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reserves to fall below the legal limit would be penalized at the rate of two per cent. on the deficit in addition to the prevailing discount rate. He wrote:

With the inauguration of the collection system the penalty for the impairment of reserves, provided by the Federal Reserve Act, will be imposed. You will be requested to report monthly the average reserve required to be kept with the federal reserve bank. Impairment of this reserve, if any, will be ascertained by comparing this figure with the average actual reserve shown by our books. The penalty has for the present been fixed by the Federal Reserve Board at a rate of interest on the average impairment equal to two per cent. above the discount rate for ninety-day paper, which now is four per cent.

In explaining when the proceeds of the checks sent for collection will be available the Governor also stated:

All items drawn on members of the New York Clearing House Association received in time for clearing will be immediately credited at par and will thereupon become available as reserve or to pay checks drawn. Such items, however, will not be received from members of the New York Clearing House Association.

For all other items immediate credit at par will be made, but such credit will not be available as reserve or to pay checks drawn, until the appropriate period indicated on the attached schedule has elapsed. These periods are based on the mail time required for items to reach the paying bank plus the mail time required for the paying bank to remit to the federal reserve bank of its district. By averaging the mail time it has been possible to include all points in the country in four divisions, namely, one, two, four and eight days.

THE POSTAL SAVINGS ACT AMENDED

June 7, 1916, the postal savings bank act was amended. The most important amendment is the maximum limit upon interest-bearing accounts now raised to $1,000. The clause which provides that no one shall be permitted to deposit more than $100 in any calendar month is eliminated. Permission is given for the deposit of these funds in banks not members of the Federal Reserve System in case there are no members in the locality willing to receive them upon the terms fixed in the statute. The provision for security is modified to include, besides public securities supported by the taxing power, "other securities authorized by Act of

Congress.'

This modification was represented by members of Congress in debating these amendments to mean farm mortgage debentures, under the proposed rural credits law.

Postal savings deposits now aggregate very nearly the sum of $80,000,000. This amendment does not fulfill the expectations of the promoters of the system, who claimed that hundreds of millions of dollars would be brought to light from secret accumulations.

The following are the amendments:

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That such part of section six of the act approved June 25, 1910, authorizing a system of postal savings depositories, as reads "but no one shall be permitted to deposit more than $100 in any one calendar month" is hereby amended to read as follows: "but the balance to the credit of any person, upon which interest is payable, shall not exceed $1,000, exclusive of accumulated interest"; and said act is further amended so that the proviso in section seven thereof shall read as follows: "Provided, That the board of trustees may, in their discretion, and under such regulations as such board may promulgate, accept additional deposits not to exceed in the aggregate $1,000 for each depositor, but upon which no interest shall be paid."

SEC. 2. That postal savings funds received under the provisions of this act shall be deposited in solvent banks, whether organized under National or State laws, and whether member banks or not of the federal reserve system established by the act approved December 23, 1913, being subject to National or State supervision and examination, and the sums deposited shall bear interest at the rate of not less than two and onefourth per cent. per annum, which rate shall be uniform throughout the United States and territories thereof; but five per cent. of such funds shall be withdrawn by the board of trustees and kept with the Treas urer of the United States, who shall be treasurer of the board of trustees, in lawful money as a reserve. The board of trustees shall take from such banks such security in public bonds or other securities, authorized by Act of Congress or supported by the taxing power, as the board may prescribe, approve, and deem sufficient and necessary to insure the safety and prompt payment of such deposits on demand. The funds received at the postal savings depository offices in each city, town, village, and other locality shall be deposited in banks located therein (substantially in proportion to the capital and surplus of each such bank) willing to receive such deposits under the terms of this act and the regulations made by authority thereof: Provided, however, If one or more member banks of the federal reserve system established by the act approved December 23, 1913, exists in the city, town, village, or lo

cality where the postal savings deposits are made, such deposits, shall be placed in such qualified member banks substantially in proportion to the capital and surplus of each such bank, but if such member banks fail to qualify to receive such deposits, then any other bank located therein may, as hereinbefore provided, qualify and receive the same. If no such member bank and no other qualified bank exists in any city, town, village, or locality, or if none where such deposits are made will receive such deposits on the terms prescribed, then such funds shall be deposited under the terms of this act in the bank most convenient to such locality. If no such bank in any State or territory is willing to receive such deposits on the terms prescribed, then such funds shall be deposited with the treasurer of the board of trustees and shall be counted in making up the reserve of five per cent. Such funds may be withdrawn from the treasurer of said board of trustees, and all other postal savings funds, or any part of such funds, may be at any time withdrawn from the banks and savings depository offices for the repayment of postal savings depositors when required for that purpose. If at any time the postal savings deposits in any State or territory shall exceed the amount which the qualified banks therein are willing to receive under the terms of this act, and such excess amount is not required to make up the reserve fund of five per cent. hereinbefore provided for, the board of trustees may invest all or any part of such excess amount in bonds or other securities of the United States. When, in the judgment of the President, the general welfare and interests of the United States so require, the board of trustees may invest all or any part of the postal savings funds, except the reserve fund of five per cent. herein provided for, in bonds or other securities of the United States. The board of trustees may in its discretion purchase from the holders thereof bonds which have been or may be issued under the provisions of section ten of the Act of June 29, 1910. Interest and profit accruing from the deposits or investment of postal savings funds shall be applied to the payment of interest due to postal savings depositors, as hereinbefore provided, and the excess thereof, if any, shall be covered into the Treasury of the United States as a part of the postal revenue: Provided further, That postal savings funds in the treasury of said board shall be subject to disposition as provided in this act, and not otherwise: And provided further, That the board of trustees may at any time dispose of bonds held as postal savings investments and use the proceeds to meet withdrawals of deposits by depositors. For the purposes of this act the word "territory" as used herein shall be held to include the District of Columbia, the District of Alaska, and Porto Rico, and the word “bank” shall be held to include savings banks and trust companies doing a bank. ing business.

