Q. 26. What advantages does the Federal Reserve bank-offer in transferring funds?

A. The Federal Reserve bank makes telegraphic transfers of funds at par to any part of the United States for its members without any charge whatever. For example, upon request from a member bank in Utica the Federal Reserve Bank of New York would wire the Federal Reserve Bank of Dallas to pay or credit to any of its members a specified sum, no charge being made for this service. Such transfers may be ordered by telegraph, charges collect.

A member bank may also draw special drafts on its Federal Reserve bank for amounts not exceeding $5,000 which are receivable for immediate availability at any other Federal Reserve bank. It may also make special drafts on its Federal Reserve bank which are payable at any specified Federal Reserve bank, no limit being placed on such drafts. In either case the member bank must advise the special draft to its Federal Reserve bank, which, upon receipt of the advice, charges the amount to the account of the member bank. The member bank is thus placed in position to obtain without cost, and furnish to its customers, exchange on any of the twelve Federal Reserve cities at any time or season.

These facilities are made possible by the gold settlement fund which the twelve Federal Reserve banks maintain at Washington and through which they settle daily their obligations to one another by transfers on the books of the fund instead of by actual shipments of currency or coin. The gold held in this fund amounted in June, 1919, to almost $600,000,000.