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THIRD ANNUAL REPORT
OF THE

FEDERAL RESERVE
BOARD

COVERING

OPERATIONS

FOR THE YEAR 1916

WASHINGTON
GOVERNMENT PRINTING OFFICE
1917

TABLE OF CONTENTS.
Part I.—Report of the Federal Reserve Board
Text of report:
Letter of transmittal
Inflow of gold and attendant problems
Development of discount rates.
Federal Reserve note issues
Conversion of bonds and retirement of national-bank notes
Clearance and collection system.
Earnings and expenses of Federal Reserve Banks
Branches and agencies of Federal Reserve Banks
Operations abroad
Enforcement of the Clayton Act
Entry of new members into system
Fiduciary powers
Changes in Federal Reserve districts
More effective control of gold supply, and proposed amendments
Other proposed amendments to Federal Reserve Act
Staff and organization of the Federal Reserve Board

1
..

1
1
5
7
7
9
12
14
16
17
19
21
21
22
27
29

EXHIBITS.

Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit

A.—Discount rates.
35-39
B.—Federal Reserve notes
40-55
C.—Statement of condition of Federal Reserve Banks
56-83
D.—Investment operations of Federal Reserve Banks
84-105
E.—Gold settlement fund and Federal Reserve agents' fund
106-112
F.—Receipts and disbursements of the Federal Reserve Board. 113-115
G.—Earnings and expenses of Federal Reserve Banks
116-121
II.—Changes in Federal Reserve districts....
122-133
I.—Amendments to the Federal Reserve Act
134-145
J.—Members of the Federal Reserve system
146
K.—Foreign branches authorized
147
L.—Circulars and regulations issued by the Federal Reserve
Board
148-171
Exhibit M.—List of national banks granted fiduciary powers
172-181
Exhibit N.—Personnel and salaries:
(1) Salaries paid by Federal Reserve Banks
182-184
(2) Salaries of officers and employees of Federal Reserve
Board
184,185
(3) Salaries paid national-bank examiners
185-187
Exhibit O.—Directory of Federal Reserve Board, Federal Reserve Banks,
and Advisory Council
188-191
CHARTS.

Federal Reserve notes issued to banks by agents
44, 45
Assets and liabilities of Federal Reserve Banks
58
Cash reserves of Federal Reserve Banks and cash holdings of Federal
Reserve Banks and Agents
59
Earning assets, by classes, for each Federal Reserve Bank
62
Deposits and cash reserves held by commercial banks in the United States.. 192
in

TABLE OF CONTENTS.

Part II.—Reports of Federal Reserve Agents to Federal Reserve Board:
District No. 1.—-Boston
District No. 2.—New York
District No. 3.—Philadelphia.
District No. 4.—Cleveland
District No. 5.—Richmond
District No. 6.—Atlanta
District No. 7.—Chicago
District No. 8.—St. Louis
. District No. 9.—Minneapolis
District No. 10.—Kansas City
District No. 11.—Dallas
District No. 12.—San Francisco

page.
195-220
221-252
253-276
277-294
295-314
315-330
331-338
339-365
366-390
391-414
415-444
445-475

PART I.
REPORT OF THE FEDERAL RESERVE BOARD,
WITH EXHIBITS.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
FEDERAL RESERVE BOARD,

Washington, February Sy 191?\
The SPEAKER OF THE HOUSE OF REPRESENTATIVES :

The Federal Reserve Board presents herewith its annual report
for the calendar year 1916.
This report, the third submitted, is made just after the close of a
year of unexampled commercial, industrial, and financial activity in
the United States. In practically all important industries labor and
capital have throughout the year found full and remunerative employment. During the calendar year 1916 exports of merchandise
from the United States to other countries amounted to about $5,480900,000, while imports amounted to about $2,391,700,000, leaving a net
trade balance in favor of the United States of about $3,089,200,000.
Domestic trade, stimulated by unusual demands, has developed an
activity keeping pace with the nation's foreign business, and the
result of these conditions is reflected in the augmentation of bank
resources, as illustrated by the fact that the deposits of all banks
and trust companies in the United States showed an increase of
$4,344,000,000 during the year ended June 30, 1916.
INFLOW OF GOLD AND ATTENDANT PROBLEMS.

Since the beginning of the European war the problem involved in
the distribution of gold throughout the world, as far as the United
States is concerned, has been completely reversed. It will be remembered that at the outbreak of the war the Board was confronted
with a serious situation in connection with European credits, which
were maturing to the extent of about $450,000,000, for which settlement was demanded. The liquidation of this indebtedness at first
involved large shipments of gold, which were aided by a bankers'
gold fund of $100,000,000. But, owing to the growing volume of
our exports to Europe, balances shortly began to appear in favor
of this country. These balances have increased at an unprecedented rate. From the beginning of the war until the end of
December, 1916, there has been a net movement of gold into the
United States of approximately $870,000,000, and it is estimated that
during the same period about $2,250,000,000 of securities of American origin, including obligations of the National Government, of

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

States, of municipalities, and of corporations, have been transferred
from foreign to domestic ownership. ' During this period, it is estimated, about $2,000,000,000 of securities issued by foreign Governments and corporations have been absorbed and are now held by
American financial institutions and investors.
During the years 1915 and 1916 the growth in volume of banking
business of the United States was unprecedented, as shown by the
following table, which includes aggregate figures for the National
and all other banks: 1
[000's omitted.]

Deposits
Loans and d i s c o u n t s . . . . . . . .
Cash

June,
1914.

June,
1915.

June,
191G.

$21,359
15'339
1,639

$22,031
15 758
1,457

$26,376
17 849
l',486

While there has been a notable addition to the gold holdings of the
banks, there has been an even greater proportionate expansion of deposits and of loans. The investments of banks in stocks and bonds
have increased during the period from June 30,1914, to June 30,1916,
in the sum of $1,211,644,754. The purchase by American investors
of desirable foreign loans in large amounts, and the absorption
by them of a vast volume of American securities previously held
abroad, may be regarded as a healthy and normal operation, in
view of the circumstances that have existed since the war began, but
the Board has deemed it necessary, nevertheless, to emphasize the
importance of having the banks of the country keep themselves in
a liquid condition. Banks may, of course, perform an important
function as temporary holders of securities during the process of
their distribution to ultimate investors, but in times when there
are enormous international transactions such as we have witnessed
during the past two years, the velocity and volume of our foreign
trade, as far as it is based upon long-time credit, must be regulated
by the power of absorption of the American investor. Whenever the
absorbing power of the investment market shows signs of exhaustion
it would, in the opinion of the Board, be better that the volume of
our exports be reduced, or that trade balances in our favor be
settled by imports of gold, than that our banks, especially those of
moderate size, should unduly extend their investments in foreign
securities at a time when business prudence and conservatism suggest the necessity of their maintaining themselves in a particularly
strong position. The Board is not, however, unmindful that large
accretions of gold may induce a rapid and dangerous expansion of
our credit structure, and in outlining the policy of the Federal
Reserve Banks and in considering amendments that, in its opinion,
*A11 reporting banks exclusive of Federal Reserve Banks.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

should be made to the Federal Reserve Act, the Board has been impressed with its duty to keep in close touch with the situation and to
control as far as possible conditions resulting from either an excessive inflow or outgo of gold.
As illustrating our present situation, the Board would point out
that the capital and surplus of National' and all other banks in the
United States on June 30, 1916, aggregated approximately $4,044,000,000. These banks held on June 30, 1916, $6,057,000,000 of
long-time securities, principally bonds, exclusive of their holdings
of about $760,000,000 of United States Government bonds, most of
which are, or can be, used to secure circulation. In other words, the
securities held by banks in the United States, exclusive of United
States bonds, amount in the aggregate to 150 per cent of their combined capital and surplus. When compared with their condition
in June, 1914, before the outbreak of the European war, the aggregate capital and surplus of the banks have increased from $3,846,500,000 to $4,044,000,000, or 5.1 per cent; while their investments
in stocks and bonds other than United States bonds, including, of
course, domestic securities and obligations of neutral as well as
belligerent nations, have increased from $4,761,500,000 to $6,057,000,000, or 27.2 per cent. Stated more briefly, American banks' investments in securities other than United States bonds amounted in
June, 1914, to 124 per cent of their capital and surplus, and amount
at the present time to 150 per cent.1
Notwithstanding these heavy investments, money rates remained
easy during almost the entire year, and there did not develop
even the seasonal demand which on some occasions requires action
and which, during the year 1915, led the Board to establish what is
known as the commodity rate, designed particularly to aid growers
of farm products during the crop-moving season. To a great degree the ease of money and smoothness of operation of our financial
machinery have been due to the facilities afforded and to the confidence inspired by the Federal Eeserve System, as well as to the largely
increased stock of reserve money resulting from the importations of
gold. During the year there was a comparatively light demand on
the part of member banks for rediscount accommodations, the maxi1

T h e figures of t h e t e x t m a y be summarized as follows :

Capital and surplus of all banks
United States Government bonds, practically all with circulation privilege
Other securities (domestic and foreign) owned
Ratio of securities (other than United States bonds) owned to
paid-in capital and surplus (per cent)

* Decrease.

June, 1916.

June, 1914.

Increas<

$4,044,000,000

$3,846,500,000

Per cent.
5.1

760,000,000
6,057,000,000

823,000,000
4,761,500,000

*7.7
27.2

150

124

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

mum amount of rediscounted paper held by the Federal Eeserve
Banks being $38,345,000 on December 8; and the activities of the
Federal Eeserve Banks have been chiefly under the open-market
provision of the law in the purchase of acceptances, of Government
bonds, and of municipal warrants. Transactions of these kinds were
engaged in to such an extent that the total invested resources of all
Federal Eeserve Banks on December 30, 1916, amounted to
$221,895,000, as against $83,398,000 on December 30, 1915.
The Board notes with great satisfaction the progress made during the past year in developing a market for American bankers'
acceptances, which now enjoy the standing to which they are entitled in most of the world's financial centers. American banking facilities are now being used in Europe, South and Central
America, and in Asia. The number of banks, trust companies, and
private bankers engaging in this business has increased materially,
and the advantages of American bankers' acceptances, payable in
dollars, are now better understood both at home and abroad. A very
satisfactory beginning has thus been made, but it should be borne
in mind that it is only a beginning, though a promising one, and
that the scope of this new function of American banking must be
greatly extended before it will be commensurate with the country's
financial resources.
During its last session Congress enacted into law two amendments
suggested by the Board which are destined to assist in the growth
and development of the acceptance business. One of these permits
national banks to accept to the extent of 50 per cent of their capital
and surplus in certain domestic transactions, and the other allows
national banks to accept bankers' drafts originating in countries
where the 90-day bill is the customary means of remittance for foreign purchases. The member banks have already availed themselves
quite freely of these new powers granted by Congress. The domestic
acceptance doubtless will become an important factor in equalizing
rates and should prove of especial value during crop-moving periods,'
when the lowest rates for bankers' acceptances prevailing in any
of the districts will become available for acceptances drawn against
commodities in those districts where, owing to seasonal demands,
rates naturally would have a tendency to be higher. It has been
the desire of the Board, as shown by its regulations and by its
approval of low rates, to assist in the development of these various
branches of the acceptance business as far as possible. The Board
has, however, consistently pursued a policy of protecting the acceptance market and the Federal Eeserve Banks from the possibility
of an overgrowth of acceptances which, while technically within
the law, might, owing to their intrinsic character and to agreements
providing for a renewal of the credits over a considerable period,

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

tend to obscure evidence of the commercial basis of the underlying
transaction. The Board realizes, however, that if the banking business—and particularly international banking business—is to develop
freely it should not be unduly hampered by inflexible rules,' and that
there must be some latitude and discretion left to the banks in their
dealings. But the Board nevertheless deems it its duty to take care
that acceptance transactions not founded upon a normal commercial
basis should be kept within limits, in order that ordinary commercial
business may not be affected by any increase in rates which might
result from an overextension of the credit facilities of the kind just
described. During the past two years American banks and bankers
have become accustomed to acting as acceptors, and the Board hopes
that the coming year will witness marked progress in acquainting
country banks particularly with the merits of commercial acceptances
as banking investments.
The Federal Reserve Act is based essentially upon the principle
that liquid paper rather than loans secured by stock-exchange collateral, or " merely investments," should be the principal asset of
the member banks when considered collectively; that the acceptance
market rather than the call loan market, and rediscounts with
Federal Reserve Banks rather than loans placed through banks in
reserve and central reserve cities, should be made the means through
which the average bank can supply its current requirements. In the
development of a free and healthy acceptance market, it is desirable
that acceptors should abandon the practice of discounting, as a
matter of regular routine, their own acceptances, and the Board
hopes that during the present year progress wTill be made along these
lines.
Since the last annual report was submitted Congress has, upon
the Board's recommendation, empowered Federal Reserve Banks to
discount for member banks their fifteen-day notes secured by paper
eligible for rediscount or purchase under sections 13 or 14 of the
Federal Reserve Act. This new privilege already has proved most
serviceable, particularly in larger financial centers. The Board feels
that the member bank's fifteen-day collateral note should prove an
important factor in the further development of the rediscounting
function of the Federal Reserve Banks, as it affords them the means
of supplying more economically the requirements of member banks
for short-time accommodation.
DEVELOPMENT OF DISCOUNT RATES.

Except for a stiffening toward the close of the year, resulting
in an increase of rates in some districts by one-half of 1 per cent,
the discount rates prevailing at Federal Reserve Banks have been

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

nearly stationary. Of the changes made the only one worthy of
note was that in the rate for acceptances, which was slightly advanced
by the Federal Reserve Bank of New York in consequence of a
firmer tendency in the money market. A differential rate for acceptances in favor of those made b'y member banks of the Federal
Reserve System, has been adopted by some of the Federal Reserve
Banks.
There has been no occasion to establish new or special rates designed for the accommodation of particular industries or districts.
The plan of applying a low "commodity rate," established by the
Board in September, 1915, for the benefit of producers and shippers
of agricultural products, has continued operative, although the rate
itself was raised to 3-J and 4 per cent at some of the banks. The need
for it has been less than it was a year ago. High prices for all agricultural products and the general and sustained demand for them, not
only at home but throughout the world, have brought to the farmers
of the country an unprecedented degree of prosperity. This has,
to a great extent, relieved them of dependence upon banks for
current accommodation. Not only the farmers, but those engaged
in all lines of business and industry, were during the year just closed
unusually strong and independent from a financial standpoint; and,
partly because of this fact and partly by reason of the prevailing
ease in the money market, the influence of the Federal Reserve
Banks upon rates was indirect and potential rather than dominant.
A comparison of discount rates prevailing at Federal Reserve
Banks shows that the principal difference between conditions during
the past year and those of 1915 lies in the somewhat greater diversification of rates. Perhaps there is no better commentary upon some
of the factors that have led to the transfer of discount business to
the United States, than a comparison of rates prevailing in the principal foreign markets with those in New York. A notable difference
is shown by the following figures contrasting the range of official
bank and private discount rates in the principal financial markets:
Private
Official discount
rates
for
bank
rates. 3-months'
bank
bills.
London
Pans.
Berlin
Rome
Petrograd
Amsterdam

Per cent. Per cent.
5-6
5
4|-5
5
(0
5
(l)
6
0)
41
(J)
1

Private
discount
Official rates
for
bank
rates. 3-months'
bank
bills.
Stockholm
Christiania
Copenhagen
Madrid .
New York

No quotations available.

Per cent. Per cent.
1

. .

C)
0)
0)
0)
2-3

ANNUAL REPORT OF T H E FEDERAL RESERVE BOARD.

FEDERAL RESERVE NOTE ISSUES.

The Federal Reserve Agents' holdings of gold and lawful money
from January 1, 1915, to December 30, 1916, increased by $270,270,000, while our net imports of gold for that period were $950,480,000.
The Federal Eeserve Act does not provide for the direct issue of
notes by Federal Eeserve Agents against gold deposited by the
Reserve Banks, but Federal Reserve Banks, with the sanction of
the Board, have reduced to a large extent their liability upon outstanding notes by depositing gold, dollar for dollar, with the Agents,
in the manner specifically provided in section 16 of the Act, and
withdrawing the paper originally pledged*for their issue. There
had been issued and were outstanding on December 30, 1916, $300,110,000 of Federal Reserve notes, originally issued against the
deposit of eligible commercial paper, but of this total only $17,588,000 were secured on that date by eligible paper pledged with
the Agents, the banks' liability upon the remainder having been
reduced by the deposit of gold as above described. The result of
this reduction of liability upon the notes is to leave the banks in the
same position as if the pledged paper had matured and the gold proceeds of the same were held by the Agents. This method has proved
a valuable means of conserving gold. Practically the same result
would have been obtained if the agents had been authorized to issue
notes originally against the deposit of gold, dollar for dollar, and
the Board has suggested an amendment, elsewhere discussed in this
report, to authorize such issue.
CONVERSION OF BONDS AND RETIREMENT OF NATIONAL-BANK

NOTES.

Under section 16 of the Federal Reserve Act, Federal Reserve
Banks may be required to purchase annually a maximum of $25,000,000 of United States bonds from national banks desiring to retire
their note issues, such sum to include United States bonds bought
in the open market by Federal Reserve Banks under section 4 of
the Act, and the Secretary of the Treasury by ruling has provided
for the conversion during the current year of not exceeding $30,000,000 of such bonds into 30-year 3 per cent United States bonds and
one-year 3 per cent United States Treasury notes.
United States bonds actually purchased by Federal Reserve Banks
during the year 1916 exceeded $25,000,000, the amount which Federal
Reserve Banks may be required to purchase during any one year,
and at no quarterly period was it necessary for the Federal Reserve
Board to direct the purchase of bonds under section 18 of the Federal
Reserve Act.

ANNUAL BEPOKT OF THE FEDERAL KESEBVE BOAKD.

The full amount of $30,000,000 in conversion bonds and one-year
notes was taken by the twelve Federal Reserve Banks, an allotment
based upon capital being made to each. Three banks, those at Boston, Philadelphia, and San Francisco, did not avail themselves of
the full conversion privilege. The difference of $1,918,900 between
the full quota of these banks and the amounts applied for by them
was distributed among seven other banks which had applied to
convert more than their allotment. Conversion bonds amounting to
$15,761,000, and one-year notes amounting to $14,239,000, were issued
for the year 1916. On January 1, 1917, Federal Reserve Banks converted $18,597,200—$9,301,000 in notes and $9,306,600 in bonds—the
Board having previously announced that it would approve the applications of Federal Reserve Banks for the conversion of all or any
portion of their full annual allotment on January 1, 1917, or the
beginning of any other quarterly periodThe original purpose of the bond conversion provision of the
Federal Reserve Act was to maintain the market for United States
bonds deposited to secure circulation and to insure a gradual but
steady retirement of national-bank notes, any resulting deficiency in
the volume of circulation to be filled, so far as necessary, by Federal
Reserve currency. During the past year national banks have withdrawn from deposit with the Treasurer of the United States bonds
deposited to secure circulation of the par value of $64,233,360, and
deposited bonds for new circulation amounting to $11,211,460—a net
decrease in the amount of bonds held to secure circulation of
$53,021,900. Incident to these withdrawals of bonds national-bank
circulation showed a reduction of $44,511,968 during the year 1916.
Federal Reserve Banks sold in 1916 United States 30-year 3 per
cent conversion bonds and 1-year 3 per cent notes as follows:
Thirty-year bonds
One-year notes

$13, 882, 000
3, 372, 000

Total

17, 254, 000

Section 16 of the Federal Reserve Act permits Federal Reserve
Banks to issue bond-secured currency known as Federal Reserve bank
notes, secured by United States bonds, as is the case with nationalbank notes. Under this provision of the law the total amount of Federal Reserve bank notes issued up to December 31,1916, was $12,054,980. There were held at the close of 1916 by the Federal Reserve Bank
of Kansas City $6,000,000 and by the Federal Reserve Bank of Dallas
$2,000,000. The remaining amount is in circulation or in the Treasury of the United States. Federal Reserve Banks have extinguished
their liability on account of $4,000,000 of these notes through the
deposit of lawful money and on account of $54,980 through the

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

return to the comptroller of an equal amount of Federal Reserve
bank notes for destruction. There is therefore no addition to the
circulation of the country through the issue of Federal Keserve bank
notes.
CLEARANCE AND COLLECTION.

As explained in the report of last year, the Board found that the
introduction of a general and effective clearance and collection system was a highly technical matter, involving legal questions and
many complexities of practice. It was calculated to arouse the opposition of many banks, due to the loss of revenue from the exchange
on checks which they had been accustomed to charge. The Board
thought best at first, therefore, to leave the actual initiative in the
matter largely to the Federal Keserve Banks and at their instance
to authorize a voluntary system of clearance and collection in which
member banks might or might not participate as they chose. Such
a system, as explained in the Board's annual report for 1915, was in
fact put into effect by each of the Federal Keserve Banks, and for a
time it was hoped that it would prove effective. Experience, however, soon showed that the plan was not sufficiently comprehensive,
and that many factors were militating against its success. The
number of members did not increase materially, and in some districts
declined. There were conditions which indicated that the existence
of the system in the form then adopted was a hardship to certain
classes of banks, while the plan did not attain, and seemed unlikely ever to reach, such a plane of efficiency as to make it a substantial factor in the clearance and collection system of the country.
For these reasons the Board decided in April, 1916, to establish a
uniform and more comprehensive system, and it formulated a plan
of clearance and collection which it directed the Federal Reserve
Banks to put into effect. It was originally intended to begin operations under the new plan on June 15, but subsequent events made
it desirable to postpone its establishment for a month, so that it
actually became operative on July 15. Under the new system
member banks are free to continue to carry accounts with their
present correspondents and with other banks to which they may
send items for collection and from which they may receive for
similar purposes checks drawn upon themselves or upon other
banks. They are, however, required to pay without deduction checks
drawn upon themselves and presented at their own counters. Remittance of such checks by the Federal Reserve Bank of their district through the mail is construed as presentation at their own
counters and banks must settle with the Federal Reserve Bank for

ANNUAL KEPORT OF THE FEDERAL RESERVE BOARD.

such checks by acceptable checks upon other banks. Remittance
of lawful money or Federal Reserve notes can be made at the
expense of the Federal Reserve Bank in case they are unable to
send in offsetting checks on other banks. Checks drawn upon a
member bank which have been received by the Federal Reserve
Bank are not charged against its reserve account until sufficient
time has elapsed for the checks to have reached the member bank
and for returns in due course to have reached the Federal Reserve
Banks.
The clearing plan provided also that a small service charge (not
exceeding 2 cents per item) be made at stated intervals against such
banks as send to the Federal Reserve Bank checks on other banks for
collection and credit. It follows that no portion of this charge can
be assessed against any bank unless it shall have availed itself of
the facilities offered. Besides checks drawn on member banks, Federal
Reserve Banks receive checks on such State banks as can be collected
at par, and member banks desiring to collect checks drawn on nonmember banks in their vicinity are given the preference. During
crop-moving periods this will give a distinct advantage to member
banks in agricultural sections.
Member banks have not been deprived of any income which they
have been receiving from the collection of drafts (other than bank
checks) or from the purchase or discount of commercial bills of
exchange.
It was estimated by the Board that as soon as the new clearing
system could be put into operation checks upon about 15,000 national banks, State banks, and trust companies throughout the
United States would be collected by the Federal Reserve Banks at
par, subject to the small service charge above referred to. As any
bank will be likely to lose desirable business when checks drawn
upon it are at a discount, while checks drawn upon a nearby competitor circulate at par, it is believed that in the near future checks
upon practically all banks in the United States can be collected at
par by Federal Reserve Banks. Many banks have found it necessary hitherto to maintain balances with a number of correspondents
for exchange purposes, thus compelling them to keep an undue proportion of their funds away from home. Under the new plan the
number of banks upon which par collections are being made was,
on December 15, over 15,000. In other respects, also, the plan is
working as anticipated. The total daily clearances at all Federal
Reserve Banks now aggregate over $125,000,000.
In Federal Reserve District No. 1, which embraces the New England States, the Federal Reserve Bank of Boston is now, and for
some time past has been, collecting checks upon all the banks in the

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

district (member and nonmember) without any charge to the member banks depositing them, except a service charge of 0.9 cent per
item. The cost and service charge per item, also the cost per $1,000
of collecting checks in each of the Federal reserve districts, are shown
in the subjoined table: 1
Clcarings, July 15 to Dec. 31, 1916.
Disburseper Cost per Service
Total numamounts ments, Cost
thousand charge
ber of items Total
item
handled.
transit
di handled.
dollars. per item.
handled.
partment.

Federal Reserve Bank,

Boston..
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis. =
Minneapolis...
Kansas City...
Dallas
San Francisco.
Total..
1

14,847,745 SI. 002, 784,
4,908,674
3,025, 978,
3,506,676
1,837, 524,
1.996,122
957, 386,
2,020,065
891, 077,
1,602,095
494, 368,
i 2.586,871 1,599, 624,
2,234,060
1,008 756,
1,529,407
329; 826,
1,562,860
845, 154,
1,495,626
378, 491,
594,475
167, 287.

$40,674
35,153
34,241
23,394
21,311
17,576
26,921
11,890
17,068
15.241
19,497
28,525

Cents.
0.84
.72
.98
1.17
1.05
1.10
1.03
.53
1.12
.98
1.31
4.80

Cents.
4.05
1.16
1.86
2.44
2.43
3.57
1.68
1.17
5.17
1.80
5.15
17.00

28,884,676 | 12,538,260,555

291,491

1.01

2.32

Cent*.
0.9
1.0
1.5
1.5
1.25
1.5
1.5
1.5
1.5
1.5
1.5
2.0

Does not include Government checks.

After November 17, 1917, or sooner, should the proposed amendment be adopted, no bank balance will be available as reserve for
national banks except balances in Federal Beserve Banks, and,
therefore, after that time any necessity to maintain nonreserve balances with correspondents, either for exchange purposes or in order
to obtain collection facilities, would be deemed in many cases a great
hardship. I t is believed that in numerous instances banks will
find it expedient to concentrate their balances and to close many
accounts which they now carry with other banks, and that a system
which will enable them to send all of their checks on other banks
to the Federal Eeserve Banks for exchange purposes, or as an offset
against checks on themselves forwarded by the Federal Eeserve
Banks, will soon come to be appreciated not only as a convenience
but as a necessity.
1
The above table was compiled from data in the Federal Reserve agents' annual reports
and special reports of the transit departments. Inasmuch as the methods of segregating
the expenses of the transit departments are far from uniform for the several banks, the
costs shown are by no means exact, but only approximately correct.

75284°—17

ANNUAL REPORT OP THE FEDERAL RESERVE BOARD.

The following table shows briefly the clearing operations of the
Federal Reserve System for the 30 days ending December 15, 1916,
with comparative,figures for each of the four preceding months:
Operations of the Federal Reserve interdi strict clearing system, Nov. 16 to
Dee. 15, 1916.

Bank.

Average
number
of items
handled
daily.

Average
amount of
daily
clearing.

Boston
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City....
Dallas...
San Francisco..

38,479
42,551
30,081
15,873
17,064
13,851
i 20,452
10,039
15,613
13,782
12,734
5,519

Total, Nov. 16 to Dec. 15.
Total, Oct. 16 to Nov. 15
Total, Sept. 16 to Oct. 15
Total, Aug. 16 to Sept. 15
Total, July 15 to Aug. 15

236,038 125,603,732
227,489 115,061,224
204,891 97,666,107
177,397 78,559, 704
133,113 59,301,696

153,317
307,438
545,774
320,355
0G2,500
689,214
220,268
402,904
828,269
791,296
521,235
761,162

Member
banks
in the
district.

402
625
632
754
520
390
993
469
759
941
621
521

Nonrnember banks
in district
from which
checks are
collected
at par.
242
313
292
496
286
440
1,269
881
1,100
1,412
238
1,096
8,065
8,059
7,459
7,449
7,032

Does not include Government checks, averaging 2,062.

With the view of making the clearing and collection system more
effective and of enabling checks drawn upon nonmember banks and
trust companies to be handled by Federal Reserve Banks in the same
manner as checks drawn upon members, the Board has asked Congress to amend section 13 of the Act so as to allow Federal Reserve
Banks to receive accounts for collection and exchange purposes from
such nonmember banks and trust companies as will agree to remit
to Federal Reserve Banks at par for checks drawn upon themselves
and which will in addition maintain a compensating balance with
the Federal Reserve Bank in an amount to be determined by the
reserve bank. This will greatly extend and improve the service and
will make the clearing system complete and comprehensive.
EARXIXGS AXD EXPENSES.

The past year has shown a decided improvement in the earnings
of the Federal Reserve Banks. They have been able to provide for
their expenses and to carry a substantial amount to dividend account.
For the year 1916, as will be seen in greater detail from figures furnished in the exhibits to this report, the current expenses of the system were $2,204,344, while the total net earnings for the entire year
were $2,750,999. The following table shows gross and net earnings

ANNUAL KEPOET OF THE FEDEBAL EESEBVE BOARD.

for the calendar year 1916, and dividends declared by Federal Reserve Banks from the date of their organization to the end of 1916:
Gross
earnings.

Boston
New York
Philadelphia
Cleveland

$450,214. GO
950, G49.00
417,939.00
429,150.00

Net
earnings.

$295,935.00
414,064,00
249,941.00
293,808.00

Richmond.......

311,758.00

186,571.00

Atlanta

261,945.00

129,308.00

Chicago
St. Louis
Minneapolis 4
Kansas City

646,983.00
286,158.00
238,109.00
364,967.00

403,206.00
141,017.00
134,603.00
224,989.00

Dallas

306,875.00

166,046.00

Ban Francisco...
Total

290,590.00

111,511.00

4,955,343.00

2,750,999.00

Date of
authorization Amount of Period for which authorized.
by Federal
dividend.
Keserve Board.
Dec. 21,1916
Dec. 16,1916
Dec. 23,1916
Nov. 27,1916
PDec. ,1915
\ Apr. ,1916
1 Dec. ,1916
P June ,1916
\ Dec. ,1916
/ iJune , 1916
\ Dec. ,1916
Dec. ,1916
Dec. 16,1916
July ,1916
fi Jan.
, 1916
< Sept. ,1916
I Decc. 7,1916
HSept. 30,1916
\ Dec. 20,1916

§246,931
127,113
128,458
143,237
2 151,940
8 30,388
167,534
129,198
70,941
75,874
284,775
31,100
57,720
66,707
65,578
78,813
53,052
12,341
31,395

Nov., 1914, to Dec. 31,1915.
Nov., 1914, to Mar. 31,1915.
Nov., 1914, to June 30,1915.
Do.
JNov., 1914, to Dec. 31,1915.
Jan., 1916, to Oct. 31,1916.
Nov., 1914, to Dec. 31,1915.
Jan., 1916, to June 30,1916.
Nov., 1914, to Mar. 31,1915.
Apr., 1915, to Dec. 31,1915.
Nov., 1914, to Mar. 31,1915.
Nov;, 1914, to June 30,1915.
Nov., 1914, to June 30,1915.
Nov., 1914, to June 30,1915.
July, 1915, to Dec. 31,1915.
Jan. 1 to Apr. 30,1916.
Nov., 1914, to Dec. 31,1914.
Jan., 1915, to Mar. 31,1915.

1
2
8
4

Date when dividend was declared.
Five per cent dividend for period November, 1914, to Dec. 31,1915.
One per cent dividend for period. November, 1914, to Dec. 33, 1915.
A dividend of $87,921 covering period of July 1 to Dec. 1, 1915, was authorized on Jan. 9,1917, payable Jan. 25,1917.

The figures for the whole system to December 31, 1916, show an
average net earning since organization of 3 per cent on the actual
paid-up capital, while for the year 1916 they show an average
net earning of 5 per cent. The improvement in earnings thus
shown is especially gratifying when it is remembered that discount rates have continued low9 being practically no higher than
they were in 1915; while both years have been exceptionally unfavorable for rediscount institutions, owing to the great plethora of funds
in the vaults of member banks generally, the consequent low rates
of interest, and to the lack of need for member banks to obtain
accommodation.
The average "rediscounts" of all national banks, as shown by five
abstracts issued by the Comptroller of the Currency in 1916, were
$39,561,000. Of this amount $22,200,000, or 56 per cent, were rediscounts with the Federal Keserve Banks.
The Federal Reserve Banks have not been operated with profit as a
primary object, but they have all earned their expenses, as well as
a substantial part of their dividend requirements. They have won
the confidence of the public, and the fact of their existence has
enabled the country to withstand, without the slightest financial
disturbance and without any marked fluctuations in rates for commercial paper, many shocks and sensations, which probably would,
under old conditions, have led to serious consequences. The Federal
Reserve System is no longer looked upon as an experiment. It is

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

established upon a firm and enduring foundation, and it has demonstrated repeatedly that it is not being conducted for the benefit of any
section, group, or interest, but that the policies governing its operation are, and will continue to be, broad enough to serve, without discrimination or favor, the banks and those who deal with banks
throughout the entire country. While regulatory and conservative,
it is none the less a constructive force, and as conditions throughout
the world become more normal the Federal Reserve System will be
recognized not only as a dominant factor in our own financial affairs
but as a most important influence in the commerce of the world.
BRANCHES AND AGENCIES OF FEDERAL, RESERVE BANKS.

Of the constructive sections of the Federal Reserve Act, section 3,
which provides for the establishment of branch banks, is the shortest. It is as follows:
Each Federal Reserve Bank shall establish branch banks within
the Federal Reserve district in which it is located and may do so in
the district of any Federal Reserve Bank which may have been suspended. Such branches shall be operated by a board of directors
under rules and regulations approved by the Federal Reserve Board.
Directors of branch banks shall possess the same qualifications as directors of Federal Reserve Banks. Four of said directors shall be
selected by the reserve bank and three by the Federal Reserve Board,
and they shall hold office during the pleasure, respectively, of the
parent bank and the Federal Reserve Board. The reserve bank
shall designate one of the directors as manager.
In its annual report for 1915 the Board stated that only in one
instance had it received a definite request from a Federal Reserve
Bank to establish a branch. This referred to the application of the
Federal Reserve Bank of Atlanta to establish a branch in New Orleans. Up to this time no other Federal Reserve Bank has asked
the sanction of the Board for the establishment of a branch. The
expense incident to the operation of a branch is no doubt a deterrent,
and, while the terms of section 3 appear to be mandatory as to the
establishment of branch banks, it will be observed that no time is
specified within which they must be established. While it has been
intimated to the Board that there are a few cities in some of the districts that would like to secure a branch of the Federal Reserve Bank,
the only formal application that has been presented to the Board has
come from the bankers of the city of Louisville for a branch of
the Federal Reserve Bank of St. Louis. A committee representing
Louisville bankers appeared before the Board on December 21 and
presented arguments to support their application. This case is now
under consideration by the Board and by the Federal Reserve Bank
of St. Louis. The New Orleans branch of the Federal Reserve Bank

ANNUAL REPORT-OF THE FEDERAL RESERVE BOARD.

of Atlanta was established after a specific request had been made by
the board of directors of the Atlanta bank. In accordance with this
precedent, and, in view of the provision of law which requires the Federal Reserve Banks to establish branches, without giving the Federal
Reserve Board any direct authority in the matter except to approve
rules and regulations under which the branches shall be operated, the
Board has not yet determined whether or not it has authority to establish branches except upon the initiative of a Federal Reserve Bank.
When the branch bank in New Orleans was established, member banks
in Louisiana, in Mississippi, and in two counties in Alabama were advised that their reserves should be kept with, the branch bank at New
Orleans, and that all of their transactions with the reserve bank should
be conducted through New Orleans. The amount of the capital stock
in the Federal Reserve Bank of Atlanta held by the member banks assigned to the New Orleans branch is regarded for bookkeeping purposes as the theoretical capital. The profits arising from the discount
of paper for member banks, from the purchase of commercial paper
and bills of exchange, and from transfers of funds are shown on the
books of the branch bank, from which are deducted all expenses of
operation. The income and expenditures of the branch bank, however, appear each week on the balance sheet of the parent bank. During the year 1916 the gross earnings of the branch bank at New Orleans were $62,052 and the total expenses of operation, including
salaries of employees and directors' fees, amounted to $28,645, leaving a net profit to the Federal Reserve Bank of Atlanta from the
operations of its New Orleans branch of $33,407, which profit
amounts to 7.5 per cent on the capital of $445,000 theoretically
allotted to the New Orleans branch.
It is, however, reasonable to assume that much of this profit would
have accrued to the Federal Reserve Bank of Atlanta had there been
no branch at New Orleans, as only' $13,871 were derived from
local discount operations. In view of the experience gained from
the operation of the one branch bank in the entire system, it would
seem wise, in considering the establishment of other branches, to
take into account whether there is an actual need for them—immediate or prospective—growing out of the added convenience to the
member banks which would naturally fall within the territory allotted to the branch, or whether the application for a branch is primarily a manifestation of local civic pride. In justice to all the
member banks in a district where branches are sought to be established, it would be well to ascertain as nearly as can be done in
advance, whether the branch would be really self-sustaining, i. e.,
whether the net profits growing out of its operation would exceed
the net revenue that would accrue in any event to the parent bank.

AISTKUAL REPORT OF THE FEDERAL RESERVE BOARD,

The Board would welcome legislation simplifying the organization and operation of branch banks and reducing the cost of maintaining them. This would enable the Federal Reserve Banks better
to determine the question of branches.
The Board has been informed that some of the Federal Reserve
Banks are ready to establish agencies or offices in such cities in their
districts as may require special services, such as the collection of
checks or the making of loans on warehouse receipts. An agency of
this kind was established by the Federal Reserve Bank of St. Louis
in September at Memphis, Tenn. This has proved convenient to the
banks of that city in the handling of the cotton crop.
OPERATIONS ABROAD.

The clearance and collection system has now fairly begun its
activities and has demonstrated that the provisions of the Federal.
Reserve Act relating to this feature of the business of Federal
Reserve Banks are feasible and practical. It is confidently expected that the present year will witness a general acquiescence
in it and its use by all banks. With the completion of the collection and clearance system, all the domestic functions of Federal
Reserve Banks wTill have been at least tentatively undertaken, requiring only a reasonable period of development for their complete
application. With regard to the provisions of the Federal Reserve
Act relating to foreign trade, the case.is different. While much has
been done to facilitate the financing of foreign trade through the
development of the acceptance market and by the establishment
abroad of American banks and branches, the provisions of the Act
which permit the establishment of foreign agencies or branches of
Federal Reserve Banks have not as yet been availed of, nor have the
banks as yet undertaken the direct purchase of foreign commercial
bills, or the performance of other functions relating to foreign transactions authorized in the law. This delay has been due partly to the
disturbed condition of business in markets abroad and partly to the
belief that a sound and thorough application of the law in its
domestic aspects should precede the undertaking of foreign operations allowed by the Act. The Board has, however, had under
consideration for some time, the advisability of authorizing Federal Reserve Banks to appoint correspondents, and to establish
agencies in foreign countries, and on December 20 formally approved the application of the Federal Reserve Bank of New York
for authority to establish an agency with the Bank of England.
This authority was granted under the provisions of section 14 of
the Act which permit any Federal Reserve Bank " with the consent
of the Federal Reserve Board to open and maintain banking accounts

ANJSTUAL REPORT OF THE FEDERAL RESERVE BOARD.

in foreign countries, appoint correspondents, and establish agencies
in such countries wheresoever it may deem best for the purpose of
purchasing, selling, and collecting bills of exchange, and to buy and
sell with or without its indorsement through such correspondents or
agencies bills of exchange arising out of actual commercial transactions," so that a broad field of operations is opened under it. If the
authority granted by the Board in this case shall result in the establishment of the agency, it will be so arranged that the other Federal
Keserve Banks will be enabled to participate in the agency relationship upon the same terms and conditions.
It is probable that other connections of this character will be authorized from time to time as occasion requires, thus enabling the
Federal Keserve Banks, while assisting in the development of our
international trade, to provide for themselves, by holding a substantial amount of foreign paper, an effective means of absorbing any
shock due to sudden withdrawals of gold for export. There seems
to be no reason why the Federal Reserve Banks should not be
placed upon the same footing in this respect as the great reserve
banks of Europe and given wide powers in the matter of international exchange, with the Federal Reserve Board acting as the central controlling force in the coordination and direction of operations.
ENFORCEMENT OF THE CLAYTON ACT.

Important duties relative to the determination of the eligibility
of member bank directors were imposed upon the Federal Reserve
Board by the amendment to the Clayton Act, known as the Kern
amendment, which became a law on May 15, 1916. This legislation
was intended to give individuals greater latitude in accepting and
holding bank directorships. It authorized such individuals, when
directors of member banks, to act also as officers, directors, or
employees of not more than two other banks, banking associations,
or trust companies, when organized under the laws of the United
States or any State, " if such other bank, banking association, or
trust company is not in substantial competition with such member
bank." It was, however, required that the consent of the Federal
Reserve Board be obtained as a basis for the continuance of such
relations with other banks. This placed upon the Board as a
condition necessarily precedent to the granting or withholding of
its consent in such cases, the duty of ascertaining whether the banks
in which an individual might seek to hold directorships were or were
not in "substantial competition" with the member bank of which
such individual was also a director. The Board reviewed the various
applications, this work occupying the greater part of its time during
the months of August, September, and the first half of October,

ANNUAL KEPOKT OF THE FEDERAL RESERVE BOARD.

the Clayton Act by its terms becoming effective on October 15.
During the year 1916 the Board considered in all 1,359 applications,
of which 1,215 were granted and 144 refused. In a large number of
other cases the directors affected recognized that substantial competition did unquestionably exist, and so withdrew voluntarily from
one or more directorates, thereby bringing themselves into compliance with the Act.
Some difficulty was found in the provisions of the Clayton Act
which prohibit a private banker from holding a directorship in a
member bank. Compliance with this prohibition necessarily involved
a definition of the term " private banker," and the Board accordingly
published a definition of the term for use in the administration of the
Act. The term " private banker " was interpreted to include partnerships or individuals engaged in the banking business, as the term
is generally understood, including those partnerships or individuals
which solicit or receive deposits subject to check, which do a foreign
exchange, acceptance, loan, or discount business, or which purchase
and sell or distribute issues of securities by which capital is furnished for business or public enterprise. The term as thus interpreted did not include the ordinary stock, note, or commodity broker
unless a substantial proportion of his profits came from banking
activities, nor did it include partnerships or individuals using only
their own funds in making loans or investments.1
In a number of cases difficulty also was encountered in determining
the exact scope properly to be assigned to the term " substantial competition," particularly with reference to the question whether such competition must be regarded as limited in area. It was found that some
large banks situated in cities or places far distant from one another,
while not in competition in their respective locations, yet might be
held to compete to a greater or less degree in common territory.
While in some such instances it was thought best to grant the applications of directors who were desirous of serving on the boards of such
banks, it was indicated in each case that the consent accorded to them
was tentative only and that further investigation would be undertaken for the purpose of arriving at a final conclusion. Indeed the
Board's work with reference to the application of the Kern amendment must be regarded as a continuing operation which can never be
definitely finished. New facts or evidence bearing upon the business
of given institutions may at any time develop, or the natural growTth
of their business may bring them into substantial competition,
although they were not found so in the first instance. It will therefore be necessary from time to time to revise decisions already made.
New conditions may develop which will necessitate the revocation of

Federal Reserve Bulletin, 1916, p. 588.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

permission already granted in certain cases in order to deal appropriately with such conditions without subjecting some directors to a
rule different from that applied in the case of others. As in all new
legislation, there is a considerable zone of uncertainty in the interpretation and application of the Clayton Act. It will require experience and further analysis to resolve such uncertainties and to
apply the terms of the measure fairly and uniformly in carrying out
the intent of Congress.
ENTRY OF NEW MEMBERS.

During the year 1916 one hundred and thirty banks entered the
Federal Reserve System, making a total of 7,627 members on December 31. Of these new members, eighty-seven were newly organized
national banks, which, under existing law, automatically became
members and took stock in the Federal Reserve Bank of the district
in which they were located. Of the remaining members thirty-five
were State banks which entered the system through conversion into
national banks, and two were national banks which were in charge of
receivers and were restored to solvency. State institutions which
applied for and received membership while retaining their State
charters numbered six. It had been expected that upon the organization of the clearance and collection system a considerable number of State institutions would find it to their advantage to apply
for membership or that other factors would tend to bring them into
the system. So far this has not proved to be the case, for the number
of State institutions which came into the system during 1916 while
retaining their local charters was less than during the preceding
year. Many causes have operated to produce this result, the chief
being those already outlined by the Board in its report for 1915.
Added to these considerations has been the effect of the Clayton Act,
which is objected to by many State banks as likely to result in inconvenient or undesirable changes in their boards of directors should
they enter the Federal Reserve System; and the operation of section
22 of the Federal Reserve Act, which deals with the relations of
directors of member banks to their institutions. The Board has suggested an amendment to this section designed to clarify it and to remove uncertainties without affecting in any way its principle.
Apprehension of stringent conditions or the development of any
situation requiring mutual aid on the part of banks would undoubtedly cause many nonmember banks to apply for membership, but it
is not believed that they will as a rule elect to await such conditions.
The largest and most important State bank in New York is already
a member of the system, as is the largest trust company in Boston.
Prominent trust companies (in St. Louis, Chicago, Kansas City, and
Birmingham) are also members, and there are indications that other

A1STISTUAL REPORT OF T H E FEDERAL RESERVE BOARD.

large institutions are awakening to a sense of public duty, and are besides gradually reaching the conclusion that their own best interests
require their affiliation with the Federal Reserve System. Many
apprehensions previously entertained by nonmember banks have been
shown to be groundless, and the attitude of the Board toward State
banks as members is better understood. The public, moreover, is beginning to realize that its interests will be best served by the amplification and fullest development of the Federal Reserve System.
In July last the Board advised the representatives of certain State
banks and trust companies, which were apprehensive that membership in the system might involve an undue restriction of their corporate activities as a result of the future regulations of the Board, that
it did not understand that it was incumbent upon it to undertake to
impose upon the activities of member banks any restrictions that are
not contemplated by the Act, but only to prescribe such regulations
as are designed to carry out the purposes of the Act. The Board
does not feel that it is one of its functions to undertake to restrict
State banks or trust companies in the exercise of banking or trust
company powers as defined by the laws of the State in which they
are created. In passing upon the applications of State banks and
trust companies, however, the Board holds that it is its duty to
admit only those institutions which ar^e solvent and sound and whose
membership will not constitute an element of weakness in the system.
The Board does not consider that it is a prerequisite to the admission of any State bank or trust company that it should possess any
prescribed amount of paper eligible for rediscount with a Federal
Reserve Bank. The law provides that privileges and advantages of
membership may be extended,to State banks and trust companies,
thus contemplating one compact banking s}^stem, while preserving
the integrity of both the State and national banking organizations.
The fact that a State bank has little eligible paper does not necessarily make its membership an element of weakness or danger, and it
is obvious that as a member of the system it will be in a position to
contract for loans and to obtain cash from other member banks having paper eligible for rediscount, and thus indirectly to obtain desired accommodations. The ability to assist member banks directly
and indirectly wTill be increased as the strength of the s}rstem and
lending power of the Federal Reserve Banks is increased. There
is no reason why such assistance should not be freely given to a member State bank, while in time of stress the nonmember banks may
find the member banks not less disposed, but less able to give them
this indirect assistance. The Board, of course, might consider the
exercise of extraordinary and unusual charter powers, which would
make an applying State bank or trust company an undesirable mem

ANNUAL REPOET OF THE FEDEEAL RESERVE BOARD.

ber, a sufficient reason to refuse to grant the application for admission, but after a State bank or trust company has actually become a
member bank, the Board does not expect to interfere with the exercise of the banking and fiduciary powers authorized by its charter.
FIDUCIARY POWERS.

Applications for permission to exercise fiduciary powers under
the terms of the Federal Reserve Act have continued to be presented to the Board during the past year, and have been granted
in one hundred and twenty-five cases, action on eighty-four of which
carried approval of full fiduciary powers, while in the case of fortyone only limited powers were granted. There is still uncertainty as to
the legal status of the banks in exercising this function, the doubts
regarding it having been intensified by the action of the Supreme
Court of the State of Michigan in handing down, on September 26,
an opinion adverse to the contention of the national banks.1 It was
the view of the court in this case that Congress had no authority to
permit national banks to exercise the fiduciary powers provided
for in the Federal Reserve Act, and, in accordance with the policy
announced in its report for 1915, the Board took steps to have the
case transferred to the Supreme Court of the United States on a
. writ of error, in order that it might be finally determined. In
the meantime the Board is pursuing the policy of granting to properly qualified and well-managed banks the authority to exercise
fiduciary powers in so far as provided by the Federal Reserve Act.
As has been explained on former occasions, the Board is bound to
grant specifically the privileges that have been granted by Congress
under the Federal Reserve Act, leaving to judicial determination any
questions which may be raised as to the constitutionality of such
grant. Pending a final decision by the court the Board will continue to pursue its present policy.
CHANGES IX DISTRICTS.

In its report for 1915 the Board set forth the reasons that had led
it to make changes in the boundaries of certain Federal Reserve
districts, and stated that " further consideration of this subject
was suspended in view of an opinion rendered by the Attorney
General of the United States * * * wherein it was held that
the Board possessed no power to reduce the number of Federal
Reserve districts." The Board also called attention to the fact that
" a further opinion has been asked as to whether the Board has power
1
Grant Fellows, attorney general of the State of Michigan, on the relation of the
Union Trust Co., Detroit Trust Co., Security Trust Co., Michigan Trust Co., and the
Grand Rapids Trust Co. v. The First National Bank of Bay City.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

to change the location of a Federal Reserve Bank within a district."
The opinion thus referred to was rendered by the Attorney General
on April 4, 1916, and covered two points:
(1) Whether the Board could change the present location of any ,
Federal Reserve Bank in certain cases, and
(2) Whether the Board in readjusting district lines must preserve
the $4,000,000 minimum capitalization required of each Federal
Reserve Bank.
The Attorney General held that the Board has no power to change
the location of a bank, irrespective of alterations or readjustments in
district lines, but that the maintenance of the minimum capitalization of $4,000,000 was not necessary.
The effect of this ruling was to suspend consideration of the pending appeals which involved changes in the location of Federal Reserve
Banks within their districts. There remained, then, but three appeals calling for immediate decision—one filed by certain Connecticut banks, which requested transfer from the Boston to the New
York district; one filed by certain banks in Wisconsin, which requested transfer from the Minneapolis to the Chicago district; and
one filed by certain banks in southern Louisiana, which requested
transfer from the Dallas to the Atlanta district. The Louisiana
appeal was granted by a resolution adopted on February 25 transferring certain banks as desired; while the Connecticut appeal w as determined by a resolution on March 6 transferring those banks situated
in Fairfield Co., Connecticut, to the New York district, leaving the
remainder of the petitioning Connecticut banks as members of the
Federal Reserve Bank of Boston, subject to such future determination of the Board as experience shall show to be necessary. The Wisconsin appeal was settled by an order of October 12, transferring
the greater number of the applying banks to the Chicago district.1
MORE EFFECTIVE CONTROL OF GOLD SUPPLY, AND PROPOSED AMENDMENTS.

The final installment of member banks' obligatory reserves, amounting to about $60,000,000, was paid into the Federal Reserve Banks by
their members on November 16, 1916. Under the provisions of the
Federal Reserve Act about $250,000,000 of reserves were paid into
the Federal Reserve Banks immediately upon their organization.
The Act provided that subsequent reserve payments should be made
at intervals of six months, and accordingly on May 16, 1915, November 16, 1915, May 16, 1916, and November 16, 1916, additional percentages of reserves were transferred. Due partly to these regular
transfers of reserves, as required by law, and partly to the increase
of member bank deposit liabilities as well as to the change in vault

Federal Reserve Bulletin, p. 596.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

requirements provided by the act of September 7, 1916, the moneystock of Federal Reserve Banks has been greatly increased. The
actual holdings on successive dates were as follows:
December 31, 1914
June 30, 1915
December 31, 1915
June 30, 1916
December 30, 1916

$255, 647,000
300,814,000
357, 983, 000
404,206,000
474,590,000

No further payments are now compulsory, but from and after November 16, 1917* (or earlier if the Board's suggested amendment
should be adopted), balances with reserve agents in reserve and central reserve cities will no longer count as member banks' reserves,
and members will be required to build up either their vault cash or
their balances with Federal Reserve Banks sufficiently to cover the required reserves heretofore carried as balances with correspondents.
In a press statement dated November 28, the Board announced
that Congress would be asked to move forward the date when balances with correspondent banks in reserve and central reserve cities
shall no longer count as member bank reserves, and suggested that the
date originally fixed for November 16, 1917, be advanced to some
time in February or March. There are several good reasons for
urging this change upon the immediate attention of Congress. The
United States has to-day a plethora of gold. While the Board does
not believe that further importation of gold will of necessity prove
a source of danger or disturbance, it nevertheless believes it desirable, in order to avoid possible danger and misconception of the
situation, to call particular attention to the actual reserve conditions
and to make clear that the inflowing gold should be controlled and
not be permitted to become the basis of abnormal loan expansion.
The following table shows the reserve position of member banks on
November 17, 1916:
[GOO's omitted.]

In vault.

Total United States (all member banks):
Amount reserve held
Amount reserve required
Excess reserve

With
Federal
Reserve
Bank.

Either in
With
vault or
with Fed- approved
reserve
eral Reserve Bank. agents.

Total
reserve.

813,573
576,062

674,235
606,413 1

151,756

1,048,313
175,914

2,536,121
1,510,145

237,511

67,822

1151,756

872,399

1,025,976

* Amount to be deducted from excess in vaults of Federal Reserve Banks to agree with total excess.

From this table, taken from the official abstract issued by the
Comptroller of the Currency, it is evident that under present methods
of computation more than four-fifths of the item " excess reserve " is
in the form of balances carried by banks with other banks which are
now approved reserve agents, but which can not act in that capacity
after
November 16 next. Of the actual reserve required on November

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

17, 1916 ($1,510,145,000), the member banks carried in their vaults
and with Federal Reserve Banks $1,487,808,000; so that in order to
place them upon their permanent reserve basis it would have been necessary on that date for the reserve city banks and the country banks
to transfer only $22,337,000 from their central reserve and reserve
city bank correspondents to the Federal Reserve Banks or to their
own vaults. This process would not have altered the technical
position of the banks in any appreciable degree, for the city banks
would still have had more than $1,000,000,000 of balances from their
depositing banks just as before, less a deduction of the comparatively small amount required to be transferred to the Federal Reserve Banks. The essential difference would have been that balances
with former reserve correspondents could no longer be counted as
bank reserves, but in all other respects would provide for the same
functions as at present. It is interesting to note that had the
reserve requirements which will now become operative on November
17, 1917, been effective on November 17, 1916, the apparent excess
reserve of more than $1,000,000,000 would not have existed, but
that a transfer of $-22,337,000 from the vaults of central reserve
and reserve city banks to the Federal Reserve Banks would have
been necessary to place the member banks as a whole upon their
required reserve footing. After carefully studying the whole reserve problem, there has been transmitted to the chairmen of the
appropriate committees, in the name of the Board, recommendations for further amendments to the Federal Reserve Act. The text
of these suggested amendments is attached as an exhibit to this
report.
When the Federal Reserve Act was drafted its principal object was
to deal with internal problems of banking and currency, Since its
enactment financial and economic conditions in the United States
have undergone far-reaching changes which were not foreseen three
years ago. The United States has attained to world influence in
financial affairs and it seems necessary that the Act, which has proved
of such great value in the treatment of our domestic problems, should
be amended in order to enable us to deal effectively with the international problems which now confront us and which seem destined to play so important a part in our economic life. The: banking
system of the United States should be prepared effectively to meet
two conditions of opposite character—one the excessive and uncontrolled inflow of gold, the other the excessive and unregulated outflow of gold. The amendments proposed are designed to provide
means of controlling an overextension of loans based on new accretions to our gold stock and to provide for the mobilization and concentration of the gold holdings of the United States so that the flow
of gold back to Europe, or to South America, or to the Orient, may

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

be arranged without forcing any violent contraction of loans or
causing undue disturbance to legitimate business.
Of approximately two and three-quarter billions of gold in this
country there are held or controlled by Federal Reserve Banks about
$738,000,000, of which Federal Reserve Agents hold $283,000,000 as
security for Federal Reserve notes outstanding, and $455,000,000 is
reserve money held by the Federal Reserve Banks. But even assuming that the Federal Reserve Banks were willing to reduce their
gold reserves to 40 per cent of their deposit and note liabilities (which
should be regarded as a minimum and in normal times would be
inadequate) the amount of free gold—i. e., the amount of gold that
the Federal Reserve Banks could lose before reaching this 40 per
cent minimum—would be a little more than $375,000,000. While this
is a very large sum, its sufficiency can not safely be assumed when we
consider the wide scope of our transactions in world finance and the
phenomenal growth of our own credit structure,
It is estimated that there are now in the hands of the public—i. e.,
outside the Treasury and the banks—over $800,000,000 in gold and
gold certificates, and that there are at present held in the vaults of
member banks about $815,000,000 of reserve money of which about
$545,000,000 is gold coin or gold certificates. There should be added
to this total about $600,000,000 of lawful money in the vaults of
nonmember State banks and trust companies.
The Federal Reserve note, which is an obligation of the United
States secured by an ample reserve of gold and commercial paper,
circulates as readily as a national-bank note or as any other form
of currency, and the public does not discriminate between different
forms of United States currency. This is shown by the fact that
Federal Reserve note circulation has been substituted for gold certificates to the extent of about $300,000,000.
Under the present law this gold is deposited with the Federal Reserve Agents for the redemption of the Federal Reserve notes protected by it. The notes so protected in effect cease to be obligations
of the Federal Reserve Banks; but as the gold does not figure as an
asset of the Federal Reserve Banks, they do not show the strength
which would be evidenced if the law permitted, as proposed in the
amendments, the issuance of Federal Reserve notes not only against
commercial paper, but also against gold, provided only that every
Federal Reserve note must be covered by at least 100 per cent of
commercial paper or gold, and that there must always be a gold
reserve of not less than 40 per cent against all outstanding Federal
Reserve notes.
The control of gold by Federal Reserve Banks in times of abundance such as the present, will decrease the danger of inflation of
domestic credits and at the same time will enable the country, when

AXSTUAL REPORT OF THE FEDERAL RESERVE BOARD.

the tide turns, to part with large sums of gold with less inconvenience
or shock, thus enabling us more safely and effectively to proceed with
the development of our foreign trade and to give the necessary credit
facilities for its extension. The United States should be in a position to face conditions which may call for an outflow of gold without
any disturbances of our own or the world's business, and without
making necessary drastic changes in our interest or discount rates.
The amendments suggested by the Board are designed to enable the
Federal Eeserve Banks to withdraw gold from actual circulation
while enabling member banks at the same time to release gold which
at present is tied up in their own vaults. The amendments are based
upon the theory that all of the individual banks should strengthen
the gold holdings of the Federal Eeserve Banks. The country's
holdings of gold are not used most effectively when they are in the
vaults of a large number of banks scattered all over the country, but
its greatest use would come from concentrating it to a greater degree
in the vaults of the Federal Eeserve Banks, where it can be effectively protected when not required and effectively used when needed.
The member bank requires currency rather than gold with which to
supply the. ordinary demands of its depositors.
It is from this point of view that the Federal Eeserve Board has
proposed that Congress increase the required reserves to be maintained by member banks with the Federal Eeserve Banks. On
November 17, 1916, the cash reserves of all member banks were
about $814,000,000. Under the proposed amendment of section 19,
$300,000,000 of this amount would be transferred to the Federal Eeserve Banks. Hence the Board believes that ultimately the law
should require of member banks no more than that they should maintain specified balances with the Federal Eeserve Banks in amounts
adequate to supply the necessary reserve basis, and that the Federal
Eeserve Banks should have sufficient reserves of gold with which to
protect all obligations, but that there should be no legal requirement
as to the amount of currency a member bank should carry in its own
vault. This is a matter of business judgment which might well be
left to the discretion of each member bank. It was thought, however, that if this principle were carried into full effect at this time,
the step might be considered too extreme, particularly under present
conditions, and that nothing should be done which might tend to a
further release of reserve money.
A minimum amount of currency which the member banks should be
required to keep in their vaults was, therefore, suggested. The
amount suggested is 5 per cent of the demand deposits, so that the
total requirements—cash and reserve—will remain practically unchanged. While the apparent effect of the proposed changes will be
a slight reduction of the reserve requirements, the reserves will really

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

be increased by the abrogation of the practice' hitherto observed of
counting items in transit or " float" as reserve. The permission given
member banks to use their own discretion as to the character of currency in their vaults, will enable them to release the gold they now
hold, with the important result that the substitution of Federal Reserve notes for gold and gold certificates will be facilitated by this
change in the law. Without some such change member banks will
continue to ask for gold certificates in small denominations, because
as long as they must have gold or lawful money to count as reserve
it would be impossible for the banks to exchange them for Federal
Reserve notes.
Besides the proposed changes relating to note issues and to reserves,
the Board has suggested also the following:
Amendment of section 4, to abolish the- title and office of
Deputy Federal Reserve Agent, thus having two unattached class
C directors instead of one, as at present, and to create the position
of Assistant Federal Reserve Agent, who shall not be a director of
the bank, but who shall be a salaried, bonded officer in the Federal
Reserve Agent's department, serving at all times as an assistant to
the Federal Reserve Agent and qualified to act for the agent in his
absence. Experience has shown that there is difficulty in filling the
office of Deputy Federal Reserve Agent. This officer is required to
have the same qualifications as the Federal Reserve Agent; he must
have had banking experience, and he must not be an officer, director,
or stockholder in any bank. At the same time he is not, as a rule,
a salaried officer, and receives only the customary fees paid directors
for attendance upon meetings, and he is obliged to be prepared to
assume the duties of the Federal Reserve Agent in case of the
absence or disability of that officer, which involves a transfer and
audit of securities and accounts. It is believed that the change suggested will operate to fix responsibility more definitely and will give
the Board more latitude in the selection of the class C directors other
than the Federal Reserve Agent.
Amendment of section 9, to authorize mutual savings banks
not having capital stock to become associate members of the Federal
Reserve System under certain prescribed conditions. The principal
beneficiaries of this amendment would be the mutual savings
banks of the Eastern and New England States, which cannot become
members of the Federal Reserve System under the present law
owing to the lack of any provision enabling them to subscribe for
capital stock of a Federal Reserve Bank, as they have no capitalization of their own upon which a percentage could be based. They
would be required to carry a reserve balance with the Federal Reserve Bank against their time deposits in the same proportion as
member banks; and the accommodation proposed for mutual sav75284°—17
3

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

ings banks are limited strictly to the discount of their 30-day obligations properly secured.
Amendment of section 11 so as to permit the Federal Reserve
Board to raise reserve requirements in emergencies, just as it is
now empowered in certain contingencies of a different kind to
lower those requirements.
This provision, if adopted, would enable the Federal Reserve
Board in prolonged periods of extreme ease in the money market
to check any tendency toward excessive loans or other forms of
undue extensions of credit.
Amendment of section 13, to restore the provision which was by
error stricken from the Act in the amendments of September 7, 1916,
thus restoring to national banks, with the approval of the Federal
Reserve Board, the right to accept up to 100 per cent of their capital
and surplus in transactions involving imports or exports.
Amendment of section 16 to permit nonmember State banks
and trust companies, even though too small to be eligible for membership in the Federal Reserve Banks, to avail themselves of the
clearing and collection facilities of the Federal Reserve Banks, provided that they cover at par checks on themselves sent for collection by the Federal Reserve Bank, and provided further that they
keep compensating balances with the Federal Reserve Bank in
amounts to be determined under rules prescribed by the Federal
Reserve Board. This is not intended to operate as an extension of
any of the privileges of the Federal Reserve System to nonmember
banks at the expense of members, but, on the contrary, the amendment is proposed primarily for the convenience of the public and
incidentally for the benefit of the member banks. It is contemplated
that the compensating balances which nonmember banks participating in the clearing plan will be required to keep with Federal
Reserve Banks will be sufficiently large to protect member banks
and justify Federal Reserve Banks in undertaking the service. Any
clearing and collection plan to be effective must be so comprehensive
as to include all checks. At present the par lists of the Federal
Reserve Banks include the names of banks checks on which can be
collected in any circumstances at a minimum of time and expense,
but do not embrace a large number of towns in every State where
there are no member banks; and in order to make collections on
such points many banks are obliged to maintain accounts in addition to their reserve accounts with the Federal Reserve Banks. A
necessary factor in any successful clearing plan is the offset w^hereby
balances only instead of the total volume of transactions require
settlement. As long as the clearing system does not embrace all
of the banks this offset is lost in a corresponding degree and the
value of the system diminished in proportion.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Amendment of section 17, to cancel the provision of the nationalbank act which requires national banks to maintain a minimum deposit of Government bonds with the Treasurer of the United States,
National banks are no longer required to keep outstanding a minimum amount of circulating notes, and a newly organized bank is not
obliged to purchase or carry any bonds of the United States; but
there are a number of national banks organized before the passage
of the Federal Reserve Act which have retired their national-bank
circulation in full, yet which are, under a construction of the old law,
required to keep on deposit with the Treasurer of the United States,
a certain minimum of United States bonds. The Board feels that it
is just to these banks that they be relieved of this obligation.
Amendment of section 19, abbreviating and simplifying the
clauses in section 19 which relate to reserve requirements. This
proposed amendment provides that all member banks shall maintain
reserves in the Federal Eeserve Banks as follows:
Against Against
demand
time
deposits. deposits.
Per cent. Per cent.
7
3
10
3
13
3

(a) Country banks
(6) Reserve city banks
(c) Central reserve city banks.

In addition it is suggested that every member bank be required to
keep in its own vault an amount of specie or currency (not necessarily gold or lawful money) equal to 5 per cent of its demand
deposits, less the amount of net balances with Federal Reserve Banks
in excess of the minimum above stipulated.
Amendment of section 22—the penal statute—so as to define
more clearly the rights and limitations of directors in the matter of
accepting fees or compensation other than the ordinary fees paid directors for legitimate services rendered in the regular course of business, the performance of which service is not incumbent upon them in
their capacity as directors.
Amendment of section 25, to authorize member banks located in
cities of more than 100,000 population and which have a capital and
surplus of more than $1,000,000 to establish branches in the same city,
provided the State laws do not prohibit State banks and trust companies from establishing branches.
STAFF AND ORGANIZATION.

On August 10,1916, the Federal Reserve Board had been organized
two years, and, under the provisions of the Act creating it, the term
of one member expired two years after his original appointment.

ANNUAL KEPOET OF THE FEDEKAL KESEKVE BOAKD.

On July 25 the President sent to the Senate the nomination of
Charles S. Hamlin to succeed himself as a member of the Board,
the appointment being for the regular term of 10 years. This
nomination was confirmed on August 3. Mr. Hamlin's term under
his original appointment expired on Wednesday, August 9. He
qualified by taking the oath on August 10. W. P. G. Harding was,
on August 10, designated by the President as governor and Paul M.
Warburg as vice governor of the Board, each " for a period of one
year, or until otherwise directed."
The Federal Advisory Council has held its four stated meetings
during the last year and has discussed topics submitted to it by the
Board, as well as questions raised by its own members, presenting
results of the discussions to the Board. Conferences were held also
by the Federal Reserve Agents on May 29 and December 4, in Washington, these meetings being devoted to the consideration and analysis
of questions of current interest to the Federal Eeserve Banks. The
meetings of governors of Federal Reserve Banks, which have taken
place at intervals since the organization of the system, have continued, three such meetings having been held during the year.
The staff and internal organization of the Board have continued
without important modification, the principal changes being the
better development of its organization and the gradual growth and
enlargement of the work. The personnel of the staff remains essentially unaltered and its numbers have been only slightly increased.
The total cost of conducting the Board's work in 1916, including
members' salaries, was $213,000. The volume of clearings through
the gold settlement fund, to which reference has been made elsewhere in this report, has been greatly enlarged, but without appreciable increase in expense of operation; the cost for the year 1916
being $1,343.37, while the total volume of business cleared during the
year has been about $5,533,966,000, being a net cost of $0.0002J per
$1,000. This fund was originally conducted merely as a means of
settling between Federal Eeserve Banks, but the scope of its operations has been enlarged by providing a similar fund for Federal
Reserve Agents, conducted on the same plan as the gold settlement
fund itself. This renders possible the making of payments not only
between Federal Reserve Banks, but also between the Reserve Agents
and their own banks, without the necessity of shipping gold or its
equivalent back and forth. The net amount of change of ownership
among the Federal Reserve Banks of gold held in the fund was
$223,870,000, and it may be estimated conservatively that the shipment of coin and currency to at least this amount was thus avoided.
The Federal Reserve Bulletin has been conducted throughout the
year, as during the year 1915, as a monthly publication, and has been
enlarged in size and broadened in scope in response to the increasing

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

public interest. It is distributed without charge to all member banks,
but it has also a growing list of paid subscribers among nonmembers
and the financial community generally. So fully has the Bulletin
dealt with all of the details of the operation of the Federal Reserve
System that it is unnecessary to repeat them in this report, a complete
file of the Bulletin itself being transmitted as supplementary to the
information herein given.
G. MCADOO,
W. P. G. HARDING, Governor,
Secretary of the Treasury,
PAUL M. WARBURG, Vice Governor.
Chairman, FREDERIC A. DELANO,

WILLIAM

JOHN SKELTON WILLIAMS,

ADOLPH C. MILLER,

Comptroller of the Currency. CHARLES S. HAMLIN,
Members Federal Reserve Board.

EXHIBITS.

Exhibit A—DISCOUNT RATES.
Changes in discount rales during calendar year 1916.
MEMBER BANKS' COLLATERAL NOTES.
Sept.—

Dec—

Bank.
11 14
Boston
New York.
.
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis .
. . .
Kansas City
Dallas
San F r a n c i s c o . . .

15 16

19 20 22 23

Oct.
6.

In force
Jan. 1,
1917.

4
3
31
31

.
3

4
3i

31
31
31
4
4
31
4

84
4
4
4

PAPER MATURING WITHIN 10 DAYS.
July—

In effect
Jan. 1, Apr. 12.
1916.
5

Bank.

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis .
Minneapolis
Kansas City
Dallas
San Francisco

3
3
3
31
4

Sept.—
Dec. 7.

In effect
Jan.l,
1917.

13
1 3J

31
1

4
4

3i
....

3
4
31
4
3

131
13

4
4

4
3

1 Changed from "10 days and less" to "15 days and less" on the dates shown.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
Changes in discount rates during calendar year 1916—Continued.
PAPER MATURING WITHIN 15 DAYS.
Sept.—

Bank.

Dec. 29.
11

In effect
Jan.l,
1917.

Boston
New York

.
I

3
31
31

4
4

31-

Philadelphia
Cleveland

Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas . . . .
San Francisco

3i
31

!
3

4
4
4

4
4

. . .

P A P E R MATURING 11 TO 30 DAYS, INCLUSIVE
In effect
J a n . l , Jan. 13. Apr. 12.
1916.
15

Bank.

Chicago

4
4
4
4
4
4
4

St. Louis

Minneapolis
Kansas City
Dallas

4
4
4
31

Boston
New York..
Philadelphia
Cleveland
Richmond

Atlanta

San Francisco

Sept.—
16

Dec. 7.

In effect
Jan. 1,
1917.

22 23

3.V
i 4 !
i 4
1

4
4
4
(!)
i 4

i 41

iChanged from "11 to 30 days, inclusive," to "16 to 30 days," on dates shown above.
P A P E R MATURING 16 TO 30 DAYS, INCLUSIVE.
In effect
Jan. 1,
1916.

Banks.

Boston
New Y or k
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis . . .
Minneapolis
Kansas Citv
Dallas
San Francisco

Sept.—
15

4 i
4

4
4
4

•

4
4
41

•.
4

In effect
Jan. 1,
1917.

4
4
4
4
4
4
4
4
41
4

REPORT OF T H E FEDERAL RESERVE BOARD.
Changes in discount rates during calendar year 1916—Continued.
PAPER MATURING 31 TO 60 DATS, INCLUSIVE

In effect
Jan. 1,
1916.

Banks.

Au
Apr.
12.

July
1

4
4
4
4
4
4
4
4

Boston
New York
Philadelphia
Cleveland
Richmond
\tlanta
Chicago
St Louis
Minneapolis
Kansas City
Dallas
San Francisco

In effect
Jan. 1,
1917.
4
4
4

4-V

4
4
4

4
4
4
4
4

4
4

PAPER MATURING 61 TO 90 DAYS, INCLUSIVE.
In effect
Jan. 1,
1916.

Banks.

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis . . .
Kansas City
Dallas
San Francisco

Apr. 12.

In effect
Jan. 1,
1917.

4
4

4
4
U
4

4
4
4
41
4

4
4
44

AGRICULTURAL AND LIVE-STOCK PAPER OVER 90 DAYS.

Banks.

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis .
Minneapolis.
Kansas City
Dallas
San Francisco

In effect
Jan. 1,
1916.

Feb. 24.

Aug. 4.

Nov. 20.

5
5

5
m

44
5

5
5
5
5
5
5
0

In effect
Jan.'l,
1917.

5
4-1

4.t

5
5
52

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
Changes in discount rates during calendar year 1916—Continued.
TRADE ACCEPTANCES, TO 30 DAYS, INCLUSIVE.
Mar.—

In effect

Bank.

Boston . . .
New York..
Philadelphia....
Cleveland
Richmond
Atlanta
Chicago
St. Louis . . .
Minneapolis
Kansas City .
Dallas ..
San Francisco

July—

Feb.
21.

Jan. 1,
1916.

Nov.
25.
10

31
3i
3
31
31
31

V-

31
3

31
31

31
31
31
3

In effect
Jan. 1,
1917.

31
31
31
3
31
31
31
3
31
4
31
3

Trade acceptances with maturities up to 15 days, 3 per cent.
TRADE ACCEPTANCES, 31 TO 60 DAYS, INCLUSIVE.
In effect
Jan. 1,
1916.

Bank.

B oston....
New York..
Philadelphia .
Cleveland
Richmond..
Atlanta
Chicago
St. Louis
Minneapolis....
Kansas City
Dallas..
San Francisco

Mar.—

July—

Feb.
21.
18

Nov.
25.

Aug.
1.
20

3
31

31
31

. .

31
31
3

In effect
Jan. 1,
1917.

31
31
31
31
31
31
31
3
31
4
Si
3

TRADE ACCEPTANCES, 61 'TO 90 DAYS, INCLUSIVE.
1

Bank.

In effect
Jan. l
1916.

Boston
New York
Philadelphia
Cleveland .
Richmond
Atlanta..
Chicago..
St. Louis
Minneapolis..
Kansas City
Dallas.
San Francisco

Mar.—

Jan. 12. Feb. 21.
10

July—

i:-

Aug. 1.
5

31
31
3
4

Nov.
25.

3^
i

I1
3±

n
4
%

In effect
Jan. 1,
1917.

31
31
31
4
31
31
34
31
34
4
31
34

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Changes in discount rates during calendar year 1916—Continued.
COMMODITY PAPER MATURING WITHIN 90 DAYS.
May—

July-

Apr.22.
10

Dec—
*

In effect
Jan. 1,
1917.

3i
31
3

CO
CO

CO CO

New York..
Philadelphia..
Cleveland
Richmond..
\tlanta...
Chicago
St. Louis. .
Minneapolis. .
Kansas City. . .
Dallas
San Francisco

Jan. 1,
1916.

