cost and without loss o f time. C H E C K S T A N D A R D IZ A T IO N 37. T o facilitate the sorting, routing and mechanized processing of checks and other cash items by all banks, and thereby promote earlier presentment and return o f unpaid items, it is urged that: (1 ) The appropriate transit number-routing symbol in fractional form be clearly imprinted in the upper right-hand corner o f all checks or other cash items drawn payable by, at, or through all par re mitting banks. It is preferable that the symbol be printed in Gothic type, the face o f which measures at least 8 points vertically or ¥» of an inch from the top to the bottom o f the individual characters. (2 ) In conform ity with the American Bankers Association Magnetic Ink Character Recognition Program, the routing symbol and the suffix o f the transit number be encoded on all checks and other cash items in magnetic ink in E-13B type in the manner prescribed and at the location assigned by the A .B .A . within the ¥s inch strip reserved fo r magnetic ink encoding along the bottom edge o f such items. (3 ) Checks and other cash items be conformed to the standards pre scribed by the A .B .A ., including a minimum width o f 2 % inches, a maximum width o f 3% inches, a minimum length o f 6 inches, and a maximum length o f 8 % inches, and be restricted to a single thickness o f card or paper. 38. The depositor o f each cash item which is sent to this bank for han dling hereunder and every prior collecting bank agree with respect to such item that: (1 ) this bank may handle and forward such item hereunder to any bank whose name or designation appears on the item as the bank by, at, or through which the item is payable, whether such name or designation is written or made by means of any magnetically-in scribed routing symbol and A B A transit number, or by means of any routing symbol and A B A transit number not magnetically in scribed, or by any other means: (2 ) if the item does not bear any routing symbol and A B A transit number, this bank may inscribe on the item in magnetic ink, or otherwise write thereon, the routing symbol, the A B A transit num ber, or both, o f the bank by, at, or through which the item is pay able, and handle and forward the item accordingly. The depositor o f such item and each such collecting bank hereby are given notice and recognize that the efficient operation o f the Federal Reserve collec tion system makes impracticable the assumption by the Federal Reserve banks o f any responsibility for delay resulting from action taken by this bank, as -1 2 - BULLETIN No. 8 stated in (1 ) and (2 ) above; and they hereby assume any and all risk o f loss arising from any such delay and agree that the handling o f such item in accordance herewith shall constitute the exercise o f ordinary care by this bank. R IG H T T O AMEND 39. The right is reserved to withdraw, add to, or amend, at any time, any o f the provisions o f this bulletin. Yours very truly, Watrous H . Irons President FED ERAL RESERVE BANK O F DALLAS B U L L E T IN N o . 9 SEPTEM BER 1, 1964 (Superseding Bulletin N o . 9, dated April 1, 1962) COLLECTION OF NONCASH ITEMS T o the Member and Nonmember Clearing Banks o f the Eleventh Federal Reserve D istrict:1 Regulation G o f the Board of Governors of the Federal Reserve System (hereinafter referred to as Regulation G ) and this bulletin prescribe the terms and conditions upon which we will receive and handle noncash items for col lection. Section 207.4 o f Regulation G provides that each Federal Reserve bank may promulgate rules not inconsistent with the terms o f the law or o f Regula tion G, governing the details o f its noncash collection operations, and that such rules shall be binding upon any member or nonmember clearing bank which sends any noncash items to such Federal Reserve bank for collection or to any other Federal Reserve bank for the account o f such Federal Reserve bank for collection. This bulletin is issued pursuant to this provision o f Regulation G. Unless otherwise stated, all references to the Federal Reserve Bank o f Dal las will include the head office and all o f its branches. D E F I N I T I O N O F N O N C A S H IT E M S 1. As used in Regulation G and in this bulletin, the term “ noncash items” means any items o f the following classes when payable in any Federal Reserve district :2 (1 ) Maturing notes, acceptances, bankers’ acceptances, certificates o f deposit, bills o f exchange, and drafts with or without securities, bills o f lading, or other documents attached; (2 ) Drafts and orders on savings deposits with passbooks attached; (3 ) Checks, drafts, and other cash items which have previously been dishonored or on which special advice o f payment or dishonor is required.8 (A n y check, draft, or other item which is normally handled as a cash item will not be handled as a noncash item unless special conditions require that this be done, and the Federal Reserve bank will decide whether such special conditions e x is t ); !T h e provisions o f paragraphs 26 through 30, and paragraph 34, as well as those of paragraph 8 with respect to remittance drafts, are applicable not only to member and non member clearing banks but also to other nonmember banks to which we send noncash collec tion letters. This bulletin is accordingly sent to all member and nonmember banks in the Eleventh Federal Reserve District. 2F or the purposes o f this bulletin, any dependency, insular possession or part o f the United States outside the States o f the United States and the District o f Columbia shall be deemed to be in or o f such Federal Reserve district as the Board o f Governors may designate. 