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FEDER AL RESERVE BANK O F DALLAS C ircu la r No. 4 S e rie s o f 1920. February 19th, 1920* TO TH M BER BANK ADDRESSED: E EM The fo llo w in g l e t t e r has ju s t been r e c e iv e d from the F ederal Re serve Board and i s tran sm itted to you fo r your guidance: ’’ S e ctio n 19 o f the F ederal Reserve A ct, which r e la t e s to r e serve requirem ents o f member banks and which supersedes S e c tio n 5191, Re v is e d S ta tu te s , p rov id es in p a rt as fo llo w s : " ’ Every bank, banking a s s o c ia t io n , or tr u s t which i s or which becomes a member o f any Reserve Bank s h a ll e s t a b lis h and m aintain ba la n ces w ith i t s F ed eral Reserve Bank as company F ederal reserv e fo llo w s : ______ ’“ In estim a tin g the balan ces req u ired by t h is A ct, the net d iffe r e n c e o f amounts due to and from other banks s h a ll be taken as the b a s is fo r a s c e rta in in g the d e p o s its a g a in st which req u ired b a la n ces w ith F ederal Reserve Banks s h a ll be d eterm in ed ,' ” In determ ining t h e ir net d e p o sit l i a b i l i t y on which reserv e is computed, member banks are perm itted under p resen t r u lin g s t o deduct the t o t a l o f : (a ) Balances due from banks, oth er than F ed eral Reserve Bank; (b ) Items w ith F ed eral Reserve Bank in p ro ce s s o f c o lle c tio n ; (c) ’ Exchanges fo r c le a r in g -h o u s e ’ ; (d ) Checks on other banks in the same p la c e ; from the t o t a l o f ; (a ) B alances due to banks other than F ed eral Re serve Bank; (b ) C a s h ie r 's , S e c r e t a r y 's or T r e a s u r e r 's checks on own bank o u ts ta n d in g ;1 (c) C e r t if ie d checks o u tsta n d in g . “ I t w i l l be noted from the above th at w hile banks are allow ed to deduct ''item s w ith F ed eral Reserve Bank in p rocess o f c o l l e c t i o n ’ from ’’ ba la n ces due t o banks, e t c ’ , they are not req u ired to carry r e serves a g a in st item s in p ro ce s s o f C o lle c t io n which they have r e c e iv e d from the F ederal Reserve Bank, i . e * , item s which they have re ce iv e d from the F ederal Reserve Bank and charged to tR e ir d e p o sito rs* a ccou n ts, but fo r which the F ed eral Reserve Bank has been given d e fe r r e d c r e d it fo r the number o f days e la p s in g between the day the checks are charged This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) -2 to the d e p o s it o r s 4 accou n ts and the day on w hich, in accordance with the' p u b lish ed time sch ed u le, they become a charge a g a in st the bank’ s reserv e account on the books o f the F ed eral Reserve Bank* “ I t i s e v id e n t, however, th a t amounts fo r which F ederal Re serve Banks have been given d e fe rre d c r e d it must be included w ith amounts due to banks and ban kers, i f items w ith the Federal Reserve Bank in p ro ce s s o f c o l l e c t i o n are allow ed as deduction s in a s c e r ta in ing the net d e p o sit l i a b i l i t y on which reserv e is computed* “ A c c o r d in g ly , the F ed eral Reserve Board has ru led that in computing t h e ir n et d e p o s it l i a b i l i t i e s on which reserv e is computed banks may deduct the t o t a l o f (a ) (b ) (c) (d ) B alances due from banks, other than F ederal Reserve Bank and fo r e ig n banks; Items w ith F ederal Reserve Bank in p ro ce ss o f c o lle c tio n ; ’ Exchanges fo r c le a r in g -h o u s e ;1 Checks on other banks in same p la c e ; from the t o t a l o f (a ) (b ) (c) (d ) Balances due to a l l