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LIBRARY OF THE FEDERAL T R A N S f© RESERVE f e d e r a l R e s e r v e B bank o f Cl e v e l a n d a n k O F S T . L O U IS January 10, 1942. C O L L E C T IO N OF U. S. P O S T A L M O N EY O R D ER S To A ll M em ber and N on m em ber C learing Banks: This is to advise that on and after F ebruary 2, 1942, this Bank and other Federal Reserve Banks will not acccpt for collection from m em ber or nonmember clearing banks, either as cash or noncash items, any postal money orders th at are not draw n on or issued by a post office in a Federal Reserve Bank or Branch city, or W ashington, D. C., and M issouri Affton Bel-Nor 1?rent wood Clayton Ferguson Ft. Leonard W ood G ray’s Grove Jefferson Barracks Jennings Kirkwood Lam bert Field Lemay Maplewood Normandy Overland Fine Law n Richmond H eights Rock Hill U niversity City W ebster Groves A rkansas Kentucky Camp Joseph T. Robinson St. M atthew s W e will continue after February 2, 1942, to accept for collection as cash items money orders th at are drawn on or issued bv post offices in the cities referred to above. Consistent with the foregoing, direct sending member banks and nonmember clearing banks should not send to any other Federal Reserve Bank, or to any Branch of another Federal Reserve Bank, any postal money orders not draw n on or issued by the respective post offices in the cities in which such other Federal Reserve Banks or Branches are located. For the inform ation of m ember banks and nonm em ber clearing banks we quote below paragraphs 1 and 2 of section 1429 of the Postal Laws and Regulations, which section is contained in Title VIIT, Chapter 3, entitled “ Paym ent of Domestic Money O rders''. "U nder such rules and regulations as the Postm aster General shall prescribe, postal money orders m ay be issued payable at any m oney-order post office, and on and after the date upon which such rules and regulations become effective all money orders shall be legally payable at any money-order post office, although draw n on a specified office; and as compensation for the extra labor involved in paying a money order at an office other than th at on which the order is draw n the Postm aster General is authorized to exact a fee of the same amount as that charged for the issue of the order (act of June 16, 1934, Public, No. 366, 73d Cong.). “2. An original domestic money order shall be paid at its full face value if presented at the office on which draw n or at the office of issue at any time within the period of its validity, which is 1 year from the last day of the m onth in which issued. For the first 30 days after issue any domestic money order issued in the continental United States (except A laska), and draw n on an office located therein, may be paid for its face value, less the fee prescribed by the law quoted above, at an office other than th at of issue or th at on which drawn, provided the office at which presented is loeated w ithin the continental U nited States (except A laska).” Prior to A ugust 1, 1934. when the revised R egulations of the Post Office D epartm ent became effec tive, Federal Reserve Banks could collect all postal money orders at their local post offices w ithout the pay m ent of a fee, regardless of w here such orders were issued or where they were payable. W hen the Post Office D epartm ent revised its Regulations to provide a fee for cashing any postal money order when pre sented at an office other than th at of is-ue or th at on which drawn, Federal Reserve Banks, as a general rule, began sending money orders not draw n on or issued by postm asters in Federal Reserve Bank and Branch cities to member or par nonmember banks located at the points on which the orders were draw n or at which issued as cash items for collection and rem ittance. This practice has not proven to be entirely s a t isfactory since many member and par nonm em ber banks feel that they are entitled to make a charge for their services in presenting the money orders to their local post offices for paym ent, and some banks have declined to handle postal money orders for the Federal Reserve Banks unless they are perm itted to make a charge for their services. In view of these developm ents and since the payees or holders of postal money orders can collect all of them from their local post offices, and such of them as are draw n on or issued by their local post offices w ithout the paym ent of prescribed fees, there is no adequate reason why the Federal Reserve Banks should continue to receive for collection any money orders, other than those (specified in the first paragraph of this circular) which can be cashed by the Federal Reseve Banks themselves for their member and nonmember clearing banks free of fees or other collection charges. V ery truly yours, C H E S T E R C. DAV IS, President.
@FedFRASER