'W c reserve the right to refuse to accept, either as a cash or a noncash item, any item payable in foreign currency. —2— BULLETIN No. 9 (4 ) Checks, drafts, and other items with special instructions or requiring special handling; (5 ) Maturing bonds and coupons (other than obligations o f the United States and its agencies which are redeemed by Federal Reserve banks as fiscal agents) ; (6 ) State and municipal warrants, including both orders to pay addressed to officers o f States and political subdivisions thereof and any special or general obligations o f States and political subdivisions th ereof; (7 ) All other evidences o f indebtedness and orders to pay, except checks and bank drafts handled under the provisions o f Regulation J and checks and bank drafts drawn on or payable by a nonmember bank which cannot be collected at par in funds acceptable to the Federal Reserve bank o f the district in which such nonmember bank is located. (Checks and bank drafts drawn on or payable by a nonmember bank which cannot be collected at par in funds acceptable to the Federal Reserve bank o f the district in which such nonmember bank is located, and which may not be received under the terms o f Regulation J, like wise may not be received as noncash items under the terms o f Regu lation G and this bulletin.) 2. This bank will not accept noncash items payable in the same city in which the sending bank is located. 3. Since definite advice o f payment cannot be obtained for checks drawn on the Treasurer o f the United States or for postal money orders, such items should be sent to this bank only as cash items and not as noncash items. T E R M S O F C O L L E C T IO N 4. Every bank sending noncash items to us or to another Federal Reserve bank direct for our account by such act shall be understood to have agreed to the terms and conditions of this bulletin and o f Regulation G in effect at the time such noncash items are received by the Federal Reserve bank. 5. Noncash items payable in other Federal Reserve districts and forwarded for collection to the Federal Reserve banks o f such other districts either by us or by our member and nonmember clearing banks for our account will be handled by such other Federal Reserve banks subject to the terms and condi tions o f Regulation G and o f the respective bulletins o f such other Federal Reserve banks, and to the rules o f law applicable to such banks; but we will give credit to the sending banks for such items in accordance with the pro visions o f this bulletin. 6. A ny noncash item, or check received in remittance therefor, may be pre sented through a clearing house or a clearing house association subject to the rules and practices thereof. 7. A n y noncash item, or check received in remittance therefor, may be pre sented by delivery to a bank or representative thereof, pursuant to an agree ment or arrangement permitting such bank at any time during the same day to pay or remit for such noncash item or check or to return it as dishonored BULLETIN No. 9 and entitling such bank, if it has previously made conditional payment or remittance for the noncash item or check so returned, to receive credit or refund therefor. The specific authorization o f the above methods o f present ment shall not be construed to exclude any other method o f forwarding or presentment which may be authorized or would constitute ordinary care under existing rules o f law or under any other provision o f Regulation G or o f this bulletin. 8. Section 207.3 o f Regulation G on the date o f this bulletin prescribes the following terms and conditions under which all Federal Reserve banks will handle noncash items for member and nonmember clearing banks: “ (a ) Agreement of sending bank.— Each member and nonmem ber clearing bank and each Federal Reserve bank which sends noncash items to a Federal Reserve bank for collection shall by such action be deemed: (1 ) to authorize the Federal Reserve banks to handle such items subject to the terms and conditions o f this part; (2 ) to warrant its own authority to give the Federal Reserve banks such authority; (3 ) to agree to indemnify any Federal Reserve bank for any loss or expense sustained (including but not limited to attorneys’ fees and expenses o f litigation) resulting from the failure of such sending bank to have such authority, or resulting from such Federal Reserve bank’s guaranty o f prior endorsements, or resulting from any action taken by the Federal Reserve bank within the scope o f its authority for the purpose o f collecting such noncash items, or resulting from any and all warranties given by the Federal Reserve bank, in respect o f such items, under the law of any State applicable to the Federal Reserve bank as a collecting bank; (4 ) to guarantee all prior endorsements on such items whether or not a specific guaranty is incorporated in an endorsement o f the sending bank; and (5 ) to warrant to the Federal Reserve bank, in respect o f such items, all such matters and things as the Federal Reserve bank shall warrant in respect thereof under the law of any State applicable to the Federal Reserve bank as a collecting bank; provided, that nothing herein contained shall, or shall be deemed to, constitute a limitation upon the effect o f any warranty by such sending bank arising under the law o f any State applicable to such sending bank as a collecting bank. “ (b) Federal Reserve bank as agent.