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FEDERAL RE SE R V E BANK O F NEW YORK No. 3 8 5 8 1 May 27, 1952 J [ Circular PAP ER C U R REN CY A N D COIN Revision of Operating Circular No. 3 To all Member and Nonmember Banks in the Second Federal Reserve D istrict: W e transmit herewith a copy of our Operating Circular No. 3, entitled “ Paper Currency and Coin,” revised effective today. The circular has been revised because we are compelled to restrict deposits and with drawals o f paper currency to standard package and bundle units. In 1947 the Bank Management Commission o f the American Bankers Association completed an extensive study o f the problems arising from a lack o f uniform ity in packaging currency and from the variety o f straps then used. The findings and recommendations o f the Commission were presented in Bank Management Publication No. 114 o f the American Bankers Associa tion, entitled “ Standards for Currency Straps, Coin W rappers, and Packaging.” The Com mission pointed out in that publication that standardization in banking practices reduces errors and increases efficiency; that new and inexperienced operators may be confused when hand ling packages o f currency that vary in amount o f contents; and that lack o f standardization in packaged amounts contributes to cash differences. The Commission concluded, accordingly, that it would be in the interest o f more efficient bank operating procedure if packages o f cur rency were uniform in amounts. Our experience fully confirms this conclusion. While much of the currency withdrawn and deposited has been prepared in package units of 50 or 100 pieces o f the same denomination, and in bundle units o f 5 or 10 packages of the same denomination, a substantial portion of all withdrawals and deposits has consisted of currency arranged in less than these package and bundle units. Moreover, the substantial increases during recent years in the volume of currency in circulation have imposed severe strains on our staff and facilities for receiving, distributing, and redeeming currency, and has made it impractical fo r us to continue the prac tice o f accepting deposits and making payments of fit currency in other than standard pack ages and bundles. Accordingly, fit currency in the $1, $2, $5, $10, and $20 denominations will be furnished hereafter only in the following standard units, which should also be used for arranging cur rency intended for deposit with u s : Denomination N um ber o f packages ( o f 100 pieces) to a bundle Am ount $ 1 10 $ 1,000 $ 2 5 10 $ 1,000 $ 2,000 $ 5 10 $ 5,000 $10 5 10 $ 5,000 1 to 10 $2,000 to $20,000 $20 $10,000 Paragraphs 2, 17, and 18 of the revised operating circular set forth the new requirements. Other revisions reflect only minor editorial changes. Additional copies of this circular and o f the enclosure will be furnished upon request. A llan S proul, P r e s id e n t. F ederal of R N eserve ew Y B ank ork [ O p e r a t in g C ir c u la r N o . 3 *[ R e v is e d M a y 2 7 , 1 9 5 2 J PAPER CURRENCY AND COIN To all Member and Nonmember Banks in the Second Federal Reserve D istrict: This circular sets forth the general terms and conditions regarding the handling of shipments of paper currency and coin between us and banks in the Second Federal Reserve District, and the risk of loss incident to such shipments. Unless otherwise indicated, all references to us apply equally to our Buffalo Branch, and banks in the territory assigned to the Buffalo Branch are requested to transact such business directly with the Branch as usual. Cooperation of banks in avoiding unnecessary shipments 1. In view of the heavy expense of maintaining this service, the continued cooperation of the banks in avoiding unnecessary deposits, withdrawals and shipments will be appreciated. To that end, banks are urged to observe the practice of interchanging fit currency and coin among themselves locally whenever feasible, and to refrain when ever possible from sending fit currency or coin to us when there is reason to anticipate need for money of like denominations in the near future. INCOMING SHIPMENTS TO FEDERAL RESERVE BANK OF NEW YORK Preparation and shipment of paper currency Preparation o f packages and bundles 2. Currency should be arranged, face and top up, according to denominations and in units, as follows: Denomination $1 $2 Number o f packages (o f 100 pieces) to a bundle Amount 10 $ 1,000 5 $ 1,000 10 $ 2,000 $5 10 $ 5,000 $10 5 $ 5,000 10 $10,000 $20 1 to 10 $2,000 to $20,000 $50 and larger should, wherever possible, be consolidated in units of 50 or 100 pieces of the same denomination to a package and either 5 packages or 10 packages of the same denomination to a bundle. Each such bundle should be marked “ Large.” Packages of currency in the $1, $2, $5, $10, and $20 denominations that cannot be arranged in bundles as above provided should not be forwarded to us but should be retained until additional quantities of such currency have been accumulated sufficient to complete appropriate bundle units. 