FEDERAL RESERVE BOARD WASHINGTON. Redenption of Ourrency Fit for Circula.tion. is very ma.t.erially reduced there is danger that the existing

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1 Digitized for FRASER Federal Reserve Bank of St. Louis FEDERAL RESERVE BOARD WASHINGTON X3481. July 22, SUBJECT: Redenption of Ourrency Fit for Circula.tion. I Dear Sir: I enclose herewith ca,py of a letter from the Secretary of the Treasur.y, to which your attention is invited. I enclose also tables l;lhowing the results of test examinations of each kind of paper currency presented for redemption during the month of June, 1922, by your bank and its branches. In discuss~ this matter with Treasury officials, I am convinced that unl.ess the percentage of fit notes sent in for redeq>tton is very ma.t.erially reduced there is danger that the existing methods ma.~. be cbanied. so as to transfer to the Tre,asury all the. details of redenption. and distribution now handled. by the Staffs of the banks and the Board. Very tru.ly yours, (linclosures) G o v e r Jl o r.. GOvmNOBS OF.ALL F. B. BANKS COPIES TO AGENTS.

2 . COPY TREASURY DEPARTMENT WASHINGTON. July 18, X343la., J My dear Governor: I have just bad brought to my attention by the Currency Committee the Treasurer's report for June of test examinations of paper currency received during that month from.federal Reserve Banks for redemption. I am transmitting copies herewith. If these tests reflect the actual situation, I confess to great astonishment and I think the matter is one to receive the serious consideration of the Board and the several Federal Reserve Banks. You will note very satisfactory assortment is being zzade by all the banks with respect to Federal reserve b&'"lk notes and National bank notes. With respect to United States currency, the only creditable showing appears to have been made by the Federal Reserve Banks of Ric~ mond and Minneapolis; all other banks show an an:ount of notes fit for further circulation having been cancelled far in excess of any reasonable standards. The Treasury is directly and particularly concerned in the situation, and must insist that United States currency be more. carefully assorted before it is cancelled and forwarded.to the Treasurer.for redemption. It would seem entirely feasible to assort United States currency notas to the same standard as apparently is applied to Fe~eral reserve and National bank notes. As regards the assortment of Federal reserve notes, the percentage of fit forwarded by each of the banks is so excessive that I am sure there must b e some axceptional circumstances to account for the matter. The most cursory examination of the Treasurer's reports indicates the situation, for it appears that approximately seventyfive per cent of Federal reserve notes fit for further circulation are being forwarded for rede!iption. Very truly yours, (Signed) A. w. Mellon, Secretary. Ron. W. P. G. Harding, Governor, Federal Reserve Board. Digitized for FRASER Federal Reserve Bank of St. Louis \

3 Jacksonville c.o. C'l c.> BESULTS OF TEST EXAMINATION OF EACH KIND OF PAPEl~ 8U.;:L EtJCi FOHWARDED :BY F.E:DETI.AL R..;:8:mVE.BJ',. _. ' FOR REDEMPTION DURING 'rfie MONTH OF JUNE, X:)'~c~.L b u. s... CUF.Bm1CY. Number of Notes examined Number offit Notes Percen_1! ID. Notes l's 2 1 s 5's lo s 20 1s Total l's 2's 5.s lo s 20 s Total l's 21 s 5'S lo's 20's Total Boston 38, , ,300 13,843 2,249 ~, , New Yo:t'k 119,000 7,i00 10,200 1, '29,276 2, ' Buffalo 5,300 4oo 4oo 6,1oo I Phi1ade'lpb.ia 38,100 2,600 3,300 44,000 14, ,204 17, Cleveland 16,800 l,loo 1,6oQ 19,500 6, , Cincinnati , l6,200.1, , Pittsburgh 15,500 1,000_ 1,')00.}00 18,100 '; 4,o ,S I Richmond 2, ,4o Baltimore 12, , ,200 3, ,370 3~ Atlanta 13,500 '4oo ,800 2, , :. 19 Nashville 3, o4 14 Birmingham 4,100 4, New Orleans 10,000 4oo ll,lwo 3.~ , ,000 ' ,6oo 4o4 28~ S Chicago 56, ,700 14,214 1,434' 2,170 17, Detroit 10, oO 12~ , St. Louis 18,200 1,400 1, ,400 8, , , o 50 Memphis 1, , Louisville 5t100 3o ,000 1, , Little Rock 2, , Minneapolis 4, oo 100 4,800 ~~ Sl: Helena '":" 6oo Kansas City 7, ,300 2, , Denver 1.., ,300 l.l o Omaha , Oklahoma. Cy. 1, , Pallas 16, ,000 3, , ' El Paso 600 6oo San Francisco 1, ,100 1, , Los Angeles 2, ,100 1, , Seattle 1, , Spokane 1,000 J.OO 1, Portland , Salt Lake Cy. 1, , g 29 Digitized for FRASER Federal Reserve r Bank of St. Louis