— A Federal Reserve bank will act only as agent o f the bank from which it receives such noncash items and will assume no liability except for its own negligence, its guaranty o f prior endorsements and its warranties under the law of any State applicable to it as a collecting bank. “ ( c ) Presentation o f items by Federal Reserve bank.— A Fed eral Reserve bank may present such noncash items with any accompany ing documents for payment direct to the person, firm, or corporation on which they are drawn or by or through which they are payable or collectible, or may present them for payment or forward them for col lection direct to the bank on which they are drawn, at which they are payable, or through which they are payable or collectible; or, in its discretion, may forward them to another agent with similar authority —4— BULLETIN No. 9 to present them for payment or forward them for collection. The bank upon which any such noncash item may be drawn, or at which the same may be payable or through which the same may be payable or collectible shall be deemed to be a proper agent for collection within the meaning o f this part. “ ( d) Items payable in other districts.— Noncash items received by a Federal Reserve bank payable in other districts will be forwarded for collection to the Federal Reserve bank o f the district in which such items are payable; except that, when in the judgment o f the Federal Reserve bank the size or character o f the items or other special cir cumstances justify such action, any such items, in the discretion o f the Federal Reserve bank, may be forwarded for collection direct to the bank on which they are drawn, at which they are payable, or through which they are payable or collectible, or may be forwarded for collection to another agent with authority to present them for payment direct to the person, firm, or corporation on which they are drawn or by or through which they are payable or collectible or to present them for payment direct to the bank on which they are drawn, at which they are payable, or through which they are payable or collectible. “ ( e) Forms of payment accepted by Federal Reserve bank.— A Federal Reserve bank may, in its discretion and at its option, accept from any bank in payment o f or from any collecting agent in remit tance for such noncash items, cash, checks, bank drafts, transfers o f funds or bank credits, or other forms o f payment or remittance, accept able to the collecting Federal Reserve bank. The Federal Reserve bank shall not be liable for the failure of any bank or any agent to collect, or to pay, or to remit for, such noncash items, nor for any loss result ing from the acceptance from any bank or any agent, in lieu o f cash, o f any other form o f payment or remittance authorized herein, nor for the nonpayment of, or failure to realize upon, any bank draft or other medium o f payment or remittance which may be accepted from any bank or any collecting agent. “ ( f ) Collection of remittances for noncash items.— Bank drafts and other forms o f payment or remittance received by a Federal R e serve bank in payment o f or in remittance for noncash items handled under the terms o f this part will be collected, at the option o f the Fed eral Reserve bank, either under the terms and conditions o f this part or under the terms and conditions o f Part 210 o f this chapter. “ ( g) Suspension or closing of paying or remitting bank.— No draft, authorization to charge, or other order, upon any reserve balance, clearing account, deposit account, or other funds o f a paying, remit ting, or collecting bank in the possession o f a Federal Reserve bank, issued for the purpose o f settling items handled under the terms of this part will be paid, acted upon, or honored after receipt by such Federal Reserve bank o f notice o f suspension or closing o f such pay ing, remitting, or collecting bank. 5— BULLETIN No. 9 “ (h) Items sent direct to Federal Reserve bank in another dis trict.— W ith respect to any noncash items sent direct by a member or nonmember clearing bank in one district to a Federal Reserve bank in another district, the relationships and the rights and liabilities existing between the member or nonmember clearing bank, the Federal R e serve bank o f its district, and the Federal Reserve bank to which the noncash item is sent will be the same, and the relevant provisions o f this part will apply, as though the member or nonmember clearing bank had sent such noncash item to the Federal Reserve bank of its district with its endorsement and guaranty o f prior endorsements and such Federal Reserve bank had sent the noncash item to the other Federal Reserve bank with its endorsement and guaranty o f prior endorsements.” PROCEDURE TO B E F O L L O W E D B Y S E N D IN G B A N K S 9. Items forwarded for collection and credit when paid should be listed on a letter different in form from that in which cash items are listed. It is desir able that collection letters include a description o f each item listed, showing the name o f the payer, place o f payment, maturity, amount, whether or not subject to protest, and any special instructions such as request for telegraphic advice o f payment or nonpayment. I f documents are attached, they must be clearly and adequately identified in the accompanying letter. The collection letter should also show the collection number assigned to each item by the forwarding bank. I f documents consist o f bills o f lading and are attached to sight or demand drafts, the collection letter should carry instructions to “ Hold for arrival” ; that is, if the draft is to be held for payment until that time. Inasmuch as neither the Federal Reserve Bank o f Dallas nor its collecting agencies have any means o f knowing when shipments arrive, the Federal Reserve Bank o f Dallas will not be responsible in any event for delay in demand or presentment where drafts are accompanied by instructions to hold for arrival o f shipments or other similar instructions. 