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FEDERAL RESERVE BANK
OF N E W YORK
Collection Department
J Circular No. 298
"
L August 21, 1920
Collection of Maturing Notes, Bills and Other Collection Items
To all Member Banks in the Second Federal Reserve District:
This circular brings up to date with some minor changes our rules and procedure
governing the collection of maturing notes, bills and other collection items received by
us, exclusive, however, of the collection of checks, the rules and regulations governing
which are specifically set forth in our general Circular N o . 258 of March 1, 1920, entitled
"Collection of Checks" as supplemented by Circulars N o . 278 of May 17, 1920, and
N o . 286 of June 1, 1920. I t therefore supersedes our Circulars N o . 78 of September
10, 1917, entitled " P l a n for the Collection of Maturing Notes, Bills and other Collection I t e m s , " N o . 107 of July 6, 1918, entitled " P a y m e n t Coupons British Government
Bonds," and N o . 147 of February 26, 1919, entitled "Schedule Showing When Proceeds of Bankers Acceptances will be available if Collected through the Federal Reserve
Bank of New York."
/
2. Classes of Items Received for Collection
All time items, sight and demand drafts, with or without securities, bills of lading
or other documents attached, drafts on savings banks, maturing bonds and coupons and
other forms of collection items are received by us for collection.
Bankers acceptances payable a t New York Clearing House banks and bonds and
coupons payable in the City of New York will not be received from Clearing House
members.
iT
3. Preparation of Member Bank's Collection Letter
Each member bank is requested to list its collection items in a separate letter and,
in describing the respective items, t o give the member bank's collection number, the
name of the payer, instructions to protest or not to protest, or other special instructions,
and the date, maturity and amount of each item sent. Promissory notes and drafts
payable otherwise than at sight or on demand should have affixed the proper Federal
tax stamps; for a sum not exceeding $100, two cents, and for each additional $100 or
fractional p a r t thereof, two cents.
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4. W h e n Credit is Given
Upon receiving payment of collection items, advice of collection is given by us to
the member bank originally forwarding such items and its reserve account is thereupon
credited. Advice is also given such member bank if t h e item is returned unpaid, and if
so returned, as t o whether protest has been made. When payment is made in New York
or other exchange, credit is given subject to final payment.
By arrangements made with all other Federal Reserve Banks t h e proceeds of bankers acceptances payable in cities where Federal Reserve Banks or their branches are a t
present or may hereafter be established will be available, subject to payment, on
day of maturity.
Proceeds of bankers acceptances payable elsewhere than in Federal Reserve or
Federal Reserve branch cities will be available, subject t o payment, one or more days
after maturity until further notice, in accordance with t h e schedule on page 4.
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5.
Collection of Maturing Bonds anfl Coupons
Every member bank sending a letter enclosing bonds or coupons for collection,
due or past due, payable in New York City, will receive immediate credit in its reserve
account for the total amount of the letter subject to final payment of such items and
will receive advice of credit immediately.
The proceeds of any bonds or coupons not due, sent for collection, or of bonds or
coupons due or past due payable outside of New York City, will be credited to the
sending bank's account when payment is received, as provided in paragraph 4.
Maturing bonds and coupons are not to be included in a letter enclosing checks or in a
letter containing maturing notes, bills or other collection items, but should be sent by registered mail
or by express. Bonds and coupons if sent to us by registered mail will be insured at our
expense provided we are advised under separate cover of the shipment, on the form which
will be provided by us. Coupons and bonds sent to us for collection should be carefully
listed on the sending bank's letter and each class of coupon or bond should be enclosed in
a separate envelope with the appropriate United States Internal Revenue Ownership
Certificate attached.
6.
Payment of United States Government and Farm Loan Coupons;
Collection of British Government Coupons
Maturing coupons from United States Government bonds, notes and Treasury
certificates of indebtedness and from Farm Loan bonds issued by the twelve Federal
Land Banks are paid by us when due or, if unmatured, may be deposited a week or ten
days in advance for payment on their due date.
Coupons from British Government securities are received for collection, provided
United States Internal Revenue certificates of ownership have been detached by the
first collecting bank and the coupons stamped "Certificate detached and
information
furnished."