Boston

In effect

Bank.

3!
4

4
3

i Commodity paper rates as follows: Maturing within 30 days, 3 | per cent; 31 to 60 days, 4 per cent; 61 to
90 days, 4} per cent; 91 days to 6 months, 5 per cent.
NOTE.—Rate for bankers' acceptances, 2 to 4 per cent.

Exhibit B.—FEDERAL RESERVE NOTES.
Federal Reserve notes received from the Comptroller of the Currency, issued to each Federal Reserve Bank and in actual circulation, gold and lawful money,
also paper, held by each Federal Reserve Agent, amounts of Federal Reserve notes held and amounts carried to net assets and liabilities by each
Federal Reserve Bank on the last Friday in each month during calendar year 1916.
[In thousands of dollars; i. e. 000's omitted.]

Boston.

New
York.

Philadelphia.

Cleveland.

Richmond.

Atlanta.

Chicago.

St.
Louis.

Minneapolis.

Kansas
City.

Dallas.

San
Francisco.

Total.
d

o
w

Federal Reserve notes received from the Comptroller of
the Currency less returned for destruction:
Jan. 28
Feb. 25
Mar. 31
Apr. 28
May 26
June 30
July 28
Aug. 25
Sept. 29

H
14,S40

17,000

14,190

12, 760

17, 000

19,298

13,271

12,368

14,626

19,040

9, eoo

19,000

13,000

19,434

11,130

273,664

9,260

9,600

19,000

13,000

19,294

11,070

254.444

8,700

9,403

18, 865

12,582

19,659

10,842

245,347

9,260

12,899

12,242

14,228

18,774

8,677

9,074

18,815

12,455

20,799

11,611

246,633

12,578

12,128

13, 7r.O

18,528

8,554

8,718

18, 767

12,286

21,898

11,910

246,397
212,334

11,933

13.420

13,12S

18,218

8,520

8,553

18,673

12,119

20,986

12,545

11,608

13,132

12,660

17,856

8,276

8,440

18,604

12,807

20,682

12,394

237,454

11,130

12,738

12,169

17,562

8,239

8,019

18,515

15,237

21,893

12,338

236,463

10,046

12.421

14,686

23,534

8,206

10,671

20,411

21,015

30,031

12,666

282,118

o
H

w
i

10,153

12,097

17, 776

26,080

8,056

16,576

20,335

21, 489

31,544

12,928

297,566

13,163

11,765

20,088

29,330

8,029

20,262

21,743

22,313

31,317

13,343

311,151

24,330

13,932

22,931

31,545

10,183

19,930

23,604

25,988

30,819

15,781

367.445

94,240

8,660

11,200

14, 430

17,790

4,380

8,950

13,000

11,000

14,145

11,130

218,945

77,635

8,097

11,200

14,200

15,696

4,379

7,838

13,200

10,205

13,880

11,070

196,992

75,125

7,178

10,668

11, 726

14,944

3,819

7,641

13,065

9,609

14,869

10,842

190,232

70,791

6,806

10,542

10,828

14,678

3,796

7,312

13,105

9,462

15,705

11,611

185,424

74,742

6,485

10,428

10,350

14,432

3,673

6,956

13,137

9,368

15,209

11,910

187,248

69,474

7,313

9,920

9,628

14,122

3,639

6,791

12,143

9,201

13,957

9,745

176,168

9,632

9,260

13,760

3,395

6,678

12,774 i

10,314

13,753

9,594

174,023

Oct. 27

Nov. 24
Dec. 29
Federal Reserve notes issued to Federal Reserve Banks
(net amount):
Jan. 28
Feb. 25
Mar. 31
Apr. 28
May 28
June 30
July 28

20,400

12, 880

66,481

Aug. 25
Sept. 29
Oct. 27
Nov. 24
Dec. 29
Gold and lawful money in hands of or to credit of Federal Reserve Agent:
Jan. 28
Feb. 25
Mar. 31
Apr. 28
May 26
June 30
July 28
Aug. 25
Sept. 29
Oct. 27
Nov. 24
Dec. 29
Paper held by Federal Reserve Agent:
Jan. 28
Feb. 25
Mar. 31
Apr. 28
May 26
June 30
July 28
Aug. 25
Sept. 29
Oct. 27
Nov. 24
Dec. 29

10,158 69,345
10,337 78,414
11,121 81,831
11,230 88,668
13,518 107,004

7,410
7,606
8,473
13,163
17,070

9,438
9,121
8,797
8,465
10,832

9,419
12,536
15,626
18,438
20,431

13,236
19,040
22,095
23,805
25,920

3,358
3,325
3,175
3,148
7,183

6,257
8,909
13,916
16,722
16,890

12,885
13,781
15,415
18,423
20,484

12, S64
17,062
18,276
19,600
22,235

15,930
23,730
25,783
24,976
24,163

9,538
10,106
10,368
11,443
14,781

179,838
213,967
234,876
258,081
300,511

10,020 94,240
9,592 77,635
10,446 75,125
10,788 70,791
10,558 74,742
10,235 69,474
10, 494 66,481
10,158 69,345
10,337 78,414
11,121 81,831
11,230 88,668
13,518 107,004

8,660
8,097
7,178
6,806
6,485
7,313
7,888
7,410
7,606
8,473
13,163
15,770

11,200
11,200
10,668
10,542
10,428
9,920
9,632
9,438
9,121
8,797
8,465
10,832

9,160
9,130
6,856
6,208
5,730
5,108
4,640
4,149
7,466
11,406
15,548
16,601

14,200
13,201
13,944
14,678
14,432
14,122
13,760
11,236
16,288
18,574
18,883
21,649

4,380
4,379
3,819
3,796
3,673
3,639
3,395
3,358
3,325
3,175
3,148
7,183

8,950
7,838
7,641
7,312
6,956
6,791
6,678
6,257
6,122
10,569
11,375
12,543

13,000
13,200
13.065
13,105
13,137
12,143
12,774
12,885
13, 781
15,415
18,423
20,484

9,000
9,000
8,679
8,232
8,283
8,116
8,374
11,084
15,362
16,736
17,960
19,695

11,440
11,433
11,018
11,978
11,782
9,380
9,066
8,976
19,644
23,037
23,260
22,463

11,130
11,070
10,842
11,611
11,910
9,745
9,594
9,538
10,106
10,368
11,443
14,781

205,380
185.775
179,281
175,847
178,116
165,886
162.776
163,834
197,572
219,502
241,566
282,523

5,406
5,256
5,008
4,885
4,934
5,163
5,558
6,001
5,157
4,240
3,058
4,077

3,590

2,000
1,215
1,245
1,235
1,085
1,091
1,943
1,850
1,899
1,643
1,658
2,545

3,794
4,171
3,927
4,122
4,189
4,950
5,766
7,194
4,448
3,061
1,853
1,844

1,300

1,000

2,003
2,762
3,525
4,930
4,285

2,788
3,348
5,349
4,351

14,790
13,140
11,ISO
10,242
10,208
11,204
13,267
17,048
17,054
15,817
16,848
18,402

Federal Reserve notes receivedfrom the Comptroller of the Currency, issued to each Federal Reserve Bank and in actual circulation, gold and lawful money,
also paper, held by each Federal Reserve Agent amounts of Federal Reserve notes held and amounts carried to net assets and liabilities by each
Federal Reserve Bank on the last Friday in each month during calendar year 1916—Continued.
[In thousands of dollars; i. e. 000's omitted.]

Boston.

Federal Reserve notes held by bank:
Jan. 28
Feb. 25
Mar. 31
Apr. 28
May 26
June 30
—
July 28
Aug. 25
Sept. 29
Oct. 27
Nov. 24.
Dec. 29
Federal Reserve notes issued by each Federal Reserve
Bank and in circulation:
Jan. 28
Feb. 25
Mar. 31
Apr. 28
May 26
June 30
July 28
Aug. 25
Sept. 29
Oct. 27

1,025
1,124
1,111

New
York.

622

25,185
13,230
14,325
9,630
13,986
13,821
11,775
14,015
8,313
10,750
9,785
13,637

8,995
8,468
9,335
9,854
9,504
9,493
9,650
9,248
9,578
9,714

69,055
64,405
60,800
61,161
60,756
55,653
54,706
55,330
70,101
71,081

934

1,054
742
844
910
759

1,407
824

Philadelphia.

Cleveland.

Richmond.

658

894

375

135

417

116

563
352

153

426

464

St.
Atlanta. Chicago. Louis.

138

530

512

634

309

504

267

427
482

384

426

693

634

465

406

307

520

342

296

1,687
1,169

888

294

592

688

164

560

1,138

1,051

1,747
1,806
1,537
1,635
1,615
1,700
1,286
1,300
1,410
1,299
1,028
2,647

8,002
7,962
7,062
6,653
6,347
6,679
7,384
7,026
7,141
7,953

10,306
10,637
10,316
10,116
9,898
9,611
9,365
9,012
8,715
8,455

14.055
13,783
10,795
10,364
9,838
9,201
8,778
8,726
12,229
15,330

15,935
14.559
13,713
13,492
13,030
12,324
12,532
12,602
17,353
20,926

2,633
2,573
2,282
2,161
2,058
1,939
2,109
2,058
1,915
1,876

931

1,855
1,137
1,231
1,186
1,402
1,798
1,228

Minneapolis.

Kansas
City.

Dallas.

San
Francisco.

540

198

817

509

543

1,239
2,188

256

167

431

500

574

5,409
5,573
5,296
5,210
4,856
1,978
1,764
1,484
1,556
1,711
1,356
1,646

8,009
7,452
6,661
6,311
5,907
5,494
5,484
5,258
8,462
13,025

12,390
12,224
11,895
11,676
11,334
11,240
11,328
11,181
12,440
14,598

10,120
10,117
9,851
9,320
9,028
8,984
9,852
12,362
16,522
17,767

14,003
13,691
14,810
15,585
14,635
13,859
13,572
15,488
23,532
25,240

5,721
5,497
5,546
6,401
7,054
7,767
7,830
8,054
8,550
8,657

941

610

880

142

386

976

189

980

1,170
1,429
1,803

142

120

340

574

217
462

181

502

442

1,001
1,049
1,297
1,194
999
447
891
516

903

1,446
1,704
1,341

Total.

39,721
25,624
27,166
22,330
27,859
23,924
21,433
23,493
17,429
20,254
17,633
25,158

179,224
171,368
163,066
163,094
159,389
152,244
152,590
156,345
196,538
214,622

Nov. 24
Dec. 29
Federal Reserve notes, amount of, carried to net assets:
Jan. 28
Feb. 25
Mar. 31
Apr. 28
May 26
June 30
July 28
Aug. 25
Sept. 29
Oct. 27
Nov. 24
Dec. 29
Federal Reserve notes, amount of, carried to net liabilities:
Jan. 28
Feb. 25
Mar. 31
Apr. 28
May 26
June 30
July 28
Aug. 25
Sept. 29
Oct. 27
Nov. 24
Dec. 29

10,406
12,896

78,883
93,367

12,275
16,906

1,025
1,124
1,111
934
l',054
742
844
910
759
1,407
824
622

25,185
13,230
14,325
9,630
13,986
13,821
11,775
14,015
8,313
10, 750
9,785
13,637

658
135
116
153
138
634
504
384
465
520
888

1,136

8,171
10,272

17,846
19,293

894
563
352
426
530
309
267
426
406
342
294
560

23,117
24,869

231
1,186
1,402
1.798
1,228

4,895
4,653
3,939
4,156
4,108
4,093
4,138
4,577
4,763
3,924
2,298
2,692

2,120
4,536

16,206
16,459

17,184
IS, 296

1.747
1,806
1,537
1,635
1,615
1,700
1,286
1,300
1,410
1,299
1,028
2,647

941
386
980
1,001
1,049
1,297
1,194
999

610
976
1,170
1,429
1,803
903
1,446
1,704
1,341
817
1.239
2,188

1,735
1,358

1,366
1,065
2,352
4,234
3,220

2,340
2,456
4,831
3,916

19,344
21,735

1,120
1,117
1,172
1,088
745
868
1,478
1,278
1,160
1,031
1,384
2,040

24,809
23,589

2,563
2,258
3,792
3,607
2,853
4,479
4,506
6,512
3,888
2,203
1,549
1,126

10,087
13,135

240,448

5,409
5,573
5,296
5,210
4,856
1,978
1,764
1,484
1,556
1,711
1,356
1,646

36,469

275,353

23,793
25,118
21,604
26,433
23,182
20,308
21,222
14,250
16,846
15,414
21,300

10,313 /
9,386
8,903
8,851
7,706
9,440
10,122
13, 733
13.216
11,966
14,296
14,130

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

FEDERAL RESERVE NOTES
ISSUED TO BANKS BY AGENTS
J??}tou,7tts covered,
fftus .•

1915.
DEC 30,

1316,
DSC 29.

NET AMOUNTS OF FEDERAL RESERVE NOTES
ISSUED TO THE FEDERAL RESERVE BANKS
BY AGENTS,AND AMOUNTS OF GOLD HELD BY
AGENTS AGAINST FEDERAL RESERVE NOTES
ON THE LAST FRIDAY OF EACH MONTH m/9/SS/S/S.

o
jf
Curve showsfipfralneb amdi&nGs issued,.
JCbwer Carve <shows cum<)vun/)$ cov&recbby <jold>*
Jht shaded jiortion- between, 6h# two curres jhows apzozLttCs
secured. 3y commercial p&j&r pledged, with, age<rtf& *

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Statement of Federal Reserve notes, by denominations, printed, shipped to Federal Reserve
Agents and United States subtreasuries, and on hand in reserve vault Dec. 31, 1916.
Fives.

Tens.

Twenties.

Fifties.

Hundreds.

Total.

$18,580,000
12,080,000

$18,000,000
11,440,000

$6,800,000
1,760,000

$2,600,000
1,600,000

$4,400,000
2,000,000

$50,380,000
28,880,000

6,500,000

6,560,000

5,040,000

1,000,000

2,400,000

21,500,000

145,560,000
74,600,000

166,200,000
69,520,000

63,680,000
24,480,000

7,600,000
4,200,000

11,200,000
7,600,000

394,240,000
180,400,000

70,960,000

96,680,000

39,200,000

3,400,000

3,600,000

213,840,000

20,000,000
11,880,000

15,000,000
10,200,000

9,200,000
8,400,000

2,600,000

5,200,000

52,000,000
30,480,000

On hand

8,120,000

4,800,000

800,000

2,600,000

5,200,000

21,520,000

Cleveland:
Printed...
Shipped

17,680,000
4,300,000

15,120,000
4,720,000

10,000,000
6,240,000

2,400,000
1,200,000

4,800,000
1,200,000

50,000,000
17,660,000

On hand

13,380,000

10,400,000

3,760,000

1,200,000

3,600,000

32,340,000

12,000,000
8,700,000

11,560,000
9,400,000

10,640,000
8,800,000

3,400,000
1,800,000

2,400,000
800,000

40,000,000
29,500,000

3,300,000

2,160,000

1,840,000

1,600,000

10,500,000

15,800,000
12,400,000

17,000,000
13,800,000

12,400,000
10,400,000

1,800,000
1,600,000

2,000,000
1,600,000

49,000,000
39,800,000

Bank.
Boston:
Printed
Shipped
On hand
New York:
Printed
Shipped
On hand
Philadelphia:
Printed
Shipped

Richmond:
Printed
Shipped
On hand
Atlanta:
Printed
Shipped

3,400,000

3,200,000

2,000,000

200,000

400,000

9,200,000

Chicago:
Printed
Shipped

26,800,000
10, 780,000

19,240,000
5,200,000

19,760,000
4,800,000

3,200,000
1,200,000

6,000,000
2,400,000

75,000,000
24,380,000

On hand

16,020,000

14,040,000

14,960,000

2,000,000

3,600,000

50,620,000

St. Louis:
Printed.
Shipped

13,960,000
11,580,000

10,960,000
9,040,000

10,000,000
5,520,000

1,400,000
800,000

3,200,000
400,000

39,520,000
27,340,000

2,380,000

1,920,000

4,480,000

600,000

2,800,000

12,180,000

15,000,000
9,180,000

10,760,000
8,120,000

7,440,000
6,400,000

800,000
400,000

2,000,000
400,000

36,000,000
24,500,000

5,820,000

2,640,000

1,040,000

400,000

1,600,000

11,500,000

20,400,000
13,480,000

17,760,000
9,040,000

7,840,000
6,400,000

2,000,000
800,000

2,000,000
400,000

50,000,000
30,120,000

6,920,000

8,720,000

1,440,000

1,200,000

1,600,000

19,880,000

On hand

On hand
Minneapolis:
Printed
Shipped.
On hand
Kansas City:
Printed
Shipped
On hand...

ANNUAL REPORT OF THE FEDERAL RESERVE • BOARD.

Statement of Federal Reserve notes, by denominations, printed, shipped to Federal Reserve
Agents and United States subtreasuries, and on hand in reserve vault Dec. 31. 1916—
Continued.
Fives.

Tens.

Twenties.

Fifties.

Hundreds.

11,240,000
9,200,000

12,400,000
11,400,000

12,160,000
9,920,000

2,400,000
2,400,000

On hand

2,040,000

1,000,000

2,240,000

San Francisco:
Printed
Shipped

14,160,000
7,340,000

12, 760,000
6,760,000

11,840,000
6,800,000

11,000,000
6,000,000

12,400,000
6,800,000

62,160,000
33,700,000

On hand

6,820,000

6,000,000

5,040,000

5,000,000

5,600,000

28,460,000

331,180,000
185,520,000

326,760,000 181,760,000
168,640,000 99,920,000

41,200,000
22,000,000

58,000,000
26,000,000

938,900,000
502,080,000

145,660,000

158,120,000

19,200,000

32,000,000

436,820,000

Bank.
Dallas:
Printed
Shipped

Vault balance Dec. 31, 1916:
Total printed
Total shipped
Total on hand

81,840,000

Total.

40,600,000
35,320,000
5,280,000

Federal Reserve notes by denominations issued through the Federal Reserve agents to the
banks, also amounts retired, and outstanding Dec. 31, 1916.
Twenties.

Fives.

Tens.

$9,846,600
3,284,110

$8,645,600
3,396,405

$728,200
266,100

6,562,490

5,249,195

462,100

465,100

67,490,350
25,461,395

61,967,800
22,432,230

23,238,400
5,200,560

2,802,450
305,750

6,014,000 -161,513,000
1,109,300 54,509,235

Outstanding

42,028,955

39,535,570

18,037,840

2,496,700

4,904, 700 107,003,765

Philadelphia:
Issued . . . . . . .
Retired

9,592,700
3,475,005

7,854,800
2,573,805

6,510,200
839,300

0
0

23,957,700
6,888,110

Outstanding

6,117,695

5,280,995

5,670,900

17,069,590

3,600,000
1,226,960

3,840,000
1,280,965

5,440,000
1,108,620

950,000
66,750

730,000
44,400

14,560,000
3,727,695

2,373,040

2,559,035

4,331,380

883,250

685,600

10,832,305

9,079,300
3,413,320

10,067,700
3,167,700

9,264,400
2,606,710

1,887,200
1,011,850

717,000
385,300

31,015,600
10,584,880

5,665,980

6,900,000

6,657,690

875,350

331,700

Bank.
Boston:
Issued
Betired
Outstanding
New York:
Issued- .
Retired

Cleveland:
Issued
Retired
Outstanding..
Richmond:
Issued
Retired
Outstanding.. . .

Fifties.

Hundreds.

Total.

$642,000 SI,082,300
302,800
176,900

$20,944,700
7,426,315

779,500

13,518,385

20,430,720
—

—

••

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Federal Reserve notes by denominations issued through the Federal Reserve agents to the
fianks, also amounts retired, and outstanding Dec. 31, 1916—Continued.

Atlanta:
Issued
Retired
Outstanding
Chicago:
Issued
Retired
Outstanding
St. Louis:
Issued
Retired
Outstanding
Minneapolis:
Issued
Retired
Outstanding
Kansas City:
Issued
Retired

Outstanding
Dallas:
Issued
Retired
Outstanding.
San Francisco:
Issued
Retired .

Tens.

Twenties.

Fifties.

Hundreds.

11,914,050
4,754,165

12,817,800
3,998,105

10,480,980
2,460,180

1,935,450
930,300

1,782.900
868,900

38,931,180
13,011,650

7,159,885

8,819,695

8,020,800

1,005,150

914,000

25,919,530

5,440,050
2,020,855

760,000
82,200

2,720,600
203,600

200,250
25, 750

400,100
5,100

9,521,000
2,337,505

3,419,195

677,800

2,517,000

174,500

395,000

7,183,495

7,092,950
2,465,155

8,022,940
1,253,955

5,692,160
386,460

200,050
12,800

0
0

21,008,100
4,118,370

4,627,795

6,768,985

5,305,700

187,250

16,889,730

9,382,000
1,704,735

8,215,000
1,179,910

5,695,000
417,310

230,000
52,400

360,000
43,600

23,882,000
3,397,955

7,677,265

7,035,090

5,277,690

177,600

316,400

20,484,045

13,067,000
3,231,790

8,126,000
1,302,600

5,312,000
334,500

895,000
316,350

20,000
0

27,420,000
5,185,240

9,835,210

6, 823,400

4,977,500

578,650

20,000

22,234,760

8,624,750
3, 707,580

13,675,400
5,333,765

11,60S, 600
3,534,300

2,220,000
1,149,850

2,130,000
770,400

38,258,750
14, 495,895

4,917,170

8,341,635

8,074,300

1,070,150

1,359,600

23,762,855

5,440,000
2,928,110

3,360,000
1,584,200

5,200,000
266,400

2,000,000
19,900

3,600,000
20,300

19,600,000
4,818,910

2,511,890

1,775,800

4,933,600

1,980,100

3,579,700

14,781,090

160,569,750
57,673,180

147,353,040
47,585,840

91,890,540
17,624,040

13,962,400
4,068,600

102,896,570

99,767,200

74,256,500

9,893,800

Fives.

Bank.

. .

Outstanding

Total.

RECAPITULATION,

Total issued
Total retired
Total outstanding

16, ,836,300 430,612,030
3,550,100 130,501,760
13,286,200

300,110,270

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Statement of Federal Reserve notes, by denominations, sines organization of banks, received
by agents, issued to the banks, returned to the Comptroller for destruction, and on hand
Dec. 31, 1916, as reported by Federal Reserve agents.
RECEIVED FROM COMPTROLLER OF THE CURRENCY.
Federal Reserve agent at—

Fives.

Tens.

Twenties.

Fifties.

Hundreds.

Total.

$1,760,000
24,480,000
8,400,000
6,240,000
8,800,000
9,360,000
2,720,000
5,520,000
6,400,000
5,680,000
9,920,000
5,200,000

$1,600,000
4,200,000

$2,000,000
7, COO,000

13,040,000
9,200,000
4,160,000

111,440,000
69,520,000
10,200,000
4,720,000
9,400,000
12,003,000
760,000
9,040,000
8,120,000
8,200,000
11,400,000
2,7G0,000

400,000
400,000
800,000
2,400,000
2,000,000

1,200,000
800,000
1, GOO,000
400,000
0
400,000
400,000
2,400,000
3, COO, 000

$28,880,000
180,400,000
30,480,000
17,660,000
29,500,000
35,380,000
11,880,000
22,540,000
24,500,000
28,120,000
35,320,000
17,720,000

173,340,000

157,580,000

94,480,000

16,600,000

20,400,000

462,380,000

Boston
New York

I $12,080,000
! 74,600,000

Philadelphia
Cleveland
Richmond

I 11,880,000
I 4,300,000
|
8,700,000
10,820,000
7,800,000
7,580,000
9,180,000

Atlanta
Chicago
St. Louis
Minneapolis....
Kansas City...,
Dallas
San Francisco.
Total.

0
1,200,000
1,800,000
1,600,000
200,000

RETURNED BY FEDERAL RESERVE BANKS.
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco..

Total.

I 25,401,395
3,475,005
1,226,960
3,413,320
4,754,165
2,020,855
2,4G5,155
1,704,735
3,231,790
3,707,580
2,928,110

$3,396,405
22,432,230
2,573,805
1,280,965
3,167,700
3,998,105
82,200
1,253,955
1,179,910
1,302,, COO
5,333,765
1,534,200

$266,100
5,200,560
839,300
1,108,620
2,606,710
2,460,180
203,600
3S6,460
417,310
334,500
3,534,300
266,400

$176,900
305,750
0
66,750
1,011,850
930,300
25,750
12,800
52,400
316,350
1,149,850
19,900

$302,800
1,109,300
0
44,400
385,300
868,900
5,100
0
43,(500
0
770,400
20,300

$7,426,315
54,509,235
6,888,110
3,727,695
10,584,880
13,011,6,50
2,337,505
4,118,370
3,397,955
5,185,240
14,495,895
4,818,910

57,673,180

47,585,840

17,624,040

4,068,600

3,550,100

130,501,760

$3,284,110

TOTAL AMOUNTS FOR WHICH FEDERAL RESERVE AGENTS AEE
Boston
New York
Philadelphia...
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City....
Dallas
San Francisco..
Total

$15,364,110
100,061,395
15,355,005

5,526,960
12,113,320
15,574,165
9,820,855
10,045,155
10,884,735
16,271,790
12,907,580
7,088,110

$14,836,405
91,952,230
12,773,805
6,000,965
12,567,700
15,998,105
842,200
10,293,955
9,299,910
9,502,600
16,733,765
4,344,200

ACCOUNTABLE.

$2,026,100 $1,776,900 $2,302,800 $36,306,315
29,680,500 4,505,750 8,709,300 234,909,235
9,239,300
0
0
37,368,110
7,348,620 1,266,750 1,244,400 21,387,695
11,406,710 2,811,850 1,185,300 40,084,880
11,820,180 2,530,300 2,468,900 48,391,650
2,923,600
14,217,505
225,750
405,100
5,906,460
26,658,370
412,800
0
6,817,310
452,400
443,600 27,897,955
6,014,500 1,116,350
400,000 33,305,240
13,454,300 3,549,850 3,170,400 49,815,895
5,466,400 2,019,900 3,620,300 22,538,910

231,013,180 205,145,840 112,104,040 20,668,600

23,950,100

592,881,760

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Statement of Federal Reserve notes, by -denominations, since organization of banks, received
by agents, issued to the banks, returned to the Comptroller for destruction, and on hand
Dec. 31, 1916, as reported by Federal Reserve agents—Continued.
ISSUED TO FEDERAL RESERVE BANKS.
Federal Reserve agent at—

Fives.

Boston
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas City..,
Dallas
San Francisco.

$9,846,600
67,490,350
9,592,700
3,600,000
9,079,300
11,914,050
5,440,050
7,092,950
9,382,000
13,067,000
8,624,750
5,440,000

Total...

160,569,750

Tens.

Twenties.

$728,200
$8,645,600
61,967,800 23,238,400
7,854,800 6,510,200
5,440,000
3,840,000
10,067,700 9,264,400
12,817,800 10,480,980
760,000 2,720,600
5,692,160
8,022,940
5,695,000
8,215,000
5,312,000
8,126,000
13,675,400 11,608,600
5,200,000
3,360,000

Fifties.

Hundreds.

Total.

$642,000 $1,082,300 $20,944,700
2,802,450 6,014,000 161,513,000
23,957,700
950,000
730,000 14,560,000
1,887,200
717,000 31,015,600
38,931,180
1,935, 450 1,782,900
9,521,000
200,250
400,100
21,008,100
200,050
230,000
360,000 23,882,000
895,000
20,000 27,420,000
38,258,750
2,220,000 2,130,000
19,600,000
2,000,000
3,600,000

147,353,040 91,890,540 13,962,400

16,836,300

430,612,030

RETURNED TO COMPTROLLER FOR DESTRUCTION.
Boston
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas City...
Dallas
San Francisco.

$3,277,510
25,371,045
3,062,305
1,226,960
2,514,020
1,851,115
1,380,805
1,632,205
467,735
1,487,790
2,272,580
1,128,110

13,390,805
22,344,430
2,359,005
1,280,965
1,940,000
1,265,805
82,200
751,015
289,910
502,600
1,512,865
504,200

$257,900
4,362,160
729,100
1,108,620
1,582,310
592,700
203,000
214,300
132,310
120,500
655,700
266,400

$174,900
303,300

$300,500
1,095,300

66,750
409,650
49,850
25,500
12,750
2,400
21,350
54,200
19,900

44,400
123,300
76,000
5,000

5,400
20,300

$7,401,615
53,476,235
6,150,410
3,727,695
6,569,280
3,835,470
1,696,505
2,610,270
895,955
2,132,240
4,500,745
1,938,910

Total...

45,672,180

36,223,800

10,225,000

1,140,550

1,673,800

94,935,330

3,600

IN HANDS OF FEDERAL RESERVE AGENTS, DEC. 31, 1916.
Boston
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas City...
Dallas
San Francisco.

$2,240,000
7,200,000
2,700,000
700,000
520,000
1,809,000
3,000,000
1,320,000
1,035,000
1,717,000
2,010,250
520,000

$2,800,000
7,640,000
2,560,000
880,000
560,000
1,914,500

$1,040,000
2,080,000
2,000,000
800,000
560,000
746,500

1,520,000
795,000
874,000
1,545,500
480,000

990,000
582,000
1,190,000

200,000
220,000 |
80,000
200,000 | 380,000
1,275,650
1,035,000

Total...

24,771,250

21,569,000

9,988,500

5,565,650

$960,000
1,400,000

$920,000
1,600,000

250,000
515,000
545,000

470,000
345,000
610,000

5,440,000

$7,960,000
19,920,000
7,260,000
3,100,000
2,500,000
5,625,000
3,000,000
3,040,000
3,120,000
3,753,000
7,056,400
1,000,000
67,334,400

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Statement of Federal Reserve notes, by denominations, since organization of banks, received
by agents, issued to the banks, returned to the Comptroller for destruction, and on hand
Bee. SI, 1916, as reported by Federal Reserve agents—Continued.
TOTAL AMOUNTS OF FEDERAL RESERVE NOTES ACCOUNTED FOR.
Federal Reserve agent at—
Boston
,
New York
Philadelphia..
Cleveland
Richmond...
Atlanta
Chicago
St. Louis
,
Minneapolis...
Kansas City...
Dallas
San Francisco
Total...

Fives.

Tens.

$15,364,110
100,061,395
15,355,005
5,526,960
12,113,320
15,574,165
9,820,855
10,045,155
10,884,735
16,271,790
12,907,580
7,088,110

$14,836,405
91,952,230
12,773,805
6,000,965
12,567,700
45,998,105
842,200
10,293,955
9,299,910
9,502,600
16,733,765
4,314,200

231,013,1

205,145,840 112,104,040

Twenties.

Fifties.

$2,026,100 $1,776,900
29,680,560 4,505,750
9,239,300
7,348,620 1,266,750
11,406,710 2,811,850
11,820,180. 2,530,300
2,923,600
225,750
5,906,460
412,800
6,817,310
452,400
6,014,500
1,116,350
13,454,300 3,549,850
5,466,400 2,019,900
20,668,600

Hundreds.

Total.

$2,302,800
8,709,300

443,600
400,000
3,170,400
3,620,300

$36,306,315
234,909,235
37,368,110
21,387,695
40,084,880
48,391,650
14,217,505
26,658,370
27,897,955
33,305,240
49,815,895
22,538,910

23,950,100

592,881,760

1,244,400
1,185,300
2,408,900
405,100

RECAPITULATION.
Received from comptroller.. $173,340,000 1157,560,000 $94,480,000 $16,600,000 $20,400,000 $462,380,000
57,673,180
3,550,100 130,501,760
Returned by banks
47,585,840 17,624,040
4,068,600
Total
Issued to banks
Returned for destruction
On hand Dec. 31,1916
Total

231,013,180

205,145,840 112,104,040

20,668,600

23,950,100

592,881,760

160,569,750
45,672,180
24,771,250

147,353,040
36,223,800
21,569,000

91,890,540
10,225,000
9,988,500

13,962,400
1,140,550
5,565,650

16,836,300
1,673,800
5,440,000

430,612,030
94,935,330
67,334,400

231,013,180

205,145,840 112,104,040

20,668,600

23,950,100

592,881,760

Mutilated Federal Reserve notes, by denominations, received and destroyed since organization of banks and on hand in vault Dec. 31, 1916.
RECEIVED F O R DESTRUCTION.
Fives.

Tens.

Twenties. I

$3,277,510
25,371,045
3,062,305
1,226,960
2,514,020
1,851,115
1,380,805
1,632,205
467,735
1,487,790
2,272,580
1,128,110

$3,390,805
22,344,430
2,359,005
1,280,965
1,940,000
1,265,805
82,200
751,015
289,910
502,600
1,512,865
504,200

$257,900
4,362,160
729,100
1,108,620
1,582,310
592,700
203,000
214,300
132,310
120,500
655,700
266,400

$174,900
303,300

$300,500
1,095,300

66,750
409,650
49,850
25,500
12,750
2,400
21,350
54,200
19,900

44,400
123,300
76,000
5,000

5,400
20,300

$7,401,615
53,476,235
6,150,410
3,727,695
6,569,280
3,835,470
1,696,505
2,610,270
895,955
2,132,240
4,500,745
1,938,910

Total received

45,672,180

36,223,800

10,225,000

1,140,550

1,673,800

94,935,330

Total destroyed

45,023,280

35,646,800

10,008,300

1,100,150

1,621,200

93,399,730

648,900

577,000

216,700

40,400

52,600

1,535,600

Bank.
B oston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

Balance on hand

Fifties.

Hundreds.

3,600

Total.

NOTE.—During the year burned, badly mutilated, and fractional parts of Federal Reserve notes
amounting to $2,725 have been identified, valued, and the bank of issue determined.

AXNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Total amount of Federal Reserve Bank, currency received, since organization of banks, by
Comptroller of the Currency from Bureau of Engraving and Printing, issued, and on
hand, Dec. 31, 1916.
Bank.
Boston:
Printed
Issued
On hand
New York:
Printed
Issued
On hand
Philadelphia:
Printed
Issued
On hand
Cleveland:
Printed .
Issued
On hand
Richmond:
Printed
Issued
On hand
Atlanta:
Printed
Issued
On hand .
Chicago:
Printed
Issued
On hand.
St. Louis:
Printed
Issued
On hand
Minneapolis
Printed
Issued
On hand
Kansas City:
Printed
Issued
On hand

Fives.

Twenties.

Tens.

Fifties.

Hundreds.

Total.

$0
0

10
0

$0
0

0
0

320,000
0

440,000
0

240,000
0

0
0

1,000,000
0

320,000

440,000

240,000

1,000,000

1,000,000
0

2,000,000
0

0
0

5,000,000
0

1,000,000

2,000,000

5,000,000

200,000
0

400,000
0

0
0

1,000,000
0

200,000

400,000

400,030

1,000,000

040,000
0

480,000
0

400,000
0

0
0

2,000,000
0

040,000

480,000

400,000

2,000,000

1,000,000
0

1,800,000
0

1,000,000
0

0
0

5,000,000
0

1,000,000

1,800,000

1,000,000

5,000,000

0
0

1,320,000
0

2,080,000
0

0
0

4,000,000
0

1,320,000

2,080,000

4,000,000

3,300 000
1,434,900

4,000,000
4,0-30,000

2,040,000
2,020,000

0
0

10,000,000
8,054,980

1,925,103

19,920

1,945,020

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Total amount of Federal Reserve Bank currency received, since organization of banks, by
Comptroller of the Currency from Bureau of Engraving and Printing, issued, and on
hand, Dec. SI, 1916—Continued.
Bank.

Fives.

Dallas:
Printed

Issued

On hand

Tens.

Twenties.

Hundreds.

Fifties.

Total.

1,200,000
640,000

2,400,000
1,840,000

2,000,000
1,520,000

0
0

5,660,000
4,000,000

620,000

560,000

480,000

1,660,000

1,680,000
0

1,960,000
0

1,360,000
0

0
0

5,000,000
0

1,680,000

1,960,000

1,3(30,000

5,000,000

11,380,000
2,074,900

.16,160,000
5,840,000

10,720,000
4,140,080

400,000
0

0
0

38,600,000
12,054,980

9,305,100

10,320,000

6,579,920

400,000

26,005,020

San Francisco:
Printed
Issued

„

On hand
BECAPITULATION.
Total printed
Total issued
Total on hand

NOTE.—Plates for fives, tens, twenties, fifties, and hundreds have been engraved for both Boston and
New York, and fives, tens, and twenties for St. Louis, but no currency ordered printed.
COST OF FEDERAL RESERVE NOTES.

The cost to each Federal Reserve Bank of Federal reserve notes, including paper,
preparing plates, and printing, but exclusive of cost of transmitted, for the calendar
year 1916 was as follows:
Boston.
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago.
St. Louis
Minneapolis
Kansas City
Dallas.
San Francisco
Total....

$4, 845. 89
102,554.12
859.20
0
6, 564. 29
20, 517. 70
10, 516. 61
7, 526. 60
4, 983. 36
33, 543.17
11,135. 23
7, 354. 72
210, 400. 89

INTERDISTRICT MOVEMENT OF FEDERAL RESERVE NOTES.
Amounts

of Federal Reserve notes received from

and returned to other Federal Reserve banks for

redemption

or credit by each Federal Reserve bank

during the calendar year 1916.

New York.

Boston.

Philadelphia.

Cleveland.

Richmond.

Atlanta.

Federal Reserve bank.
Received.

Returned

Boston
New York

,261,750

Received.

Returned

$3,068,000

$1,262,400

13,039,000

133,380

180,000

3,111,000

1,617,500

Cleveland

13,820

150,000

299,760

903,100

Richmond

15,020

185,000

286,290

3,155,250

Atlanta

19,465

112,000

376,965

2,653,310

Chicago

96,500

24,000

1,615,500

137,150

Philadelphia...

Received.

Returned

Received.

Returned.

Returned

$133,380

$150,000

$13,820

$185,000

$15,020

$112,000

$19,465

3,095,000

912,860

299,760

3,181,220

286,290

2,691,730

376,965

221,280

44,420

494,715

67,865

188,629

27,760

44,420
67,865
27,760

221,280

57,340

38,620

26,895

48,805

144,310

395,875

16,970

8,795

51,690

5,045

603,000
366,140
25,440
16,000
310,870
30,130

605,595

4,515,135

507,190

St. Louis

12,150

28,000

214,520

426,000

Minneapolis

10, 440

68,500

146,655

702,800

Kansas City....

1,785

49,000

26,000

752,200

1,550

46,910

Dallas

4,420

74,000

116,805

1,251,550

74,280

18,240

57,000

165,485

1,353,600

4,445
7,310

46,480

1,586,970

3,966,500

9,426,980

14,214,860

2,110,175

4,411,975

2,097,295

Received.

$180,000

124,000
16,205
9,140

Total

Returned

1,627,480

38,620
48,805
572,000
75,935
33,935
9,000
11,710
23,150

San Francisco.

Received.

188,620
30,175

57,340
26,895
17,190
15,235
33,130
26,820
24,280
11,600
570,490

395,875

144,310

328,000
53,840
19,200

2,600
8,125

5,610

10,090

16,675
22,205

19,830

4,759,6

7,800

•d
o

H
94,005

21,890
58,415
736,585
18,400
1,806,960

W
o

Chicago.
Federal Reserve bank.

St. Louis.

Minneapolis.

Kansas City.

Dallas.

San Francisco.

ReReReReReceived. Returned. Received. Returned, Received. turned. Received. turned. Received. turned. Received. turned.

Total.
Received. Returned,
izj

Boston
New York
,
Philadelphia...
Cleveland
,
Richmond
Atlanta
,
Chicago
St. Louis
,
Minneapolis
Kansas City....
Dallas
,
San Francisco.
Total.....

$96,500
$24,000
140, 410 1,615,500
124,000
16,970
572,000
17,190
328,000
2,600
603,000
8,795
545,500
49,950
53,380 2,286,500
2,895 1,496,500
4,795
930,500
9,380
391,500

$28,000
430,890
30,175
15,235
8,125
94,005
545,500
25,790
44,000
142,110
14,960

$12,150
$68,500
214,520
702,800
16,205
51,690
75,935
33,130
59,190
7,800
366,140
21,890
49,950 2,286,500
140,070
140,070
1,292,605
29,500
1,017,315
21,690
38,625
99,270

$49,000
$10,440
146,655
762,650
9,140
45,910
33,935
26,820
19,200
10,090
25,440
59,615
53, 380 1,496,500
25,790 1,292,605
117,530
121,030
51,565
259,440
82,285
153,500

330,365 8,989,500 1,378,790 3,282,705 3,462,840 650,075

$57,000 $18,240 $3,983,500 $1,599,305
$1,685
$62,000 $16,205
25,000 1,265,500 111,555 1,374,340 165,485 14,351,630 9,375,730
7,760 4,414,950 2,100,475
4,275
46,930
74,280
1,550
11,150 23,150
24,280 11,320
570,040 2,087,145
9,000
5,045 22,205
5,610
605,595 4,750,225
19,830 15,365
17,205 30,130 1,763,380 4,433,965
16,000
693,000 268,120
9,380 8,977,500
327,105
2,895
930,500
4,795
379,500
44,000 1,017,315 137,370
37, 425 14,960 3,276,155 1,369,160
51,565 21,690
29,500
153,500 99,270
646,575 3,462,840
244,690
254,920 4,180,545
20,000 82,285
98,500
15,765 76,910
908,725 4,355,315
550,325 2,113,660
20,000
77,910 17,910

4,202,445 253,740 4,314,760 853,295 2,117,860 549,775 40,303,295 40,155,470

w
o

Exhibit C—STATEMENTS OF CONDITION OF FEDERAL RESERVE BANKS.
Combined resources and liabilities of all Federal Reserve banks as at close of business on the last Friday of each month, during calendar year 1916.
RESOURCES.
[In thousands of dollars; i. e., 000's omitted.]

J a n . 28.

Feb. 25.

Mar. 31.

Apr. 28.

May 26.

J u n e 30.

J u l y 28.

Aug. 25.

Sept. 29.

Oct. 27.

N o v . 24.

Dec. 29.

263,8G5

262,491

258,052

234,304

242,985

262,038

259,931

259,799

260,845

274,001

283,730

281,588

Gold settlement fund

84,850

70,435

75,640

75, 421

91,991

112,931

102,911

110,951

124,421

122,587

174,801

170,471

Gold redemption fund

1,146

1,512

1,548

1, 457

2,163

1,789

1,918

1,637

1,929

1,391

1,404

1,054

349,8(11

340, 43S

335,240

311,182

337,139

376,758

364, 760

372,387

387,195

397,979

459,935

453,713

15,496

17,678

9,938

12,011

21,972

27,448

16,589

12,265

7,811

9,976

17,974

17,538

365,357

358,116

345,178

323,193

359.111

404,20a

381,349

384,652

395,006

407,955

477,909

471,251

Gold coin and certificates in vault

w
w
o
H

Total gold reserve
Legal-tender notes, silver, etc

O
H

Total reserve

5 per cent redemption fund—Federal Reserve bank
50

250

362

450

500

420

470

400

Bills discounted—members *

26,901

22,S27

21,207

21,448

20,365

21,188

27,594

27,032

25,953

21,131

20,501

30,196

Bills bought in open m a r k e t l

20,314

29,054

40,408

47,585

52, 708

71,095

83,454

82,146

80,625

86,085

102,092

127,497

United States bonds

21,372

29,632

40,275

45,841

51,942

52,939

48,656

46,796

46,544

40,469

39,427

44,247

3,840

4,190

7,925

8,205

6,927

11,435

11,167

20, 602

25,403

33,015

36,933

44,946

22,671

27,220

27,863

24,028

29,890

22,166

8,975

95,189

106,916

134,965

155,647

173,801

172,083

194,849

192,042

184,077

189,010

195,353

222,082

Federal Reserve notes YJ?X assets

36,469

23,793

25,118

21,604

26, 433

23,182

20,80S

21,222

14,250

16,846

15,414

21,300

Due from other Federal Reserve Banks net

10,761

13,274

13,128

14,658

16,512

20, 414

12,620

21,654

31,365

33,197

43,263

46,958

9,944

11,351

4,725

-4,171

9,043

4,622

5,514

3,541

7,543

3,708

2,651

6,235

517,770

513,500

523,364

519,635

585,350

624,957

615,090

623,611

632,741

651,136

735,060

768,226

notes...

1-year Treasury notes
Municipal warrants

All other resources
Total resources

>
g
2
w
o
>

LIABILITIES.

Capital paid in

54,892

54,897

54.8S8

54,793

54,875

54,854

55,206

55,363

55,393

55,703

55,711

Government deposits

27,760

32,501

38,469

40,660

44,131

101,152

56,542

50,099

38,985

29,982

26,319

28,837

424, G64

416,566

419,987

413,011

476,680

457,503

491,266

502,421

521,740

551,918

637,072

668,786

10,313

9,386

8,903

8,851

7, 706

9,440

13,216

11,966

14,296

14,130

1,669

1,732

1,721

10,122
1,692

13,733

964

1,690

3,033

1,031

262

305

374

536

1,028
634

778

615,090

623,611

632,741

651,136

735,060

768,226

Member b a n k deposits, n e t
Federal Reserve notes, n e t liability
Federal Reserve b a n k notes in circulation.
All other liabilities
Total liabilities.

141

150

153

651

226

517,770

513,500

523,364

519,635

585,350

624,957

55,695

j
Cj

i MATURITIES OF BILLS ON HAND.

Maturities:
Within 10 days
,
Over 10 but wi thin 30 days.
Over 30 but within 60 days.
Over 60 but within 90 days.,
Over 90 days

Total.

7,744
11,259
18,518
12,185
3,509
53,215

7,126

9,153

11,721

15,291

21,409

27,598

19,453

14,585

2,266

1,966

51,881

61,675

7,477
11,750
16,758
13,630

16,808
20,513
39,062
29,620
1,213

17,465
27,472
50,751
25,373
1,532

30,256

41,514

Jij

2,387

21,408
23,245
36,527
23,882
1,510

109,178

106,578

107,216

122,593

11,451

17,308

12,955

16,539

19, 421

27,507

28,492

40,019

42,781

30,614

30,493

23,548

2,406

9,471
18,064
24, 748
17,122
3,668

5,187

3,807

69,033

73,073

92,283

111,048

47,772

37,105

1,046

157,693

o
i

ANNUAL REPORT OF THE FEDEBAL RESERVE BOARD.

PRINCIPAL ASSETS AND LIABILITIES
OF THE FEDERAL RESERVE BANKS,
PEC. 30,1315, & DEC £S, 1916.

-ASSETS

1916

1915
-LIABILITIES

MEMBER
BANK
DEPOSITS

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

CASH RESERVES
OF FEDERAL RESERVE BANKS

19!S.
DEC.30

1916.

DCC. 23

TOTAL CASH
HOLDINGS
OFFEDERAL RESERVE BANKS AND AGENTS

1915.
DEC. 30.
75284°—17-

1916.
DEC.Z9.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Commercial paper, exclusive of acceptances bought in open market, held by each Federal
Reserve Bank on Dec. 29, 1916, distributed by maturities.
MATURITIES.
[In thousands of dollars; i. e., 000's omitted.]
Federal Reserve bank.

Within
10 days.

Boston
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis..
Kansas City..
Dallas
San Francisco

2,425
422
2,326
850
819
9G2
779
4G2
592
80

Total...
Per cent

9,927
32.87

154
56

From
From
11 to 30 31 to 60
days.
days.

From
61 t o 90
days.

357
1,135
204
68
829
761
666
206
442
106
151

45
139

900
5,372
500
142
843
439
2,306
527
378
130
103
94

25
19
377
891
406
99
148
97
161

11,794

5,006

39.06

16.58

2,423
8.02

Over 90
days.

6
3
11
37

Total.
3,727
7,068
3,061
1,082
2,879
3,090

259

4,416

17
414

1,311
1,974

103
190
6

516
819
253

1,046

30,190

Per
cent.
12.35
23.41
10.14
3.58
9.54
10.23
14.61
4.34
6.54
1.71
2.71
.84

100.00

3.47

Acceptances bought in open market, held by each Federal Reserve Bank on Dec. 9, 1916,
distributed by maturities.
MATURITIES.
[In thousands of dollars; i. e., 000's omitted.]
Federal Reserve bank.

Boston
New Y o r k . . . .
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis..
Kansas C i t y . .
Dallas
San Francisco
Total...
Per cent. *

Within
10 days.

From
11 to 30
days.

From
31 to 60
days.

649
6,114
2,560
1,953
1,515
679
1,537
1,084
896
731
108
2,503

1,598
10,359
4,105
2,185
708
1,449

7,224
14,526
3,897
3,081
363
1,734
3,400

640
555
725
3,413

1,665
1,600
671
748
3,857

20,329

29,720

42,766

34,682

15.95

23.31

33.54

27.20

2,333
1,650

From
61 to 90
days.

Over 90
days.

Total.

Per
cent.
9.98
32.51
10.67
7.74
2.90
3.57
8.01
5.32
4.81
3.05
1.73
9.71

3,254
10,458
3,040
2,652
1,108
692
2,942
2,385
2,992
1,933
620
2,606
127,497

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
Short-term investments

(municipal warrants) held by each Federal Reserve Bank on
Dec. 29, 1916, distributed by maturities.
MATURITIES,
fin thousands of dollars; L e.r 000's omitted.]
Within
10 days.

Federal Reserve Bank.

Boston
New York

F r o m 11
to 30
days.

From 31
to 60
days.

From 61
to 90
days.

255
442
76
52
61
278
182
76
91
63
2
67

187 ,

. .

Philadelphia...-

191

Cleveland

833

60
721

Richmond
Atlanta
Chicago

. .

2
152
391
35
40
50
466

1
408

St Louis
Minneapolis
Kansas City
Dallas

San Francisco
Total
Per cent

1,588
17.68

2,104
23.42

Over 90
days.

Total.

203
335
56
913

171

117
95
34
338
6

4
489
75
25
55
75
75

890
972
465
2,685
61
402
1,326
576
570
164
127
737

129

1,645

2 226 i

18.33

24.84

195
82
166

1 419
-, —
15.73

Per

cent.
9.92
10.83
5.18
29.92
.68
4.48
14.77
6.42
6.35
1.83
1.41
&21

8,975
100.00

United States bonds and notes held by all Federal Reserve Banks on Dec. 30, 1916,
distributed by classes and maturities.
per cent 2 per cent 2 per cent 3 per cent
Federal Re- 2 consols
P a n a m a s Panamas loan of
serve bank.
of 1930. of 1936.
of 1938.
1918.

Boston
New York
Philadelphia...
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas C i t y . . .
Dallas
San Francisco.

Total

$1,252,000
142,550
1,651,000
903,900
1,392,450
875,100
3,618,000
522,900
1,014,900
7,401,250
2,923,350
2,633,750

3 per 3 per cent
cent converloan
sion
of
bonds of
1961.
1946.

$80,000
$900,000
500,000 1,000,000 $2,586,560
655,000
145,000
5,000
363,000
509,300 2,581,000
1,080,000
1,193,740
50,000
88,000
162,000
542,500

155,000

24,331,150 3,172,500 1,977,300 7,446,300

Amount of United States bonds with circulation
privilege:
2 per cent
$29,480,950
3 per cent
7,446,300
4 per cent
5,143,200
Tofal

42,070,450

$1,800

$400
500

829,900
18,400
600,000
2,200
16,600
707,400

3 per cent 4 per cent
loan of
1-year
Total.
1925.
notes.

$1,000,000
$2,332,000
1,205,000
2,247,550
1,174,000
2,825,000
618,000 $2,369,200 7,979,460
1,070,000
3,262,450
824,000
2,534,000
1,517,000 1,768,000 10,375,100
891,000
3,093,900
700,000
181,000 3,142,340
963,000
825,000 9,455,850
705,000
5,033,250
500,000
3,133,750

900 2,176,300 11,167,000 5,143,200 55,414,650

Amount of United States bonds and notes without
circulation privilege:
3 per cent of 1961
$900
3 per cent conversion
2,176,300
3 per cent 1-year notes
11,167,000
Total

13,344,200

EARWHG ASSETS, BY CLASSES,
FOR EACH FEDERAL RESERVE BANK,

DEC.3O,lBtS,AliD DEC.29,/9/6.
2

i. BOSTON
Z.H5WYOHK
3. rHtLAPELFHtA
4>. CLEVELAND
£ fVGHMOV D
6/tTLAJVr/t
7. CHICAGO
4. ST. LOUIS
&. MINNEAPOLIS
IO.KAHSASCITY
II. DALLAS

3
/

tzsArtrnAn

a
3
BEET?"

3
Z

€

2
3
***

I 19JS
\

8
9

?.
1Z

Jl
12.

J9/6 I
\

\19tS
ISIS
j
XACCEPTAIHCESA

I91S

1916

U.S. BONDS

s
6

nri

2
3

1916.
TRBASY
NOTES

8
S

II
fZ

f$!6\

/eis

/ere
TOTAL

w
o

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Principal resources and liabilities of all Federal Reserve Banks at close of business on each
Friday, Jan. 7, 1916, to Dec. 29, 1916.
[In thousands of dollars; i. e., 000's omitted.]
Total
cash re- Bills disGold coin Gold setBills
Gold
Total
counted bought
serve,
and cer- tlement redempgold re- including
for
tificates
fund. tion fund. serve. legal ten- m e m b e r in open
market.
in vault.
ders, sil- banks.

United
States
bonds.

ver, etc.

Jan. 7
Jan. 14...
Jan. 2 1 . . .
Jan. 28...
Feb. 4 . . . .
Feb. 11...
Feb. 18...
Feb. 25...
Mar. 3 . . . .
Mar. 10...
Mar. 17...
Mar. 24...
Mar. 3 1 . .
Apr. 7....
Apr. 14..
Apr. 21..,
Apr. 28..,
May 5 . . . .
May 12...
May 19...
May 26...
June 2 . . .
June 9 . . ,
June 16..
June 23..
June 30..
July 7...,
July 14..
July 21..
July 28...
Aug. 4 . .
Aug. 11.,
Aug. 18.
Aug. 25.
Sept. 1 . .
Sept. 8..
Sept. 15.
Sept. 22.
Sept. 29.
Oct. 6 . . .
Oct. 13..
Oct. 20..
Oct. 27..
Nov. 3 . .
Nov. 10.
Nov. 17.
Nov. 24.
Dec. 1...
Dec. 8...

272,018
260,855
259,106
263.865
255,469
255,284
255,369
262, 491
261,822
257,875
253,880
260,866
258,052
245,778
245,714
239,882
234,304
232,284
238,485
246,812
242,985
242,253
255,444
262,062
265,643
262,038
261,232
269, 602
262,049
259,931
256,437
258,952
260,926
259,799
245,358
248,846
250,308
258,711
260,845
265,626
267,400
261,515
274,001
278,157
265,897
293, 441
283,730
261,917
245,325

81,150
85,630
81,620
84,850
85,368
83,938
81,648
76,435
74,890
79,170
78,970
79,680
75,640
80,011
75,690
74,785
75, 421
72, 621
71,911
77,971
91,991
102,331
103,481
104,101
106,101
112,931
123,611
118,631
99,561
102,911
106,811
106,121
110,001
110,951
104, 601
118,950
125,271
117, 791
124,421
119,441
125,261
121,351
122,587
127, 641
139,571
140,821
174,801
175,781
181,101

1, 250
1,215
1,062
1,146
1,167
1,120
1,300
1,512
1,538
1,494
1,623
1,578
1,548
1,549
1,495
1,473
1,457
1,692
1,778
1,825
2,163
1,793
1,703
1,833
1,894
1,789
2,011
1,970
1,931
1,918
1,915
1,852
1,991
1,637
1,812
1,884
1,894
1,941
1,929
1,910
1,687
1,418
1,391
1,394
1,368
1,383
1,404
1,476
1,533

354,418
347,700
341,788
349, 861
342,004
340,342
338,317
340, 438
338,250
338,539
334, 473
342,124
335,240
327,338
322,899
316,140
311,182
306,597
312,174
326,608
337,139
346,377
360,628
367,996
373,638
376, 758
386,854
390,203
363,541
364.760
365,163
366,925
372,918
372,387
351,771
369,680
377,473
378, 443
387,195
386,977
394,348
384,284
397,979
407,192
406,836
435,645
459,935
439,174
427,959

367,306
361, 983
355, 920
365,357
356,641
355.590
356.591
358,116
351,244
358,575
345,777
354,347
345,178
338,938
334,403
325,645
323,193
316,856
320,101
344,305
359,111
360,232
378,683
381, 618
387, 664
404,206
423, 756
400,482
377,343
381,349
376,862
378,052
389,916
384,652
365,376
397,167
385,371
386,085
395,006
400,968
405, 725
394,845
407,955
414,076
414,148
452,225
477,909
450,010
432,603

30,531
29,498
27,958
26, 901
25,044
24,654
23,678
22,827
21,715
21,529
21,608
21,306
21,267
22, 268
22,162
22,067
21,448
20,300
20,007
19,809
20,365
19,895
20,155
20, 427
20,750
21,188
22,025
23,968
28,937
27,594
30,415
28, 459
26,756
27,032
26,392
27,527
27,713
27,706
25,953
23,656
21,959
21,365
21,131
19,682
19,380
19,704
20,501
21,505
38,345

25,048
26,258
27,910
26,314
26,279
28,074
29,136
29,054
30, 783
32,949
36,092
39,244
40, 408
42,116
44,108
44,237
47,585
47,647
49,196
52,186
52,708
53,492
58,188
64,948
68,953
71,095
70,148
81,130
85,382
83, 454
79,519
80,512
80,138
82,146
79,278
79,808
82,609
83,884
80,625
77,438
77,527
82,692
86,085
85,081
90,913
97,789
102,092
106,606
119, 782

16,734
17,613
20,242
21,372
24,341
25,304
26, 422
29,632
33,063
34,141
39,213
40,184
40,275
45,226
44,924
45,204
45,841
50,137
51,268
51,837
51,942
51,991
52,191
52,875
52,875
52,939
52,589
52,589
49,746
48,656
48,037
46,703
47,029
46,796
46,821
45,954
46,915
47,553
46,544
44,370
42,642
41,335
40,469
40,540
38,853
39,115
39,427
40,215
41,548

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Principal resources and liabilities of all Federal Reserve Banks at close of business on each
Friday, Jan. 7, 1916; to Dec. 29, 1916—Continued.
[In thousands of dollars; i. e., OGO's omitted.J
Total
cash re- Bills dis- Bills
Gold coin Gold set- Gold
serve, counted bought
Total
and cer- tlement redemp- gold
for
re- including
tificates
ten- member in open
in vault. fund. tion fond. serve. legal
ders, sil- banks. market.
ver, etc.
Doc. 15
Dec. 22
Dec. 29
Total..
A verage for year

256,418
269,627
281,588

177,341
178,811
170,471

13,448,274 5,622,946
258,621

108,134

1,543
1,479
1,654

435,302
449,917
453,713

443,209
455,942
471,251

37,748
32,297
30,196

122,918
124,633
127, 497

84,322 19,155,542 19,869,863 1,267,303 3,443,694
1,622

368,376

382,113

24,371

66,225

United
States
bonds.

42,048
43,504
44,247
2,182,631
41,974

ShortLiabili- LiabiliOne-year term in- Total
ties on ties on
United
vest- resources Capital Member
GovernFederal
bank
Federal
States
ments and lia- paid in. deposits,
Reserve Reserve
ment
Treasury (munici- bilities.
deposits. notes in
net.
bank
circula- notes.
notes. pal warrants).
tion.
17,097
19,484
20,624
20,602

Jan. 7
Jan. 14..
Jan;. 21..
Jan. 28,..
Feb. 4...
Feb. 11..
Feb. 18..
Fet>. 25..

Mar. a...

Mar. 10L.
Mar. 17..
Mar. 24..
Mar. SI..
Apr. 7...
Apr. 14..
Apar. 21..
Apr. 28..
May 5...
May 12..
May 19..
May 26..
June 2..
June $._
June 16-.
Jnne23..
Juiae 30..
July 7...
July 14..
July 21..
July 28..
Aug. 4 . .
Aug. 11..
Aug. IS..
Aug. 25..
Sept. 1..

1,932
3,234
3,840
3,840
3,840
3,840
3,840
3,840
4,190
4,190
4,190
4,190
4,190
4,546
4,546
7,190
7,925
7,925
8,351
7,885
8>205
8,205

25,577
24,964
25,403
30,539
32, 755
33,034
32,669
33,015
35,256
35,706
35,892
36,933
39,154
40,285
44,482
44,946
36,633
23,095
22,067
21,632
22,671
25,236
27.424
27,723
27,220
27,375
27,975
27,788
27,863
21,302

499,087
507,579
511,326
517,770
513,997
513,396
509,551
513,500
519,456
522,647
521,608
529,998
523,364
526,245
527,544
519,707
519,635
525,694
531,193
568,371
585,350
574,747
583,791
597,897
603,201
624,957
647,113
639,649
613,523
615,090
615,367
610, im
624,193
623,611
607,402

54,8-95
54,899
54,889
54,892
54,907
54,890
54,886
54,897
54,919
54,944
54,937
54,910
54,888
54,843
54,845
54,843
54,793
54,862
54,850
54,870
54,875
54,858
54,863
54,864
54,863
54,854
54,858
55,176
55,183
55,206
55,148
' 55,130
55^110
55,363
55,390

407,244
413,719
416,656
424,664
419,137
421,907
416,490
416,566
418,718
426,322
423,259
428,816
419,987
423,497
426,507
417,349
413,011
419,943
427,810
463,022
476,680
460,422
467,780
477,293
472,613
457,503
465,840
474,942
492,000
491,266
490>625
489,219
505,090
502,421
484,697

23,841
26,879
28,073
27,760
29,850
26,881
28,946
32,501
36,043
30,639
32,380
35,088
38,469
37,016
34.732
35,291
40,660
40,414
38,153
40,475
44,131
50,000
51,578
55,751
64,499
101,152
114,4(50
97,476
54,277
56,542
56,607
53,259
49,717
50,099
50,918

12,982
11,948
11,571
10,313
9,966
9,577
9,089
9,386
9,635
10,178
10,203
9,977
8,903
9,500
9,511
9,617
8,851
8,573
8,402
8,018
7,706
7,512
7,593
8,003
9,228
9,440
9,992
10,098
10,120
10,122
11,029
11,212
12,295
13,733
14,416

419
681
1,053
964
1,251
1^423
1,964
1,66$
1,694
1,751
1,736
1,732
1,731
1,730
1,726
1,723
1,721
1,721
1,720
1,692
1,692
1,692
1,691
1,691
1,690
1,690

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Principal resources and liabilities of all Federal Reserve Banks at close of business on each
Friday, Jan. 7, 1916, to Dec. 29, 1916—Continued.
[In thousands of dollars; i. e., 000's omitted.]
ShortLiabiliOne-year term inties an
Member Govern- Federal
Total
vest- resources
United
bank
Capital
ments and lia- paid in. deposits, ment
States
Reserve
deposits. notes in
Treasury (munici- bilities.
net.
notes. pal warcircularants).
tion.
Sept.8
Sept. 15
Sept. 22
Sept. 29...
Oct. 6
Oct. 13
Oct. 20
Oct. 27Nov.3
Nov. 10
Nov. 17
Nov. 24
Dec. 1
Dec. 8..
Dec. 15
Dec. 22
Dec. 29
Total
Average for year...

44,236
40,199
39,947
38,985
33,971
26,515
26,116
29,982
28,686
23,339
25,171
26,319
26,777
28,668
28,762
29,472
28,837

16,076
14,223
14.605
13,216
11,782
12,316
11,896
11,966
12,627
13,886
14,468
14,298
13,383
11,423
12.606
15, 754
14,130

2,334
3,214
2,914
3,033
1,033
1,033
1,032
1,031
1,031
1,030
1,030
1,028
28

290, 216 1,382,155 31,106,189 2,869,297 25,441,117 2,140,539
7,441
41,164
55,179 489,252
26,580 598,196

577,352
11,103

60,046
1,501

9,055
9,039
8,039
6,927
8,763
10,444
11,697
11, 435
11,367
11,347
11,167
11,167
11,167
11,167
11,167
11.167
11,167

21,166
23,714
24,137
24,028
29,085
31,542
32,543
29,890
24,100
20,694
18,597
22,166
21,254
13,235
11,195
10,557
8,975

632,594
627,742
631,701
632,741
628,951
638,253
633,312
651,136
650,864
650,946
719,217
735,060
710,161
715,316
741,051
750,560
768,226

55,406
55,416
55,42a
55,393
55,684
55,682
55,682
55.703
55.709
55.710
55.704
55.711
55,737
55,746
55,731
55,765
55,695

514,225
514,343
518,456
521,740
526,019
542,243
538,102
551,918
552,386
556,462
622,254
637,072
613 530
618,643
643,136
648, 787
668, 785

Liabilities on
Federal
Reserve
bank
notes.

Statement showing condition of each Federal Reserve Bank and of the system on Dec. 30, 1916.
RESOURCES.
[Detailed figures shown for each bank in first column represent items as reported to the Board; figures in second column, printed in italics, indicate results of consolidation
according to methods used in the compilation of the Board's weekly statement.]
Boston.
Gold bullion and United States coin
United States gold certificates (including clearing-house certificates)
Gold coin and certificates in vault
Gold settlement fund
Gold redemption fund with United States Treasurer

$34,857.50
11,690,000.00
14,737,000.00
50,000.00

Total gold reserve
Legal tender notes (including clearing-house certificates)
Silver certificates (including clearing-house certificates)
Silver coin
Legal tender notes, silver, etc

Total bills on hand
Investments:
United States bonds
One-year treasury notes
Municipal warrants

8,042,000.00
100,000.00

180,141,000.00
11,188,200.00
4,076,577.00
697.80

$16,989,000.00
8,042,000.00
100,000.00

ft
o
w

25,131,000.00
329,797.00
136,109.00
248.30

w
ft
ft

428,000.00

15,266,000.00

466,000.00

26,940,000.00

195,407,000.00

25,597,000.00

ft
w

1,563,000.00
13,656,000.00

w
ft

525 000.00
3,220,315.28

4,069,000.00
3 002,158.55
3,746,000.00
12, 725,000.00

41,457,184.04

16,471,000.00

900,000.00
663,076.79
7,071,000.00
41,457,000.00

13,656,430.08

48,528,000.00

15,219,000.00

w
u

W
ft

1,332,000.00
1,000,000.00
890,002.23

1,332,000.00
1,000,000.00
890,000.00

1,042,550.00
1,205,000.00
972,311.62

19,693,000.00

Total earning assets
Federal Reserve notes on hand
Federal Reserve notes—net

$1,172.50
16 987 720.00

$11 725 000. 00
$159 321 000.00
14,737,000.00 20,570,000.00 20,570,000.00
50,000.00
250,000.00
250,000.00

183,650.00
243,573.00
460.00

12,725,167.81

Philadelphia.

$1,187.50
159,320,070.00

26,512,000.00

Total reserve
Member banks' collateral notes
All other bills discounted
Bills discounted—members
Bills bought in open market

New York.

1,042,000.00
1,205,000.00
972,000.00
51,747,000.00

630,000.00

13,578,000.00

1,651,000.00
1,174,000.00
465,000.00
18,509,000.00

= = = = =

13,577,665.00

630,500.00

1,651,000.00
1,174,000.00
465,112.22

w
o
>

Due from other Federal Reserve Banks
Due from other Federal Reserve Banks, investment account
Due from other Federal Reserve Banks, overdrafts
Deferred debits, other Federal Reserve Banks

19,835,909.16
343,013.62
11,984.62

Total due from other Federal Reserve Banks
Due to other Federal Reserve Banks
Due to other Federal Reserve Banks, investment account

20,190,907.40
8,862,228.26

Total due to other Federal Reserve Banks
Due from other Federal Reserve Banks—net
All other resources:
National bank notes and notes of other Federal Reserve banks
Mutilated currency forwarded for redemption
Total all other resources gross

25,305,019.38

13 453 475.88

37,678,741.29

8,862,228.26
11,329 000.00

463,476.00
132,500.00

185,000.00

288,220.00

595,976.00
288 000.00

596,000.00

58,777,000.00

262,100,000.00

50,085,000.00

19,416,000.00
210,476.00

$1,354,671.07
3,891,860.00
$4,906,000.00
19,416,000.00
210,000.00

$5,246,000.00
7,439,000.00
349,000.00

ft
ui

13,034,000.00
o
>
>

13,752.00
67,467.00
1,407.00

32,335.00
32,588. 00
15. 40

424,160.00
60,257.00
41,131.30

7,439,000.00
348,778.29

24,532,000.00

32,756,000.00

Atlanta.

Richmond.
$502,485.00
4,403,150.00

$15,761,000.00
16,953,000.00 16,953,000.00
42,000.00
42,250. 00

w
O

185,000.00

$2,683,112.50
13,078,270.00

Total gold reserve

5,383,000.00

288,220.00

Cleveland.

Total reserve

/, 080,000.00

185,000.00

Total resources

Legal tender notes (including clearing-house certificates)
Silver certificates (including clearing-house certificates)
Silver coin
Legal tender notes, silver, etc

5,382,501.30

38,758,495.26
35,615,898.82
2,062,842.47

....

A11 other resources, net.. . .

Gold bullion and United States coin
United States gold certificates (including clearing-house certificates)
Gold coin and certificates in vault
Gold settlement fund
Gold redemption fund with United States Treasurer

5,382,501.30

526,000.00

65,000. 00

83,000.00

33,282,000.00

24,597,000.00

13,117,000.00

Statement showing condition of each Federal Reserve Bank and of the system on Dec. 30,

1916—Continued.

RESOURCES—Continued.
[Detailed figures shown for each bank in first column represent items as reported to the Board; figures in second column, printed in italics, Indicate results of consolidation
according to methods used in the compilation of the Board's weekly statement.)
Cleveland.
Member banks' collateral notes
All other bills discounted
Bills discounted—members
Bills bought in open market

.»

Total bills on liQn.d
Investments:
United States bonds..
One->year treasury notes
Municipal warrants

10,153,694.75

$1,007,000.00
10,153,000.00

4,334,372.21

11,160,000.00

. . .
,

7,361,460.00
618,000.00
2,684,589.64

$550,000,00
2,414,133.02
$2,880,000.00
4,334,000.00

4,447,696.96

2,192,450.00
1,070,000.00
60,7pOr 00

2,192,000.00
1,070,000.00
61,000.00

$2,964,000.00
4,448,000.00
7 412 000 QQ

1,710,000.00
824,000.00
401,509,00

1,710,000.00
824,000.00
402,000.00

s
1-3

10,348,000.00

10,537,000.00

588,935.00
589,000.00
19,189,346.96

,..,

Total due from other Federa.1 Reserve Banks.,
Due to other Federal Reserve Banks
,
Deferred credits, other Federal Reserve B a n k s . . .
Total due to other Federal Reserve Banks
Due from other Federal Reserve Banks—net
All other resources:
Interest accrued on United States b o n d s . . . „
Premiums on United States bonds ,
Difference a c c o u n t . . . .
Premium paid on stock surrendered....,
Expenses paid in advance,,
Cost of unissued Federal Reserve currency

7,362,000.00
618,000.00
S, 685,000.00

Atlanta.

7,214,000.00

21,825,000.00

Total earning assets
Federal Reserve notes on hand
Federal Reserve notes—net
Due from other Federal Reserve Banks...,

$342,500.00
2,537,095.87

$1,006,773.50

. . .

Richmond.

, , , , . , . , , . . , , . , . , . . 19,189,346.96
11,263,136.20
,...,
2,153,364. 72
13 416 500.92

5, 773,000. GO
,

42,895.54
254 764.54
134,57
934.76
39,544.25

4,033.20

14,386.66

181.60
4,680.00
9,354.57

156,87
1,705.01
517.43
30,314.87

o
>

Total resources

17,575.53
102,500.00
1,677,795.00
160.83
180,000.00
73,627.89
229. 70

126,219.71

7,372.39

Total all other resources, gross

Total deductions
All other resources, net

12,282.26

121,475.77
48,060.00
3.49

50 680.00
5.47
140,000.00
62,028.17
79.10

Nickels and cents
Mutilated currency forwarded for redemption
Current expenses
Exchange paid
Dividends paid

Less liability for;
Discount earned on bills, discounted .
Discount earned on bills bought
Interest earned on investments
Interest earned on United States bonds
Commissions earned
Transfer charges
:.
Interest including penalties on deficient reserves
Sundry profits. .
Service charges
Discount on United States bonds
Unearned discount on bills discounted
Unearned discount on bills bought.
Profit arid loss
Unearned interest on investments
Difference account
Reserved for sundry expenses
Withheld for Federal income tax

12,000.00

20,163.92
4 5^0.27
420.49

Furniture and equipment
Suspense account disbursements
Disbursements transit department
Bank premises

. . . .

616,171.08

333,380.73

2,101,252.05

10,981.80
87,505.36
61 249.75
89,180.82

214,856.78
29,171.24
3,494.64
39,175.18

64,648.62
43,037.75
4,216.92
27,853.56
135.49
11,690.75

3,322.03
1,602.05

26,093.65

3,902.13
20,058.77

•

37 228.53
1,160.22
28,871.46
9,634.34
7,946.91

8,959.34
11,161.66

9,522.43
12,631.65
1,295.59
1,557.47

189.96
26.20

460.64

2,236.70
213.76
341,133.73
T

201,011.67

333,128.65

1,900,000.00

876,000.: 00
61,744,000.00

35,134,000.00

25,365,000.00
CO

Statement showing condition of each Federal Reserve Bank and of the system on Dec. 30, 1916—Continued.
RESOURCES—Continued.
[Detailed figures shown for each .bank in first column represent items as reported to the Board; figures in second column, printed in italics, indicate results of consolidation
according to methods used in the compilation of the Board's weekly statement.]
Chicago.
Gold bullion and United States coin
United States gold certificates (including clearing-house certificates).
Gold coin and certificates in vault
Gold settlement fund
Gold redemption fund with United States Treasurer

St. Louis.

$1,640,000.00
25,960,625.00
26,183,000.00
200,000.00

3,395,000.00
254,850.00

53,984,000.00

Total gold reserve

$906,487.00
7,839,150.00

$11,088,000.00
$•27,601,000.00
26,183,000.00
200,000.00

Minneapolis.

$11,088,000.00
3,395,000.00
255,000.00

7,064,000.00
30,000.00

14,738,000.00

$8,746,000.00
7,064,000.00
30,000.00

15,840,000.00

w
H

hrj

Legal-tender notes (including clearing-house certificates).
Silver certificates (including clearing-house certificates)..
Silver coin
Legal-tender notes, silver, etc
Total reserve
Member banks' collateral notes..
All other bills discounted
Bills discounted— Members
Bills bought in open market
Total bills on hand
Investments:
United States bonds
1-year Treasury notes
Municipal warrants
Total earning assets..