10. A ny special instructions as to handling should be incorporated in the letter o f transmittal. Special instructions noted on or attached to the items themselves and not supported by like instructions in the letter of transmittal will be ignored. 11. This bank will receive, handle, and forward noncash items subject to the following instruction: Do not hold after maturity or for convenience o f payer. A ny contrary instruction in the collection letter or otherwise will be dis regarded ; and this bank reserves the right, without prior notice to the sending bank, to recall any noncash item and to return it to the sending bank whenever, in the judgment o f this bank, such item is being held contrary to such instruction. 12. Time items should not be forwarded to us or sent direct to another Federal Reserve bank for our account more than 30 days prior to their maturity. 13. W e do not undertake to present time items on the day o f maturity unless such items are received by us sufficiently in advance of the day o f maturity to — 6— BULLETIN No. 9 permit presentment to the payer utilizing the means which we normally utilize for that purpose. 14. Maturing bonds and coupons (except obligations o f the United States and o f Governmental agencies which are redeemed by the Federal Reserve banks as fiscal agents) should be listed separately as to each class and maturity, and only coupons o f one class and maturity should be enclosed in the same envelope. Coupons or other securities should not be listed in a letter with checks, notes, bills, or other items. All securities or documents, other than maturing bonds and coupons, should have drafts attached drawn upon the payers for the exact amounts to be collected. 15. For their own protection and to insure safety, member and nonmember clearing banks should forward bonds, coupons and other valuable securities by insured, registered mail or by express. I f desired, registered mail shipments may be insured under this bank’s insurance policy at the expense o f the sending bank, but in this event a separate advice stating the value o f the shipment must be sent to us by open mail on the same day the shipment is made. 16. Each noncash collection letter covering valuable securities should con tain instructions specifying the value for which the securities should be insured ; otherwise, if forwarded by mail for collection, they will be insured at a value to be determined by this bank. P R O T E S T P R A C T IC E IN A B S E N C E O F IN S T R U C T IO N S 17. In the absence o f specific instructions in the sending bank’s collection letter, this bank will receive, handle, and forward noncash items subject to the following protest instructions: (1 ) D O N O T P R O T E S T items o f less than $1,000. (2 ) P R O T E S T dishonored items o f $1,000 or over, except bonds, debentures, coupons, and other similar securities. C O L L E C T IO N C H A R G E S 18. Except as provided in paragraph 20, the Federal Reserve banks make no charge for their services in collecting noncash item s; however, it is recog nized that any other bank acting as agent to collect any such item renders a serv ice in presenting, collecting and remitting, for which a reasonable charge may be made if it cares to do so, and when such a charge is made, it will be deducted and credit given to the forwarding bank for the net proceeds. 19. N o charge may be made by a collecting bank in connection with the collection or payment o f any check that may be handled as a noncash item. 20. Items sent to the Federal Reserve banks for collection are subject to the following charges: (1 ) Charges made by collecting banks or agents, referred to above; (2 ) Charges made in the discretion o f the Federal Reserve banks for handling or collecting securities; (3 ) A service charge o f 50(1 per item on all collection items returned unpaid and unprotested; — 7— BULLETIN No. 9 (4 ) Expenses incurred for postage and insurance or express in for warding items by registered mail or express; (5 ) All telephone and telegraph charges. (See paragraph below, “ Telegraphic Advice.” ) T E L E G R A P H IC A D V IC E 21. W hen instructed to do so by forwarding banks, this bank will request telegraphic advice of payment or nonpayment o f noncash items and will trans mit by telegraph any information received. A service charge of $1.50 will be made against the forwarding bank’s account for each telegram transmitted over the leased wire pertaining to payment, nonpayment or tracing o f items, and in connection with receiving or transmitting any other information or instructions. Charges for telegrams transmitted over commercial wire facilities will be made at commercial wire rates against the forwarding bank’s account; telegrams to such banks will be sent “ collect.” IN T E R P R E T A T I O N O F T E R M S R E Q U E S T IN G T E L E G R A P H IC A D V IC E 22. The terms listed below, when used in advices or communications in connection with noncash items, will be understood to have the meanings indi cated, as follow s: (a ) “ W IR E P A Y M E N T ” when it is desired that the collecting agent furnish telegraphic advice