3. Large size currency, gold certificates, and patched currency require special handling. It will be helpful, therefore, if banks will segregate such pieces from other currency and arrange them in pack ages of 100 pieces, if volume permits, without regard to denomination. Such packages should be made up in a separate bundle marked ‘ ‘ Miscellaneous. ’ ’ 4. Each package should be bound with a paper strap, and each bundle should be well secured by cord or by a strong paper wrapper (such as kraft stock) three to four inches wide. Each strap should indicate the amount contained in the package, the name or initials of the person by whom prepared, and the name of the depositing bank. The same information for each bundle should be indicated on the paper wrapper securing the bundle, or if the bundle is secured by cord, the information should be shown on a face card that approximates the currency in size. Under no circumstances should rubber bands, pins, or clips be used instead of paper straps. Bundles to be shipped in sealed bags 5. Currency should be shipped in strong cloth or canvas bags, and each bag should be sealed with a lead seal, crimped, in such a manner that the contents will be well secured but the bag need not be damaged in opening and may be used again. A tag bearing the name of the sending bank should be attached to each bag, and the necessary postage stamps should be affixed securely to the back of the tag and not to the bag. No writing indicating the nature of the contents or stating the value thereof should appear on the bag or the tag. Shipments to be sent by registered mail 6. Currency in all denominations may be included in the same bag and should be sent by registered mail. Our deposit form (Head Of fice: Form Mon. 82; Buffalo Branch: Form B. Mon. 29) should be executed for each bag; copies Nos. 1 and 2 of that form should be enclosed with the currency, and copy No. 3 should be forwarded as indicated thereon at the time of shipment. Postage 7. Postage on currency should be prepaid at first class rates, plus the registry fee and the surcharge at the rate per thousand dollars or fraction thereof applicable to the parcel post zone in which the sending bank is located. It is not necessary to pay the additional fee for a return post office registry card, as copy No. 2 of the deposit form will be returned to the sending bank to show receipt of the shipment. As a registry fee is charged on each bag, shipments should be confined to as few bags as possible. 2 Mutilated or torn currency 8. Mutilated or torn currency should be carefully mended on the back, and not on the face, with transparent paper in such manner as to preserve as nearly as possible the original design and size. Pins, clips and other metallic substances should be removed, as they will damage the machinery used in counting, punching and cutting cur rency and may cause injury to the handlers. Fragments 9. Mutilated currency, of which at least three-fifths of the origi nal proportions remain, will be received at its face amount. Fragments of less than three-fifths should be sent directly to the Treasurer of the United States, Currency Redemption Division, Washington, D. C., in accordance with Treasury Department Circular No. 55, copies of which will be furnished upon request. Preparation and shipment of coin To be shipped in bags 10. Coin should be shipped loose in a strong cloth or canvas bag and sealed with a lead seal, crimped, in such a manner that the contents will be well secured but the bag need not be damaged in opening and may be used again. Coin should not be put in wrappers of any kind. Each denomination should be in a separate bag, the denomination and amount contained in each bag should be plainly marked on the ship ping tag, and, except as provided in paragraph 11 with respect to ship ments by insured fourth-class mail, the amount in each bag should be as follows: Silver D o lla r s .. $1,000 in each bag H a lf D o lla r s .. . $1,000 in each bag Q uarter D ollars $1,000 in each bag Dimes . . . . $1,000 in each bag Nickels . . . $ 200 in each bag 50 in each bag C e n t s ......... $ Method o f shipment 11. All coin shipments should be sent by express,* charges collect, except that a bank located in a city or town in which express facilities are not available may ship coin by insured fourth-class mail. The amount of coin contained in each bag shipped by insured fourth-class mail should not exceed $200, and the address tag attached to each such bag should be endorsed “ Examined at mailing office— Contains only fourth-class mail.” Our coin express shipment form (Head Office: Form C.CG.28; Buffalo Branch: Form B. CG.30) should be executed, and all copies should be mailed to us under separate cover at the time of shipment. Mutilated coins 12. Mutilated coins received by us will not be accepted at their face amount but will be sold at their bullion or metal value and credit * The terms *‘ express ’ * and ‘ ‘ express company, ' ’ as used in this circular, refer to the Railway Express Agency, Inc. 3 will be given for the proceeds. Silver coins are mutilated when plugged, fused together, or so punched, clipped, chipped, or otherwise