923,500.00
525,773.00

1S7,OOO.OO
206,308.00
2, 740.00
396,000.00

1,449,000.00

179,000.00

16,187,000.00

16,019,000.00

1,985,000.00
6,200,000.00

100,000.00
1,200,711.54
4,438,000.00
10,337,000.00

7,036,819.35

14,775,000.00
8,858,100.00
1,517,000.00
1,325,760.88

$4,380,000.00
1,568,800.00
2,868,660.35
10,337,161.09

105,535.00
72,882.00
1,130.00

8,858,000.00
1,517,000.00
1,336,000.00
26,476,000.00

333,200.00
1,651,982.75
1,301,000.00
7,037,000.00

6,199,999.55

8,185,000.00

8,338,000,00
2,202,900.00
891,000.00
575,879.71

2,203,000.00
891,000.00
576,000.00
12,008.000.00

2,442,340.00
700,000.00
569,664.72

2,44^,000.00
700,000.00
569,000.00
11,896,000.00

2,656,185.00

Federal Reserve notes on hand
Due from other Federal Reserve Banks.
Total due from other Federal Reserve Banks
Due to other Federal Reserve Banks..
Deferred credits, other Federal Reserve Banks
Total due to other Federal Reserve Banks

20,389,339.94

29,913,819.08

20,389,339.94

13 035 447.86
1,535,295.07

10,998,953.24
1,333,434.94

67,957.83
38,304.53
330,000.00
54.95
136,894.80
223. 26
162.31
284,775.25

8,057,000.00
19,161.17
17,303.15

849.30
19,763.00
28,688.75
806,435.00
321.08
254,100.35

18,800.00

1,102,877.18

1,146,621.80

71,471.47
74,880.68
50,449.17
116,477.50
34,471.47
40.20
280.96

46,041.34
81,598. 79
31,618.94
70,362. 41
30,000.00
2,036.01
6,627.90
17,873.14
11,790.08

18,953.14

tr1

12,332,388.18
15 368 000 00

50,896.48
193,311.66
296.11

tz{

IS, 800.00

EVE

Less liability for:
Discount earned on bills discounted
Discount earned on bills bought
Interest earned on investments
Interest earned on United States bonds
Transfer charges
Interest including penalties, on deficient reserves
Sundry profits
Appreciation on United States bonds
Service charges

. . . .

2,374,000.00

29,013,819.08

14,550,742.93

Due from other Federal Reserve Banks—Net
All other resources:
Interest accrued on United States bonds
Premium on United States bonds .
Difference account
. . .
ExDenses "oaid in advance
Cost of unissued Federal Reserve currency . . .
.
Furniture and equipment
National bank notes and notes of other Federal Reserve Banks
Nickels and cents
Current expenses
Exchange paid
Deferred debits
Dividends paid
Total all other resources, gross .

2,374,585.00
2,656,000.00

Federal Reserve notes—Net

o
w

Statement showing condition of each Federal Reserve Bank and of the system on Dec. SO,

1916—Continued.

RESOURCES—Continued.
[Detailed figures shown for each bank in first column represent items as reported to the Board; figures in second column, printed in italics, indicate results of consolidation
according to methods used in the* compilation of the Board's weekly statement.]
Chicago.
Less liability for—Continued.
Unearned discount on bills discounted
Unearned discount on bills b o u g h t . . . .
Profit and loss.
Unearned interest on investments . . .
Difference account .
. . .
Reserved for sundry expenses
Withheld for Federal income tax

$16,259.90
30,191.33
126,801.77
6,051.22

Total deductions
All other resources, net

Kansas City.

Total gold reserve

$371 195.00

5,071.08
320.00
' 551,719.89

326,344.00

21,235,500.00
150,095.00

150,000.00

W
$820,000.00

99,426,000.00

37,072,000.00

Dallas.

San Francisco.
$5 727 870 00 !

4,403,500.00
$6,165,000.00
21,236,000.00

$551,000.00

$604,9S7.50

5,793,590.00

Minneapolis.

$2,640.83
22,414. 89
1,735. 53
110. 04
1,217.10
277.00

Total resources.,

Gold bullion and United States coin.. ..
United States gold certificates (including clearing-house certificates)
Gold coin and certificates in vault
Gold settlement fund
Gold redemption fund with United States
Treasurer

St. Louis.

4 807 290.00

14,946,500.00

$5,008,000.00
14,946,000.00

10,489,000.00

56, 750.00

57,000.00

10,000.00

$19,000.00
SO, 308,000.00
Total.

w
02

$13,828,025.57
269,263,225.00
$10,535,000.00
10,489,000.00 170,470,000.00

w
$283,091,000.00
170,470,000.00
o

27 551 000.00

10,000.00
21 034 000.00

20,011,000.00
•

1,703,199.29

1,708,000.00
455,264,000.00

Legal-tender notes (incl. C. H . certificates)
Silver certificates (incl. C. H . certificates)
Silver coin .
.
Legal-tender notes, silver, etc

113,845.00
30,131.00
1,287.00
145,GOO.00

Total TeseTve . . . . . .
5 per cent redemption fund—Federal Reserve
Bank notes. .
Member banks' collateral notes
All other bills discounted
Hills discounted—Members
Bills bought in open market
Total bills on hand
Investments:
United States bonds
1-year Treasury notes
Municipal warrants

27,696,000.00

300,000.00
35,820.74
479,067.72
3,945,180.94

Total earning assets .
Federal Reserve notes on, hand
Federal Reserve notes—Net
Due from other Federal Reserve Banks
Due from other Federal Reserve Banks, investment account
Due from other Federal Reserve Banks, overdrafts
Deferred debits, other Federal Reserve Banks

300,000.00

100,000.00

2,201,485.70

8,493,000.00
963,000.00
164,000.00

243,000.00

79,000.00

19,325,000.00

21,113,000.00

474,589,000.00

100,000.00

14,080,000.00

400,000.00
8 424 320 74
20,125,573.41

250,968.05
831,000.00
2,202,000.00

12,462,265.95

3, 038, 000.00
4,328,250.00
705,000.00
127,318.87

13,632,644.00
5,628,367.00
63,879.75

20,254,000.00

830,629.99
515,000.00
s, 945,000.00
4,460,000.00

8,492,850.00
963,000.00
163,813.65

43,870.00
34,159.00
648.95

87,000.00
142,543.00
14,114.00

4,328,000. 00
705,000.00
127,000.00

251,000.00
12,462,000.00

128,957,458.43

2,634,000.00
500,000.00
737,000'. 00

44,247,650.00
11,167,000.00
8,974,088.67

1,682,975.00

21,510,000.00
131,967,976.42
343,013.62
11,984.62
13,453,475.88

Total due from other F. R Banks

11 952 040 60

145, 776,450.54

Due to other Federal Reserve Banks
Due to other Federal Reserve Banks, investment a c c o u n t . . . .
Deferred credits, other Federal Reserve Banks.

6,917,721.67

86,673,386.05

3,419,239.87

2,062,84? 47
8,441,334.60

Total due to other Federal Reserve Banks.

10,336,961.54

97,177,563.12

21,510,845.00
1,683,000.00

11,952,040.60

44, M7,000.00
11,167,000.00
8,974,000.00

221,896,000.00

16,584,000.00

8,193,000.00

28,552,000.00
128,956,000.00
157,508.000.00

12,713,000.00
2,633,750.00
500,000.00
737,376.13

400,000.00

w
o
>

Statement showing condition of each Federal Reserve Bank and of the system on Dec. 30,

1916—Continued.

RESOURCES—Continued.
[Detailed figures shown for each bank in first column represent items as reported to the Board: figures in second column, printed in italics, indicate results of consolidation
according to methods used in the compilation of the Board's weekly statement.]
Kansas City.

Dallas.

San Francisco.

Total.

d
Due from other Federal Reserve Banks—Net....
All other resources:
Interest accrued on United States bonds...
Premium on United States bonds
Difference account
Premium paid on stock surrendered
Expenses paid in advance
Cost of unissued Federal Reserve currency..
Furniture and equipment
Suspense account disbursements
Disbursements, transit department....
Bank premises
National bank notes and notes of other
Federal Reserve Banks
Nickels and cents
Mutilated currency forwarded for redemption
Current expenses
Exchange paid
Deferred debits
Dividends p a i d . . . .
Expense—Organization
Profit and loss
Commissions paid

$1,615,000.00
$53,978.18
85,887.20

i $44,543,000.00
$27,234.54
1,406.26

$16,918.75
29.80

2,062.70
28,598.67
41,960.83

78.18
10,579.98
8,940.32
37,164.32

42,236.04
3,289.50

$229,504.52
552,672.81
617.35
1,964.79
19,624.17
236,709.55
193,854.11
4,520.27
24,403.05
368,222.08

1,277.35
144,246.31

5,129.68

749,465.00
860.57

378,804.00
23.15

5,104,380.00
1,456.29

413,000.00
69,093.01

70,000.00
13,785.46
107.84

935,500 00
907,734.38
1,409.26
162 31
390,249.84
34,768. 71
16,600. 82
558.58

o
w

w
w

107,645.00v
26.75

171,984.99
769.36
66,706.95
34,768.71

31,395.25
16,600.82
558.58

W
02

w
o

Accrued service charges
Cost of Federal Reserve notes issued

Total all other resources, gross
Less liability for:
Discount earned on bills discounted
Discount earned on bills bought
Interest earned on investments
Interest earned on United States bonds
o
Commissions earned
Transfer charges
Interest, including penalties on deficient
reserves.
Sundry profits
Appreciation on United States bonds
Profits on United States securities sold
Discount on United States bonds
Unearned discount on bills discounted
Unearned discount on bills bought
Unearned interest on investments
Reserved for sundry expenses
Withheld for Federal income tax
Total deductions
All other resources, net
Total resources

$126.96
68.14

$594,389.34

$1,480,505.24

561,914.57

9,025,107.99

84,571.71
29,601.03
14,366.41
186,411.19

102,502.84
10,817.14
547.79
43,329.59

1,100.75
29,023.55
2,887.20
5,632.09

1,732.32

7,305.20

4,567.86

596,175.31
385,635.54
168,830.82
578,422.34
135.49
89,767.60

16,864.49

181.91
34,463.96
14,407.50

3,591.57
13,386.39

3,375.48
8,144.47

770.54

814.36
168.67
257.25

2,829.32

386,313.85

1,796.33
9,587.50
813.51
32,375.01
56,792.57
2,306.76

194,127.28
$1,287,000.00

43,899,000.00

$9,834,000.00

o
H
W

m
<

1,959,943.74

146,946.86

$208,000.00

5,461.97
55,553.09
52,337.10
14,407.50
52,598.32
46,816.03
46,323.28
159,176.76
194,524.27
21,372.75
304.91
12,072.09
810. 76

63.73

$415,000.00
39,795,000.00 773,480,000.00

$6,544,000.00
769,482,000.00

W
O
>

o
i Difference between net amounts due from and net amounts due to other Federal Reserve Banks.

Statement showing condition of each Federal Reserve Bank and of the system on Lee. SO, 1916—Continued,
LIABILITIES.
[Detailed figures by ledger items shown for each bank in first column represent items as reported to the Board; figures in the second column, printed in italics, indicate results
of consolidation according to methods used in the compilation of the Board's weekly statement.]

•

Boston.
$4,989,700.00

Capital
Capital—suspense account
Capital paid in
Government deposits..
Member bank deposits:
Diipi f.n member b a n k s . . . . . . . .
Expense checks.
.
Cashiers' checks
Deferred credits
Returned item checks
XJncollected deposits

. .

Total member bank deposits—gross
Less:
Due from banks and bankers
Exchanges for clearing house
Checks and other cash items
Deferred debits (transit account)
Remittance account, member banks
XJncollected items.
Service charges accrued . . . . . . .
Checks lost In transit.. .
Total deductions
Member bank deposits—net..
Federal Reserve note liability.
Federal Reserve notes—net

$4,990,000.00
2,131,000.00

..
.

$11,866,000.00
3,571,000.00

61,404,883.06
1,109.51
24,906.21
1,625,777.86

57,816,866.81

277,287,575.85

63,056,676.64

$5,228,000.00
3,145,000.00

H
O
H

609,389.97
3,803,265.90
61,467.32
18,187,897.41

2,221,250.39
281,917.82
7,451,350.41
2,172,592.35
18,552,984.84

5
w
w

5,986.07
128.56
6,427,768.90

30,680,095.81
61,389,000.00

w
w
o

3,145,549.05

256,460,339.71
2,195.30
180,421.23
2,085,975.49
5,659.28
18,552,984.84

.
.

3,571,391.94

50,757,135.68
517.48
21.99
1,058,988.16
203. 50

2,516,949.51
328,149. 59
700.51
3,581,969.29

.
.

2,130,617.72

Philadelphia.
$5,227,600.00
500.00

$11,860,100.00
5,650.00

....
. . . .

New York.

22,668,135.23
246,607,000.00

40,389,000.00
1,300,000.00
171,140.00
1,129,000.00

All other liabilities:
Discount earned on bills discounted
Discount earned on bills bought
Interest earned on investments
Interest earned on United States securities
Commissions earned
Transfer charges
Sundry profits
Discount on United States bonds
Unearned discount on bills discounted
Unearned discount on bills bought
Unearned interest on investments
Profit and loss
Reserved for sundry expenses
Withheld for Federal income tax

23,722.98
6,875.00
4,699.78
45,610.88
4,023.98

Total, all other liabilities, gross
Less:
Interest accrued on United States bonds
Difference account
Expense, organization
Expenses paid in advance
Cost of unissued Federal Reserve notes
Furniture and equipment
Disbursements, transit department
Expense, current
Exchange paid
Profit and loss
Suspense account
Nickels and cents

8,852.42
657.22

254.05

511,521.87

1,133,365.46

347,978.18

13,870.83
88.98
17,301.73
1,564.72
29,230. 20
15,352.04
8,384. 44
156,139.16
.40
2,804.17

12,501.88
1,319.53
72,289.96
4,727.74
235,598.86
63,442.17

17,057.93
122.43

e
O

n
•

2,445.83
27,708.01
20,409.87
5,367.18
80,650.25
2.06

557,352.12
68.09
268.89
129,830.26
12.46

244,832.54

„.

17,190.87
9,734.36
2,988.49
35,608.92
961.92
42,482.25

198.33

95.87

Total deductions

20,591.19
144,252.26
32,320.72
41,593.15

12 798.64
121,504.35
5 943.61

„.

All other liabilities,net
Total liabilities

37,368.26
530,483.75
214,122.13
81,644.49
42,387.09
887.83
76,715.67

43,203.20
236,858. 74
78,578.27
57,194.16
10,558.55

o
>

121.89

1,077,411.98

153,885.45

267,000.00

66,000.00

194,000.00

68,777,000.00

262,100,000.00

60,085,000.00

Statement showing condition of each Federal Reserve Bank and of the system on Dec. 30, 1916—Continued.

LIABILITIES—Continued.
Detailed figures by ledger items shown for each bank in first column represent items as reported to the Board; figures in the second column, printed in italics, indicate results
of consolidation according to methods used in the compilation of the Board's weekly statement.]
Cleveland.
Capital
Capital—suspense account
Capital paid in
Government deposits

Member bank deposits:
Due to member banks
Expense checks
Cashiers' checks
Deferred credits
Returned item checks

$6,019,750.00
2,050.00
974,809.73

Kichmond.

$2,450,000.00

$3,346,150.00
$6,022,000.00
975,000.00

3,059,731.73

Atlanta.

$3,346,000.00
8,060,000.00

3,821,076.20

25,283,162.40
862.52
1,829.50
7,952,026.69

21,812,983.12
1,007.06
52,828.06
58,727.49
50.00

Total member bank deposits—gross.

61,049,841.06

33,237,881.11

21,925,595.73

Less:
Due from member banks—overdrafts..
Due from banks and bankers
Exchanges for clearing house
Checks and other cash items
Deferred debits (transit account)

228.22
129,618.62
23,799.03
7.13
(,149,280.71

5,078.46
119,871.42
315,358.16
8,486.22
8,011,646.28

4,819.11
341,704.52
825,242.33
21,806.71
5,117,731.24

Total deductions

w
W

6,302,933.71

8,460,440.54
3,830,000.00
1,336,200.00

Federal Reserve notes—net
Due to other Federal Reserve Banks

8,534,871.56

6,311,303.91
24,777,000.00

54,747,000.00

Federal Reserve note liability
Less Federal Reserve notes on hand

o
w
H

54,442,990.10
932.94
16.67
6,605,809.90
91.45

Member bank deposits—net

$2,450,000.00
3,821,000.00

15,615,000.00
4,271,100/00
1,241,765.00

2,494,000.00

8,029,000.00
5,762,247.41

w
o

Less due from other Federal Reserve Banks
Dueto other Federal Reserve Banks—net
61,7U,000.00

Total liabilities

Chicago.

2,045,784.95

Total member bank deposits, gross
Less:
Due from member banks—-overdrafts..
Due from banks and bankers..
Exchanges for clearing house
.

2,614,398.56
30,893,631.02
2,103.76
13,250.82

35,134,000*00

25,365,000.00

95,390,012.65

30,909,321.64

Minneapolis.
$2,608,900.00
800.00

$2,800,000.00
2,614,000.00

886,437.51

$2,609,000.00
886,000.00

29,477,242.00
2,395.84
3,284.61
H

259.71
76.33

4,693,773.84
.'

450,000.00

St. Louis.

95,357,431.94
540.40
3,240.64
27,884.09
144.26
771.32

4,064,961.81

Total deductions
Member bank deposits—net
Federal Reserve note liability

$6,684,000.00
2,046,000.00

1,723.57
369,491.68
257,596.78

Deferred debits (transit account)

1,457,000.00

$2,799,750.00

$6,683,550.00

Capital
Capital—Suspense account
Capital paid in..
Government deposits..
Member bank deposits:
Due to member banks
Expense checks
Cashier's checks
Dividend checks
Deferred credits
Returned item checks

Federal Reserve notes—net
.
.....
Due to other Federal Reserve Banks
Less due from other Federal Reserve Banks
Due to other Federal Reserve Banks—net

5,312,435.71

7,077,524.30

tj
H
W
>

2,972.41
540,005.56

15,595.22
71,067.46
12,830.30
2,390.91
3,065,478.15 : : : : : : : : : : : : : : : :

265,172.30
2,641,779.34

3,167,362.04

3,449,929.61
27,742,000.00

90,696,000.00

29,482,922.45

in
W
W
26,033,000.00

4,347,000.00
431,445.00
.

3,916,000.00
4,347,156.58
3,598,997.07
748,000 .00
CO

Statement showing condition of each Federal Reserve Bank and of the system on Dec. 30, 1916—Continued.

*
LIABILITIES-Continued.
[Detailed figures by ledger items shown for each bank in first column represent items as reported to the Board; figures in the second column, printed in italics, indicate results
of consolidation according to methods used in the compilation of the Board's weekly statement.]
Chicago.

St. Louis.

All other liabilities:
Discount earned on bills discounted
Discount earned on bills bought
Interest earned on investments.
Interest earned on U. S. securities
Transfer charges
Sundry profits
Discount on U S. bonds
Unearned discount on bills discounted
Unearned discount on bills bought
Unearned interest on investments
Profit and loss

Minneapolis.

$39,343.46
40,675.75
16,397.39
40,998.46
20,004.23
1,165.72

11,218,41
22,314.31

2,737.76

1,572.69
3.97
176.25

Total, all other liabilities, gross
Less:
Premium on U S bonds
Interest accrued on U. S. bonds

219,143.14

o
w
>
r
w

36,347.85
15,607.73
1,250.00
16,295.18
59,274.19
57,896.56
5.47

Cost of unissued Federal reserve notes
ExDpnsfr current
Niclcpl^ and opnts

w
W

w
o
>

186,676.98

Total deductions
All other liabilities—net

22,534.74

Withheld for Federal income tax

Total liabilities

$32,000.00
$99 426 000 00

$37 072 000 00

80,308,000.00

Kansas City.
Capital
Capital—Suspense account . .
Capital paid in
Government deposits
Member bank deposits:
Due to member banks
Expense checks
Cashier's checks-. .
Dividend checks
Deferred credits
Returned item checks
Uneollected deposits
Clearing-house settlement account
Total member bank deposits—gross
Less:
Due from member banks-—overdrafts
Due from banks and bankers
Exchanges for clearing house
:
Checks and other cash items
Deferred debits (transit account)
Remittance account member banks
Uneollected items
Suspense account nonmember returns
Due from express companies
Transfer drafts purchased
Service charges accrued
Checks lost in transit
Total deductions

$3,073,950.00

275,778.80
44,191,246.07
764.61
1,373.07

Dallas.

$3,929,300.00

$2,695,300.00
750.00
$3,07^,000.00
276,000.00

1,493,691.05

San Francisco.

$2,696,000.00
1,494,000.00

3,643,138.44

27,662,405.68

28,200,863.19

37,891,534.06

780,442,474.94

11,072.50
8,732.00

524,253.13
491,698. 67
50.50
1,968,912. 44

4,974,723.95

47,299.28
243,489.76
2,550,000.00

5,667,461.95

$3,929,000.00
3,643,000.00

739,623,194.41
25,607.89
300,126.40
59,292.59
21,680,117.95
6,851.88
18,552,984.84
194,298.98

194,298.98

17,688.57
1,029,956.21
10,899.57
6,415.95
4,602,501.65

$55,684,050.00
9,750.00

37,852,375.89
7,573.62
176.05
31,408.50

25,689,773.42
5,604.85
18,777.55
2,292,408.39

44,193,383.75

Total.

5,041,827.73

5,778,404.50

48,105.56
6,263,380.58
8,298,822.72
648,415.37
69,818,232.68
2,172,592.35
18,552,984.84
47,299.28
243,489. 76
2,550,000.00
5,986.07
128. 56

$55,694,000.00
27,662,000.00

>-d

fcd

w
Pi

108,649,437.77
GO

oo
to

Statement showing condition of each Federal Reserve Bank and of the system on Dec. 30, 1916—Continued.
LIABILITIES—Continued.
[ Detailed figures by ledger items shown for each bank in first column represent items as reported to the Board; figures in the second column, printed in italics., indicate
results of consolidation according to methods used in the compilation of the Board's weekly statement.]
Kansas City.
$38,526,000.00

Member batik deposits—net

Federal Reserve note liability
Less Federal Reserve notes on hand
Federal Reserve notes—net

Due to other Federal Reserve Banks
Less due from other Federal Reserve Banks...
Due to other Federal Reserve Banks—net

All other liabilities:
Discount earned on bills discounted
Discount earned on bills bought
Interest earned on investments
Interest earned on U. S. securities..
Commissions earned ... .
Transfer charges
Sundry profits
Discount on U. S. bonds
Unearned discount on bills discounted
Unearned discount on bills bought...
Unearned interest on investments
Profit and loss
Difference account
Reserved for sundry expenses
Withheld for Federal income tax
Total, all other liabilities, gross

Dallas.

2,023,000.00

Total.

$32,118,000.00

$23,159,000.00
$1,300,000.00
100,750.00

$2,540,000 00
517,120.00

San Francisco.

$671,793,000.00

$17,588,100.00
3,804,420.00

$2,970,511. 49
2,860.938.70

25? 447,412.77
21,390,086.00

1,193,000.00
3,832,625. 73
2,540,190.22
1,292,000.00

13,784,000.00

o
w
H

110,000.00
H

140,500.11
952,268.50
341,418.51
221} 430. 26
52,945.64
20,892.06
118,795.24
39,144.10
31,705.32
225,038. 46
13,667.27
44,054.94
3.97
8,852. 42
1,285.85
2,212,008.65

Less:
Premium on U S bonds
Interest accrued on U S bonds .
Difference account
Expense organization
Expenses paid in advance
Cost of unissued Federal reserve notes
Furniture and equipment . . .
Disbursements, transit department
E xpense—current
Exchange paid
Profit and loss
Suspense-account disbursements
Nickels and cent^

36,347.85
59,038.37
1,530.94
89,591.69
9,988.29
308,832.25
158,478.27
13,751.62
852,038.09
70.55
3,073.06
129,830. 26
235.69

H
O

1,662,806.93

Total deductions
All other liabilities net
Total liabilities

o
w

594,000.00
43,899,000.00

29,834,000.00

89,795,000.00

769,482,000

fcrj

oo
CO

Exhibit D.—INVESTMENT OPERATIONS OF FEDERAL RESERVE BANKS.
Commercial paper discounted by Federal Reserve Banks during each month in 1916, and totals for 1916 and 1915.
PAPER MATURING WITHIN 10 DAYS.
[In thousands of dollars.]

Perc ent.

1916

Federal Reserve
Bank.

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago...
St Louis
Minneapolis
Kansas Citv
Dallas
San Francisco
Total, 1915..
JP&T cent
Total, 1915..
Per cent

January.
31.3

February.

March.

2.8
6.1

69.1
12.1
20.0
13.8

11.6
30.4
6.9
11.0

42 7
18.3
56.1

23.2
2.1
7.2
1.9
1.0

April.

50.1
4.4
678.3
132.0
196.1
6.1
591.2

May.
41.0
2.5
996.9
7.0
92.2
1.0
15.0
94.2
.7

4.1

13.7
5 0

263.4
6

64.0
.1

C1)

45.6

June.

58. 2
27.6
785.7
8.S
.4
267.2

July.
2,762. 7
17.1
914.1
189.0
19.0
4,0
620.2
110.6

1.9
46 5
10 0
10 0

6.6

4,644.8
10.3
103.6
8.4

1,676.9
3.6

1,250.5
2.8

1,216.3
2.7

C1)

August.

2,626.4
566. 5
7.5
26.2
9.5
592.0
41.4

Septem- October. November.
ber.
61.2
68.0
472.9
293.8
215.0
11.5
154. 7
12.0

374.1
30.6
30.2
8.3
S9.2
79.0
26.4
1.8

4,729.2
.3
2,121.9
2.5
21.0
SO. 2
46.5
79.8
9.8

.2
1.5

40.0

.5
7.1

3,877.5
8.6
320.2
26,0

4.5

1,293.8
2.9
131. 7
10.7

8.2

687.8
1.6
165.2
13.4

4.0

December.

Total,
1916.

7,336. 4 18,073.4
5,572.8 5,729.4
5,421.1 12,091.5
1,633.8 2,288.1
2,098.6 2,823.7
80.3
294.6
222.0 2,547.2
890.8
508.3
37.7
171.4
50.1
77.0
20.0
34.4

7,095. 2 22,943.4
50.9
15. S
214.2
296.9
17.4
24.1

Total,
1915.

108.1
40.3
554.5
14.5
89.5
53.1
133.5
84.0
65.5
85.4

1916

1915

40.1
12.7
26.8
5.1
6.3

8.8

45.0
1.2
4.3

5. 7

10.8

2.0

6.6

5.3

.4
.2

6.9
.5

6.4

45,059.2

3.3

w
w
o
w
.H
O

100.0
100.0
1 231 8
100.0

w
o
>

PAPER MATURING AFTER 10 DAYS BUT WITHIN 30 DAYS.
Boston.
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total 1916
Per cent
Total 1915
Per cent

36.6
37.5
67.5
30 6
381.5
255 1
412.7
104.5

86.7
12.6
45.1
14
458.1
193 8
45.2
16.5

163.0
10.5
87.7
67 6
362.0
171 9
49.4
24.6

352.6
37.5
50.1
209 0
1,019.0
232 4
537.9
74.8

72 9
30.8
457.9
46 8
705.8
229 9
62.3
263.2

6.2

2.4

5.6

5.5

360.2
160.3

25.7
127.3
25.5

101.6
77.7
39.8

35.0
122.6
10.5

35.6
37.9
20.9

1 040 3
15
2 957 5
11.7

1 156 5
17
1 798 6

2.7

1 855 4
2 6
4 109 3
16.2

4.9

1 969 5
2 8
1,631.5
6.5

4.9

2 055 3
29
1 810.3
7.2

2,165.0
97.4
382.3
304 5
469.7
114 8
2,117.7
69.2
35.9
36.7
147.8
59.2

1,690. 2
91.2
142.4
38 5
550.1
118 6
930.3
431.2
326.9
24.1
99.5
19.1

181.0
300.3
37.9
414 5
735.9
357 6
1,214.1
509.3
20.5
13.1
258.9

6 000 2
86
1 612 3

4 462 1
6 4
1 380 1

4 048 8
58
1 698 2

6.4

5.5

* Included in 30-day paper

5.7

6.7

51.6
456.7
236.8
66 8
415.0
1 126 9
224.3
276.5
552.3
16.6
246.9
34.2

1,879.5 7,216.5 14,268.9
368.8 11,131.7 12,694.6
1,273.6 6,125.3 8,956.8
37 7 1,943.8 3,203.6
690.3 6,931.7
360.1
473 0 1 054 2 4,485.0
1,291.7 5,081.8 12,283. 4
452.0 2,930.6
644.8
14.6
789.1 1,779.6
36.6
810.0
40.0
75.0
1,404.4
11.3
!
15.8
245.3
7.0

3 704 6
53
1 995 2

6 402 1 34 612 1 69,993 9
49 5
91
2 516 6 2 528 8
10.0
9.9

7.9

803.8
2,385.5
2,219. 6
1,200 7
6,459.5
3,185 6
1,451.4
1,147.7
445.5
2,278.0
2,132.0
1,568.1

20.4
18.1
12.8

3.2
9.4

4.6

8.8
4.8

*>
^

9.9

25.5

3
d

4.2
2.5

12.6
5.7
4.6
1.8

t>
f
W
t-tf

1.2

Q A

2.0

8.4
6.2

H
O

6 4
17.5

100 0

25 277 4
100.0

p
ERAL RESEEVE BOA

7.1

2 687 0
38
1 239.0

373.3
119.6
50.2
42 4
784.2
156 8
316.0
64.0
19.9
84.8
39.2

Commercial paper discounted by Federal Reserve Banks during each month in 1916, and totals for 1916 and

1915—Continued.

PAPER MATURING AFTER 30 DAYS BUT WITHIN 60 DAYS.
[In thousands of dollars.]
1916
Federal Reserve
Bank.

Per cent.

January.

February.

March.

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta .
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

41.5
34.5
47.1
54.3
1,380.0
660.7
234.3
164.5
14.7
325.2
352.3
50.1

20.1
50.6
29.9
12.9
1,187.0
642.9
104.8
84.1
11.9
102.8
284.5
26.9

17.4
112.4
44.2
152.3
1,131.6
777.5
213.2
67.6
21.2
203.9
386.9
48.5

10.0
65.4
94.9
53.2
888.0
490.2
244.4
50.7
22.5
82.6
345.1
26.2

26.3
59.0
70.3
103.9
909.2
573.3
257.2
93.3
53.5
133.4
292.0
51.9

23.2
115.9
47.7
47.3
747.8
280.3
310.9
79.0
42.7
185.5
435.3
62.0

61.0
50.9
64.5
22.2
1,043.7
440.9
243.3
110.6
178.7
140.4
339.4
51.9

125.0
137.5
12.2
53.0
954.5
706.5
186.0
96.4
214.6
106.4
801.1
54.1

522.1
60.7
9.6
142.8
800.0
739. 2
277.4
548.1
82.6
77.3
608.1
30.5

7.2
517.7
24.2
49.9
371.3
1,044.3
365.5
358.4
545.0
44.3
152.5
12.3

45.8
101.3
9.2
25.0
408.4
257.7
328.1
188.1
101.9
55.9
23.1
81.6

121.3
519.6
316.5
61.3
506.2
377.1
152.5
167.7
441.3
7.5
56.8
14.8

Total, 1916..
Per cent
Total, 1915..
Per cent

3,359.2
9.8
3,627.0
6.3

2,558.4
7.4
5,421.7
9.4

3,176.7
9.2
5,257.4
9.1

2,373.2
6.9
3,500.9
6.0

2,623.3
7.6
3,800.8
6.6

2,377.6
6.9
3,905.3
6.7

2,747.5
8.0
4,512.4
7.8

3,447.3
10.0
4,990.9
8.6

3,898.4
11.3
6,180.0
10.7

3,492.6
10.2
5,327.4
9.2

1,626.1
4.7
6,242.0
10.8

2,742.6
8.0
5,071.6
8.8

April.

May.

June.

July.

August.

Septem- October. November.
ber.

December.

Total,
1916.

Total,
1915.

728.2
1,020.9
1,171.2
•1,825.5
1, 405.9
770.3
1,972.6
778.1
10,327. 7 18,703.7
6,990. 6 13,097.0
2,667.0
2,917.6
2,008.5 2,228.4
1,445.0
1,730.6
1,465.2 3,930.5
4,077.1 8,652.7
1,835.2
510.8
34,422.9

1916

3.0
5.3
2.2
2.3
30.0
20.3
8.5
5.8
5.0
4.3
11.8
1.5

1915

1.3
2.0
2.4
3.4
32.3
22.6
4.6
3.9
2.5
6.8
15.0
3.2

o
w

H
hi

100.0
57,837.4
100.0

w
o
>
>

PAPER MATURING AFTER 60 DAYS BUT WITHIN 90 DAYS.
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

19.9
53.2
54.6
29.6
1,555.3
865.8
155.3
227.8
40.2
388.9
677.0
54.0

4.9
35.1
18.9
11.8
1,270.2
688.2
91.9
77.7
36.1
139.5
561.5
60.0

32.9
175.1
52.4
40.1
1,665.5
712.0
142.1
99.8
18.3
218.1
537.9
111.3

7.1
42.7
94.4
9.4
1,060.0
719.4
210.1
73.9
12.1
125.4
611.3
51.3

17.7
95.6
58.5
25.2
1,098.5
686.1
146.3
121.7
20.1
144.4
519.5
27.7

12.1
81.8
55.5
33.4
1,104.9
495.4
237.9
89.1
62.2
191.7
629.1
91.3

12.2
70.1
17.2
16.7
1,585.2
809.4
203.2
217.5
170.4
513.8
1,212.1
138.0

23.7
358.1
14.6
67.5
1,284.0
867.5
250.0
192.1
169.2
113.0
1,117.9
64.1

71.3
128.9
25.8
27.8
735.1
1,289.5
338.8
607.1
110.7
171.0
572.3
29.1

7.1
28.9
16.1
66.8
786.1
746.1
386.1
672.6
92.8
69.5
204.9
49.4

211.1
240.2
10.3
34.5
462.2
496.6
149.3
93.2
55.4
43.0
13.7
86.4

135.9
753.9
48.5
13.2
553.7
1,044.9
169.5
101.0
85.0
19.2
32.8
16.1

555.9
421.6
2,063.6
1,211.7
466.8
918.7
376.0 1,035.0
13,160.7 17,728.6
9,420.9 14,464.0
2,480. 5 2,507.0
2,573.5
2,253.2
872.5
1,283.9
2,137.5
2,896.0
6,690.0 9,519.5
778.7 3,083.2

Total, 1916..
Per cent
Total, 1915..
Per cent

4,121.6
9.9
2,365.1
4.1

2,995.8
7.2
.3,265.9
5.7

3,805.5
9.2
5,162.9
9.0

3,017.1
7.2
4,166.4
7.3

2,961.3
7.1
4,331.1
7.6

3,084.4
7.4
5,187.2
9.0

4,965.8
11.9
5,294.3
9.2

4,521.7
10.9
4,520.1
7.9

4,107.4
9.9
5,306.5
9.3

3,126.4
7.5
5,671.0
9.9

1,895.9

2,973.7
7.2
5,260.7
9.2

41,576.6

•4.6

8,791.2
11.8

1.3
5.0
1.2
.9
31.6
22.7
6.0
6.2
2.0
5.1
16.1
1.9

0.8
2.1
1.6
1.8
30.9
25.2
4.4
3.9
2.2
5.1
16.6
5.4

ft
w
ft

H
W
ft

100.0
57,322.4
100.0

ft
ft

w
ft
w
ft
w
c

CO
oo

Commercial paper discounted by Federal Reserve Bants during each month in 1916, and totals for 1916 and 1915—Continued.
AGRICULTURAL AND LIVE-STOCK PAPER MATURING AFTER 90 DAYS.
[In thousands of dollars.]
Per c ent.

1916
Federal Reserve
Bank.

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis.
Minneapolis..
Kansas City
Dallas
San Francisco
Total 1916
Per cent
Total, 1915..
Per cent

January.

February.

March.

May.

June.

July.

0 3

1.8
4

4.5
1.3
80.3
148.6
171.2
44.3
109.6
234. 2
655.9
63.3

3.7
7.8
29.3
6S.1
85.8
23.2
46.2
189.8
517.8
34.4

05
4.5
6.7
74.6
40.8
212.3
42.1
71.2
268.2
443.0
39.1

1,515.4

1,006.1

1,203. 0

9.0

6.0

7.2

611.4
3.1

885.2
4.5

1,180.8
6.0

April.

5.0
3.8
167. 9
105.6
224.9
41.2
81.7
307. 4
792.2
37.6

3f
6.5
57.7
181.4
248.3
288.3
49.2
247.3
314.0
938.6
56.2

3 5
6.6
33.9
186.6
232.6
432.3
91.1
353.6
316.2
1,162.1
107.9

2.0
2.4
116.7
147.0
236. 7
40.3
341.6
128.6
781.1
28.0

1,767.3
10.5
1,643.0
8.4

2,390.9
14.2
2,382.3
12.1

2,926. 4
17.4
2,503.2
12.7

1,824.7
10.8
1,715.4
8.7

August.

Septem- October.
ber.

November.

December.

Total,
1916.

2.8

6.3
211.4
31.3
220.8
6.9
219.6
72.4
108.7
2.7

6.3
1.6
3.2
9.6
81.1
25.2
176.1
34.4
104.9
1.8

16.4
43.0
146.6
1,133. 4
1,132.1
2,949.4
439.3
2,053.1
2,233.6
6,264.0
404.2

851.5

884.8

444.2

16,817.9

5.1

5.3

2.6

1,892.0
9.6

2,505.7
12.7

2,254.0
11.5

3.8
6.2
64.7
50.4
266.4
20.8
159.8
113.0
352.4
5.0

27
.1
1.1
7.6
23.1
333.9
47.2
129.1
132.3
268.3
15. 0

17.8
9.7
26.7
395. 7
7.8
117.3
123.1
139.0
13. 2

1,043.2

960.4

6.2

5.7

1,022.4
5.2

1,088.6
5.5

1 2

4 7

Total,
1915.

25.0
10.9
38.4
303.2
1,910.1
3,409.6
2,479.8
607.3
1,966.6
1,685.6
6,452. 7
794.8

1916

1915

0.1

j
o

H
o

0.1

.3
.9
6.7
6.7
17.6
2.6
12.2
13.3
37.2
2.4

1.6
9.7

17.3
12.5
3.1
10.0
8.7
32.8
4.0

100.0
19 684.0
100.0
w
o

Cmmercial paper discounted by Federal Reserve Banks during each month im 1916 and toialsfor

1916 and 1915.

[In thousands of dollars.]
1916
January. February. March.

213.3
304.6
212.0
268.8
3,240.9
1,704.1
618.0
234.1
111.4
795.9
1,445.5
238. 7

April.

May.

June.

July.

August.

466.8
348.4
945.7
157.0
2,832.3
1,165. 5
1,564.3
323.2
480.3
824.7
2,275.7
276.1

5,001.2
235.5
1,380.1
534.8
3,234.3
1,516.1
3,421.1
548. 2
733,2
819. 5
2,481.9
277.1

4, 466.0
586.8
739.5
172.7
2,879.5
1,752.5
2,224. 7
781.9
870.9
356.5
2,371.4
149. 4

11 115 0 7 664 6 9 387.3 11 521 5 11 195 5 11,660 0
Total 1916
4.5
5.4
5.5
5.4
Per cent
3.7
Total, 1915... 10,712.8 12,530.3 13,399.7 10,549.3 12,145.7 13,406.0
7.5
8.3
6.5
7. 8
8.3
6.7
Per cent 1915..

20 183.0

17,351.8

9.7

8.3

13,238.0
8.2

12,233,7
7.6

Boston..
New York
Philadelphia
Cleveland
Richmond
Atlanta .
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

131.1
125.6
242.8
127.9
3,417.1
1 944.0
973.5
583.8
189.0
1,384.6
1,845. 5
170.1

114.5
98.3
109.2
33.9
2,975.0
1,599.9
338.7
201.5
96.6
458.5
1,491.1
147.4

419.8
150.0
922.7
407.4
3,331.0
1,553.7
1,808. 5
240.6
121.9
564.1
1,876.2
125. 6

157.9
191.3
1,590.1
240.6
2,987.1
1, 738.6
769.1
621.6
327.1
627.4
1,788.0
156.7

Septem- October. November.
ber.

835.6
560.6
546.3
880.0
2,493.6
2,420. 9
2,318.9
1,723.7
342.9
393. 9
1,707.6
84.8

440.0
1,035.1
307.3
209.6
1,671.3
3,023.0
1,398.0
1,317.1
1,307.4
253.5
783.3
117.3

14 308 8 11 862.9
6.9
5,7
14,405.0 15,050.8
9.3
8.9

6,865.6
715.3
3,415.0
106.0
1,463.1
1,338.8
2,036.4
1,012.8
401.3
211.3
156.8
181.7

December.

14,810.1
17,978.0
11,917.7
3,653.7
3,852.0
2,566.1
5,706.9
1 254.2
1,491.5
147.8
289.5
48.5

1915

Total.

Per
cent.

Total.

33,921.9
22,329.5
22,328.4
6,792.4
34,377.2
22,323. 2
23,178.1
8,842.7
6,473. 5
6,817. 7
18,512.5
1,973.4

16.3
10.7
10.7

2,086.7
4,819.6
5,137.1
4,526.0
44,891.4
34,209.3
9,238.7
6,317.6
5,206.5
10,875. 5
26,756.9
7,287. 7

16.5
10.7
11.2
4.3
3.1
3.3
8.9
1.0

17 904 1 63 716 0 207 870.5
8.6
100.0
30.7
161,353.0
18,269.7 15,412.0
9.6
11.3

Per
cent.
1.3
3.0
3.2
2.8
27.8
21.2
5. 7
3.9
3.2

6.8
16.6
4.5

100.0

o
>

oo
o

Member banks' collateral notes discounted by Federal Reserve Banks from September 11, date when first special rate became effective, to J)ec. 31, 1916.
September. October. November. December.
Boston
New York

150,000

Philadelphia
Cleveland

$25,000
350,000
460,000
140,850

Richmond
Atlanta

$314,502
124,900
220,000
20,000
208,000
461,500
92,400

$340,000 $1,227,111
330,000 7,484,500
3,032,500 10,366, 768
15,000 2,000,000
180,000 2,427,500
120,000
790,000
1,082,600 4,242,500

Total.

September. October.

$2,031,613
7,939,400
13,644,268
2,385,000
3,275,500
1,512,350
5,417,500

St. Louis
Minneapolis
Kansas City

$200,000

85,000

135,000

$435,000
12,795
30,000
10,000

1,410,850

2,076,302

5,587,895

$500,000

Dallas .

November. December.

Total.

$667,500
543,200
85,821
57,500

$1,302,500
1,055,995
115,821
287,500

32,269,900

38,967,447

San Francisco

Total

o
H

Trade acceptances discounted by Federal Reserve Banks during each inonth in 1916 and totals for 1916 and 1915.
[In thousands of dollars.]

Federal Reserve Bank.
Boston..
New York. ..
Philadelphia .
Cleveland
Richmond .
Atlanta

February.

January.

March.

April.

May.

June.

July.

August.

September.

28.5

7.1

October. November.

December.

265.4
161.0
1.0
3.7
155.0
179.0
23.7
50.4

113.9

14.3

5.6

135.8
95.5

49.6
144.9
54.0

3.7
7.4
97.6
43.7

3.5

33.2

43.0

47 3
11.7
5.3

10.6

2.3
9.1

30.4
13.6

444.4

24J5.1

0.7

. .

Chicago

St Louis
Minneapolis
TCansa*; Citv

Dallas
San Francisco
Total 1916
Total 1915

W
W

137.3
202.0
8.2
32.6

Total.

Total,
1915.

298.7

240.0

33.9
10.8
126.9
91.7

7.3
49.5
89.6
46.9

17.6
13.9
89.8
20.5

27.6

38.5

17.2

2.3
2.0
29.1
87.7
15.0
55.8

136.4
89.3
10.2
189.1

13.2
26.8

25.0

70 5
84.6

199.0

245.-4

40.4
6.8

298.3

3.5

275.7

6.3

593.5
319.5

.8
29.9
147.0
37.7
31.7
75.5

70.8
7.2

14.1

414.9
629.1

853.3
496.2

8.2
1.4
219.8
643.0
16.4
59.2
41.1

1,103.0
514,0

429.2
106.6
74.8
175.2
1,509.2
1,591.0
105.2
626.2
41.7
190.9 '
248.9
53.4

5.7

49
450.5
1,007.1

107.8
87.8
160.8
74.2

5,212.3
1,958.8

w
o
w
d

Commodity paper discounted by Federal Reserve Banks during each month in 1916 and totals for 1916 and 1915.
[In thousands of dollars.]

Federal Reserve Bank.

Richmond.
Atlanta .
St Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total 1916
Total 1915

January.

February.

March.

April.

May.

June.

July.

August.

Septem- October.
ber.

November.

December.

512.7
874.6
246.5

370.2
1,560.6
972.5

343.2
539.4
129.0

237.2
393.5
186.0

1,010.6
745.8

1,092.2
622.7

802.5
853.8

805.7
541.7

571.8
305.7

499.1
207.1

1.3

9.1

2.0

5.5

1.0

81.9
24.0

57.6
13.1

55.0
6.8

21.3

4.4
12.0

2.5
2.3

360.0
2.5
26.7

7.4

2.5

17.8

35.4

1,863.6

1,794.7

1,719.0

1,370.7

899.4

712.0

1,525.2

507.5

1,636.3
905.6

2,921.1
2,094.8

1,047.0
4,375.2

353.6
782.4

427.0
73.1

i
816.7
2,939.4

Total,
1916.
7,025.8
7,500.4
1,534.0
19.8
360.0
225.2
148.0

Total,
1915.
2,881.4
7,032.3
99.8
25.3
239.0
37.2

o
w
H

16,813.2
10,315.0

w
o

Commercial paper, including member hanks' collateral notes, discounted by each Federal Reserve Bank during the calendar year 1916, distributed by sizes.

To $100.

Over $100 to
$250.

Over $250 to
$500.

Over $500 to
$1,000.

Over $1,000 to
$2,500.

[In thousands of dollars.]
Over $2,500 to
$5,000.

Over $5,000 to
$10,000.

Over $10,000.

3 ft

3ft
ft

Per cent.

Total.

5? &

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total

34
94

266
50
1,296
1,202
250
59
14
297
819
20

3.1
155
6.5
293
12.8
435
4.5
192
92.1 3,109
90.2 2,292
21.1
786
4.6
345
1.1
276
24. 5
911
60.2 3,184
110
1.9

27.5
54.1
73.6
31.1
599.1
388.0
145. 2
61.0
48.9
157.8
531.5
19.6

gft
ft

3ft
ft

183
75.8
402
152.1
448
172.8
209
80.3
4,534 1,827.4
2,022
787. S.
1,487
607.8
608 230. 4
519
193.8
1,353 502.6
2,601
972.0
185
68.0

153
130.6
170
363
267.4
475
463
371.2
G88
219
159.9
429
4,440 3,497. 6 4,009
1,955 1,547.4 2,020
1,998 1,602.5 2,182
613
463.1
692
859
600.7 1,039
1,276
913.0 1,120
2,301 1,664.4 j 2,266
173.7 1 310
267

ft
309.9
704
813.5
521
1,285.3 697
819.9
149
7,087.8 2,375
3,441.7 1,369
3.655.4 1,139
1,166.9
454
1,571.6 348
1.759.5 393
3, 706.4 1,308
502.5
151

4,407 322.6 12,088 2,137.4 14,551 5,670.8 14,907 11,391.5 il 5,460 26,120.4

gft

3,413.7
2,320. 0
3,030.6

590.1
9,428.5
5,452. 5
4,6S6.9
1,850.2
1,238.8
1,379.2
4,815.4
550.3

381 3,670.7
171 1,644.9
210 1,843.7
614. 6
73
705 5,181.2
4S7 3,002. 0
297 2,618.6
275 2,096.5
808.4
113
922.4 j
138
481 3,325. 9
422.0
60

183
118
74
225
241
154
87
33

290.6
071.0
538. 4
492.0
663. 5
013. 6
840.6
970.0
010.2
158. 7
436. 7
235. 4

2,291
2,502
3,325
1,401
20,753
11,588
8,293
3,133
3,201
5>530
13,145
1,121

33,921.9
22,329.5
22,328.4
6.792.4
34,377.2
22,323. 2
23,178.1
8,842.7
6.473.5
6,817.7
18,512.5
1,973.4

3.0
3.3
4.4

s
16.3
10.7
10. 7

1.8

3.3

27.2
15. 2
10.9

10.5
10. 7
11.2

4.1

4.3

4.2

3.1

7.2

3.3

17.2

8.9

1.5

1.0

38,756.2 3,391 26,750.9 j 1,871 96,720.7 76,283 207,870.5 1100.0

100.0

42
185
18

H
W

I
W

Number of member banks, by districts, accommodated through the discount of commercial paper during each month in 1916.
Federal Reserve Bank.
Boston
New York
Philadelphia...
Cleveland. ..
Richmond
Atlanta
.
Chicago
St. Louis.
Minneapolis
Kansas City...
Dallas
San Francisco

. .

January.

February.

March.

June.

May.

April.

July.

August. Septem- October. November.

December.

Total,
1916.

Total,
1915.

8
11

6
7

19
11

8
11

20
12

10
6

13
13

16
14

15
24

13
15

11
9

6
12

8
12

9
14

12
12

28
9

143
50

65
81

118

107

116

106

115

109

111

101

202

226

126

209

247

80
40
64
73
147

72
39
56
52
148

69
37
47
34
144

85
37
41
29
67

92
28
30
26
29

212
114
174
189
301
76

143
129
176
258
360

84
25
38
20
8
11

43
19
31
9
16

74
32
25
94
121
20

73
40
58
60
130

80
56
30
18
69
94
23

55
41
44
74
109

79
33
22
19
37
101

614

451

535

606

655

678

642

483

448

314

1,788

469

570

606

693

813

760

711

761

383
794

336

398

835

754

7,649
7,609

7,643
7,618

7,639
7,614

7,631
7,622

7,606
7,623

7,621
7,624

7,621
7,625

7,618
7,640

7,624
7,650

7,626
7,655

7,628
7,655

7,627
7,646

167

Total number of member
banks accommodated:
1916.
1915.
Total number
banks:
1916.. . .
1915. .

1,920

of member
. . .

Acceptances bought in open market by Federal Reserve Banks during each month in 1916,

[In thousands of dollars; i. e., 000's omitted.]
Per cent.
Federal Beserve January.
Rank.

February.

March.

April.

May.

June.

July.

DecemOctober. NovemAugust. September.
ber.
ber.

Total,
1916.

Total,
1915.
1916.

1915.

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

2,831

3,727

6,011

1,732

3,860

7,671

1,395

4,340

4,673

2,280

8,644

5,213

52,377

14,105

13.6

3,894

5,379

8,178

6,478

5,343

14,954

14,368

8,086

8,484

11,793

18,620

17,829

123,406

25,834

32.0

194

709

4,759

3,990

4,109

5,766

5,049

3,661

6,591

5,962

5,670

6,662

53,122

7,565

13.8

11.7

373

475

649

898

1,712

2,954

3,603

2,153

2,787

3,190

2,728

5,960

27,542

2,963

7.1

4.6

480

501

503

1,205

446

2,827

960

368

3,967

11,313

250

379

439

448

522

883

412

916

2,146

2,320

1,933

2,081

12,544

768

772

955

1,572

1,128

2,167

3,277

1,752

2,867

2,920

2,124

6,759

400

193

501

739

1,401

2,238

2,401

1,717

2,448

2,222

1,991

226

228

409

534

628

1,126

1,334

1,053

1,032

1,373

1,444

215

£19

436

440

721

1,098

463

1,137

635

649

227

726

439

1,452

3,543

323

558

566

1,188

1,987

3,991

3,471

2,576

2,542

6,012

3,951

5,611

32,776

Total
Per cent
Total, 1915.
Per cent

9,603
2.5

12,416
3.2
2,666
4.1

22,918

18,499

21,912

42,325

36,575

28,447

37,087

40,895

386,095

4.8

5.7

11.0

9.5

7.4

9.6

10.6

8,356

4,018

2,805

4,701

5,986

4,656

4,548

0,340

12.9

6.2

4.4

7.3

9.2

.7-2

7.0

9.8

48,547
12.5
7,919
12.2

66,871

5.9

•

39.8

2.9

3.2

27,061

5,782

7.0

8.9

4,430

20,681

1,801

5.4

2.8

4,152

13,539

1,455

3.5

2,755

8,191

1,788

2.1

3,230

8.5

19.7

r1
w
w
o
w
H
O
H

H
2.8

17.3
12,790

•

21.7
.

100.0
64,845
100.0

5.0
>
t-1

w
w
w
o
>

Acceptances bought in open market during each month in 1916, distributed by maturities,
MATURITIES.
[In thousands of dollars; i. e., 000's omitted.!]
After 30
After 60
Within 30 but
within but wthin
days.
60 days. 3 months.

Month.
January.,
February
March
April
May
June
July

813

1,204

7,586

9,603

1,453

654

10,309

12,416

1,454

3,139

18,325

22,918

1,029

3,403

14,067

18,499

2,207

3,345

16,360

21,912

4,676

7,635

30,014

42,325

4,805

4,219

27,551

36,575

After 30
After 60
Within 30 but
within but within
days.
3 months.

Month.

Total.
August
September.
October
November.
December.,

3,719

4,978

4,118

8,179

717

6,826

Total

4,379

9,431

9,072

10,638

19,750
24,790
33,352
34,737
47,161

38,442

63,651

284,002

Total.
28,447
37,087
40,895
48,547
66,871
386,095

w
o
w
H
O

Acceptances bought in open market by all Federal Reserve banks during the calendar year 1916, distributed by sizes.
Acceptances
bought in open
market.

To 15,000.

To $10,000.

To $25,000.

Pieces. 1 Amount.

To $50,000.

Pieces.

Amount.

To $100,000.

Pieces.

Amount.

Over $100,000.

Amount.

Total.

Pieces.

Amount.

January, 1916

194

$546,959

220

SI, 720,758

217

$4,113,726

$1,857,477

$1,363,593

February, 1916...

267

789,675

159

1,307,989

196

3,548,326

1,830,851

1,613,614

$3,326,375

707

12,416,830

March, 1916

288

941,908

234

1,983,554

356

6,578,432

109

4,539,671

5,095,263

3,779,223

1,071

22,918,051

Pieces.

Amount.

Pieces.

Pieces.
695

Amount.
$9,602,513

April, 1916

269

847,351

281

2,305,281

313

5,420,116

3,898,184

2,697,334

3,332,850

1,000

18,499,116

May,1916

335

1,012,891

219

1, 755,224

312

5,960, 425

108

3,262,880

5,698,417

4,221,630

1,059

21,911,467

J u n e , 1916

562

1,533,168

737

6,238,168

853

13,739,638

191

8,137,221

6,763,226

5,913,336

2,463

42,324,757

J u l y , 1916

526

1,633.337

495

4,026,432

809

12,830,111

185

7,734,451

5,065,021

5,286,683

2,112

36,576,035

August, 1916

327

916,682

232

1,888,457

422

7,835,547

131

5,340,003

5, 744,106

6,721,610

1,216

28, 446,405

September, 1916..

524

1,504,439

445

3,517,940

660

11,194,706

165

6,835,609

6,836,652

7,197,162

1,909

37,086,508

October, 1 9 1 6 . . . .

497

1,384,176

632

5,079,008

740

12,333,597

265

12,142,475

6 990,915

2,964,522

2,228

40,894,693

November, 1916..

626

1,832,661

533

4,212,925

950

15,628,393

271

11,255,398

106

8,844,327

6,772,741

2,520

48,546,445

December, 1916..

812

2,349,906

839

6,645,981

1,342

22,187,684

404

16,662,750

135

11,012,433

8,012,793

3,577

66,871,547

5,227

15,293,153

5,026

40,681,717

7,170

121,370,676

2,019

83,494,970

807

67,724,901

308

57,528,925

20,557

386,094,367

Total

Amounts of United States bonds and one-year Treasury notes (par value) purchased by Federal Reserve Banks during each month in 1916.

Federal Reserve Bank. January. February. March.

April.

May.

June.

July.

August. September.

October.

November.

December.

Total,
1916.

Total,
1915.

Per
cent.
1916 1915

Boston
New York
Philadelphia.. .
Cleveland
Richmond
Atlanta....
Chicago...
St. Louis..
Minneapolis.
Kansas City.
Dallas
San Francisco
Total, 1916
Percent .
Total, 1915
Per cent

$1,000,000
525,000

$500,000
819,000
1,320,000

25,000
133,000
1,613,000
488,000
799,000 1,570,000

$2,327,000
$5,000
$3,202,000
879,500
940,000
716,000
284,000
523,000
826,000 1,782,000
356,000
75,000
310,000
1,241,600
694,900
1,000
350,000 1,740,700 1,330,000

145,380

337,000
402,500
434,500 1,090,500
69,800 4,264,250 1,492,250 1,223,000
537,600
425,000
25,000
32,000 1,513,750
481,250
92,500
2,025,000

$6,250 $348,000 U, 138,000

404,000

60,000

400

757,000

250,000

$2,332,000 $1,000,000 4.1 6.3
13.8
$950,000 7,818,750
2,500,000 2,000,000 4.4 12.6
250,000 8,403,160 2,357,000 14.8 14 8
4,060 2,402,100
276,200 1,916,250 4,335,250
7«|
4fi
500,000 2,595,500
1,257,000 1,615,000 8,644,100 4,231,000 15.2126.5

$250,000

$92,500

50,000
135,540

2,000

525,000

100

245,000

100,000

1,500

3,000
500
1,550,000

215,000

867,500
434,940
20,000

341,250

501,100

2,193,300

0.6

0.9

3.9

477,500

735,300

3.0

4.6

331,250

473,100

2,186,300

10,000

3,000

7,000

2,000 5,397,100 5,249,750 48,128,100 11,776,350 84.8 74.9
231,000
40,000 3,918,880 3,167,120 6,9 20.2
200
770,000 7.8 4.9
250,000 4,403,200

5,060

250,000

477,500

501,100
735,300

4.C 6.4

257,060 5,628,300 5,539,750 56,750,180
0.4
9.9
100
9.8
100.0
488,000 1,200,100 2,988,820 2,347,500
15,918,470
7.5
3.1
100
18.8
14.7

25,000

341,250

2,419,000
970,000 4.4 6.1
1,000 2,552,920 1,328,820 4.5 8.3
250,000 8,362.500 2,151,650 14.7 13.5
870,000 7.3 5.5
57,500 4,163,250
2,623,750 1,010,000

25 000

6/627,180 9,496,750 8,249,850 10,479,600 6,113,600 1,322,440
2,650,500 2,566,250 1,340,000
559,500
75,000
285,000

51,000

81,800

6,627,180 9,496,750 8,249,850 10,479,600 6,113,600 1,322,440
14.5
2.3
11.7
18.5 10.8
16.7
559,500
2,650,500 2,566,250 1,340,000
75,000
285,000
8.4
3.5
16.7
0.5
1.8
16.1

Classes of securities purchased each month:
4,393,800 6,782,250 7,400,850 9,436,100 5,608,100
2 per cent bonds
403,380 1,739,500
766,000
53,500
225,500
3 per cent bonds
1,830,000
940,000
4 per cent bonds
975,000
83,000
280,000
1 year Treasury
50,000
notes
Total, 1916
Total, 1915

$12,500

300,000

257,060 5,628,300 5,539,750 56,750,180
100
488,000 1,200,100 2,988,820 2,347,500
15,918,470
100

2,193,300

Amounts of United States bonds and 1-year Treasury notes sold by Federal Reverve Banks during each month in 1916.
January.

Federal Reserve Bank.

Boston
New York .
Philadelphia ..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total sales

March.

April.

$500 000
450,000

May.

June.

$1,300

$25,000

30,000

July.

August.

Septem- October. November.
ber.

$30,000
272,000
97,000
405,600
82,000

$60,000 $70,000
588,000 2,662,000
195,000 228,000
122,200
95,100
166,000 192,000

$40,000 $744,000
610;000 1,310,000
130,000 506,000
550,000 1,085,000
110,000 505,000

370,000
15,000
1,000

240,000
30,000
115,400
30,000

280,000
35,000
104,700

160,000 1,450,000
20,000 120,000
81,000 401,000
105,000

180,000

96,000

61,500

1,100
$300

....

2 per cent
3 per cent (including conversion bonds)..
4 per cent
1-year Treasury notes... . „
Total

February.

$300

1,011,500

300

61,500
700,000

1
1,011,500

124,000

100,000

Total.

$56,000 11,000,000
102,900 5,571,200
19,000 1,675,000
42.800 2,780,700
17.800 1,072,800
61,500
2,500,000
75,100
295,100
25,000
739,400
923,000 1,058,300

500,000

32,400

35,200 1,272,600 1,726,600 3,762,800 1,825,000 6,326,000 1,261,600 17,254,000

2,400
30,000

15,000
25,000
80,000
80,000
261,500
35,200 1,072,600 1,606,600 1,715,800 1,050,000 6,146.000 1,261,600 13,590,500
30,000
200,000
40,000 2,032,000 750,000
100,000
3,372,000

32,400

35,200 1,272,600 1,726,600 3,762,800 1,825,000 6,326,000 1,261,600 17,254,000

250,000
300

10,200

December.

zn
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United States bonds on hand Jan. I, 1916, purchases and sales of both United States bonds and 1-year Treasury notes during the year, and amounts
of United States bonds and of 1-year Treasury notes held by each Federal reserve bank on Jan. 1, 1917; also conversion operations of each Federal
Reserve Bank during the year.
Boston. New York. PhiladelCleveland.
phia.
United States bonds on hand
$1,000,000
Jan. 1,1916

Sales during year:
United States bonds
1-year Treasury notes

Total United States
securities on hand
Jan. 1,1917
Conversions:
United States 2 per cent
bonds converted during
year

Chicago.

$4,231,000

St. Louis.

Minneapolis.

$970,000 $1,328,820 $2,151,650

San Francisco.

Total.

$870,000 $1,010,000 $15,918,470

8,644,100

2,419,000

8,362,500

4,163,250

2,623,750

56,450,180
300,000

2,500,000

8,403,160

4,335,250 2,595,500

8,644,100

2,419,000 2,552,920 8,362,500

4,163,250

2,623,750

56,750,180

4,335,250 2,595,500 12,875,100

3,389,000 3,881,740 10,514,150

5,033,250 3,633,750

72,668,650

1,000,000 3,289,200
2,282,000

1,675,000

1,690,700 1,072,800
1,090,000

2,552,920

Dallas.

8,353,160 $4,335,250 $2,595,500
50,000

4,500,000 10,760,160

61,500

2,500,000

295,100

739,400

1,058,300

500,000

13,882,000
3,372,000

61,500

500,000

17,254,000

2,633,750
500,000

44,247,650
11,167,000

5,033,250 3,133,750

55,414,650

1,675,000 2,780,700

1,072,800

2,500,000

295,100

739,400 1,058,300

2,192,450 1,710,000 8,858,100
1,070,000
824,000 1,517,000

2,202,900
891,000

2,442,340 8,492,850
700,000
963,000

1,332,000
1,000,000

1,042,550
1,205,000

1,651,000
1,174,000

7,361,460
618,000

2,332,000

2,247,550

2,825,000

7,979,460 3,262,450

2,534,000 10,375,100

3,093,900 3,142,340

2,000,000 6,476,200 2,849,000 3,318,000 2,142,800

1,653,900 4,035,400

1,786,100

Kansas
City.

2,500,000

3,332,000 7,818,750

Total sales during year.. 1,000,000 5,571,200
Balance on hand Jan. 1,1917:
United States bonds
1-year Treasury notes

Atlanta.

$2,000,000 $2,357,000

Purchases during year:
2,332,000 $7,568,750
United States bonds
250,000
1-year Treasury notes.. ..
Total purchases during
2,332,000 7,818,750
year
Grand total

Richmond.

9,455,850

1,398,600 1,927,600

4,328,250
705,000

1,412,400

1,000,000 30,000,000

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Keceived from United States
Treasurer in exchange for
bonds converted:
3 per cent conversion
bonds of 1946
3 per cent 1-year gold
Treasury notes
Total

1,000,000 3,239,200

1,675,000

1,660,000

1,072,800

829,900

2,518,400

895,100

698,600

964,600

707,400

500,000

15,761,000

1,000,000 3,237,000

1,174,000

1,658,000

1,070,000

824,000

1,517,000

891,000

700,000

963,000

705,000

500,000

14,239,000

6,476,200

2,849,000

3,318,000

2,142,800

1,653,900 4,035,400

1,786,100

1,398,600 1,927,600 1,412,400 1,000,000

30,000,000

2,000,000

Public debt refunding operations conducted by the Secretary of the Treasury under'authority
year 1916.

d
t-1

of sec. 18 of the Federal Reserve act during the calendar

[Prepared by the Office of the Secretary of the Treasury, Division of Loans and Currency.]
2 P E R CENT BONDS OF THE UNITED STATES SUBMITTED BY F E D E R A L RESERVE BANKS AND CANCELED.
Apr. 1,1916.
Federal
Reserve
Bank.

2 per
cent
consols,
1930.

2 per
2 per
cent
cent
PanaPanamas,
mas,
1916-36. 1918-38.

Total.

2 per
2 per
2 per
cent
cent
cent
PanaPanaconsols,
mas,
mas,
1930.
1916-36. 1918-38.

Total.

2 per
cent
consols,
1930.

Atlanta
$705,300 $242,100 $107,500 $3,000 $352,600 $596,000
$705,300
Boston
500,000
1,500 000
500,000
Chicago
1,700,000 250,000
750,000 $150,000 $100,000 1,000,000 1,700,000
Cleveland..,,. 400,000
400,000 1,475,000 520,000 5,000 2,000,000 818,000
Dallas...
1,059,300 224,100
1,059,300
412,400
88,100
Kansas City... 820,600
820,600 412,400
699,300
Minneapolis... 699,300
699,300
New York
3,015,300 25,000 25,000 3,065,300 1,500,000
1,500,000 1,422,900
Philadelphia 1,424,600
1,424,600 712,200
712,200 342,200
913,800 456,900
Richmond
913,800
456,900 609,600
761,700 380,800
St. Louis
761,700
380,800 643,600
1,000,000
San Francisco.
1,000,000
T o t a l . . . 9,990,600

175,000

125,000 10,290,600 8,938,700 627,500

Total for year 1916.

Oct. 1, 1916.

July 1,1916.

2 per
2 per
cent
cent
PanaPanamas,
mas,
1916-36. 1918-38.

$730,000 $355,400
100,000
110,000
19,000
356,500 250,000
385,000
231,000
162,500

8,000 9,574,200 7,193,800 1,975,000

103,000
139,000

Total.

$596,000
1,500,000
1,335,400
918,000
353,100
694,600
699.300
1,910,900
712,200
772,100
643,600

2 per cent
consols,
1930.

2 per
cent
Panamas,
1916-36.

$1,543,400 $107,500
2,000,000
2,700,000 880,000
2,693,000 520,000
1,283,400 110,000
1,321,100 356,500
1,398,600
5,938,200 410,000
2,479,000 231,000
1,980,300 162,500
1,786,100
1,000,000

2 per
cent
Panamas,
1918-38.

Total.

$3,000 $1,653,900
2,000,000
455,400 4,035,400
105,000 3,318,000
19,000 1,412,400
250,000 1,927,600
1,398,600
128,000 6,476,200
139,000 2,849,000
2,142,800
1,786,100
1,000,000

966,400 10,135,200 26,123,100 2,777,500 1,099,400 30,000,000

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Public debt refunding operations conducted by the Secretary of the Treasury under authority of sec. 18 of the Federal Reserve act during the calendar
year 1916—Continued.

o
o

THIRTY-YEAR 3 P E R CENT CONVERSION BONDS AND ONE-YEAR 3 PER CENT TREASURY NOTES ISSUED TO F E D E R A L R E S E R V E BANKS.

Federal Reserve Bank.

Apr. 1,1916.

J u l y 1,1916.

Oct. 1,1916.

Conversion One-year
Treasury
bonds,
notes, series
series
Apr. 1,
1916-46.
1916-17.

One-year
Conversion Treasury
bonds,
notes,
series
series
July 1,
1916-46.
1916-17.

Conversion One-year
Treasury
bonds,
notes, series
series
Oct. 1,
1916-46.
1916-17.

Atlanta
Boston
Chicago
Cleveland

$355,300

$350,000

250,000

1,000,000
200,000

200,000

Total.

1,000,000

2,000,000

2,518,400

1,517,000

4,035,400

458,000

918,000

1,660,000

1,658,000

3,318,000

177,100

176,000

353,100

707,400

705,000

1,412,400

347,600

347,000

694,600

964,600

963,000

1,927,600

349,300

350,000

699,300

698,600

700,000

955,900

955,000

1,910,900

3,239,200

3,237,000

850,000

1,700,000

400,000

1,000,000

2,000,000

530,300

529,000

206,400

206,000

410,600

410,000

S20,600

350,000

699,300

1,533,300

1,532,000

3,065,300

750,000

1,335,400

1,000,000

349,300

$298,000

$596,000

750,000

668,400

667,000

460,000

1,059,300
412,400
1,500,000

Total.

1,500,000

$298,000

Minneapolis

One-year
Treasury
notes.

.|l,653,900

$352,600

500,000

Conversion
bonds.

824,000

$176,000

Kansas C i t y . . .

Total.

$829,900

$176,600

$705,300

Dallas

New York

Total.

Total for 1916.

1,398,000

Philadelphia...

962,600

462,000

1,424,600

356,200

356,000

712,200

356,200

356,000

712,200

1,675,000

1,174,000

2,849,000

457,800

456,000

913,800

228,900

228,000

456,900

386,100

386,000

772,100

1,072,800

1,070,000

2,142,800

St. Louis

381, 700

3X0,000

761,700

322,600

321,000

643,600

895,100

891,000

1, 7SG, 100

500,000

1,000,000

15,761,000

14,239,000

30,000,000

Total

5,900,600

4,390.000

190,800

190,000

380,800

500,000

1,000,000

10,290,600 I 4,789,200

4, 7*5,000

9,574,200

5,071,200

5,064,000

10,135,200

6, 476,200

Richmond
San Francisco..

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Amounts originally allotted by Federal Reserve Board on basis of capital and actual amounts converted.

Federal Keserve Bank.

Boston
New York...
Philadelphia
Cleveland...
Richmond...
Atlanta
Chicago

Amounts
originally
allotted by
Federal Reserve Board.
$2,763,900
6,130,500
2,849,100
3,249,600
1,827,600
1,410,600
3,635,400

Amounts
actually
converted.

$2,000,000
6,476,200
2,849,000
3,318,000
2,142,800
1,653,900
4,035,400

Federal Keserve Bank.

Amounts
originally
allotted by
Federal Reserve Board.

Amounts
actually
converted.

St. Louis
Minneapolis..
Kansas City..
Dallas
San Francisco

$1,523,400
1,398,600
1,644,000
1,412,400
2,154,900

$1,786,100
1,398,600
1,927,600
1,4127 400
1,000,000

Total...

30,000,000

Amounts of municipal ivarrants bought, including renewals by Federal Reserve Banks during each month of calendar year 1916.

[In thousands of dollars.]

Federal Reserve
Bank.

January. February.

March.

April.

May.

June.

July.

DecemOctober. NovemAugust. September.
ber.
ber.

Per cent,
Total,
1916.

Total,
1915.
1916. 1915.

_
Boston....
New York.. .
Philadelphia
Cleveland
Richmond..
Atlanta
Chicago
St Louis
Minneapolis .
Kansas City
Dallas
San Francisco . . . . .
Total, 1916
Per cent
Total, 1915....

Per cent

449.0
6 148.6
1,576.0
374.6
77.6

546.5
4,964.8
630.6
708.6
5.0

1,071.1
3,582.6
855.7
1,413.3
10.0

32.5
5,837. 4
100.0
2,496. 8
50.4

2,218.9
1,657.4
862.8
968.3

320.2
1,984.2
617.6
1,005.0
50.5

190.0
2,042.2
889.8
361.0
275.3

511.5
191.6
75.6
285.8

1,584.8
1,209.2
434.2
321.3
10.0
122.6
606.6
108.6
357.8
6.1

483.7
121.1
293.4
125. 8

1,306.3
471.5
364.9
314.2

1,230. 2
578.7
632.3
593.7

1,075.9
40.5
263.6
36.5

1,361.5
512.1
458.3
307.6

600.2
355.2
227.1
8.0

1,378.6
813.6
312.7
50.0

166.7
104.2
105.5
23.3
12.2

156. 5

1,138. 4

458.3

421.4

632.3

309.8

941.3

126.5

329.7

9,806. 3 10,450.8
10.8
11.5
10,087.0
2,583.2
15.3
3.9

10,425.9
11.5
3,739. 2

10,361.1
11.4
3,196.6

8,979.2
9.9
4,946. 8

5,477.8
6.1
4,512.8

4.8

1,602.9
1.8
11,750.0
17.8

5,090.9
5.6
4,115.3

5.7

7,254.5
8.0
7,346.5
11.2

6.1

7.5

6.9

6.2

180.0
3,562.7
1,200.3
2,272.4
50.8
5.0

816.1
125.0
527.0
312.2
50.0
1,166.0

517.1
5,301.4 1,950.2
378. 2
202.2
185.6
267.5
117.3
434.7
160.3
168.1
180. 2
52.0
70.2

10,267.5 7,565.1
11.3
8.3
1,370.1 9,001.2
2.1
13.7

2.6

335.3
227.1
106.3
50.3
50.3
212.2
3,404.0
3.8
3,210.6

7,621.6 8, 259. 9 8.4
38,432.3 26,465. 4 42.4
7,823.0 7,399.8 8.6
10,660. 2 6,805. 0 11.7
529.6
.6
120.3
420.3
329.7
.5
9,733.3
7,684.6 10.7
3,619.2 2,264.8
4.0
3,734.8 2,396.2
4.1
1,250. 2 2.2
1,996.8
152.3
75.7
.2
5,962. 6 2,807.7
0.6

cj
12.6
40.2
11.2
10.3
.2

.5
11.7

O
*J

3.4

3.6
1.9
.1
4.3

90,686.0
100 0
65,859.3

100.0

4.9

NOTE.—The amounts of municipal warrants purchased by the Boston, New York, and St. Louis banks, as shown in the above statement, do not agree with the amounts
shown in the Agents' reports for those banks, as the abovefiguresrepresent the amounts charged to investments, whereas the figures given in the Agents' reports represent the,
par value of the warrants purchased. The amounts shown above for the Kansas City bank also differs from those shown in the Agents' report for the reason that the amounts of
renewed warrants were included in the abovefiguresand not included in the Agents' report.

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Investment

operations of Federal Reserve Banks during the calendar year 1916, by months and classes of

investments.

[In thousands of dollars.]

Year and month.

January
February
March
April
May
June
July
August
September
October
November
December
Total, 1916
Total, 1915

Acceptances.
Commercial
paper
disTotal.
counted. Bankers'. Trade.

11,115.0
7", 664.6
9,387.3
11,521.5
11,195.5
11,660.0
20.183.0
17,351.8
14.308.8
11.862.9
17.904.1
63, 716.0

9,453.5
149.0 9,602.5
11,894.8
522.0 12,416.8
22,394.1
524.0 22,918.1
17,565.6
933.5 18,499.1
20,990.9
920.6 21,911.5
39,640.0 2,685.1 42,325.1
34,802.2 1,773.5 36,575.7
27,075.4 1,371.0 28,446.4
35,874.9 1,211.6 37,086.5
39,195.6 1,699.1 40,894.7
45,928.7 2,618.4 48,547.1
64,946.6 1,924.9 66,871.5

Municipal warrants.

