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federal

Reserve

Ba n k

of

Dallas

F IS C A L A G E N T O F T H E U N IT E D S T A T E S
DALLAS. TEXAS 7 5 2 2 2

Circular No. 73-25
January 31, 1973

SHIPMENTS OF VALUABLES AND THE USE OF RESTRICTIVE ENDORSEMENTS

To All Banks and Others Concerned in
the Eleventh Federal Reserve District:
For some time, this Bank has been concerned over the extent to
which valuables, including in particular bearer Government and Agency secu­
rities, are received here in ordinary mail shipments from member banks and
other financial institutions. The use of such facilities for the shipment
of valuables serves to increase greatly the risk of loss or theft. Inasmuch
as such risk can be minimized by the use of alternative methods of shipment,
including the use of registered mail facilities, we would urge all banking
institutions in this District to avoid the use of ordinary mail facilities
when shipping items of intrinsic value.
With respect to shipments of bearer United States Treasury secu­
rities to a Reserve Bank office, banks may, in certain circumstances, effect
savings in insurance costs and further reduce the risk of loss or theft
through the use of restrictive endorsements. Treasury Department Circular
No. 853? "Regulations Governing Restrictive Endorsements of United States
Bearer Securities," contains the provisions under which banks may use restric­
tiveendorsements. A copy
of Treasury Circular No. 853 is enclosed. We urge
all banks in this District to make use of such endorsements in allcircum­
stances in which such use has been authorized by the Treasury Department.
In this connection, Treasury Circular No. 853 has recently been
revised, effective September 21, 1972, to authorize member banks of the
Federal Reserve System to place restrictive endorsements on bearer Treasury
securities for the purpose of presenting such securities to a Reserve Bank
for conversion into book-entry form. The revision is intended to ensure
that the ongoing conversion of physical securities into book-entry form
can be accomplished at minimal risk and expense. In addition, the regula­
tions continue to provide that all banks are authorized to place restrictive
endorsements on bearer Treasury securities presented to a Reserve Bank for
the following purposes:
(a)

For payment or redemption— at any time within one
calendar month prior to the maturity date, or the
date on which the securities become payable prior

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to a call for redemption, or at any time after
the maturity or call date of the securities;
(b)

For exchange— during any period for the presenta­
tion of the securities pursuant to an exchange
offering;

(c)

For redemption at par in payment of Federal estate
taxes, where eligible— at any time prior to the
maturity or call redemption date of the securities.

In accordance with the provisions of Treasury Circular No. 8533
securities restrictively endorsed in the manner prescribed will thereafter
be nonnegotiable, and payment, redemption or exchange will be made only as
provided in such endorsements. Moreover, bearer securities so endorsed may
be declared to be of "no value" for purposes of registered mail shipments,
thus reducing significantly the cost of mail shipments of such securities.
In this connection, it should be noted that Treasury regulations provide
that restrictively endorsed securities may be shipped by registered mail,
messenger, armored car service or express to a Reserve Bank. Ordinary mail
facilities may not be used for such shipments.
Information and instructions on such matters as the authorized
form of the endorsement, the requirements for endorsement and the procedures
for the granting of relief on account of restrictively endorsed securities
proven to have been lost, stolen or destroyed are set forth in Treasury
Circular No. 853. Instructions on the procedures to be followed in sub­
mitting such securities to a Reserve Bank and forms for that purpose will
be available in the next few weeks.
At the present time, several Federal Agencies are reviewing their
procedures with a view to authorizing the use of restrictive endorsements on
their securities under the same conditions applicable to bearer Treasury
securities. We expect that such reviews will be completed by the time we
send you instructions on the new procedures, and at that time we will furnish
you full information on the restrictive endorsement procedures of the Federal
Agencies.
The officers in charge of Fiscal Agency activities at each of our
offices will be pleased to discuss any questions you may have concerning
methods and procedures for the shipment of valuables and the use of restric­
tive endorsements.
Yours very truly,
P. E. Coldwell
President
Enclosure

REGULATIONS GOVERNING RESTRICTIVE ENDORSEMENTS
OF UNITED STATES BEARER SECURITIES
1964
D epartm ent C ircu lar N o . 853
R e v is e d and am ended *

T reasury
O f f ic e

D epartm ent,

of

,

t h e

S ecretary,

Washington December h 196If.
F i s c a l S e r v ic e
B ureau of the P u b lic D ebt