mutilated as to be appreciably reduced in weight, or when so defaced as to be not readily and clearly identifiable as to genuineness and denomination. Minor coins are mutilated when plugged, fused together, or so defaced as not to be readily identifiable, or when so punched or clipped or otherwise mutilated as to show a material loss of metal. Paper currency and coin to be shipped separately 13. Shipments of currency and coin should be prepared and forwarded separately and the shipments should not include securities or other valuables. Credit for shipments of United States paper currency and coin 14. We will credit, on the date of receipt, but subject to verification, the amount of United States currency and coin shipped to us, plus the cost of postage, if any, and advice of such credit will be mailed to the sending bank. Canadian paper currency and coin 15. Canadian currency may be shipped to us by member banks at our expense, and may be included in the same bag in which United States currency is shipped provided the two kinds of currency are properly segregated within the bag. Canadian coin may also be shipped to us by member banks at our expense, but it should be shipped in a different bag from that in which United States coin is shipped. The amount of Canadian currency and coin should be entered as separate items on the printed forms pertaining to the shipment. Canadian currency and coin received by us will be converted into United States funds by sale at current market rates and credit will be given for the proceeds, and advice mailed, upon completion of the sale. OUTGOING SHIPMENTS FROM FEDERAL RESERVE BANK OF NEW Y O R K Paper currency and coin 16. W e will furnish currency and coin in all available denomina tions. Currency will be forwarded by registered mail. Coin will be forwarded either by registered mail or by express at the option of the bank ordering the coin. W e will pay the cost of postage and expressage incident to shipments to member banks. Fit paper currency 17. Fit currency will be furnished only in standard units, as follows: 4 Denomination $1 $2 $5 $10 $20 Number o f packages (o f 100 pieces) to a bundle A mount 10 5 10 10 5 10 1 to 10 $ 1,000 $ 1,000 $ 2,000 $ 5,000 $ 5,000 $10,000 $2,000 to $20,000 $50 and larger. Withdrawals in these denominations should, wherever possible, be made in units of 50 pieces of the same denomination to a package, and either 5 packages or 10 packages to a bundle. New paper currency 18. W e will furnish new currency in the $1, $2, $5, $10, and $20 denominations only in standard units of 100 pieces of the same denom ination to a package. The amount of new currency we can furnish is governed primarily by the volume of fit currency on hand, and the furnishing of new currency may be suspended entirely or in part until any abnormal supply of fit currency on hand is sufficiently re duced. Neto coin 19. United States Mints supply us with new coin only when cir culated coin is not available. Therefore, we are seldom able to supply new coin. Requests for paper currency and coin 20. Requests for paper currency and coin should be made on forms supplied by us (Head Office: Form Mon. 126 for currency and Form C. Pay. 12 for coin; Buffalo Branch: Form B. Mon. 127 for currency and coin). Urgent or emergency requests may be made, however, by telegram or telephone followed immediately by officially signed con firmation. In order that shipments will not be duplicated, the con firmation should be plainly marked as such. Whenever possible, the American Bankers Association code should be used in telegrams, and the appropriate test word, taken from the list of special test words supplied by us, should be used in each telegram or telephone conver sation. Member banks may send their telegrams collect; all other telegrams should be forwarded prepaid. Shipments are more likely to be sent and received in time to meet needs, of course, when banks anticipate their requirements and order currency and coin by mail far enough in advance to allow for delay in transmission. Method o f payment 21. In the absence of other arrangements, the amount of currency and coin shipped by us will be charged to the reserve account or nonmember clearing account of the bank requesting the shipment. If 5 a bank does not have such an account with us, the charge will be made to the reserve account of a member bank that has made appropriate arrangements with us. Time o f shipment 22. Requests for shipments of currency and coin will be acted upon on the day of receipt unless otherwise directed, except that requests received after 3 o ’clock p.m. will be acted upon customarily on the following business day. Whenever a nonmember bank requests a shipment and sends us a bank draft in payment therefor, the shipment will be made only upon receipt of the proceeds of the draft in finally and actually collected funds in accordance with the terms and condi tions of our current circular regarding the collection of cash items and of our published time schedules. Contents o f coin bags 23. Coins are shipped in standard bags containing the following amounts: S ilver