Such coupons when past due may be presented to us at any time, but if
not due they should not be forwarded to us more than one month prior to their due
date. They should also be accompanied by t h e proper papers required by t h e British
Government and will be paid in the City of New York by us on the day of receipt of
authority to pay from the Bank of England a t the cable rate of exchange on t h a t day.
All necesssary forms will be furnished upon request.
The proceeds of government and of Farm Loan coupons thus received will, when
paid, be credited to the reserve account of a member bank, or check will be issued, as
may be desired.
7.
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Free Collection Service
No service charge for collection of items as above described will be made by us other
than one of fifteen cents for returned unpaid collection items payable outside of the Borroughs of Manhattan and Bronx which have not been protested. No charge will be made
on recalled items. We collect items in all Federal Reserve cities free, b u t it is recognized
t h a t a member bank, in presenting and remitting for collection items, renders a distinct
service for which it is entitled, if it so desires, to make a reasonable charge. If such
a charge is made, however, it will be deducted from the face amount of the item and
credit given for the actual proceeds as indicated in our advice of credit.
8.
A
Routing
Every collection item received by us may, in our discretion, be sent for payment
direct to the bank on which it is drawn, or at which it is payable, or to a bank located
in the place where the item is payable or to another agent for collection, whether or not
the item is accompanied by bill of lading, securities, or other documents.
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9.
Liability
Every member bank sending maturing notes, bills and other collection items to this bank
for collection will be understood to have agreed to the terms and conditions herein set forth and
to have thereby specifically agreed that in receiving such items this bank will act only as the
collecting agent of the sending bank; that it assumes no responsibility other than for due
diligence and care in fonvarding such items promptly; and that it shall be held liable only when
payment in actual funds is in its possession.
10.
„
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Instructions to Collecting Banks
Each note, bill or other item sent by us for collection will be accompanied by the
form in current use for collection and returns when the item is actually paid. Unless
otherwise instructed, all unpaid items over $10 should be protested and returned
immediately, with the reason for non-payment. The non-payment of items of $500 or
over should be telegraphed. I t is desirable that payment be made by advice of credit
upon receipt of which we will charge the reserve account of the paying member bank.
If payment is not made by advice of credit, remittance should be sent in New York
exchange.
11. Amendments
The right is reserved to withdraw, add to or amend at any time or from time to
time, with or without notice, any or all of the foregoing rules or regulations.
Very truly yours,
J.
H.
CASE,
Acting Governor
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Schedule Showing When Proceeds of Bankers Acceptances will be
Available if Collected Through the Federal Reserve Bank of New York
Locality
District
No.
Credit Available
at Maturity
for Items Payable in
Credit for Items
Payable elsewhere in
District Available
Boston .
1
Boston, Mass.
1 day after maturity
New York .
2
New York, New York
Buffalo, New York
1 day after maturity
Philadelphia
3
Philadelphia, P a .
1 day after maturity
Cleveland .
4
Cleveland, Ohio
Cincinnati, Ohio
Pittsburgh, P a .
1 day after maturity
Richmond .
5
Richmond, Va.
Baltimore, M d .
2 days after maturity for Maryland, District of Columbia
and Virginia.
3 days after maturity for West
Virginia, North Carolina
and South Carolina.
Atlanta
6
Atlanta, Ga.
New Orleans, La.
Jacksonville, Fla.
Birmingham, Ala.
Nashville, Tenn.
1 day after maturity for acceptances of member banks
only.
Acceptances of non-members
when collected.
Chicago
7
Chicago, 111.
Detroit, Mich.
1 day after maturity
St. Louis .
8
St. Louis, M o .
Louisville, K y .
Memphis, Tenn.
Little Rock, Ark.
1 day after maturity
Minneapolis
9
Minneapolis, Minn.
St. Paul, Minn.
1 day after maturity
Kansas City
10
Kansas City, Mo.
Oklahoma City, Okla.
Omaha, N e b .
Denver, Col.
1 day after maturity
Dallas .
11
Dallas, Texas
El Paso, Texas
Houston, Texas
1 day after maturity
San Francisco
12
San Francisco, Cal.
Spokane, Wash.
Portland, Oregon
Seattle, Wash.
Salt Lake City, Utah
Los Angeles, Cal.
1 day after maturity
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@FedFRASER