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CIRCULAR N O . 91. • hr 0 FEDERAL RESERVE BANK OF N E W YORK N E W Y O R K , November 17, 1917. CURRENCY SHIPMENTS. T o THE C A S H I E R , SIR: In view of t h e increased postage rates a revised circular on currency shipments superseding our circular No. 23 dated M a y 15, 1915, is herewith presented for your attention. A supply of Federal reserve notes in denominations of $5, $10, $20, $50 and $100 is kept on hand by this bank and will be shipped to member banks on request in such denominations as m a y be required, t h e face a m o u n t , plus t h e cost of shipment, being charged to t h e member bank's account. Shipments of gold, gold certificates, silver certificates and legal tender notes may be made to this bank either by express or registered mail for credit of the member bank's account or for exchange for Federal reserve notes. We pay transportation charges on gold or gold certificates, whetiier fit or unfit for circulation, and also furnish, free of expense, Federal reserve notes in exchange. Ordinarily we receive gold coin subject to the usual limit of tolerance, b u t up to t h e close of business, November 20th, we will agree to receive gold coin a t its face value, thereby absorbing whatever loss there may be by abrasion. Please note, however, t h a t the offer to t a k e gold coin a t its face value will expire November 20, 1917. After t h a t date, all gold coin received will be credited, less the allowance for any coin on which the abrasion exceeds the legal limit of tolerance, as ascertained by t h e New York subtreasury. This bank reserves the privilege of shipping the notes ordered, either by express or registered mail according to which is cheaper. In most cases t h e cost of shipping notes of $5. denomination is less by express than by registered mail, while for notes of higher denominations registered mail is usually cheaper. T h e cost of shipment by registered mail, fully insured, at present is approximately as follows: N o . of Bills 1000 1000 1000 1000 1000 Denominations 5's io's 20's 50'S ioo's Postage $1-44 1.44 1.44 1.44 1.44 R sgistry $ .10 .10 Insurance $0.25 •50 .10 1.00 .10 2.50 5.00 .10 Total Cost $i-79 2.04 2-54 4.04 6-54 Respectfully, BEN T J. STRONG, Governor. FEDERAL RESERVE BANK OF N E W YORK N E W Y O R K , November 24, 1917. T o THE P R E S I D E N T , DEAR SIR: We desire to call your attention to the great desirability of selling to tax payers a large a m o u n t of the issue of United States Treasury 4 % certificates of indebtedness announced in our circular of November 21st. These certificates will be dated November 30, 1917, will mature J u n e 25, 1918, and will be accepted a t par with accrued interest in payment of income and excess profits taxes when the same are payable either a t or before maturity of these certificates. They m a y be paid for by book credit in conformity with the terms of our circular. T h e amount of Federal income tax and excess profits taxes which will be due and payable J u n e 15, 1918, has been estimated to be in excess of two billion dollars. Payment of such a huge sum in currency or b y b a n k checks within a short period would occasion an unprecedented strain on the banks and money markets of the country; b u t if the Government from time to time borrows in anticipation of the receipt of these revenues and gradually disburses the proceeds of such borrowings between now and J u n e 15th, the strain may be avoided. T h e purpose of this issue of certificates is, therefore, to produce a medium for the gradual payment of taxes. I t is doubtless the custom of m a n y of your corporate and other clients gradually to set aside or accrue funds to be used later in payment of taxes. T h e general benefits t h a t will result to t h e banking and commercial interests of t h e country as a whole from a wide investment of such accumulated funds in these certificates are manifest; b u t the tax payer may enjoy a further and individual benefit from the purchase of these certificates as will be seen by reference to a recent ruling of t h e Commissioner of Internal Revenue, which runs as follows: "Investments in obligations of t h e United States, including Liberty bonds of both issues, made by a corporation or partnership from capital, surplus or undivided profits will be included in invested capital for the purpose of computing the deduction and rate of taxation under the excess profits tax law; b u t undivided profits earned during the taxable year cannot be included in invested capital." T h e advantage to corporations and firms t h a t are liable under the excess profits tax law resulting from their investing in these certificates in anticipation of their use for tax-paying purposes, is in addition to a practical discount of 4 % for prepayment of taxes. Y o u c a n render v a l u a b l e a s s i s t a n c e t o t h e G o v e r n m e n t b y b r i n g i n g t h i s i s s u e a n d i t s a d v a n t a g e s t o t h e a t t e n t i o n of all of y o u r c u s t o m e r s w h o will be i n t e r e s t e d i n t h e m . Y o u r active a n d p r o m p t c o - o p e r a t i o n i n p l a c i n g t h e m i n t h e h a n d s of tax payers will b e a p p r e c i a t e d . Very truly yours, B E N J . STRONG, Governor. P . S. Additional copies of this letter and of our Circular of Nov. 21st. may be had upon request.
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