that payment has been made by the drawee or payer. It will be understood that banks requesting “ wire payment” wish to be advised when payment has been made to the col lecting agent, rather than when the proceeds are credited to the reserve or nonmember clearing account with the Federal Reserve bank. When a Federal Reserve bank gives such advice o f payment, it does not neces sarily imply that actually and finally collected funds are in its possession. (b ) “ W IR E N O N P A Y M E N T ” when a telegraphic advice o f dis honor only is desired. ( c ) “ W IR E F A T E ” or “ W IR E P A Y M E N T O R N O N P A Y M E N T ” when a prompt advice o f payment or nonpayment by drawee or payer is desired. (d ) “ W IR E C R E D IT ” when a telegraphic advice o f final payment and o f credit to the reserve or nonmember clearing account o f the send ing bank is desired. A V A I L A B I L I T Y O F P R O C E E D S O F N O N C A S H IT E M S 23. Except as hereinafter provided in this paragraph and in the para graph that follows, credit for the proceeds o f noncash items, with the usual advice, will be given in the reserve account o f member banks, or the clearing account o f nonmember banks, upon receipt by this bank o f payment in actually and finally collected funds or on receipt of advice from other Federal Reserve banks o f such payment. In the case o f noncash items forwarded to other Federal Reserve banks for which credit is given subject to final payment, corresponding credit subject to final payment will be given by this bank. —8— BULLETIN No. 9 24. Credit for bankers’ acceptances and certificates o f deposit will be given, subject to payment in actually and finally collected funds, in accordance with the following schedule, if received by us sufficiently in advance to permit fo r warding in time to reach the place o f payment at least one day before maturity: Place P ayable Credit A vailable Federal Reserve bank or branch cities_____________________On maturity date Elsewhere..................... ...................................... ............... ........ 1 day after maturity 25. Analysis adjustments in the computed average reserve balances of member banks will be made on noncash items payable in other Federal Reserve districts, making it possible for member banks to receive the benefit for reserve purposes o f the proceeds o f such items as o f the day the collecting Federal Reserve bank receives payment in actually and finally collected funds. IN S T R U C T IO N S T O C O L L E C T IN G B A N K S 26. Collecting banks should not remit for items until they are actually and finally paid. Remittance should be accompanied by the remittance form which is sent with each item. I f remittance is not accompanied by this form, the col lection number, name of payer and the amount should be furnished so the item can be identified. 27. Collecting banks should follow carefully the instructions contained in collection letters regarding presentation, protest, telegraphic instructions, special instructions, etc. Instructions regarding the handling of items should not be accepted direct from drawers or preceding endorsers but only from this bank. Deliver securities or documents only on payment of drafts unless otherwise instructed by us. 28. A ll items should be paid or returned promptly on their due dates and not held for any reason, except upon authorization by this bank. W hen items are returned, give reason for nonpayment. 29. W hen communicating with us about any item, collecting banks should always give the collection number and the amount o f the item so it can be identified. 30. N o collection charge may be made by a collecting bank in connection with the collection or payment o f any check that may be presented to or handled by it as a noncash item. (See paragraph 19.) D A L L A S , E L P A S O , H O U S T O N A N D SAN A N T O N IO IT E M S 31. Items payable in the cities of Dallas, El Paso, Houston or San Antonio will be presented when payable within the city collection districts respectively established by the banking customs o f those cities. Items payable outside o f such districts will not be presented, but payers will be requested by mail or telephone to give such items attention. The Federal Reserve Bank o f Dallas assumes no liability for failure to present such items. W hen time will permit, notice of maturity will be sent by mail to payers o f notes and bills having a fixed maturity. BULLETIN No. 9 — 9— D IR E C T R O U T IN G T O O T H E R F E D E R A L R E S E R V E D IS T R IC T S 32. Member and nonmember clearing banks are authorized to send, for our account, noncash items payable in other Federal Reserve districts direct to the Federal Reserve banks and branches o f the districts in which the items are payable. Since direct sending o f such items expedites handling by Federal Reserve offices and also is o f advantage to member and nonmember clearing banks, banks are urged to send such items direct whenever feasible. 33. W hen in our judgment the number or nature o f noncash items payable in other Federal Reserve districts usually received from a bank justifies such action, we reserve the right to decline to accept such items for collection unless they are routed direct to the Federal Reserve banks or branches o f the districts in which they are payable. R IG H T T O AMEND 34. The right is reserved to withdraw, add to, or amend, at any time, any o f the provisions o f this bulletin. Yours very truly, Watrous H . Irons President
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