SEC. 17. That all laws or parts of laws in conflict with the provisions of this act are hereby repealed.

NEW YORK FEDERAL RESERVE BANK SCHEDULE SHOWING WHEN THE PROCEEDS OF ITEMS BECOME AVAILABLE

June 10, 1916, the Federal Reserve Bank of New York issued a schedule showing when the proceeds of items become available, as follows:

IMMEDIATE CREDIT-Members of clearing house in New York.

ONE DAY AFTER RECEIPT-Members of clearing houses in Boston, Philadelphia and Richmond.

TWO DAYS AFTER RECEIPT Members of clearing houses in Cleveland, Chicago, Atlanta, Minneapolis, St. Louis, Kansas City, and banks in Connecticut, Delaware, District of Columbia, Maine, Maryland, 1Massachusetts, New Hampshire, New Jersey, New York, 1Pennsylvania, Rhode Island, Vermont, 1Virginia.

FOUR DAYS AFTER RECEIPT-Members of clearing houses in Dallas, New Orleans, and banks in Alabama, Arkansas, Florida, 1Georgia, 1Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, 1Minnesota, Mississippi, 1Missouri, North Carolina, 'Ohio, South Carolina, Tennessee, West Virginia, Wisconsin.

EIGHT DAYS AFTER RECEIPT-Banks in Arizona, California, Colorado, Idaho, Louisiana, Montana, Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Utah, Washington, Wyoming.

It may be added as to the handling of items at a cost not to exceed one and one-half cents each, only a trial will show whether the estimate is too high.

If the member banks, because of the operation of the plan or for other reasons, face an impaired reserve, the New York bank will impose a penalty which has been fixed at a rate of interest two per cent. above the present ninety-day discount rate of four per cent. In other words, the banks will be assessed six per cent. on the amount of their impairment but they will have the opportunity of saving two per cent. by rediscounting their paper with the federal bank at four per cent. They also can make good the impairment by putting up their own funds.

1 Except members of clearing houses in Federal Reserve cities.

ASSESSMENT OF .00075 PER CENT. OF CAPITAL STOCK PURSUANT TO PARAGRAPH THREE OF SECTION TEN OF

THE ACT

June 24, 1916, pursuant to the third paragraph of section 10 of the Federal Reserve Act the Federal Reserve Board levied an assessment of .00075 per cent. of the capital stock of the twelve federal reserve banks for expenses of the board during the next six months. The following resolution was adopted:

Whereas, Under section 10 of the act approved December 23, 1913, and known as the Federal Reserve Act, the Federal Reserve Board is empowered to levy semi-annually upon the federal reserve banks, in proportion to their capital stock and surplus, an assessment sufficient to pay its estimated expenses, including the salaries of its members, assistants, attorneys, experts and employees for the half year succeeding the levying of such assessment, together with any deficit carried forward from the preceding half year; and

Whereas, It appears from estimates submitted and considered that it is necessary that a fund equal to seventy-five thousandths of one per cent. (.00075) of the capital stock of the federal reserve banks be created for the purposes hereinbefore described, exclusive of the cost of engraving and printing federal reserve notes;

Now, therefore, be it resolved, That pursuant to the authority vested in it by law, the Federal Reserve Board hereby levies an assessment upon the several federal reserve banks of an amount equal to seventyfive thousandths of one per cent. (.00075) of the total capital stock of such banks, and the fiscal agent of the board is hereby authorized to collect from said banks such assessment and execute, in the name of this board, a receipt for payment made. Such assessment will be collected in two installments of one-half each; the first installment to be paid on July 1, 1916, and the second half on September 1, 1916.

A NEW STATUTE AS TO DEPOSITS OF GOLD BULLION June 12, 1916, a statute was enacted permitting the Secretary of the Treasury, in his discretion, to receive deposits of gold bullion and to hold gold bullion and foreign coin up to two-thirds of the total amount of gold certificates outstanding. The statute is as follows:

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section six of an

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