United States bonds.
2 per
cent.

3 per
cent.

4 per
cent.

Treasury

Total.

6,627.18
,393.80 403.38 1,830.0
9,496. 75
,782.25 1,739.5
975.0
8,249.85
, 400.85 766.0
83.0
,436.1
940.0 50.0 10,479.6
53.5
280.0
6,113. 6
,608.1
225.5
20.0
1,322.44
867.5
434.94
341.25
331.25
10.0
501.1
473.1
3.0
25.0
2,193.3
186.3
7.0
250.0
257.06
2.0
5.06
5,628.3
39*7.1
231.0
.2
5,539.75
249. 75
250.0
40.0

207,870.5 369,762.3 16,3'32. 7 386,095.0 48,128.10 3,918.88 4,403.2
161,353.0 64,814.0
31.0 64,845.0 11,776.35 3,167.12 770.0

City.

All
State. other.

9,507.8 236.0 62.5 i, 806.3
10,419.2
20.4
11.2 10.450.8
10,408.0
9.2
8.7 10.425.9
10,113.2 197.3 50.6 10,361.1
6, 774. 8 2,187.3
17.1 8,979. 2
5, 300.0
152.8 25.0 5,477.8
6,553.2 498.8 202.5 7,254.5
1,259.8 238.2 104.9 1,602.9
4,867.2
114.9 108.8 5,090.9
10,030.3
2.0 235.2 10,267.5
7,043. 7 427.6 93.8 7,565.1
3,385.2
2.6
16.2 3,404.0

300.0 56,750.18 85,662.4 4,087.1

.5,713. 47

Total,
1916.

Total,
1915.

Total.

37,150.98
40,028.95
50,981.15
50,861.3
48,199. 8
60,785.34
64,354.45
47,902.2
58.679.5
63,282.16
79.644.6
139,531.25

23,450.3
20.345.8
26,834.9
17.838.9
20,242.5
23,179. 3
27,048.0
29,375.0
23,556.3
23.961.0
38,178. 7
33.760.1

936.5 90,686.0 741,401.68
307,770.8
65,859.3

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Total investment operations (bills discounted, acceptances, United States bonds and Treasury notes, and municipal warrants bought) of Federal Reserve
Banks during each month in 1916.
[In thousands of dollars.]

Banks.

Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total 1916
Total 1915

April.

May.

4,388.8
7,295.4
10,442.1
15,267.2
1,948.8
6,542.7
2,036. 5
2.854.1
4,341.0
3,621.9
1,797.9
3,384. 8
2,905.0
3.153.2
2,436.0
1,313.8
1,092.0
1,489.7
5,255. 95 3,317.85
1,541.1
1,477.5
1,843.8
1,263.0

4,511.2
13,344.6
5,296.5
4,628.6
3,936.9
2,702.8
6,197.1
1,019.8
1,354.3
2,263.3
3,389.9
2,216.3

6,242.1 8,457.7
8,131.3 17,298. 8
6,562.0 7,329.2
4,702. 6 4,520.4
3,798.2 3,385.3
2,262.0 2,048.9
4,588.3 4,331.8
2,534.7 2,916. 8
1,969.34
2,193.2 1,429.6
1,813.0 2,520.7
2,868.7 4,576.8

37,150.98 40,028.95 50,981.15
23,450.3 20,345. 8 26,834.9

50,801.3
17,838. 9

January. February.
3,411.1
10,167.7
3,012.8
1,400.5
3,494.7
2,348.1
3,838.2
1,903.8
853.78
1,775.2
2,270.5
2,674.6

March.

June.

July.

August.

Septem-

October.

November.

December.

Total.

6,586. 6
16,652.45
7,318.4
4,619.4
4,715.0
1,927.7
8,326. 8
3,762.6
2,379.7
869. 5
2,481.9
4,714.4

9,317.5
9,212.5
4,476.1
2,661. 9
3,325.5
2,835.2
4,080.3
2,604.4
1,949.6
1,466.8
3,120.4
2,852.0

7,093.4 2,899. 8
11,391.8 16,640. 6
7,571.5 7,469.3
4,745.3 5,676.36
5,412.4 2,682.1
4,689. 5 5,347.8
5,792.5 5,134.0
4,280.2 3,664.0
1,734.2 3 210.3
863.0 1,702.7
2,149.6
1,559. 8
2,956.1 7,295.4

16,026.8
24,729.0
9,462. 6
5,421.7
2,106.9
3,389.8
5,852.4
3,214.6
2,013.4
1.026.8
2.197.9
4,202.7

20,023.2
38,707.5
18,781.7
10,131.1
9,735.05
5,150.1
14,416.2
5,911.0
5,750.8
3,203.6
1,848.9
5,872.1

96,253.6
191,985.55
85,771.6
53,398.46
50,554.95
37,884.6
68,615.8
35,561. 7
26,300.82
25,367.5
26,371.2
43,335.9

48,199. 8 60,785. 34 64,354.45
20,242. 5 23,179.3 27,048.0

47,902.2
29,375.0

58,679.5 63,282.16
23,556.3 23,961.0

79,644.6
139,531.25
38,17S. 72 33,760.1

741,401.68
307,770.77

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Earnings on investments

of Federal Reserve Banks—Average amounts of earning assets held by each Federal Reserve Bank during 1916, and
rates of earnings.

Average balances for the year of the several classes of
earning assets.

Bills discounted
members.

Bills
bought
in open
market.

$1,231,179 $10,652,867
Boston
1,012,146 22,255,655
New York
756 080 8 585,000
Philadelphia
425,176 4,672,648
Cleveland
5,366,640
Richmond
943,941
3,754,795 1,935,536
Atlanta
2,705,768 4,441,998
Chicago
1,140,759 3,489,229
St. Louis
1,268,350 2, 162 599
Minneapolis
1,771,504 1,237,692
Kansas City
4,570,761
Dallas
323,705
412,449 5,579,387
San Francisco...
24,415,607

Municipal United
States
warrants. securities.

$2,910,236
8,551,986
2 675 600
3,943,463
110,604
142,710
3,384,088
1,160,388
1,403,164
582,360
22,745
1,927,892

$2 563 367
3,011,443
3,574,005
5,692,548
1,532,776
1,618,128
8,420,404
3,109,270
2,867,783
8,555,169
2,905,613
3,221,723

Total.

$17 357,649
34,831,230
15,590 685
14,733,835
7,953,961
7,451,169
18,952,258
8 899,646
7,701,896
12,146 725
7,822,824
11,141,451

Earnings from—

Bills
MuBills dis- bought
United
counted in open nicipal
States
war- securities.
members. market.
rants.

$43,303 $236,857 $78,578
37,368 530,484 214,122
28 391 198 243 69 183
18,064
106,993 116,925
214,857
29,171 3,495
141,774
52,474 5,102
124,452
101,186 90,700
46,041
81,599 31,619
60,938
50,099 34,267
84 572
29,601 14,366
737
205,232
10,880
20,683 133,331 49,773

Calculated annual rate of earnings from—

Total.

$57,194 $415,932
81,645 863,619
81 081 376,898
144,844 386,826
39,175 286,698
40,725 240,075
204,051 520,389
70,362 229,621
69,266 214 570
186,411 314,950
64,576 281,425
67,530 271,317

66,280,257 26,815,236 47,072,229 164,583,329 1,025,675 1,560,918 708,867 1,106,860 4,402,320

annual

Bills
Bills dis- bought
counted in open
members. market.

All
investMunici- United
ment
pal war- States
rants. securities. operations.

Per cent. Per cent. Per cent. Per cent. Per cent.
2.40
3.52
2.22
2.70
2.23
2.48
3.69
2.38
2.50
2.71
2.42
3.75
2.31
2.58
2.27
2.63
4.25
2.29
2.97
2.54
3.60
4.00
3.09
3.16
2.55
3.22
3.77
2.71
3.57
2.52
2.74
4.60
2.28
2.68
2.42
2.58
4.04
2.34
2.72
2.26
2. 78
4.80
2.32
2.44
2.41
2.59
4.77
2.39
2.47
?.18
3.60
4.49
3.36
3.24
2.22
2.43
5.01
2.39
2.58
2.10
4.20

2.36

2.64

2.35

2.67

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Exhibit E.—GOLD SETTLEMENT FUND AND FEDERAL RESERVE
AGENTS' FUND.

Operations of the Gold Settlement Fund during the year 1916 hare
resulted in the settlement of obligations totaling $5,533,966,000.
The resulting change in ownership of gold was only $223,870,000, or
4.0453 per cent of the total obligations settled, as compared with 8.14
per cent in 1915. There has been rapid and steady growth in the
volume of transactions handled through the Gold Settlement Fund.
Especially has this been true since July 15, 1916, when the Federal

THW0GH

terra: *t&

MY20,1315 TVJA NVAi

A
XT
iE/^E?^g^gt&iaft^Eg^

Reserve Banks began active check clearing and collection operations.
This development is illustrated in the above chart showing the
amount of obligations settled through the fund each week.
The regulation covering the operation of the Gold Settlement
Fund provides that each Federal Reserve Bank shall keep on deposit
in the fund at least $1,000,000, but actual operations have led to the
upbuilding of balances of many times this amount. The total for
the 12 banks on December 30, 1916, was $169,740,000. The Federal
Reserve Agents7 Fund, made of deposits from nine Federal Reserve
106

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

107

Agents, totaled $102,580,000, so that the combined totals represented
$272,320,000.
The expectation that the operations of the fund would make
unnecessary, for the most part, actual shipments of gold between
Federal Reserve Banks, has been well justified by experience extending over 19 months. No expense for shipment of gold in connection
with the fund's operations has been incurred other than the charges
on a small number of shipments made by banks not located in cities
having subtreasuries. The abnormal inflow of gold from Europe
entering the country at New York, though destined in large part for
interior points whose exports had induced the gold movement,
has influenced materially the trend of the settlements. The Federal
Reserve Bank of New York has usually been debtor at the clearings
and has parted with gold during the year to the amount of $222,147,000, and since May 20, 1915, to the amount of $303,430,000. This
movement has resulted in increased reserves held by other Federal
Reserve Banks and in increased holdings by Federal Reserve Agents
against Federal Reserve notes outstanding. The following table
shows the gold held by the Federal Reserve Banks and the amount of
Federal Reserve notes secured by gold deposited with the Federal
Reserve Agents at the beginning and end of the year. I t indicates
that of the $222,147,000 of gold which passed from the Federal
Reserve Bank of New York to the other eleven Federal Reserve
Banks, $107,323,000 has been retained by them as increased reserve
holdings and $67,369,000 has been deposited with Federal Reserve
Agents as security for issues of Federal Reserve notes outstanding.
Changes in gold and lawful money holdings of Federal Reserve Banks and Federal Reserve,
Agents.
[In thousands of dollars; i. e., 000 Ts omitted.]
New Phila- Cleve- Rich- Atlanta,
Boston. York.
delphia. land. mond.
Dec. 30, 1915.
Gold and lawful money held by or for account of Federal Reserve Bank
18,743 183,214
Gold held by or for account of Federal Reserve Agent... 10,020 89,300

18,232
9,160

21,812
11,000

15,499
9,550

9,081
14,200

28,763 272,514

27,392

32,812

25,049

23,281

Gold and lawful money held by or for account of Federal Reserve Bank
27,062 188,654
Gold held by or for account of Federal Reserve Agent.. 13,518 107,004

27,349
15,770

33,251
10,832

24,537
16,601

13,122
21,649

43,119

44,083 41,138

34,771

9,038
7,051

4,041
7,449

16,089

11,490

Total
Dec. 29,1916.

Total

40,580 295,658

Increase in holdings of Federal Reserve Banks
Increase in holdings of Federal Reserve Agents
Total increase

75284°—17

8,319
3,498

5,440
17,704

9,117
6,610

11,817

23,144

15,727

11 439
-168
11,271

108

KEPORT OF THE FEDERAL BESEEVE BOARD.

Changes in gold and laiuful money holdings of Federal Reserve Banks and Federal Reserve
Agents—Continued.
[In thousands of dollars; i. e. 000's omitted.]
San
St. Minne- Kansas Dallas. FranChicago. Louis.
apolis. City.
cisco.

Total.

Dec. SO, 1915.

Gold and lawful money held by or for account
of Federal Reserve Bank
37,048
7,105 11,072 13,435 14,090 358,488
9,157
Gold held by or for account of Federal Reserve
Agent
9,000 11,440
4,380 8,950 14,000
6,450 197,450
Total
41, 428 18,107 21,105 20,072 24,875 20,540 555,938
Dec. 29,1916.

Gold and lawful money held by or for account
of Federal Reserve Bank..."
54,812 16,053 16,170
Gold held by or for account of Federal Reserve
Agent
7,183 12,543 20,484
Total
61,995 28,596 36,654
Increase in holdings of Federal Reserve Banks. 17, 764 6, 896 9,065
Increase in holdings of Federal Reserve Agents. 2,803 3,593 6, 484
Total increase

20,567

10, 489 15,549

27,659

20,233

22,349

471,251

19,695

22,463

14,781

282,523

47,354

42,696

37,130

753,774

16,587
10,695

6,798
11,023

8,259
8,331

112,763
85,073

27,282

17,821

16,590

197,836

Member banks in other districts have made a considerable proportion of their reserve deposits with the Federal Reserve Banks by
drawing on New York correspondents or by utilizing the proceeds of
New York exchange acquired during crop-moving or similar periods,
for this purpose. I t should not, however, be inferred that this movement of gold has involved a diminution of the gold holdings of the
Federal Reserve Bank of New York, for its gold holdings have increased slightly during the year.
In the Board's second annual report, at page 77, was described the
establishment and operation of the Gold Settlement Fund, through
which the Board exercises the functions of a clearing house for Federal Reserve Banks, as provided in section 16 of the Federal Reserve
Act. The subsequent establishment of the Federal Reserve Agents'
Fund was also described, this fund consisting of gold held by Federal
Reserve Agents to reduce the liability of Federal Reserve Banks
against Federal Reserve notes outstanding, and deposited for convenience and safekeeping with the Federal Reserve Board. Weekly
adjustments of the amounts due among the Federal Reserve Banks
are made through the Gold Settlement Fund, principally by book
entries, and it is' expected that in the near future such adjustments
will be made daily. Upon request of Federal Reserve Banks, payments from the fund are also made to the Treasurer of the United
States for various purposes, and transfers are made to other Federal
Reserve Banks &nd to the credit of their respective Federal Reserve
Agents in the Federal Reserve Agents7 Fund. A Federal Reserve
Bank having a credit with the Gold Settlement Fund can thus at any

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

109

time have the money immediately available at any other Federal
Reserve city, or, for certain purposes, at Washington.
The cost of operating the Gold Settlement Fund and the Federal
Reserve Agents' Fund has continued very low, although somewhat
increased because of greater expense of telegraphic service, due to
more numerous transactions. The total expense for the year 1916
was $1,343.37, of which $818.31 represented the cost of telegrams,
$25.06 printing and supplies, and $500 the portion of the deputy settling agent's salary chargeable to the fund.

Gold Settlement Fund—-Condensed summary of transactions Jan. 1 to Dec. 30, 1916, loth inclusive.
[OOO's omitted.]

Federal Reserve Bank of—

Boston
New York
Philadelphia..
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas City...
Dallas
San Francisco.
Total....

Gold withdrawn by
Balance to
credit in Gold with- transfer to
Federal
fund Dec.
drawn.
Reserve
31, 1915.
Agent, net.
$4,279
5,717
9,695
11,042
9,875
3, 717
1,356
6,072
4,355
2,464
9,308
9,880

SI 1,500
2,000
41,550
5,750
11,190
7,000
5,000
1,950

77,760

136,550

10,322.5
13,387.5

$9,230
11,450
10,720
3,250
3,520
2,900
10,460
12,490
9,020
73,040

Excess of—
Gold deposited.

$4,500
239,000
2,500
890
10,140
1,490
34,800
50
2,730
2,370
3,100
301,570

Withdrawals.

Deposits.

$7,000
$237,000
48,280
4,860
12,500
16,230
26,550

5,420
2,900
18,052 A
23,507 A
32,820
171,570

263,550

Payments to and from other Federal Reserve
Banks.
Total
debits.

Total
credits.

$494,279
1,334,441
740,202
302,909
486,159
197, 784
766,240
558,319
114,791
308,048
144,263
86,531

$511,737
1,112,294
786,829
313,680
508,200
216,986
764,517
561,062
120,400
344,872
173,429
119,960

5,533,966

Balance to
credit in
fund Dec.
Net debit. Net credit. 30, 1916.
$17,458
$222,147
46,627
10,771
22,041
19,202
1,723
2, 743
5,609
36,824
29,166
33,429
223,870

223,870

$14,737
20,570
8,042
16,953
19,416
6,689
26,183
3,395
7,064
21,235.5
14,966.5
10,489

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169,740
IP

Gold Settlement

Fund—Deposits

mid withdrawals by Federal Reserve Banks, and where made, Jan. 1, 1916 to Dec. 30, 1916.
[OOO's omitted.]
Federal Reserve Bank of—-

Treasury, subtreasurv, or mint
at—

Withdrawn.

Boston
New York
Philadelphia
Washington
Chicago
New Orleans
Total

New York.

Boston.

$7, 500

Deposited.

Withdrawn.

Philadelphia.

Deposited.

Withdrawn.

Deposited.

Cleveland.
Withdrawn.

Atlanta.

Richmond.

Deposited.

Withdrawn.

Denosited.

Withdrawn.

Chicago.

Deposited.

Withdrawn.

Deposited.

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$4,500
$239,000
$41,500
3,100

$2,000

4,000

W
ft

$2,500
85,750

$890

SI 6,190

$10,140

$15,200

$560

$500
5,000

534,800

5,500

34,800

930

11; 500

4,500

2,000

239.000

44,600

2,500

5,750

890

16,190

10,140

15,200

1,490

Federal Reserve Bank of—
Treasury, subtreasury, or mint at—•

St. Louis.
Withdrawn.

Minneapolis.

Deposited.

Withdrawn.

Deposited.

Kansas City.
Withdrawn.

Deposited.

Boston

Wpw York
T'hiladpl'nhia
Washington

Total

$650

$3 960

3,960

$2, 730

650

13,522.5

Withdrawn.

$100
30
16,667.5

$13,522.5

$50

St T nni<3

2,730

San Francisco.

Dallas.
Deposited.

Deposited.

$2,000
370

10
50
30
60
16/947.5

Withdrawn.

2,370

$1,570

26,480

53,100

28,050

3,100

By all banks.
Withdrawn.

Deposited.

$7.500
100
41,530
83,110
5,000
10
50
26,510
60

$1,500
241,000
2,500
11,960
31.800
2,780
930
3,100

163,870

301,570

112

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Condensed summary of transactions in Federal Reserve Agents1 fund, Jan. 1 to Dec.
1916, both inclusive.
[000's omitted.]

Federal Reserve Agent at—

Balance to
credit in
fund, Dec.
31,1915.

Transfers—
To
bank.

From
bank.

Withto
drawals of Balance
credit in
gold a t
fund,
Dec.
Washing30,1916.
ton.

Philadelphia..
Richmond
Atlanta
Chicago
St. Louis
Minneapolis..
Kansas City..
Dallas
San Francisco

$5,000
9,550
13,700
4,260
5,000
4,000
7,000
1,900
6,450

$2, 440
2,710
3,600
1,130
1,480
2,000
2,000
2,300
3,820

$11,670
14,160
14,320
4,380
5,000
4,900
12,460
14,790
12,840

$3,050
5,000
8,200
500
2,010
650
3,200
3,560
1,150

$11,180
16,000
16,220
7,010
6,510
6,250
14,260
10,830
14,320

Total...

56,860

21,480

94,520

27,320

102,580

Exhibit P.—RECEIPTS AND DISBURSEMENTS OF THE FEDERAL
RESERVE BOARD.
There is here given a statement of receipts and expenditures of the Federal Reserve
Board in 1916. The total expense of the Board for the calendar year 1916 is shown on
the detailed statement of commitments to have been $212,477.02. This figure includes
a number of items which have of necessity been estimated.
Under the Federal Reserve Act the Federal Reserve Board is authorized to make
semiannual assessments upon Federal Reserve Banks to cover its expenses. The first
assessment for this purpose was made on November 2, 1914.
The funds of the Board are carried in a special account with the Treasurer of the
United States, and transfers are made by the Governor of the Board to the credit of
the fiscal agent as necessary. The accounts of the Board pass through the hands of
the Auditor for the State and Other Departments and are given the offic'al examination
required by the Government. The term /'auditor's settlement" under "Disbursements 7 ' covers settlements made by transfers of credit authorized and directed by
the auditor on the books of the Treasury Department. The term "commitments"
where used covers all obligations entered into by the Board for the periods stated;
that is to say, it covers not only funds actually expended, but pledges made for
materials purchased, salaries accrued but«iot paid. etc.
RECEIPTS.

Unexpended balance Jan. 1, 1916
Assessments
Bulletin, subscriptions to
Reimbursements

$37,289.77
192,143. 60
1,024. 70
10, 487. 26

Total available

$240, 945. 33
DISBURSEMENTS.

By the fiscal agent of the Federal Reserve Board
Auditor's settlements (see explanation above)

$199, 436. 35
27, 501. 02

Total disbursements
226, 937. 37
Balances, Dec. 31, 1916, with Treasurer of United States to
credit of—•
Fiscal agent of the Federal Reserve Board
$2, 832. 46
Federal Reserve Board
11,175. 50
—
• 14, 007. 96
240, 945. 33
GENERAL STATEMENT.

Total available
Receipts account of reimbursable commitments

$240, 945. 33
10, 487. 26

Total available for general expenses, Federal Reserve Board
230, 458. 07
Commitments for general expenses, 1916
$212, 477. 02
Commitments, 1915, paid in 1916
8,720.56
• • 221,197.58
Unencumbered balance Jan. 1, 1917
Outstanding commitments Dec. 31,1916, remaining unpaid.
Balance to credit reimbursable account.
Unexpended balance

260. 49
3, 808. 80
938. 67
14,007. 96
113

Detailed statement of commitments.
January.

Personal services:
Board and its clerks
Secretary's office
Counsel's office
Division of audit and examination
Division of reports and statistics
Division of issue
Messengers
Charwomen
Total.
Nonpersonal services:
Transportation and subsistence of
personsBoard and its clerks
Secretary's office
Division of audit and examination.
Division of reports and statistics...
Counsel's office
Messengers (car fare)
Communication service:
Telephone
Telegraph
Printing, binding, etc
Contract repairs
Electricity (light and power).
Steam (heat)
Other (nonpersonal service)...

February.

March.

April.

$7,374.98 $7,374.98 $10,977.76 $7,374.98
2,516.65 2,516.65 2,433.32 2,258.32
1,866.66 1,866.67 1,866.67 2,066.66
1,466.66 1,254.16 1,254.16 1,254.16
683.33
707.33
878.66
866.66
651.66
717.00
791.66
716.66
315.00
315.00
315.00
315.00
60.00
60.00
60.00
60.00

May.

June.

July.

August.

Septem- October. November.
ber.

December.

Total.

$7,354.15 $7,374.99 $7,374.98 $7,374.98 $7,425.04 $7,374.98 $7,375.05 $7,375.04 $92,131.91
1,683.32 1,683.32 1%958.33 1,958.33 1,983.34 2,563.33 2,577.23 2,651.67 26,783.81
2,066.67 2,066.67 2,066.66 2,066.67 2,066.67 2,066.66 2,066.66 2,066.67 24,199.99
1,254.16 1,254.16 1,338.33 1,338.33 1,338.34 1,338.33 1,338.34 1,338.34 15,767.47
866.66
905.00
905.00
905.00
866.66
825.83
926.66
936.67 10,273.46
646.66
658.33
728.33
728.34
646.66
691.00
648.34
648.34 8,272.98
315.00
365.00
365.00
335.00
338.00
327.00
365.00
365.00 4,035.00
60.00
60.00
60.00
58.67
60.00
58.66
714.00
58.67
58.00

14,934.94 14,811.79 18,577.23 14,912.44 14,246.62 14,287.46 14,726.63 14,795.31 14,844.73 15,245. 79 15,355.95 15,439.73 182,178.62

83.60

225.82
69.00
584.36

178.58

622.65

135.15
5.00

5.00

70.54
•331.69

38.29
237.57

850.00

839.48
2.75
30.00
15.00

59.83
396.64
45.00
950.06
6.75
30.00
15.00
28.65

30.00
15.00

104.65
109.98

902.55
158.42
5.00

97.47
703.10
19.20

546.9

5.00

144.86

337.40

154.58

213.34
25.05
811.15

5.00

34.98
280.10

50.11
324.44

46.40
342.91

110.66
425.94

45.07
315.81

734.17
2.50
30.00
15.00
7.88

794.81
9.50
30.00

1,442.80
4.82
30.00

1,027.33
.82
30.00

: oo

101.82

224.76

21.05
345.78
64.55
51.40
5.00

59.48
412.08

55.98
266.30

62.51
336.09

1,050.46
28.75
30.00

56.42
318.43
20.00
1,165.31
9.87
30.00

1,100.31
.90
30.00

1,127.06

45.15

19.75

11.08

1,221.44
3.25
30.00
15.00
43.49

30.00
15.00

1,115.55
94.05
5,683.40
83.75
344.97
35.00

690.27
3,988.00
65.00
12,303.23
69.91
360.00
90.00
260.82

Supplies:
Stationery
•
Periodicals
Other
Equipment:
Furniture and office equipment
Books
Total
Grand total

88.05
5.00
23.64

115.58

165.13

46.21
122.13
62.67

451.12
5.25

39.95
8.00

445.20
9.20

1,686.92 3,001.71

2,391.63

2,629.39

171.14

13.91

134.32
14.10
11.52

278.39
4.50

126.47
10.00
43.58

43.45

80.10
20.75
2,371.64

.23

65.15
73.60
90.36

189.57
19.00
65.39

154.76
39.80
15.20

61.50

16.60

44.88
14.50
17.16

20.54

1,241.08
" 298.36
545.70

52.50
24.75

39.40

121.31

661.29

427.80
3.15

220.15
108.00

22.90
5.60

2,840.11
189.20

2,275.50

2,496.63

2,357.55

3,077.34

2,618.20 3,081.79

2,310.10 30,298.40

17,306.58 16,498.71 21,578.94 17,304.07 16,876.01 16,562.96 17,223.26 17,152.86 17,922.07 17,863.99 18,437.74 17,749.83 212,477.02
j
O
H
O

w
f

W
O

Exhibit G.—EARNINGS

AND EXPENSES OF
RESERVE BANKS.

THE

FEDERAL

Total earnings of the Federal Reserve Banks for the calendar year 1916 were
$4,955,343, while total current expenses for the same period were $2,495,835. Of
this total $291,491 represents the estimated expenses of the transit department for
the period July 15 to December 31 of the past year. This amount is reimbursed to the
Federal Reserve Banks through special charges assessed against member banks which
forward checks to the Federal Reserve Bank for collection. Aggregate net earnings
of the banks, i. e., total earnings, less current expenses of the banks proper, were
thus $2,750,999, or at the rate of almost 5 per cent on an estimated yearly average
paid-in capital of $55,178,000.
Three banks report net earnings in excess of 6 per cent on their average paid-in
capital; five banks show a rate in excess of 5 per cent but less than 6 per cent, while
two more banks show net earnings in excess of 4.per cent but below 5 per cent. Total
current expenses are composed of $1,975,992, expenses of operation; $298,007, the
cost (including insurance, expressage, etc.) of Federal Reserve currency issued,
returned, and retired during 1916; $192,940, depreciation charges; and $28,896, the
excess of disbursements of the transit departments over net service charges received.
Of the total net earnings of $2,750,999, the banks applied $494,314 to charge off
the balance of organization expenses carried over from 1915; $8,441 to pay dividends
accrued on stock surrendered or canceled during the year; and $1,487,402 in payment of dividends to their members during the past year. The remainder, $760,842,
was carried to profit and loss. This amount, combined with the adjusted total of
$135,392 for January 1, 1916, gives a total profit and loss of $896,234 carried to January 1, 1917.
Of the total earnings for the year 20.7 per cent was from bills discounted for member
banks; 31.5 per cent from acceptances bought in open market; 22.3 per cent from
United States bonds and Treasury notes, and 14.3 per cent from municipal warrants,
while 6.1 per cent represents profits realized from the sale and appreciation of United
States securities owned. The remainder, 5.1 per cent, represents commissions earned
on acceptances and warrants bought for other Federal Reserve Banks, charges for
transfers of funds for member and nonmember banks, penalties and interest on
deficient reserves, and sundry smaller profits.
Of the total expenses of operation, $559,949, or 28.3 per cent, went as compensation to the clerical staff and $495,560, or 25.1 per cent, as salaries to bank officers.
Nearly 10 per cent of total expenses of operation, or $192,277, is represented by the
contributions of the banks for the support of the Federal Reserve Board. Rent
paid by all banks, except Dallas, totaled $164,965, or 8.3 per cent of the toal expenses
of operation. Postage and printing, including stationery, are the two other items
next in importance in the expense budget of the banks.
Current expenses are exclusive of $170,697 expended during the year in the purchase of additional furniture and equipment. The total written off this account
during the year is $185,440, leaving a balance on January 1, 1917, of $255,249.
Dallas owns a banking house, while Richmond and Atlanta own ground for the
erection of bank buildings. The total amount invested in bank premises by these
three banks is given as $368,222.
During 1916 a total of $230,778 was paid for the printing and shipping of Federal
Reserve notes, while the total cost of notes issued to the banks and charged to current expenses was $270,743. From November, 1914, to December 31, 1916, the
banks have paid $1,035,483 for printing and shipping Federal Reserve notes and
have charged off during the same period a total of $533,161 for notes issued, leaving
thus a balance of $502,322 at the beginning of 1917.
116

Earnings and expenses of each Federal Reserve Bank and of the system as a whole for the calendar year 1916.
EARNINGS.

Bills discounted—members
Bills bought in open market
Investments:
U. S. bonds and notes
Warrants
Commissions received
Profits realized on United States securities.
Sundry profits
Total earnings

Cleveland.

Richmond.

Atlanta
(including New
Orleans
branch).

Chicago. St. Louis.

Minneapolis.

Kansas
City.

$28,391
198,243

$18,064

$214,857

$141, 774

$124,452

$46,041

$60,938

$84,572

$205,232

106,993

29,171

52, 474

101,186

81,599

50,099

29,601

10,880

81,081

144,844
116,925

39,175

40,725
5,102
154

204,051

70,362

67,530

31,619

34,267

186,411
14,366

64,576

90,700

737

49,773

1,530

66,175

21,650

5,407

37,229
5,101

12,517

3,148

81,645
214,122
42,387
43,515
1,128

12,543

20,186

60,419

34,887

23,539

1,145

25,450

4,786

1,106,860
708,867
53,100
302,184
197,739

450,214

950,649

417,939

429,156

311,758

261,945

646,983

286,158

238,109

364,967

306,875

290,590

4,955,343

Boston.

New
York.

$43,303

$37,368

236,857

530,484

57,194
78,578
10;559
20.575

Philadelphia.

69,183
35,634

3, 495

FranDallas. San
cisco.

48,872

Total.

$20,683 $1,025,675
133,331 1,560,918

14,487

CURRENT E X P E N S E S .
Expenses of operation:
Assessment account expenses Federal
Reserve Board
Federal Advisory Council (fees and travGovernors' conferences (including traveling expenses)
Federal Reserve Agents' conferences,
incl. traveling expenses
Salaries:
Bank officers
Clerical staff
Special officers and watchmen
Allother

$17,704

$39,029

$18,362

$20,825

$9,750

$8,962

$10,575

401

1,103

306

555

397

743

306

915

2,885

749

1,586

1,208

1,392

1,245

332

648

280

• 519

299

393

417

423

52,385
65,311
5,846
4,198

46,699

26,625

25,973

495,560

37,264

29,277
1,311
78

40,223
805
1,599

559,949

33,916

92,650

39,100

39, 767

43,169

103,699

52,398
6,012

39,044

7,248
11.737

716
176

1,620
1,200

29,358
23,597

Earnings and expenses of each Federal Reserve Bank and of the system as a whole for the calendar year

1916—Continued.
00

CURRENT EXPENSES—Continued.

Boston.

Expenses of operation—Continued.
Directors' fees
Directors' per diem allowance
Directors' traveling expenses
Officers' and clerks' traveling expenses...
Legal fees
Rent
Telephone
Telegraph
Expressage
Insurance and premiums on fidelity
bonds
Light, heat, and power
Printing and stationery
Repairs and alterations
All other expenses, not specified
Total expenses of operation.
Cost of Federal Reserve notes issued, including expressage, etc
Miscellaneous charges, account Federal
Reserve note issues
Miscellaneous charges, account Federal
Reserve bank note issues, including taxes.

New
York.

Philadelphia.

Cleveland.

Richmond.

Atlanta
(including New Chicago. St. Louis.
Orleans
branch).

$3,820

$3,930

$3,220

$1,880

$3,760

$2,790

$2,030

1,120

1,040

820

1,020

1,840

2,038

680

772

1,245

895

1,288

2,505

2,251

1,018

1,993

659

558

913

407

1,846

595

2,000

2,500

1,425

1,400

2,521

2,225

$4,360
1,040
1,155

Minneapolis.

Kansas
City.

Dallas. San Fran-

Total.

$3,100
990
1,486
1,145
1,500
6,955
568
299
8,157
533

$3,705
2,385
3,628
633
600
8,500
506
352
10,851
825

$1,655
1,210
1,394
1,234
2,422
946
683
6,139
11,123

1,164
2,421
11, 732
466
507
4,787
7,595

599
1,378
2,900
228
6,612

1,227
432
8,472
5,133
3,322

89,400

$1,850
400

$36,100
14,583
17,637
11,745
19,014
164,965
11,223
4,553
102,421
31,256

15,139

45,810

9,250

7,212

6,034

12,845

26,588

1,492

1,985

1,231

1,017

391

362

1,382

186

766

296

226

573

398

10,081

12,946

8,174

6,869

7,404

7,934

11,315

2,839

1,648

3,378

1,255

664

582

14,900
877
255
7,764
745

1,701

3,125

3,415

2,393

1,641

1,192

5,904

2,199

1,731

1,147

1,266

160

2,242

6,648

12,246

6,852

5,473

9,964

6,198
719
3,169

1,306
1,118
4,361
301
4,422

105,355

124,642

127,289

142,338

1,975,992

20,436

14,443

49,031

270,743

981

19,907

1,490
731

260

987

241

206

1,201

8,779

25,537

6,041

3,334

3,625

8,823

12,585

5,278
347
3,151

157,285

378,077

164,983

144,354

124,769

133,604

232,096

141,200

18,248

12,167

8,480

20,067

26,433
9,264
96,939
10,452

=====
15,141

95,240

16,600

5,113 I

10,720

522 I

1,656

3,738
675

12,938

1,003
2,132

5,791

1,566

7,357

Depreciation of furniture and equipment...
Disbursements of transit department in excess of net service charges received

21,852

70,707

15,653

8,097

4,514

4,442

25,000

3,355

7,967

100

5,353

14,776

4,000

421

—1,038

Total current expenses, exclusive of
amortization charges, account organization expenses
194,953
Less disbursements of transit department.. 40,674

571,738
35,153

202,239
34,241

158,742
23,394

146,498
21,311

150,213
17,576

270,698
26,921

157,031
11,890

120,574
17,068

Current expenses of bank proper, exclusive
of amortization charges, account organization expenses

154,279

536,585

167,998

135,348

125,187

132,637

243,777

145,141

Net earnings for year 1916

295,935

414,064

249,941

293,808

186,571

129,308

403,206

141,017

5.19

3.61

4.78

4.92

5.57

5.26

6.05

34,603 2123,776
127,113

31,517
128,458

55,774
143,237

198,840

360,649

2,879

670

Per cent of average paid-in capital
Disposition of net earnings:
Organization expenses charged off in full.
Dividends paid
Dividends accrued and paid on surrendered and canceled stock
Total
Balance of net earnings carried to profit and
loss account
Profit and loss account .Tan 1 1916
Profit and loss account, Jan. 1,1917

197,922

2,804

4,350

U7,028

i 192,940

2,665

28,896

155,219
15,241

160,326
19,497

207,604
28,525

2,495,835
291,491

103,506

139,978

140,829

179,079

2,204,344

134,603

224,989

166,046

111,511 2,750,999

5.05

5.22

7.45

6.14

2.84

4.99

97,169
31,100

32,341
57,720

2 66,776
66,707

131,920

52,358
43,736

2 494,314
1,487,402

2,088

250,889

159,975

199, CU

197,922

201, 719

361,319

128,269

90,061

133,483

134,008

96,094

1,990,157

258,528

163,175
— 111
163,064

89,966

94,797

41,887
20,091
61,978

44,542

91,506

12,748

44,542

91,506

32,038
9,865
41,903

15,417

94,797

-72,4U
2 82,532
10,121

12,748

89,966

-11,851
23,015
11,664

760,842
2135,392
896,234

258,528

O
W
H
H
W

8,441

37,407

1 Includes $7,500 depreciation of bank premises.
Difference betweenfiguresmarked and correspondingfiguresshown in the 1915 annual report due to slight adjustments after Jan. 1,1916.

12,589

15,417

w
o
>•

Profit and loss account of each Federal Reserve Bank and of the system as a whole for the calendar year 1916.

to
©

Earnings
Current expenses of bank proper
Net earnings for vear
Deduct organization expenses
Net profits for year available for dividends

Boston.

New
York.

Philadelphia.

Cleveland.

Richmond.

Atlanta.

Chicago. St. Louis.

$450,214

$950,649
536,585

$417,939
167,998

$429,156

154,279

135,348

$311,758
125,187

$261,945
132, 637

$646,983
243,777

295, 935

414,064

249,941

293,808

186,571

129,308

403,206

34,603

i 123,776

31,517

55,774

261,332

290,288
— 111

218,424

. 238,034

Profit and loss account Jan 1 1916
Total net profits available for dividends. .

261,332

Dividends accrued and paid on surrendered and canceled stock

2,804

Total dividends paid during year

2,804

403,206
20,091

$286,158
145,141

$238,109

$364,967
139,978

$306,875

141,017

134,603

224,989

166,046

97,169

32,341

i 66,776

43,848

102,262

158,213

103,506

Dallas.

140,829

166,046

Total.

$290,590 $4,955,343
179,079 2,204,344
111,511

2,750,999

52,358

1494,314

59,153

2,256,685
135,392

9 865

o
H

258,528

218,424

238,034

209,586

211,840

423,297

43,848

102,262

158,213

175,911

59,153

2,392,077

127,113

128,458

143,237

197,922

198,840

360,649

31,100

57,720

66, 707

131,920

43,736

1,487,402

2,879

670

201,719

361,319

31,100

10,121

61,978

12, 748

127,113
163,064

128,458
89,966

143,237

197,922

94,797

11,664

8,441

2,088
57, 720

66, 707

134,008

43, 736

1,495,843

44,542

91,506

41,903

15,417

896,234
246,931

246,931
12 31-15
6-30-15

6-30-15

10-31-16

6-30-16

12-31-15

3-31-15

6-30-15

4-30-16

Difference between figures marked and corresponding figures shown in the 1915 annual report due to slight adjustments after Jan. 1,1916.

San Francisco.

290,177

3-31-15

Dividends paid to

129,308
i 82,532

Kansas
City.

Dividends paid..

Profit and loss account Jan. 1, 1917
Dividends declared during 1916 and approved for payment after Jan. 1, 1917

186,571
23,015

Minneapolis.

3-31-15

3
w
w
o
>

Cost offurniture and equipment, including vaults, also hank premises.

Boston.

Balance as reported Jan. 1,1916
Additional purchases during calendar year
ending Dec. 31, 1916

$9,595
12,257

Total.
Depreciation charged during calendar year
ending Dec. 31 1916

New
York.

Philadelphia.

Cleveland.

$26,980

$18,491

$20,187

43,727

12,572

Richmond.

Atlanta
(including New Chicago. St. Louis. Minneapolis.
Orleans
branch).
$54,159

FranDallas. San
cisco.

$41,829

$33,255

$6, -.22

Total.

$269,992

$9,500

$6,228

$23,000

8,074

7,014

10,496

30,305

11,698

10,468

4,482

13,437

6,167

170,697

16,724

53,305

32,044

64,627

46,311

46,692

12,589

440,689

25,000

3,355

5,353

4,350

9,528

12,589

185,440

28,305 . 28,689

59,274

41,961

21,852

70,707

31,063

28,201

16,514

21,852

70,707

15,653

8,097

4,514

4,442

15,410

20,164

12,000

12,282

Balance, Jan. 1,1917.

$20,346

Kansas
City.

Bank premises

121 476

102 500

37,164

255,249

144,246

368,222

Cost of unissued Federal Reserve notes.
Balance as reported Jan. 1,1916
Additional cost during calendar year ending Dec. 31,1916

$38,633

$232,087

$43,172

$42,758

817,368

$9,502

$60,380

$22,363

$19,933

$11,252

$9,924

$34,915

$542,287

5,738

98,752

1,136

524

10,235

22,980

12,691

8,120

6,228

36,799

13,459

14,116

230,778

Total
Cost of Federal Reserve notes issued and
charged to current expenses during calendar year ending Dec. 31,1916

44,371

330,839

44,308

43,282

27,603

32,482

73,071

30,483

26,161

48,051

23,383

49,031

773,065

49,031

Balance Jan. 1 1917

15,141

95,240

16,600

3,738

18,248

12,167

5,113

10,720

9,866

20,436

14,443

29,230

235,599

27,708

39,544

9,355

20,315

67,958

19,763

16,295

27,615

8,940

i Net amount, less depreciation of $7,500 on banking house, included among current expenses.

270,743
502,322

Exhibit H.—CHANGES IN FEDERAL RESERVE DISTRICTS,

When the annual report of the Board for 1915 was prepared the
Board had acted favorably on the following petitions for changes in
Federal Reserve districts, under section 1 of the Federal Reserve Act:
The petition of certain banks in northern New Jersey for transfer
from district No. 3 to district No. 2.
The petition of certain banks in West Virginia for the transfer of
the counties of Wetzel and Tyler from district No. 5 to district No. 4.
The petition of certain banks in Oklahoma for transfer from
district No. 11 to district No. 10.
The petition of certain banks in Nebraska and Wyoming for
transfer from district No. 10 to district No. 7 had been denied.
There remained for action:
The petition of the city of Baltimore to be designated as the headquarters of district No. 5 in place of Richmond, Va.
The petition of the city of Pittsburgh to be designated as the headquarters of district No. 4 in place of Cleveland, Ohio.
The petition of certain banks in southern Wisconsin to be transferred from district No. 9 to District No. 7.
The petition of certain banks in Connecticut to be transferred from
district No. 1 to District No. 2.
There was filed, on December 21, 1915, a petition on the part of
certain banks in southern Louisiana to be transferred from district
No. 11 to district No. 6.
The opinion of the Attorney General, of April 14, 1916, holding
that the Board had no power under the law to abolish existing Federal
Reserve Banks or Federal Reserve districts, automatically disposed
of the petitions from Baltimore and Pittsburgh.
There remained then for action, the petition from Louisiana banks,
that from banks in southern Wisconsin, and that from banks in
Connecticut.
Action has been taken by the Board upon all of these petitions and
there are none now pending.
Favorable action was taken on the petition of Louisiana banks to
be transferred from district No. 11 to district No. 6.
The petition of Wisconsin banks to be transferred from district
No. 9 to district No. 7 was granted, and the banks in the county of
Fairfield, Conn., bordering upon New York State were transferred
from the first to the second district.
122

ANNUAL REPORT OF T H E FEDERAL RESERVE BOARD.

123

The details of changes made prior to December 31, 1915, will be
found in the annual report for that year, on page 114.
Below are given the orders entered in the three petitions acted
upon by the Board in 1916:
FEBRUARY 28,

1916.

SIR: I have the honor to inform you that Hie Federal Reserve Board on February
25 adopted the following resolution:
" Resolved, That all of Louisiana north of the parishes of Vernon, Rapides, and
Avoyelles remain in the Eleventh Federal Reserve District, and that the remaining
part of the State of Louisiana now in the Eleventh District be transferred to the Sixth
Federal Reserve District, and the banks therein allotted to the New Orleans Branch
of the Federal Reserve Bank of Atlanta."
Accordingly, the following banks now members of the Eleventh Federal Reserve,
District, and owning stock in the Federal Reserve Bank of Dallas, will be transferred
to the Sixth Federal Reserve District and will take out a corresponding amount of
stock in the Federal Reserve Bank of Atlanta. These banks will be classed as belonging to the territory assigned to the New Orleans Branch of the Federal Reserve Bank
of Atlanta.
Bank.

Capital.

First National, Abbeville
First National, Alexandria
First National, Jeanerette
First National, Lafayette
Calcasieu National, Lake Charles
First National, Lake Charles
Peoples National, New Iberia
State National New Iberia
Opelousas National, Opelousas
Planters National, Opelousas
First National, Ville Platte
First National Bank of Arcadia Parish, Crowley.
First National, De Bidder
First National, Eunice
First National, Morgan City
New Iberia National, New Iberia

$50,000
100,000
50,000
100,000
150,000
100,000
100,000
100,000
50,000
50,000
25,000
50,000
25,000
30,000
50,000
50,000

Surplus.
$50,000
200,000 .
50,000
100,000

50,000
40,000
20,000
30,000
50,000
15,000

i2,500
7,000
6,000
50,000
500,000

The question of transfers of capital stock from the Federal Reserve Bank of
Dallas to the Federal Reserve Bank of Atlanta will require your attention, and it
is suggested that you follow in this matter the same procedure which was laid down
by the Board in effecting the transfer of the banks of West Virginia from the Fifth to
the Fourth Federal Reserve District some nine months ago. I inclose a copy of the
Federal Reserve Bulletin for July, on page 142 of which you will find the details of
the process fully set forth. You should note in communicating with member banks
that this proceeding is a readjustment under the Board's general power, and not a
review on appeal. The Board will be glad to hear from you with respect to the arrangement of any details that may seem to call for further adjustment. Would it
be agreeable that the transfer be made effective as of April 1? Please notify that
the Board may enter the formal order.
Respectfully,
H. PARKER WILLIS, Secretary.
Mr. M. B. WELLBORN,

Chairman Board of Directors, Federal Reserve Bank of
75284°—17
9

Atlanta.

124

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
ORDER AMENDING THE GEOGRAPHICAL LIMITS OF DISTRICTS NOS. 6 AND 11.

At a stated meeting of the Federal Reserve Board, duly held at its office in the
city of Washington, D. C , March 6, 1916.
Present: Mr. Hamlin, Governor; Mr. Delano, Vice Governor; Mr. Miller; Mr. Harding; Mr. Warburg; Mr. Williams.
In the matter of readjusting the geographical limits of districts Nos. 6 and 11 in
accordance with the power vested in the Federal Reserve Board by section 2 of the
Federal Reserve Act.
Whereas the Federal Reserve Board is authorized and empowered by section 2 of
the Federal Reserve Act to readjust the Federal Reserve districts; and
Whereas upon consideration of (a) the petition of certain banks in Louisiana for
the transfer from district No. 11 to district No. 6 of all that part of Louisiana then
situate in district No. 11; (6) the printed briefs and exhibits filed by counsel, it
appears to the Federal Reserve Board that the convenience and customary course
of business and the best interests of the Federal Reserve System will be served by
a readjustment of the geographical limits of districts Nos. 6 and 11:
Now, therefore, the Federal Reserve Board doth order—
(1) That district No. 11 be readjusted and altered so as to include the State of
Texas; all that part of New Mexico not included in district No. 10; the counties of
Pima, Graham, Greenlee, Cochise, and Santa Cruz, all situate in the State of
Arizona; the counties of Marshall, Bryan, Choctaw, Pushmataha, McCurtain,
Johnson, Atoka, and Coal, all situate in the State of Oklahoma; and all that part of
Louisiana situate north of the northern boundaries of the parishes of Vernon, Rapides, and Avoyelles.
(2) That district No. 6 be readjusted and extended so as to include the States of
Florida, Georgia, and Alabama; all that part of the State of Tennessee not included
in district No. 8; all that part of the State of Mississippi not included in district No.
8; and all that part of the State of Louisiana south of the northern boundaries of the
parishes of Vernon, Rapides, and Avoyelles.
(3) That the alterations in districts Nos. 6 and 11 directed in this order become
effective April 1, 1916.
(4) That the Federal Reserve Banks of Atlanta and Dallas be notified of the
changes made in the districts referred to and directed to take such action as may
be necessary for the transfer of membership of the banks included in the territory
affected.
(5) That a copy of this order be filed with the Comptroller of the Currency in order
that the certificate of the Reserve Bank Organization Committee may be properly
amended.
C. S. HAMLIN, Governor.

Attest:
H. PARKER WILLIS, Secretary.
MARCH 1,

1916.

SIR: I have the honor to inform you that the Federal Reserve Board on February
29 adopted a resolution transferring the banks situated in Fairfield County, Conn.,
from district No. 1 to district No. 2.
Accordingly the following banks, now members of the First Federal Reserve
District, and owning stock in the Federal Reserve Bank of Boston, will be transferred
to the Second Federal Reserve District, and will take out a corresponding amount of
stock in the Federal Reserve Bank of New York:
Bethel National Bank, Bethel, Conn.
First Bridgeport National Bank', Bridgeport, Conn,
City National Bank, Bridgeport, Conn.
Connecticut National Bank, Bridgeport, Conn.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

125

Danbury National Bank, Danbury, Conn.
City National Bank, Danbury, Conn.
Greenwich National Bank, Greenwich, Conn.
First National Bank, New Canaan, Conn.
Central National Bank, Norwalk, Conn.
Fairfield County National Bank, Norwalk, Conn.
National Bank of Norwalk, Conn.
First National Bank, Ridgefield, Conn.
City National Bank, South Norwalk, Conn.
First National Bank, Stamford, Conn.
Stamford National Bank, Stamford, Conn.
The question of transfers of capital stock from the Federal Reserve Bank of Boston
to the Federal Reserve Bank of New York will require your attention, and it is suggested that you follow in this matter the same procedure which was laid down by the
Board in effecting the transfer of the banks of West Virginia from the Fifth to the
Fourth Federal Reserve District some nine months ago. I inclose a copy of the
Federal Reserve Bulletin for July, on page 142 of which you will find the details
of the process fully set forth. You should note in communicating with member
banks that this proceeding is a readjustment under the Board's general power, and
not a review on appeal. The Board will be glad to hear from you with respect to the
arrangement of any details that may seem to call for further adjustment. Would
it be agreeable that the transfer be made effective as of April 1? Please notify, that
the Board may enter its formal order.
Respectfully,
H. PARKER WILLIS, Secretary.
Mr. PIERRE JAY,
Chairman Board of Directors, Federal Reserve Bank of New

York.

ORDER AMENDING THE GEOGRAPHICAL LIMITS OF DISTRICTS NOS. 1 AND 2.

126

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

(3) That consideration of so much of the petition of the Connecticut banks as
requests the transfer of that part of Connecticut west of the Connecticut River which
is not covered by this order be continued without prejudice until the further order
of the Board.
(4) That the alterations in districts Nos. 1 and 2 directed in this order become
effective April 1, 1916.
(5) That the Federal Reserve Banks of Boston and New York be notified of the
changes made in the districts referred to and directed to take such action as may be
necessary for the transfer of membership of the banks included in the territory affected.
(6) That a copy of this order be filed with the Comptroller of the Currency in order
that the certificate of the Reserve Bank Organization Committee may be properly
amended.
C. S. HAMLIN, Governor.

Attest:
H. PARKER WILLIS, Secretary,

ORDER AMENDING THE GEOGRAPHICAL LIMITS OF DISTRICTS NOS. 7 AND 9.

At a stated meeting of the Federal Reserve Board, duly held at its office in the city
of Washington, D. C, October 12, 1916.
Present: Mr. Harding, Governor; Mr. Warburg, Vice Governor; Mr. Hamlin; Mr.
Delano; Mr. Miller; Mr. Williams.
In the matter of readjusting the geographical limits of districts Nos. 7 and 9 in accordance with the power vested in the Federal Reserve Board by section 2 of the
Federal Reserve Act.
Whereas the Federal Reserve Board is authorized and empowered by section 2 of
the Federal Reserve Act to readjust the Federal Reserve districts; and
Whereas, upon further consideration of—(a) The petition of certain banks in Wisconsin for the transfer from district No. 9 to district No. 7 of all that part of Wisconsin
situated in district No. 9 east of the western boundaries of the counties of Ashland,
Price, Taylor, Clark, Jackson, and Monroe; (b) The answer of the Federal Reserve
Bank of Minneapolis; (c) The briefs of counsel and arguments heard by the Federal
Reserve Board; it appears to such Board that the convenience and customary course
of business and the best interests of the Federal Reserve system will be served by a
readjustment of the geographical limits of districts Nos. 7 and 9:
Now, therefore, the Federal Reserve Board doth order—
(1) That district No. 7 be readjusted and altered so as to include the State of Iowa,
all that part of Wisconsin located south of the northern boundary of the counties of
Marinette, Oconto, Langlade, Marathon, and Clark; and east of the western boundary of the counties of Clark, Jackson, Monroe, Vernon, Crawford, and Grant; all of
the southern peninsula of Michigan, viz, that part east of Lake Michigan; all that part
of Illinois located north of a line forming the southern boundary of the following
counties: Hancock, Schuyler, Cass, Sangamon, Christian, Shelby, Cumberland, and
Clark; and all that part of Indiana north of a line forming the southern boundary of
the following counties: Vigo, Clay, Owen, Monroe, Brown, Bartholomew, Jennings,
Ripley, and Ohio.
(2) That district No. 9 be readjusted and altered so as to include the States of
Montana, North Dakota, South Dakota, Minnesota, all that part of Wisconsin not included in district No. 7 and all that part of Michigan not included in district No. 7.
(3) That the alterations in districts Noa. 7 and 9 directed in this order become
effective January 1, 1917.
(4) That the Federal Reserve Banks of Chicago and Minneapolis be notified of the
changes made in the districts referred to and directed to take such action as may be

127

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

necessary for the transfer of membership of the banks included in the territory affected.
(5) That a copy of this order be filed with the Comptroller of the Currency in order
that the certificate of the Reserve Bank Organization Committee may be properly
amended.
W. P. G. HARDING, Governor.

Attest:
H. PARKER WILLIS, Secretary.

Transfers of counties resulting from the order are as follows:
Counties in Wisconsin transferred from district No. 9 to district No. 7.
Adams.
Brown.
Calumet.
Clark.
Door.

Fond du Lac.
Green Lake.
Jackson.
Jimeau.
Kewaunee.

Langlade.
Manitowoc.
Marathon.
Marine tte.
Marquette.

Monroe.
Oconto.
Outagamie.
Portage.
Shawano.

Sheboygan.
Waupaca.
Waushara.
Winnebago.
Wood.

Counties in Wisconsin remaining in district No. 9.
Ashland.
Barron.
Bayiield.
Buffalo.
Burnett.
Chippewa.

Douglas.
Dunn.
Eau Claire.
Florence.
Forest.

Iron.
La Cross.
Lincoln.
Oneida.
Pepin.

Pierce.
Polk.
Price.
Rusk.
St. Groix.

Sawyer.
Taylor.
Trempealeau
Vilas.
Washburn.

Counties in Wisconsin now in district No. 7.
Adams.
Brown.
Calumet.
Clark.
Columbia.
Crawford.
Dane.
Dodge.
Door.

Fond du Lac.
Grant.
Green.
Green Lake.
Iowa.
Jackson.
Jefferson.
Juneau.
Kenosha.

Kewaunee.
Lafayette.
Langlade.
Manitowoc.
Marathon.
Marinette.
Marquette.
Milwaukee.
Monroe.

Oconto.
Outagamie.
Ozaukee.
Portage.
Racine.
Richland.
Rock.
Sauk.
Shawano.

Sheboygan.
Vernon.
Wai worth.
Washington.
Waukesha.
Waupaca.
Waushara.
Winnebago.
Wood.

Transfers of member banks resulting from the order are as follows:
National banks in Wisconsin transferred from district No. 9 to district No. 7.
Name of bank.

City.
Antigo...
Appleton.
Berlin
Black River Falls.
Bullion
Cliilton
Clinton ville
Dale
DePere
Fond du Lac
Grand Eapids

First National Bank
Langlade National Bank
Citizens National Bank
Commercial National B a n k . . .
First National Bank
do
do.
do
Chilton National Bank
First National Bank
do....
National Bank of De Pere
Commercial National B a n k . . .
First National Bank
Fond du Lac National B a n k . .
Citizens National Bank
First National Bank
Wood County National Bank.

Capital.
$100,000
50,000
150,000
150,000
300,000
75,000
50,000
25,000
50,000
60,000
25,000
50,000
125,000
125,000
200,000
100,000
100,000
100,000

Surplus.
$20,000
25,000
50,000
100,000
100,000
25,000
12,500
7,500
10,000
12,000
3,400
25,000
75,000
25,000
50,000
10,500
50,000
100,000

128

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

National banks in Wisconsin transferred from district No. 9 to district No. 7—Continued.
City.
Green Bay.
Kaukauna..
Manawa
Manitowoc.
Marinette...
Marshfield..
Menasha
Neenah
Neillsville....
New London.
Oconto
Oshkosh.
Peshtigo...
Princeton.
Ripon
Seymour.
Shawano.
Stevens Point
Tigerton..
Waupaca Wausau..
Weyauwega.

Name of bank.
Citizens National Bank
Kellogg National Bank
McCartney National Bank.
First National Bank
do.
National Bank of Manitowoc.
First National Bank
Stephenson National Bank...
American National Bank
First National Bank
.do
.do.
National Manufacturers Bank.
First National Bank
.do.
Citizens National Bank
Oconto National Bank
City National Bank
Commercial National Bank.
Old National Bank
Peshtigo National Bank
First National Bank
.do.

German National Bank
First National Bank
do
German-American National Bank.
Citizens National Bank
First National Bank
do
Old National Bank
First National Bank
National German American Bank.
First National Bank

Total

Capital.

Surplus.

$250,000
200,000
200,000
50,000
25,000
100,000
100,000
100,000
50,000
65,000
80,000
125,000
100,000
50,000
50,000
65,000
60,000
200,000
200,000
300,000
25,000
25,000
100,000
100,000
30,000
50,000
25,000
100,000
100,000
25,000
50,000
350,000
300,000
25,000

$100,000
50,000
100,000
10,000
5,000
10,000
40,000
100,000
40,000
55,000
20,000
62,500
27,500
10,000
13,500
13,000
12,000
40,000
100,000
100,000
10,000
6,000
25,000
25,000
8,500
25,000
40,000
20,000
30,000
5,000
15,000
150,000
150,000
4,000

5,510,000

2,122,900

OPINION OF ATTORNEY GENERAL AS TO REDISTRICTING.
DEPARTMENT OP JUSTICE,

Washington, April 14, 1916.
SIR: At the request of the Federal Reserve Board, you have submitted the following
questions for my opinion:
I. Can the Federal Reserve Board legally change the present location of any Federal Reserve Bank:
(a) In the case where there has been no alteration in the district lines; and
(6) In the case where there has been such readjustment of district lines as in the
opinion of the Board necessitates the designation of a new Federal Reserve city in
order that due regard may be given to the convenience and customary course of
business as required by section 2 of the Federal Reserve Act?
II. Must the Federal Reserve Board, in exercising its admitted power to readjust,
preserve the $4,000,000 minimum capitalization required of each Federal Reserve
Bank as a condition precedent to the commencement of business?
I.
In my opinion of November 22, 1915,1 expressed the view that the Federal Reserve
Act does not confer on the Federal Reserve Board the power to abolish any of the
existing Federal Reserve Banks or Federal Reserve districts. I believe that the
reasoning of that opinion is equally applicable to both branches of the first question
now submitted.
Section 2 of the Federal Reserve Act provides:
"As soon as practicable, the Federal Reserve Bank Organization Committee shall
designate not less than eight nor more than twelve cities to be known as Federal Re

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

129

serve cities, and shall divide the continental United States * * * into districts
each district to contain only one of such Federal Reserve cities. The determination
of said organization committee shall not be subject to review except by the Federal
Reserve Board when organized: Provided, That the districts shall be apportioned with
due regard to the convenience and customary course of business and shall not necessarily be coterminous with any State or States. The districts thus created may be
readjusted and new districts may from time to time be created by the Federal Reserve
Board, not to exceed twelve in all. Such districts shall be known as Federal Reserve
districts and may be designated by number. * * *
" Said organization committee shall be authorized * * * to make such investigation as may be deemed necessary by the said committee in determining the reserve
districts and in designating the cities within such districts where such Federal Reserve
Banks shall be severally located. "
The same section further provides:
"The said committee shall supervise the organization, in each of the cities designated, of a Federal Reserve Bank, which shall include in its title the name of the city
in which it is situated, as 'Federal Reserve Bank of Chicago.' "
Since the Act thus provides that each city designated as a Federal Reserve city is
to be the location of a Federal Reserve Bank, it follows that a change in the location
of a Federal Reserve Bank would in effect be the designation of a new Federal Reserve
city and the abandonment of one previously designated. I find no more warrant
in the Act for the abandonment of one Federal Reserve city and the designation of a
new one than I do for the abolition of a Federal Reserve district when once established.
The power to designate a new Federal Reserve city (12 cities having been named
by the Organization Committee) or to change the location of a Federal Reserve
Bank is not expressly conferred by the Act on the Federal Reserve Board. If the
Board possesses such power, it is only by implication from the provision that—
"The determination of said Organization Committee shall not be subject to review
except by the Federal Reserve Board when organized: Provided, That the districts
shall be apportioned with due regard to the convenience and customary course of
business and shall not necessarily be coterminous with any State or States. The
districts thus created may be readjusted and new districts may from time to time
be created by the Federal Reserve Board, not to exceed twelve in all."
In my opinion there is no clear indication, either in the provision just quoted or
elsewhere in the Act, of an intent to confer on the Federal Reserve Board the power
to change the location of Federal Reserve Banks by the designation of new Federal
Reserve cities. On the contrary, there are indications of an opposite intent. As
stated in my opinion of November 22, 1915, above referred to, "the merely negative
statement that the determination of the Organization Committee shall not be subject
to review except by the Federal Reserve Board when organized clearly can not be
enlarged into an affirmative grant of power to the Board to review and set aside everything done by the Organization Committee. The reasonable view is that by that
language Congress meant that the determination of the Organization Committee should
not be subject to review at all, except in so far as the subsequent provisions specifically
authorize a review by the Federal Reserve Board. The only subsequent provision
authorizing a review of the determination of the Organization Committee by the
Federal Reserve Board is contained in the sentence, 'The districts thus created may
be readjusted and new districts may from time to time be created by the Federal
Reserve Board, not to exceed 12 in all.' "
Again, as stated in that opinion, "a reading of the Act shows at once that the Organization Committee was created not merely for the purpose of attending to the formalities of organization or to serve as a stop-gap until the Federal Reserve Board should
come into existence, but that it had an independent function to perform and to that

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ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

end was invested with wide powers. That is to say, its function was to organize the
system as contradistinguished from the function of the Federal Reserve Board, which
was primarily to administer the system."
The duty of designating Federal Reserve cities belonged to the Reserve Bank
Organization Committee as a part of the organization of the system, and the committee
was required by the Act to designate not less than 8 nor more than 12 cities. This
duty is named first among those imposed upon the Organization Committee, and it
is imposed by the same provision of section 2 which required the committee to divide
the United States into Federal Reserve districts. The same considerations that indicate an intention that the several districts should be permanent would also indicate
that the designation of the cities was not to be made for temporary purposes, but was
intended to be permanent, subject, of course, to change by Congress. The designation was to be made only after thorough investigation, and the same machinery was
provided to facilitate both the determination of the districts and the designation of
the cities. Thus, section 2 provides:
"Said Organization Committee shall be authorized to employ counsel and expert
aid, to take testimony, * * * and to make such investigation as may be deemed
necessary * * * in determining the reserve districts and in designating the
cities within such districts where such Federal Reserve Banks shall be severally
located."
In my opinion, this coupling of the duty of determining the districts with the
duty of designating the Federal Reserve cities within the several districts shows an
intention on the part of Congress that the cities so designated are to constitute the
fixed centers in the scheme or system of division, the duty of designating the cities
being coordinate with the duty of forming districts around them. It was left to the
discretion of the Organization Committee whether it should designate the full number
of Federal Reserve cities and establish the full number of Federal Reserve districts
permitted by the Act. The committee elected to designate and establish the full
number authorized, thereby practically suspending the operation of the provision of
the Act that "new districts may from time of time be created by the Federal Reserve
Board not to exceed 12 in all." The primary if not the only purpose of that provision
must have been to take care of the situation in the event that the Organization Committee had designated less than 12 Federal Reserve cities.
The fact that the Federal Reserve Board, aside from the provision relating to the
creation of new districts from time to time, was merely given the power to readjust
districts suggests that there was to be some permanent characteristic or element in the
districts created by the Organization Committee. If, however, in addition to the
power which the Federal Reserve Board has of readjusting districts by changing their
boundary lines, it also possessed the power to change the location of the respective
Federal Reserve cities within such districts, then the Board could, by successive
changes of cities and boundaries, entirely obliterate existing districts and substitute
in their place new districts totally different "from those created by the Organization
Committee. I do not think that Congress intended to confer such a power.
The Act provides that each Federal Reserve Bank is to include the name of the city
in which the bank is located. By section 4 it is provided that the organization certificate of each bank shall state specifically—
"The name of such Federal Reserve Bank, the territorial extent of the district over
which the operations of such Federal Reserve Bank are to be carried on, the city and
State in which said bank is to be located, the amount of capital stock, and the number
of shares into which the same is divided * * *."
Upon the filing of such certificate with the Comptroller of the Currency in the
manner prescribed such Federal Reserve Bank—
"Shall become a body corporate and"as such, and in the name designated in such
organization certificate, shall have power * * * to have succession for a period of

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

131

20 years from its organization unless it is sooner dissolved by an act of Congress, or
unless its franchise becomes forfeited by some violation of law." (Sec. 4.)
It is to be noted that there is no provision in the Act by which the Federal Reserve
Board may change the name of a Federal Reserve Bank or amend its certificate in
this respect. The whole tenor suggests permanency.
The omission of Congress to grant, by express language the power to change Federal
Reserve cities is significant, especially in view of the language of section 11 (e) of the
Act, which confers the power—
"To add to the number of cities classified as reserve and central reserve cities
* * * ; or to reclassify existing reserve and central reserve cities, or to terminate
their designation as such."
It would have been equally easy had Congress desired to grant the authority to
designate new Federal Reserve cities to have said so in express terms. (Tillson v.
United States, 100 U. S., 43, 46, quoted in my opinion of Nov. 22, 1915, supra.)
It may be suggested that changes in the "customary course of business" or other
changes not foreseen by the Organization Committee may result in inconveniences
which the Federal Reserve Board can not remedy if its power to change the location
of Federal Reserve cities is denied. The answer is that the remedy is with Congress,
in so far as it may not already be supplied by section 3, which authorizes the establishment of as many branch banks in any district as may be found expedient.
To sum up my conclusion on the question of whether the Federal Reserve Board can
legally change the present location of any Federal Reserve Bank, I am of opinion that
the Board has no such power, and that such power is lacking whether there has been
an alteration or readjustment in the district lines or not.
II.
Coming now to the consideration of the second question submitted, namely, whether
the Federal Reserve Board, in exercising its admitted power to readjust, must preserve
the $4,000,000 minimum capitalization required of each Federal Reserve Bank as a
condition precedent to the commencement of business, I am of opinion that this
question is to be answered in the negative.
The Federal Reserve Act provides in section 2:
"No Federal Reserve Bank shall commence business with a subscribed capital less
than $4,000,000."
The same section also contains a provision requiring subscriptions to the capital
stock to be paid—
"One-sixth * * * on call of the Organization Committee or of the Federal
Reserve Board, one-sixth within three months and one-sixth within six months thereafter, and the remainder of the subscription, or any part thereof, shall be subject to
call when deemed necessary by the Federal Reserve Board * * * . "
Section 4 contains the following provision:
"When the minimum amount of capital stock prescribed by this Act for the organization of any Federal Reserve Bank shall have been subscribed and allotted, the
Organization Committee shall designate any five banks * * * to execute a certificate of organization. * • * *
"Upon the filing of such certificate with the Comptroller of the Currency, the said
Federal Reserve Bank shall become a body corporate."
The decrease of capital stock is authorized by the following provision of section 5:
"The outstanding capital stock shall be increased from time to time as member
banks increase their capital stock and surplus, or as additional banks become members,
and may be decreased as member banks reduce their capital stock or surplus or cease
to be members."
Additional provisions relating to the decrease of capital stock are found in sections
5 and 6, as follows:

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ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

"SEC. 5. * * * When a member b#nk reduces its capital stock it shall surrender
a proportionate amount of its holdings in the capital of said Federal Reserve Bank,
and when a member bank voluntarily liquidates, it shall surrender all of its holdings
of the capital stock of said Federal Reserve Bank and be released from its stock subscription not previously called. In either case the shares surrendered shall be canceled and the member bank shall receive in payment therefor * * * a sum
equal to its cash-paid subscriptions on the shares surrendered * * * less any
liability of such member bank to the Federal Reserve Bank.
"SEC. 6. If any member bank shall be declared insolvent * * * the stock
held by it in said Federal Reserve Bank shall be canceled * * * and all cashpaid subscriptions on said stock, with one-half of one per cent per month from the
period of last dividend, not to exceed the book value thereof, shall be first applied
to all debts of the insolvent member bank to the Federal Reserve Bank, and the
balance, if any, shall be paid to the receiver of the insolvent bank. Whenever the
capital stock of a Federal Reserve Bank is reduced either on account of a reduction
in capital stock of any member bank or of the liquidation or insolvency of such bank,
the board of directors shall cause to be executed a certificate to the Comptroller of the
Currency showing such reduction of capital stock and the amount repaid to such
bank."
In section 9 it is provided:
"If at any time * * * a member bank has failed to comply with * * * the
regulations of the Federal Reserve Board, it shall be within the power of the said
Board, after hearing, to require such bank to surrender its stock in the Federal Reserve
Bank; * * * and said Federal Reserve Bank shall, upon notice from the Federal
Reserve Board, be required to suspend said bank from further privileges of membership, and shall within thirty days of such notice cancel and retire its stock and make
payment therefor in the manner herein provided."
It will be observed from the foregoing quotations that the Federal Reserve Act
expressly provides that no Federal Reserve Bank shall commence business with a
subscribed capital of less than $4,000,000. (Sec. 2.) They were each to be organized when the minimum amount of capital stock had been subscribed. (Sec. 4.)
Only three-sixths of the capital subscribed is required to be paid in, the remainder
being left "subject to call when deemed necessary by the Federal Reserve Board."
(Sec. 2.)
The Act specifically provides for the decrease of capital stock (1) as member banks
reduce their capital stock; and (2) as they cease to be members. (Sec. 5.)
Member banks may cease to be members for any of four causes—
(a) Voluntary liquidation (sec. 5);
(b) Insolvency (sec. 6);
(c) Violation of regulations of Federal Reserve Board (sec. 9);
(d) Transfer from one Federal district to another through readjustment of districts
(sec. 2);
The Act specifically requires the cancellation of capital stock where membership
ceases under (a), (b), or (c). (Sees. 5, 6, and 9.)
No specific provision is made for cancellation of capital stock where membership
ceases under (d).
While the minimum capital had to be subscribed in order to commence business,
the maintenance of that minimum is nowhere prescribed by the Act. The fact that
the Board is to determine whether more than half the subscription is to be paid in
seems to indicate that the minimum to be subscribed was fixed as a precaution to
make sure that ample credit should be pledged to insure the success of the system.
Not only is the maintenance of the minimum not prescribed, but express provision
is made for reducing the capital stock as, or whenever, member banks cease to be
members. This language is general and includes in its terms all cases in which

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

133

member banks cease to be members. It is coupled with no expressed condition that
the minimum capitalazition be preserved; and since the Federal Reserve Act required the organization of the Federal Reserve Banks upon the subscription of the
minimum, it is obvious that any reduction whatever made after commencing business might reduce the capital below the minimum.
It is plain that a member bank can be a member only of the Federal Reserve Bank
of the district in which both are located. This is obvious from the nature of the Federal
Reserve districts and is assumed in sections 2, 4, and 9. Of necessity, therefore,
when the Federal Reserve Board, in the exercise of its power to readjust, transfers a
member bank from one district to another, such transferred bank must cease to be
a member of the Federal Reserve Bank of the district from which it is transferred.
When it thus ceases to be a member, the capital of the Federal Reserve Bank may be
reduced; and there is nothing in the Act requiring the reduction to be made subject
to the maintenance of a minimum capital.
It is to be noted that section 5 provides that the capital stock shall be increased
and may be decreased under the conditions therein mentioned. Succeeding provisions of sections 5,6, and 9, however, make it clear that may is here used in the sense
of shall, as 'applied to cases arising under (a), (6), and (c). It seems reasonable to
infer that it is used in the same sense as applied to (d). But whether so used or used
in its more literal sense is here immaterial, for so far as the answer to the question
submitted is concerned, the result is the same whether the Board is required or merely
authorized to reduce the capital when members bank cease to be members.
Nor can any significance be attached to the fact that specific provision is made
for reducing the capital stock of a Federal Reserve Bank in cases arising under (a).
(6), and (c), while the Act is silent as to cases arising under (d). The cases specifically
provided for include cases where the member banks cease to be members as the
direct result of their own acts or conduct. Cases under (d) arise where banks cease
to be members as an incident of the exercise of the power of the Federal Reserve
Board to readjust districts. The grant of the specific power to readjust carries with it
as fully as if expressed in the Act, the power to do what is necessarily incidental
(Broom's Maxims, 7th ed., 505; 199 U.-S., 12.)
My conclusion as to the second question submitted is that the Federal Reserve
Act, in prescribing a minimum capitalization of $4,000,000 for Federal Reserve
Banks as a condition precedent to commencing business, does not require that such
minimum capitalization shall be preserved under the circumstances.
Very respectfully,
T. W. GREGORY,

Attorney General.
The

PRESIDENT,

The White House.

Exhibit L - AMENDMENTS TO THE ACT.

Amendments to the Federal Reserve Act were adopted by the Senate on August 26, by the House on August 29, and approved by the
President on September 7, 1916.
In presenting the report of the conference the managers on the part
of the Senate made the following explanation of the amendments:
The amendments of the Senate to the bill have been accepted by
the House conferees with some slight verbal modifications, except
that the House declined to agree to, and the Senate receded from, its
amendment of section 16 of the Federal Reserve Act which would
have explicitly authorized and encouraged Federal Reserve Banks to
issue Federal JReserve notes based upon gold or gold certificates.
The House conferees declined to agree to the Senate amendment
proposing to permit national banks in cities of more than 100,000
inhabitants and possessing a capital and surplus of $1,000,000 or more
to establish branches, and the Senate conferees have agreed to recommend that the Senate recede from this amendment.
The House conferees insisted upon an amendment to section 11,
which was accepted by the Senate conferees, permitting the Federal
Reserve Board, upon an affirmative vote of not less than five, to permit member banks to carry in the Federal Reserve Banks any portion of their reserves now required to be held in their own vaults.
The amendments follow:
AN ACT To amend certain sections of the act entitled "Federal Reserve Act/' approved December 23,
1913.
[Italics indicate new matter; lined type indicates matter stricken out.]