banks, other than F ederal Reserve Bank; Due to F ed eral Reserve Bank - d e fe r r e d c r e d it s ; C a sh ier’ s , S e c r e ta r y ’ s or T rea su rer’ s checks on own bank ou tsta n d in g; C e r t if ie d checks ou tstan d in g ^ e r e i s attach ed h ereto a specimen form , in d ic a t in g the manner in whicn member banks may c a lc u la t e the amount o f reserv e req u ired t o be c a r r ie d w ith the F ederal Reserve Bank, This form supersedes the ones h e r e t o fo r e used fo r t h is purpose, and i f d esired the F ed eral Reserve Bank o f D allas w i l l fu rn ish i t s member banks with a s u f f i c i e n t supply o f the new forms fo r t h e ir use in computing d a ily r e serves req u ired to bo m aintained. Yours very t r u ly , G o v e / fin o r B-45-2299 1. 2. 3. 4. 5. COMPUTATION OF RESERVE TO BE CARRIED WITH THE FEDERAL RESERVE BANK BY M BER BANKS, EM DEM D DEPOSITS AN D e p o s its , other than United S ta tes Govern ment and bank d e p o s it s , payable w ith in t h ir t y days * .................................................. 4. Balances due to a l l banks other than F ederal Reserve Bank ( 1 ) ...................... ..................................$____________ Balance due t o F ederal Reserve Bank D eferred c r e d it s . . . . . . . . . . . . . . . . . . . . . . . . . . ___________ _ C a s h ie r 's , S e c r e ta r y 's or T re a su re r's checks on own bank ou tsta n d in g ........... _____________________ C e r t if ie d checks o u ts ta n d in g ........... ____________________________ _ TOTAL DU TO BANKS (item s 2, 3 , 4 and 5) E 4 .________ L ess: 6r Balances due from banks other than F ed eral Reserve Bank and fo r e ig n b a n k s .. .. . : Items w ith F ed eral Reserve Bank in 7« p r o ce s s o f c o l l e c t i o n . . . . . . . . . . . . .................... , Exchanges fo r c le a r in g h o u s e . . . . . . ............................ 9 * Checks on other banks in same p l a c e , , . . . . . ........... TOTAL DEDUCTIONS FROM BANK DEPOSITS (item s 6, 7, 8 and 9 ) * . ........... .. 1 0 . Net balan ce due to b a n k s $ ,............. .. . , . . TOTAL DEM AND DEPOSITS (atems 1 and 10) li. 8 12. 13. 14. 15. 16* §. TIME DEPOSITS Savings accounts ( s u b je c t t o not le s s than t h ir t y days' n o t ic e b e fo r e paym ent)................ C e r t if ic a t e s o f d e p o sit ( s u b je c t to not le s s than t h ir t y days' n o t ic e b e fo r e p a y m e n t)... Other d e p o s its payable on ly a f t e r t h ir t y days ........... ..................... .. ........................ ..................... P o s ta l Savings d e p o s i t s . . . . . . . . . . . ............. TOTAL TIME DEPOSITS (item s 12, 13, 14 and 1 5 ) . , , RESERVE REQUIRED: Demand d e p o s it s : Banks in C en tral Reserve C it ie s , 13 per cent o f Item 1 1 . .................... Banks in other Reserve C i t i e s , 10 per cent o f Item 1 1 . ............................... ............... Banks ou tsid e Reserve and C en tral Reserve C i t i e s , 7 per cent o f Item 11.................. Time d e p o s it s : A l l banks, 3 per cent o f Item l 6 . . . . . . . . . . . TOTAL RESERVE TO BE MAINTAINED WITH FEDERAL RESERVE BANK................................................ ^Should the aggregate "due from banks" (item s 6 ,7 ,8 and 9) exceed the aggregate "due to banks" (item s 2 ,3 ,4 and 5 ) , both amounts must be om itted from the c a lc u la t io n * NOTE. "B alances due to a l l banks other than F ed era l Reserve Bank" (item 2, De mand D eposits^ should in clu d e b a la n ces due to fo r e ig n banks*
