Mr. BROOKS. While it may be recouped at a later date, for the current time it is missing and is adjudged lost since we don't have it, until it is recovered.

Mr. DAY. I think that any self-insurance plan, Mr. Chairman, must be considered as being a type of insurance and that it is a deliberate decision made as no doubt by the Federal Government as to fire insurance on its buildings, but the fact that there is no insurance with a private carrier does not mean that it's a complete loss without any insurance because what will be involved here if this money is not recovered is a reduction in the profits of the Federal Reserve selfinsurance plan rather than just an out-of-pocket loss of their general funds.

Mr. BROOKS. The Government would still lose that million and a half, or any loss that is finally gone in the Federal Reserve System. They have just got to stand a loss in their own insurance program, when they allocate it on a certain percentage of insurance to each of the Federal Reserve banks. There is no way to avoid the actual loss. It's a charge against their insurance program, is it not?

Mr. DAY. That is correct; it is. The fact that their profit on their self-insurance fund is reduced results in them having less profit to turn in to the Federal Treasury, but if they have been carrying insurance with commercial firms over a period of years and I'm not giving a commercial for private insurance firms, but if they had been I don't think that we would consider that those premiums over a period of years were a loss to the Government. This is a way of handling it, and when there is a loss in a self-insured plan that is the substitute for the premiums that would otherwise have been paid out.

As I mentioned, I think as far as net loss to the Government, we must consider the fact that the Post Office Department may be saving the Federal Reserve System tens of millions of dollars each year by the availability of our service instead of the much more expensive program they would have if they had to provide a transportation system of their own.

Mr. BROOKS. I didn't mean to imply that the Federal Government should go out and buy insurance for money shipments. But I did want to make it clear that we did lose that money and the cost of that self-insurance. Certainly the Federal Government has no need to insure its own money.

Would you, General, give us some idea as to the extent of currency shipments that are handled by the Post Office Department-totals; realizing that the Federal Reserve System is the major shipper?

Mr. DAY. Well, this is one of the items, Mr. Chairman, that frankly I am very reluctant to advertise, because I think that the fact that people were surprised we were carrying a shipment of this kind is a very good thing.

Mr. BROOKS. You don't think that they will be surprised much longer after the Boston papers and the A.P. and U.P. and the television services and the primer that these people wrote has been pretty well disseminated throughout the country, do you, General?

POST OFFICE CARRIES BILLIONS IN CURRENCY

Mr. DAY. Well, the extent to which this is a general practice I don't think has been widely disseminated, but the Post Office Department does carry billions of dollars in currency every year.

Mr. BROOKS. Would you agree with me that a major part of this is handled-let's say two-thirds of it is probably handled in maximum security matters with your railroad car operations?

Mr. DAY. Well, nearly all of it is handled with one of the three preferred methods of transportation, either a railway mail car, a highway post office, or mixture with other mail in a star route contract vehicle. Mr. BROOKS. Well, it's pretty much of a public record that the Federal Reserve for the year ending November 30, 1959, for example, had shipments totaling $17 billion. About one-third of that was new money with the serial numbers all known, not the kind a robber particularly would want to be caught with, and another third is shipped under the same maximum security manner and the remaining third is probably handled from commercial banks to the Federal Reserve system. Part of this latter portion of the money is for destruction, it being worn out and sent in to the Federal Reserve banks for destruction.

I will now place in the record a schedule prepared by the Insurance Committee of the Federal Reserve banks which indicates Federal Reserve shipments of currency and coin for the fiscal years 1957, 1958, and 1959.

(The document referred to, exhibit 4, follows:)

Computation of percentage ratios for sharing distributable losses during 1960 under loss sharing agreement

[Dollar amounts in thousands]