D olla rs. . $1,000 in each bag H a lf D o lla r s .. . $1,000 in each bag Q uarter D ollars $1,000 in each bag Dimes . . . . $1,000 in each bag Nickels . . . $ 200 in each bag 50 in each bag C e n t s ......... $ Advice o f paper currency shipment 24. A form of receipt is enclosed with each shipment of currency and a duplicate copy of the form, marked “ advice,” is forwarded by ordinary mail to the consignee. The copy marked “ receipt,” which is enclosed with the shipment, should be executed by the consignee over properly authorized signature (s), and returned. If the shipment is not promptly received, we should be notified immediately by tele gram (charges collect) or by telephone (charges reversed) so that the shipment may be traced promptly. Advice o f coin shipment 25. Two advices covering each shipment of coin are forwarded by ordinary mail to the consignee. The copy marked “ receipt” should be executed by the consignee over properly authorized signature(s), and returned. If the shipment is not promptly received, we should be noti fied immediately as stated in the preceding paragraph. RISK OF LOSS Shipments by registered mail and express Certain risks assumed by us 26. Except as specifically provided in paragraphs 27, 28, and 29, we will assume: (a) All risks of loss incident to the shipment in conformity with the provisions of this circular, of paper currency or coin by any bank in the Second Federal Reserve District to us by registered mail or express, from the time the shipment leaves the office of the sender until delivery to our office; and 6 (b) All risks of loss incident to the shipment of paper currency or coin by us, or for our account at our request, to a member bank in this District by registered mail or express, until the shipment is delivered at the office of the addressee bank; P rovided, however, we will not assume any risk of loss for shipments sent by express while such shipments are in the custody of the Railway Express Agency, Inc., as the rate charged by the express company on such shipments is based on the declared value and the ordinary risks of loss are assumed by the express company under its shipping contract. The Uniform Express Receipt, however, provides that the express com pany shall not be liable for loss, damage or delay caused by “ The Act of God, public enemies, authority of law, quarantine, riots, strikes, perils of navigation, the hazards or dangers incident to a state of war, or occurrence in customs warehouse.” In case an undelivered shipment is reforwarded, we will continue to assume such risks of loss until the shipment is delivered at the correct or new address or until it is returned to the sender. Certain risks not assumed by us 27. W e will not assume any risk of loss in any of the following circumstances: (a) Any loss resulting from capture, seizure, arrest, restraint, detainment, confiscation, preemption, requisition, or nation alization by or under the authority of any Government (de facto or otherwise) or any agency thereof whether civil or military, and the consequences thereof or of any attempt thereat, whether in time of peace or war and whether lawful or otherwise, or from aerial or other bombardment, or as a consequence of hostilities or warlike operations (whether there be a declaration of war or not), piracy, civil war, revolution, rebellion, or insurrection or civil strife arising therefrom. (b) Any loss resulting from any dishonest, fraudulent, or criminal act of an employee of any bank, other than ourselves, ship ping, causing, ordering or receiving the shipment. (c) Any loss to the extent recoverable under any insurance or any surety or indemnity agreement carried or maintained by any person other than ourselves. (d) Any loss in excess of $2,000,000 on all shipments to us by any one banking office on any one day. (e) Any loss incident to a shipment to us by ordinary mail. (f) Any loss incident to a shipment to us by registered mail or express if the shipment is not made in conformity with the provisions of paragraph 28. (g) Any loss incident to a shipment to us by registered mail or express in excess of the amount stated in the notice of ship ment referred to in paragraph 28 (a). (h) Any loss incident to a shipment by us by registered mail or express if the addressee bank takes delivery of the shipment at any place other than the office of the addressee bank and 7 the shipment is not transported to the office of the addressee bank as provided in paragraph 29. Conditions regarding shipments to us 28. We will not assume any risk of loss in respect of any shipment to us by registered mail or express unless the sender complies with the following terms and conditions: (a) Concurrently with the shipment but under separate cover the sender shall mail us a notice of shipment showing the date, amount and description of the shipment, such notice to be on the appropriate form supplied by us for use in accordance with the provisions of paragraphs 6 and 11 of this circular. (b) The contents of the shipment shall be verified and enclosed in a strong wrapper, envelope, or cloth or canvas bag, well