Be it enacted by the Senate and House of Representatives of the United States of America
in Congress assembled, That the act entitled " Federal Reserve Act," approved December twenty-third, nineteen hundred and thirteen, be, and is hereby, amended as
follows:
At the end of section eleven insert a new clause as follows:
(m) Upon the affirmative vote of not less than five of its members the Federal Reserve
Board shall have power, from time to time, by general ruling, covering all districts alike, to
permit member banks to carry in the Federal Reserve Banks of their respective districts
any portion of their reserves now required by section nineteen of this Act to be held in their
own vaults.
• That section thirteen be, and is hereby, amended to read as follows:
''Any Federal Reserve Bank may receive from any of its member banks, and from
the United States, deposits of current funds in lawful money, national-bank notes,
Federal Reserve notes, or checks, and drafts upon •BokreBrfr-mcmbcE-^&fee? payable
upon presentation, and also, for collection, maturing bills; or solely for purposes of
exchange or of collection yapposco, may receive from other Federal Reserve Banks
deposits of current funds in lawful money, national-bank notes, or checks fta4-€h?a£fee
upon eot^eat member eg other Federal Reserve Banks, and checks and drafts, payable
upon presentation within its district, and maturing bills payable within its district,
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ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

135

"Upon the indorsement of any of its member banksT which shall be deemed wi%fe a
waiver of demand, notice, and protest by such bank as to its own indorsement exclusively, any Federal Reserve Bank may discount notes, drafts, and bills of exchange
arising out of actual commercial transactions; that is, notes, drafts, and bills of exchange
issued or drawn for agricultural, industrial, or commercial purposes, or the proceeds
of which have been used, or are to be used, for such purposes, the Federal Reserve
Board to have the right to determine or define the character of the paper thus eligible
for discount, within the meaning of this act. Nothing in this act contained shall be
construed to prohibit such notes, drafts, and bills of exchange, secured by staple
agricultural products, or other goods, wares, or merchandise from being eligible for
such discount; but such definition shall not include notes, drafts, or bills covering
merely investments or issued or drawn for the purpose of carrying or trading in stocks,
bonds, or other investment securities, except bonds and notes of the Government
of the United States. Notes;, drafts, and bills admitted to discount under the terms
of this paragraph must have a maturity at the time of discount of not more than
ninety days, exclusive of days of grace.
"Provided, That notes, drafts, and bills drawn or issued for agricultural purposes or
based on live stock and having a maturity not exceeding six months, exclusive of days
of grace, may be discounted in an amount to be limited to a percentage of the capital
assets of the Federal Reserve Bank, to be ascertained and fixed by the Federal Reserve
Board.
—Any Federal Reserve Bank may discount acceptances which arc baaed on the
importation or exportation of goods, and which have a maturity at time of diocount of
not more thae three mefttha,- and-indorscd-by-ark-leae! one member-baftfe—¥hc amount
of acccptanccs-so discounted: shall atnao time exceed one haH-£be-pa*4-ttff and unimpaired-capital otock and surplus of the bank for which-fehc rediscounts arc made,
eseept by authority-of-thc Federal Reserve Board, under-such general rogulations-ae
eaid board may-prescribe, but not to cxcced-fee-eapital stock"The aggregate of such notes, drafts, and bills bearing the signature or indorsement
of any one borrower, whether a person, company, firm, or corporation rediscounted for
any one bank shall at no time exceed ten pei centum of the unimpaired capital and
surplus of said bank; but this restriction shall not apply to the discount of bills of
exchange drawn in good faith against actually existing values.
"Any Federal Reserve Bank may discount acceptances of the hinds hereinafter described,
which have a maturity at the time of discount of not more than three months1 sight, exclusive
of days of grace, and which are indorsed by at least one member bank.
" Any member bank may accept drafts or bills of exchange drawn upon it aad
growing out of-feranoactiono involving the importation or exportation of goods having
not more than six months' sight to run, exclusive of days of grace, which grow out vf
transactions involving the importation or exportation of goods; or ivhich grow out of
transactions involving the domestic shipment of goods, provided shipping documents conveying or securing title are attached at the time of acceptance; or which are secured at the
time of acceptance by a warehouse receipt or other such document conveying or securing
title covering readily marketable staples. No member bank shall accept, whether in a
foreign or domestic transaction, for any one person, company, firm, or corporation to an
amount equal at any time in the aggregate to more than ten per centum of its paid-up and
unimpaired capital stock and surplus unless the bank is secured either by attached documents or by some other actual security growing out of the same transaction as the acceptance
and tofe no bank shall accept such bills to an amount equal at any time in the aggregate to more than one-half of its paid-up and unimpaired capital stock and surplus.
" Any Federal Reserve Bank may make advances to its member banks on their promissory
notesfor a period not exceedingfifteendays at rates to be established by such Federal Reserve
Banks, subject to the review and determination of the Federal Reserve Board, provided such
promissory notes are secured by such notes, drafts, bills of exchange, or bankers' acceptances

136

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

us are eligible for rediscount or for purchase by Federal Reserve Banks under the provisions
of this Act, or by the deposit or pledge of bonds or notes of the United States.
u
Section fifty-two hundred and two of the Revised Statutes of the United States is
hereby amended so as to read as follows: No national banking association shall at any
time be indebted, or in any way liable, to an amount exceeding the amount of its
capital stock at such time actually paid in and remaining undiminished by losses
or otherwise, except on account of demands of the nature following:
"First. Notes of circulation.
" Second. Moneys deposited with or collected by the association.
"Third. Bills of exchange or drafts drawn against money actually on deposit to the
credit of the association, or due thereto.
''' Fourth. Liabilities to the stockholders of the association for dividends and reserve
profits.
11
Fifth. Liabilities incurred under the provisions of the Federal Reserve Act.
' l The discount and rediscount and the purchase and sale by any Federal Reserve
Bank of any bills receivable and of domestic and foreign bills of exchange, and of
acceptances authorized by this Act, shall be subject to such restrictions, limitations,
and regulations as may be imposed by the Federal Reserve Board.
"That in addition to the powers now vested by law in national banking associations
organized under the laws of the United States any such association located and doing business
in any place the population of which does not exceed five thousand inhabitants, as shown
by the last preceding decennial census, may, under such rules and regulations as may be
prescribed by the Comptroller of the Currency, act as the agent for any fire, life, or other
insurance company authorized by the authorities of the State in which said bank is located
to do business in said State by soliciting and selling insurance and collecting premiums
on policies issued by such company; and may receive for services so rendered such fees or
commissions as may be agreed upon between the said association and the insurance company
for which it may act as agent; and may also act as the broker or agent for others in making
or procuring loans on real estate located within one hundred miles of the place in which
said bank may be located, receiving for such services a reasonable fee or commission: Provided, however, That no such bank shall in any case guarantee either the principal or interest
of any such loans or assume or guarantee the payment of any premium on insurance policies
issued through its agency by its principal: And provided further, That the bank shall not
guarantee the truth of any statement made by an assured in filing his application for
insurance.
li
Any member bank may accept drafts or bills of exchange drawn upon it having not
more than three months' sight io run, exclusive of days of grace, drawn under regulations
to be preswibed by the Federal Reserve Board by banks or bankers in foreign countries or
dependencies or insular possessions of the United States for the purpose of furnishing
dollar exchange as required by the usages of trade in the respective countries, dependencies,
or insular possessions. Such drafts or bills may be acquired by Federal Reserve Banks
in such amounts and subject to such regulations, restrictions, and limitations as may be
prescribed by the Federal Reserve Board: Provided, however, That no member bank shall
accept such drafts or bills of exchange referred to in this paragraph for any one bank to an
amount exceeding in the aggregate ten per centum of the paid-up and unimpaired capital
and surplus of the accepting bank unless the draft or bill of exchange is accompanied by
documents conveying or securing title or by some other adequate security: Provided further,
That no member bank shall accept such drafts or bills in an amount exceeding at any time
the aggregate of one-half of its paid-up and unimpaired capital and surplus.1'
That subsection (e) of section fourteen be, and is hereby, amended to read as follows:
" (e) To establish accounts with other Federal Reserve Banks for exchange purposes
and, with the consent of the Federal Reserve Board, to open and maintain banking
accounts in foreign countries, appoint correspondents, and establish agencies in such
countries wheresoever it may deem best for the purpose of purchasing, selling, and

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

137

collecting bills of exchange, and to buy and sell, with or without its indorsement,
through such correspondents or agencies, bills of exchange arising out of actual commercial transactions which have not more than ninety days to run, exclusive of days of
grace, and which bear the signature of two or more responsible parties, and. with the
consent of the Federal Reserve Board to open and maintain banking accounts for such
foreign correspondents or agenci.es."
That the second paragraph of section sixteen be, and is hereby, amended to read as
follows:
"Any Federal Reserve Bank may make application to the local Federal Reserve
Agent for such amount of the Federal Reserve notes hereinbefore provided for as it
may require. Such application shall be accompanied with a tender to the local
Federal Reserve Agent of collateral in amount equal to the sum of the Federal Reserve
notes thus applied for and issued pursuant to such application. The collateral security
thus offered shall be notes, aset drafts, bills of exchange, or acceptances accepted for rcdiseount rediscounted under the provisions of section thirteen of this Act, or bills of exchange
indorsed by a member bank of any Federal Reserve district and purchased under the provisions
of section fourteen of this Act, or bankers7 acceptances purchased under the provisions of said
section fourteen, a»4 The Federal Reserve Agent shall each day notify the Federal
Reserve Board of all issues and withdrawals of Federal Reserve notes to and by the
Federal Reserve Bank to which he is accredited. The said Federal Reserve Board may
, at any time call upon a Federal Reserve Bank for additional security to protect the
Federal Reserve notes issued to it."
That section twenty-four be, and is hereby, amended to read as follows:
"SEC. 24. Any national banking association not situated in a central reserve city
may make loans secured by improved and unencumbered farm land situated within
its Federal reserve district or within a radius of one hundred miles of the place in which
such bank is located, irrespective of district lines; and may also make loans secured by
improved and unencumbered real estate located within one hundred miles of the place in
which such bank is located, irrespective of district lines; but no sttek loan made upon the
security of such farm land shall be made for a longer time than five years, and no loan
made upon tne security of such real estate as distinguished from farm land shall be made for
a longer time than one year nor lor an shall the amount of any such loan, whether upon such
farm land or upon such real estate, exceeding exceedfiftyper centum of the actual value
of the property offered as security. Any such bank may make such loans, whether
secured by such farm land or such real estate, in an aggregate sum equal to twenty-five per
centum of its capital and surplus or to one-third of its time deposits, and such banks
may continue hereafter as heretofore to receive time deposits and to pay interest on
the same.
"The Federal Reserve Board shall have power from time to time to add to the list of
cities in which national banks shall not be permitted to make loans secured upon real
estate in the manner described in this section."
That section twenty-five be, and is hereby, amended to read as follows:
SEC. 25. Aay-^tieB&Jr-kftftfeiBg-aesoeia&eft-fteg^
of $l-00Qr
Board, upon-ouch conditions
and under ouch regulations-as
branehoo in foreign countries or depend
the United S£ato, and to
- do-so, as -fiseal-agents-ef
thc-Unitod S
p
g
opQcify—ifl-adrditioii' to the name-and capital-of the banking
it, the plaee or pJraees-whe^e-^fee-bafiLking-opcrations-pyepeBed-afe-to be earned ony and
tho amount ef-eapital set aside for the eeftfeet-ol-ite-fo^ign business.—¥hc Federal. Re •
ee?^e-Beaf4-8fea&-kavo powoF-te-ap^o¥e-e¥4e-^}e€^Btteh^^iea^ee4M»-^g-i udgment ,of cap&al^ propoocd-to-be-se^-asi4e-lef-fefee-eeft4tte#-ej-forcign business is

138

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

inadequate, or if for othor reasons- the granting-oi such application io deomed incxpediE¥efy-national backing association which shall receive authority to establish foreign
branches shall be required at all times to furnieh information concerning the condition
of ouch branches to the Comptroller of the Currency upon demand, and the Federal
Reserve Board may order opeeia-1 examinationo of the said foreign branches at such
time of times as it may deem best:—Every 3uch national banking association shall con
duct the accounts of each foreign branch independently of the accounts of other foreign
branches established by it and of its homo office-^ and shall at the end of each fiscal
period transfer to its general ledger the profit or loss-accruing-at each-branch as-a-Beparatc item.
Any national banking association possessing a capital and surplus of $1,000,000 or
more may file application with the Federal Reserve Board for permission to exercise, upon
such conditions and under such regulations as may be prescribed by the said Board, either or
both of the following powers:
"First. To establish branches in foreign countries or dependencies or insular possessions
of the United States for the furtherance of the foreign commerce of the United States, and
to act if required to do so as fiscal agents of the United States.
"Second. To invest an amount not exceeding in the aggregate ten per centum of its paidin capital stock and surplus in the stock of one or more banks or corporations chartered or
incorporated under the laws of the United Slates or of any State thereof', and principally
engaged in international or foreign banking, or banking in a dependency or insular possession of the United States either directly or through the agency, ownership, or control of
local institutions in foreign countries, or in such dependencies or insular possessions.
"Such application shall specify the name and capital of the banking association filing it,
the powers applied for, and the place or places where the banking operations proposed are to
be carried on. The Federal Reserve Board shall have power to approve or to reject such application in whole or in part if for any reason the granting of such application is deemed inexpedient, and shall also have power from time to time to increase or decrease the number of
places where such banking operations may be carried on.
"Every national banking association operating foreign branches shall be required to
furnish information concerning the condition of such branches to the Comptroller of the Currency upon demand, and every member bank investing in the capital stock of banks or corporations described under subparagraph two of the first paragraph of this section shall be
required to furnish information concerning the condition of such banks or corporations
to the Federal Reserve Board upon demand, and the Federal Reserve Board may order
special examinations of the said branches, banks, or corporations at such time or times as
it may deem best.
"Before any national bank shall be permitted to purchase stock in any such corporation
the said corporation shall enter into an agreement or undertaking with the Federal Reserve
Board to restrict its operations or conduct its business in such manner or under such limitations and restrictions as the said board may prescribe for the place or places wherein
such business is to be conducted. If at any time the Federal Reserve Board shall ascertain
that the regulations prescribed by it are not being complied ivith, said board is hereby authorized and empowered to institute an investigation of the matter and to send for persons and
papers, subpoena witnesses, and administer oaths in order to satisfy itself as to the actual
nature of the transactions referred to. Should such investigation result in establishing
the failure of the corporation in question, or of the national bank or banks which may be
stockholders therein, to comply with the regulations laid down by the said Federal Reserve
Board, such national banks may be required to dispose of stock holdings in the said corporation upon reasonable notice.
"Every such national banking association shall conduct the accounts of each foreign
branch independently of the accounts of other foreign branches established by it and of its

ANNUAL BEPORT OF THE FEDERAL RESERVE BOARD.

139

home office, and shall at the end of each fiscal period transfer to its general ledger the profit
or loss accrued at each branch as a separate item.
"Any director or other officer, agent, or employee of any member bank may, with the approval of the Federal Reserve Board, be a director or other officer, agent, or employee of any
such bank or corporation above mentioned in the capital stock of which such member bank
shall have invested as hereinbefore provided, without being subject to the provisions of section
eight of the Act approved October fifteenth, nineteen hundred and fourteen, entitled, "An
Act to supplement existing laivs against unlawful restraints and monopolies, and for
other purposes."

Following are the amendments proposed by the Federal Reserve
Board and submitted to Congress in December, 1916:
A BILL To amend the Act approved December twenty-third, nineteen hundred and thirteen, known
as the Federal reserve Act, as amended by the Acts of August fourth, nineteen hundred and fourteen,
August fifteen, nineteen hundred and fourteen, March third, nineteen hundred and fifteen, and September seven, nineteen hundred and sixteen.
Be it enacted by the Senate and House of Representatives of the United States of America

in Congress assembled, That section four of the Act approved December twenty-third,
nineteen hundred and thirteen, known as the Federal reserve Act, be amended by
striking our the sentence reading as follows: "One of the directors of Class C, who
shall be a person of tested banking experience, shall be appointed by the Federal
Reserve Board as deputy chairman and deputy Federal reserve agent, to exercise
the powers of the chairman of the board and Federal reserve agent in case of absence
or disability of his principal," and by adding in place thereof the following:
" Subject to the approval of the Federal Reserve Board, the Federal reserve agent
shall appoint one or more assistants. Such assistants, who shall be persons of tested
banking experience, shall assist the Federal reserve agent in the performance of
his duties and shall also have power to act in his name and stead during his absence
or disability. The Federal reserve agent may require such bonds of his assistants
as he may deem necessary for his own protection. Assistants to the Federal reserve
agent shall receive an annual compensation to be fixed and paid in the same manner
as that of the Federal reserve agent."
SEC. 2. That section nine be amended by adding a subsection (a) to read as follows:
"SEC. 9a. That any mutual savings bank or association operating under the laws
of any State may make application to the Federal Reserve Board for the right to
become an associate member of the Federal reserve bank of the district in which
euch savings bank or association is located.
"The Federal Reserve Board, under such rules and regulations as it may prescribe,
may permit such bank or association to become an associate member of the Federal
reserve bank, but such board, before granting any application, shall require satisfactory evidence that the laws of the State in which the applying bank or association
is located authorize such bank or association to engage in the business of a mutual
savings bank and provide for a proper supervision over the operations of such bank
or association.
"Any mutual savings bank or association which becomes an associate member of
a Federal reserve bank shall agree to comply with all the provisions of section nineteen of this Act. Such associate members shall be entitled to all the clearing privileges granted to member banks, and Federal reserve banks shall be authorized to
discount the promissory notes of such associate members having a maturity of not
more than thirty days and which are secured (a) by paper eligible for rediscount
under section thirteen of the Federal reserve Act; (b) by United States bonds; (c) by
euch municipal warrants as Federal reserve banks are authorized to purchase under
the provisions of section fourteen of the Federal reserve Act; or (d) by commercial
75284—17
10

140

AKlsTUAL REPORT OF THE FEDERAL RESERVE BOARD.

paper or bankers' acceptances bearing the signature of not less than three persons,
firms, or corporations."
SEC. 3. That clause (c) of section eleven be, and is hereby amended by adding at
the end thereof the following sentence:
"The Federal Reserve Board shall also have power, whenever extraordinary conditions justify, to increase from time to time for periods not exceeding thirty days, on
the affirmative vote of five of its members, the amount of balances required by this
Act to be maintained by member banks with their respective Federal reserve banks:
Provided, Such increase shall at no time exceed twenty per centum of such balances
and shall be at the same rate for all member banks of any one district: And provided
further, That the Federal Reserve Board shall make a report to Congress in writing
setting forth the conditions on which such action is based."
SEC. 4. That the first paragraph of section thirteen be further amended so as to
read as follows:
" Any Federal reserve bank may receive from any of its member banks, and from
the United States, deposits of current funds in lawful money, national-bank notes,
Federal reserve notes, or checks, and drafts, payable upon presentation, and also, for
collection, maturing notes and bills; or, solely for purposes of exchange or of collection,
may receive from other Federal reserve banks deposits of current funds in lawful
money, national-bank notes, or checks upon other Federal reserve banks, and checks
and drafts, payable upon presentation within its district, and maturing notes and
bills payable within its district; or, solely for the purposes of exchange or of collection,
may receive from any nonmember bank or trust company deposits of current funds in
lawful money, national-bank notes, Federal reserve notes, checks and drafts payable upon
presentation, or maturing notes and bills: Provided, Such nonmember bank or trust company maintains with the Federal reserve bank of its district a balance in an amount to be
determined by the Federal Reserve Board under such rules and regulations as it may
prescribe.'"
SEC. 5. That the fifth paragraph of section thirteen be, and is hereby, further
amended so as to read as follows:
'' Any member bank may accept drafts or bills of exchange drawn upon it having not
more than six months sight to run, exclusive of days of grace, which grow out of transactions involving the importation or exportation of goods; or which grow out of transactions involving the domestic shipment of goods provided shipping documents conveying or securing title are attached at the time of acceptance; or which are secured at
the time of acceptance by a warehouse receipt or other such document conveying or
securing title covering readily marketable staples. No member bank shall accept,
whether in a foreign or domestic transaction, for any one person, company, firm, or
corporation to an amount equal at any time in the aggregate to more than ten per
centum of its paid-up and unimpaired capital stock and surplus, unless the bank is
secured either by attached documents or by some other actual security growing out of
the same transaction as the acceptance; and no bank shall accept such bills to an
amount equal at any time in the aggregate to more than one-half of its paid-up and
unimpaired capital stock and surplus: Provided, however, That the Federal Reserve
Board, under such general regulations as it may prescribe, which shall apply to all banks
alike regardless of the amount of capital stock and surplus, may authorize any member
bank to accept such bills to an amount not exceeding at any time in the aggregate one hundred per centum of its paid-up and unimpaired capital stock and surplus: Provided, however, That the aggregate of acceptances growing out of domestic ransactions shall in no
event exceed fifty per centum of such capital stock and surplus"
SEC. 6. That section sixteen, paragraphs two, three, four, five, six, and seven, be
further amended and reenacted so as to read as follows:
"Any Federal reserve bank may make application to the local Federal reserve
agent for such amount of the Federal reserve notes hereinbefore provided for as it may
require. Such application shall be accompanied with a tender to the local Federal

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

141

reserve agent of collateral in amount equal to the sum of the Federal reserve notes thus
applied for and issued pursuant to such application. The collateral security thus
offered shall be notes, drafts, bills of exchange, or acceptances rediscounted under the
provisions of section thirteen of this Act, or bills of exchange indorsed by a member
bank of any Federal reserve district and purchased under the provisions of section
fourteen of this Act, or bankers7 acceptances purchased under the provisions of said
section fourteen, or gold or gold certificates; but in no event shall such collateral security,
whether gold, gold certificates, or eligible paper, be less than the amount of Federal reserve

notes appliedfor. The Federal reserve agent shall each day notify the Federal Reserve
Board of all issues and withdrawals of Federal reserve notes to and by the Federal
reserve bank to which he is accredited. The said Federal Reserve Board may at any
time call upon a Federal reserve bank for additional security to protect the Federal
reserve notes issued to it.
"Every Federal reserve bank shall maintain reserves in gold or lawful money of
not less than thirty-five per centum against its deposits and reserves in gold of not
less than forty per centum against its Federal reserve notes in actual circulation:
Provided, however, That when the Federal reserve agent holds gold or gold certificates as
collateral for Federal reserve notes issued to the bank such gold or gold certificates shall be
counted as part of the gold reserve which such bank is required to maintain against its
Federal reserve notes in actual circulation and not offset b y gold or lawful money

deposited with the Federal reserve agent. Notes so paid out shall bear upon their
faces a distinctive letter and serial number, which shall be assigned by the Federal
Reserve Board to each Federal reserve bank. Whenever Federal reserve notes
issued through one Federal reserve bank shall be received by another Federal reserve
bank they shall be promptly returned for credit or redemption to the Federal reserve
bank through which they were originally issued or, upon direction of such Federal
reserve bank, they shall be forwarded direct to the Treasurer of the United States to be

retired. No Federal reserve bank shall pay out notes issued through another under
•penalty of a tax of ten per centum upon the face value of notes so paid out. Notes
presented for redemption at the Treasury of the United States shall be paid out of
the redemption fund and returned to the Federal reserve banks through which they
were originally issued, and thereupon such Federal reserve bank shall, upon demand
of the Secretary of the Treasury, reimburse such redemption fund in lawful money
or, if such Federal reserve notes have been redeemed by the Treasurer in gold or gold
certificates, then such funds shall be reimbursed to the extent deemed necessary by
the Secretary of the Treasury in gold or gold certificates, and such Federal reserve
banks shall, so long as any of its Federal reserve notes remain outstanding, maintain
with the Treasurer in gold an amount sufficient in the judgment of the Secretary to
provide for all redemptions to be made by the Treasurer. Federal reserve notes
received by the Treasurer otherwise than for redemption may be exchanged for gold
out of the redemption fund hereinafter provided and returned to the reserve bank
through which they were originally issued, or they may be returned to such bank
for the credit of the United States. Federal reserve notes unfit for circulation shall
be returned by the Federal reserve agents to the Comptroller of the Currency for
cancellation and destruction.
"The Federal Reserve Board shall require each Federal reserve bank to maintain
on deposit in the Treasury of the United States a sum in gold sufficient in the judgment
of the Secretary of the Treasury for the redemption of the Federal reserve notes issued
to such bank, but in no event less than five per centum of the total amount of notes
issued less the amount of gold or gold certificates held by the Federal reserve agent as col-

lateral security; but such deposit of gold shall be counted and included as part of the
forty per centum reserve hereinbefore required. The board shall have the right,
acting through the Federal reserve agent, to grant, in whole or in part, or to reject
entirely the application of any Federal reserve bank for Federal reserve notes; but
extent that such application may be granted the Federal Reserve Board shall,
Digitized to
for the
FRASER

142

ANNUAL REPORT OF THE FEDEBAL RESERVE BOARD.

through its local Federal reserve agent, supply Federal reserve notes to the bank
eo applying, and such bank shall be charged with the amount of ouch notes issued
to it and shall pay such rate of interest on said amount as may be established by the
Federal Reserve Board and the amount of ouch on only that amount of such notes
which equals the total amount of its outstanding Federal reserve notes less the amount of
gold or gold certificates held by the Federal reserve agent as collateral security. Federal
reserve notes ee issued to any such bank shall, upon delivery, together with such
notes of such Federal reserve bank as may be issued under section eighteen of this
Act upon security of United States two per centum Government bonds, become a
first and paramount lien on all the assets of such bank.
•-•'Any Federal reserve bank may at any time rcduee ito liability for outotanding
Federal reserve notco by dcpooiting with the Federal reserve agent ito Federal rcocrvo
notes, gold, geld certificates, or-lawful money of the United Statco, Federal rcoor¥e
notes so dcpooitcd ohall not be rciooucd, except upon compliance with the conditions
•of an original issuer
-'The Federal reserve agent ohalt hold ouch gold, gold certificated or lawful money
available oxeluoivoly-ler exchange for the • outstanding Federal rcocrvo notes when
offered by the rcocrvc bank of which he is a director. Upon the request of the Secretary of the Treasury the Federal Reserve Board shall require the Federal reserve
agent to transmit so much of the paid gold to the Treasurer of the United States so
much of the gold held by him as collateral security for Federal reserve notes as may be
required for the exclusive purpose of the redemption of such »e£ee Federal reserve
notes, but such gold when deposited with the Treasurer shall be counted and considered as
if collateral security on deposit with the Federal reserve agent.
"Any Federal reserve bank may at its discretion withdraw collateral deposited
with the local Federal reserve agent for the protection of its Federal reserve notes
deposited with it issued to it and shall at the same time substitute therefor other like
collateral of equal amount with the approval of the Federal reserve agent under
regulations to be prescribed by the Federal Reserve Board. Any Federal reserve bank
may retire any of its Federal reserve notes by depositing them with the Federal reserve agent
or with the Treasurer of the United States, and such Federal reserve bank shall thereupon be
entitled to receive bach the collateral deposited with the Federal reserve agent for the security
of such notes. Federal reserve banks shall not be required to maintain the reserve or the
redemption fund heretofore provided for against Federal reserve notes which have been
retired; nor shall they be further liable to pay any interest charge which may have been
imposed thereon by the Federal Reserve Board. Federal reserve notes so deposited shall
not be reissued except upon compliance with the conditions of an original issue."
SEC. 7. That section seventeen be, and is hereby, amended so as to read as follows:
" S E C . 17. So much of the provisions of section fifty-one hundred and fifty-nine of
the Revised Statutes of the United States and section four of the Act of June twentieth,
eighteen hundred and seventy-four, and section eight of the Act of July twelfth,
eighteen hundred and eighty-two, and of any other provisions of existing statutes as
require that before any national banking associations shall be authorized to commence
banking business it shall transfer and deliver to the Treasurer of the United States a
stated amount of United States registered bonds, and so much of those provisions or of
any other provisions of existing statutes as require any national banking associations now
or hereafter organized to maintain a minimum deposit of such bonds with the Treasurer
is hereby repealed."
SEC. 8. That paragraph live of section eighteen be, and is hereby, amended so as to
read as follows:
"Upon the deposit with the Treasurer of the United States of bonds so purchased, or
any bonds with the circulating privilege acquired under section four of this Act, or
any three per centum one-year gold notes issued in accordance with the provisions of this
section, any Federal reserve bank making such deposit in the manner provided by
Digitized forexisting
FRASERlaw for the deposit by national banks of bonds bearing the circulating privilege,

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

143

ehall be entitled to receive from the Comptroller of the Currency circulating notes
in blank, registered and countersigned as provided by law, equal in amount to the
par value of the notes or bonds so deposited. Such circulating notes shall be obligations of the Federal reserve bank procuring the same, and shall be in form prescribed
by the Secretary of the Treasury, and to the same tenor and effect as national bank
notes now provided by law. They shall be issued and redeemed under the same
terms and conditions as national bank notes, except that they shall not be limited to
the amount of the capital stock of the Federal reserve bank issuing them. Circulating
notes of Federal reserve banks secured by three per centum one-year gold notes shall be
subject to the same tax imposed by law on circulating notes which are secured by three per
centum bonds of the United States."
SEC. 9. That section nineteen be further amended and reenacted so as to read as
follows:
"SEC. 19. Demand deposits within the meaning of this Act shall comprise all
deposits payable within thirty days, and time deposits shall comprise all deposits
payable after thirty days, a»4 all savings accounts and certificates of deposit which are
subject to not less than thirty days' notice before payment, and all postal savings deposits.
—When thc-Sccrotary-oi-feho Trcaoury shall have officially announced,in-such-manner
OB he may elect, the ootabliohmcnt of a Federal rcocrvc bank in any district, every
eubocribing member Every bank, banking association, or trust company which is or
which becomes a member of any Federal reserve bank shall establish and maintain reserve
balances with its Federal reserve bank ^ese^-^ee as follows:
"(a) If a bank not in a reserve or central reserve city, as now or hereafter defined,
it shall hold and maintain with the Federal reserve bank of its district an actual net
balancereservesequal to not less thanfcwetsFeseven per centum of the aggregate amount
of its demand deposits and fr¥e three per centum of its time deposits- as follows:,
—fat-its vaults for-a-ffefied of thirty oix months aftcr-eaid date five twelfths thereof
and permanently thereafter fouf-kwel&ksT
—In the Federal rcocrvc bank of its district, for a period of twelve months after oaid
date, two twelfths, and for each succeeding six months an additional one twelfth, until
five twelfths have been GO deposited, which shall be the amount permanently required-.
" For a period of thirty six months after said date tho balance of the reserve may be
feei4-in its own vaults or in-thc Federal reserve bank, or in national banks in reserve
or central reserve cities as now defined by lawr
"After said thirty six montho' period, said reserves other than those hereinbefore required to be held in the vaults of the member ba&k and in the Federal reserve bank,
shall be held in the vaults of tho member bank or in the Federal rccsrvc bank or-in
both, at the option of the member banfe" (b) 2/a-%aftfe in a reserve city, as now or hereafter defined, it shall hold and maintain with the Federal reserve bank of its district an actual net balance reserves equal to
not less thanfi£fcee«ten per centum of the aggregate amount of its demand deposits
and &¥e three per centum of its time deposits, ao follower.
^-In its vaults for a period of thirty oix months after oaid date six fifteenths thereof,
and pcrmancntly-thcrcoftcr five fifteenths.
—In the Federal reserve bank of its district for-a period of twelve months after tho
4ate-aforoaaid at least three fifteenths, and for each succeeding six months an addi •
tional one fifteenth, until oix fifteenths have been so deposited, which shall be the
amount pcrmancHtly-rcquircd.
" For a period of thirty oix montho after oaid date the balance of the reserves may be
held in its own vaults, or in the Fc4e?al reserve bank, or in national banks in rcocrvc
or central rcocrvc cities ao now dcfoicd by law-."After said thirty six months'-period all of-said reserves except those hereinbefore
required to be hcld-pcrmancntly-m the vaults-ei the member bank and in-thc Federalreserve bank, shall be held in the vaults of thc-Fcdcral reserve bank, or
option of the member-bank.-

144

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

"(c) If a bank in a central reserve city, as now or hereafter denned it shall hold
and maintain with the Federal reserve bank of its district an actual net balance fcacrvo
equal to not less than eighteen thirteen per centum of the aggregate amount of its
demand deposits and fi^ three per centum of its time deposits, a3 follows:.
—In its-vaults six eighteenths thereof.
" In the Federal reserve bank seven eighteenths.
^ The balance of said reserves-shall be held- in ito own vaults or in the Federal rcscrvo
bank at ito
"Every member bank shall maintain in its own vaults an amount of specie or currency
equal to at least five per centum of its demand deposits less the amount of those balances
with the Federal reserve bank ivhich are in excess of the minimum balances required by
this section.
—Any Federal reserve bank may receive from the membcr-banko ao rcocrvco, not ex
eeoding one half of each installment, eligible paper as described in section fourteen,properly indorsed and acceptable to the oaid reserve bank.
-'If a State-bank or trust company is required by-the4aw of its State-to keep ito
reserves cither ie its own vaults or with another State bank or trust company, such
rcacrvc-dcpooifes so kept in such State bank or-teaefr company shaft be construed within
the meaning of this section, ao if they were reserve deposits in a national bank in a
reserve or central reserve city for a period of three years after the Secretary of tho
Treasury shall have officialfo-aagte^fteed^fee^eteMishmont of a Federal reserve bank
in the district in which auch State-bank or trust company is situate-except aa thus provided, no No member bank shall keep on deposit with any nonmember bank a sum in
excess of ten per centum of its own paid-up capital and surplus. No member bank
shall act as the medium or agent of a nonmember bank in applying for or receiving
discounts from a Federal reserve bank under the provisions of this Act, except by
permission of the Federal Reserve Board..
''The resef^e required balance carried by a member bank with a Federal reserve
bank may, under the regulations and subject to such penalties as may be prescribed
by the Federal Reserve Board, be checked against and withdrawn by such member
bank for the purpose of meeting existing liabilities: Provided, however, That no
bank shall at any time make new loans or shall pay any dividends unless and until
the total reserve balance required by law is fully restored.
*' In estimating the Feee^^s balances and the cash in vault required by this Act, the
net balance difference of amounts due to and from other banks shall be taken as the
basis for ascertaining the deposits against which reserves required balances with Federal
reserve banks and cash in vault shall be determined. Balances in reserve banks duo
to member banks shall to the extent herein provided be counted as reserves?
'•National banks, or banks organized under local laivs, located in Alaska or in a dependency or insular possession or any part of the United States outside'the continental United
States may remain nonmember banks, and shall in that event maintain reserves and
comply with all the conditions now provided by law regulating them; or said banks
i3 may, with the consent of the Reserve Board, become
member banks of any one of the reserve districts, and shall in that event take stock,
maintain reserves, and be subject to all the other provisions of this Act."
SEC. 10. That that part of section twenty-two which reads as follows: " Other than
the usual salary or director's fee paid to any officer, director, or employee of a member
bank and other than a reasonable fee paid by said bank to such officer, director, or
employee for services rendered such bank, no officer, director, employee, or attorney
of a member bank shall be a beneficiary of or receive, directly or indirectly, any fee,
commission, gift, or other consideration for or in connection with any transaction or
business of the bank," be. and hereby is, amended and reenacted so as to read as
follows:
'-Other than the usual salary or director's fee paid to any officer, director, e* employee, or attorney of a member bank, and other than a reasonable fee paid by said

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

145

bank to such officer, director, e? employee, or attorney for services rendered to such
bank, no officer, director, employee, or attorney of a member bank shall be a beneficiary of or receive, directly or indirectly, any fee, commission, gift, or other consideration for or in connection with any transaction or business of the bank: Provided,
however, That nothing in this Act contained shall be construed to prohibit a director, officer,
employee or attorney from receiving the same rate of interest paid to other depositors for
similar deposits made with such bank, or to prohibit an attorney or director who is not an
officer or employee from receiving, directly or indirectly, the usual and customary commissions or fees for services rendered in buying and selling securities or other investments for or
on account of such bank; but in this latter case the action of the board of directors in directing each purchase or sale of such securities or other investments must be by an affirmative
vote or written assent of at least three-fourths of the members of the board exclusive of the
director interested and must be recorded in the minutes of the meeting of said board, such
minutes to specify the name of the director and the firm or corporation with which he is connected, if any, through which such order is to be executed, together with the amount of the
fee or commission to be paid on each transaction: And provided further, That notes, drafts,
bills of exchange, or other evidences of debt executed or indorsed by directors or attorneys of
a member bank may be discounted with such member bank on the same terms and conditions as other notes, drafts, bills of exchange, or evidences of debt upon the affirmative vote
or written assent of at least three-fourths of the members of the board of directors of such
member bank.

SEC. 11. That section twenty-five be amended by adding a subsection (a) to read
as follows:
"SEC. 25a. That any member bank located in a city or incorporated town of more
than one hundred thousand inhabitants and possessing a capital and surplus of
$1,000,000 or more may, under such rules and regulations as the Federal Reserve
Board may prescribe, establish branches, not to exceed ten in number, within the
corporate limits of the city or town in which it is located: Provided, That no such
branch shall be established in any State in which neither State banks nor trust companies mf y lawfully establish branches."
KERN AMENDMENT TO CLAYTON ACT.

AN ACT To amend section eight of an Act entitled "An Act to supplement existing laws against unlawful
restraints and monopolies, and for other purposes," approved October fifteenth, nineteen hundred and
fourteen.
Be it enacted by the Senate and House of Representatives of the United States of America

in Congress assembled, That section eight of an Act entitled "An Act to supplement
existing laws against unlawful restraints and monopolies, and for other purposes,"
approved October fifteenth, nineteen hundred and fourteen, be, and the same ia
hereby, amended by striking out the period at the end of the second clause of said
section, inserting in lieu thereof a colon, and adding to said clause the following:
"And provided further, That nothing in this Act shall prohibit any officer, director,
or employee of any member bank or class A director of a Federal reserve bank, who
shall first procure the consent of the Federal Reserve Board, which board is hereby
authorized, at its discretion, to grant, withhold, or revoke such consent, from being
an officer, director, or employee of not more than two other banks, banking associations, or trust companies, whether organised under the laws of the United States or
any State, if such other bank, banking association, or trust company is not in substantial competition with such member bank.
"The consent of the Federal Reserve Board may be procured before the person
applying therefor has been elected as a class A director of a Federal reserve bank or
as a director of any member bank."
Approved, May 15, 1916.

Exhibit J.—MEMBERS OF FEDERAL RESERVE SYSTEM.

, All national banks in the continental United States are, under the
Federal Reserve Act, members of the Federal Reserve System.
There were, on December 31, 1916, 7,590 national banks, members
of the system, and 37 State banks.
The list of State banks is as follows:
Bank.
Continental Trust Co
The Savings Bank of Richmond
Bank of Woodruff
Sullivan Bank & Trust Co
Central Trust Co. of Illinois
Bank of Wisconsin
Mercantile Trust Co
First State Bank
Do..
The Citizens State Bank
Farmers & Merchants State Bank...
Bank of Eufaula
First State Bank
Do
Do
Do
Broadway Trust Co
Fidelity Trust Co
Old Colony Trust Co
Badger State Bank
Fort Scott State Bank
German-American Bank
Elmhurst State Bank:
Fruit Growers State Bank
Bank of Lewellen
Central State Bank
Bank of Hartsville
Commercial Trust & Savings Bank.
Commercial & Savings Bank
Guardian Trust & Savings Bank
Merchants & Farmers Bank
Peoples Bank
First State Bank
Corn Exchange Bank
American Trust & Savings Bank
Bankers Loan & Trust Co
Bank of Iota
146

Location.
Washington, D. C .
Richmond, Va
Woodruff, S. C
Montgomery, Ala..
Chicago, 111
Madison, Wis
St. Louis, Mo
Dallas, Tex
Bonham, Tex
Memphis, Tex
Edgewood, Tex
Eufaula, Ala
Savoy, Tex
Hamlin, Tex
Wolfe City, T e x . . . .
Bremond, Tex
New York, N. Y . . .
Kansas City, M o . . .
Boston, Mass
Milwaukee, Wis
Fort Scott, Kans...
Minneapolis, Minn.
Elmhurst, 111
Saugatuck, Mich...
Lewellen, Nebr
Dallas, Tex
Hartsville, S. C
Joliet.'IU.
Albion, Mich
Toledo, Ohio
Cheraw, S. C
Sumter, S. C
DeKalb, Tex
New York, N. Y . . .
Birmingham, Ala..
Sioux City, Iowa...
Iota, La./

Federal Reserve Bank.
Richmond
do
do
Atlanta
Chicago
do
St. Louis
Dallas
do
do
do
Atlanta
Dallas
.....do
do
do
New Y o r k . . .
Kansas City..
Boston
Chicago
Kansas City..
Minneapolis..
Chicago
do
Kansas City..
Dallas
Richmond...
Chicago
do
Cleveland
Richmond.
....do
Dallas
New Y o r k . . .
Atlanta
Chicago
Atlanta

Capital.

Surplus.

$1,000,000 $100,000
200,000
200,000
40,700
10,500
250,000
25,750
4,500,000 1,000,000
300,000
60,000
3,000,000 6,500,000
250,000
21,500
100,000
14,000
75,000
26,400
35,000
7,000
100,000
14,000
25,000
3,500
25,000
1,750
100,000
21,000
50,000
25,000
1,500,000
750,000
1,000,000 1,000,000
6,000,000 6,000,000
200,000
2,000
100,000
25,000
200,000
200,000
60,000
25,000
50,000
10,000
25,000
10,000
200,000
50,000
"5*6,'666
100,000
5,000
50,000
25,000
200,000
200,000
100,000
1,250
100,000
17,400
25,000
25,000
3,500,000 6,991,165
250,000
500,000
100,000
5,000
25,000

Exhibit K.—FOREIGN BRANCHES AUTHORIZED.

The Board has authorized the establishment of foreign branches
and subbranches of national banks as follows:
National City Bank, New York City:
Date authorized.
Branch, at Buenos Aires, Argentina
Sept. 2,1914
Subbranch at Montevideo, Uruguay
Apr. 16,1915
Branch at Rio de Janeiro, Brazil
Sept. 2,1914
Subbranches at Santos, Sao Paulo, Pernambuco, Para, and
Bahia, Brazil
.Dec. 23,1914
Branch at Habana, Cuba
Mar. 17,1915
Subbranches at Santiago, Matanzas, Cienfuegos. Guantanamo,
Camaguey, Cardenas, Manzanillo, Cuba;~Kingston? Jamaica;
and Santo Domingo, Santo Domingo
Mar. 17,1915
Branch at Valparaiso, Chile
Oct. 18,1915
Subbranches at Antofagasta and Santiago, Chile
Oct. 18,1915
Branch at Genoa, Italy
May 25,1916
Subbranches at Turin, Milan, Venice, Florence, Rome, Naples,
and Palermo, Italy
May 25,1916
Branch at Petrograd, Russia
July 5,1916
Subbranches at Moscow, Odessa, Warsaw, Riga, Baku, Astrakhan, Vladivostok, Sebastopol, Helsingfors, and Vilna,
Russia
July 5,1916
Commercial National Bank, Washington, D. C :
Branch at Panama City, Panama
,. Jan. 12,1915
Branch at Cristobal, Canal Zone.
Nov. 30,1914
147

Exhibit L,—CIRCULARS AND REGULATIONS OF THE FEDERAL
RESERVE BOARD,
SPECIAL INSTRUCTIONS NO. 1 OF 1916.
WASHINGTON, July 6, 1916.
To ALL FEDERAL RESERVE AGENTS:

The prohibitions of section 8 of the Clayton Act which relate to interlocking bank
directorates go into effect on October 15, 1916. These prohibitions relate to banks
organized or operating under the laws of the United States, and therefore apply to State
banks or trust companies which are members of the Federal Reserve System as well
as to national banks. For convenience, therefore, banks "organized or operating
under the laws of the United States" will be referred to as "member banks."
ANALYSIS OF SECTION 8 OF THE ACT.

As originally enacted, section 8 of the Clayton Act provides, in substance—
(a) That no person shall be a director, officer, or employee of a member bank having
resources aggregating more than $5,000,000 and at the same time a director, officer, or
employee of any other member bank;
(6) That no private banker or person who is a director of a nonmember bank having
resources aggregating more than $5,000,000 shall be eligible to serve at the same time
as a director in any member bank;
(c) That no member bank in a city of more than 200,000 inhabitants shall have as a
director or other officer or employee any private banker or any director or other officer
or employee of any other bank or trust company located in the same place.
EXCEPTIONS.

The provisions of section 8—
(1) Do not apply to mutual savings banks not having a capital stock represented
by shares.
(2) Do not prohibit a person from being at the same time (a) a class A director of a
Federal Reserve Bank and also an officer or director, or both an officer and a director,
in one member bank; (b) an officer, director, or employee of one member bank and
one other bank or trust company, whether a member bank or nonmember bank, where
the entire capital stock of one is owned by the stockholders of the other.
THE KERN AMENDMENT.

By an Act of Congress, approved May 15, 1916, section 8 was amended by the
addition of a further proviso reading as follows:
" Nothing in this Act shall prohibit any officer, director, or employee of any member
bank, or class A director of a Federal Reserve Bank, who shall first procure the consent
of the Federal Reserve Board * * * from being an officer, director, or employee
of not more than two other banks * * * if such other bank * * * is not in
substantial competition with such member bank."
The duty imposed upon the Federal Reserve Board in passing upon any application
made under authority of this amendment is to determine whether or not the two banks
in question (or either of them) are in substantial competition with the member bank.
If both are nonmember banks the Act does not require that they shall not be in
substantial competition with each other.
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ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

149

In reaching a conclusion on this point, it will be necessary for the Board to call upon
the Federal Eeserve Agent, as its local representative, to make investigation of the
facts in each case, to report the same to the Board and to give the Board the benefit
of his recommendation whether the consent applied for shall be granted or refused.
It is, therefore, necessary to call to the attention of the Federal Reserve Agents some
of the factors which must be considered in determining the question of whether or not
the banks involved are in substantial competition.
PURPOSES OF THE ACT AND THE AMENDMENT.

The significance of the language "substantial competition" can not be fully understood without considering the purpose of the original act as well as that of the amendment.
As outlined by the Judiciary Committee, in reporting the original bill to the House,
the purpose of section 8 of the original Clayton Act was "to prevent as far as possible
control of great aggregations of money and capital through the medium of common
directors between banks and banking associations, the object being to prevent the concentration of money or its distribution through a system of interlocking directorates."
It will be observed that the Act does not undertake to prevent interlocking directorates of banks located in small cities and having small aggregate resources. It applies
in terms to the qualification of directors, officers, and employees of banks (a) in cities
of more than 200,000 inhabitants or (b) having resources aggregating more than
$5,000,000.
While the general purpose of the Act, as indicated by its title, was "to supplement
existing laws against unlawful restraints and monopolies,'' and while monopolies are
created by a restraint of legitimate competition a literal interpretation of section 8 as
originally enacted would prohibit a person from serving at the same time as a director,
officer, or employee of two or more banks, under certain circumstances, whether or
not such banks were competitors. The Kern amendment, however, authorizes the
Board to permit a director, officer, or employee of a member bank, who otherwise
would be ineligible, to serve as a director, officer, or employee of not more than two
other banks or trust companies, whether State or National, provided such other banks
or trust companies are not in substantial competition with such member bank.
It should be borne in mind that the Act does not vest an arbitrary discretion in the
Board to permit the same person to serve on the board of directors of any two or more
banks, when such banks come within the restrictive language of the Act as originally
passed; but it merely confers authority upon the Board to permit interlocking directorates when such banks are not in substantial competition, within the meaning of
the Act.
SUBSTANTIAL COMPETITION.

It is manifest that no fixed rule can be prescribed by which this question can be
automatically determined. The facts in each case must be carefully considered and
it is the duty of the Board to withhold its consent in any case in which it would defeat
the purposes of the Act to permit the same person to serve as an officer, director, or
employee of more than one bank.
If the two banks in question are not competitors in any respect, no question arises.
If they do compete, the very difficult question arises whether or not the competition
is "substantial."
It is necessary to keep in mind that the main purpose of the Act was to prevent the
monopolization and centralization of cerdit through interlocking directorates of
banking institutions. One of the injurious results of such conditions is that the
public is deprived of the benefit of legitimate competition.
In general, therefore, two banks coining within the prohibition of the original Act
would be deemed to be in substantial competition within the meaning of the language

150

AXXUAL EEPOET OF THE FEDERAL RESERVE BOARD.

used in the amendment if the business engaged in by such banks under natural and
normal conditions conflicts or interferes, or if the cessation of competition between
the two would be injurious to customers, or would-be customers, or would probably
result in appreciably lessening the volume of business or kinds of business of either
institution.
It is realized that some difficulty will be experienced in the application of this test.
Two banks engaged in the same character of business (for example, where both
receive commercial deposits and make commercial loans) would be regarded as in
substantial competition if their fields of activity extended over the same geographical
territory. If their operations were not carried on in the same geographical territory,
then, although they, engaged in the same class of business, they would not necessarily
be regarded as substantial competitors.
Again, if they conducted their operations in the same place, but, because of their
comparatively small size in relation to the total banking opportunities of the locality,
and because of the fact that they did not deal with the same class of customers, the
cessation of competition between them might, from the public point of view, be
unimportant; they would not necessarily be deemed to be in substantial competition.
Or if their operations were conducted in the same locality, but the character of business
engaged in differs fundamentally (for example, where one does only an essentially
commercial banking business, while the other does only an essentially trust company
or fiduciary business), such banks need not be regarded as in substantial competition.
It is, therefore, necessary to consider the scope or extent of territory that a bank's
operations cover and the character and kinds of business it engages in. Size, measured
by aggregate resources, will constitute one of the factors to be considered, since to
increase the volume of loanable funds usually increases the radius of a bank's operations. A bank with $100,000,000 resources would seek investments in a larger area
and of a more diverse character than a bank with $5,000,000, and so might come into
competition with banks located some distance away, while the bank with $5,000,000
resources might not extend its activities to any real extent beyond the borders of the
city in which it is located. For example, a bank in New York might come into
substantial competition with a bank in Chicago if both were engaged in the same
class of business and if both had become so large as to be more than local institutions.
Where the operations of the two banks cover a common territory from a geographical
standpoint, it is necessary to consider carefully the character of business engaged in.
As a very large proportion of the member banks do a commercial banking business,
the volume of this business within the territory covered by the operations of the banks
in question becomes an important factor. In a city of 250,000 inhabitants any two
banks which engaged in a commercial banking business to any great extent would
presumably come into substantial competition, whereas in a city of 2,000,000 inhabitants the operations of one bank might be substantially confined to the wholesale
district only, while those of another might be substantially confined to the retail
district only, and so might be noncompetitive in the sense that an increase or decrease
in the business of one would not affect the business of the other.
RESUME.

It is therefore necessary that consideration should be given—
(1) To the size in aggregate resources of banks involved.
(2) To the character of business engaged in, i. e., the extent of commercial business
and extent of purely investment or trust company business of the two institutions.
(3) Whether the operations of the two banks cover the same geographical territory.
(4) Whether the two banks actually compete to any appreciable extent in any
important activity, for example, (a) in soliciting deposits on demand or on time from
other banks or individuals, (6) in the purchase or sale of commercial paper or other
securities, (c) in the purchase or sale of foreign exchange, (d) in soliciting trusteeships, etc.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

151

The form of application approved by the Board is intended to furnish an analysis
of the character of business of the banks involved as far as it is possible to determine
this from the books of the bank. The Federal Reserve Agent should supplement
this, however, with any information he may be able to obtain and should base his
recommendation upon the facts in each case. If he concludes that there is substantial
competition between the banks or that interlocking directorates or common officers
or employees of the two banks might result in any injury to the public, or in any
substantial restraint of or detriment to the business of either bank, he should recommend that the application be refused. The Board, in reaching a decision, will carefully consider the recommendation of the Federal Reserve Agent and will base its
conclusion upon the report and recommendation of the agent together with other
information which its own investigation may disclose.
The Kern amendment authorizes the Federal Reserve Board at its discretion
a* •* * ^0 revoke such consent." In order that the Federal Reserve Board
may revoke its consent at any time it becomes necessary, Federal Reserve Agents
should keep it advised of any change either in local business conditions or in the
resources or character of business conducted by the banks which may tend to make
them substantial competitors.
In view of the great amount of time necessary to an adequate consideration of each
case, it is desirable that directors, officers, and employees file their applications as
soon as possible. The Board will endeavor to act upon all applications received before
August 15, 1916, on or before September 15, 1916.

SPECIAL INSTRUCTIONS NO. 2 OF 1916.
WASHINGTON, September 15, 1916.
SPECIAL INSTRUCTIONS TO FEDERAL RESERVE BANKS AND TO FEDERAL RESERVE AGENTS.

For the convenience of the Federal Reserve Banks and member banks, all regulations issued for the guidance of member banks have been consolidated and issued by
the Board with Circular No. 2, series of 1916. While this circular and the regulations
which accompany it will govern the operations of Federal Reserve Banks with their
members, they contain only such regulations as are of interest to member banks or
to the general public and carry none of the special instructions intended solely for
the guidance of Federal Reserve Banks. They are, therefore, supplemented by the
special instructions and regulations herein contained.
A. Discount and purchase of bankers'1 acceptances.

(a) Bankers' acceptances, other than those of a member bank, whether foreign or
domestic, shall be eligible for discount or purchase, under sections 13 or 14, respectively, only after the acceptors shall have agreed in writing to furnish the Federal
Reserve Bank of their respective districts, upon request, information concerning the
nature of the transactions against which acceptances have been made.
(6) The aggregate of bills, domestic and foreign, of any one drawer, drawn on and
accepted by any bank or trust company and purchased or discounted by a Federal
Reserve Bank, shall at no time exceed 10 per cent of the unimpaired capital and
surplus of such bank or trust company, but this restriction shall not apply to the
purchase or discount of bills drawn in good faith against actually existing values;
that is, bills the acceptor of which is secured by a lien on or by a transfer of title to
the goods to be transported, or by other adequate security, such as a warehouse
receipt, or the pledge of goods actually sold.
(c) The aggregate of bills, domestic and foreign, of any one drawer, drawn on and
accepted by any firm, person, company, or corporation (other than a bank or trust

152

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

company) engaged in the business of discounting or accepting, and purchased or
discounted by a Federal Reserve Bank, shall at no time exceed a sum equal to a
definite percentage of the paid-in capital of such Federal Reserve Bank, such percentage to be fixed from time to time by the Federal Reserve Board; but this restriction shall not apply to the purchase or discount of bills drawn in good faith against
actually existing values; that is, bills the acceptor of which is secured by a lien on
or by a transfer of title to the goods to be transported or by other adequate security,
such as a warehouse receipt, or the pledge of goods actually sold.
(d) The aggregate of bankers' acceptances, domestic and foreign, made by any one
firm, person, company, or corporation (other than a bank or trust company) engaged
in the business of discounting or accepting, discounted or purchased by a Federal
Reserve Bank without the indorsement of a member bank, shall at no time exceed
a sum equal to a definite percentage of the paid-in capital of such Federal Reserve
Bank; such percentage to be fixed from time to time by the Federal Reserve Board.
(e) No Federal Reserve Bank shall purchase a domestic or foreign acceptance of a
"banker " other than a member bank which does not bear the indorsement of a member
bank, unless there is furnished a satisfactory statement of the financial condition of
the acceptor in form to be approved by the Federal Reserve Board.
(/) In purchasing or discounting bankers' acceptances or other bills which are
secured by warehouse receipts, etc., the Federal Reserve Bank should make sure
that the receipt is issued by a warehouse which is independent of the borrower.
(g) Federal Reserve Banks should bear in mind that preference should be given
wherever possible to acceptances indorsed by a member bank discounted under section
13, because of the additional protection that such indorsement affords.
B. Purchase of cable transfers and foreign bills of exchange.

In order to carry on open-market transactions in cable transfers and foreign bills of
exchange (including foreign bankers' acceptances)—that is, payments to be made in,
or bills payable in, foreign countries—it will be necessary for Federal Reserve Banks
to open accounts with correspondents or establish agencies in foreign countries. Such
bills of exchange and foreign acceptances must comply with the applicable requirements of sections 13 and 14. Inasmuch as the law prescribes that these foreign accounts
and accounts opened by Federal Reserve Banks for such foreign correspondents or
agents are to be established only with the consent of the Federal Reserve Board,
Federal Reserve Banks will be required to communicate with the Federal Reserve
Board whenever they are ready to enter these foreign fields.
The Federal Reserve Board realizes that in dealing in foreign exchange the Federal
Reserve Banks must necessarily have wide discretion in determining the rates at
which they will buy or sell. It is not necessary that foreign bills shall have been
actually accepted at the time of purchase. The Federal Reserve Board, however,
will require that unaccepted '•long bills," payable in foreign countries, when purchased, unless secured by documents, shall bear one satisfactory indorsement other
than those of the drawer or acceptor, preferably that of a banker. Federal Reserve
Banks should exercise due caution in dealing in foreign bills, and boards of directors
should fix a limit within which the acceptances or bills of a single firm may be taken.
C. Purchase of domestic bills of exchange.

(a) Before purchasing domestic bills of exchange under the provisions of section
14, the Federal Reserve Bank must secure statements concerning the condition and
standing of the drawer of the paper, and, if possible, also of the acceptor of the bill,
sufficient to satisfy the bank as to the nature and quality of the paper to be purchased.
(6) No Federal Reserve Bank will be permitted to purchase bills of any one drawer,
or issued upon any one maker to an amount to exceed in the aggregate a percentage

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

153

of its capital, to be fixed from time to time by the Federal Reserve Board, except
wlien secured by approved warehouse receipts, bills of lading, or other such documents covering readily marketable goods. The aggregate amount drawn on any one
acceptor, purchased by Federal Reserve Banks, shall not exceed a reasonable percentage of the stated net worth of the parties whose names appear upon the paper.
D. Rediscounts of agricultural paper.
Any Federal Reserve Bank may discount notes, drafts, and bills drawn or issued
for agricultural purposes or based on live stock and having a maturity not exceeding
six months, exclusive of days of grace, up to an amount not exceeding 5 per cent
of its assets. Should any such bank desire to discount such paper in excess of that
amount it should file with the Federal Reserve Board an application stating the
limit desired and the necessity for an increase in the percentage fixed above.
Regulation L, series of 1915, governing clearings between Federal Reserve Banks
(i. e., gold-settlement fund), remains in force as previously issued.
Regulation O, series of 1915, containing instructions to Federal Reserve Agents
in the matter of issuance and redemption of Federal Reserve notes, will be reissued
in a somewhat modified form.
CIRCULAR NO. 2,1 SERIES OF 1916.
WASHINGTON, September 15, 1916.

The accompanying revision of the Federal Reserve Board's regulations, which has
been delayed by the desire to incorporate all changes occasioned by amendment
of the Federal Reserve Act, is, for the greater convenience of member banks, now
issued in pamphlet form, and is a compendium of all regulations applicable to the
transactions of member banks. All previous issues of regulations are superseded by
the present issue, to which alone reference will hereafter be made.
Instructions which concern only Federal Reserve Agents or Federal Reserve
Banks will be covered in separate letters or regulations.
REGULATION A, SERIES OF 1916.
(Superseding Regulations B, C, P, Q, and R of 1915.)
REDISCOUNTS U N D E R SECTION 13.
A. NOTES, DRAFTS, AND BILLS OF EXCHANGE.

I. General statutory provisions.
Any Federal Reserve Bank may discount for any of its member banks any note,
draft, or bill of exchange provided—
(a) It has a maturity at the time of discount of not more than 90 days, exclusive
of days of grace; but if drawn or issued for agricultural purposes or based on live
stock, it may have a maturity at the time of discount of not more than six months,
exclusive of days of grace,
(b) It arose out of actual commercial transactions; that is, it must be a note, draft,
or bill of exchange which has been issued or drawn for agricultural, industrial, or
commercial purposes, or the proceeds of which have been used or are to be used
for such purposes.
(c) It was not issued for carrying or trading in stocks, bonds, or other investment
securities, except bonds and notes of the Government oi the United States.
i Circular No. 1 of May 1, 1916, Check Clearing and Collection, in slightly modified form, is reissued
herein as Regulation J.

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ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

(d) The aggregate of notes, drafts, and bills bearing the signature or indorsement
of any one borrower, whether a person, company, firm, or corporation, rediscounted
for any one member bank shall at nq, time exceed 10 per cent of the unimpaired
capital and surplus of such bank; but this restriction shall not apply to the discount
of bills of exchange drawn in good faith against actually existing values.
(e) It is indorsed by a member bank.
(/) It conforms to all applicable provisions of this regulation.
II. General character of notes, drafts, and bills of exchange eligible.
The Federal Reserve Board, exercising its statutory right to define the character
of a note, draft, or bill of exchange eligible for rediscount at a Federal Reserve Bank,
has determined that—
(a) It must be a note, draft, or bill of exchange the proceeds of which have been
used or are to be used in producing, purchasing, carrying, or marketing goods 1 in
one or more of the steps of the process of production, manufacture, or distribution.
(b) It must not be a note, draft, or bill of exchange the proceeds of which have been
used or are to be used for permanent or fixed investments of any kind, such as land,
buildings, or machinery.
(c) It must not be a note, draft, or bill of exchange the proceeds of which have been
used or are to be used for investments of a purely speculative character.
(d) It may be secured by the pledge of goods or collateral, provided it is otherwise
eligible.
III. Applications for rediscount.
All applications for the rediscount of notes, drafts, or bills of exchange must contain
a certificate of the member bank, in form to be prescribed by the Federal Reserve
Bank, that, to the best of its knowledge and belief, such notes, drafts, or bills of
exchange have been issued for one or more of the purposes mentioned in II (a).
IV. Promissory notes.
(a) Definition.—A promissory note, within the meaning of this regulation, is defined '
as an unconditional promise, in writing, signed by the maker, to pay, in the United
States, at a fixed or determinable future time, a sum certain in dollars to order or to
bearer.
(6) Evidence of eligibility and requirement of statements.—A Federal Reserve Bank
must be satisfied by reference to the note or otherwise that it is eligible for rediscount. Compliance of a note with II (6) may be evidenced by a statement of the
borrower showing a reasonable excess of quick assets over current liabilities. The
member bank shall certify in its application whether the note offered for rediscount
has been discounted for a depositor or another member bank or whether it has been
purchased from a nondepositor. It must also certify whether a financial statement
of the borrower is on file.
Such financial statements must be on file with respect to all notes offered for rediscount which have been purchased from sources other than a depositor or a member
bank. With respect to any other note offered for rediscount, if no statement is on
file, a Federal Reserve Bank shall use its discretion in taking the steps necessary to
satisfy itself as to eligibility. It is authorized to waive the requirement of a statement with respect to any note discounted by a member bank for a depositor or another
member bank—
(1) If it is secured by a warehouse, terminal, or other similar receipt covering
goods in storage.
(2) If the aggregate of obligations of the borrower rediscounted and offered for
rediscount at the Federal Reserve Bank is less than a sum equal to 10 per cent of the
paid-in capital of the member bank and does not exceed $5,000.
i When used in this regulation the word "goods" shall be construed to include goods, wares, merchandise, or agricultural products, including live stock.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

155

V. Drafts, bills of exchange, and trade acceptances.

(a) Definition.—A draft or bill of exchange, within the meaning of this regulation,
is defined as an unconditional order in writing, addressed by one person to another
other than a banker as defined under B (6), signed by the person giving it, requiring
the person to whom it is addressed, to pay, in the United States, at a fixed or determinable future time, a sum certain in dollars to the order of a specified person; and a
trade acceptance is defined as a draft or bill of exchange drawn by the seller on the
purchaser of goods sold and accepted by such purchaser.
(6) Evidence of eligibility.—A Federal Reserve Bank shall take such steps as it deems
necessary to satisfy itself as to the eligibility of the draft or bill offered for rediscount,
unless it presents prima facie evidence thereof or bears a stamp or certificate affixed
by the acceptor or drawer showing that it is a trade acceptance.
VI. Six months' agricultural paper.
(a) Definition.—Six months' agricultural paper, within the meaning of this regulation, is defined as a note, draft, bill of exchange, or trade acceptance drawn or issued
for agricultural purposes, or based on live stock; that is, a note, draft, bill of exchange,
or trade acceptance the proceeds of which have been used, or are to be used, for
agricultural purposes, including the breeding, raising, fattening, or marketing of
live stock, and which has a maturity at the time of discount of not more than six
months, exclusive of days of grace.
(6) Eligibility.—To be eligible for rediscount six months' agricultural paper, whether
a note, draft, bill of exchange, or trade acceptance, must comply with the respective
ections of this regulation which would apply to it if its maturity were 90 days or less.
VII. Commodity paper.
(a) Definition.—Commodity paper within the meaning of this regulation is defined
as a note, draft, bill of exchange, or trade acceptance accompanied and secured by
shipping documents or by a warehouse, terminal, or other similar receipt covering
approved and readily marketable, nonperishable staples properly insured.
(6) Eligibility.—To be eligible for rediscount at the special rates authorized to be
established for commodity paper, such a note, draft, bill of exchange, or trade acceptance must also comply with the respective sections of this regulation applicable to it,
must conform to the requirements of the Federal Reserve Bank relating to shipping
documents, receipts, insurance, etc., and must be a note, draft, bill of exchange, or
trade acceptance on which the rate of interest or discount—including commission—
charged the maker, does not exceed 6 per cent per annum.
B. BANKERS' ACCEPTANCES.

(a) General statutory provisions.—Any Federal Reserve Bank may discount for any
of its member banks bankers' acceptances which have a maturity at the time of discount of not more than three months' sight, exclusive of days of grace, which are
indorsed by at least one member bank, and which grow out of transactions involving
the importation or exportation of goods; or which grow out of transactions involving
the domestic shipment of goods, providing shipping documents are attached at the
time of acceptance; or which are secured at the time of acceptance by a warehouse
receipt or other such document conveying or securing title covering readily marketable staples. Any Federal Reserve Bank may also acquire drafts or bills of exchange
drawn on member banks by banks or bankers in foreign countries or dependencies or
insular possessions of the United States for the purpose of furnishing dollar exchange.
(b) Definition.—A banker's acceptance within the meaning of this regulation is
defined as a draft or bill of exchange of which the acceptor is a bank or trust company,
or a firm, person, company, or corporation engaged in the business of granting bankers'
acceptance credits.

75284°—17
11

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ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

(c) Eligibility.—To be eligible'for rediscount the bill must have been drawn under
a credit opened for the purpose of conducting, or settling accounts resulting from, a
transaction or transactions involving (1) the shipment of goods between the United
States and any foreign country, or between the United States and any of its dependencies or insular possessions, or between foreign countries, or (2) the domestic shipment of goods, provided shipping documents are attached at the time of acceptance;
or it must be a bill which is secured at the time of acceptance by a warehouse receipt
or other such document conveying or securing title covering readily marketable
staples. Any Federal Reserve Bank may also acquire drafts or bills drawn by a bank
or banker in a foreign country or dependency or insular possession of the United
States for the purpose of furnishing dollar exchange and accepted by a member bank
in accordance with the provisions of Regulation 0, page 7. Such drafts or bills may
be acquired prior to acceptance provided they have the indorsement of a member
bank.
(d) Evidence of eligibility,—A Federal Reserve Bank must be satisfied, either by
reference to the acceptance itself or otherwise, that it is eligible for rediscount. Satisfactory evidence of eligibility may consist of a stamp or certificate affixed by the
acceptor in form satisfactory to the Federal Reserve Bank.

REGULATION B, SERIES OF 1916.
(Superseding Regulations S and T of 1915.)
OPEN-MARKET PURCHASES OP BILLS OF EXCHANGE, TRADE ACCEPTANCES, AND BANKERS' ACCEPTANCES UNDER SECTION 14.

I. Generav statutory provisions.
Section 14 of the Federal Reserve -Yet permits Federal Reserve Banks, under rulea
and regulations to be prescribed by the Federal Reserve Board, to purchase and sell
in the open market from banks, firms, corporations, or individuals^bankers' acceptances and bills of exchange of the kinds and maturities made eligible by the act for
rediscount, with or without the indorsement of a member bank.
II. General character of bills and acceptances eligible.
The Federal Reserve Board, exercising its statutory right to regulate the purchase
of bills of exchange and acceptances, has determined that a bill of exchange or acceptance, to be eligible for purchase by Federal Reserve Banks under section 14—
(a) Must not have been issued for carrying or trading in stocks, bonds, or other investment securities, except bonds and notes of the Government of the United States.
(b) Must not be a bill the proceeds of which have been used or are to be used for
permanent or fixed investments of any kind, such as land, buildings, or machinery,
or for investments of a merely speculative character.
(c) Must have been accepted by the drawee prior to purchase by a Federal Reserve
Bank unless it is accompanied and secured by shipping documents or by a warehouse
terminal, or other similar receipt conveying security title.
(d) May be secured by the pledge of goods l or collateral, provided it is otherwise
eligible.
In addition to the above general requirements, each bill of exchange and trade
acceptance purchased under the terms of this regulation must also conform to the
more specific requirements set forth under III, and each banker's acceptance must
also conform to the more specific requirements set forth under IV.
1
When used in this regulation the word "goods" shall be construed to include goods, wares, merchandise, or agricultural products, including live stock.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

157

III. Bills of exchange and trade acceptances.
(a) Definition.—A bill of exchange, within the meaning of this regulation, is defined
as an unconditional order in writing, addressed by one person to another, other than
a banker as denned under IV (a), signed by the person giving it, requiring the person
to whom it is addressed to pay in the United States, at a fixed or determinable future
time, a sum certain in dollars to the order of a specified person; and a trade acceptance
is denned as a bill of exchange drawn by the seller on the purchaser of goods sold and
accepted by such purchaser.
(6) Eligibility.—To be eligible for purchase the bill must have arisen out of an actual
commercial transaction, domestic or foreign; that is, it must be a bill which has been
issued or drawn for agricultural, industrial, or commercial purposes or the proceeds of
which have been used or are to be used for the purpose of producing, purchasing, carrying, or marketing goods in one or more of the steps of the process of production, manufacture, or distribution. It must have a maturity at time of purchase of not more
than ninety days, exclusive of days of grace.
(c) Evidence of eligibility.—A Federal Reserve Bank shall take such steps as it deems
necessary to satisfy itself as to the eligibility of the bill offered for purchase, unless it
presents prima facie evidence thereof or bears a stamp or certificate affixed by the
acceptor or drawer showing that it is a trade acceptance.
(d) Statements.—Unless indorsed by a member bank, a bill is not eligible for purchase until a satisfactory statement has been furnished of the financial condition of
one or more of the parties thereto.
IV. Bankers' acceptances.
(a) Definition.—A bankers' acceptance, within the meaning of this regulation, is a
bill of exchange of which the acceptor is a bank or trust company, or a firm, person,
company, or corporation engaged in the business of granting bankers' acceptance
credits.
(b) Eligibility.—To be eligible for purchase the bill, which must have a maturity at
time of purchase of not more than three months, exclusive of days of grace, must have
been drawn under a credit opened for the purpose of conducting, or settling accounts
resulting from, a transaction or transactions involving—
(1) The shipments of goods between the United States and any foreign country
or between the United States and any of its dependencies or insular possessions, or between foreign countries; or
(2) The shipment of goods within the United States, provided the bill at the
time of its acceptance is accompanied by shipping documents; or
(3) The storage within the United States of readily marketable goods, provided
the acceptor of the bill is secured by warehouse, terminal, or other similar
receipt; or
(4) The storage within the United States of goods which have been actually sold,
provided the acceptor of the bill is secured by the pledge of such goods;
or it must be a bill drawn by a bank or banker in a foreign country or dependency or
insular possession of the United States for the purpose of furnishing dollar exchange.
In this latter case the bank or banker drawing the.bill must be in a country, dependency, or possession whose usages of trade have been determined by the Federal Reserve
Board to require the drawing of bills of this character.
(c) Evidence of eligibility .—A Federal Reserve Bank must be satisfied either by
reference to the acceptance itself, or otherwise, that it is eligible for purchase. Satisfactory evidence of eligibility may consist of a stamp or certificate affixed by the
acceptor, in form satisfactory to the Federal Reserve Bank. No evidence of eligibility
is required with respect to a bill accepted by a national bank.

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ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

(d) Statements.—Bankers' acceptances, other than those accepted or indorsed by
member banks, shall be eligible for purchase only after the acceptor has furnished a
satisfactory statement of financial condition in form to be approved by the Federal
Keserve Board and has agreed in writing with a Federal Reserve Bank to inform it upon
request concerning the transactions underlying such acceptances.

REGULATION C, SERIES OF 1916.
ACCEPTANCE BY MEMBER BANKS OF DRAFTS DRAWN TO FURNISH DOLLAR EXCHANGE.

I. Statutory provisions.
Section 13 of the Federal Reserve Act provides that any member bank may accept
drafts or bills of exchange drawn upon it having not more than three months' sight
to run, exclusive of days of grace, drawn, under regulations to be prescribed by the
Federal Reserve Board, by banks or bankers in foreign countries or dependenciet
or insular possessions of the United States for the purpose of furnishing dollar exchange
as required by the usages of trade in the respective countries, dependencies, or insular
possessions.
No member bank shall accept such drafts or bills of exchange for any one bank to
an amount exceeding in the aggregate 10 per centum of the paid-up and unimpaired
capital and surplus of the accepting bank unless the draft or bill of exchange is accompanied by documents conveying or securing title or by some other adequate security.
No member bank shall accept such drafts or bills in an amount exceeding at any
time in the aggregate one-half of its paid-up and unimpaired capital and surplus.
II. Regulations.
Any member bank desiring to accept drafts drawn by banks or bankers in foreign
countries or dependencies or insular possessions of the United States for the purpose
•of furnishing dollar exchange shall first make an application to the Federal Reserve
Board, setting forth the usages of trade in the respective countries, dependencies, or
insular possessions in which such banks or bankers are located.
If the Federal Reserve Board should determine that the usages of trade in such
countries, dependencies, or possessions require the granting of the acceptance facilities
applied for, it will notify the applying bank of its approval and will also publish in
the Federal Reserve Bulletin the name or names of those countries, dependencies,
or possessions in which banks or bankers are authorized to draw on member banks
whose applications have been approved for the purpose of furnishing dollar exchange.
The Federal Reserve Board reserves the right to modify or on 90 days' notice to
revoke its approval either as to any particular member bank or as to any foreign
country or dependency or insular possession of the United States in which it has
authorized banks or bankers to draw on member banks for the purpose of furnishing
dollar exchange.
REGULATION D, SERIES OF 1916.
(Superseding Regulation E of 1915.)
TIME DEPOSITS AND SAVINGS ACCOUNTS.

Section 19 of the Federal Reserve Act provides, in part, as follows:
"Demand deposits, within the meaning of this act, shall comprise all deposits payable within 30 days, and time deposits shall comprise all deposits payable after 30
days, and all savings accounts and certificates of deposit which are subject to not less
than 30 days' notice before payment."

AST^UAL REPORT OF THE FEDERAL RESERVE BOARD.