4 igitized for FRASER ttp://fraser.stlouisfed.org/ ederal Reserve Bank of St. Louis f. ll Ci Cl 2 FEDERAL RESERVE BANK NOTES NUmber! Notes examined Number 2f Fit F2..~~ Percent of it Notes l 1 s 2's 5's 10 1s 20's Total l's 2 1s 5'8"' 10 1 s 20's Total l's 2's 5's 101 s 20's Total Boston 14,700 19, ,6oo 496 1, ,~ ~6. Ne:: York 23,300 20,000 10,900 54,200 1,061 3,266 1,155 ~ Bu;f.fa.lo 6,000 8,000 14, Philadelphia 18,900 12,6oo 31,500 2,268 l,04o 3, ClJvelru:ld 33,500 14,700 2.,4oo 5Q,6oo ,66o Ci;,cinna.ti 12,000 3,000 3,000 18, l Pi,.ts1)1.;.rgh 6,000 9,800 7,100 22,900 ql 228 3,877 4, Ri,~hrnvnd. 12,500 1,500 14,000 ' Ba1. ti..r.1ore ~,700 10,4oo 24,100 7c# 767 1t Atlanta,300 2,050 4, , " Na.3h>Tille 12, , :.4 o., 1.4.,_:Si ~mir..gh.am 16,000 1, , o New Cr:eans 18, ,501 1, , Je::k.i: onvi11e 15,000 2,000 1, , Cl '~c:::.z:g 19,900 14,000 2,000 35, , De~rcl~ 15,900 6,000 1~100 23, St... J,cuis 20,100 3,000 2, ,700 1, ,52a Me:;::[:' his 7;900 1, Lc aisville 16,coo 1,000 4oo ,500 1, , s.o Little Rock 13, , , , 6oo o l.j.o 0.0 o.4 Mi:meapolis 18, ,6oo , Hel.ena. Kansas City 26,aoo 7,500 1, ,055 1, , De:;:1ver 11,~00 1,300 7,900 20,600 1, ~ s.~ Orr,:ilia 9,900 2,000 6, ,~ o.. o 2. Oklahoma City 12,000 1,000 3,4oo. 16, Dallas 22,500 2,500 2, ,200 1, , Houston 4,400 1,000 5,4oo o.s 0.8 E1 Paso San Francisco 29,700 16,900 1,900 48,500 5,682 2, , Los Angeles 12,600 6,100 lc~300 ao,ooo 1,451& , Seattle Spokane 3,800,... 3,.800 1, , Portland 11,200 1,4oo 12,6Qo 2, , Salt Lak~ City 6,800 1,6oo 4oo 300 9,

5 igitized for FRASER ttp://fraser.stlouisfed.org/ ederal Reserve Bank of St. Louis 00 4 Cl C). 3. _ FE.DERAL RESERVE KOTES (Half ~1otes) ~~ber of Notes examined f~rnber of Fit Notes Percent of :Fi::. ::::;_~ ~ s lo's 20's 50 1 s 100 1s total 5's lo's~ 20's 50's s total 5's 10 s 20's 50's s total Boston 15,800 19,000 18,900 53, ,306 13, New York 19,600 20,000 19,900 59,500 15,447 14,342 15,046 44, Buffalo 15,900 16,000 15,4ob.. 47, ,718 11,980 12,798 36, Philadelphia20, ,000 16,525 56,625 l5tl63 16, , Cleveland 10,900 7,500 6ooo 25,300 9,014 5,533 4,432 18, JJ Cincinnati 16, , OOQ 12,000 44,000 l1,6sl 11;538 3,156 31, Pittsburgh 6, ,100 16,000 4o, ,536 11,174 26, Ricbmond Baltimore Atlanta 4,000 3,000 1,000 s,ooo 2, ~10 5,o S Nashville : Birmingham. New Orleans 15,000 14,600 6,600 36,600 12,268 12,675 5,715 30, s~ Jacksonville Chicago 21,600 24,000 2~;100 67,900 14,639 17,253 1S,033 49, Detroit. 16,000 15,900 16,000 ~ 37,900 10,529 9,216 10,501 30, St. Louis 15,900 12,000 12, ,941 9,297 10,528 31,7, Memphis 4,000 4,000 2,300 10,300 3,033 3,407 1,291 7, Louisville 8,000 5,600 5,600 19,200 5:429 4,52S. 4,729 14, so.s Little Rock Minneapolis 8,000 7,600 1,100 l6,ioo 4,326 5.~78..::.~ 10, g Helena 4,000 2,000 2,000 8,000 1,091 1, , Kansas City 15,000 16,000 16,000 47, ,375 11,295 30,S Denver 4,100 2,000 1,600 7,700 l~i16 1,011 1,336 4, Omaha 7,900 7, ,400 2,071+ 3,916 2,719 8,7C ? Oklahoma Cy. ~ Dallas 8,000 2,500 1,900 12,400 4,629 1,473 1,229 7, S !B.. l Houston El Paso San Francisco20,000 20,000 19~700 59,700 16, ,T.J.7 49, ).4 Los.Ang~les 12,000 11,800 11,900 35,700 8,349 8,821 10,415 27, Seattle 16,000 12,000 13,000 41,000 11,399 9,494 11,032 31,9~ a.s 77.6 Spokane 4,000 1,900 1,500 7,400 2,694 1,561 1,302 5, s6.s 750 Portland 8,000 10,000 10,500 26,500 6,130 S,ll2 8,895 23, Sl.l Sl.l Salt La.keCy. )