secured, and the package shall be sealed in a manner accept able to the post office at the place of mailing or to the Railway Express Agency, Inc., at the place of delivery to the express company. (c) The verification and the packing and sealing of the package shall be done by an employee of the sender and the sealed package shall be in charge of a responsible person until deposited and registered at the post office or delivered into the custody of the express company, or shall be in the cus tody of an armored car service in transit from the office of the sender to the post office or to the office of the express company. (d) The post office registry receipt with respect to each shipment by registered mail shall be carefully preserved by the sender in order that it may be available as evidence in event of loss and, in the event a loss is claimed, shall be turned over to us upon our request. Conditions regarding shipments by us 29. W e will not assume any risk of loss in respect of a shipment by us by registered mail or express where the addressee bank takes delivery of the shipment at any place other than the office of the addressee bank, unless the shipment shall be in charge of a responsible person, or shall be in the custody of an armored car service, in transit from the place at which delivery is taken to the office of the addressee bank. Payment o f losses 30. We will pay promptly the amount of any loss, the risk of which is assumed by us under paragraph 26, upon our receiving from the bank sustaining the loss, in form satisfactory to us, a written proof of loss, receipt, and any other necessary documents, including, but not limited to, an assignment of its right, title and interest in the property in respect of which the loss was incurred. Any bank receiving any payment from us shall take all necessary measures, in our behalf and at our risk and expense, for the recovery, reissue or replacement of the property in respect of which the loss was incurred, including the insti tution of legal proceedings in its own name if deemed necessary by us. 8 Unless and until there is a change in our policy, in the event any bank recovers a loss in whole or in part under insurance, or a surety or indemnity agreement, carried or maintained by it, the risk of which loss, but for the provisions of paragraph 27(c), would have been assumed by us under paragraph 26, and as a direct result of such recovery the cost to such bank of maintaining the same or equivalent insurance, or surety or indemnity agreement, is increased, the amount of such increase, if deemed by us to be reasonable, will be reimbursed by us. Shipment by other means o f transportation 31. In the case of a shipment of paper currency or coin to us by any bank in the Second Federal Reserve District by a means of trans portation other than registered mail or express, we will assume all risks of loss incident to the shipment, except those losses described in subparagraphs (a ), (b ), (c ), (d ), and (e) of paragraph 27, from the time the shipment leaves the office of the sender until delivery to our office, Provided, (i) we shall have specifically approved the use of such means of transportation with respect to such shipment, and (ii) the sender shall have complied with all conditions specifically imposed by us with respect to such shipment. If we select a means of transportation other than registered mail or express in connection with a shipment of paper currency or coin by us, or for our account at our request, to a member bank in this District, we will assume all risks of loss incident to the shipment, except those losses described in subparagraphs (a), (b), and (c) of paragraph 27, until the shipment is delivered at the office of the addressee bank. In case an undelivered shipment is reforwarded, we will continue to assume such risks of loss until the shipment is delivered at the correct or new address or until it is returned to the sender. The provisions of paragraph 30 shall apply to any loss, the risk of which is assumed by us under this paragraph 31. Outgoing shipments to nonmember banks 32. W e do not assume any risk of loss incident to the shipment of paper currency or coin by us to a nonmember bank. The risk of loss incident to such shipments, however, is or may be covered as follows: (a) In the case of shipments by registered mail to a nonmember bank in this District, we will, in the absence of instructions to the contrary, arrange for the coverage thereof at the expense of the nonmember bank under certain registered mail insurance policies carried by us. These policies cover all risks, except theft by employees of the sender or of the addressee and so-called war risks (similar to those described in paragraph 27 (a )). Risk attaches from the time of leav ing the office of the sender until actual delivery has been made to the office of the addressee, whether delivery is made in whole or in part by employees or agents of the Post Office Department, the sender or the addressee, and in event of nondelivery continues until returned to the sender. In case of reforwarding of any shipment, such