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FEDER L RESERVE BO RD

WASHINGTON

  T O

T H E  FEDERAL RESERVE BOARD

X-7285

November  4, 1932.

SUBJECT: Shipment  of  Canceled Checks,

e t c . , b y Expres s.

Dear

  S i r :

With further reference

  to t he

  above subject, which

was the  subject  of the  Board 's let ter  of  October  15, 1932,

(X-7272), there

  a r e

  inclosed

  f o r

  your information copies

  of

further correspondence,

  a s

  follows:

(1 )  Le tt er dated October  21, 1932,  from  the

Governor

  of the

  Federal Reserve Bank

  of

Cleveland

  and a

  copy

  of the

  inclosure

  r e -

f e r red

  to

  therein.

(2 )

  Le tt er dated October

  21, 1932,

  from

  the

Governor

  of the

  Federal Reserve Bank

  of

Dallas.

Very truly yours,

Chester Morrill,

Secretary.

Inclosures.

TO

  GOVERNORS

 OF ALL F . R .

  BAMS.

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C O P Y X-7285~a

FEDERAL RESERVE  BAH

OF CLEVEIAHD

October

  21, 1932.

M r.

  Chester Morrill, Secretary,

Federal Reserve Board,

Washington,  D. C.

Dear  M r.  Morri l l :

I n

  response

  t o t h e

  board's l e t t e r X-7272

  of

  October

  15, 1932,

subject Shipment

  of

  Canceled Checks,

  E t c , , b y

  Express ,

  we

  have

  to r e -

port that

  i t h a s

  been

  t h e

  pract ice

  of

  this bank

  a n d i t s

  branches

  f o r

  many

years  t o  ship  t o t h e  Treasury Department  by  express Government checks  and

warrants accompanied  by the  daily transcript  of the  Treasurer 's general  ac-

count,  a s  well  a s a  limited number  of  bulky cash letters  to our  member

banks.  The  shipment  of  Treasury checks  and  warrants  by  express  was  begun

a t t h e

  suggestion

  of the

  Federal Reserve Board contained

  i n i t s

  l e t t e r

  of

November

  30, 1918

  (X-1296),

  and the

  shipment

  of

  bulky cash letters

  by ex-

press

  was

  adopted

  a s a

  measure

  of

  added protection afforded

  by the

  special

handling given express shipments,  as  well  as the  saving  i n  transportat ion

charges, which  i s  quite substantial  on  large packages.  The  volume  of ex-

press shipments  was not  augmented  a t t h e  time  t h e  increased postal rates

became effective.

Our

  experience with

  t h e

  Post Office inspectors

  h a s

  been similar

t o

  that

  of

  Kansas City;

  i n

  July

  of

  this year,

  an

  inspector from

  t h e

  Cleve-

land di s t r i c t to ld  u s  that this bank  was  v io la t ing  t h e  postal laws  by  send-

i n g  cash le t ters  to our  member banks  by  express instead  of by  mail .  He

was  informed that  our  in te rp re ta t ion  of the law  indicated that  we  were with-

in our  r igh ts  i n  using  t h e  express company  f o r t h e  shipment  of  checks,  and

that

  t h e

  adding-machine l i s t accompanying

  t h e

  checks

  was in the

  nature

  of

a n

  invoice such

  a s t h e

  Post Of fi ce Department approves

  f o r

  enclosure with

parcel post shipments.

I n

  September

  of

  this year,

  a

  Post Office inspector from

  t h e

  Pi t ts -

burgh dis t r ic t v is i ted  our  Pittsburgh Branch, calling attention  t o a n a l -

leged violation

  of the

  postal laws

  i n

  sending cash letters

  by

  express

  and

requested that

  t h e

  prac t ice

  b e

  discontin ued. Aft er conf err ing with

  our

Pittsburgh Branch  and  obtaining detailed information regarding  t h e  number

of  express shipments,  a  l e t t e r  was  received from  t h e  inspector estimating

t h e  amount  of  revenue  of  which  th e  Post Office Department  was  deprived  d u r -

i n g t h e  pe riod from Ju ly  6 to th e  time  t h e  matter  was  taken  up  with  the

branch,

  as no t

  less than $734.40.

  A

  copy

  of

  th i s l e t t e r

  i s

  enclosed.

  KTo

formal demand

  h as

  been m&de

  by th e

  Post Of fi ce Department

  f o r

  re-imburse-

ment.  Our  Cincinnati Branch  has had no  communication from  t h e  postal  a u -

t h o r i t i e s

  on

  th is su bjec t .