Department Circular No. 853, dated October 5 , 1 9 4 9 ,
i s hereby amended and i s s u e d as Department Circular
No. 853, R e v is e d .
A UT HOR IT Y : S e c s . 328.1 to 328.9 is s u e d under
R.S. 161, as amended (5 U.S.C . 22); Second Liberty
Bond Act, as amended (31 U .S.C . 752, 753, 754, 754b).
CONTENTS
Scope of regulations.
D efin itio n s.
Authorization for restrictive endorsem ents.
E ffect of restrictive endorsements.
Forms of endorsement.
Requirements for endorsement.
Shipment of s e c u r it ie s .
L o s s , theft or destruction of se c u r it ie s bear­
ing restrictiv e endorsements.
S ec. 328.9 M isce lla n eo u s.
S ec.
S ec.
S ec.
S ec.
S ec.
S ec.
S ec.
Sec.

328.1
328.2
328.3
328.4
328.5
328.6
328.7
328.8

S ec. 328.1 Scope o f regulations. — The regulations
in th is part are ap plicab le only to United S tates bearer
s e c u r i t i e s 1 presented (a) by or through banks for pay­
ment at or after their maturity or c a ll date, or in exchange
for any s e c u r it ie s under any exchan ge offering, (b) by
member banks of the F ed eral R ese rv e System for con­
version to book-entry s e c u r it ie s , ( c ) b y or through banks
at any time prior to their maturity or c a ll date for re­
demption at par and application of the entire p roceed s
in payment of Fed eral e s ta t e t a x e s , provided said
s e c u r it ie s by the terms of their i s s u e are e lig ib le for
such redemption, and (d) by D istrict Directors, Internal
R evenue Service, for redemption, with the p roceed s to
be applied in payment of t a x e s (other than s e c u r it ie s
presented under (c) above). T h e s e regulations do not
apply to bearer s e c u r it ie s presented for any other
tran sactio n s, or to registered se c u r it ie s a s s ig n e d in
blank, or to bearer, or so a ssig n e d as to becom e, in
e ffe c t, payable to bearer.
S ec. 3 2 8 .2 Definitions. — Certain words and terms,
as used in t h e s e regulations, are defined as fo llo w s :
(a) “ B a n k s ” refer to, and in clud e, incorporated
banks ( i . e . , banks doing a general commercial banking
b u s in e s s ) , incorporated trust com panies ( i . e . , trust
com panies doing either a general banking b u s in e s s or
general trust b u s in e s s ) , and sa v in g s banks (whether or
not mutual).
(b) “ Bearer s e c u r it ie s " or “ s e c u r it ie s " are th o se
which are payable on their face to “ bearer," the owner­
ship of which i s not recorded. T h ey include “ Treasury
b o n d s," “ Treasury n o t e s ," “ Treasury c e r t if ic a te s of
in d e b t e d n e s s ," and “ Treasury b i l l s . "
I n c l u d e s a m e n d m e n t o f S e p te m b e r 21, 1972.
C e r ta in a g e n c i e s o f th e U n ite d S t a t e s a nd c e r t a i n G o v e rn m e n t an d
G o v e r n m e n t- s p o n s o r e d c o r p o r a tio n s a l s o a u t h o r i z e th e r e s t r i c t i v e
e n d o r s e m e n t of b e a r e r s e c u r i t i e s .

S ec. 328.3. Authorization for restrictive endorse­

ments.

— (a) B y banks. B a n k s are au th o r iz e d , under th e
c o n d i t i o n s and in th e form h ereinafter p rovid ed , to p l a c e
r e s t r i c t i v e e n d o r s e m e n t s upon th e f a c e of bearer s e c u r i ­
t i e s ow n e d by t h e m s e l v e s or th eir c u s t o m e r s for th e
p u rp o se o f p r e s e n t a t io n to F e d e r a l R e s e r v e B a n k s or
B r a n c h e s , or t o th e T re a su r e r o f th e U nited S t a t e s , a s
fo llo w s :
(1) For payment or redemption — at any tim e
w ith in o n e c a le n d a r month prior to th e ir maturity
d a t e , or th e d a t e on w h ic h t h e y b e c o m e p a y a b le
pursu ant to a c a l l for red em p tion, or at any tim e after
their maturity or c a l l date;
( 2 ) For exchange - during a n y period for their
p r e s e n t a t i o n pursuant to an e x c h a n g e offerin g; and

(3 ) For redemption at par in payment of Federal
e s ta te taxes (only eligible se c u r itie s ) — at any tim e
prior to their maturity or c a l l redem p tion d a t e .

