frsbog_mim_v31_0203.pdf
TRANSCRIPT
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ivUo
FEDER L RESERVE BO RD
WASHINGTON
ADDRESS OFFICIAL CORRESPONDENCE T O
T H E FEDERAL RESERVE B OARD ^ 6 4 1 3
November 7, 1929.
SUBJECT: Canadian Currency.
Dear
S i r :
After reviewing replies received from the Fed-
era l reserve banks
to the
Board's letter X-6370
of
September
4, the
Board
has
approved
the
report
of the
Committee on Canadian currency with some modification
in the
press statement.
The
Board will issue
the
statement
to %he
press
a t 2 o'clock on Friday, November 22, and i t i s suggested
that
a
corresponding statement
be
given
to the
press
a t
your head office and if you think i t advisable a t each
of
your branches,
if any.
I t
should
be
understood
i n
this connection that
th e Canadian currency r e ceived from member banks may be
shipped to the Detroit branch of the Federal Heserve
Bank
of
Chicago
f o r
conversion into United States
cu r -
rency or i t may be disposed of locally in any manner
which
the
Federal reserve bank
may
deem advisable.
A
copy
of the
statement
to be
given
to the
press by the Federal Reserve Board together with a
draf t
of a
l e t t e r
to be
sent
by
each Federal reserve
bank
to
member banks
i n i t s
d i s t r i c t
i s
enclosed here-
with. If you feel that the l e t t e r to member banks i n
your district should
be
amplified somewhat
th e
Board
has no
objection
to
your adding
to i t bu t
would
sug-
gest that no changes be made in the statement to be
given
to the
press.
Very truly yours,
E. M.
McClelland,
Enclosures Ass is tan t Secretary*
TO
GOVERNORS
OF ALL F , R .
BANES.
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&-6413-A
September-*,
1929.
p
rW
REPORT
o r
W v i i m i l
ON
BZBEMFHOH OF ASi-DIAU CUKR3NCY
Jfo the Federal Reserve Board,
Washington, D. C.
Dear Sirs:
The Committee appointed to determine th e most efficient
and economical means of effect ing th e redemption of Canadian c u r -
rency begs, to transmit herewith i t s recommendations;
( a ) That a l l Federal Reserve Banks offer their
f a c i l i t i e s to member hanks fo r t h e collection
and conversion of Canadian currency into United
States currency a t t h e current rates of exchange,
(b ) That t h e Federal Reserve Banks absorb th e cost of
shipping Canadian currency from th e member banks
to their respective Federal Reserve Banks but
that they deduct am allowance to cover shipping
charges, if any, from th e Federal Reserve Banks
to the points of conversion into United States
currency,
( c ) That a l l Federal Reserve Banks send a circular*
similar to the attached draft, to their member
hanks stating th e terms upon which Canadian c u r -
rency will be received,
(d ) That t h e Inderal Reserve Board and each Federal Re-
serve Bank and Branch simultaneously give to the
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X- 6413-ii
S O
- 2 - I
f
press copies Of the attached circular announcing
terms under which the Federal Reserve Banks and
Branches will receive Canadian currency.
With respect to the procedure under which Federal *56serve
Banks and their Branches will handle the collection and conversion
of Canadian smi rflrrey, th e Committee suggests that th e Federal Re-
serve Banks
and
Branches ship Canadian currency direct
to the
Detroit Branch
of the
Federal Reserve Bank
of
Chicago
f o r
conversion
and
credi t ,
or
make such other disposition thereof
a s
conditions
i n
their distr icts warrant. The Committee believes that i t i s impor-
tant that each Federal Reserve Bank employ
th e
most economical means
of
conversion.
The
Committee also suggests that Federal Reserve
Banks permit member banks to include Canadian currency i n their ship-
ments of United States currency provided both kinds of currency a re
properly segregated within the package.
The Committee believes that the Fedaral Reserve Banks should
not at %his
t ime offer their faci l i t ies
to
member banks
fo r t h e c o l -
lec t ion and conversion of Canadian coin.
Your Committee h as considered th e des i rabi l i ty of a pos-
sible arrangement with
the
Canadian Government
or the
Canadian banks
which would provide
fo r t h e
exchange
of
United States
and
Canadian
currencies a t p a r | While in theory much may be said i n favor of
such
a
plan,
i t
appears
to be
inadvisable
to
endeavor
to
exchange
»
•
Canadian and United States currencies a t p a r without making similar
arrangements
to
maintain exchange
a t
parity between
the two
countries,
a subject which your Committee does no t have under consideration#
*
Respectfu lly submitted:
E . L.* Saead
(S ) W e i . R. Cation
J . B . Crane
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X-6413-b
November
22, 1929
SUBJECT: Canadian Currency.
To
Member Bank Addressed:
Enclosed herewith i s a statement which the
Federal Reserve Board
and the
Federal reserve banks
and branches have given to the press, relating to the
conversion into
U. S.
funds
of
Canadian paper currency
spent
i n
this country.
I n
accordance with this statement,
you may
include Ca.nad:La~i paper currency
i n
your shipments
of
United States currency provided the two kinds of currency
a r e
properly segregated withif.
the
package.
Credit f o r such currency will be given f o r
i t s
face value
and
when
the
cost
of
conversion into
United States funds
i s
determined, which should
generally average loss than one per cent, such cost
wil l
be
charged
t o
your reserve account.
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COPY
X 6 4 1 3 C
F E D E R A L S I S E B T E B O A R D
STATEMENT FOE THE PRESS
For
release
Friday, November 22, 1929%
SUBJECT: Canadian Currency.
The
Federal Reserve Board, announces that
a
plan
h as
been
worked out and. wi l l be p ut in operation f o r handling Canadian currency
deposited, with Federa l reserve banks, a t a miriiwnp of the actual c o l -
lection charges incurred by them.
The discount on Canadian currency brought int o the United
States by travelers has frequently ranged a s high as 10 and sometimes
even
a s
high
as 20 per
cent,
a t
places remote from
th e
border line.
This i s regarded a s excessive and has given rise to a feeling o f re -
sentment i n Canada, especially as United States currency i s generally
accepted a t pa r i n Canada, *
The
Federal Reserve Board
h as
taken
the
subject
up
with
the
Federal reserve banks and they have agreed to of fe r the i r fac i l i t ie s
to member banks f o r t he collection and conversion of Canadian paper
currency into United States currency a t t he current rates of exchange.
The
Federal reserve banks wi ll absorb
the
cost
of
shipping Canadian
paper currency from the member banks to their respective Federal r e -
serve banks
b u t
will deduct
an
allowance
to
cover
the
actual exchange
charges, and insurance and shipping charges, if any, from the Federal
reserve banks to the points of conversion into United States currency.
Daring
the
past three years
the
cost
of
conversion
of
Canadian currency
into United States funds, including both
the
exchange
and the
shipping
charges, h a s averaged less than 1 pe r cent.
The new method which is to be pu t into effect by Federal reserve
banks
f o r
handling Canadian currency
in the
future, will, however,
r e -
sul t
i n
such substantial reductions
in the
cost
of
collecting this
currency as to bring i t close to p a r . The Board feels that i f member
banks cooperate i n this mattfr by extending a similar service to their
customers, Canadian tourists traveling i n th is country wi l l fi nd Ameri-
can merchants willing to accept Canadian currency a t o r near p a r .