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X-7285-a

FEDEBA.L EESEHVE

  BAH

OF  CISVELAED

Mr.  Chester Morrill, Secretary  - a -  October  21, 1932.

Federal Eeserve Board,

Washington,  D. C.

We

 have been advised that

  a

  report regarding

  t h e

  prac t i ce

  of

this bank

  a n d i t s

  Pittsburgh Branch

  h as

  been forwarded

  t o t h e

  Post Office

Department

  i n

  Washington.

Very truly yours,

F:S:K

(S) E. E.  Fancher

Governor.

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X-7285-b

PITTSBURGH BRAHCH

FEDERAL  BE SERVE BAHK  OF CLEVELAHD

POST OFFICE DEPARTMENT

OFFICE

  OF

  INSPECTOR.

1. C.  Kennedy-

Inspector

S  Pit tsburgh,  P a . ,  September  24, 1932

Mr. F. E.

  Cobun

Assistant Cashier

Pittsburgh Branch Federal Reserve Bank

Pittsburgh,

  Pa.

Dear

  S i r :

At a

  conference with

  you

  yesterday regarding

  t h e

  transmission

of  mail matter through express channels  you  stated that  you  sent  an

average  of 30  l e t t e r s  a day  weighing  12  ounces  or  more  t o  your corres-

pondent banks.

  The

  postage revenue

  on

  this would

  be not

  less than

$10.80.

  The

  increased postage rates went into effect July

  6, 1932.

There were

  68

  business days between

  t h e

  time

  of the

  increase

  i n

  rates

and the  time that  I  called  a t  your office  and a t  th i s ra te  t h e  Post

Office Department

  was

  deprived

  of

  revenue

  t o a

  minimum charge

  of

  $734.40,

this based  on the  assumption that each  of the 30  letters mailed daily

by you

  weighed

  a t

  leas t

  12

  ounces

  and the

  amount estimated

  i s t h e

  minimum

amount  of  revenue lost  to the  Post Off ice Department through  the use of

t h e

  Railway Express.

Please advise

  i f

  this estimate

  i s

  correct .

  I am

  enclosing

  an

officially addressed envelope requiring  no  postage  f o r  your  use in

submitting

  a

  reply.

Very respectfully,

L. C.  KE1TNEDY (signed)

Post Office Inspector

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4 6

C O P Y X-7285-c

FEDERAL RESERVE BANK

OF

 DALLAS

B. A.

  McKinney

Governor

October  21, 1932

Federal Reserve Bank

Washington,

  D. C.

Gentlemen: Attention

  of Mr.

  Chester Morrill

This will acknowledge receipt

  of

  your le t t e r X—7272,

dated October

  15, 1932,

  su bj ec t: Shipment

  of

  Canceled Checks,

e t c . , b y

  Express.

For  your information,' we a r e a t  this time sending

dai ly t ranscr ip ts

  of the

  general account

  of the

  Treasurer

  of

t h e  United States  by  express, accompanied  by  paid vouchers.  We

a r e

  also forwarding

  by

  express daily cash letters

  t o

  twelve

  o r

f i f t ee n banking in st i t uti ons within  t h e  d i s t r i c t ,  a s  well  a s

t h e

  Federal Reserve Bank Branch

  a t

  Oklahoma City,

  a l l o f

  which

are now  accompanied  by  l e t t e r s  of  transmit ta l .

Early  i n  September  we had an  experience here somewhat

similar

  t o

  that

  of the

  Kansas City Federal Reserve Bank.

  An

inspector

  of the

  Post Of fi ce Department ca ll ed upon

  us a t

  that

time

  and

  inquired

  if we

  were sending checks

  by

  express, accom-

panied  by a  pr in ted le t t e r  of  tr an sm it ta l. Upon lear ning  of our

manner

  of

  handling such items,

  he

  obtained copies

  o f a l l

  t r ans -

mittal letters, which, according  to our  understanding, were  to

b e

  refer red

  t o t he

  Office

  of the

  Third Assistant Postmaster

  Gen-

eral

  f o r a

  def in i te ru l ing .

  We had n o t ,

  pr ior

  t o t he

  receip t

  of

your letter, heard anything further  i n  connection with  t h e i n -

vest igat ion .

We a re a t

  th is time giving

  t h e

  matter consideration,

and

  without further discussion with

  t h e

  Post Office Department,

contemplate instituting

  a t an

  early date

  a

  plan which will

  com-

p l y  with  t h e  suggestion  of  counsel  i n a  manner that should  p r o -

tect this bank from

  any

  complaint

  on the

  part

  of the

  Post Office

Department.

Very truly yours,

(S) B. A.

  McKinney

Governor.