(4) For conversion to book-entry se c u ritie s, but
only by member banks of the Federal R eserve System
as defined in Sec. 306.115(g) o f this chapter — at
any tim e prior to their maturity or c a l l red em p tion
date.
(b) B y D istrict Directors, Internal Revenue Service.
D i s t r i c t D ir e c t o r s , Inte rnal R e v e n u e S e r v i c e , are autho­
r i z e d , under th e c o n d it io n s and in th e form herein after
p r o v id e d , t o p l a c e r e s t r i c t i v e e n d o r s e m e n t s upon th e
f a c e o f b earer s e c u r i t i e s for th e p u rp o se o f p r e s e n t a t io n
to F e d e r a l R e s e r v e B a n k s or B r a n c h e s , or to th e T r e a s ­
urer of th e U n ite d S t a t e s , for redem p tion and a p p li c a t i o n
o f the p r o c e e d s in paym ent of t a x e s (other th an s e c u r i ­
t i e s p r e s e n t e d for redem ptio n at par and a p p li c a t i o n of
t h e p r o c e e d s in p aym ent of F e d e r a l e s t a t e t a x e s ) .
(c ) Instructions from Federal R ese rv e Banks. F e d ­
e r a l R e s e r v e B a n k s w i l l inform e l i g i b l e b a n k s and
D i s t r i c t D ir e c t o r s of th e Internal R e v e n u e S e r v i c e in
th eir r e s p e c t i v e d i s t r i c t s a s to the procedu re to be
f o l l o w e d under th e auth ority granted by t h e s e re g u la ­
t i o n s . N o bank or D is t r i c t D ir ector s h o u ld imprint re­
s t r i c t i v e e n d o r s e m e n t s on s e c u r i t i e s u n til s u c h infor­
m ation i s r e c e i v e d from th e F e d e r a l R e s e r v e B a n k s .

S ec. 328.4. Effect o f restrictive

endorsements. —

B e a rer s e c u r i t i e s bea ring r e s t r i c t i v e e n d o r s e m e n t s as
h erein p rovided w i l l th erea fter b e n o n n e g o t i a b l e and
p aym en t, red em p tion , or e x c h a n g e w i l l b e made o n ly as
p ro vided in s u c h e n d o r s e m e n t s .

S ec. 328.5. Forms o f endorsement. — (a) When pre­
sen ted by banks —
(1)
For payment or exchange. T h e e n d o rsem en t
p la c e d on a bearer s e c u r i t y p r e s e n t e d for p aym en t or
e x c h a n g e by a bank s h o u ld be in th e f o l l o w i n g form:
F o r p r e s e n t a t io n t o th e F e d e r a l R e s e r v e Bank
o f _______________, F i s c a l A g e n t of th e U nited
S t a t e s , for redem ptio n or in e x c h a n g e for s e -

