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FEDERAL RESERVE BOARD 558
WASHINGTON a d d r e s s o f f i c i a l c o r r e s p o n d e n c e t o
t h e f e d e r a l r e s e r v e b o a r d December 29, 1933* 3-941.
SUBJECT: Fiscal Agency and Depositary Expenses.
Dear Sir:
The October 1933 Governors' Conference considered Under Secretary
of the Treasury Ache son's l e t ter of August 21, 1933» suggesting that the
Treasury hereafter reimburse the Federal Reserve "banks only for f i s c a l
agency expenses which represent direct additional expenses, such as
printing and postage, incurred sole ly on account of now issues of secu-
r i t i e s at the time of i ssue , and appointed a committee of throe gover-
nors to confer with the Federal Reserve Board and the Treasury with a
view to arriving at some equitable basis for reimbursement. Following
a conference with this committee, consisting of Governors Fancher,
Martin and McKinney, the Board requested the Division of Bank Operations
to work out a uniform formula for use in determining f i s c a l agency ex-
penses, to assemble data showing the amount of such expenses absorbed
by each Federal Reserve bank, and to obtain an estimate of the additional
amount which each bank would be required to absorb i f the suggestion
contained in the Under Secretary's l e t t er of August 21 were adopted*
Inasmuch as the question of reimbursement for f i s c a l agency ex-
penses has arisen on several occasions in the past and as to comply
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559 — 2 —
with the request of the Under Secretary of the Treasury would r e s u l t in
the Federal Reserve banks assuming a large proportion of the cost of
new i s s u e s of s e c u r i t i e s in addit ion to the cos t of a l l other serv ices
rendered the Treasury, i t i s f e l t that complete information should be
avai lable as to the cost of the various c l a s s e s of operations performed
by the Federal Reserve banks for the Treasury in the several c a p a c i t i e s
of f i s c a l agent, depositary, and custodian, and p a r t i c u l a r l y the ir out -
of-pocket expenses in t h i s connection. Such f i g u r e s are not now a v a i l -
ab le .
Accordingly, we have prepared the attached forms on which i t i s
requested that the Federal Reserve banks report their expenses during
the l a s t ha l f of 1933 in connection with their f i s c a l agency and deposi -
tary operat ions . Forms are also included covering s erv i ce s performed
for the Reconstruction Finance Corporation and the Farm Credit Adminis-
trat ion in order that v/e may have data s imi lar ly compiled covering a l l
f i s c a l agency and depositary serv ices performed for the Government and
a l l i t s agenc ies . The cost of s erv ices , i f any, performed for Government
agencies not s p e c i f i c a l l y mentioned should be reported on the inc losed
blank forms. I t w i l l bo noted that the expenses are c l a s s i f i e d in accor-
dance with B u l l e t i n Ho. 1 of the General Accounting O f f i c e and are sub-
divided into reimbursable expenses and expenses not reimbursable; a l so
that in addit ion there i s to be shown the part of the t o t a l expenses
representing d i r e c t , or out-of-pocket expenses, such as s a l a r i e s of
employees regular ly assigned, compensation paid extra help, supper money,
travel expenses, p r i n t i n g , postage, e t c . , which wuuld not be incurred in
connection with other a c t i v i t i e s of the banks.
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It i s hoped to obtain f igures for the l a s t hal f of 1933, based on
careful estimates where actual f igures are not avai lable , covering the
tota l expense to the Federal Eeserve banks of a l l services performed for
the Treasury and for other Governmental agencies, and to have th is in -
formation compiled on as nearly a uniform bas i s as pract i cab le . Accord-
ingly , i t i s requested that in preparing the information ca l l ed for in
the attached forms specia l attention be given to the description at the
top of each form of the operations, the cost of which i s to be included
in the report . Attention i s invi ted to the fac t that while some of the
operations are ident i ca l with those included in certain "expense uni ts"
of Form E, the to ta l expense w i l l not agree with Form E f igures because
of the inclusion in the attached forms of certain expenses that are not
distr ibuted in Form E reports*
As i t has been the po l i cy of the Treasury Department for a number
of years to reimburse the Federal Reserve banks for expenses incurred in
connection with new i s sues only, your comment i s part i cu lar ly invi ted
on Exhibit A defining the operations which for present purposes are to
be regarded as being connected with new i s s u e s . Please indicate any
amendment of this exhibit that you would recommend for any future com-
p i l a t i o n of expenses connected with new i ssues and also the extent , i f
any, to which the operations described therein d i f f e r from the operations
which you have included heretofore in determining the cost of new issues
for the purpose of obtaining reimbursement from the Treasury.
It i s be l ieved that a l l of the items on the attached forms except
those commented on s p e c i f i c a l l y below are se l f -explanatory. Salaries
of bank o f f i c e r s should include an appropriate part of the salary of any
o f f i c e r v/lio devotes an appreciable amount of time to supervision Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
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of the operations covered in any given statement. The items "Furnish-
ing of heat, l i g h t , power, water and e l e c t r i c i t y " and "Furnishing of
janitor, elevator and cleaning service" should "be shown for a l l oper-
ations to which de f in i t e space has been assigned and in most instances
wi l l represent an estimated part of the total expenses of the Federal
Reserve bank for such purposes.
I t i s contemplated that the expense reports submitted on the
attached forms shal l show combined f igures for the head o f f i c e and
branches, i f any. As regards the statement on space u t i l i z e d , however,
i t i s requested that a separate report be submitted for the head
o f f i c e and for each branch, i f any. Special attention i s ca l led to
the footnote on t h i s form providing that rent received shal l include
any expenses incurred by the bank for heat, l i g h t , power, water and
e l e c t r i c i t y and for janitor, elevator and cleaning service, the cost
of which i s reimbursed to the Federal Reserve bank.
Very truly yours,
E. L. Snead, Chief, Division of Bank Operations.
Inclosures.
COPY TO ALL GOVERNORS*
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