159

Time deposits, open accounts.
The term "time deposits, open accounts" shall be held to include all accounts,
not evidenced by certificates of deposit or savings pass books, in respect to which a
written contract is entered into with the depositor at the time the deposit is made
that neither the whole nor any part of such deposit may be withdrawn by check or
otherwise, except on a given date or on written notice given by the depositor a certain
specific number of days in advance, in no case less than 30 days.
Savings accounts.
The term "savings accounts" shall be held to include those accounts of the bank
in respect to which, by its printed regulations, accepted by the depositor at the time
the account is opened—
(a) The pass book, certificate, or other similar form of receipt must be presented
to the bank whenever a deposit or withdrawal is made, and
(b) The depositor may at any time be required by the bank to give notice of an
intended withdrawal not less than 30 days before a withdrawal is made.
Time certificates of deposit.
A "time certificate of deposit" is defined as an instrument evidencing the deposit
with a bank, either with or without interest, of a certain sum specified on the face
of the certificate payable in whole or in part to the depositor or on his order-—
(a) On a certain date, specified on the certificate, not less than 30 days after the
date of the deposit, or
(b) After the lapse of a certain specified time subsequent to the date of the certificate,
in no case less than 30 days, or
(c) Upon written notice given a certain specified number of days, not less than 30
days before the date of repayment, and
(d) In all cases only upon presentation of the certificate at each withdrawal for
proper indorsement or surrender.

REGULATION E, SERIES OF 1916.
(Superseding Regulation F of 1915.)
PURCHASE OP WARRANTS.

Statutory requirements.
Section 14 of the Federal Reserve Act reads in part as follows:
"Every Federal Reserve Bank shall have power—
"(6) To buy and sell, at home or abroad, bonds and notes of the United States,
and bills, notes, revenue bonds, and warrants with a maturity from date of purchase
of not exceeding six months, issued in anticipation of the collection of taxes or in
anticipatiin of the receipt of assured revenues by any State, county, district, political
subdivision, or municipality in the continental United States, including irrigation,
drainage, and reclamation districts, such purchases to be made in accordance with
rules and regulations prescribed by the Federal Reserve Board. *'
For brevity's sake, the term "warrant" when used in this regulation shall be construed to mean "bills, notes, revenue bonds, and warrants with a maturity from
date of purchase of not exceeding six months," and the term "municipality" shall
be construed to mean "State, county, district, political subdivision, or municipality
in the continental United States, including irrigation, drainage} and reclamation
districts."

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ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
Regulation.

I. Any Federal Reserve Bank may purchase warrants issued by a municipality
in anticipation of the collection of taxes or in anticipation of the receipt of assured
revenues, provided—
(a) They are the general obligations of the entire municipality; it being intended
to exclude as ineligible for purchase all such obligations as are payable from "local
benefit" and "special assessment" taxes when the municipality at large is not directly
or ultimately liable;
(b) They are issued in anticipation of taxes or revenues which are due and payable
on or before the date of maturity of such warrants; but the Federal Reserve Board
may waive this condition in specific cases. For the purposes of this regulation, taxes
shall be considered as due and payable on the last day on which they may be paid
without penalty;
(c) They are issued by a municipality—
(1) Which has been in existence1 for a period of 10 years;
(2) Which for a period of 10 years previous to the purchase has not defaulted * for
longer than 15 days in the payment of any part of either principal or interest of any
funded debt authorized to be contracted by it;
(3) Whose net funded indebtedness x does not exceed 10 per centum of the valuation of its taxable property, to be ascertained by the last preceding valuation of
property for the assessment of taxes.
II. Except with the approval of the Federal Reserve Board, no Federal Reserve
Bank shall purchase and hold an amount in excess of 25 percentum of the total
amount of warrants outstanding at any time and issued in conformity with provisions
of section 14 (6) above quoted, and actually sold by a municipality.
III. Except with the approval of the Federal Reserve Board, the aggregate amount
invested by any Federal Reserve Bank in warrants of all kinds shall not exceed at
the time of purchase a sum equal to 10 per centum of the deposits kept by its member
banks with such Federal Reserve Bank.
IV. Except with the approval of the Federal Reserve Board, the maximum amount
which may be invested at the time of purchase by any Federal Reserve Bank in
warrants of any single municipality shall be limited to the following percentages of
the deposits kept in such Federal Reserve Bank by its member banks:
Five per centum of such deposits in warrants of a municipality of 50,000 population
or over;
Three per centum of such deposits in warrants of a municipality of over 30,000
population, but less than 50,000;
One per centum of such deposits in warrants of a municipality of over 10,000 population, but less than 30,000.
V. Warrants of a municipality of 10,000 population or less shall be purchased only
with the special approval of the Board.
The population of a municipality shall be determined by the last Federal or State
census. Where it can not be exactly determined the Board will make special rulings.
VI. Opinion of recognized counsel on municipal issues or of the regularly appointed
counsel of the municipality as to the legality of the issue shall be secured and approved
in each case by counsel for the Federal Reserve Bank.
VII. Any Federal Reserve Bank may purchase from any of its member banks
warrants of any municipality, indorsed by such member bank, with waiver of demand,
notice, and protest, up to an amount not to exceed 10 per centum of the aggregate
capital and surplus of such member bank: Provided, however, That such warrants
comply with provisions I and III- of these regulations, except that where a period of
10 years is mentioned in I (c) hereof a period of 5 years shall be substituted for the purposes of this clause.

See appendix to this regulation.

REPORT OF THE FEDERAL RESERVE BOARD.

161

APPENDIX TO REGULATION E.
' " N E T FUNDED INDEBTEDNESS."

The term "net funded indebtedness" is hereby defined to mean the legal gross
indebtedness of the municipality (including the amount of any school district or
other bonds which depend for their redemption upon taxes levied upon property
within the municipality) less the aggregate of the following items:
(1) The amount of outstanding bonds or other debt obligations made payable from
current revenues;
(2) The amount of outstanding bonds issued for the purpose of providing the inhabitants of a municipality with public utilities, such as waterworks, docks, electric
plants, transportation facilities, etc.: Provided, That evidence is submitted showing
that the income from such utilities is sufficient for maintenance, for payment of
interest on such bonds, and for the accumulation of a sinking fund for their redemption;
(3) The amount of outstanding improvement bonds, issued under laws which provide for the levying of special assessments against abutting property in amounts
sufficient to insure the payment of interest on the bonds and the redemption thereof:
Provided, That such bonds are direct obligations of the municipality and included
in the gross indebtedness of the municipality;
(4) The total of all sinking funds accumulated for the redemption of the gross
indebtedness of the municipality, except sinking funds applicable to bonds just
described in (1), (2), and (3) above.
"EXISTENCE" AND "NONDEFAULT."

Warrants will be construed to comply with that part of I (c) of Regulation E relative
to term of existence and nondefault under the following conditions:
(1) Warrants issued by or in behalf of any municipality which was, subsequent to
the issuance of such warrants, consolidated with or merged into an existing political
division which meets the requirements of these regulations, will be deemed to be
the warrants of such political division: Provided, That such warrants were assumed
by such political division under statutes and appropriate proceedings the effect of
which is to make such warrants general obligations of such assuming political division and payable, either directly or ultimately, without limitation to a special fund
from the proceeds of jtaxes levied upon all the taxable real and personal property
within its territorial limits.
(2) Warrants issued by or in behalf of any municipality which was, subsequent to
the issuance of such warrants, wholly succeeded by a newly organized political division whose term of existence, added to that of such original political division or of
any other political division so succeeded, is equal to a period of 10 years will be
deemed to be warrants of such succeeding political division: Provided, That during
such period none of such political divisions shall have defaulted for a period exceeding 15 days in the payment of any part of either principal or interest of any funded
debt authorized to be contracted by it: And provided further, That such warrants
were assumed by such new political division under statutes and appropriate proceedings the effect of which is to make such warrants general obligations of such assuming political division and payable, either directly or ultimately, without limitation to a special fund from the proceeds of taxes levied upon all the taxable real and
personal property within its territorial limits.
(3) Warrants issued by or in behalf of any municipality which, prior to such issuance, became the successor of one or more, or was formed by the consolidation or
merger of two or more, preexisting political divisions, the term of existence of one
or more of which, added to that of such succeeding or consolidated political division,

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ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

is equal to a period of 10 years, will be deemed to be warrants of a political division
which has been in existance for a period of 10 years: Provided, That during such period
none of such original, succeeding, or consolidated political divisions shall have defaulted for a period exceeding 15 days in the payment of any part of either principal
or interest of any funded debt authorized to be contracted by it.

REGULATION F, SERIES OF 1916.
(Superseding Regulation H of 1915.)
TRUST POWERS OF NATIONAL BANKS.

I. Statutory

'provisions.

The Federal Reserve Act provides:
"SEC. 11. The Federal Reserve Board shall be authorized and empowered:
"(k) To grant by special permit to national banks applying therefor, when not in
contravention of State or local law, the right to act as trustee, executor, administrator,
or registrar of stocks and bonds, under such rules and regulations as the said Board
may prescribe."
II. Applications.
A national bank desiring to exercise any or all of the privileges authorized by section 11, subsection (7c), of the Federal Reserve Act, shall make application to the
Federal Reserve Board on a form approved by said Board (Form No. 61). Such application shall be forwarded by the applying bank to the chairman of the board of
directors of the Federal Reserve Bank of its district, and shall thereupon be transmitted to the Federal Reserve Board with his recommendations.
III. Separate departments.
Every national bank permitted to act under this section shall establish a separate
trust department, and shall place such department under the management of an
officer or officers, whose duties shall be prescribed by the board of directors of the
bank.
IV. Provision for keeping trust funds.
The funds, securities, and investments held in each trust shall be held separate
and distinct from the general funds and securities of the bank, and separate and
distinct one from another. The ledgers and other books kept for the trust department shall be entirely separate and apart from the other books and records of the bank.
V. Examinations.
Examiners appointed by the Comptroller of the Currency or designated by the.
Federal Reserve Board will hereafter be instructed to make thorough and complete
audits of the cash, securities, accounts, and investments of the trust department of
every bank at the same time that examination is made of the banking department.
VI. Conformity with State laws.
Nothing in these regulations shall be construed to give to a national bank doing
business as trustee, executor, administrator, or registrar of stocks and bonds under
section 11 (Jc) of the Federal Reserve Act any rights or privileges in contravention
of the laws of the State in which the bank is located.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

163

VII. Revocation of permits.
The Federal Reserve Board reserves the right to revoke permits granted under
these regulations in any case where in the opinion of theBoard a bank has willfully
violated the provisions of these regulations or the laws of any State relating to the
operations of such bank when acting as trustee, executor, administrator, or registrar
of stocks and bonds.
VIII. Changes in rules.
These regulations are subject to change by the Federal Reserve Board: Provided,
however, That no such change shall prejudice obligations undertaken in good faith
under regulations in effect at the time the obligation was assumed.

REGULATION G, SERIES OP 1916.
(Superseding Regulation I of 1915.)
LOANS ON FARM LAND AND OTHER REAL ESTATE.

Section 24 of the Federal Reserve Act provides in part that—
"Any national banking association not situated in a central reserve city may make
loans secured by improved and unencumbered farm land situated within its Federal
reserve district or within a radius of one hundred miles of the place in which such
bank is located, irrespective of district lines, and may also make loans secured by
improved and unencumbered real estate located within one hundred miles of the
place in which such bank is located, irrespective of district lines; but no loan made
upon the security of such farm land shall be made for a longer time than fiYe years,
and no loan made upon the security of such real estate as distinguished from farm
land shall be made for a longer time than one year, nor shall the amount of any such
loan, whether upon such farm land or upon such real estate, exceed fifty per centum
of the actual value of the property offered as security. Any such bank may make
such loans, whether secured by such farm land or such real estate in an aggregate
sum equal to twenty-five per centum of its capital and surplus or to one-third of its
time deposits, and such banks may continue hereafter as heretofore to receive time
deposits and to pay interest on the same."
National banks not located in central reserve cities may, therefore, legally make
loans secured by improved and unencumbered farm land or other real estate as provided by this section.
Certain conditions and restrictions must, however, be observed—
(a) There must be no prior lien on the land; that is, the lending bank must hold
an absolute first mortgage or deed of trust.
(6) The amount of the loan must not exceed 50 per cent of the actual value of the
land by which it is secured.
(c) The maximum amount of loans which a national bank may make on real estate,
whether on farm land or on other real estate as distinguished from farm land, is limited
under the terms of the act to an amount not in excess of one-third of its time deposits
at the time of the making of the loan, and not in excess of one-third of its average
time deposits during the preceding calendar year: Provided, however, That if onethird of such time deposits as of the date of making the loan or one-third of the average
time deposits for the preceding calendar year, is less than one-fourth of the capital
and surplus of the bank as of the date of making the loan, the bank in such event
shall have authority to make loans upon real estate under the terms of the, Act to the
extent of one-fourth of the bank's capital and surplus as of that date.
(d) Farm land to be eligible as security for a loan by a national bank must be situated within the Federal Reserve district in which such bank is located or within a
radius of 100 miles of such bank, irrespective of district lines.

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ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

(e) Real estate, as distinguished, from farm land, to be eligible as security for a loan
by a national bank must be located within a radius of 100 miles of such bank, irrespective of district lines.
(/) The right of a national bank to "make loans " under section 24 includes the right
to purchase or discount loans already made, as well as the right to make such loans
in the first instance: Provided, however, That no loan secured by farm land shall have
a maturity of more than five years from the date on which it was purchased or made
by the national bank, and that no loan secured by other real estate shall have a maturity
of more than one year from such date.
In order that real estate loans held by a bank may be readily classified, a statement
signed by the officers making a loan and having knowledge of the facts upon which
it is based must be attached to each note secured by a first mortgage on the land by
which the loan is secured, certifying in detail as of the date of the loan that all of the
requirements of law have been duly observed.

REGULATION H, SERIES OF 1916.
(Superseding Regulation M of 1915.)
MEMBERSHIP OF STATE BANKS AND TRUST COMPANIES.

I. Statutory requirements.
Specific provisions of the Federal Reserve Act applicable to State banks and trust
companies which become member banks are quoted in the appendix to this regulation.
II. Banks eligible for membership.
A State bank or a trust company to be eligible for membership in a Federal Reserve
Bank must comply with the following conditions:
(1) It must have been incorporated under a special or general law of the State
or district in which it is located.
(2) It must have a minimum paid-up unimpaired capital stock as follows:
In cities or towns not exceeding 3,000 inhabitants, $25,000.
In cities or towns exceeding 3,000 but not exceeding 6,000 inhabitants, $50,000.
In cities or towns exceeding 6,000 but not exceeding 50,000 inhabitants, $100,000.
In cities exceeding 50,000 inhabitants, $200,000.
III. Application for membership.
Any eligible State bank or trust company may make application on Form 83, made
a part of this regulation, to the Federal Reserve Agent of its district for an amount
of capital stock in the Federal Reserve Bank of such district equal to 6 per cent of
the paid-up capital stock and surplus of such State bank or trust company. *
Upon receipt of such application the Federal Reserve Agent shall submit the
same to a committee composed of the Federal Reserve Agent, the governor of the
Federal Reserve Bank, and at least one other member of the board of directors of
such bank, to be appointed by such board, but no class A director whose bank is
in the same city or town as the applying bank or trust company shall be a member
of such committee. This committee shall, after receiving the report of such examination as may be required by the Federal Reserve Bank in pursuance of directions
from the Federal Reserve Board, consider the application and transmit it to the
Federal Reserve Board, with its report and recommendations.
1
Three per cent has already been called from national and other member banks, but the remainder of
the subscription or any part of it shall be subject to call if deemed necessary by the Federal Reserve Board.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

165

IV. Approval of application.
In passing upon an application the Federal Reserve Board will consider especially—•
(1) The financial condition of the applying bank or trust company and the general
character of its management.
(2) Whether the nature of the powers exercised by the said bank or trust company
and its charter provisions are consistent with the proper conduct of the business of
banking and with membership in the Federal Reserve Bank.
(3) Whether the laws of the State or district in which the applying bank or trust
company is located contain provisions likely to prevent proper compliance with
the provisions of the Federal Reserve Act and the regulations of the Federal Reserve
Board made in conformity therewith.
If, in the judgment of the Federal Reserve Board, an applying bank or trust company conforms to all the requirements of the Federal Reserve Act and these regulations, and is otherwise qualified for membership, the Board will issue a certificate
of approval. Whenever the Board may deem it necessary, it will impose such conditions as will insure compliance with the act and these regulations. When the certificate of approval and any conditions contained therein have been accepted by the
applying bank or trust company, stock in the Federal Reserve Bank of the district
in which the applying bank or trust company is located shall be issued and paid
for under the regulations of the Federal Reserve Act provided for national banks
which become stockholders in the Federal Reserve Banks.
V. Powers and restrictions.
Every State bank or trust company while a member of the Federal Reserve System—
(1) Shall retain its full charter and statutory rights as a State bank or trust company,
and may continue to exercise the same functions as before admission, except as provided in the Federal Reserve Act and the Regulations of the Federal Reserve Board,
including any conditions embodied in the certificate of approval.
(2) Shall invest only in loans on real estate or mortgages of a character and to an
extent which, considering the nature of its liabilities, will not impair its ability to
meet current or maturing obligations.
(3) Shall adjust, to conform with the requirements of the Federal Reserve Act and
these regulations, within such reasonable time as may be determined by the Board in
each case, any loans it may have at the time of its admission to membership which
are secured by its own stock, or any loans to one person, firm, or corporation aggregating
more than 10 per cent of its capital and surplus or more than 30 per cent of its capital,
or any real estate loans which, in the judgment of the Federal Reserve Board, impair
its ability to meet current or maturing obligations.
(4) Shall maintain such improvements and changes in its banking practice as may
have been specifically required of it by the Federal Reserve Board as a condition of
its admission, and shall not lower the standard of banking then required of it; and
(5) Shall enjoy all the privileges and observe all those requirements of the Federal
Reserve Act and of the regulations of the Federal Reserve Board made in conformity
therewith which are applicable to State banks and trust companies which have become
member banks.
VI. Withdrawals.
Any State bank or trust company desiring to withdraw from membership in a
Federal Reserve Bank may do so 12 months after written notice of its intention to
withdraw shall have been filed with the Federal Reserve Board. The Board will
immediately notify the Federal Reserve Bank of the receipt of such notice. At the
expiration of said 12 months such bank or trust company shall surrender all of its
holdings of capital stock in the Federal Reserve Bank, which stock shall then be
canceled and the withdrawing bank or trust company shall thereupon be released from

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ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

its stock subscription not previously called. Such bank or trust company shall,
immediately upon the cancellation of its stock, cease to be a member of the Federal
Reserve Bank, and the Federal Reserve Bank shall then refund to such bank or
trust company a sum equal to the cash-paid subscription on the shares surrendered,
with interest at the rate of one-half of 1 per cent per month computed from the last
dividend, if earned, not to exceed the book value thereof, and the reserve deposits,
less any liability of such member to the Federal Reserve Bank: Provided, That no Federal Reserve Bank shall, except by the specific authority of the Federal Reserve
Board, cancel within the same calendar year more than 10 per cent of its capital stock
for the purpose of effecting voluntary withdrawals during that year. All applications,
including therein any on which action may have been deferred because in excess of
the aforesaid 10 per cent limitation, will be dealt with in the order in which they
were originally filed with the Board.
Any State bank or trust company desiring to withdraw from membership at the
expiration of the 12 months' notice, notwithstanding the fact that the Federal Reserve
Bank has previously canceled 10 per cent of its stock during the same calendar year,
may do so. In such case, however, the Federal Reserve Bank shall not be required
to repay to the withdrawing bank or trust company the sums due as above until such
time as its stock would have been canceled had it not exercised this option. The
Federal Reserve Bank shall, however, give a receipt for the stock surrendered.
VII. Examinations.
Every State bank or trust company, while a member of the Federal Reserve System,
shall be subject to such examinations as may be prescribed by the Federal Reserve
Board in pursuance of the provisions of the Federal Reserve Act.
In order to avoid duplication, the Board will exercise the broad discretion vested
in it by the act in accepting examinations of State banks and trust companies made
by State authorities wherever these are satisfactory to the Board and are found to be
of the same standard of thoroughness as national bank examinations and where, in
addition, satisfactory arrangements for cooperation in the matter of examination
between the designated examiners of the Board and those of the States already exist
or can be effected with State authorities. Examiners from the staff of the Board or
of the Federal Reserve Banks will, whenever desirable, be designated by the Board
to act with the examination staff of the State in order that uniformity in the standard
of examination may be assured.
VIII. Future regulations.
The Federal Reserve Board reserves the right to make such amendments and adopt
and issue, from time to time, such further regulations authorized by the Act as it may
deem necessary, but no amendment of Section VI of these regulations, relating to
voluntary withdrawals, shall take effect until six months after its adoption and issue
by the Board.
APPENDIX TO REGULATION H.

The Federal Reserve Act provides:
"SEC. 9. Any bank incorporated by special law of any State, or organized under
the general laws of any State or of the United States, may make application to the
Reserve Bank organization committee, pending organization, and thereafter to the
Federal Reserve Board for the right to subscribe to the stock of the Federal Reserve
Bank organized or to be organized within the Federal Reserve district where the
applicant is located. The organization committee or the Federal Reserve Board,
under such rules and regulations as it may prescribe, subject to the provisions of this
section, may permit the applying bank to become a stockholder in the Federal Reserve
Bank of the district in which the applying bank is located. Whenever the organiza

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

167

tion committee or the Federal Reserve Board shall permit the applying bank to
become a stockholder in the Federal Reserve Bank of the district, stock shall be
issued and paid for under the rules and regulations in this Act provided for national
banks which become stockholders in Federal Reserve Banks.
"The organization committee or the Federal Reserve Board shall establish by-laws
for the general government of its conduct in acting upon applications made by the
State banks and banking associations and trust companies for stock ownership in
Federal Reserve Banks. Such by-laws shall require applying banks not organized
under Federal law to comply with the reserve and capital requirements and to submit
to the examination and regulations prescribed by the organization committee or by
the Federal Reserve Board. No applying bank shall be admitted to membership in
a Federal Reserve Bank unless it possesses a paid-up, unimpaired capital sufficient
to entitle it to become a national banking association in the place where it is situated,
under the provisions of the national banking act.
"Any bank becoming a member of a Federal Reserve Bank under the provisions
of this section shall, in addition to the regulations and restrictions hereinbefore provided, be required to conform to the provisions of law imposed on the national banks
respecting the limitation of liability which may be incurred by any person, firm, or
corporation to such banks, the prohibition against making purchase of or loans on
stock of such banks, and the withdrawal or impairment of capital, or the payment of
unearned dividends, and to such rules and regulations as the Federal Reserve Board
may, in pursuance thereof, prescribe.
"Such banks, and the officers, agents, and employees thereof, shall also be subject
to the provisions of and to the penalties prescribed by sections fifty-one hundred and
ninety-eight, fifty-two hundred, fifty-two hundred and one, and fifty-two hundred
and eight, and fifty-two hundred and nine of the Revised Statutes. The member
banks shall also be required to make reports of the conditions and of the payments of
dividends to the Comptroller, as provided in sections fifty-two hundred and eleven
and fifty-two hundred and twelve of the Revised Statutes, and shall be subject to
the penalties prescribed by section fifty-two hundred and thirteen for the failure to
make such report.
"If at any time it shall appear to the Federal Reserve Board that a member bank
has failed to comply with the provisions of this section or the regulations of the Federal
Reserve Board, it shall be within the power of the said Board, after hearing, to require
such bank to surrender its stock in the Federal Reserve Bank; upon such surrender
the Federal Reserve Bank shall pay the cash-paid subscriptions to the said stock with
interest at the rate of one-half of one per centum per month, computed from the last
dividend, if earned, not to exceed the book value thereof, less any liability to said
Federal Reserve Bank, except the subscription liability not previously called, which
shall be canceled, and said Federal Reserve Bank shall, upon notice from the Federal
Reserve Board, be required to suspend said bank from further privileges of membership, and shall within thirty days of such notice cancel and retire its stock and make
payment therefor in the manner herein provided. The Federal Reserve Board may
restore membership upon due proof of compliance with the conditions imposed by
this section.
4
'SEC. 19. If a State bank or trust company is required or permitted by the law of
its State to keep its reserves either in its own vaults or with another State bank or trust
company or with a national bank, such reserve deposits so kept in such State bank
or trust company or national bank shall be construed, within the meaning of this section, as if they were reserve deposits in a national bank in a reserve or central reserve
city for a period of three years after the Secretary of the Treasury shall have officially
announced the establishment of a Federal Reserve Bank in the district in which such
State bank or trust company is situate. Except as thus provided, no member bank
shall keep on deposit with any nonmember bank a sum in excess of ten per centum

168

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

of its own paid-up capital and surplus. No member bank shall act as the medium or
agent tof a nonmember bank in applying for or receiving discounts from a Federal
Keserve Bank under the provisions of this Act except by permission of the Federal
Reserve Board,
U
SEC. 21. The Comptroller of the Currency, with the approval of the Secretary of
the Treasury, shall appoint examiners, who shall examine every member bank at
least twice in each calendar year and oftener if considered necessary: Provided, however, That the Federal Reserve Board may authorize examination by the State authorities to be accepted in the case of State banks and trust companies, and may at any
time direct the holding of a special examination of State banks or trust^companies that
are stockholders in any Federal Reserve Bank. The examiner making the examination of any national bank, or of any other member bank, shall have power to make a
thorough examination of all the affairs of the bank, and in doing so he shall have power
to administer oaths and to examine any of the officers and agents thereof under oath,
and shall make a full and detailed report of the condition of said bank to the Comptroller of the Currency.
"The Federal Reserve Board, upon the recommendation of the Comptroller of the
Currency, shall fix the salaries of all bank examiners and make report thereof to
Congress. The expense of the examinations herein provided for shall be assessed by
the Comptroller of the Currency upon the banks examined in proportion to assets or
resources held by the banks upon the dates of examination of the various banks.
"In addition to the examinations made and conducted by the Comptroller of the
Currency, every Federal Reserve Bank may, with the approval of the Federal Reserve Agent or the Federal Reserve Board, provide for special examination of member
banks within its district. The expense of such examinations shall be borne by the
bank examined. Such examinations shall be so conducted as to inform the Federal
Reserve Bank of the condition of its member banks and of the lines of credit which
are being extended by them. Every Federal Reserve Bank shall at all times furnish
to the Federal Reserve Board such information as may be demanded concerning the
condition of any member bank within the district of the said Federal Reserve Bank.
"No bank shall be subject to any visitatorial powers other than such as are authorized by law or vested in the courts of justice, or such as shall be or shall have been
exercised or directed by Congress, or by either House thereof, or by any committee
of Congress or of either House duly authorized.
"The Federal Reserve Board shall, at least once each year, order an examination
of each Federal Reserve Bank, and upon joint application of ten member banks the
Federal Reserve Board shall order a special examination and report of the condition
of any Federal Reserve Bank."
REGULATION I, SERIES OF 1916.
(Superseding Regulation N of 1915.)
INCREASE OR DECREASE OF CAPITAL STOCK OF FEDERAL RESERVE BANKS.

Increase of capital

stock.

Whenever the capital stock of any Federal Reserve Bank shall be increased by new
banks becoming members, or by the increase of capital or surplus of any member
bank and the allotment of additional capital stock to such bank, the board of directors of such Federal Reserve Bank shall certify such increase to the Comptroller of
the Currency on Form 58, which is made a part of this regulation.
Decrease of capital

stock.

I. Whenever a member bank reduces its capital stock or surplus, and, in the case
of reduction of its capital, such reduction has been approved by the Comptroller of

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

169

the Currency and by the Federal Reserve Board in accordance with the provisions
of section 28 of the Federal Reserve Act, it shall file with the Federal Reserve Bank
of which it is a member an application on Form 60, which is made a part of this regulation. When this application has been approved, the Federal Reserve Bank shall
take up and cancel the receipt issued to such bank for cash payments made on its
subscription and shall issue in lieu thereof a new receipt after refunding to the member bank the proportionate amount due such bank on account of the subscription
canceled. The receipt so issued shall show the date of original issue, so that dividends
may be calculated thereon.
II. Whenever a member bank shall be declared insolvent and a receiver appointed
by the proper authorities, such receiver shall file with the Federal Reserve Bank of
which the insolvent bank is a member an application on Form 87, which is made
a part of this regulation, for the surrender and cancellation of the stock held by, and
for the refund of all balances due to, such insolvent member bank. Upon approval
of this application by the Federal Reserve Agent the Federal Reserve Bank shall
accept and cancel the stock surrendered, and shall adjust accounts between the
member bank and the Federal Reserve Bank by applying to the indebtedness of the
insolvent member bank to such Federal Reserve Bank all cash-paid subscriptions
made by it on the stock canceled with one-half of 1 per centum per month from the
period of last dividend, if earned, not to exceed the book value thereof, and the
balance, if any, shall be paid to the duly authorized receiver of such insolvent member bank.
III. Whenever a member bank goes into voluntary liquidation and a liquidating
agent is appointed, such agent shall file with the Federal Reserve Bank of which it
is a member an application on Form 86, which is made a part of this regulation, for
the surrender and cancellation of the stock held by and for the refund of all balances
due to such liquidating member bank. Upon approval of this application by the
Federal Reserve Agent the Federal Reserve Bank shall accept and cancel the stock
surrendered, and shall adjust accounts between the liquidating member bank and the
Federal Reserve Bank by applying to the indebtedness of the liquidating member
bank to such Federal Reserve Bank all cash-paid subscriptions made by it on the
stock canceled with one-half of 1 per centum per month from the period of last dividend, if earned, not to exceed the book value thereof, and the balance, if any, shall
be paid to the duly authorized liquidating agent of such liquidating member bank.
IV. Whenever the stock of a Federal Reserve Bank shall be reduced in the manner
provided in Paragraphs I, II, or III of this regulation the board of directors of such
Federal Reserve Bank shall, in accordance with the provisions of section 6, file with
the Comptroller of the Currency a certificate of such reduction on Form 59, which is
made a part of this regulation.

REGULATION J, SERIES OF 1916.
(Superseding Circular No. 1 of 1916.)
CHECK CLEARING AND COLLECTION.

The Federal Reserve Board is empowered, under section 16 of the Federal Reserve
Act, to require each Federal Reserve Bank to—
"Exercise the function of a clearing house for its member banks."
In pursuance of the authority vested in it under the provisions of this section, the
Federal Reserve Board, desiring to afford to both the public and the various member
banks a direct, expeditious, and economical system of check collection and settlement of balances, hereby requires all Federal Reserve Banks to exercise the functions

170

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

of a clearing house for their respective member banks under the following general
terms and conditions:
Each Federal Reserve Bank will receive at par from its member banks checks *
drawn on all member banks, whether in its own district or other districts, and checks
drawn upon nonmember banks when such checks can be collected by the Federal
Reserve Banks at par.
Each Federal Reserve Bank will receive at par from other Federal Reserve Banks
checks drawn upon all member banks of its district and upon all nonmember banks
whose checks can be collected at par by the Federal Reserve Bank. The Federal
Reserve Banks will prepare a par list of all nonmember banks, to be revised from time
to time, which will be furnished to member banks.
Immediate credit entry upon receipt subject to final payment will be made for all
such items upon the books of the Federal Reserve Bank at full face value, but the proceeds will not be counted as part of the minimum reserve nor become available to meet
ckecks drawn until actually collected in accordance with the best practice now prevailing.
(2) Checks received by a Federal Reserve Bank on its member banks will be forwarded direct to such member banks and will not be charged to their accounts until
advice of payment has been received or until sufficient time has elapsed within which
to receive advice of payment.
(3) In the selection of collecting agents for handling checks on nonmember banks
member banks will be given the preference.
(4) Under this plan Federal Reserve Banks will receive at par from their member
banks checks on all member banks and on nonmember banks whose checks can be
collected at par by any Federal Reserve Bank. Member banks will be required by
the Federal Reserve Board to provide funds to cover at par all checks received from
or for the account of their Federal Reserve Banks: Provided, however, That a member
bank may ship lawful money or Federal reserve notes from its own vaults at the
expense of its Federal Reserve Bank to cover any deficiency which may arise because
of and only in the case of inability to provide items to offset checks received from or
for the account of its Federal Reserve Bank.
(5) Section 19 of the Federal Reserve Act provides that—
The reserve carried by a member bank with a Federal Reserve Bank may, under
the regulations, and subject to such penalties as may be prescribed by the Federal
Reserve Board, be checked against and withdrawn by such member bank for the
purpose of meeting existing liabilities: Provided, however, That no bank shall at any
time make new loans or shall pay any dividends unless and until the total reserve
required by law is fully restored.
It is manifest that items in process of collection can not lawfully be counted as part
of the minimum reserve to be carried by a member bank with its Federal Reserve
Bank. Therefore, should a member bank draw against such items the draft would be
charged against its reserve if such reserve were sufficient in amount to pay it; but any
resulting impairment of reserves would be subject to all the penalties provided by
the act.
Inasmuch as it is essential that the law in respect to the maintenance by member
banks of the required minimum reserve shall be strictly complied with, the Federal
Reserve Board, under authority vested in it by section 19 of the act, hereby prescribes
as the penalty for any deficiency in reserves a sum equivalent to an interest charge on
the amount of the deficiency of 2 per cent per annum above the ninety-day discount
rate of the Federal Reserve Bank of the district in which the member bank is located.
The Board reserves the right to increase this penalty whenever conditions require it.
i A check is generally defined as a draft or order upon a bank or banking house, purporting to be drawn
upon a deposit of funds, for the payment at all events of a certain sum of money to a certain person therein
named, or to him or his order, or to bearer, and payable instantly on demand.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

171

Member banks can at all times arrange to keep their reserves intact by rediscounting with their Federal Reserve Bank.
(6) Each Federal Reserve Bank will determine by analysis the amounts of uncollected funds appearing on its books to the credit of each member bank. Such analysis
will show the true status of the reserve held by the Federal Reserve Bank for each
member bank and will enable it to apply the penalty for impairment of reserve.
A schedule of the time required within which to collect checks will be furnished to
each member bank to enable it to determine the time at which any item sent to its
Federal Reserve Bank will be counted as reserve and become available to meet any
checks drawn.
(7) In handling items for member banks a Federal Reserve Bank will act as agent
only. The Board will require that each member bank authorize its Federal Reserve
Bank to send checks for collection to banks on which checks are drawn, and, except
for negligence, such Federal Reserve Bank will assume no liability. Any further
requirements that the Board may deem necessary will be set forth by the Federal
Reserve Banks in their letters of instruction to their member banks.
(8) The cost of collecting and clearing ckecks must necessarily be borne by the
banks receiving the benefit and in proportion to the service rendered. An accurate
account will be kept by each reserve bank of the cost of performing this service and
the Federal Reserve Board will, by rule, fix the charge, at so much per item, which
may be imposed for the service of clearing or collection rendered by the reserve banks
as provided in section 16 of the Federal Reserve Act.
75284°—17
12

Exhibit M.—LIST OF NATIONAL BANKS GIVEN FIDUCIARY
POWERS TO DECEMBER 31, 1916.
DISTRICT N O . 1.

City or town.
Connecticut:
Ansonia
Middletown
New Haven
Do
Do
Do
New -London...
Wallingford
Waterbury
Maine:
Bangor
Bath
Lewiston..

Name of bank.

Powers granted.

Ansonia National Bank
Middletown National Bank
Merchants National Bank..
National Tradesmens Bank
Second National Bank
Yale National Bank
National Bank of Commerce
First National Bank
Manufacturers National
Bank

Registrar of stocks and bonds.
Trustee, executor, administrator, and registrar of stocks

First National Bank
Bath National Bank
Manufacturers N a t i o n a l

Trustee, executor, and registrar of stocks and bonds.
Trustee, executor, administrator, and registrar of stocks
Trustee, executor, and registrar of stocks and bonds.

Do.
Do.
Do.
Do.

Registrar of stocks and bonds.
Trustee, executor, and administrator.
Trustee, executor, administrator, and registrar of stocks

Norway
Portland
Do...
Do
Massachusetts:
Adams
Beverly
Boston
Do
Do
Do
Do
Do
Fall River
Fitchburg
Gardner
Gloucester
Great BarringHaverhill
Do
Holyoke
Do
Do
Lowell
Marlboro
Do
New Bedford...
Northampton..
Norwood
Pittsfield
Do
Salem
Springfield
Do

Norway National Bank
Canal National Bank
First National Bank
Portland National Bank

Turners Falls..
Watertown
Webster
Worcester
Do
New Hampshire:
Claremont
Concord
Do

Do.
Crocker National Bank
Do.
Union Market National
Do.
First National Bank
Do.
Merchants National Bank..
Do.
Worcester National Bank..
Do.
Claremont National Bank..
Do.
First National Bank
Mechanicks National Bank. Trustee and registrar of stocks and bonds.

Greylock National Bank...
Beverly National Bank
First
National
Bank
Fourth
Atlantic
National
Bank.
Merchants National Bank..
National Shawmut Bank..
Peoples National Bank
Second National Bank
Massasoit - Pocasset NaSafety Fund National Bank
First National Bank
Cape Ann National Bank...
National Mahaiwe Bank...
Essex National Bank
First National Bank
City National Bank
Home National Bank
Holyoke National Bank
Old Lowell National Bank.
Peoples National Bank
First National Bank
Mechanics National Bank..
Northampton N a t i o n a l
•Rfmlr
Norwood National Bank...
Agricultural National Bank
Pittsfield National Bank...
Merchants National Bank..
Chapin National Bank
Chicopee National Bank...

172

Do.
Do.
Do.
Do.

Trustee, executor, administrator, and registrar of stocks
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.

Registrar of stocks.
Trustee, executor, administrator, and registrar of stocks
and bonds
Do.
Do.
Do.

Trustee. executor, administrator, and registrar of stocks
Trustee,
and bonds
Do.
Do.
Do.
Do.

Bo.
Do.
Do.

Trustee.
Trustee, executor, administrator, and registrar of stocks
and bonds

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

173

DISTRICT NO. 1—Continued.
City or town.

Name of bank.

Powers granted.

New HampshireContinued.
Dover
Merchants National Bank.. Trustee, executor, and administrator.
Do
Strafford National Bank... Trustee, executor, administrator, and registrar of stocks
and bonds.
Keene
Ashuelot National Bank... Trustee and registrar of stocks and bonds.
Trustee, executor, administrator, and registrar of stocks
Do
Keene National Bank
Amoskeag National Bank.. Trustee and registrar of stocks and bonds.
Manchester
Second National Bank
Do.
Nashua
Indian Head National Bank Trustee, executor, and administrator.
Do
Citizens National Bank
Trustee and registrar of stocks and bonds.
Newport
Do.
Wolfeboro National Bank..
Wolfeboro
Rhode Island:
Aquidneck National Bank. Trustee, executor, administrator, and registrar of stocks
Newport
and bonds
Vermont:
Do.
First National Bank
Brandon
Do.
Peoples National Bank
Brattleboro
Do.
Citizens National Bank
Poultney
Do.
Welden National Bank
St. Albans
Do.
First National Bank
Springfield
DISTRICT NO. 2.

Connecticut:
Bridgeport
Danbury.
Norwalk..
South Norwalk
New Jersey:
Atlantic Highlands.
Bloomfield
Bound Brook..
Cranbury
Dover
Hoboken
Lambertville...
Long Branch...
Morristown
Do
Newark
Do.
Do.,
Do.
Do..

Trustee, executor, administrator, and registrar of stocks
and bonds.
Registrar
of stocks and bonds.
.do.
National Bank ol Norwalk. Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.
City National Bank
Atlantic Highlands Na- Trustee, executor, and administrator.
tional Bank.
Trustee, executor, administrator, and registrar of stocks
Bloomfield National
and bonds.
Do.
First National Bank
Do.
do
Do.
National Union Bank
Do.
First National Bank
Do.
Lambertville N a t i o n a l
Bank.
Do.
First National Bank
Do.
.do
Trustee, executor, and administrator.
National Iron Bank.
Essex County National Trustee, executor, administrator, and registrar of stocks
and bonds.
Bank.
Do.
Merchants National Bank..
Do.
National Newark Banking
Company.
Do.
National State Bank
North Ward National
Do.
Bank.
Do.
National Bank of New
Jersey.
Do.
Peoples National Bank
Do.
Second National Bank
Do.
City National Bank
Do.
Rutherford National Bank.
Trustee, executor, and administrator.
First National Bank
City National Bank,

New Brunswick
Do
Paterson
Plainfield..
Rutherford
Somerville
New York:
Registrar of stocks and bonds.
Albany
..do.
Do.
National Commercial Bank.
- Do
Do.
New York State National
Do
Bank.
Do.
Cayuga County National
Auburn.
Bank.
Do.
Do
, National Bank of Auburn..
Do.
Nassau National Bank
Brooklyn
Do.
Buffalo
, Marine National Bank
Do.
National Exchange Bank..
Clayton
Do.
Cooperstown... Second National Bank
Do.
Edwards N ational Bank...
Edwards
Do.
Second National Bank
Elmira
Do.
Far Rockaway. National Bank of
Do.
First National Bank
Geneva
Do.
Geneva National Bank
Do
Do.
Farmers National Bank
Granville
Do.
Washington County NaDo
tional Bank.

174

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
DISTRICT NO. 2—Continued.

City or town.
New York—Contd.
Hempstead .
Herkimer
Lockport
Mineola
Morristown
New York
Do

Do
Do
Do
Do
Do
Do
Do
Do
Do
Do
Do
Ovid
Plattsburg
Do
Richfield
Springs.
Riverhead
Rochester
Saratoga
Springs.
Stapleton
Wellsville
Westfield

Name of bank.

Powers granted.

First National Bank
Registrar of stocks and bonds.
Do.
Herkimer National Bank...
Do.
National Exchange Bank..
Do.
First National Bank
Do.
Frontier National Bank—
Do.
American Exchange NaDo.
Bankof, N. B. \
Do.
Bronx National Bank
Do.
Chase National Bank
Do.
Gotham National Bank
Do.
Harriman National Bank..
Do.
Irving National Bank
Do.
Liberty National Bank
Do.
Lincoln National Bank
Do.
National Bank of Commerce
Do.
National City Bank of
Do.
National Park Bank
Do.
Seaboard National Bank...
Do.
First National Bank
Do.
City National Bank
Do.
Plattsburg National Bank..
Do.
First National Bank
Do.
Suffolk County National
Lincoln National Bank
First National Bank
Richmond Borough National Bank.
First National Bank
National Bank of

Do.
Do.
Do.
Do.
Do.

DISTRICT N O . 3.

Delaware:
Frederica
Laurel.
Seaford
New Jersey:
Atlantic City...
Do
Cane May
Princeton
Trenton
Do
Pennsylvania:
Annville
Belleville
Blossburg

First National Bank
Peoples National Bank
First National Bank.

I Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.
Do.

Atlantic City National Bank
Do.
Trustee, executor, and administrator.
Union National Bank
Merchants National Bank.. Registrar of stocks and bonds.
First National Bank
Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.
.do.
Do.
Broad Street National Bank

Annville National Bank
Do.
Belleville National Bank... Trustee, executor, and administrator.
Trustee, executor, administrator, and registrar of stocks
Miners National Bank
and bonds.
Do.
Deposit National Bank
DuBois
Do.
DuBois
National
Bank
Do
Trustee, executor. and administrator.
Farmers National Bank
Ephrata
Trustee,
executor, administrator, and registrar of stocks
Harnsburg..... Merchants National Bank..
and bonds.
Do.
Hazleton National Bank...
Hazleton
Do.
Huntingdon— First National Bank
Jenkintown National Bank. Trustee, executor, and administrator,
Jenkintown
Trustee, executor, administrator, and registrar of stocks
First National Bank
Johnstown
and bonds.
Do.
Lansdale
.do.
Do.
Farmers National Bank
Lititz
Do.
Exchange National Bank.
Marietta
Mountville National Bank
Do.
Mountville
Do.
First National Bank
Nanticoke
Do.
Nazareth National Bank..
Nazareth
Do.
First National Bank
NewTille
Do.
Patton
.do.
Trustee, executor, administrator, and registrar of stocks
Pen Argyle
First National Bank
and bonds.
Philadelphia. . - Fourth Street National Registrar of stock::s and bonds.
Bank.
Do.
Quaker City National Bank.
Do

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

175

DISTRICT NO. 3—Continued.
City or town.

Powers granted.

Name of bank.

Pennsylvania—Con.
Philadelphia... Southwark National Bank. Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.
Penn National Bank.
Reading
Registrar of stocks and bonds.
Third National Bank
Scranton
Trustee, executor, administrator, and registrar of stocks
Stroudsburg... First National Bank
and bonds.
Do.
Grange National Bank
Tioga
Do.
Bank of Chester
West Chester... National
County.
Do.
Industrial National Bank
York
of West York.
DISTRICT N O . 4.

Kentucky:
Brooksville
Mount Sterling.
Williamsburg..
Ohio:
Akron
Bellaire
Bucyrus
Columbus
Do
Do
Do....:....
Hamilton
Hillsboro
Marietta
Sidney
Steubenville...
Urbana
Youngstown...
Pennsylvania:
Greenville
Oakmont.
Sharon
Zelienople

Trustee, executor, administrator, and registrar of stocks
First National Bank
and bonds.
Do.
Mount Sterling National...
Do.
First National Bank
Trustee, and registrar of stocks and bonds.
National City Bank..
Do.
First National Bank.
Do.
.do.
Do.
City National Bank
Do.
Commercial National Bank.
Do.
Huntingdon National Bank
Do.
Ohio National Bank
Do.
First National Bank
Do.
Merchants National Bank..
Do.
German National Bank
Trustee.
Citizens National Bank
Do.
National Exchange Bank..
Do.
Citizens National Bank
Registrar of stocks and bonds.
First National Bank
do
.do.
McDowell National Bank.
Peoples National Bank

Trustee, executor, administrator, and registrar of stocks
and bonds.
Trustee.
Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.

DISTRICT N O . 5.

District of Columbia:
Washington
Do.

Maryland:
Baltimore
Frederick

National
Metropolitan
Bank.
National Bank of Washington.

Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.

Merchants-Mechanics NaDo.
tional Bank.
Farmers & Mechanics NaDo.
tional Bank.
Montgomery County Na- Trustee, executor, and administrator.
tional Bank.

Rockville
North Carolina:
Elizabeth City. First National Bank.
....do
Oxford
South Carolina:
Charleston
Peoples National Bank

Trustee.
Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.

Do.
......do
Greenville
Farmers and Merchants
Do.
Lake City
National Bank.
Orangeburg
Do.
Edisto National Bank
Spartanburg... Central National Bank
Do.
Virginia:
Alexandria
Citizens National Bank....
Do.
Do
First National Bank
Do.
Charlottesville. Jefferson National Bank...
Do.
Do
Do.
National Bank of
Do
Trustee, executor, and administrator.
Peoples National Bank

176

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
DISTRICT N O . 5—Continued.

City or town.

Name of bank.

Powers granted.

Virginia—Contd.
Clifton Forge... Clifton Forge National
Bank
Covington
Citizens National Bank
Do
Covington National Bank..
Danville
National Bank of
Martinsville
Peoples National Bank
Newport News. First National Bank
Norfolk
National Bank of Commerce
Petersburg
Virginia National Bank
Richmond
American National Bank..
Merchants National Bank..
Do
Roanoke
American National Bank..
Do
National Exchange Bank ..
South Boston.. Planters and Merchants
National Bank.
Staunton
National Valley Bank
Warrenton
Fauquier National Bank...
Shenandoah Valley National
Winchester
Bank
West Virginia:
Clarksburg
Empire National Bank
Fairview
First National Bank
Grafton
do
Madison
Madison National Bank
Parkersburg
Parkersburg National Bank

Trustee, executor, administrator, and registrar of stocks
Do.
Do.
Do.
Do.
Do.
Do.

Trustee, executor, and administrator.
Trustee, executor, administrator, and registrar of stocks
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.

Trustee, executor, and administrator.
Trustee, executor, administrator, and registrar of stocks
and bonds.

DISTRICT NO. 6.

Alabama:
Anniston.
Bessemer
Birmingham.
Florence
Gadsden
Mobile

First National Bank
Bessemer National Bank.
First National Bank
....do
....do
do

Do
Montgomery.
Piedmont
Tuskaloosa...

National City Bank..
First National Bank.
....do
do

Florida:
Bradentown..
Jacksonville...
Georgia:
Colquitt
Fitzgerald
La Grange
Quitman
Savannah
Louisiana:
Lake Charles..
Mississippi:
Biloxi
Meridian
Tennessee:
Harriman
Knoxville
McMinnville.
Nasnville
Do.
Do.

Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.
Do.
Do.
Trustee, executor, and administrator.
Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.
Trustee and registrar of stocks and bonds.
Trustee, executor, and administrator.
Trustee, executor, administrator, and registrar of stocks
and bonds.

.do.
Barnett National Bank
Colquitt National Bank...
Exchange National Bank.

Do.
Do.

Calcasieu National Bank of
S. W. Louisiana.

Do.

First National Bank.
First National Bank.

Do.
Do.

Trustee.
Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.
La Grange National Bank .
Trustee, executor, and administrator.
First National Bank
Merchants National Bank. Trustee, executor, administrator, and registrar of stocks
and bonds.

Do.
Manufacturers N a t i o n a l
Bank.
Trustee for bond issue by Fidelity Trust Co.
City National Bank
Trustee, executor, and administrator.
Peoples National Bank
Broadway National Bank.. Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.
Fourth-First National Bank
Do.
Tennessee Hermitage National Bank.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

177

DISTRICT NO. 7.

City or town.
Illinois:
Belvidere.
Bloomington..
Casey
Chicago
Decatur
Freeport
Joliet
Macomb
Marseilles
Mattoon
Moweaqua
Rockford
Do
Indiana:
Anderson
Batesville
Brazil
Do
Brookville

Powers granted.

Name of bank.

Trustee, executor, administrator, and registrar of stocks
Second National Bank
and bonds.
Do.
State National Bank
Do.
First National Bank
Do.
National City Bank
Do.
Milliken National Bank...
Do.
First National Bank
Do.
.do.
Do.
Union National Bank
Do.
First National Bank
Trustee, executor, and administrator.
National Bank of
Do.
First National Bank
Rockford National Bank.. Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.
Third National Bank
Peoples State National
First National Bank
do
Riddcll National Bank
Franklin County National
Bank.
National Brookville Bank.
First National Bank
Franklin National Bank..
First National Bank
Citizens National Bank...

Do.
Do.
Do.
Do.
Do.

Do.
Do.
Do.
Trustee, executor, and administrator.
Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.
Howard National Bank...
Do...
Do.
First National Bank
La Porte,
Union County National Trustee, executor, and administrator.
liberty..
Bank.
Trustee, executor, administrator, and registrar of stocks
First National Bank
Logansport
and bonds.
Do.
Marion
.do.
Do.
Marion National Bank
Do
Do.
Michigan City. Merchants National Bank..
Do.
First National Bank
Richmond
Do.
Second National Bank
Do
Do.
First National Bank
Rochester
Do.
Rockville National Bank..
Rockville
Do.
Rush County National
Rashville
Bank.
Do.
Rushville National Bank..
Do.
Trustee, executor, and administrator.
First National Bank
Russia ville
Trustee, executor, administrator, and registrat of stocks
Farmers National Bank
Sheridan
and bonds.
Do.
First National Bank
Do
Do.
do
South Bend.
Do.
Citizens National Bank...
Tipton
Do.
Farmers
National
Bank...
Valparaiso..
Do.
Farmers & Merchants NaWabash
tional Bank.
Do.
Whiteland National Bank
Whiteland..
Farmers National Bank... Trustee, executor, and administrator.
Wilkinson..
Iowa:
Trustee, executor, administrator, and registrar of stocks
First National Bank
Boone
and bonds.
Do.
Cedar Rapids. Merchants National Bank.
Cedar Rapids National
Do
Do.
Bank
Do.
First National Bank
Clarence
Do.
City National Bank
Clinton
Trustee, executor, and administrator.
Coon Rapids.. First National Bank
Trustee, executor, administrator, and registrar of stocks
Council Bluffs City National Bank
and bonds.
Do.
Des Moines... Des Moines National Bank.
Do.
First National Bank
Fonda
Do.
.do
Humboldt
Do.
.do.
Independence.
Trustee,
executor, and administrator.
.do.
Indianola
Do.
.do.
Le Mars
.do.
Trustee,
executor,
administrator, and registrar of stocks
Marengo
and bonds.
.do.
Do.
Montezuma...
.do.
Do.
Odebolt
Oskaloosa
Oskaloosa National Bank. Trustee, executor, and administrator.
First National Bank
Trustee, executor, administrator, and registrar of stocks
Peterson
and bonds.
.do.
Trustee, executor, and administrator.
Sibley
Do.
.da.
Sioux Rapids.
Do
Dyer.,
Franklin
Greeneastle...
Kokomo

178

AKNTJAL REPORT OF THE FEDERAL RESERVE BOARD.
DISTRICT NO. 7—Continued.

City or town.
Iowa—Continued.
Stanton

Powers granted.

Name of bank.

Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.
.do.
Do.
Commercial National Bank.
Do.
Leavitt-Johnson National
Bank.
Do.
Webster City.. Farmers National Bank
Michigan:
Do.
Battle Creek.., Old National Bank..
Do.
First National Bank.
do
BoyneCity...
Trustee, executor, and administrator.
Grand Rapids Old National Bank..
Trustee and registrar of stocks and bonds.
First National Bank.
Trustee, executor, administrator, and registrar of stocks
Petoskey
and bonds.
Do.
First
National
Exchange
Port Huron
Bank.
Rochester
Do.
First National Bank
Do.
Second National Bank
Saginaw
Do.
St. ClairHts.. Michigan National Bank...
Trustee, executor, and administrator.
Traverse City. First National Bank
Wisconsin:
Trustee, executor, administrator, and registrar of stocks
Beaver Dam... Old National Bank.
and bonds.
Do.
First National Bank
Janesville
Do.
do
Monroe
Do.
Waukesha
National Exchange Bank.
First National Bank.

Story City.
Waterloo...
Do

DISTRICT NO. 8.

Illinois:
Anna
Jacksonville
Nokomis
Pittsfield
Bedford
Evansville

First National Bank
Ayers National Bank
Nokomis National Bank...
First National Bank
Bedford National Bank
City National Bank

Do
Mount Vernon.
Tell City
Kentucky:
Elizabethtown.
Glasgow
Henderson
Hopkins ville...
Lebanon
Do
Morganfield
Columbia

Old State National Bank...
First National Bank
Citizens National Bank
First Hardin National Bank
Farmers National Bank
Henderson National Bank.
First National Bank
Citizens National Bank
Marion National Bank
Morganfield National Bank.
Boone County National

Do
St. Louis
Sedalia.
Versailles
Memphis

Trustee, executor, administrator, and registrar of stocks
Do.

Trustee, executor, and administrator.
Trustee, executor, administrator, and registrar of stocks
Trustee, executor, and administrator.
Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.
Do.

Do.
Exchange National Bank...
Do.
Merchants-Laclede National
Do.
Citizens National Bank
Trustee, executor, and administrator.
First National Bank
Central State National Bank Trustee, executor, administrator, and registrar of stocks
and bonds.

DISTRICT N O . 9.

Michigan:
Negaunee
Montana:
Great Falls..
North Dakota:
Ellendale...
South Dakota:
Aberdeen...
Colman

Negaunee National Bank... Trustee, executor, and administrator.
Great Falls National Bank. Trustee, executor, administrator, and registrar of stocks
and bonds.
First National Bank.
Aberdeen National Bank...
First National Bank

Do.
Do.
Do.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

179

DISTRICT NO. 9—Continued.
City or town.

South Dakota—Con. j
Flandreau
First National Bank .
Lake Preston... |
do
Security National Bank
Sioux Falls
American National Bank..
Spearfish
p
First National Bank
e
Webster
Wisconsin:
Commercial National Bank.
Apple ton
Ashland
I Ashland National Bank
Clintonville
j. First National Bank
Neenah
National Manufact u r e r s
Bank.
Oshkosh
City National Bank
Do

Powers granted.

Name of bank.

Trustee, executor, and administrator.
Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.
Trustee, executor, and administrator.
Do.
Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.
Do.
Trustee, executor, and administrator.

Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.
! Commercial National Bank.
DISTRICT NO. 10.

Colorado:
Canon City
Colorado
Springs.
Do

Fremont County National Trustee, executor, administrator, and registrar of stocks
and bonds.
Bank.
Exchange National Bank... Trustee, executor, and administrator.

Trustee, executor, administrator, and registrar of stocks
First National Bank
and bonds.
Do.
Colorado National Bank...
Do.
Denver National Bank
Do.
First National Bank
Do.
U. S. National Bank
Do.
First National Bank of
Eagle County.
Do.
Fort Morgan... j First National Bank
Greeley
\
do
Do.
Do
| Greeley National Bank
Trustee, executor. and administrator.
Do
I Union National Bank
Trustee, executor, administrator, and registrar of stocks
and bonds.
Idaho Springs..! First National Bank.
Do.
Trinidad....... |
do
Trustee, executor. and administrator.
Kansas:
j
Trustee, executor, administrator, and registrar of stocks
Anthony
I
do
and bonds.
Do.
Goodland
Farmers National Bank
Do.
First National Bank
Horton..
Do.
do
Hutchinson.
Trustee, executor , and administrator.
Jewell City
do
Trustee, executor, administrator, and registrar of stocks
Ottawa. /.
j Peoples National Bank
and bonds.
Do.
National Bank of Sabetha.
Sabetha
Missouri:
Trustee, executor, and administrator.
Carthage
Central National Bank
Trustee, executor,
Kansas City
Drovers National Bank
administrator, and registrar of stocks
and bonds.
Do.
New England National
Do
Bank.
Trustee, executor. and administrator.
First National Bank
Neosho
Trustee, executor, administrator, and registrar of stocks
Burnes National Bank
St. Joseph
and bonds.
Do.
Tootle - Lemon National
Do
Bank.
Nebraska:
First National Bank.
Trustee, executor, and administrator.
Butte
Do.
....do
Decat.ur
Do.
....do
Lyons
Executor and administrator.
Utica
.....do
Oklahoma:
.do.
Trustee, executor, and administrator.
Muskogee..
.do.
Trustee, executor, and registrar of stocks and bonds.
Tulsa
.do.
Trustee, executor, and administrator.
Woodward.
Denver.
Do..
Do..
Do..
Eagle...

Cheyenne..
Evanston..
Kemmerer.
Rawlins

.do.
.do.
Raw]ins National Bank.

Trustee, executor, administrator, and registrar of stocks
and bonds.
Trustee, executor, and administrator.
Trustee, executor, administrator, and regist rar of stocks
and bonds.
Trustee, executor, and administrator.

180

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
DISTRICT NO. 11.'

City or town.
Arizona:
Tucson.,
Louisiana:
Shreveport
New Mexico:
Albuquerque...
Texas:
Abilene
Austin
Beaumont
Bonham.
Colorado.
Corsieana
Dallas
Do
Fort Worth
Do
Galveston
Granger
Greenville
McKinney
Marshall
Do
Mexia
Port Arthur
San Angelo
Do. . . . .
Sealy
Stanton
Troup
Tyler
Victoria

Powers granted.

Name of bank.
Consolidated National

Trustee, executor, administrator, and registrar of stocks
and bonds.

First National Bank..

Do.

State National Bank.
Citizens National Bank...
American National Bank.
First National Bank

Do.

Trustee and executor.
Trustee, executor, and administrator.
Trustee, executor, administrator, and registrar of stocks
and bonds.
Trustee, executor, and administrator.
.....do
Trustee,
executor, administrator, and registrar of stocks
City National Bank.
and bonds.
Corsieana National Bank..
Do.
City National Bank
Do.
National Bank of ComDo.
merce.
Trustee, executor, and registrar of stocks and bonds.
First National Bank
Stockyards National Bank Trustee, executor, administrator, and registrar of stocks
and bonds.
Do.
First National Bank,
.do.
Trustee and executor.
Greenville National Ex- Trustee, executor, administrator, and registrar of
stocks and bonds.
change Bank.
Do.
First National Bank
Trustee, executor, and administrator.
do
Marshall National Bank... Trustee, executor, administrator, and registrar of
stocks and bonds.
First National Bank,
Do.
do.
Do.
Central National Bank..
Do.
First National Bank
Do.
Sealy National Bank
Do.
First National Bank
Trustee, executor, and administrator.
do
Trustee.
Citizens National Bank.
Trustee, executor, and administrator.
Victoria National Bank.
Trustee, executor, administrator, and registrar of
stocks and bonds.
DISTRICT NO. 12.

California:
Calexico...
Fullerton.

First National Bank
Registrar of stocks and bonds.
Do.
Farmers & Merchants National Bank.
Do.
Los Angeles
Continental NationalBank.
Do.
Mountain View First National Bank
Central National Bank
Do.
Oakland
Do.
First National Bank
Orland
Do.
do
Pleasanton
Do.
Capital National Bank
Sacramento
Do.
San Francisco.. American National Bank..
Bank of California,National Trustee, executor, administrator, and registrar of
Do
Association.
stocks and bonds (limited to registrar in California).
First National Bank
Registrar of stocks and bonds.
Visalia
Do.
do
Wilmington..
Nevada:
Nevada First National
Do.
Tonopah
Bank.
Oregon:
First National Bank.
Ashland..
Trustee.
do
Corvallis.
Trustee, executor, administrator, and registrar of
stocks and bonds.
Eugene
Do.
.do.
.do.
Harrisburg
Trustee, executor, and administrator.
.do.
Junction City.
Do.
.do.
Milton
Trustee, executor, administrator, and registrar of
stocks and bonds.
Executor and administrator.
Ontario
.do.
American National Bank. Trustee, executor, administrator, and registrar of
Pendleton
stocks and bonds.
First National Bank.
Do.
Do
Do.
do
Portland
Utah:
Trustee, executor, administrator, and registrar of
Salt Lake City Deseret National Bank
stocks and bonds.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

181

DISTRICT NO. 12—Continued.
City or town.
Washington:
Bellinghain
Ellensburg
Mount Vernon
Seattle
Do
Do
Vancouver
Walla Walla..

Name of bank.

Powers granted.

Bellingham National Bank. Trustee, executor, administrator, and registrar of
stocks and bonds.
Washington National Bank Trustee, executor, and administrator.
First National Bank
Do.
Trustee, executor, administrator, and registrar of
do
stocks and bonds.
Do.
National Bank of Commerce
Do.
Seattle National Bank
Do.
Vancouver National Bank.
Do.
First National Bank

Exhibit N.—PERSONNEL AND SALARIES.
Salaries of officers and employees of Federal Reserve Banks.
FEDERAL RESERVE BANK OF BOSTON.
Number of officers and
employees.
1915

Chairman and Federal Reserve agent
Governor
Other officers
Banking department
Bookkeeping department
Transit department
Federal Reserve Agents' department
General
Total

|
!
|
j
!

1916

1
1
2
4
3
3
2
4

Salaries.
1915

1916

1 $10,000 $10,000
1 15,000 20,000
3 8,500 10,900
15,260
13 6,100
12 3,100 11,360
25 2,100 24,460
3,680
3 2,500
13 3,580 10,280
71

50,880

105,940

F E D E R A L R E S E R V E BANK OF NEW YORK.

Chairmanl and Federal Reserve agent.
Governor
Deputy governor2
Other officers
Banking department
Bookkeeping department
Transit department
Federal Reserve Agents' department..
General

$16,000 $16,000
15,000
30,000
20,000
42,000
32,800
60,588 97, 552
4,620 10,700
6,430 36,480
5,540

Total.

8,460

173 155,978 246,192

FEDERAL RESERVE BANK OF PHILADELPHIA.
Chairman and Federal Reserve agent
Governor
Other officers
Banking department
Bookkeeping department
Transit department
Federal Reserve Agents' department.
General
Total

1
1
1
8
4
6
5
19

1
1
2
12
10
35
o
23

89 77,036

$10,000 $10,000
20,000 20,000
5,000 10,200
14,400 15,940
9,360
3,300
5,880 24,180
7,140
5,976
12,480 14,672
111,492

FEDERAL RESERVE BANK OF CLEVELAND.
Chairman and Federal Reserve agent
G overnor
Other officers
Banking department
Bookkeeping department
Transit department
Federal Reserve Agents' department
General

1
1
2
9

4
2
2

j 31

Total
1

182

!
i

On leave of absence.

1 $10,000 $10,000
1 18,000 20,000
7,000 10,750
3
4
36|
2
10

16,900
5,160
1,080
3,500
6,900

13,430
4,380
23,370
3,780
8,040

68,540

93,750

2 Acting governor.

183

ANNUAL REPORT OP THE FEDERAL RESERVE BOARD.
Salaries of officers and employees of Federal Reserve Banks—Continued.
FEDERAL RESERVE BANK OF RICHMOND.
Number of officers and
employees.
1915

Chairman and Federal Reserve agent
Governor
Other officers
Banking department
Bookkeeping department
Transit department
Federal Reserve Agents' department
General
Total

1916

Salaries.

1915

1916

$10,000
10,000
5,978
12,742
4,748
2,278
945
6,439

$10,000
12,000

53,130

72,238

$7,500
9,000
3,600
1,260
3,200
3,180

$9,000
9,000
12,060
21,828
5,100
15,900
4,380
4,080

65 64,768

81,348

9,428
13,956
5,520
11,599
916
8,819

F E D E R A L R E S E R V E BANK OF ATLANTA.

Chairman and Federal Reserve agent
Governor
Other officers
Banking department
Bookkeeping department
Transit department
Federal Reserve Agents' department.
General
,

I
I1
4
23
3
2
2
5

Total

1
1

4 13,100
21 23,928
5
24
3
6

FEDERAL RESERVE BANK OF CHICAGO.
Chairman and Federal Reserve agent.
Governor
Other officers
Banking department
Bookkeeping department
Transit department
Federal Reserve Agents' department..
General
Total.

1
1
2
18
4
9
2
13

1
1
3
33
9
40
2
21

$10,000
20,000
14,000
21,426
4,100
8,700
7,200
11,134

$10,000
20,000
17,500
31,880
8,700
30,240
7,800
20,985

110

96,560

147,105

1
1
2
8
5
14
3
o

1
1
2
12
6
24
3
4

$10,000
20,000
13,500
12,820
6,200
9,660
5,900
2,820

$10,000
20,000
13,500
17,180
6,260
16,140
5,900
2,820

53 80,900

91,800

1
1
1
9
2
1
4

1 $7,500
1 15,000
3 4,500
12 8,720
6 1,680
28 2,000
3 8,020

$9,000
15,000
6,600
11,440
5,540
18,020
6,830

54 47,420

72,430

F E D E R A L R E S E R V E BANK OF ST. LOUIS.

Chairman and Federal Reserve agent
Governor
Other officers
Banking department
Bookkeeping department
Transit department
Federal Reserve Agents' department.
General
Total

FEDERAL RESERVE BANK OF MINNEAPOLIS.
Chairman and Federal Reserve agent.
Governor.
Other officers
Banking department
Bookkeeping department
Transit department
Federal Reserve Agents' department.
Total

184

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
Salaries of officers and employees of Federal Reserve Banks—Continued.
FEDERAL RESERVE BANK OF KANSAS CITY.
Number of officers and
employees.
1915

Salaries.

1915

1916

Chairman and Federal Reserve agent.
Governor
Other officers
Bookkeeping department
Transit department
Federal Reserve Agents' department..
General

1916

10,980
4,080
13,460

$7,500
10,000
8,800
4,500
18,780
4,380
18,460

55,640

72,420

1
1
2
11
2
2
2
10

1
1
3
12
5
27
2
12

$7,500
10,000
11,000
17,140
1,620
2,100
7,400
9,060

$9,000
10,000
15,000
17,760
5,100
20,760
3,700
11,680

65,820

93,000

1 $12,000
1 15,000
4 12,600
7
7,020
5
2,520
780
24
2
7,000
18
7,200

$12,000
15,000
14,600
9,240
4,620
17,520
1,620
17,310

$7,500
7,500
6,000
6,120

Total.

FEDERAL RESERVE BANK OF DALLAS.
Chairman and Federal Reserve agent
Governor
Other officers
Banking department
Bookkeeping department
Transit department
Federal Reserve Agents' department.
General
Total

FEDERAL RESERVE BANK OF SAN FRANCISCO.
Chairman and Federal Reserve agent
Governor
Other officers
Banking department
Bookkeeping department
Transit department
Federal Reserve Agents' department.
General
Total

1
1
3
4
2
1
3
7

64,120

91,910

SALARIES OF OFFICERS AND EMPLOYEES OF THE FEDERAL RESERVE BOARD AS OF
DEC. 31, 1916.
OFFICE OF THE SECRETARY.

H. Parker Willis, secretary
Sherman Allen, assistant secretary and fiscal agent
Staff:
3 at $1,800
4 at $1,200
3 at $1,080
1 at $960
1 at $780
1 at $720
1 at $120

$9,000
6,000
5,400
4, 800
3, 240
960
780
720
120

$31,020

OFFICES OF MEMBERS OF THE BOARD.

Staff:
1 at $3,000
5 at $2,500
5 at $1,200

3,000
12, 500
6,000

21,500

ANISTUAL REPORT OF THE FEDERAL RESERVE BOARD.

185

OFFICE OF COUNSEL.

Milton C. Elliott, counsel
J. P. Cotton, consulting counsel
Staff:
1 at $4,500
1 at $3,300
1 at $1,800
1 at $1,200

$9,000
5,000
4, 500
3, 300
1, 800
1, 200
$24,800

DIVISION OF AUDIT AND EXAMINATION.

Joseph A. Broderick, chief of division
1 at $3,600
1 at $2,500
1 at $1,800
2 at $1,080

6, 000
3, 600
2, 500
1, 800
2,160

16,060

DIVISION OF REPORTS AND STATISTICS.

Morris Jacobson, chief of division
Staff:
1 at $1,800
3 at $1,200
2 at $1,080

3, 600
1, 800
3, 600
2,160

11,160

DIVISION OF ISSUE.

W. E. Buell, chief of division
Staff:
1 at $1,800
1 at $1,080
2 at $840
1 at $720

2, 500
1, 800
1, 080
1, 680
720
7

70A

MESSENGERS.

1 at $780
5 at $720

780
3,600
4,380
CHARWOMEN.

3 at $240

720
720
117,420

Total

SALARIES OF NATIONAL BANK

EXAMINERS EFFECTIVE IN THE YEAR ENDING
DEC. 31, 1916.

Stephen L. Newnham, supervising examiner, not assigned to any
Federal Keserve District

$4,200

DISTRICT NO. 1—BOSTON.

(397 national member banks.)
J. D. Brennan chief examiner
$8, 000
1 examiner, at $3,600; 3 examiners, at $3,300; 1 examiner, at $3,000;
1 examiner, at $2,400
18,900
—
26,900

186

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
DISTRICT NO. 2—NEW YORK.

(620 national member banks.)
Charles F. Richmond, acting chief examiner
(*)
1 examiner, at $5,000; 2 examiners, at $4,200; 1 examiner, at $3,600;
2 examiners, at $3,000; 3 examiners, at $2,400
$30, 200
DISTRICT NO. 3

$45, 200

PHILADELPHIA.

(632 national member banks.)
E . I . Johnson, chief examiner
8, 000
1 examiner, at $4,500; 1 examiner, at $3,600; 1 examiner, at $3,300;
2 examiners, at $3,000; 3 examiners, at $2,400
24, 600 2

32, 600

DISTRICT NO. 4—CLEVELAND.

(753 national member banks.)
Silas H. L. Cooper, chief examiner
8, 000
1 examiner, at $5,000; 1 examiner, at $4,200; 2 examiners, at $3,900;
3 examiners, at $3,600; 1 examiner, at $3,000; 1 examiner, at $2,700;
1 examiner, at $2,400
35, 900

43,900

DISTRICT NO. 5—RICHMOND.

(514 national member banks.)
Thomas P. Howard, chief examiner
6,500
1 examiner, at $6,000; 2 examiners, at $3,300; 2 examiners, at $3,000;
2 examiners, at $2,700; 3 examiners, at $2,400
31, 200

37,700

DISTRICT NO. 6—ATLANTA.

(383 national member banks.)
James K. Doughton, chief examiner
1 examiner, at $3,600; 3 examiners, at $3,000; 1 examiner, at $2,700..

6, 000
15, 300

21,300

DISTRICT NO. 7—CHICAGO.

(984 national member banks.)
Sherrill Smith, chief examiner
12, 000
1 examiner, at $5,000; 1 examiner, at $4,200; 2 examiners, at $3,600;
3 examiners, at $3,300; 5 examiners, at $3,000; 4 examiners, at
$2,400
50, 900
- 62,900
DISTRICT NO. 8—ST. LOUIS.

(468 national member banks.)
Joseph M. Logan (acting chief examiner)
7, 500
1 examiner, at $4,200; 3 examiners, at $3,600; 2 examiners, at $3,000;
2 examiners, at $2,400
25, 800
33,300
DISTRICT NO. 9—MINNEAPOLIS.

(758 national member banks.)
Peter M. Kerst, chief examiner
8, 000
1 examiner, at $4,200; 3 examiners, at $3,600; 2 examiners, at $3,000;
2 examiners, at $2,700; 1 examiner, at $2,400
28, 800
—
36, 800
1 The salary of the chief examiner has heretofore been $15,000 a year, but the salary of the present incumbent of the office. Charles Starek, has been suspended since Nov. 15,1916, pending the selection of his successor. Acting Cnief Examiner Richmond, the Chief of the Examining Division of the Comptroller's Office,
s now
temporarily in charge of the New York office.
2
One examiner (salary $2,700) whose resignation took effect Dec. 31,1916, omitted from list.

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

187

DISTRICT NO. 10—KANSAS CITY.

(938 national member banks.)
Jay D. Rising, chief examiner
$6, 000
1 examiner, at $4,200; 2 examiners, at $3,000; 1 examiner, at $3,300;
1 examiner, at $3,000; 4 examiners, at $2,700; 5 examiners, at
$2,400
40, 500
$46, 500
DISTRICT NO. 11—DALLAS.

(609 national member banks.)
John C. Chidsey, chief examiner
6, 000
1 examiner, at $4,200; 2 examiners, at $3,600; 3 examiners, at $3,000;
1 examiner, at $2,700
23,100

29,100

DISTRICT NO. 12—SAN FRANCISCO.

(521 national member banks.)
Claud Gateh, chief examiner
8, 500
1 examiner, at $6,000; 3 examiners, at $4,200; 1 examiner, at $3,900;
2 examiners, at $2,700; 2 examiners, at $2,400
32, 700
41,200
Total

461, 600
RECAPITULATION.

Examining staff:
Chief examiners—
At $15,000 per annum
At $12,000 per annum
At $8,500 per annum
At $8,000 per annum
At $7,500 per annum
At $6,500 per annum
At $6,000 per annum

Total chief examiners
Salaries, chief examiners
Other examiners—•
At $6,000 per annum
At $5,000 per annum
At $4,500 per annum
At $4,200 per annum
At $3,900 per annum
At $3,600 per annum
At $3,300 per annum
At $3,000 per annum
At $2,700 per annum
At $2,400 per annum

112
-

362,100
x

Total examining staff
Total salaries
Acting.
75284°—17
13

99, 500

2
3
1
2
12
3
" 19
10
24
13
25

Total other examiners
Salaries, other examiners

1
1
1
4
1
1
3

124
461, 600

Includes 1 supervising examiner.

Exhibit O.—DIRECTORY OF THE FEDERAL RESERVE BOARD
AND FEDERAL RESERVE BANKS.

FEDERAL RESERVE BOARD.
EX OFFICIO MEMBERS.
WILLIAM G. MCADOO,
Secretary of the Treasury,
Chairman.
JOHN SKELTON WILLIAMS*
Comptroller of the Currency.

