Gold Fund for Cashing Traveler's Credits: Minutes of Meeting

Gold Fund for Cashing Traveler's Credits: Minutes of Meeting

Strong, Benjamin, 1872-1928

WWP18446

1914 August 5

This report of a meeting for the Gold Fund describes the discussion members had regarding issuing traveller’s cheques versus letters of credit and the various details needing attention for traveller’s cheques.

Benjamin Strong Jr. Papers, New York Federal Reserve Bank

English

MINUTES of a meeting held Wednesday, August 5, 1914, of a Special Committee appointed to outline instructions in connection with the application of the Gold Fund in cashing Travellers’ Credits. PRESENT: Mr. Benjamin Strong Jr. Chairman. Messrs. Benedict, Brown and Taylor. The Chairman stated that he had added to the membership of the whole Committee, Mr. Charles D. Norton, Mr. John E. Gardin, of the National City Bank, Mr. C. R. Agnew of the Farmers Loan & Trust Company and Mr. James S. Alexander, representing the National Bank of Commerce, making a committee consisting of ten members, with a representative from each of the ten institutions, thereafter to be known as the “Original Contributors”. The Chairmanl’s action was approved. An informal discussion was had of the questions to be settled in connection with the cashing of Travellers’ Cheques as distinguished from Letters of Credit, and the ways and means of the Gold Fund being reimbursed for the payment made from it in cashing Travellers’ Cheques. The rates of exchange to be fixed were discussed. A preliminary memorandum was drafted and distributed for consideration, thereupon the meeting adjourned until 2:30 P. M. At 2:30 P. M. the meeting reconvened with all members of the Special Committee in attendance. There was submitted a memorandum with reference to Travellers’ Cheques and the Special Committee recommended that both drafts drawn upon letters of Credit and Travellers’ Cheques should be cashed at the fixed rate of $4.90 per pound sterling (the rate already fixed on Travellers’ Cheques) in order that both Cheques and letters of Credit be put upon parity. The Special Committee agreed to recommend that the expenses incurred in the administration of the Gold Fund should be covered as follows:
FIRST: Upon the drafts drawn against the Letters of Credit by the holders thereof, the drawers of such drafts should be asked on receipt of accommodation, to agree by notation upon the drafts to pay the expenses incurred by the Fund in cashing such drafts, in the proportion in which the amount paid on such drafts should bear to the total amount of payments from the fund against tTravellers' Credits; but irrespective of whether or not the holders of such letters of Credit should so agree, the institutions, (contributors to the fund), should pay the expense incurred by the fund in cashing such drarfts in like proportions, and institutions not contributors to the fund should be invited to pay the expenses incurred in cashing their drafts in like proportions.
SECOND: Institutions issuing Travellers' Cheques who are at the same time contributors to the fund, shall reimburse the fund for the expense incurred in connection with cashing their Travellers' Cheques by payments mfrom the fund. Issuers of Travellers' Cheques (not contributors) will be invited to reimburse in same way such epxpense as to their cheques.
THIRD: In so far as the fund shall not be so reimbursed as provided in “First” and “Second”, the contributors shall be charged with the deficit so resulting pro rata to their respective contributions. Report was submitted to the Committee of the progress made in obtaining insurance and the Special Committee recommended that no shipment should be made of any part of the fund by the United States Steamship “Tennessee” unless the entire value of the shipment was covered by all marine risks, exclusive of war risks. The meeting of the Special Committee was thereupon adjourned.

Miscellaneous