United S t a t e s ." No subsequent endorsement w ill be
permitted and no other form of endorsement may be made.
(In sert nam e of p r e se n tin g bank)
(b)
On coupons. Unmatured coupons attached to
re stric tively endorsed s e c u r it ie s should be c a n ce lle d
ABA N o________________
(2)
For redemption at par. The endorsement by imprinting the prescribed endorsement in su ch manner
that a su bstantial portion of the endorsement w ill appear
placed on a bearer security presented for redemption
on each su ch coupon. Where such endorsements are
at par in payment of F ed eral esta te t a x e s should be
made by a bank, it s ABA code number should not be
in the follow ing form :
perforated on the coupons. If any such coupons are
For presentation to the Federal R ese r v e Bank
m issin g , deduction of their fa ce amount w ill be made in
of______________ , F i s c a l Agent of the United
c a s e s of redemption, and in c a s e s of exchan ge, remit­
S tates, for redemption at par in payment of
tance equal to the fa ce amount of the m issin g coupons
F ed eral e s ta te t a x e s , in accordance with writ­
must accompany the s e c u r it ie s. All matured coupons,
ten instructions submitted by________________ .
(In sert nam e of p r e se n tin g bank)
including coupons which w ill mature on or before the
date of redemption or exchange (except as otherwise
ABA N o________________
(b)
For conversion to book-entry securities. The s p e c if i c a ll y provided in an announcement of an exchange
endorsement placed on a bearer secu rity presented by a
offering), should be detached from se c u r it ie s upon which
member bank of the F ed eral R ese rve System for con­
restrictive endorsements are to be imprinted.
version to abook-entry se cu rity sh a ll be in the following
S ec. 3 2 8 .7 . Shipment o f secu rities. — Secu rities
form :
bearing restrictive endorsements may be sh ipped, at the
For presentation to the F ed eral R ese rv e Bank
risk and e x p en se of the shipper, by registered mail,
o f ---------------------, F i s c a l Agent of the United S tates,
m essenger, armored car s e r v ic e , or ex p re ss to the F e d ­
for conversion to book-entry s e c u r itie s b y ________
eral R ese rv e Bank of the district in which the presenting
bank or D istrict Director, Internal Revenue S ervice, i s
(In sert nam e o f p r e se n tin g bank)
located, or to the appropriate branch of su ch Federal
ABA N o________________
R eserve Bank. Shipments to the Treasurer of the United
(c)
When presented by District Directors, Internal
S ta tes, Washington, D. C ., should be made by m essenger
Revenue Service. The endorsement placed on a bearer
or armored car.
security by a District Director, Internal Revenue Service,
should be in the following form :
S ec. 328.8. L o ss, theft or destruction o f securities
bearing restrictive endorsements. — (a) General. R e lie f
For presentation to the Federal R eserve Bank
w ill be provided on account of se c u r it ie s bearing re­
o f _____________ , F i s c a l Agent of the United S tates,
stric tiv e endorsements proved to have b een lo s t , stolen
for redemption, the proceed s to be credited to the
or destroyed, upon the owner’s application, in the same
account of the District Director, Internal Revenue
manner as registered s e c u r itie s which have not been
Service a t _____________ , for credit on the F ederal
_________________ta x e s due from__________________.
a ssig n e d . (See Subpart N of the current revision of De­
(Incom e, g ift or other)
(Name and a d d r e s s)
partment Circular No. 300, the general regulations with
S ec. 3 2 8 .6 . Requirements for endorsement, — (a) Gn
resp ect to United States s e c u r it ie s .) Except for bearer
bearer securities. The endorsement must be imprinted in
s e c u r itie s submitted for redemption at par in payment of
the left-hand portion of the fa ce of each security with
Federal e s ta t e t a x e s , a bank w ill be considered the
the first line thereof parallel to the left edge of the
owner of s e c u r it ie s handled on behalf of customers
security and in such manner as to be clearly le g ib le and
u n le s s it otherwise requ ests. The application for relief
in such position that it w ill not obscure the se ria l num­
(Form PD 2211) and instructions w ill be furnished by
ber, s e r ie s d esignation or other identifying data, and
the F ed eral R ese rv e Banks.
cover the sm a llest p o s s ib le portion of the text on the
(b)
Bond of indemnity. Where s e c u r it ie s bearing
face of the security. The dim ensions of the endorsement
restrictive endorsements shipped by a bank have been
should be approximately four in ch es in width and one
lo st, sto len , or destroyed, a bond of indemnity with
and one-half in ch es in height, and must be imprinted by
surety sa tisfa cto ry to the Secretary of the Treasury w ill
stamp or plate of such character, with a carbon pigment
be required from the owner. If such bond i s executed
ink, and by such means, as will render the endorsement
by a bank or other corporation, the execution must be
substantially ineradicable. In c a s e s where the endorse­
authorized by general or s p e c ia l resolution of the board
ment i s being made by a bank, immediately below and
of directors, or other body exercising.,sim ilar functions
as part of the endorsement the ABA code number of the
under it s bylaw s. Ordinarily, no surety, w ill be required
presenting bank must be perforated in figures approxi­
on a bond executed by a presenting bafok. The Secretary
mately one-fourth to one-half inch in height. The per­
of the Treasury rese rv e s the right, however, to require
forations should be placed as nearly as p o s s ib le beneath
a surety in any c a s e in which he co n sid er s su ch action
the endorsement without obliterating any of the identi­
n e c e s s a r y for the protection of the United S ta tes.
fying data. The name of the Federal R eserve Bank Qf
S ec. 3 2 8 .9 . Miscellaneous . - The prov isions of th is
the district must appear on the plate or stamp used for
circular are subject to the current revision of Department
the imprinting of the endorsement, and presentation to
Circular No. 300. The Secretary of the Treasury reserves
the appropriate branch of the Federal R eserve Bank
the right at any time to amend, supplement, or withdraw
named w ill be considered as presentation to the bank.
any or all of the provisions of t h e s e regulations.
When s e cu ritie s are to be presented to the Treasurer of
the United S ta tes, the words “ Treasurer of the United
John K. Carlock,
S ta te s " should be used in lieu of the words “ Federal
F iscal A s s is ta n t Secretary.
R eserve Bank o f _____________ , F i s c a l Agent of the
curities of a new i s s u e , in accordance with
written in structions submitted by____________ .