W. P. G. HARDING, Governor.
PAUL M. WARBURG, Vice Governor.
FREDERIC A. DELANO,
ADOLPH C. MILLER.
CHARLES S. HAMLIN,
H. PARKER WILLIS, Secretary,
SHERMAN ALLEN, Assistant Secretary and
Fiscal Agent.
M. C. ELLIOTT, Counsel.

OFFICERS AND DIRECTORS OF FEDERAL RESERVE BANKS,
DISTRICT NO. 1.—FEDERAL RESERVE BANK OF BOSTON.
[Frederic H. Curtiss, chairman and Federal Reserve Agent. Walter S. Hackney, deputy chairman and
deputy reserve agent. Alfred L. Aiken, governor.]
Class.
A
B

Name,
(T. P. Beal
•1 Thomas W. Farnam
|A. M. Heard
Chas. A. Morss
E. R. Morse
Chas. G. Washburn
Frederic H. Curtiss
Walter 8. TJacknev
Allen Hollis

Residence.

Boston, Mass
New Haven, Conn
Manchester, N. H .
Boston, Mass
Proctor, Vt
Worcester, Mass
Boston Mass
Providence, R. I
Concord N. H

Term expires.
De n 31 1917
Dec.'6\\1919
Dec. 31 1918
Dec. 31 1917
Dec. 31,1919
Dec. 31,1918
Dec. 31,1917
Dec. 31 1919
Dec. 31,1918

DISTRICT NO. 2 . - FEDERAL RESERVE BANK OF NEW YORK.

[Pierre Jay, chairman and Federal Reserve Agent. George F. Peabody, deputy chairman and deputy
reserve agent. Benjamin Strong, jr., governor.]
Name.

Class.

A
B...
C

[William Woodward
^R. H. Treman
IF. D. Locke
H. R. Towne
W.B.Thompson
L. R. Palmer
Pierre
GeorgeJay
F. Peabodv
W. L Saunders
188

Residence.
New York, N. Y
Ithaca, N. Y
Buffalo, N. Y..
New York, N. Y
Yonkers, N. Y
Croton-on-Hudson, N. Y
New York N. Y
Lake George, N. Y
New York N Y

Term expires.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec,
Dec.
Dec.
Dec.

31,1919
31,1917
31,1918
31 1919
31.1917
31,1918
31,1919
31,1918
31,1917

189

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
DISTRICT NO. 3.—FEDERAL R E S E R V E BANK OF P H I L A D E L P H I A .

[Richard L. Austin, chairman and Federal Reserve Agent, II, B. Thompson, deputy chairman and
deputy reserve agent. Charles J. Rhoads, governor.]
Name.

Class.

Term expires.

Residence.

I
(0 J Rhoads
<W H Peck
(M. J. Murphy
A. B. Johnson

Philadelphia, Pa
Scranton, Pa
.
Clarks Green, Pa
Philadelphia, Pa
do....
Mullica Hill, N. J
Philadelphia, Pa
Wilmington, Del
Bethlehem, Pa

E. S. Stuart

G. W. F. Gaunt
Richard L. Austin
H. B. Thompson
J. Davis Brodhead

...

Dec. 81,1917
Dec. 31,1918
Dec. 31,1919
Do.
Dec. 31,1917
Dec. 31,1^18
Dec. 31,19.17
Dec. 31,1919
Dec. 31,1918

DISTRICT NO. 4.--FEDERAL RESERVE BANK OF CLEVELAND.
[D. C. Wills, chairman and Federal Reserve Agent. Lyman H. Treadway, deputy chairman and deputy
reserve agent. E. R. Faneher, governor.]
Name.

Class.

A
B
C.

(Robert Wardrop
{W. S. Rowe
[S. B. Rankin
T. A. Combs
R. P. Wright
John Stambaugh
[D. C. Wills
<^ Lyman H. Treadway
!H. P . Wolfe

Residence.
Pittsburgh, Pa.»
Cincinnati, Ohio
South Charleston, Ohio..
Lexington, Ky
Erie, Pa
Youngstown, Ohio
Bellevue, Pa
Cleveland, Ohio
Columbus, Ohio

Term expires.
Dec
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.

31,1917
31,1919
31,1918
31,1917
31,1919
31.1918
31.1917
31.1919
31.1918

DISTRICT NO. 5.—FEDERAL R E S E R V E BANK OF RICHMOND.
[Caldwell Hardy, chairman and Federal Reserve Agent. James A. Moncure, deputy chairman and de/outy
reserve agent. George J. Seay, governor.]
Class.

A
B.

Name.
(H. B. Wilcox
<J F Brut on
{Edwin Mann
[Edmund Strudwick
\l). R. Coker
(j F. Oyster
(James A Moncure
<M. F. H. Gouverneur
(Caldwell Hardy

Residence.
Baltimore, Md.
Wilson N 0
Bluefield W Va
Richmond, Va
Hartsville, S. 0
Washington, D. C
Richmond Va
Wilmington, N. C
Norfolk, Va . ..

Term expires.
Dec. 31,1918
Dec. 31,1919
Dec. 31,1917
Dec. 31,1918
Dec. 31 1917
Dec. 31,1919
Do
Dec. 31,1918
Dec. 31,1917

DISTRICT NO. 6.—FEDERAL R E S E R V E BANK OF ATLANTA.
[M. B. Wellborn, chairman and Federal Reserve Agent. Edward T. Brown, deputy chairman and deputy
reserve agent. Joseph A. McCord, governor.]
Class.

A
B
C

Name.
(L. P. Hillyer

IF. W. Foote

( W . H . Tooie
P. H. Saunders
•jJ. A. McCrary
IW. H. Hartford
M . B . Wellborn
\ Edward T. Brown
W. H. Kettig

Residence.
Macon, Ga
Hattiesburg, Miss
Winder, Ga
New Orleans, La
Decatur, Ga
Nashville, Tenn
Anniston, Ala
Atlanta, Ga
Birmingham, Ala

Term expires.
Dec. 31,1918
Dec. 31,1919
Dec. 31,1917
Do.
Dec. 31,1918
Dec. 31,1919
Dec. 31,1917
Dec. 31,1918
Dec. 31,1919

190

ANXUAL REPORT OF THE FEDERAL RESERVE BOARD.

DISTRICT NO. 6.—NEW ORLEANS BRANCH OF FEDERAL RESERVE BANK OF ATLANTA.
[P. II. Saunders, chairman; Branch Bank. Marcus Walker, manager. W. D. Wellborn, Representative
Federal Reserve Agent.]
Name.

Class.
A

c..

/Frank Roberts
\J. E. Bouden, jr
/Marcus Walker
\H. B Lightcap
(P. H. Saunders
{A. P. Bush
(jas. E. Zuiits

Residence.
Lake Charles, La..
New Orleans La
do
Jackson, Miss
New Orleans, La.

Term expires.
Dec 31 1917
Do.

Do.
Do.
Do
Do.
Do.

Mobile; Ala

New Orleans, La

DISTRICT NO. 7.—FEDERAL RESERVE BANK OF CHICAGO.
[William A. Heath, chairman and Federal Reserve Agent. W. F. McLallen. deputy chairman and deputy
reserve agent. James B. McDougal, governor.]
Name.

Class.
A.
B.
C.

Geo. M. Reynolds.
J. B. Forgan
E. L. Johnson
(John W. Blodgett.
hi. B. Hutchison.
A.H. Vogel.
William A. Heath.
W. F. McLallen...
E. T. Meredith....

Residence.

Term expires.

Chicago, 111.
do
Waterloo, Iowa.
Grand Rapids, Mich.
Ottumwa, Iowa
Milwaukee, Wis
Evanston, Til.
Columbia City, Ind..
Des Moines, Iowa

Dec. 31,1918
Dec. 31,1919
Dec. 31,1917
Dec. 31,1919
Dec. 31,1917
Dec. 31,1918
Do.
Dec. 31,1917
Dec. 31,1919

DISTRICT NO. 8.—FEDERAL RESERVE BANK OF ST. LOUIS.
[William McC. Martin, chairman and Federal Reserve Agent. Rolla Wells, governor.]
Class.

B
C

Name.
[Walker Hill.
F. O. Watts.
Sam A. Ziegler
David C. Biggs
W. B.Plunkett
Leroy Percy
W. McC. Martin
John W. Boehne

Residence.
St. Louis, Mo
do
Albion, 111
St. Louis, Mo
Little Rock, Ark
Greenville, Miss
St. Louis, Mo
E vansville, Ind

rm expires.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.

31,1917
31,1918
31,1919
31,1918
31,1919
31^1917
31,1918
31,1917

DISTRICT NO. 9.—FEDERAL RESERVE BANK OF MINNEAPOLIS.
[John H. Rich, chairman and Federal Reserve Agent. Wm. H. Lightner, deputy chairman and deputy
reserve agent. Theodore Wold, governor.]
Name.

Class.
A

B
G

[E W Decker
IL. B. Hanna
[J C Bassett
F R Bigelow
F. P. Hixon
N. B. Holter .
John H. Rich
Wm. H. Lightner.
John W. Black

Residence.
Minneapolis, Minn
Fargo, N. Dak
Aberdeen, S. Dak
St Paul Minn
La Crosse, Wis
Helena,
Mont
Red
Wing,
Minn.
St. Paul, Minn
Houghton, Mich

Term expires.
Dec
Dec.
Dec.
Dec.
Dec.
Dec.

31 1919
31,1917
31 1918
31,1919
31,1918
31,1917
Do.
Dec. 31,1918
Dec. 31,1919

191

ANNUAL EEPOET OF THE FEDERAL RESERVE BOARD.

DISTRICT NO. 10.—FEDERAL R E S E R V E BANK OF KANSAS CITY.
[Chas. M. Sawyer, chairman and Federal Reserve Agent. F. W. Fleming, deputy chairman and deputy
reserve agent. J. Z. Miller, jr., governor.]
Name.

Class.

B
C

f J. C. Mitchell
•{W. J. Bailey
(C E Burnham
M. L. McClure
T. C. Byrne
Harry W. Gibson
Chas. M. Sawyer
F W Fleming
R. H. Mai one"

Residence.

Denver, Colo
Atchison, Kans
Norfolk, Nebr
Kansas City, Mo
Omaha, Nebr
Muskogee, Okla
. . Kansas City, Mo
do
Denver, Colo..

Term expires.
Dec. 31,1918
Dec. 31 1919
Dec. 31,1917
Dec. 31,1919
Dec. 31,1918
Dec. 31,1917
Do.
Dec. 31,1919
Dec. 31,1918

DISTRICT NO. 11.—FEDERAL R E S E R V E BANK OF DALLAS.
[W. F. Ramsey, chairman and Federal Reserve Agent. W. B. Newsome, deputy chairman and deputy
reserve agent. R. L. Van Zandt, governor.]

Name.

Class.

A
B
C

fJ. T. Scott
]E.K. Smith

Residence.
Houston, Tex
Shreveport, La
Durant, Okla
Fort Worth Tex
Wichita Falls, Tex
Paris, Tex
Dallas, Tex
do
Abilene, Tex

B A McKinney
Marion Sansom
{Frank Kell
J. J. Culbertson
W. F . Ramsey
<W. B. Newsome
El 0 Wooten

Term expires.
Dec. 31,1918
Dec. 31,1917
Dec. 31,1919
Do.
Dec 31 1918
Dec. 31,1917
Do.
Dec. 31,1918
De^ 31 1919

DISTRICT NO. 12.—FEDERAL R E S E R V E BANK OF SAN FRANCISCO.
[John Perrin, chairman and Federal Reserve Agent. Walton N. Moore, deputy chairman and deputy
reserve agent. Archibald Kains, governor.]
Name.

Class.

A
B
C

fC K McTntosh
U. K. Lynch
Alden Anderson
A. B . C . Dohrman
J. A. McGregor
E II Cox
John Perrin
E. C. Bradley
Walton N. Moore

Residence.
San Francisco, Cal
do
Sacramento, Cal
San Francisco, Cal
do
Madera, Cal
Pasadena, Cal
San Francisco, Cal
do

Term expires.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.
Dec.

31,1919
31,1917
31,1918
31,1917
31,1918
31,1919
31,1917
31,1919
31,1918

FEDERAL ADVISORY COUNCIL.
DISTRICT
DISTRICT
DISTRICT
DISTRICT

NO,
NO.
NO.
NO.

DISTRICT NO.
DISTRICT NO.
DISTRICT NO.
DISTRICT NO.
DISTRICT
DISTRICT
DISTRICT
DISTRICT

NO,
NO,
NO,
NO,

1.—Daniel G. Wing, president First National Bank, Boston, Mass.
2.—J. P. Morgan, of J. P. Morgan & Co., New York City.
3.—L. L. Rue, president Philadelphia National Bank, Philadelphia, Pa.
4.—W. S. Rowe, president First National Bank, Cincinnati, Ohio;
director Federal Reserve Bank of Cleveland.
5.—J". W. Norwood, president Norwood National Bank, Greenville, S. C.
6.—Charles A. Lyerly, president First National Bank, Chattanooga,
Tenn.
7.—James B. Forgan, president First National Bank, Chicago, 111.;
director Federal Reserve Bank of Chicago.
8.—F. O. Watts, president Third National Bank, St. Louis, Mo.;
director Federal Reserve Bank of St. Louis.
9.—J. R. Mitchell, president Capital National Bank, St. Paul, Minn.
10.—E. F. Swinney, president First National Bank, Kansas City, Mo.
11.—T. J. Record, president City National Bank, Paris, Tex.
12.—Herbert Fleishhacker, president Anglo and London-Paris National
Bank, San Francisco, Cal.

192

ANNUAL REPORT OF

FEDERAL RESERVE BOARD.

GROSS DEPOSITS
4
CASH RESERVES

STATS
BANKS

IN MtLUQNS OF PQW*tfS,

1&I2 TO fdfff,
STATE

BAHKS
34H.O

STATS
BANKS

3€

TRUST
CCfiffi<tWg$

S73Z*
TRUST

TRUST
COmPANfG

TRUST

cmmmxs

COMfAWSS

38SF.S

wmoiw.
B4MCS
NATIONAL
BANKS

MATJOMAL,
BANKS

TOTAL fS.25&J>

13/2

MAT/QfML
SAiHfCS

JHATiONAL
BANKS

TVTAL/S^SS.S

WJAL2U30.5

13/3

JSlanJC JITCCIS rejtresen^ Oross 0efu?&L£&,

SAccdecZ jwrtuins wCChuv rejzresenC; Cks?b Jte&ervcs.
0ou&£e-£haded/ Jlreas delow rqvneserU;
CkshJfesoizrccs of ad tf&ze grovbjzs co7?ibtnje&.
Jfmounts nutrTceS #are Specie ands&gaZJcrider in, M
JtTTwunGs 7ticLrfCe&* •* include (hfUJfeseryc &f£ft£3s*Z!/Ze

Chart showing deposits and cash reserves held by commercial banks in the United Spates
about close of fiscal years 1912 to 1916.

PART II.
REPORTS OF FEDERAL RESERVE AGENTS TO
FEDERAL RESERVE BOARD.

193

REPORTS OF FEDERAL RESERVE AGENTSIn accordance with a request from the Federal Reserve Board,
each Federal Reserve Agent has submitted a report to it concerning
the operation of the Federal Reserve Bank of his district for the past
year. These reports are herewith presented as personal expressions
of the Federal Reserve Agents.
DISTRICT NO. 1—BOSTON.
FREDERIC H. CURTISS, Chairman and Federal Reserve Agent.

FINANCIAL RESULTS OF OPERATION.

Steady progress has been made during the year 1916 in broadening
the activities of the Federal Reserve Bank of Boston. On January 1, 1916, the bank became the fiscal agent of the United States
Government. The first steps were taken on April 1 toward refunding
United States bonds as provided by the Federal Reserve Act. The
general country-wide collection of checks for member banks was
undertaken on July 15. These developments necessitated an
enlargement of the bank's staff, clerical force, and accommodation,
and brought an increase in operating expense. Their effect has been
to bring the Federal Reserve .Bank in closer touch with its member
banks, increasing its use by these banks, and strengthening its place
as a factor in the financial life of the district.
General activity in manufacturing industries has developed a large
increase in the use of the bankers' acceptance by member banks
under the privilege given them by the Federal Reserve Act, and the
use of the acceptance has been encouraged in every way by the
Federal Reserve Bank of Boston. Bankers' acceptances and municipal notes constituted the principal investments of the bank, especially
during the first six months of the year, but with the inauguration of
the check collection system in July and the rise of money rates
member banks began the rediscounting of commercial paper, which
continued in fair volume throughout the remainder of the year and
did much to increase the earnings of the bank.
It will be recalled that the operations of the Federal Reserve Bank
of Boston up to the end of the year 1915 resulted in no surplus of
earnings over expenses. The surplus earnings for the year 1916, on
the other hand, have been such that it has been not only possible to
charge off all expense of organization and furniture and fixtures, but

195

196

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

also to allow for the payment of a dividend of 6 per cent to member
banks covering the period from November 2, 1914, to December 31,
1915, and, in addition, to leave a surplus of $11,596.56 out of actual
accrued earnings. (See Schedule 1.)
Additional transfers of reserves were made by member banks in
accordance with the requirements of the Federal Reserve Act on
May 15, 1916, and on November 15, 1916. These deposits, together
with the transfer of Government funds to the bank, account for the
increases shown on the accompanying balance sheet. (Schedule 2.)
GENERAL BUSINESS AND BANKING CONDITIONS IN THE DISTRICT.

The year has been unusual in many respects, both in business and
banking. Industries in the district have been running at full capacity. Low money rates have prevailed throughout the greater part
of the year. During the first few months, business activity was due
largely to demand for goods for foreign consumption. As the year
advanced the domestic demand, principally from the South and
West, increased and extended to all lines of trade. This activity continued throughout the year. The increasing cost of production, due
to the high price of raw materials and the demands of labor, has
made the task of the manufacturer no easy one. These problems
have been met and with but few exceptions the year has been
prosperous in all lines of industry.
Under normal conditions this business situation would have
brought a heavy demand on the banks for additional capital with
firm money rates. More potent factors, however, have controlled
the money market. Bank deposits have steadily increased through
the manufacturer turning his goods quickly for cash. A stead}^ flow
of gold into the country has provided for a large credit expansion.
Low money rates have prevailed in the country and have influenced
rates in this district. The rates at which commercial paper has been
offered in this market by note brokers have been so low that member banks have invested a large proportion of their surplus funds in.
securities and loans secured by collateral, thereby obtaining a return
higher than the current rate on commercial paper. (See schedule 3C)
From the middle of July until the end of the year, the current rates
for money did not reflect the condition of the supply of money in
this district, but were influenced by rates ruling in New York and
Chicago. The usual demand for financing the movement of the crops
in the south and west prevailed and this, together with the increased
cost of production, brought a heavy demand on the member banks,
particularly in manufacturing centers, for accommodation from their
commercial customers. The banks, however, were able to take care
of this demand and to renew their depleted reserves through rediscounting with the Federal Reserve Bank.

DISTRICT NO. 1

BOSTON.

ACTIVITIES OF THE FEDERAL RESERVE
DISCOUNT

197

BANK DURING THE YEAR,

OPERATIONS.

During the first six months of the year, discount operations for
member banks were more or less desultory and in limited volume.
After the general cheek collection system had started on July 15, and as
the movement of the different crops from the south and west began
to be felt in this district, the demand for rediscounts became more
pronounced. From early in the fall to the end of the year rediscounts were in such volume that not only did the bank advance its
discount rates on December 7, but also reduced its open-market
purchases of bankers' acceptances and kept out of the market for
municipal notes.
The amendment of the Federal Reserve Act, passed in September,
allowing member banks to borrow on short-time notes secured by
eligible paper has proved of advantage, especially to the out-of-town
banks. It will be noticed by the accompanying schedule 4 that
rediscounts for member banks have increased in volume during the
year, a larger number of banks having availed themselves of that
privilege. All the member banks in Boston and many of the large
out-of-town banks have taken advantage of the rediscount privilege.
It will be noticed from schedule 4 that most of the paper offered for
rediscount has been for short maturities. This has especially been
true in the case of the Boston banks, but several out-of-town banks
have used this short-time discounting privilege for collecting their
maturing notes.
Schedule 5 shows the discount rates established and maintained by
this bank throughout the year. It will be noticed that these rates
continued constant until December 7, 1916, when, owing to the
increase in volume of rediscounts and the general strengthening of
the money market, the directors of the bank deemed it advisable
that rates for short maturities be increased.
Incidental to the financing of the cotton requirements of the New
England mills, the trade acceptance appeared for the first time to
any extent in this district, acceptances being created between the
cotton broker and the mill and the mill and the selling house. While
this bank has not purchased any of these trade acceptances in the
open market, a limited volume has been rediscounted for member
banks, as will be seen by schedule 6. Although the bank has maintained a rate for commodity paper, no notes of that character have
been offered.
ACCEPTANCE BUSINESS.

With one small exception, the Federal Reserve Bank of Boston has
not rediscounted any domestic or foreign acceptances for its member
banks, all of its holdings having been purchased in open market from

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ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

member banks or through other Federal Reserve Banks or brokers.
The development of the bankers' acceptance in this district during
the past year has been second only to that of the New York district.
This bank has endeavored not only to encourage the development of
these American bills by establishing favorable rates of discount, but,
in order to encourage member banks to purchase these acceptances
and carry them in their own portfolios as secondary reserve, has
adopted a preferential rate of one-fourth per cent on acceptances
indorsed by member banks.
During the year these bankers' acceptances, as will be seen from
schedule 7, have constituted the principal investment of this bank.
Especially was this true during the period when rediscounts from
member banks were small in volume. During the year this bank has
purchased and distributed to other Federal Reserve Banks a large
volume of these acceptances, as shown by schedule 8. While, for the
most part, the acceptances created in this market have been in
connection with foreign trade, since local industries call for heavy
importations of wool, hides, jute, and cotton, there has been a fair
volume of domestic acceptances created in connection with the
movement of cotton.
In the case of foreign bankers' acceptances, the open market rate
established by the board of directors has been from 2 per cent to
4 per cent. In the case of domestic acceptances this rate is from
3 per cent to 4 per cent. The range of rates at which acceptances
were purchased is shown in the accompanying schedules 7 and 8.
UNITED STATES BOND OPERATIONS.

Inasmuch as under the provisions of section 18 of the Federal
Reserve Act, this bank could be required to purchase during the year
a certain amount of Government bonds, the directors deemed it
inadvisable to increase their investments in those securities through
open-market purchases.
On April 1, through the provisions of the above section, this bank
purchased through the Treasurer of the United States from member
banks, $2,303,250 of United States 2 per cent bonds. In order to
make up certain odd amounts the bank purchased from these banks
$28,750 additional bonds. Under the provisions of this same section, $2,000,000 of the above United States 2's with circulating
privileges were converted into $1,000,000 one-year 3 per cent gold
notes and $1,000,000 thirty-year 3 per cent bonds. The long-term
bonds have been disposed of from time to time in the open market
at prices varying from 100f to 101 i, the 3 per cent notes being held
by the Federal Reserve Bank for investment.

DISTRICT NO. 1

BOSTON.

199

MUNICIPAL WARRANTS.

As in the case of the bankers' acceptance, the municipal warrants
formed a substantial part of the investments of this bank for the first
six months of the year when the demand for rediscounts from its
member banks was limited. For the most part, these notes were of
Massachusetts cities and towns and as the volume was in excess of
the bank's own needs a large portion of the amount purchased during
the year was distributed to other Federal Reserve Banks. The
volume of warrants purchased by this bank during the year and the
character of the issuing public bodies will be found in schedule 9
attached.
CHANGES IN THE RESERVE POSITION OF THE BANK.

As will be seen from schedule 10, the percentage of cash reserve
against all liabilities during the year has averaged about 60 per cent.
There has been no liability against Federal Reserve notes outstanding
as this liability had been reduced by the deposit with the Federal
Reserve Agent of an equal amount of gold. On the few occasions
when reserves fell below 60 per cent, balances were due from other
Federal Reserve Banks, so that the bank's reserve position was
stronger than the percentages would indicate. Furthermore, its
open market purchases were of short maturities, so that the reserve
could be materially strengthened at any time by allowing these
investments to run off.
The reserve policy of this bank has been conducted with due
regard to the condition of the money market in this district and to
the reserve condition of the other Federal Reserve Banks.
CHANGES IN MEMBERSHIP DUE TO TRANSFERS FROM AND TO OTHER
DISTRICTS.

On January 1, 1916, there were 433 member banks in this district.
Under a decision of the Federal Reserve Board, Fairfield County,
Conn., was transferred to the New York district on April 1, 1916.
Fifteen banks surrendered their stock in this bank and were transferred to the New York district.
MOVEMENT OF MEMBERSHIP WITHIN THE DISTRICT.

During the year 21 banks in the district have liquidated and withdrawn from the system, converting into State institutions or consolidating with other member banks, as shown by schedule 11. No
definite, well defined reasons can be assigned for the changes from
national to State charters made by these banks.
There is the impression which is referred to elsewhere and which
should be dispelled, that a State bank may receive all the benefits

200

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

of the Federal Reserve System through its city correspondents
without contributing to its support.
Two banks have been organized during the year—the Colonial
National Bank of Hartford, Conn., and the Roxbury National Bank
of Roxbury, Mass.—the membership at the end of the year being
399 banks.
In several places in the district the organization of new national
banks is being considered and several applications are pending.
Charters have already been granted to the following banks: South
Boston National Bank, South Boston, Mass.; Manufacturers' National
Bank, Cambridge, Mass.; Back Bay National Bank, Boston, Mass.
RELATIONS WITH MEMBER BANKS.

There has been a marked increase in the use of the facilities of the
Federal Reserve Bank by member banks during the past year.
Especially is this true of the Boston banks. The settlement of the
clearings on the books of the Federal Reserve Bank has kept the
Boston banks in daily touch with it, and since the absorption by that
bank of the New England department of the Boston Clearing House
and the development of a general check-collection system the Boston
banks have made their accounts increasingly active.
The out-of-town banks are also taking advantage of their membership in the Federal Reserve System, although in most cases the
accounts of these banks are relatively inactive. The out-of-town
bank continues to carry its active account with its Boston correspondent. Under the collection system, checks are sent daily to the
country bank for collection, and these checks are generally covered
by transfers on banks in Boston or elsewhere, when they have been
charged to the member bank's account. However, several of these
out-of-town banks are doing an active business with the Federal
Reserve Bank, sending it most of their checks and studying how they
can make best use of its services. Member banks are continually
finding ways to take advantage of the additional powers the Federal
Reserve Act gives them in reducing their reserves and releasing funds
which they can loan to advantage. The cheaper and more direct
collection oi checks, the domestic and foreign acceptance, which
enables a bank to extend additional credit to its customers, are
being found of benefit.
RELATIONS WITH NONMEMBER BANKS.

Relations with nonmember banks are most satisfactory. There
have been frequent conferences with the officers of these banks which
have interested them in the activities of the bank and the benefits
which the Federal Reserve System is giving to its members. There

DISTRICT NO. 1

BOSTON.

201

is an inclination on the part of several large Boston trust companies
to apply for membership. Especially is this true of those doing
a commercial business. The officials of the Federal Reserve Bank,
whenever given the opportunity, have studied and analyzed the
business of these banks, showing how membership in the Federal
Reserve System would benefit them and affect their reserve requirements. Without a stringency in the money market, or some other
demonstration of usefulness, these banks may be slow in applying
for membership.
Much the same situation exists with the out-of-town State banks.
The officials of these banks are also keeping themselves informed on
the benefits accruing to the member banks, but the large number of
out-of-town member banks which have converted into trust companies have made those banks cautious about applying for membership. They, too, have the impression that they can reap the benefits
of the Federal Reserve System through their city correspondents
without contributing to the support of the new banking system.
ACCOMMODATION OF MEMBER BANKS THROUGH DISCOUNTS AND THE
PURCHASE OF ACCEPTANCES.

During the latter part of the year member banks, and particularly
the large city banks, have made use of the facilities of the Federal
Reserve Banks both through rediscounting their customers' paper
and by selling it bank acceptances, several of the large banks which
had been carrying acceptances as secondary reserve selling these acceptances to the Federal Reserve Bank instead of calling their
demand loans or selling their securities. Member banks, as shown
by schedule 12, have continued to borrow to a considerable extent
from their city correspondents who have granted this accommodation on demand loans and on certificates of deposit. For the most
part loans were made without collateral and at slightly lower rates
than those established by the Federal Reserve Bank.
DEPOSITS.

In accordance with the Federal Reserve Act, two transfers of
reserves were made to this bank, the first on May 16 and the second
on November 16. Each payment called for the transfer of an additional one-twelfth of reserve by country banks and one-fifteenth
of reserve by city banks. These increases have been offset to some
extent by the transfer of deposits of the Fairfield County, Conn.,
banks to the Federal Reserve Bank of New York. These deposits
amounted to $578,171.91. Schedule 13 shows the range of deposits
of this bank by weeks during the year.
There have been but few actual overdrafts during the year. These,
with some possible exceptions, have occurred only in the case of two

202

ANNUAL BEPORT OF THE FEDERAL RESERVE EOAED.

or three of the smaller banks and for but a short period. There have
been a number of cases, however, where member banks have been
deficient in the reserve required by the Federal Reserve Act to be
carried in the Federal Reserve Banks, either having drawn into
uncoilected funds or failed to carry the necessary reserve balances.
Such banks have not been penalized, as it was felt that time should
be allowed for banks to become accustomed to the operation of the
collection system. Members have been advised that after February 1,
1917, they will be expected to carry the required reserve in collected
balances and will be penalized by interest charges for a deficiency in
such reserve. Several of the out-of-town banks report excess deposits with the Federal Reserve Bank, especially since the passage
of the amendment in September allowing member banks to count
excess balances with the Federal Reserve Bank as part of their
required reserve. This practice has been especially true of the Boston
banks who, during most of the year, have carried excess balances
with the Federal Reserve Bank.
PERIODIC REPORTS REGARDING CONDITION OF MEMBER BANKS,

An analytical record of the reports of member banks to the Comptroller of the Currency showing a comparison of their condition on
different dates has been kept. A member of the staff of this bank was
authorized by the Federal Reserve Board to take part in the examination by certified public accountants of the Old Colony Trust Co.,
which is a member of the Federal Reserve System. This method of
obtaining a report of their condition proved satisfactory.
The relations existing between the officers of this bank and the
officials of the banking departments of the different States in New
England have been most cordial and in every case where they have
been brought in touch with each other the State officials have shown
a willingness to cooperate. Especially is this true in the case of the
Massachusetts bank commissioner. In the analysis of condition of
member banks, the cooperation of the chief national bank examiner of thia district has been most helpful, and any question raised
as to the condition or management of any particular banks has been
discussed with him.
There have been no failures among the member banks in the
district and all paper discounted by member banks has been paid at
maturity.
FEDERAL RESERVE BANK AND THE PUBLIC.

The discount rate policy of the Federal Reserve Bank has been
more effective during the past year than ever before. The bank's
rates on bankers7 acceptances have affected somewhat the rates on
commercial paper, and the rediscounts by the member banks in

DISTRICT NO. 1

BOSTON.

203

July and during the last months of the year were an important factor
in keeping rates steady. The public, especially the merchant, is
realizing the importance of the Federal Reserve Bank as a steadying
factor. Money rates, for the most part, have been too low to make this
bank's position felt to any marked extent. Money rates in Boston
during the year are shown in schedule 23.
PUBLICITY AND EDUCATIONAL WORK.

It has been the policy of the officers of this bank to furnish the daily
press from time to time with information regarding any new special
feature of the bank's activities.
Banking and trade organizations have been addressed by the
bank's officers and matters pertaining to the work and service of the
Federal Reserve Bank have been freely and openly discussed. Copies
of addresses by different members of the Federal Reserve Board have
been sent throughout the district. These have been read with much
interest and have done much to educate the banker and merchant in
the broader and bigger problems which the Federal Reserve System
and its officers are endeavoring to solve. The monthly reports on
financial and mercantile conditions in the district are furnished to the
press.
From the very first it has been realized that it was necessary to
demonstrate to the member banks how to make the best use of the
facilities of the Federal Reserve Bank. Although circular letters
have been sent out with the inauguration of each new activity, it was
found that these were not read or, if read, were not fully understood.
Officials of the bank have visited individual banks, examined the
character of their business and suggested methods to be adopted in
dealing with the Federal Reserve Bank and the Federal Reserve
System. The officials of banks, member and nonmember, in turn
come to the Federal Reserve Bank and discuss their problems with
its officers.
Similar relations exist between the merchant and the
Federal Reserve Bank in connection with the development of trade
and bankers' acceptances.
THE FEDERAL RESERVE BANK AND THE GOVERNMENT,
GOVERNMENT DEPOSITS.

Following the letter of the Secretary of the Treasury of November
24, 1915, designating this bank as a depository and fiscal agent of the
United States, a transfer of funds from .the Boston banks was made
by the Government on January 1. Boston banks continued to
collect checks on the Government through the subtreasury until this
75284°—17—14

204

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

bank notified them that it was prepared to handle the entire business.
In this, as in all other matters pertaining to operation, the officials of
the Boston banks have been of much assistance in their willingness to
cooperate with the officers of the Federal Reserve Bank.
Deposits are made daily by the collectors of customs and internal
revenue and a considerable volume of checks on the Government is
received each day from member banks. Transfers are still made between the Treasury and sub treasury. Inasmuch as payments on
account of warrants are in excess of deposits made by the Government officers, it has been necessary to transfer to this bank funds from
other Federal Reserve Banks. This has been done through the gold
settlement fund in Washington. This bank has not been called upon
to exercise any other duties as fiscal agent of the Government.
Details of these operations will be found appended hereto (schedules 14-14 A).
FEDERAL RESERVE BANK AND NOTE ISSUES.

The policy regarding the issuance of Federal Reserve notes has
been continued along lines similar to those of the previous year.
Notes have been issued against rediscounted paper and bankers'
acceptances, the bank reducing its liability by withdrawing the paper
and substituting gold with the Federal Reserve Agent. In this way,
Federal Reserve notes have been put into circulation and the gold
holdings of the Federal Reserve system increased. Taking into consideration the cost of the notes and that of handling and sorting, the
issuing of this currency has been a heavy expense to the bank, but
this was felt to be justified. Since the opening of this bank, there
Jiave been issued $20,944,700 Federal Reserve notes, of w^hich
$10,520,000 were issued prior to January 1, 1916. Schedule 15
shows the denominations of these notes. Notes unfit for circulation
have been redeemed and canceled to the amount of $7,401,615, of
which $500,000 were canceled prior to January 1, 1916. The
denominations are shown in schedule 16. Although no statistics
have been compiled showing the average life of Federal Reserve
notes, it is estimated that it is not over six months.
It has been the policy of the Federal Reserve Agent to keep on
hand a sufficient supply of Federal Reserve notes to meet any unusual
demands of the member banks. A large supply is always available in
Washington which could be obtained in a very short time should
necessity arise.
No Federal Reserve Bank notes (i. e. notes secured by Government
bonds) have thus far been issued by this bank, the directors believing
that such bank notes should be issued only when an unusual demand
for currency exists.

DISTRICT NO. 1

BOSTON.

205

Federal Reserve notes of other banks are continually being deposited in this bank and are promptly sorted and returned to the bank
of issue. Notes of this bank are being received daily from other
Federal Reserve Banks. Schedule 17 shows the transactions of
this character.
INTERNAL MANAGEMENT OF THE BANK.

During the year the policy of fortnightly meetings of the board of
directors has been continued, thus keeping the directors in close
touch with the operations of the bank. The executive committee
meets on the morning of the day on which directors' meetings are
held. * This committee approves all loans and investments made by
the bank, recommends changes in discount rates to the board of
directors, and discusses policies regarding reserves and investments.
The directors have passed on all applications of member banks for
permission to exercise fiduciary functions under the Federal Reserve
Act. (Schedule 18.)
The term of Mr. Charles G. Sanford, the Class A director representing member banks in Group 2, expired on December 31, 1916,
and he was ineligible for reelection as he was a resident of Fairfield
County, Conn., transferred to District No. 2. Mr. Thomas W.
Farnam of New Haven, Conn., vice president of the New Haven
Bank. N. B. A., was elected as his successor.
At an early meeting of the Board, Mr. Daniel G, Wing, president
of the First National Bank of Boston, was again elected a member
of the Advisory Council representing this district for the term ending
December 31, 1916. At subsequent meetings, Mr. Charles A. Ruggles
was elected manager of the clearing department, Mr. C. C. Bullen
was elected assistant cashier, and Mr. William Willett was elected
assistant auditor.
With the broadening of its activities by the Federal Reserve Bank
it was found necessary to increase its force to 78 employees. There
were but 18 a year ago. This number includes the entire clerical
force of the Boston Clearing House which was added to the staff
on July 15, On the same date this bank assumed the lease of the
quarters formerly occupied by the Boston Clearing House and these
rooms are now used to house the check collection department.
During the year this bank was twice examined by the Federal
Reserve bank examiner and his staff. These examinations covered
the Federal Reserve Agents department as well as the bank. Examinations were also made of both the bank and the Federal Reserve
Agent's department by the bank's auditors,,

206

ANNUAL REPORT OF THE' FEDERAL RESERVE BOARD.
CLEARINGS AND COLLECTIONS.

The voluntary system of check collection inaugurated June 15,
1915, was continued until July 15, 1916. Only a small proportion
of the member banks joined that system and those for the most
part from a disposition to cooperate with all of this bank's undertakings. Forty-three member banks out of a total of 442 joined at
the outset. That number had been increased to 50 when the system
was discontinued. Apart from the disinclination of banks to have
checks charged to their account before they had an opportunity of
examining them, the member banks had difficulty in maintaining
adequate balances and continual overdrafts ensued, although banks
joining the system were given the privilege of immediate credit for
transfer checks on New York, Philadelphia, and Albany, the three
principal collection centers, outside of Boston, for this district. The
operations of this clearing system from January 1, 1916, to July 1,
1916, are shown in schedule 19.
On July 15, 1916, Federal Reserve Banks inaugurated a system for
the general collection of checks which included checks on all member
banks throughout the county and checks on nonmember banks
that would remit at par to a Federal Reserve Bank. Under this
system the factor of time was recognized and checks were not charged
to a member bank's account until sufficient time had elapsed for it to
advise payment or in the case of checks on nonmember banks, until
the receipt of remittances to cover. While under this plan immediate credit is given for checks to the depositing bank, the proceeds do
not count as part of the reserve which member banks are required
to carry in the Federal Reserve Bank, nor do they become available
for checking purposes until actually collected. This system is
similar to the one in active operation since 1900 in the so-called
foreign department of the Boston Clearing House Association which
had proved most satisfactory and effective. Under that plan, checks
drawn upon all country banks throughout the New England States
were daily assembled and forwarded for collection and remittance,
the transit time in most cases being but two days and, with the
exception of about 85 banks, free of exchange charges. In establishing this system the Federal Reserve Bank made similar arrangements, so that checks on all New England banks could be handled
on a basis of two days' deferred payment, and the banks that had
refused to waive exchange charges to the Boston Clearing House
Association all agreed to rsmit for their checks at par.
Checks on the other districts are handled according to schedule
No. 20. The basis of this schedule is the time needed for the pro-

DISTRICT NO, 1

BOSTON.

207

ceeds of a check to reach the Federal Reserve Bank in the district
on which drawn, clearings between Federal Reserve Banks being
made weekly through the Gold Settlement Fund.
Where a member bank has a sufficient volume of checks on certain
points or districts, special arrangements have been made for the
direct routing of such items and member banks have availed themselves of this privilege to reduce transit time. As the advantage of
direct routing of items becomes better understood and appreciated,
more member banks will undoubtedly avail themselves of this service.
In order to prevent duplication of work, the committee of the
Boston Clearing House Association was approached before the
inauguration of the new collection system by the officers of this
bank with, the suggestion that the management and operation of
the foreign department of the Boston Clearing House be taken over
by the Federal Reserve Bank. This suggestion was accepted and on
July 15 this bank took over the entire equipment of the Boston
Clearing House including the staff and clerical force, and assumed
the lease of its premises. Mr. Charles A. Ruggles, manager of the
Boston Clearing House, was elected manager of the clearing department of the Federal Reserve Bank.
Daily clearing of checks between the associated banks of Boston is now made on the premises of the Federal Reserve Bank
under the supervision and management of Mr. Ruggles, who still
continues as manager of the Boston Clearing House Association,
this bank furnishing for the purpose of this clearing the clerical
force, equipment, and space at a nominal annual charge. Clearing
balances once having been established, all settlements are effected
through the Federal Reserve Bank, as has been the practice in Boston
since that bank was opened. The cooperation of the Boston Clearing
House committee in this connection and in many other matters pertaining to the development of the Federal Reserve Bank of Boston
has been of the greatest help.
It will be seen from schedule No. 21 that check collection operations
under the present system have been active and of an increasing
volume. Each month more and more member banks are availing themselves of the facilities of this department. The tendency
has been for the country banks to send their checks for collection to their city correspondents and, therefore, most of the checks
handled for collection have been received from the Boston banks.
The use of the collection department of the Federal Reserve Bank
will require some educational effort, since member banks accustomed
to send their checks, especially those on points outside of the district, to collection centers such as Albany and Philadelphia, are slow
to change their methods for the more direct collection facilities

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ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

offered by this bank. There has been a disposition shown on the
part of out-of-town member banks to eliminate the practice of sending
checks to these collection centers outside of the district and to consolidate their balances in the Boston banks.
Under the Boston Clearing House system, the cost of collection
of New England checks had been assessed on the members on a per
thousand dollar basis, the charge averaging about 7 cents a thousand
dollars. An analysis of the accounts of the Boston Clearing House
covering those operations showed that the figure of 7 cents per
thousand did not represent the actual cost of handling these items.
The Boston city clearing carried a considerable part of the expense
of this business, the city clearings being charged with a large part of
the rent and a proportion of all the other expenses of the conduct
of the clearing house entirely out of proportion to the labor and expense involved in handling city clearings. An analysis of the cost
of collecting checks in this district outside of Boston for several
years shows that with the fair proportion of the expenses charged
to the city clearing, the cost of the country clearing was nearer 12
cents a thousand dollars than 7 cents. That this work is now being
done cheaper and to .better advantage is best demonstrated by the
fact that the member banks are using it more and more each month
and that the volume of checks now handled by the Federal Reserve
Bank largely exceeds that formerly handled by the clearing house.
The bank established a per item charge based upon the cost of
maintenance of the transit department as on the whole the fairer
method, although it was realized that banks having a large number
of small items would be charged more proportionately than banks
with fewer but larger items. To the present time, the cost per item
has been levied on member banks at the rate of nine-tenths of a cent
for checks on all districts ; and a uniform charge of lh cents has been
made between Federal Reserve Banks. It is expected that this costwill be materially reduced as time goes on, for it is believed that,
with the present equipment, the collection department can handle
a large increase of items without materially increasing its operating
force.
In continuation of the practice established by the foreign department of the Boston Clearing House, the Boston banks assemble
their checks on each New England bank in packages before depositing
them in the Federal Reserve Bank. This has been a saving of work
to the Reserve Bank. As a result it has been possible to receive
these checks to a much later hour than if checks were deposited
unsorted.
Most of the checks received have been from Boston banks or other
Federal Reserve Banks, rather than from member banks outside of

DISTRICT NO, 1—BOSTON".

209

Boston. Only a few of these outside banks have used the check
collection facilities of the Federal Reserve Bank to a large extent.
These banks offer no criticism of the way their business has been
handled, but state that they have been able to consolidate their
accounts with correspondents and through this, and the more direct
routing of checks, have been enabled to reduce their reserve requirements and thereby increase their loaning ability.
The effect of the clearing system of the Federal Reserve Bank on
the Boston banks is more apparent. It has brought to the Boston
banks from out-of-town banks and from their commercial depositors
as well, a volume of business which formerly went to Albany, Philadelphia, and other collection points. The charge made by the Federal
Reserve Bank on these outside items has given the Boston banks a
basis on which to analyze the accounts of customers depositing these
outside items, whereas previously the cost was to a considerable
extent estimated. It has also tended to reduce the reciprocal account which has always been of doubtful value. By this new collection system, not alone is time saved, but also exchange charges,
and, in addition, balances which have been scattered over the country
have been greatly reduced and used to increased advantage.
The change in method of charging for collecting checks from a per
volume basis to a per item basis has made many changes in the value
of different accounts. The Boston Clearing House banks, dealing
with their depositors, both banks and individuals, are handling free
of exchange such items as may be collected at par through the Federal
Reserve Banks of Boston, New York, and Philadelphia.
The Federal Reserve Bank has as yet taken no steps to inaugurate
a department for the general collection of time items, but as the check
collection department becomes more and more firmly established
and the reserves of the member banks are transferred, such a department will inevitably have to be established.
Certain member banks have found it convenient to send in their
maturing notes for rediscount for one or two days, evidently with the
idea of using the bank for collection purposes. These notes have
been forwarded for collection, the member bank paying for any expense incurred. This bank has also acted as an agency for the collection of time items received from other Federal Reserve Banks.
GOLD SETTLEMENT FUND.

The Gold Settlement Fund, through which clearings and transfers
are made between the 12 Federal Reserve Banks, has demonstrated its
great usefulness and value during the past year. Not only have member banks used the Federal Reserve Banks to make a vast volume of
transfers through this medium to and from other districts, but bal

210

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

ances created through, the operations of the check collection department have been settled through this gold fund. While transfers to
and from any Federal Reserve Bank can be made at any time, the
general settlements between the Federal Reserve Banks continue to
be made on Thursday of each week. The indirect savings to all
member banks through the settling of balances between the different
districts obviating the shipment of actual currency and the maintaining of unnecessary bank balances are very considerable. The volume
of transactions settled through this fund is shown in schedule 22.
CONCLUSION.

It will be seen from the foregoing statement and from the attached
schedules that much progress has been made during the past year by
the Federal Reserve Bank of Boston, and that its operations have
increased in volume. The member banks have been brought in closer
touch with and have used the Federal Reserve Bank to a greater extent
than last year. Especially has this been true during the last six months.
The cooperation which the bank received from the officials of its
member banks has been most helpful and of great value in increasing
the bank's usefulness and efficiency. It has been shown that even
under the existing low rates for money and with the limited call for
rediscounts, the bank has been able to earn its dividends. Its investments have been of a character and maturity to keep its assets in a
liquid and convertible state to meet any unusual demands of its
member banks for rediscounts. Schedule 24 shows the maturities of
all investments, excepting Government notes and bonds, at close of
business December 31, 1916.
The management of the bank has pursued a policy of developing
new activities as far as was consistent with prudence, and in accordance with the needs of the district.
The most pressing needs of the member banks which are being
given careful consideration by the officers of the bank are, that the
bank should be in a position to furnish currency for pay-roll purposes,
and to furnish facilities for the collection of time items. With the
transfer of further reserve balances, the Federal Reserve Bank should
be in a position to handle checks on all banks in the United States.
In developing the activities of the bank and in formulating its policies
of operation, due regard has been given to the needs of the district and
to the policies and activities of other Federal Reserve Banks.

DISTRICT NO. 1

211

BOSTON".

SCHEDULE 1.-—Profit and loss account.
1916.
Paid, in lien of dividends on stock canceled
Organization expense
Furniture and equipment
Exchange paid
Difference account..
Current expense.

Dee. 31, to balance

258,527.42

1916.
Discount from member banks
on—
Notes discounted
f39,641. 83
Collateral notes
2,153.23
Trade acceptances
1,508.14
— $43,303.20
Discount on open market
purchases—•
Bankers7 acceptance, domestic
7,709.16
Bankers' acceutance, foreign
229,147.58
State, city, and town
notes
78,578.27
'•
315,435.01
Interest on United States
bonds
57,194.16
Appreciation and profit on
United States bonds
20,575.00
77,769.16
Commissions
10,558.55
Sundry profits..
3,147.98

450,213.90

12,804.17
17,301. 73
15,352.04
.40
88.98
156,139.16

1917.
Dividends paid member banks, period
Nov. 2, 1914, to Jan. 1,1916
246,930.86
Balance
11,596.56

Jan. 2, balance forward

1917.

258,527.42

258,527.42
Jan. 3, balance

11,596.56

SCHEDULE 2.—Comparative balance sheet Dec. 31, 1915, and Dec. SI, 1916.
Dec. 31, 1915.

Dec. 31, 1916.

RESOURCES.

Bills discounted for member banks
Bankers' acceptances
United States bonds
State, city, and town notes

$235,471.40
6,519,332.02
986,250.00
3,140,914.95

Interest accrued on United States bonds
Check collection expense (recoverable)
"Furniture and fixtures
Expenses paid in advance
Cost of Federal Reserve notes (unissued)
Expense—organization
Due from Federal Reserve Banks
Due from Federal Reserve Banks (in transit)..
Due from member banks (overdrafts)
Due from member and nonmember banks (in
transit)
Exchanges for clearing house
Federal Reserve notes on hand
National bank notes and Federal Reserve
notes, other banks
Nickels and cents
Cash reserve:
G old coin and gold certificates
14,154,370.00
Gold settlement fund
4,279,000.00
Other lawful money
786,198.00

110, SSI, 968. 37
4,945.61

$3,745,315.28
12,725,167.81
2.332,000.00
890, 002. 23

9,595. 24
970. 00
38,633. 35
34,003.45
2,137,664.12

$ 1 9 j 692.485. 32
13j870.83
8,384.44
1,564.72
29,230.20
4,836,131.06
6,492,548.08

27,893.10
114,012.74
721,930.00

6,099,619.31
328,149. 59
630,500.00

211,855.00
12.13

185,000.00
95.87

19,219,568.00

11,774,857.50
14,737,000.00
427,683.00

26,939,540.50

33,403,651.11

65,257,119.92

5,158,150.00

4,989,700.00
258,527.42
61,209. 64
56,757,135.68

LIABILITIES.

Capita! paid in
Profit and loss account
Unearned discount and interest
Due to member banks
Due to Federal Reserve Banks (uhcollected
checks)
United States deuosits
Cashier's checks outstanding

35,438.28
27,889,242.70
192,057.99
128,762.14
33,403,651.11

1,058,988.16
2,130,617.72
941.30
65,257,119.92

212

REPORT OF THE FEDERAL RESERVE BOARD,

SCHEDULE 3.—Bonds and securities and loans secured by stocks and bonds held, by member banks June 23, 1915, and Nov. 17, 1916.
Loans secured by stocks and
bonds.

Bonds and securities.
State.
June 23, 1915.

Nov. 17,1916. j June 23, 1915.

Nov. 17,1916.

Maine
New Hampshire
Vermont
Massachusetts...
Boston
Rhode Island...
Connecticut

$18,911,000
6,577, 000
6,159,000
34,752,000
30,404,000
8,635,000
i 17,468,000

$24,807,000
9,081,000
8, 726,000
44,646,000
32,099,000
11,508,000
130,234,000

$8,386,096
5,511,925
3,143,093
32,568,345
60,448,570
5,731,842
i23,331,*515

$8,519,336
5,990,500
3,354,580
38,963,954
99,863,363
5,407,317
30,085,369

Total

122,906,000

161,101,000

139,121,386

192,184,419

Includes 15 banks in Fairfield County.

SCHEDULE 4.—Distribution, by maturities, of bills rediscounted for member banks, Jan. 1,
1916, to Dec. SI, 1916.
11 to 30
days.

ltolO
days.

Month.

31 to 60
davs.

$31,311.30 I
2,808.40 i

Total

Over 90
days.

Total.

$41, 480.61 $19,906.83
20, 081.00
4,875. 00
32,893.93
17, 463.03
10, 000.00
7,100. 00
17,752.12
26; 250.00
177.99
12,050.62
23,
12,236.77
61, 000. 00
23, 708. 20
125, 029.99
522, 104. 98 71,308.00
7,075. 69
7, 176.03
45, 808.62 211,127.82
311.
89
135,859.59
121,

$1,809.00

18,073,366.62 ; 14,268,948. 25 I 1,020,884.14 j 555,894.57

2,789. 00

$36, 583. 00
86, •52. 37
162, 993. 00
352, 600. 00
50,095. 00
41,000.00
72, 885. 54
58,200. 00
373, 325. 00
2, 762,652. 37 2,165. 000. 00
2,626,300. 00 1,690, 247.35
61,212.85
180, 952. 82
374,124.13
51, 648. 51
4,729,229. 65 1,879, 472. 42
7,338,432. 92 7,216, 488. 24

January.
February
March.. I
April
.......
May
June
July
August
September
October
November
December

61 to 90
days.

280.00
700.00

$131, 090,74
114, 516. 77
213, 349. 96
419, 795. 00
157, 887. 68
466, 753. 61
5,001, 169.14
4, 465, 985. 54
835, 578. 65
440, 024. 36
6,865, 338. 51
14, 810, 092.64
33,921,882.58

SCHEDULE 5.—Discount rates.

Date.

J a n . 13, 1916
Feb. 21, 1916
J u l y 20, 1916
Sept. 18, 1916
Dec. 7, 1916

Maturities of
10 days
or less.

Maturities of
11 to 30
days.

Maturities of
31 to 60
days.

3
3
3
3
3*

31
3|
343£
4

4
4
4
4
4

!
!
j

Maturities of
61 to 90
davs.

Agricultural and Promissory
live-stock
notes not
paper 91 over 15
days to 6
davs.
months.

Trade
acceptances.

Commodity
paper.

SCHEDULE 6.—Division of rediscounts by classes.
Number of Number of
applicaitems.
tions.

Bills receivable
Trade acceptances
Collateral notes

2,223
54
28

251
17
28

2,305

296

Number of banks accommodated during 1916
Number of banks accommodated previous to 1916 but not during that year
Total banks accommodated to Dec. 31,1916

Average
rate
earned.

Amount.

Per cent.
3.626
$31,461,047.29
429.222. 40
3.374
3.413 j
2,031,612.89
1

33,921,882.58
55
10
66

213

DISTRICT XO. 1—BOSTON.
SCHEDULE 7.—Acceptances purchased for own account.
Foreign acceptances.
Month.
Items.

January
February
March
Apri^
Mav

156

175
240
81
141

339
23
152
286
97

JUPC

July

August
September
October
November
December

411

140
2,241

Total

Amount.

$2,830,499.03
3,726, 796.41
6 Oil 254 80
1,731,854.98
3.860,258.86
7,670, 702.47
1,395,437.14
4,339,564.16
4,673,573.97
2 279,809.51
7,738,414.04
3,014, 286. 55

Domestic acceptances.
Low and
high rate.

Items.

Low and
high rate.

Amount.

Per cent.
2-24
2-2|

Per cent.

2-2-J

2-2i
2-2|

if
2--2-^

2H>!

49,272,451.92

12
93

$905,690. 70
2,198, 819. 47

105

3,104,510.17

o
3

SCHEDULE 8.—Acceptances purchased for other Federal Reserve Banks.
Foreign acceptances.
Items.

January
February
March
...
April
May
June
July
August
September
October
November
December .

Amount.

Domestic acceptances.

Low and
high rate.

Items.

Amount.

Per cent.
. -

153
461

$1,914,854.84
751,585. 41
2,636 510.59
4,806. 25
1,635,549.93
6 844 956.19
2,204,039. 64
700,749. 67
1/631,917.83
2 359 820.67
9,951,164.11

1,417

30, 635,955. 13

43
27
139
1
35
345
103

40
70

Total

Low and
high rato.

Per cent.

2-2
2-2
2-2

2-2!
2-3—2 ^

2|-2|

2|-2g
2i— 2'i
20

$343,879. 82

343,879. 32

SCHEDULE 9.— Warrants.

Month.

January..
February.
March
April
May
June
Julv

Purchased
for own
account.

1447,000
541, 000
1,065,000
32,500
2,179,000
320,000
190,000

Purchased
for other
Federal
Reserve
Banks.
$135,000
105.000
40,000
100, 000
1, 730,000
1,228,000
160,000

Pnrviissed
Month.

Purchased
and held.
Banks.

August
September
October
November
December

$511,500
1, 582', 000
180', 000
515,900

$340,000
2.180.000

7,583,900 j

0,750,500

43f>; 000

297, 500

Average rate earned on warrants during year 2.729 per cent. Warrants of 98 different muaieiralities
held during year as follows: Cities, 41; towns, 52; counties, 3; States, 2; total,
1
98.

214

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

SCHEDULE 10.—Percentage of reserve carried by Federal Reserve Bank of Boston at
close of business each Friday.
1916

JAN.ff'EB , MftR I APR, MAY, JUNEj I JULY 1 AUG. SEPT | JOCT,

1916
SCHEDULE 11.—Member banks liquidated during 1916.
Name of Bank.
First National Bank
United National Bank

Location.
Plainville, Conn
Providence, R.I

Middlesex County National Bank Middletown, Conn
Casco National Bank

Portland, Me

Melrose National Bank.

Melrose, Mass

Hyde Park National Bank

Hyde Park, Mass

Neponset National Bank.

Canton, Mass

Southington National Bank

Southington, Conn

First National Bank

Richmond,Mass
Me
Taunton,

Bristol County National Bank... Boston, Mass
Old Boston National Bank
Hingham, Mass
Hingham National Bank

Hyannis, Mass

First National Bank

South Weymouth, Mass

First National Bank

Augusta, Me

First National Bank

Middleboro, Mass

Middleboro National Bank

Wakefield, Mass

Wakefield National Bank

Natick, Mass

Natick National Bank

Gardner, Mass

Westminster National Bank

Haverhill, Mass

Merchants National Bank

Hartford, Conn

National Exchange Bank

Disposition.
Formed Plainville Trust Co., PlainviUe,
Conn.
Consolidated with Industrial Trust Co.,
Providence, R. I.
Consolidated with Middletown National
Bank, Middletown, Conn.
Consolidated with Casco Mercantile Trust
Co., Portland, Me.
Formed Melrose Trust Co., Melrose, Mass.
Formed Hyde Park Trust Co., Hyde Park,
Mass.
Succeeded by Canton Trust Co., Canton,
Mass.
Succeeded by Southington Bank & Trust
Co., Southington, Conn.
Discontinued business.
Succeeded by Taunton National Bank,with
whom it consolidated.
Consolidated with Merchants National
Bank, Boston, Mass.
Succeeded by Hingham Trust Co., Hingham, Mass.
Succeeded by Hyannis Trust Co., Hyannis,
Mass.
Succeeded by Weymouth Trust Co., South
Weymouth, Mass.
Succeeded by First National Granite Bank,
Augusta, Me.
Succeeded by Middleboro Trust Co., Middleboro, Mass.
Succeeded by Wakefield Trust Co., Wakefield, Mass.
Succeeded by Natick Trust Co., Natick,
Mass.
Succeeded by Gardner Trust Co., Gardner,
Mass.
Consolidated with Haverhill National
Bank, Haverhill, Mass.
Consolidated with First National Bank,
Hartford, Conn.

215

DISTRICT NO. 1—BOSTON.
SCHEDULE 12.—Borrowings of national hanks in New England.
Borrowed
from Federal
Reserve
Bank of
Boston.

Date.

Dec. 31,1915.
Mar. 7,1910..
May 1,1916..
June 30,1916.
Sept. 12,1916
Nov. 17,1916

Borrowed
Acceptances
elsewhere. \ rediscounted.

$235,000
131,000
275, 000
183,000
497, 000
2,917,000
1

$5,100,000
3,154, 000
3,465, 000
3, 762,000
3,872,000
4,329,000

Total
borrowed.

$584, 000
1, 623, 000
3, 805, 000
3,879, 000
6,320,000
5,924, 000

$5,919,000
4,908,000
7,545,000
7,824,000
10,689,000
13,180,000

Nov. 17,1916, does not include 15 banks in Fairfield County, Conn.

SCHEDULE 13.—Member bank deposits in Federal_ Reserve Bank of Boston at close of
business each Friday.
1916
60

JAN

PR1 ftiA

' IV?

iEPT j &SCT * Hi

55
^ /

£0

40 h

i
30

O 40

A/k
Aft

A
f A.

A >«. MA

AUS,

SEPT

IBIS
SCHEDULE 14.—Number of checks drawn on treasurer of United States handled by Federal
Reserve Bank of Boston.
Month.

January
February..
March
April
May
June
July
August
September.
October
November.
December..
Total..

Number
of
pension
checks.

Amount.

629
1,189
30, 378
8,160
1,659
28, 417
8,219
1,739
40,674
9, 280
2,911
32,120

112,423.12
1, 765,606. 46

165,375

8,374, 667. 48

61,222. 86
1,631, 466.50
441,048. 75
81,874.38
1,638,894.57
434,429.41
79, 841.41
1,652, 618. 72
444,347. 50

Number
of other
checks.

Amount.

checks.

Total
amount.

15, 253
15,145
14,213

$306, 438. 82
1,629, 424.96
2,337,243. 61
2,117,106 23
1,919, 971.09
1,858, 765.57
2,219,905. 00
2, 473,364.00
2,846, 940. 41
2,577,499. 74
2,499,389. 07
2,126,533. 50

2, 880
13, 892
45, 906
22,576
15,482
41,373
22, 007
16,810
54,382
24, 533
18, 056
46,333

$337,332. 62
1, 690,647. 82
8,968, 710.11
2,558,154.98
2,001,845.47
3,497,660.14
2,654,334.41
2,553,205.41
4. 499, 559.13
3, 021, 847.24
2,611,812.19
3, 892,139.96

158, 855

24,912, 582. 00

324,230

33, 287, 249. 48

2,251
12,703
15,528
14, 416
13, 823
12,956
13, 788
15,071
13, 708

These are not included in schedules of check collection No. 19 and No. 21.

Total
number

I of

216

AXXUAL REPORT OF THE FEDERAL RESERVE BOARD.

SCHEDULE 14a.—Government deposits in Federal Reserve Bank of Boston at close of
business each Friday.

1916

AUG. J;£PT ' O C T . NOV. DE<

1916
SCHEDULE 15.—Federal Reserve notes i.
Denomination.
5s
10s
20s
50s

100 s
Total

1916

1915

$6,226,600
3,965,600
88,200
42,000
102,300

$3, 620,000
4, 680, 000
640,000
600,000
980,000

$9, 846, 600
8,645,000
, 728,200
642,000
1,082,300

10,424,700

10,520,000

20,944,700

Total.

SCHEDULE 16.—Federal Reserve notes redeemed.
Denomination.
5s..
10s.
20s.
50s.
100P

Total.

January. February March.

April.

May.

$243, 200
261,300
20,300
16.800
19,000

$180,750
207,200
32,000
11,350
21,900

$270,050
283,400
6,700
13,150
24, 800

$271, 600
243, 700
27,500
15, 800
19, 400

560,600

453.200

598,100

578,000

July.

June.

$352,300 $157, 450
315, 400 157', 100
25,800
11.300
5,950
14, 300
27,400
13,500
735,200

345,300

August.
$330,300
315,300
21,200
16,300
38,200
721,300

Redeemed Redeemed,
by United by Federal
States
Reserve
Treasury.
Agent.

September. October.

November.

December.

Total.

$422, 050
478, 500
39,600
35,850
55,100

S320, 860
372.705
27, 200
9,350
26,400

$265,550
323,800
10,900
12, 250
21,200

$203,400
222, 400
35,400
13, 800
13, 600

$3,017,510
3,180, 805
257, 900
164, 900
280,500

$1,219,510
1,300,805
85, 900
49,900
75, 500

$1,798,000
1,880, 000
172, 000
115,000
205,000

1,031,100
Total

756,515

633,700

488,600

6,901,615

2,731,615

4,170,000

Denomination.

5s
10s
20-.
50s
100s

217

DISTEICT NO. 1—BOSTON.

SCHEDULE 17.—Federal Reserve notes of the Federal Reserve Bank of Boston received
from other Federal Reserve Banks and notes of other Federal Reserve Banks returned
by Federal Reserve Bank of Boston to bank of issue.
Received. Returned.
New York
Philadelphia..
Cleveland
Richmond
Atlanta..
Chicago
St. Louis......
Minneapolis...
Kansas City...
Dallas
San Francisco.

$1,261,750
133,380
13,820
15,020
19,465
96,500
12,150
10,440
1,785
4,420
18,240

$3,039,000
180,000
150,000
185,000
112,000
24,000
28,000
68,500
49,000
74,000
57,000

Total....

1,586,970

3,966,500

SCHEDULE 18.—Banks granted fiduciary powers under section 11 (k) of the Federal Reserve
Act.
Date.

Name.

1916.

Location.

Powers granted.

Bangor, Me
Nashua, N. H.
Lewiston, Me..

Trustee, executor, registrar of stocks and bonds.
Trustee and registrar of stocks and bonds.
Trustee, executor ^registrar of stocks and bonds.

Bath, Me
Portland, Me.,.
Ansonia, Conn
Beverly, Mass

Aug. 23

Trustee, executor, administrator, registrar of
stocks and bonds.
Trustee, executor, registrar of stocks and bonds.
Registrar of stocks and bonds.
Trustee, executor, administrator, registrar of
stocks and bonds.
Do.

Aug. 23

Registrar of stocks and bonds.

Sept.
Oct.

Limited.
Trustee, executor, administrator, registrar of
stock and bonds.
Trustee, executor, registrar of stocks and bonds.
Trustee.
Trustee, executor, administrator, registrar of
stocks and bonds.

Jan. 1 First National Bank
Jan. 7 Second National Bank..
Jan. 28 Manufacturers National
Bank.
Jan. 28 Bath National Bank
Jan. 28 Canal National Bank...
Apr. 20 Ansonia National Bank.
May 31 Beverly National Bank.

Nov.
Nov.
Dec.

Fourth Atlantic Na- Boston, Mass
tional Bank.
National Bank of Com- New London, Conn.
merce.
7 State National Bank
Windsor, Vt
6 First National Bank
Gardner, Mass
,
27 Portland National Bank Portland, Me..
27 Chap in National Bank.. Springfield, Mass
8 Safety Fund National
Fitchburg, Mass
Bank.

SCHEDULE 19.— Volume and amount of checks collected by Federal Reserve Bank of
Boston Jan. 1, 1916, to July 1, 1916.
Checks drawn on
Boston banks.

Checks

A mount.

1916:
January..
February
March
April.....
May
June

drawn

members of collec-

tion system outside of Boston.

12,361 $31,220,960.00
21,814
9,603 30,459,112.59
18,585
9,986
39,302,937.67
21,371
10,626
29,336,030.10
18,447
11,058
45,785,432. 18 20,300
8,781
52,679,765. 88 20,993

Amount.
870,172.61
549,194,29
095,024.57
269,966.96
417,845.19
586,395.20

218

ANNUAL EEPORT OF THE FEDERAL RESERVE BOARD.

SCHEDULE 20.—Schedule showing -when the proceeds of items will become available.
Immediate credit:
Checks payable through clearing house in Boston.
One day after receipt:
Checks payable through clearing houses in New York and Philadelphia.
Two days after receipt:
Checks payable through clearing houses in Atlanta, Chicago, Cleveland, Kansas
City, Minneapolis, Richmond, St. Louis.
Checks on banks in Connecticut, Delaware, Maine, Massachusetts,1 New Hampshire, New Jersey, New York,1 Pennsylvania,1 Rhode Island, Vermont.
Four days after receipt:
Checks payable through clearing houses in Dallas and New Orleans.
Checks on banks in Alabama, Arkansas, District of Columbia, Florida, Georgia,1
Illinois,1 Indiana, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota,1
Mississippi, Missouri,1 North Carolina, Ohio,1 South Carolina, Tennessee, Virginia,1 West Virginia, Wisconsin.
Eight days after receipt:
Checks on banks in Arizona, California, Colorado, Idaho, Louisiana,1 Montana,
Nebraska, Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South
Dakota, Texas,1 Utah, Washington, Wyoming.
Checks

payable

through

houses in—

clearing
Days.

Checks on banks in—Continued.
Maryland
Massachusetts x
Michigan
Minnesota 3Mississippi
Missouri *
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York 1
North Carolina
North Dakota
Ohio1.....
Oklahoma
Oregon
Pennsylvania l
Rhode Island.
South Carolina
South Dakota
Tennessee
Texas 1
Utah
Vermont
Virginia l
Washington
West Virginia.
Wisconsin..«...
Wyoming

Atlanta
2
Boston
0
Chicago
2
Cleveland
2
Dallas
4
Kansas City
2
Minneapolis
2
New Orleans
4
New York
1
Philadelphia
1
Richmond
2
St. Louis
2
Checks on banks in—
Alabama
4
Arizona
8
Arkansas.
4
California
8
Colorado
8
Connecticut
2
Delaware
2
District of Columbia
4
Florida
4
1
Georgia
4
Idaho
8
x
Illinois
4
Indiana
4
Iowa
4
Kansas
4
Kentucky
4
Louisiana *
8
Maine
2
* Except checks payable through clearing houses in Federal Eeserve cities.

Days.

4
2
4
4
4
4
8
8
8
2
2
8
2
4
8
4
8
8
2
2
4
8
4
8
8
2
4
8
4
4
8

DISTKICT

3ST0. 1

219

BOSTON.

SCHEDULE 21.— Volume of checks handled for members and for other Federal Reserve
Banks, July 15, 1916, to Dec. 31, 1916.
Drawn on N. E., in- Drawn on other districts.
cluding Boston.

Total.

Date and by whom deposited.
Items.

Amount.

July 15 to Aug. 31:
1,157,250 $128,744,928
Members District No. 1
50,299,024
39,974
Other Federal Reserve Banks...
Total
September:
Members District No. 1
Other Federal Reserve Banks...
Total

. .

October:
Members District No. 1
Other Federal Reserve Banks...
Total
November:
Members District No. 1
Other Federal Reserve Banks...
Total
December:
Members District No. 1
Other Federal Reserve Banks...
Total

Amount.

Items.

41,887 $29,566,301 1,199,137
39,974

Amount.

$158,311,229
50,299,024

1,197,224

179,043,952

41,887

29,566,301 1,239,111

208,610,253

733,690
48,543

88,160,535
44,999,100

40,879

27,712,638

774,569
48,543

115,873,173
44,999,100

782,233

133,159,635

40, 879

27, 712,638

823,112

160,872,273

791,203
58,870
850,073

102,688,132. 56,020
60,615,197

35,897,946

847,223
58,870

138,586,078
60,615,197

163,303,329

56,020

35, 897,946

906,093

199,201,275

773,984
69,718

104,927,606
74,410,506

59,862

35,642,472

833, 846
69,718

140,570,078
74,410,506

843, 702

179,338,112

59, 862 35,642,472

903,564

214,980,584

817,258
83,273

104,106,865
77,706,585

75,334

37,306,389

892,592
83,273

141,413,254
77,706,585

900,531

181,813,450

75,334

37,306,389

975, 865

219,119,839

528,628,066 273,982 166,125,746 4,547,367
308,030,412
300,378

694,753,812
308,030,412

Total:
4,273,385
Members District No. 1
Other Federal Reserve Banks... 300,378
4,573,763

Total

Items.

836,658,478 273,982 166,125,746 4,847,745 1,002,784,224

This schedule does not include Government checks shown in schedule 14.
SCHEDULE 22.—Gold Settlement

Fund operations,
Amount received in settlement of
accounts due
from other
Federal Reserve Banks.

New York
Philadelphia . .
Cleveland......
Richmond
Atlanta
Chicago
St. Louis
Minneapolis....
Kansas City...
Dallas
San Francisco..
Gain.

75284°—17-

-15

Amount paid
in settlement
of accounts
due to other
Federal Reserve Banks.

Net gain.

$227,904,000 $197,825,000
146,203,000
97, 118,000
15,289,000
11,288,000
10,185,000
16,878,000
6,466,000
10, 548,000
61,901,000
96, 796,000
16,369,000
25, 069,000
4,840,000
8,655,000
3,400,000
15,510,000
1,526,000
3 357,000
3,098,000
385,000

130,079,000
49,085,030
4,001,000

484,429,000
12,752,000

84,878,000

497,181,000

Total.

Jan. 1, 1916, to Dec. SI, 1916.

Net loss.

$6,693,000
4,082,000
34,895,000
8,700,000
3,815,000
12.110,000
1,831,000
1,713,000
72,126,000
12,752,000

220

AXXUAL REPORT"OF THE FEDERAL RESERVE BOARD.

SCHEDULE 22.—Gold Settlement Fund operations, Jan. 1, 1916, to Dec. 31, 1916—Con.
TOTAL EXCHANGE THROUGH GOLD SETTLEMENT FUND BY MONTHS.

1916:

January
February
March
April
May
June
July
August
September
October
November
December

j
j
I
!
!
!
|
I
j
!

Total.

Amount
received.

Amount
paid.

$18,914,000
22,207,000
31,708,000
27,892,000
30,720. 000
38,381', 000
36,019,000
38,513, 000
39,940,000
57,410,000
95,417,000
60,054,000

$20, 816,000
24, 326,000
31, 427, 000
22, 893, 000
28, 843, 000
35, 935,000
31, 229, 000
35, 879, 000
966, 000
909,000
208,000
998,000

497,181,000

484,429,000

SCHEDULE 23.—Money rates in Boston, 1916.
i

Jan.
Call money
Commercial paper
Year money
Acceptances
Town notes

- --

Feb.

3
3
3 -4 3
4 -4i 4
? -3 ?,-3 1
24
1-

Mar. | Apr. May. June. July. Aug. Sept. i Oct. Nov. Dec.
3;
3
3
3i-4 ;: 3}-4 3i-3|
4 -H 4 -412 -3 2 -3 2 -3*
2i-2|i 24-3 24.-2!

""~ i
3 -34. 3 -4
3
3 1 i 3^ 3 - 4 |
4
-i-h
3|-4|
3|-4|
4 -44
44.
4^-l|
4
2
2 -:V
2|-3"
3I-3| 23-3-j
2|-3i
2i 3i
'

4 -6
3f-5
44-4J
3"-3£

SCHEDULE 24.—Classification by maturities of investments {exclusive of United States
securities) at close of business'Dec. 31, 1916,
10 days.
Bills discounted, members
l$l,
Trade
acceptances discounted.
TMember
d •I
bank collateral notes.
Foreign bankers' acceptances.
Domestic bankers' acceptances
Warrants

Total.

977,417.33 $786,840.60! 861,818.651

134,500.00
25,694. 53
76,221.8Sj 257,822. 29
525,000.00
488,600.19 1,443,820. 75j5,552,499. 82|2,135,736.

!, 860, 576. 58
359,738. 70
525,000. 00
9,620,657. 64

505,573. 22!!, 224,724. 83 1,118,730.19
3,104,510.17
186,500.00! 265,170. 83! 193,343. 90 $170,900. 00
890,002. 23

255,481.93
74,087. 50

3,346,281. 48|2,998,956. 45J7,3(52,036. 42;3,482,310. 9<

170,900. 00 17,360,485.32

DISTRICT NO. 2—NEW YORK.
PIERRE JAY, Chairman and Federal Reserve Agent.
KESULTS OF OPERATION.
(1) BALANCE SHEET.

The following is a statement comparing the condition of the
Federal Eeserve Bank of New York on December 31, 1915, and
December 30, 1916, and showing the increase and decrease in the
various items of resources and liabilities.
Dec. 30, 1916.

Dee. 31, 1915.

$7,071,158.55
41,457,184.04
972,311.62
1,042,550.00
1,205,000. 00

$236,472.08
9,546,011.06
1,198,585.98

51,748,204.21

10,981,069.12

Increase.

Decrease.

KESOURCES.