6 Digitized for FRASER Federal Reserve Bank of St. Louis.. ~ '". ~. ~ CJ'j (~ c~ 1.;. NATIONAL BANK NOl'ES X lb No. of Notes Examined...,... No. of Fit Notes b CtDt ot Fit Notes loo's Total. ~ 5' s lo' s 20's so s 5ta lots 20*s so~s loo s Total 5'a lots ao a SOi 100 t s Total "Boston 11'~000 13,400 4,JOO , ,771. ~.,.. a.. U..... t.:tl~ J.i..;Q." 5' 3 New Yo~k 22,700 23,40017,000 2,200 2)250 6l.550 2,997. l ~, lj.2 5 '2 2, Buffalo 4,000 3,800 3, l()' Philadelphia. 16,250 18, ,290 1, ," ;g 1' S.l Cleveland 26 J ,900 21,100 6o ,197 0 J,Sl3 3 a Cincinnati 16,000 17,000 },000 36,000 1,028:< , Pittsburgn 20,000 12, }2,100 2, , Richmond ~, , '5 o.o o.o 3 2 Ba1 tim:>re, , , ~ Atlanta 20,500 10,Goo 1, l,02;t , S g.o 5 3 Nashville 6,000 4,000 1,600 : 11,6oo 8$ ~ Birmingham 14)800 10,500 },4o ,735 1,541 6o , J.O New Orleans ,200 3 ~ ,077 ].6 8' ' Jacksonville 1i,Goo 13, ,145 1,458 1, '1 2,924 12' 5 f,~.l Chicago 21,900 21,6oo 9, ~ ,6o4 4.o q.. g 6.7 o g Detroit f,ooo 7,000 4, , $ st.. LOuis 20,500 17,600 4,400 21() 70 42,780 1,308 3, M3mphis Louisville 17,500 14,000 4,900 l6o.32 36,592 2,713 4, , u o.. o 21' 3 Little Rock 7,6oo , o.o l Minneapolis 2, goo 9, :i Helena : ~ ~_.;~: Kansas City ~~:~~ ~~~j:f:~.~a~~~ :~ttci:: 2i} , , ~0 5' J.6 Denver , ,288 2: ~ 5,100 9,6oo 4, : 20 ~#776 ~... 3 '670.h...; o.o 6' o.o.o.o J 7 Oklahoma. City ,800 3 ; , : Dallas. 12, :e 4, o 29,91W 1~171:. 1,~1 634 ;13 0 3,319 9' Houston 9,200 2, ,700 ~ ~ } n Paso 6,300 3,400 6oo lo,}lio /. l 0 0 1, ' '.4 San Francisco 28, , ,366 10,018 3 t , ~ Los Angeles 11,900 7,000 8,200 4oO ,SOO ,077 ~ 6S 90 6,332 25' g.l Seattle ,.900 1, ' 10, g 1 1, Spokane Goo J,6oo 7 IK> o.s Portla:nd 7,500 u.soo 1, ;700 '2,530 1,956 6so 5, l.jo.o. 24:.9 Salt Lake ey. 10,000 8,100 1,20Q , ~ l7 6.. () 4:.. 3 o.o o.o 4.2