FEDERAL RESERVE BOARD

WASHINGTON

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

September 17, 1924 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

Dear S i r :

The Board's Committee on Sa la r ies , Expenditures and Ef f ic iency has recent ly corresponded with the Federal Reserve Agents concerning the a l locat ion of expenses t o the "Administra-t ion" and "Federal Reserve Note Issues" u n i t s of the Federal Reserve Agents Function. From t h i s correspondence i t appears tha t a majori ty of the banks in a l loca t ing expenses have considered the "Administration" unit as intended to cover general adminis-t r a t i v e expenses connected with work under the supervision of the Federal Reserve Agent and, in some cases at l e a s t , have included expenses in t h i s un i t which c l ea r l y r e l a t e t o other funct ions , such as Bank Examinations and S t a t i s t i c a l & Analyt ical . I t a l so appears that the expenses charged to Federal Reserve Note Issues un i t include in rnary cases the cost of a number of operations which are in no respect re la ted to the note issue work.

I t has been decided t o el iminate in f u t u r e re -por t s the Administration un i t of the Federal Reserve Agent's Function on page 2b of Form "E", as i t appears from the i n fo r -mation furnished , to the Committee tha t the adminis t ra t ive ex-pense r e l a t i n g to the note issue work is, in most cases, scarcely s u f f i c i e n t in amount t o be measured.

The expenses here tofore charged to the Adminis-t r a t i o n uni t of the Federal Reserve Agent's Junction should accordingly, beginning with July 1, 1924, be charged t o other u n i t s as nearly as may be in accordance with the service ren-dered. Some of the du t ies , the cost of which has here tofore been charged in ce r t a in cases t o e i t h e r the Ncte Issues un i t or t o the Administration un i t , are s tated below together with the uni t to which the expense is properly chargeable.

Handling appl icat ions of NaticnAlBanks for fidu-ciary powers.

Handling appl ica t ions under Clayton Act. " " for acceptance powers.

Analyzing repor ts of condition - National and Sta te Banks.

F i l ing earning and dividend repor t s . Applications fo r membership. Applications to e s t ab l i sh branches, e t c .

The above should oe charged t o Bank Examinations Function.

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Capital stock applications - Issue and surrender. Maintaining capi ta l stock reg i s t e r , issuing c e r t i f i -

cates , e tc . The above should be charged to General Books un i t , Accounting

Func t i on.

Handling weekly condition reports of selected member banks.

Weekly report of bank deb i t s . Tabulation of Clearing House statements* Compilation of annual r epor t .

The above should be charged t o S t a t i s t i c a l u n i t , S t a t i s t i c a l & Analytical Function.

Election of d i r ec to r s . Cost of p r in t ing annual repor t .

The above should be charged t o the General Overhead Control-lable Rinct ion. '

Charges to be made to the Federal Reserve Note Issues un i t should represent only such expenses as are incident to the issue of Federal Reserve Notes in accordance with the mamal.

In any case where an Assistant Federal Reserve Agent or another person on the s t a f f of the Federal Reserve Agent per-forms dut ies wnich are of benef i t t o another funct ion of the bank and which are not spec i f i ca l ly provided for in' any function under the control of the Agent, a portion of the salaty bf such person should be allocated t o the un i t benefited by the service rendered; and i t i s suggested in any such case that the question of a l loca-t ion of salary be taken up by the Agent and the Governor with a view td making a f a i r d i s t r i bu t i on of the expense.

I t i s oelieved that i f the above instruct ions are ca re fu l ly followed in the preparation of future expense repor t s Form "E", the reports submitted by the several banks w i l l be more comparable and that the actual cost of conducting the a c t i v i t i e s coming under the control of the Federal Reserve Agent w i l l be more accurately s ta ted. Will you, therefore , be governed by the above in the preparation of future reports .

Very t r u ly yours,

Geo. R. James, Chairman, C omrni tt.ee on Salar ie s, Expenditures and Eff ic iency.

LETTER TO EACH FEDERAL RESERVE AGENT

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