shipment is covered until delivered at the correct or new address or until 9 returned to the sender. Liability under these policies is limited to $10,000,000 on property dispatched from any one sender to any one addressee on any one train, boat or other conveyance. (b) In the case of shipments by express to a nonmember bank in this District, the express company assumes the ordinary risks of transportation under its shipping contract. GENERAL Return of empty bags 33. Empty currency and coin bags bearing the name of other banks in the Second Federal Reserve District, received by us, are returned from time to time, at our expense, to the banks whose names appear thereon. It will be appreciated if banks that receive our bags or bags of a United States Mint will return the empty bags to us by parcel post, after a small number has accumulated. Bags bearing the name of our Buffalo Branch should be returned to the Branch. Credit will be given for the cost of postage. Requests for weekend or holiday shipments 34. The post office authorities have informed us that many post offices in towns and cities in the Second Federal Reserve District do not have adequate facilities for the overnight safekeeping of valuable registered mail shipments. In order to reduce the hazard of loss of currency and coin by burglary and robbery from post offices that are holding such shipments overnight, or over a Saturday (if delivery will not be accepted on that day). a Sunday, or a holiday, awaiting delivery to the consignees, the post office authoi*ities suggest that banks can assist by (1) anticipating currency and coin needs sufficiently in advance to assure the arrival of such shipments at destinations in time for delivery on a regular business day, (2) arranging to pick up such shipments immediately upon arrival at the local post offices, even if such arrival is after banking hours but before the bank vaults are closed, and (3) timing their requests so that shipments will not have to be made on a Friday (if delivery will not be accepted on Satur day), or on a day preceding a holiday, except in cases of urgent need. Counterfeit, altered or raised paper currency or coin 35. The regulations of the Treasury Department, Part 403 of Chapter IV of Title 31 of the Code of Federal Regulations, provide as follows: $403.1 D eliv ery o f cou n terfeit obligations and other securities and coins authorized. A u th ority is hereby given to all banks and banking institutions o f any nature whatsoever organized under general or special federal o r state statutes, to all United States P ost Offices, and to all dis bursing officers o f the United States and their agents, to take possession o f and deliver to the Treasury D epartm ent through the Secret Service D ivision all counterfeit obligations and other securities and coins o f the United States o r o f any foreig n governm ent which shall be presented at 10 their places o f business. (S ec. 492, Pub. Law 772, 80th C on g .; 18 U.S.C. 492) 36. The following information is transmitted at the request of the United States Secret Service: A ll counterfeit, altered o r raised currency received by banks from any source should be prop erly branded in ink or b y rubber stam p. A ll such currency and all counterfeit or altered coin received by banks from any source should be forw arded to the nearest office o f the United States Secret Service. The Secret Service has offices in R oom 917, Federal Office Building, 90 Church Street, New Y o rk 7, N . Y . ; in the U. S. Court House, B uffalo 1, N . Y .; in the P ost Office B uilding at Utica 1, N . Y .; and at 1060 B road Street, Newark 1, N. J. A receipt will, u pon request, be issued to the depositing bank fo r any currency o r coin that is fou n d to be counterfeit, raised o r altered. I f inspection o f such currency o r coin is desired f o r reclamation purposes, request should be made direct to the Secret Service office to which the currency o r coin was forw arded. Inform ation which m ay aid the Secret Service with respect to any counterfeit, altered or raised currency, o r any counterfeit or altered coin should be sent to the nearest office o f the Secret Service. Fragm ents o f currency (especially the ends) are sometimes used illegally in raising o r altering low er denominations to higher. T o prevent such unlaw ful operations these fragm ents should be collected and destroyed o r forw arded to the nearest office o f the Secret Service fo r destruction. Agreement to this circular 37. Any bank shipping, or causing the shipment of, paper cur rency or coin to us, and any bank requesting the shipment of paper currency or coin by us, shall by such action be deemed to have agreed to the terms and conditions set forth in this circular. Revision of this circular 38. The right is reserved to withdraw, add to, or amend at any time, any of the provisions of this circular. Effect of this circular on previous circular 39. This circular supersedes our Operating Circular No. 3, Revised September 23, 1949, and the First Supplement thereto dated August 8, 1950. A llan S prou l, President. ll
@FedFRASER