Earning assets:
Bills discounted for member banks
Acceptances purchased
Municipal warrants
United States bonds
United States one-year Treasury notes
Total.

Reserve cash:
159,321,257.50
Gold coin and certificates
20,570,000.00
Gold settlement fund
Gold redemption fund for Federal Reserve
250,000.00
notes
11,188,200.00
Legal tender notes
4,077,274.80
Silver certificates and coin
195,406,732.30

Total..

39,703,338.57

Total resources

40,993,409.45

226,274.36

'9,752,570.00
55,i,000.
765.

284;'., 322.
821,914.90

Other resources:
Federal reserve notes and other cash on
13,865,897.46 j 16,180,530.94
hand
23,077,418.64 j
Items in process of collection
Exchanges for clearing house and cash
2,503,168.21 j
items
12,501.88
Interest accrued on United States b o n d s . .
235,598.86
232,
Cost of unissued Federal Reserve notes..,.
Expense of organization
122,
Furniture and equipment
26,
Expenses paid in advance, etc
6,
8,753.52 i
Total

$6,-834,686.47
31,911,172.98 I
! $226,274.36
1,042,550.00
1,205,000.00

17,563,959.55

,853,000.00
195,000.00
5,496,435.00
3,792,952.40
24,337,387.40 |9,752,570.00

23,077,418.64
1,515,601.86
4,353.96
3,512.07

2,314,633.48

122,335.01
26,980.36

2,441.34
24,603,327.87 2,463,948.85

286,858,275.08 209,366,943.57 177,491,331.51

LIABILITIES.

Capital fund:
Capital paid in
Profit and loss
Total.

11,865,750.00
163,063.98

11.063,150.00
2
111. 22

802,600.00
163,175,20

12,028,813. £

11,063,038.78

965,775.20

Deposits:
3,571,391.94
Due to United States Government
Due to member banks, reserve balances.. 237,907,354.87 179,404,501.65
Due to member banks, uncollected funds. 18,552,984.84
Due to other Federal Reserve B a n k s Collected funds, net
12,373,721.91 17,886,055.54
Uncollected funds
2,085,975.49
Cashier's checks outstanding
188,275.81

Total

274,679,704.8
i Net.

198,131,776.63
2

3,571,391.94
58,502,853.22
18,552,984.84
2,085,975.49
82,713,205.4

5,512,333.63
652 ^943 .'63
6,165,277.26

Deficit.

221

222

ANNUAL EEPOET OF THE FEDEEAL RESEBVE BOARD.
Increase

Dec. 30, 1916.

Dec. 31, 1915.

$140 246 60
9 509.64

$140, 000.00
31, 520.01
608.15

$117,628. 08

149 756. 24

172, 128.16

117,628. 08

Decrease.

LIABILITIES—continued.

Other liabilities:
Liability on Fedoral Reserve notes
Unearned discount .. ..
Sundry reserves
Total
Total liabilities

$140,000.00

140,000.00

286,858 275.08 209,366, 943.57 177,491,331. 51

FEDERAL RESERVE AGENT.

Resources: Gold to reduce note liability

107,003, 765.00

89,440, 000.00

18,563,765. 00

Liabilities: Notes outstanding

107,003, 765.00

89,440, 000.00

18,563,765. 00

iNet.

The most noticeable features of the statement are the increase in
the investments, principally acceptances purchased, and the increase
in the member bank deposits, due partly to expansion of their own
deposits and partly to the excess balances which some of them
maintain.
(2) INCOME AND EXPENSES.

The following statement shows the income and expenses of the bank
for the years 1915 and 1916:
1916

Bills discounted for members
Acceptances bought
United States securities
Municipal warrants
Profit realized on United States bonds
Commissions received
Service charges
S u n d r y profits
Excess of expense over income, carried to profit and loss.

$37,368.26
530,483.75
81,644.49
214,122.13
43,515.01
42,387.09
32, 959. 90
1,128. 59

Total.

1915

$36.840.98
97,054.10
191,868.68
"""9," 437." 72
9,833. 85
111.22

983, 609. 22

345,146. 55

10,764. 51
215,307.83
45,810. 04
151,200.36
95,240.00
39,029.38

18.240.72
154,043.05
42,749.95
44,472.23
63,800.00
21,840.60

557,352.12

345,146.55

EXPENSE.

Directors' fees, outside conferences and Federal Advisory Council.
Salaries
Rent
General expenses
Cost of Federal Reserve notes used
Assessment for expenses of Federal Reserve Board
Total
Net earnings
Charged off, Dec. 30,1916:
Organization expense
Furniture and equipment
Sundry
Dividend paid

Amount carried over to profit and loss.

426,257.10
172,289.96
63,442.17
347. 98
127,113.01

263,193.12
163,063.c

The principal increase is due to the income from acceptances purchased. The item "Commissions received" represents, principally
the allowance made by other Federal Reserve Banks to this bank for,

DISTRICT ^ 0 . 2

223

NEW YORK.

purchasing and caring for investments made for their account in the
New York market. The item "Service charges" represents the aggregate of charges, at 1 cent per item, made to member banks depositing checks with this bank for collection. Both of these items are,
in their nature, deductions from the expenses of the bank rather than
credits to income, but it has seemed clearer to show them among the
items of income.
The increase in the salary item arises from the increase of the staff,
due partly to the general development of the business of the bank
and partly to the growth of the collection system. The general expense item for 1916 includes $58,751.15, charged to general expenses
in monthly installments during the year, representing the amortization
of the organization expenses and furniture and equipment; $12,937.70
representing the cost of redeeming Federal Reserve notes, and
$12,582.92, representing service charges paid other Federal Reserve
Banks for items sent them for collection, no similar items having been
included in general expenses for 1915.
At the close of the year, in connection with the payment of the first
installment of the accrued dividends, the entire balance in the organization expense and the furniture and equipment accounts, aggregating
$135,732.13, was charged off and a balance of $163,063.98 was carried forward to profit and loss. The only item of a nonliquidating
character now carried in the balance sheet is the amount of $235,598.86
representing the cost of unissued Federal Reserve notes. The cost
of printing Federal Reserve notes and maintaining a large supply of
them in New York and Washington is charged to this account, and
whenever any are issued to this bank for use the account is credited
with the proportionate cost.
On December 15 the directors declared a dividend at the rate of
6 per cent per annum from November 2, 1914, to March 31, 1915,
aggregating $127,113.01, which was credited to the member banks on
December 30, 1916.
(3) RESERVE POSITION.

The following table shows the reserve position of the bank at the
close of business each month during the year:
1916.

Jan. 31
Feb. 29
Mar.31
Apr.29
May 31
June 30
July 31
Aug. 31
Sept. 30
Oct. 31
Nov. 30
Dec. 31

Silver and
silver
certificates.

Gold and gold

Gold with
Federal

$208,798,935.54 $176,166,295.25 $3,050,435 $2,546,060.25
209,818,946.99 178,143,417.00 5,034,685
284,947.00
207,446,502.45 170,140,997.90 1,741,047
113,658.40
192,610,702.28 156,189,343.35 1,840,765 3,995,545.85
215,138,290.18 167,565,327.30 13,079,355 5,981,134. 80
218,614,623.88 181,180,118.30 9,639,020 10,972,688.30
217,325,003.36 175,842,078.15 5,574,565 8,913,683.15
207,995,176.68 165,664,667.10 1,767,645 3,778,552.10
2,258,605
210,134,122.36 174,708,731.55
725,669.05
1,837,510
228,771,932.10 191,848,674.70
566,729.15
2,973,380 1,084,437.40
203,290,119.62 165,764,526.80
249,099,118.01 195,406,732.30 11,188,200 4,077,274.80

$170,569,800.00
172,823,785.00
168,286,292.50
150,353,032.50
148,504,837.50
160,568,410.00
161,353,830.00
160,118,470.00
171,724,457.50
189,444,435.55
161,706,709.40
180,141,257.50

$94,240,000
77,634,700
75,125,400
70,791,200
74,390,200
69,473,500
66,041,200
68,995,800
78,413,600
84,230,815
90,733,015
107,003,765

Net deposits.

Total reserve.

Legal
tender
notes.

certificates.

Reserve
Agent.

224

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD,
(4) DISCOUNT RATES.

The discount rates established by the Federal Reserve Bank of New
York during the year and the rates at which acceptances were purchased in the open market have been as follows:
Rates at which acceptances
were
purchase:! in th.8
open market.

Discount rates for various maturities.

Month.

January
February
March
April
May
June
July
August
September...
October...

15 days
or less
10
(includdays
color less. ing
lateral
loans).
3
3
3
3
3
3
3
3
3

November
December..

11 to 30 16 to 30 31 to 60 61 to 90
days, in- days, in- days, in- days, inclusive. clusive. clusive. clusive.

4
4
4
4
4
4
4
4
4
3
3
3

4
A

4
4
4
4
4
4
4
4
4
4
4
4

AgriculIndorsed
tural
trade
paper, Bankers'
acceptbills of
91 days
ances.
foreign
too
origin.
months.
5
5
5
5
5
5
5
5
5
5
5
5

2 -2A2 -2|
2 -2\

2*
2 1 -2 3

2! -4
2", -2jj

21-2?

jpii

2; "23
2' 3

January to September, trade acceptances, 11 to 90 days, 3h per cent. October to December, trade acceptances, 16 to 90 days, 3-£ per cent.

The established discount rates, until the last few weeks of the year,
were above the market rates for commercial paper. In accordance
with the policy referred to in the last annual report and during the
present period of abundant bank reserves this bank has continued
to maintain its discount rates somewhat higher than the level of
current rates for commercial paper in order not to stimulate the use
of its resources. In periods of ease of money it is not to be expected
that member banks will rediscount with this bank, but during the
rise in. money which occurred in December, 1916, when rates for
commercial paper rose somewhat above the level of the established
discount rates of this bank member banks did not hesitate to rediscount freely.
During the first half of the year the purchases of bankers' acceptances in the open market in increasing volume by Federal Reserve
Banks undoubtedly had the effect of keeping the market rate for
such acceptances slightly below the level it would otherwise have
maintained. One of the purposes of the Federal Reserve Banks in
purchasing acceptances at rather low rates was to stimulate the drawing of "dollar bills'7 in foreign countries. While this gave the holder
of such bills a very profitable market in which to sell them, it tended,
on the other hand, to keep that market rather limited and to discourage many possible purchasers from entering it. During the late
autumn the rates at which Federal Reserve Banks purchased bills

225

DISTRICT NO, 2—NEW YORK.

gradually rose and a freer market developed, attracting the funds of
many institutions throughout the country which had hitherto refrained from purchasing acceptances.
(5)

MATURITIES.

The following statement shows the maturities of investments, other
than United States securities, held by the Federal Reserve Bank of
New York December 30, 1916:
Bills discounted.
Within 10 days
11 to 30 days
31 to 60 days
61 to 90 days
91 days (6 months).
Total

INVESTMENTS

OF THE

Warrants.

Acceptances.

Totals.

1566,258.63
5,397,785.01 $76,516. 74
1,012,548.41 365,512.50
94,566.50 334,943.46
195,338.92

$7,142,789.23
11,211,476.10
12,770,380.96
10,332,537.75

$7,709,047.86
16,685,777.85
14,148,441.87
10,762,047.71
195,338.92

7,071,158.55 | 972,311.62

41,457,184.04

49,500,654.21

FEDERAL

RESERVE

DURING

BANK

NEW

YORK

1910.

(L) MEMBER BANK REDISCOUNTS AND ADVANCES.

Since January 1, 1916, 302 applications for rediscounts or advances
aggregating $22,501,332.41 have been received from 62 member
banks, of which 16 were located in New York City and 46 elsewhere
in the district.
A recent amendment to the Federal Reserve Act permits a member
bank to borrow for not exceeding 15 days from a Federal Reserve
Bank on its own note secured by eligible paper or United States
bonds. Member banks are thus enabled to borrow for short periods
on the security of paper having not more than 90 days to run and
without the accounting labor either to them or to the Reserve Bank
of recording and computing interest on large numbers of small notes.
The total amount advanced by the bank in this manner during the
year was $7;939,400 out of a total of $22,329,581.81 borrowed by
member banks. The total amount of trade acceptances discounted
was $166,564.16.
During the period of unsettlement which prevailed in the stock
and money markets during the latter part of December several of
the large New York City banks made use of the rediscount facilities
of this bank for the first time. The amount thus rediscounted for
or advanced to New York City banks during the month of December
was $15,621,973.
The district is distinctly a creditor district, and its banks are
lenders rather than borrowers of money. On June 30, 1916, the total
amount borrowed by our member banks from all sources was

226

ANNUAL REPORT OF THE FEDEEAL RESERVE BOARD.

$4,909,000 against total member bank borrowings for the entire
country on the same date of $69,067,000.
The following is a statement of discounts for and advances to
member banks, by months, during 1916 as compared with similar
transactions during 1915:
1916

Month.

Number

of items.
January
February..
March
April
May
June
July
August
September.
October
November.
December..
Total.

1915
Number
of items.

Amount.

117
$125, 655.65
73
98, 304.35
249
304, 638.35
149
149, 950.15
307
191, 290.38
325
348, 405.34
116
235. 494.37
241
536; 851.00
105
560, 583.29
177 1,035, 118.65
79
715, 293.90
567 17,977, 996.38

139
184
167
241
207
426
259
124
211
107
64
132

$1,642,303.85
1,046,307.55
190,652.27
216,449.17
235,957.67
289,518.48
333,949.18
157,026.34
286,208. 77
137,183.62
152,330.23
131,661.74

2,505 22,329,581.81

2,261

4,819,548.87

The following figures show certain data concerning the rediscount
operations during 1915 and 1916:
1916
N u m b e r of applications received
A m o u n t of applications received
A m o u n t of applications accepted and discounted or advanced upon . . .
Largest application
Smallest application
Number of pieces of paper discounted
Largest piece of paper discounted
Smallest piece of paper discounted
Average size of notes discounted
Number of banks rediscounting

302
$22,501,332.41
$22,329,581.81
$3,877,000.00
$450.00
2,502
$1,000,000.00
$18.00
$8,914. 01
62

1915
277
$11,384,037.63
$9,668,632.41
$2,182,500.00
$1,015.00
2,676
$300,000.00
$20.20
$3,613.09

(2) BANKERS' ACCEPTANCES AND THE DISCOUNT MARKET.

This year has witnessed a remarkable increase in the volume of
business financed in this country under bankers' acceptance credits,
or "dollar credits7' as they are called both at home and abroad.
The following is a statement gathered from reports made to public
officials in the months of March, September, and November, 1916,
showing the amount of acceptance liabilities of national banks in
district No. 2 and trust companies and State banks in the State of
New York:

National banks
Trust companies
State banks
Total

. .
1

March.

September.

November.

$21,361,952
55,374,903
2,501,970

$44,300,877
68,588,558
2, 787, 995

$54,445,056
88,733,874
4, 254, 738

79,238,825

115,677,430

147,433,668

DISTRICT NO. 2—NEW YORK.

227

As originally passed; the Act permitted national banks to accept
only bills arising out of transactions involving the importation or
exportation of goods, but under the amendment of September 7,
1916, national banks may now accept bills covering domestic shipments or secured by the pledge of readily marketable goods in storage. The immediate effect of this amendment was to cause a substantial volume of staple commodities, such as cotton, grain, and
metals, to be carried or shipped within the United States under
bank acceptances instead of under direct bank loans, with beneficial results to the producers, merchants, and manufacturers
affected owing to their ability to draw their supply of funds from
wider markets and sometimes at lower rates than before.
The permission granted by the same amendment to member banks
to accept bills for the purpose of furnishing "dollar exchange" in
certain countries where trade usages require it is already beginning
to be availed of.
Some progress has been made during the year in the development
of a discount market. Kesponsible banking and brokerage houses
have become dealers and specialists in bankers' acceptances, purchasing them at wholesale as they are accepted and offered in this
country, quoting rates by cable to foreign countries where they
originate as bills of exchange, and contracting for their purchase
upon arrival here. This is giving an increasing currency and stability
to the "dollar" bill in foreign markets.
The demand for such bills during the year from banks and other
investors requiring liquid assets of short maturity has generally
exceeded the supply and has tended to keep the rates for them well
below those commanded by any other form of commercial credit
instrument. The ease with which they were negotiated at stable
rates during periods when other money rates rose abruptly demonstrated in a convincing way their desirability as prime and liquid
banking assets, which has long been recognized in other countries.
The liberal purchase of bankers7 acceptances by the reserve banks
has undoubtedly added stability to the open market ~and aided its
development.
The number of makers as well as of buyers of bankers' acceptances
increased substantially during the year. During the latter half of
the year the somewhat higher discount rates which prevailed for
bankers' acceptances induced many banks outside of the larger
cities, including a number of banks in western and southern points,
to make investments in them and added in an encouraging manner
to the breadth of the discount market. Among those undertaking
the granting of acceptance credits were a number of private bankers,
most of whom have cooperated and established relations with the
Federal Reserve Bank of New York by giving its officers such state

.228

REPORT OF THE FEDERAL RESERVE BOARD.

ments of condition as the regulations of the Federal Reserve Board
require to make their acceptances eligible for purchase by Federal
Reserve Banks. During the year also several of the foreign-trade
banks of other countries having brandies in New York City have
likewise filed statements of condition with this bank in order that
this bank might be in a position to purchase trade bills on American
firms indorsed by them.
The volume of American acceptances current at the close of 1916,
including those of nonmember banks and private bankers, and trade
bills of foreign origin drawn on American firms and indorsed by
banks, is estimated to be about $250,000,000.
During the year the Federal Reserve Bank of New York has
followed the same policy in purchasing acceptances as during the
previous year. The acceptances of nonmember banks and of private
bankers have been purchased as freely as those of member banks,
although the rate on the latter has been slightly more favorable. In
order to encourage the indorsement of bills a slight differential has
also been made in favor of bills indorsed by prime banks or bankers.
The monthly purchases of acceptances and indorsed trade bills by
this bank for itself and other Federal Reserve Banks have been as
follows:
Acceptances purchased,,
For account of Federal
Reserve Bank o£ New
York.

For account of other
Federal Keserve Banks.

Number
of items.

Month.

January
February..
March
April
May
June
July
August
September.
October
November.
December..

$3,952, 829.10
5,332, 262.69
8,360,862.35
6.315,912. 77
5,310,107.67
15,676,835.43
13,6-45,319.31
8,352, 138. 82
8,218, 059.57
13,600, 297.20
17,982, 141.64
16,659, 784. 04

168
308
441
186
565
1,287
976
776
967
1,042
919
1,032

$1, 748,101. 40
4,132,336. 01
5,902,385.17
4,506,359. 68
9,448, 715.52
18,302,523. 60
10,413,591. 87
11,727, 725. 41
13,586, 894. 24
15,145, 972. 77
14,192, 741. 94
17,380,591. 85

6,296 j 123,400,549.59 \

8,667

126, 487,939.46

321
31S
422
375
248
821
617
241
391
673
844
1, 025

Total.

Amount.

CLASSIFICATION.

112,604,618.27 !
6,485,112.43 !
4,026, 818. 89 !

Import and export
Domestic
Indorsed trade bills of foreign
origin
Bills drawn to furnish u Dollar exchange "

230,000.00 j

Total

123,406,549.59

(3)

UNITED

STATES

BOND

121,536,883.33
1,362,255. 07
3,589,001. 06
126, 487,939. 46

OPERATIONS.

During the year this bank has purchased from member banks and in
the open market $7,818,750 of United States 2 per cent bonds bearing
the circulation privilege, of which it has converted $6,476,200, its full

DISTRICT JSTO. 2 — N E W

229

YORK.

quota under the provisions of law and the rulings of the Secretary
of the Treasury and the Federal Reserve Board, into $3,239,200
30-year 3 per cent "conversion bonds77 and $3,237,000 1-year 3 per
cent gold notes of the United States.
The 30-year 3 per cent conversion bonds have no circulation
privilege, but are accepted as security for deposits of public moneys.
Believing that it was one of the purposes of the Act to refund the
United States 2 per cent bonds by issues, devoid of special features
attractive only to banks, which would find a market among investors
desiring a bond of the highest security and at the same time exempt
from both personal and income taxes, this bank has sold in the open
market a portion of its holdings of both classes of bonds. The bonds
have been taken largely by private investors and have not come again
in the market, indicating a steady demand for the issues.
The outstanding national-bank notes decreased from $746,679,970
on December 31, 1915, to $708,817,446 on December 30, 1916, largely
through the purchase of United States 2 per cent bonds by Federal
Reserve Banks.
Details of transactions in United States bonds will be found in the
appendix.
(4) MUNICIPAL WARRANTS.

During the year the monthly purchases of warrants by this bank
for itself and other Federal Reserve Banks have been as follows:

Month.

January..
February.
March
April
May
June
July

For account For account
of Federal of other FedReserve eral Reserve
Bank of
Banks.
New York.
$0,110,000
5,530,000
1,536,000
5,797,500
1,532,000
2,068,000
1,983,500

$1,115,000
6,990,000
4,030,000
293,000
2,800,000
2,947,000
1,396,000

Month.

August
September
October
November
December
Total.

For account ^or account
of Federal of other
Federal
Reserve
Bank of
Reserve
New York. Banks.
$112,500
1,202,000
3,560,000
4,971,500
1,925,000

$313,000
4,650,000
365, 000
1,300,000

36,328,000

26,199,000

Average rate for year, 2.46+.

The rates have ranged from 2\ per cent to 3 | per cent, according
to the state of the market, the maturities, and the credit of the issuing
municipality.
The requirements of eligibility for purchase by reserve banks have
become better understood both by municipalities issuing warrants
and by dealers, with the result that of those offered fewer have to be
declined on account of technical defects, and more standard forms
of instruments are now being issued.
While the larger municipalities have quite generally availed of the
wider market thus created for eligible warrants, the smaller ones have

230

ANNUAL EEPOKT OF THE FEDERAL RESERVE BOARD.

not done so, and member banks located in the smaller municipalities
have seldom offered their local warrants, which would be eligible for
purchase if indorsed by them.
FEDERAL RESERVE NOTE ISSUES.

During the year the policy of issuing Federal Reserve notes in exchange for gold, through the medium of commercial paper as provided in the Act, has been followed consistently. The net amount of
Federal Reserve notes of this bank in circulation increased from
$73,300,720 at the beginning of the year to $93,426,100 at the end, a
gain of $20,125,380 during the year. On July 31 the net amount in
circulation had declined to $54,210,745 owning to seasonal redemptions.
I The Federal Reserve note has been used not to increase the circulating medium, which seems already to be adjusted in volume to our
periods of maximum demand under normal conditions, but as a
means of steadily accumulating gold. In this respect the bank has
followed the practice of the note-issuing banks of other countries
which are authorized to issue currency against less than 100 per
cent of metallic cover. Through the medium of notes the gross
gold accumulated at the close of 1916 by this bank and held by the
Federal Reserve Agent, was $107,003,765, and by the system as a
whole $282,523,000, none of which appears in the balance sheets of
Federal Reserve Banks. The ability of this bank and of the system
to supply demands for gold are greater by 60 per cent of these
respective amounts than they would be had no notes been put in
circulation. While the policy of accumulating gold through the
issuing of notes has been misunderstood and even criticized in some
quarters, it has had the hearty approval of the member banks, and,
with some exceptions, of the financial and general press.
' In order to facilitate the accumulation of gold and to place member
banks not in New York City on a basis of equality with the New
York City banks with respect to the use of Federal Reserve notes, this
bank has offered to pay to the country member banks the cost of
shipping gold to it and the cost of shipping Federal Reserve notes to
them in return. Through their cooperation a substantial volume of
gold has been thus accumulated.
During the year there has been no change in the policy adopted
by this bank of keeping on reserve in New York and Washington a
very large supply of unissued Federal Reserve notes sufficient in its
opinion to meet any possible demands upon it for currency^ based
upon past experience.
The redemption of Federal Reserve notes unfit for circulation has
begun and $54,509,235 of notes have been thus retired. Whenever
practicable soiled notes are laundered and placed again in circulation.
The cost of printing the notes has been slightly increased during the

DISTRICT NO. 2

NEW YORK.

231

year, and is now on the basis of $10.58 per thousand bills, irrespective
of the denominations.
In the latter part of the year the demand for notes has largely been
for those of the denomination of $5. It would greatly facilitate the
use of Federal Reserve notes with the larger institutions if the Federal
Reserve Banks were authorized to issue the notes in the form of
certificates drawn to order in denominations of $5,000 and $10,000.
Further details of the transactions in and movements of Federal
Reserve notes will be found in the appendix.
COLLECTIONS AND CLEARINGS.
(L) THE COLLECTION SYSTEM.

The voluntary intradistrict collection system which this bank
inaugurated on June 1, 1915, was continued on the same basis until
July 15, 1916. The first six months of the operation of this system,
established on a basis of immediate debit and credit, demonstrated
clearly that it was impossible on a voluntary basis to extend the
system materially either within this district or across district lines,
and, furthermore, that the immediate debit and credit basis was
unsatisfactory to both the member banks and the Federal Reserve
Bank of New York for the following reasons:
The member banks, having items charged to their accounts a day
before the items could reach them, were always uncertain how their
reserve account with this bank stood until the following day. This
uncertainty required them either to keep large excess balances with
this bank or expose their reserve accounts to impairment, even to
being overdrawn. Nearly every day a large percentage of the
accounts of the country members of the collection system was impaired, many of them to such an extent that they were actually
overdrawn.
The Federal Reserve Bank of New York found its resources
reduced by the impairment of these reserve balances and found
itself compelled, against its express determination to the contrary,
to purchase from its member banks their out-of-town checks, commonly called "float."
On May 1 the Federal Reserve Board issued a circular requiring
each of the Federal Reserve Banks, tinder section 16 of the Federal
Reserve Act, "to exercise the function of clearing houses for its member banks/' Each Federal Reserve Bank was authorized to receive
at par from its member banks checks drawn on all member banks,
whether in its district or other districts, and checks drawn on all
nonmember banks which could be collected at par. Immediate credit
entry was to be given upon receipt for all items received, but the
proceeds were not to be counted as reserve or to become available
to meet checks drawn until actually collected. Checks so received

232

AXXUAL REPORT OF THE FEDERAL RESERVE BOARD.

were to be forwarded direct to the member banks and charged to
their accounts after sufficient time had elapsed within which to
receive advice of payment. Member banks were required by the
Federal Reserve Board to provide funds to cover at par all checks
received from or for the account of their Federal Reserve Bank, but
were permitted to ship lawful money or Federal Reserve notes to
provide such funds, when necessary, at the expense of their Federal
Reserve Bank. The expense of conducting the collection department was to be assessed, on a per item basis, on the member banks
using its facilities. Notice was given that penalties would be assessed for the impairment of the reserves of member banks with
their Federal Reserve Banks.
In order to insure the presentation of checks by the most direct
route to the banks on which they are drawn, the following restriction was adopted by the Federal Reserve Bank of New York:
To insure direct routing, this bank will not accept any item drawn on a bank located
outside this district when such item bears the indorsement of a bank located outside
of this district,

This restriction has prevented banks outside of district No. 2 from
sending items drawn upon banks in other districts to New York City
for the purpose of making New York exchange.
Each Federal Reserve Bank adopted a schedule showing the number of days which must elapse before the proceeds of items deposited
with it would become available as reserve or to be drawn against.
Each of these schedules covers the entire country and is based upon
the average time required for the Federal Reserve Bank to send items
to its member banks and receive remittances from them plus the
one-way mail time between Federal Reserve Banks. The schedule
of the Federal Reserve Bank of New York will be found in the
appendix.
The member banks in this district were advised by circular letter
on June 6 concerning the operating details of the collection system
which was put into operation on July 15. The immediate result
was an increase in the number and amount of items handled. At
the outset items were received from the New York City banks up to
1 o'clock. Early in November this hour was changed to 2 o'clock,
and items of $5,000 or over were received up to 3.30 p. mo This
has resulted in increasing very largely the number as well as the
amount of items, especially those drawn on banks in other Federal
Reserve districts. In this district items drawn on 625 member banks
and 313 nonmember banks are being accepted on December 31, 1916.
No items are accepted which can not be collected at par. The service charge imposed by this bank since July 15 has been at the rate
of 1 cent per item, covering the expense of conducting its collection
department.

DISTEICT TsTO. 2

233

NEW YORK.

The transactions of the collection department during the year
have been as follows:
[000's omitted under ' '
Items
on
New
York
clearinghouse banks.
Number.

Amount' '

Items on banks in
district No. 2.

column.]
Items on banks in
other Federal Reserve districts.

Items on other
Federal Reserve
Banks.

Amount. Number. Amount. Number. Amount. Number. Amount.

INTRADISTKICT
SYSTEM.

1916.
Januarv
February
March
April
May-

June
July 1-15
Total

. .

212,543
201,775
224,897
234,900
237,658
252,336
133,080

$56,038
63,949
64,453
69,749
77,298
86,641
38,264

7,831
7,731
9,117
8,918
9,354
8,841
4,471

$26,550
26,260
27,931
28,717
31,834
30,085
15,945

802
719
702
647
601
691
352

$20,647
21,265
20,751
21,678
23,414
23,705
15,436

374,624 1,353,604 1,497,189

446,392

56,263

187,322

4,514

146,896

190,149
473,412
483,930
556,380
549,810
602,264

43,743
77,330
90,866
109,369
109.826
114,152

33,310
193,902
234,865
311,652
340,788
380,927

28,675
68,740
99,688
123,302
152,138
176,221

260
470
337
402
484
548

4,617
6,339
4,605
4,020
3,047
7,316

545,286 1,495,444

648,764

2,501

29,944

45,187
40,803
46,862
44,671
65,182
91,455
40,364

S158,768
165,229
207,167
179,643
241,215
271,818
129,764

COUNTRY-WIDE
SYSTEM.

July 16-31
August
September
October
November
December
Total

. ..

46,615
112,068
97,244
93,967
95,649
109,341

119,920
223,088
304,239
348,286
378,902
427,549

554,884 1,801,984 2,855,945

Through the cooperation of many nonmember banks and the
courtesy of most of the member banks in this district, it has been
possible thus far to collect checks on 313 out of the 463 nonmember
banks in this district without deduction for exchange. The total
"par list" of the 12 Federal Reserve Banks on December 3O7 1916,
aggregated about 16,000 banks, or about 60 per cent of the number of
banks in the country. It is probable, however, that the par list includes over 85 per cent of the total banking resources of the country
and, therefore, over 85 per cent of the volume of checks could, if desired, be collected through the Federal Reserve system.
In order to devise a time schedule which would be practicable, it
was, of course, impossible to calculate the exact time with respect to
each point; therefore, average time has been used. As a result of the
average time basis, this bank finds itself carrying uncollected checks
deposited by its member banks to an amount between $1,000,000 to
$2,000,000. With four times the volume of checks handled, the
" float" carried is no larger than under the old intradistrict system.
Under the new system, by a change in the time schedule, even this
inconsiderable amount of "float" could probably be avoided if desired, but under the former system the acquisition of "float" was
practically unavoidable.
The facilities of the collection system of this bank are not generally
availed of by the member banks. Out of 625 member banks, only

234

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

150 send items regularly, of which one-half are country banks and
the other half are situated in large cities. The number of items
collected through this bank is estimated to be only about one-seventh
of the total number which passes through the banks of this district
(not including items on New York Clearing House banks), although in
amount the items so collected are estimated at over one-third of such
aggregate. Most country banks still send their collections to one or
more of the large banks in reserve cities which make a specialty of
collections. Many of the city banks send items direct to country
banks with which they have reserve or other relations, allowing them
exchange or its equivalent, time, in remitting therefor.
It is desirable for the smooth working of the collection system that
it should develop gradually. This bank would be embarrassed if the
total volume of items on the district were suddenly deposited with it
for collection. Until the collection system is able to collect items on
practically every bank in the country, its use is sure to be somewhat
limited. It will be the endeavor of this bank as rapidly as possible to
increase its par list within its own district and to develop its collecting
organization to include the collection of notes, drafts, coupons, and
other noncash items..
Since the country-wide collection system has been in operation,
the New York Clearing House Association has amended its rules and
regulations in such a manner as to reduce very materially its required
charges for the collection of out-of-town items. On such items the
members of the clearing house were formerly obliged to charge either
one-tenth or one-fourth of 1 per cent, in accordance with the distance
of the point from New York. The present schedule of charges is onefortieth of 1 per cent on two-day points, one-twentieth of 1 per cent
on four-day points, and one-tenth of 1 per cent on eight-day points.
These charges represent a reasonable rate of interest on the funds for
the number of days during which the Federal Reserve Bank defers
credit.
*
(2) GOLD SETTLEMENT FUND.

During 1916 this bank has paid out through the gold settlement
fund at Washington $230,147,000 in gold. A statement of the operations of the fund as affecting this bank will be found in the appendix.
The distribution through this fund of a large volume of gold paid into
it by the Federal Reserve Bank of New York is a natural consequence
of the importation through New York of large amounts of gold during
the year, elsewhere referred to in this report, which had to be shipped
to other parts of the country in payment for goods there purchased.
(3) THE TRANSFER SYSTEM.

The gold settlement fund has made possible the maintenance of the
transfer system, inaugurated on May 26, 1915. Under this system a

DISTRICT NO. 2

NEW YORK.

235

Federal Reserve Bank undertakes to transfer funds for any member
bank (a) to any other member bank in this district and (b) to any
other Federal Reserve Bank for account of any of its member banks.
If the transfers are advised by mail no charge is made. If the
transfers are advised by telegram a charge at the rate of 2 per cent
per annum on the funds to be transferred is made for the number of
days which would have been required to effect a mail transfer. On
December 30, 1916, this bank amended its rule for the telegraphic
transfer of funds and notified its member banks that it would make
such transfers without charge except for the cost of the telegram.
This is a service which it is expected will be more and more availed
of as the ease and economy of using it are understood.
THE FISCAL AGENCY OF THE UNITED STATES.

After carefully studying the details and preparing for it, th©
work of this bank as fiscal agent and depositary of the United States
commenced January 1, 1916.
Government funds in national banks in Greater New York, except
post office and court deposits, have been transferred to this bank and
collectors of customs and internal revenue have deposited their
receipts with it daily throughout the year. Out of such funds are
paid all checks and warrants drawn upon the Treasurer of the United
States which are presented to this bank, as well as coupons of United
States bonds.
During the year this bank handled 1,356,265 checks aggregating
$220,476,738.83 drawn on the Government's account.
RELATIONS WITH MEMBER

BANKS.

Federal Reserve district No. 2 embraces New York State, Fairfield County, Conn., and the following counties in New Jersey:
Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris,
Passaic, Somerset, Sussex, Union, and Warren.
The number of member banks on December 30, 1916, was 625, as
compared with 616 on December 31, 1915, located as follows:
Connecticut
New Jersey
New York, country
New York, city

15
130
445
35
480

Total

625

During the year one State institution was admitted to membership (the Corn Exchange Bank of New York City) and 15 member
banks in Connecticut were transferred to this district from the
Federal Reserve Bank of Boston.
75284°—17—16

236

AKKUAL REPORT OF THE FEDERAL RESERVE BOARD.

Seventeen member banks were liquidated during the year, 6 to
go out of business for one reason or another, and 11 to convert
into trust companies. Ten new national banks have begun business
in the district during the year.
The frank and cooperative attitude of this bank toward its member banks, referred to at some length in the last annual report, has
been maintained throughout the year. Officers of the bank have
attended all bankers7 conventions and group meetings to which invitations have been received, as well as several local conferences of
bankers, and have made addresses when requested. The executive
committee of the recently organized national bank section of the
New York State Bankers Association spent a day at the office of
this bank conferring with its directors and officers upon its activities and familiarizing themselves with its organization and aims.
Wherever opportunity has offered, officers of this bank have called
upon member banks, and an increasing number of officers of member
banks have called at the office of the bank in New York. Personal
relations between this bank and its members, which are so essential
to the success of the system, are thus being gradually established.
It is believed that, as compared with a year ago, the officers of
member banks understand much better the workings and purposes of
the reserve system and generally are more in sympathy with them.
In order to offset any losses arising through the collection system the
officers of this bank at every opportunity have pointed out to member banks the desirability of revising relations with their depositors,
of analyzing depositors' accounts to ascertain the cost of handling
them, and, wherever practicable, of putting each account on a paying
basis by imposing such charges or requiring such balances to be maintained as will compensate the bank for services rendered; also the
possibility of increasing earnings by withdrawing and loaning at
home funds they have hitherto found it necessary to keep with collecting banks to compensate for collecting their items. Although
many bankers, especially those in the smaller places, feel that such a
course is not practicable, nevertheless the experience of a number of
banks in this district which have undertaken such a revision of
relations proves that in most cases depositors are reasonable and
willing to compensate banks for services rendered. Letters describing
their experiences are onfilein this bank and will be shown to anyone
interested. A convenient form for use in analyzing depositors' accounts has been prepared by this bank and distributed to its members,
a number of whom have put it in practice with beneficial results. In
a number of cases, upon request, one of the junior officers of the bank
has visited country banks, explained methods of analyzing accounts,
and generally discussed the possibility of readjustments of the kinds

DISTRICT NO. 2—NEW YORK.

237

referred to. The same policy will be continued during the coming
year whenever such visits will not interfere too seriously with the
conduct of the business of the bank.
RELATIONS WITH NONMEMBER BANKS.

During the year whatever relations have been had with nonmember banks in the district have been friendly and cooperative. Federal Reserve notes have been issued freely to nonmember banks in
exchange for gold. No discrimination has been made against checks
indorsed by nonmember banks deposited in the collection system by
member banks, and the acceptances of nonmember banks have been
freely purchased throughout the year. A number of nonmember
banks in the country districts have agreed to remit to this bank at
par for items drawn upon them, in order to assist in the development
of its collection system, and their cooperation has been particularly
appreciated.
With, regard to becoming members of the Federal Reserve system
there has been but little change in the attitude of the State institutions referred to in the last annual report. On the whole there is a
growing feeling among them that our banking system should be more
thoroughly unified and that the responsibilities of maintaining the
Federal Reserve system should be shared by all7 rather than by only
a part, of the banks of the country.
RELATIONS WITH THE PUBLIC.

Much public interest in the Federal Reserve system has been
evinced during the year. Editorials and special articles on various
phases of its operations are constantly appearing in the daily press
and periodicals. Addresses have been made by the officers of the
bank before various associations and trade conventions. Public confidence in the system continues.
Many of those engaged in foreign trade are beginning to realize the
advantages of the use of bankers' acceptances and of the development
of a discount market. Considerable support has been given by important commercial organizations and houses to the movement
inaugurated by the Federal Reserve system to develop the use of trade
acceptances.
ORGANIZATION OF THE BANK.
(L) INTERNAL MANAGEMENT.

During the year the directors of the bank held 25 meetings, at which
the average attendance has been 83 per cent; the executive committee, consisting of the governor or deputy governor, the chairman, and
four directors, all of the directors serving upon it in turn, held 34
meetings; and two special committees held three meetings.

238

ANNUAL REPORT OF THE FEDERAL -RESERVE BOARD.

At the first meeting of the directors held in 1916 the officers of the
bank were reelected for the ensuing year and the auditor was made
an officer, with authority to sign correspondence and reconcilements
of accounts.
On June 22 the directors, having learned with great regret that
Governor Benjamin Strong, owing to ill health, had been ordered by
his physician to take a complete rest, granted him a leave of absence,
with the expectation that he would resume his duties as soon as practicable. They then appointed Mr. Robert II. Treman, one of the
directors of the bank and president of the Tompkins County National
Bank, Ithaca, N. Y., a deputy governor ad interim, and he assumed
the active duties of this office on Tuesday, June 27.
On September 20, Mr. J. D. Higgins, who has been with the bank
since its organization, was appointed an assistant cashier.
On January 17 1916, the staff of the bank consisted of 6 officers and
69 clerks. On December 31 there were 9 officers and 164 clerks.
The large increase in the clerical staff was occasioned partly by the
general development of the business of the bank, and partly by the
work of caring for the deposits of the United States, but principally
by the inauguration of the country-wide collection system on July 15.
The department handling Government deposits consists of 9 men.
The transit department, prior to July 15, consisted of 4 men and 3
women. Since then it has grown steadily and on December 30 consisted of 13 men and 41 women. A night force of 5 men prepares
incoming mail for the department. The establishment of the collection system has affected the volume of work in all departments of
the bank, necessitating the employment of a number of additional
clerks.
The organization of the staff has been considerably developed during the }^ear with a view to taking care of future growth and of any
sudden demands which might be made upon it. Appreciation should
be expressed of the loyalty and zeal with which the staff have dealt
with the various operating and accounting problems which have arisen
during the year and have carried on the constantly growing volume of
transactions passing through the bank.
(2) BANK PREMISES.

On May 1, 19167 the bank assumed tenancy of its new offices at the
Pine and Nassau Streets corner of the Equitable Building. These
premises are well suited to present needs, and provision is made in
the lease for large additional space when required. The total floor
space now occupied is 21,625 square feet.
The executive and banking departments and a room for the use of
member banks are situated on the main floor. The basement contains money counting rooms and the main and emergency vaults.

DISTEICT NO. 2

NEW YORK.

239

The credit, audit, stenographic, mailing and filing divisions and library
occupy the mezzanine. The collection and bookkeeping departments
are on the fifth floor, connected with the other departments by private
elevator.
The main vault is of the strongest and most modern type, large
enough to hold adequate supplies of currency for all requirements.
Pending the completion of this vault the funds of the bank have been
kept chiefly in the vaults of the Subtreasury and the New York Clearing House.
(3) ELECTION OF DIRECTORS.

To fill the vacancies caused by the expiration on December 30,
1916, of the terms of Messrs. William Woodward and Henry R. Towne
an election was held from November 21 to December 6. Of the 209
banks in the group voting this year 130 chose electors and became
entitled to vote. The following candidates for the vacancies were
nominated:
For Class A director:
J. M. Carpenter, Wellsville, N. Y.; nominated by 1 bank.
William Woodward, New York City; nominated by 85 banks.
For Class B director:
Newcomb Carlton, New York City; nominated by 9 banks.
J. M. Carpenter, Wellsville, N. Y.; nominated by 1 bank.
Eugenius H. Outerbridge, New York City; nominated by 10 banks.
Henry R. Towne, New York City; nominated by 65 banks.

At the closing of the polls it appeared that the following votes had
been cast in the column of first choice:
For Class A director:
J. M. Carpenter
William Woodward
For Class B. director:
Newcomb Carlton
J. M. Carpenter
Eugenius H. Outerbridge
Henry R. Towne

3
120
36
2
11
74

Mr. Woodward was declared elected Class A director and Mr.
Towne, Class B director, each for a term of three years, beginning
January 1, 1917.
Although second notices were mailed to the district reserve electors,
nevertheless only 123 of the 209 banks in the group which voted
performed their important duty to participate in the election of
directors of this bank.
At a meeting of the Federal Reserve Board on December 19, 1916,
Mr. Pierce Jay was reelected a Class C director of the bank for a term
of three years from January 1, 1917, and redesignated chairman of
the board and Federal Reserve Agent for 1917.

240

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
(4) MEMBER OF ADVISORY COUNCIL.

On January 12 the directors reelected Mr. J. P. Morgan, of New
York City, a member of the Federal Advisory Council from Federal
Reserve district No. 2 for the year 1916.
GENERAL BUSINESS CONDITIONS.
(L) BANKING POSITION OF THE DISTRICT DURING 1916.

The resources of the member banks in this district increased from
3,326 million dollars on September 2, 1915, to 4,063 million dollars
on September 12,1916, a gain of 736 millions. During substantially
the same period the trust companies of New York State added to
resources 470 millions and the State banks of deposit and discount
gained 169 millions. Estimates based upon the figures of the national banks on September 12 and State banks on September 20 show
an approximate growth of 1,376 million dollars in the resources of
all the national and State banks in this district during the year
ended in the latter part of September, 1916.
Liabilities to stockholders increased 80 millions, to depositors
nearly 1,250 millions. An increase of 793 millions is shown in loans
and discounts, and of 318 millions in bonds and other securities.
Cash on hand, bank balances and cash items increased 186 millions,
and acceptances and letters of credit were 53 millions higher. Of
the total, the gain in resources by New York City banks was 985
millions, leaving about 390 millions increase for the rest of the State.
(2) MONEY RATES.

Except for the brief period in December when a severe stringency
occurred in money on call, a good supply of loanable funds at low
and stable rates has been available in this market throughout the
last year, despite the unprecedented activity of trade and industry,
the great volume of stock exchange business, and the negotiations
from time to time of large loans to other countries. The proceeds
of these foreign loans, together with enormous imporatations of gold
and an increasing use of bankers' acceptances, operated to finance
the abnormal industrial and commercial expansion to such an extent
that ordinary channels of credit were not subjected to special strain.
At the beginning of the year prime six months' commercial paper
sold at 3 per cent to 3J per cent with a restricted volume of trading at
2f per cent. Bankers7 acceptances yielded 2 per cent to 2f per cent,
as was the case during the preceding five months. Call loans were
made at 3 per cent early in January, but rates soon declined to If per
cent and 2 per cent. Time loans on collateral ranged from 2 | per
cent to 3J per cent. These rates remained practically unchanged

DISTRICT NO. 2—NEW YORK.

241

during the first quarter of the year, with the exception of fractional
advances on collateral time loans toward the end of February. Disturbance in foreign relations caused a somewhat firmer money market in April, when, in the third week, call loans rose to 4 per cent for
a brief period. Rates quickly declined to about 2\ per cent and
although excess reserves were steadily decreasing, remained easy until
June, when the rate for bankers' acceptances advanced to 2|-2f per
cent and there was some calling of street loans.
On July 8 excess reserves of the New York Clearing House members
were reduced to $53,546,000. Two days later call loans advanced
to 6 per cent. Renewals were granted at 4 | per cent and 5 per cent
for a few days. This quickly attracted local and out-of-town funds
which reduced rates to 2 | per cent. Excess reserves increased
$41,000,000 during the following week and an easy money market
continued during the next three months,, Money rates became distinctly .firmer in November. During the last week of that month
call money advanced sharply. New York bank reserves had been
gradually shrinking and on Saturday, December 2, the excess had
declined to $41,000,000, the lowest amount since the establishment
of the Federal Reserve Banks. On the Monday following call money
rose to 15 per cent, the highest rate since December 2, 1913. Loans
were renewed on that date at 6 per cent and at 8 per cent the next
day. Rediscounting at the Federal Reserve Bank by leading New
York City banks and liberal purchases of bankers' acceptances by the
Federal Reserve system brought prompt relief. Substantial improvement in the reserve position was shown in the next two weeks, and
rates reacted to normal levels.
(3) THE GOLD MOVEMENT.

The United States Treasury statement of money in circulation
dated January 1, 1917, shows gold in the country $2,864,841,650, as
compared with $2,312,444,489 on January 1, 1916, an increase of
$552,397,161.
Imports of gold from all sources during the year 1916 were
$685,990,234. Gold exports were $155,792,927, mainly to Argentina,
other South American countries, Cuba, Japan, and Spain.
The gold production of the United States and its dependencies in
1916 was $92,316,400.
(4) FOREIGN LOANS.

According to estimates of the Journal of Commerce, loans and
credits aggregating $2,235,900,000 have been negotiated in the
United States by other countries since the outbreak of the war. It
is calculated that approximately $175,000,000 of these obligations

242

ANNUAL EEPOET OF THE FEDERAL RESERVE BOARD.

have been liquidated, leaving about $2,150,000,000 outstanding at
the end of the year 1916.
Following is a published compilation of foreign loans and credits
negotiated in the United States during the war*
EUROPE.

Great Britain:
Anglo-French Governments, 5 per cent 5-year bonds
British Government, 5 per cent
British Banking credit, 4J per cent
British Government, 5J per cent
Government grain credit
City of Dublin, 5 per cent
London water board
Total Great Britain

$250,000, 000
250, 000, 000
50, 000,000
300, 000,000
50, 000, 000
2, 000, 000
6, 400, 000

908, 400, 000

French Government:
Anglo-French bonds
Collateral loan, 5 per cent American Foreign Securities Co
C , M. & St. P. collateral 4 per cent
Treasury notes, 5 per cent, one year paid
Treasury bonds, 5 per cent, one year paid
Commercial credits, estimated
Collateral loan, secured by Pennsylvania and C. M. & St. P. R. R.
bonds, paid
Three City loan, 6 per cent.
City of Paris, 6 per cent
Total France

250, 000, 000
100, 000, 000
47, 000, 000
10, 000, 000
30, 000, 000
100, 000, 000
48, 000, 000
60, 000, 000
50, 000, 000
695, 000, 000

Russian Government:
Credit, 6 | per cent, 3 years
Acceptances, paid
Credit to Russian-Asiatic Bank
Treasury notes, 5 per cent, 1 year, paid
Unsecured loan, 6 per cent

50, 000, 000
25, 000, 000
25, 000, 000
10. 000, 000
50, 000, 000

Total Russia

160, 000, 000

Italian Government: Bonds, 6 per cent, 1 year

25, 000, 000

German Government:
Notes, 5 per cent, 9 months, paid
Notes, 6 per cent basis, due April, 1917
German war bonds, estimated

10, 000, 000
10, 000, 000
25, 000, 000

Total Germany
Swiss Government: Notes, 5 per cent, 1,2, and 3 years
Greek Government: Banking loan
Swedish Government: Notes, 6 per cent
Norwegian Government:
Bonds, 6 per cent, 7 years
Notes, 6 per cent, 2 and 3 years
Miscellaneous loans and banking credits, estimated
Total Europe....

45, 000, 000
-

•-

15, 000, 000
7, 000, 000
5, 000,000
5, 000, 000
3, 000, 000
25, 000, 000
1,893,400,000

DISTRICT NO. 2

NEW YORK.

243

CANADA.

Canadian Government:
Notes, 5 per cent, 1 and 2 years
Notes, 5 per cent, 5, 10, and 15 years
Government of Newfoundland, 5 per cent, 3 years
Province of Ontario:
Notes, 5 per cent, 10 years
Bonds, 5 per cent, 5 years
Loan, 3J per cent, 9 months
Province of Quebec:
Bonds, 5 per cent, 10 years
Bonds, 5 per cent, 3 to 5 years
Province of British Columbia:
Bonds, 4 | per cent, 10 years
Bonds, 4J per cent, 25 years
Treasury bills, 4\ per cent, 1 year
Province of New Brunswick: Bonds, 5 per cent, 5 years
Province of Alberta:
Bonds, 5 per cent, 10 years
Bonds, 5 per cent
Province of Manitoba:
Bonds, 5 per cent, 3 years
Bonds, 5 per cent, 3 years
Bonds, 5 per cent, 5 years
Province of Saskatchewan:
Bonds, 5 per cent, 5 and 10 years
Bonds, 5 per cent, 3 years
Bonds, 5 per cent
Province of Nova Scotia:
Bonds, 5 per cent, 10 years
Bank loan, 4 | per cent, 1 year
City of Toronto:
Serial bonds, 5 per cent
Notes, 5 \ per cent
Bonds, 4 | per cent, due 1949 and 1955
City of Quebec: Bonds, 5 per cent, 5 years (1920)
City of Vancouver:
Treasury notes, 6 per cent
Bonds, 4J per cent, 10 years
City of South Vancouver: Bonds, 6 per cent, 3 years
City of Montreal:
Bonds, 5 per cent, 20 years
Bonds, 5 per cent, 3 years
City of Ottawa:
Bonds, 5 per cent, 20 and 30 years
Notes, 5 per cent, 1 year
City of Prince Rupert
City of Sault Ste. Marie: Bonds, 5 per cent, 30 years
City of Calgary: Treasury notes, 3 years
City of Maisonneuve: Notes, 6 per cent, 2J years
City of Hochelaga: Bonds, 5 per cent, 28 years
City of Victoria, B. C : Bonds, 5 per cent, 3 years
Canadian internal 5 per cent, estimated
Toronto Harbor

...

$45,000, 000
75, 000,000
5, 000,000
10,000,000
3, 000,000
2, 000, 000
4, 000,000
6, 000,000
2,000, 000
1, 000,000
2, 700,000
700, 000
2,000, 000
4, 000,000
963, 000
1, 000,000
.5, 475,000
1,000, 000
2, 500,000
3, 500, 000
1, 000, 000
1, 000, 000
3, 669, 000
3, 000, 000
2, 500, 000
2,125, 000
1, 644, 000
827, 000
790, 000
2,000,000
6, 900, 000
1, 032, 500
1, 000,000
1, 600,000
500, 000
2,000,000
800, 000
375, 000
1, 000, 000
30, 000, 000
1, 500,000

244

ANNUAL "REPORT OF THE FEDERAL RESERVE BOARD.

Quebec School
Miscellaneous loans of Canadian provinces and municipalities (estimated)
City of Montreal
Total Canada

$200,000
24, 399, 500
3, 800, 000
270, 500? 000

LATIN* AMERICA.

Argentine Government:
Notes, 6 per cent, 1,2, and 3 years
Bonds, 6 per cent, 5 years
.,
Loan, 6 per cent, 6 months
Notes, 5 per cent, 1 year
Notes, 5 per cent, 1 year.....
Government of Chile
Government of Bolivia
Republic of Panama: Bonds, 5 per cent, 30 years
Uruguayan Government: Notes, 0 per cent, 6 months
Uruguay
Comision Reguladora (agency of Yucatan Government) credit on sisal
hemp
:
Miscellaneous bank loans and securities.'.
Sao Paulo, 6 per cent
Argentina banking credit
Total Latin America

15, 000, 000
50? 000, 000
6, 000, 000
18, 500, 000
15, 000,000
6, 000, 000
1, 000, 000
3, 000, 000
646, 375
2, 500, 000
10, 000, 000
5, 353, 625
5, 500, 000
18, 500, 000
157, 000, 000

ASIA.

China: Loan, 6 per cent
Total foreign loans in United States
Less amount paid (estimated)

5, 000, 000
...

Total

2, 325, 900, 000
175, 000, 000
2,150, 900, 000

5. FOREIGN BANKING CONDITIONS.

It has been estimated that the indebtedness of the seven principal
nations engaged in the European war now exceeds $75,000,000,000,
which is an increase from $27,000,000,000 since the middle of the
year 1914. The annual interest thereon, it is calculated, w^ill amount
to $3,800,000,000 in 1917 as against the yearly interest of
$1,070,000,000 in 1914.
The total British war credits voted between August 1, 1914, and
October 11, 1916, were £3,132,000,000. England's average daily
expenditure for war purposes since April 1 ; 1916, is reported to have
been £5,000,000. The total daily cost to all the powers engaged in
the war is reported to be $105,000,000.
Among the important financial events abroad during the year was
the Economic Conference held in Paris from June 14 to 17 by
representatives of the allied Governments, and the recommendation
by Lord Faringdon's committee for a new British foreign trade bank
to be capitalized at £10,000,000.

245

DISTRICT NO. 2—NEW YORK.

In August, the British treasury issued a new plan for dealing with
mobilized securities, under which the securities are to be borrowed
for a period of five years from March 31, 1917, for an additional
| per cent per annum on their face value.
Important accessions to the money holdings of the European
countries have been received from purchases of gold ornarnents
and from deposits of coin. The gold purchasing bureau opened in
Berlin on October 17 is reported to have received an immense amount
of gold in the form of jewelry, plate, and heirlooms. Great quantities
of gold have been shipped into the Scandinavian countries, Spain,
and Holland.
The stock held in the Bank of the Netherlands on December 2,
1916, was 585,144,000 florins against an average of about 120,000,000
florins before the outbreak of the war. Rates of interest on customers' deposits were reduced in that country from 1J to J per cent.
London discount rates, which were 5 to 5J per cent at the first of
the year, declined about f per cent toward the end of February,
and ruled generally at 4J to 4f per cent for three months thereafter.
A firmer market in June was followed by an advance from 5 | to 5f per
cent in July. During the remainder of the year rates ruled about
5TQ to 5f per cent.
Continental discount rates have been more or less nominal since
the war began.
The statements of the leading European, banks showing their
figures at the end of last year compared with the latest statements
for 1916 are as follows:
BANK OF ENGLAND.
Dec. 30, 1915.
Circulation
Public deposits
Other deposits
Government securities
Other securities
RfSBrvG
Proportion of resources to liability
Bullion

per cent..

£35,086,000
49,677,000
111,971,000
32,839,000
112,075,000
34,616,000
21|
52,576, 407

Dec. 27, 1916.
£39,675,000
52,116,000
126,726,000
57,187,000
106,461,000
33,079,000
18.49
54,aO4,915

BANK OF FRANCE.
Dec. 30, 1915.

Gold
Silver
Discounts and advances.
Circulation
Deposits
Treasury deposits

Francs.
5,015,188,000
352,066,000
2,150,606,000
13,309,848,000
1,844,201,000
406,588,000

Dec. 28, 1916.
Francs.
5,075,914,550
294,869,000
1,937,278,000
16,678,817,000
2,260,224,000
15,009,000

246

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
IMPERIAL BANK OP GERMANY.
Dec. 31, 1915.
Marks.
2,445,185,000
5,803,314,000
6 917,922,000

Gold."
Loans and discounts
Circulation

Dec. 30, 1916.
Marls.
2,520,473,000
9 609,767,000
8,054,652,000

BANK OF NETHERLANDS.
Dec. 31, 1915.
Florins.
429,180,000
6,192,000
172,428,000
577,152 000
29,772,000

Gold
Silver
Bills discounted and advances
Circulation
Deposits

Dec. 30, 1916.
Florins.
587,602,000
6,985,000
160,214,000
758,379,000
54,577,000

BANK OF RUSSIA.
Dec. 16/29,1915. Dec. 16/29,1916.
Roubles.
1,611,740,000
270,010,000
36,750,000
392,870,000
3,244,580,000
905,180,000
259,440,000
5,304,620,000
204,140,000
1,272,080,000

Gold
Balance abroad
Silver and subsidiary coin.
Securities and short loans.
Treasury bonds
Other loans and advances..
Securities
Circulation
Government deposits
Deposits, other

Roubles.
1,472,610,000
2.149,850,000
114,740,000
245,570,000
6,534.050,000
664,400,000
136,110,000
8,591,280,000
216,010,000
2,146,800,000

(6) NEW YORK STOCK EXCHANGE.

A great volume of trading has taken place on the New York Stock
Exchange during the last year. Transactions in January exceeded
those of the corresponding period of any year since 1910. Then
followed three months of comparatively dull markets, with a.downward tendency of prices. Activity increased in May, but declined
again in June on account of the Mexican situation. Less trading
was recorded in July than in any of the 16 months preceding.
There was a considerable increase during August and a strong upward turn in prices until the last days of the month when recessions
were caused by threatened strikes on the railways. In September
there began a remarkable period of speculative activity, which
reached a total of 29,992,582 shares for the month against 13,399,286
shares in September, 1915. The movement continued to increase in
volume during October and November. Transactions during the
latter month aggregated 34,552,860 shares or nearly 100 per cent
more than in November, 1915. The peace proposals caused a tremendous liquidation of stocks in December, which was accompanied

247

DISTEICT NO. 2—NEW YORK.

by a great fall in prices; particularly in. shares of industrial corporations engaged in the manufacture of war supplies.
A large volume of bond trading has continued throughout the
year with considerable transactions in Anglo-French, South American,
United Kingdom, and Canadian issues.
The New 'York Times record of the average prices of 50 representative stocks at the high point, in 1916 was 101.51 on November
20 against 94.13 in the year 1915 and 88.47 at the end of 1916. The
average price of 40 representative bonds at the end of 1916 was
88.64, y/hich may be compared with the high point, in 1915, of 87.62
on November 24.
Comparative transactions in bonds and stocks traded in on the
New York Stock Exchange during the past six years are the following:
Year.
1916
1915
1914

Shares.

Bonds.

230 060 900
173 155 644
45,989,158

SI,133,935,300
955 525,200
460,472,500

Year.

Shares.
76,134,996
118,452,676
-127,376,149

1913.
1912
1911

Bonds.
497,158,600
645,300,000
878,933,700

(7) CROPS.

Unfavorable weather reduced the yield and caused disappointment in the harvest of all the leading crops except hay and tobacco.
All products of the soil, however, have greatly advanced in price,
thus more than compensating producers for the shrinkage in volume.
The Department of Agriculture gives the following statistics:
Crops of wheat, corn, oats, barley, and rye.
Total production.

Corn
Wheat
Oats
Barley
Rye

Total. .

1914

1916

1915

Bushels.
2,583,241,000
639,886,000
1,251 992,000
180,927,000
47,383,000

2, 994,773,000
1 025,801,000
^l 549,030,000
228,851,000
54,050,000

2, 672,804,000
891,017,000
1 141 060,000
194,953,000
42,779,000

4,703,429,000

5, 852,505,000

4, 942,613,000

1915

1914

Bushels.

Farm values on Dec. 1.
Crops.
Corn
Wheat
Oats
Barley
Rye
Total

1916
$2 295, 783,000
1, 025,765,000
656 179 000
159,534,000
57,857,000
4, 195,118,000

$1, 722,680,000 $1, 722,070, 000
942,303,000
878,680, 000
499 431 000
559 506 000
118,172,000
105,903, 000
45,083,000
37,018, 000
3. 387,744,000

3, 243,102, 000

248

ANNUAL REPOET OF THE FEDERAL RESERVE BOARD.
Average ]^rices per bushel received by farmers and

Wheat
Rye
Oats
Barley
Corn .
Buckwheat
Potatoes .
Flaxseed
Rice

planters.

.
.

.
.•

1916

1915

1914

Cents.
160.3
122.1
52.4
88.2
88.9
112.9
146.1
248. 0
88.6

Cents.
91.9
83.4
36.1
51.6
57. 5
78.7
61.7
174. 0
90.6

Cents.
98.6
86.5
43.8
54,3
64.4
76.4
48.7
126.0
92.4

A cotton area larger than usual had been planted but the crop was
greatly reduced by unfavorable weather conditions and the boll
weevil. The yield is estimated by the Department of Agriculture at
11,511,000 bales, against 11,192,000 bales in 1915. The estimated
value, however, is $1,079,598,000, compared with $604,210,000 for the
preceding year.
(8) EXPORTS AND IMPORTS.

Merchandise exports reached unprecedented totals throughout the
year 1916, the aggregate for the twelve months ended December
30 being $5,481,423,589, an increase over the corresponding total
in 1915 of $1,926,752,742, and more than double the movement of
1914. The value of exports for December, which shows the heaviest
total of any of the 12 months of the year, was $521,650,904. The net
balance of exports for December, 1916, was $316,816,716, as compared with $187,473,857 for December, 1915.
The greater part of the increase in exports this year arises from
shipments to Great Britain and France, but there has also been a
substantial gain in exports to Cuba, China, Japan, and the South
American countries. Evidence of the expansion in trade with Great
Britain is measured by the calendar year figures of foreign trade, which
show exports to that country aggregating $1,888,314,301 for the year
1916, as compared with $590,732,398 and $599,812,295 for 1913 and
1914, respectively.
Imports of merchandise have also been very heavy this year, the
falling off in trade from Europe having been more than offset by increases from Canada, Cuba, China, Japan, South America, and theEast
Indies. The total for the 12 months of the year was $2,391,654,335,
against $1,778,596,695 and $1,789,276,001 in the corresponding periods of 1915 and 1914, respectively.
(9) GENERAL BUSINESS CONDITIONS.

The year 1916 opened upon a period of great activity in our domestic
and foreign trade, with industries working at full capacity, orders

DISTRICT NO. 2

NEW YORK.

249

increasing, a growing scarcity of materials and labor, wages advancing, prices rising, and buying almost unrestrained. The heavy movement of exports was confronted by a shortage of vessels and inadequate loading facilities, which caused a serious congestion of freight
on railroads leading to eastern ports. Upwards of 50,000 cars awaiting ocean shipment were held up in terminals and on tracks in and
near New York. To relieve the situation embargoes were placed upon
various lines of goods and maintained in some cases until late in the
spring.
During the second quarter of the year general business was steadier
and commitments were made with greater deliberation. A more conservative buying policy was accompanied by a slight decline in commodity prices. Every month, however, the volume of goods produced and sold in many lines greatly exceeded records of corresponding periods in previous years.
The usual mid-year dullness, which ordinarily causes a lull in commerce at that season, was hardly noticeable this year, for manufacturers were busy on orders booked far ahead and brisk business continued in wholesale jobbing, retail, and export trade.
In August and September growing confidence in the business outlook was evidenced by increased activity in practically all mercantile
lines, notwithstanding a strong upturn in prices which raised the
average price of commodities to the highest level ever recorded and
developed during October into a widespread speculative movement
in commodities and securities.
Bradstreet's index number for commodity prices of the year 1916
was 20 per cent above 1915 and 33 per cent above 1914. Annual
index numbers for the last five years are as follows:
1916
1915
1914

$11. 8251 1913
9. 8530 1912
8. 9034 10-year average

$9.2076
9.1867
8. 3377

Industry and commerce continued practically unchanged for the
rest of the year, notwithstanding developments during December in
the European war situation, the short but severe strain in call-money
rates, and the very unsettled stock markets. An unprecedented volume of holiday trade was handled by retail stores.
The year has been one of great general prosperity which has been
shared by the wage earners. Manufacturers and distributors seem to
be proceeding with caution, keeping in mind the readjustments that
will be necessary when peace comes.

250

ANNUAL EEPOET OF THE FEDERAL RESERVE BOARD.
APPENDIX.

Capital account reconciliation,

Jan. 1, 1916, to Jan. 1, 1917.

Capital paid in Jan. 1, 1916
$11, 063,150. 00
Sundry increases:
Due to increases in capital and surplus of member
banks
$605, 050. 00
Due to organization of new banks and admission of
State banks
318, 600. 00
—
923, 650. 00
11,986,800.00
Sundry decreases:
Due to decreases in capital and surplus of member
banks
6, 000. 00
Due to banks liquidated
115, 050. 00
121, 050. 00
11, 865, 750. 00
Summary

of Federal Reserve notes.

Total notes issued to bank:
1914-15
1916

$89, 240, 000. 00
71, 273, 000. 00

Less notes unfit for circulation, retired

161, 513, 000. 00
54, 509, 235. 00

Net amount outstanding
107, 003, 765. 00
As follows:
In circulation
93, 426,100. 00
On hand Dec. 30, 1916
13, 577, 665. 00
On Dec. 30, 1916, the Federal Reserve Agent held, against Federal
Reserve notes, gold certificates aggregating
107, 003, 765. 00
Total of Federal Reserve notes paid out by the Federal Reserve Bank of New
months, 1916.

To nonTo member member
banks.
banks.

To non.• o member member
banks.
banks.

January

$1, 774, ooo

February.
March. April
May
June
July
August
September.
October
Movement

I 5,571,500
7,158,500
6,354,500
5, 712, 500
5,512,000
4,967,000
8,752,500
13,758,000
13,548, 500

$479,000
686,000
454,000
283,000
401,000
155,000
110,000
119,500
275,500
333,000

November
December
Total to nonmember
banks
Total received from Federal
Reserve Agent

$15,579,100
21,718,700

$607,000
676,000

113,406,800

4,579,000

4,579,000
117,985,800
1,273,000

of Federal Reserve notes between Federal Reserve Bank of New
other Federal Reserve Banks, Jan. 3 to Dec. 31, 1916.

Atlanta
Boston
Chicago
Cleveland
Dallas
Kansas City

Minneapolis

York and

Notes of
Federal
Reserve Their notes
Bank of
New York shipped to.
received
from.

Notes of
Federal
Reserve Their notes
Bank of
New York shipped to.
received
from.
$376,965 $2,653,310
1,262, 400
3,068, 000
137,150
1,615, 500
903,100
299', 760
1,251,550
116, 805
752, 200
26, 000
702, 800
146, Goo

York, by

Philadelphia.
Richmond
St. Louis
San Francisco,

$3,111,000

Total...

9, 426, 980

286, 290
214,520
165, 485

$1,617,500
3,155,250
426,000
1,353,600
14,214,860

DISTRICT NO. 2

251

NEW YORK.

Operations in Governmentbonds.

United States 2 per cent consols of 1930
P a n a m a 2s of 1906/36
P a n a m a 2s of 1908/38

United States 1-year Treasury notes due Apr. 1,
Total

1917

United States conversion 3s of 1916/46
United States 1-year Treasury notes duo Apr. 1, 1917
United States 1-year Treasury notes due July 1, 1917
United States 1-year Treasury notes due Oct. 1, 1917
United States 2 per cent consols of 1930
Total

Open
market
purchases.

Converted
and sold
during 1916.

$6,130,750
410,000
1,028,000
250,000

$5,988,200
410,000
128,000
250,000

$142 550

7,818,750

6,776,200

1,042,550

Received
during
1916.

Sold
during
1916.

$3, 239,200
1,782,000
' 750,000
955, 000
50,000

S3,239, 200
1,532,000
750,000

6,776,200

5,571,200

Balance
Dec. 31,
1916.

900,000

Balance
Dec. 31,
1916.

$250,000
955,000

50,000
1,205,000

Transit and exchange transactions between Federal Reserve Bank of New York and other
Federal Reserve Banks, Jan. 1, 1916, to Dec. 31, 1916.
Items de- Items sent
posited
Federal
with Fed- byReserve
eral ReBank
of
serve Bank New York
of New
to.
York by.
Atlanta
Boston
Cleveland
Dallas
Kansas City
Minneapolis
Philadelphia
Richmond
St. Louis
San Francisco
Total
Chicago

;

126,277
341,911
331,406
99,785
127,299
75,353
65, 241
508,135
269,150
160,290
114,944

40,745
214,383
102,505
81,544
11,229
28,530
12,453
264,002
324,006
22,333
9,300

2,219,794

1,111,030

Summary of gold settlement fund operations, Jan. 1, 1916, to Dec. 31, 1916.

Boston
Philadelphia...
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco..
Loss.

Total.

75284°—17- -17

Amount received by the
New York
Federal Reserve Bank
in settlement of accounts due
from—

Amount paid
by the New
York Federal Reserve
Bank in
settlement
of accounts
due to—

$197,825,000
217,579,000
78,235,000
324,586,000
41,653,000
100,825,000
22,069,000
12,632,000
29,088,000
11,949,000
10,135,000

$227,904,000
221,346,000
67,718,000
257,244,000
87,021,000
69,104,000
94,360,000
61,442,000
62,076,000
71,354,000
69,080,000

!l, 046,576,000 |l, 288,649,000
242,073,000

Net gain.

Net loss.

$30,079,000
3,767,000
$10, 517,000
67,342,000
45,368,000
31,721,000
72,291,000
48,810,000
32,988,000
59,405,000
58,945,000

109,580,000 351,653,000
242,073,000

252

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
Analysis of gold movement through gold settlement fund.

$242,073,000
Gold settlement balance, Jan. 1,1916.. $5,717,000 Settlement loss
Gold withdrawn
2,000,000
Deposited out of vault of Federal Reserve Bank of New York
245,000,000 Special deposits by Federal Reserve
Bank
of
New
York,
account
Federal
Special deposits account Federal ReReserve Bank of—
serve Bank of New York by Federal
Atlanta
1,500,000
Reserve Bank of—
Chicago
1,000,000
Atlanta
1,302,000
Dallas
4,000,000
Boston
1. 500,000
Kansas City
1,800,000
Chicago
2i, 500,000
Philadelphia
5,000,000
Cleveland
4,350,000
San Francisco
34,792,000
Dallas
-- 0,281,000
Balance in fund Dec. 31, 1910
20,570,000
Kansas City
500,000
Philadelphia
1,000,000
Richmond
7,440,000 <
St. Louis
6,245,000 '
San Francisco.
9,900,000
Total

312,735,000 !

Total

312,735,000

SCHEDULE SHOWING WHEN THE PROCEEDS OF ITEMS WILL BECOME AVAILABLE.

Immediate credit: New York (Manhattan).
One day after receipt: Boston, Philadelphia, and Richmond.
Two days after receipt (business days):
Cleveland and Cincinnati, Chicago, Atlanta. Minneapolis and St. Paul, St.
Louis, Kansas City, Mo.; Kansas City, Kans.
Banks in Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts,1 New Hampshire, New Jersey, New York,1 Pennsylvania,1 Rhode
Island, Vermont, Virginia.1
Four days after receipt (business days):
Dallas, New Orleans.
Banks in Alabama, Arkansas, Florida, Georgia,1 Illinois,1 Indiana, Iowa, Kansas,1
Kentucky, Michigan, Minnesota,1 Mississippi, Missouri,1 North Carolina,
Ohio,1 South Carolina, Tennessee, West Virginia, Wisconsin.
Eight days after receipt:
Banks in Arizona, California, Colorado, Idaho. Louisiana,1 Montana, Nebraska,
Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota,
Texas,1 Utah, Washington, Wyoming.
AUGUST 1,

1916.

NOTE.—Two-day items we forward on Saturday will be available Tuesday; four-day items we forward
Thursday will be available Tuesday, and those forwarded Friday and Saturday, on Wednesday.

AUTHORITY GIVEN TO ACCEPT UP TO 100 PER CENT OF CAPITAL AND SURPLUS,

American Exchange National Bank, New York City.
Bank of New York, N. B. A., New York City.
Chase National Bank, New York City.
Chemical National Bank, New York City.
Harriman National Bank, New York City.
Irving National Bank, New York City.
Mechanics & Metals National Bank, New York City.
Merchants Exchange National Bank, New York City.
National Bank of Commerce, New York City.
National City Bank, New York City.

Except banks ia cities referred to.

DISTRICT NO. 3—PHILADELPHIA.

R. L. AUSTIN, Chairman and Federal Reserve Agent.

I. GENERAL BUSINESS AND FINANCIAL CONDITIONS IN THE DISTRICT.

The year has been remarkable for the unusual business conditions
that existed. The improvement in all kinds of business, which was
first manifested in the summer of 1915,. has continued in increasing
degree all through the year 1916, offering opportunity for employment much in excess of the supply of wage earners; taxing the
capacity of industrial plants to their limits; stimulating the enlargement and erection of additional manufactories; and greatly raising
the wages of most classes of labor. Prices of all kinds of merchandise
were much advanced; production and consumption of goods were
largely increased; and the volume of business, as reflected by the
reports from all sources, was far in excess of that ever before transacted
in any twelve months.
At the beginning of the year the banks of the district were carrying
excessive reserves and the rates for money were unusually low.
Deposits of all banks in the district increased largely, but notwithstanding the unusual expansion in business, the strong condition of
the banks was maintained up to the last month of the year, by which
time, however, the excess of reserves had been greatly reduced and
their loaning rates had advanced f to 1 per cent from the low rates
at the beginning of the year. Owing to the easy condition of our
member banks, there was little borrowing by them from the Federal
Reserve Bank until within the last 60 days of the year, during which
time, however, there was loaned to them $15,332,000 in the form of
rediscounts and collateral loans.
This bank has been in a position during the year to perform all
the functions expected of it in compliance with the requirements of
the Federal Reserve Act and the regulations of the Federal Reserve
Board.
The percentage of reserve carried by the Federal Reserve Bank
each month during the year is shown in chart 1 and the table
following.

253

254

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
Cash reserve.
Amount of
cash
reserve
required.

Month.

191(3.

Cash reserve carried.

Gold reserve carried.

Percentage.

Amount of
excess
cash
reserve.

69.5
63.4
71.4
53.8
55.0
62.9
64.8
64.5
67.3
65.6
66.6
66.8

$11,100,000
13,000,000
13,700,000
7,100,000
6,200,000
10,200,000
10,800,000
11,900.000
13,200,000
13,500,000
13,000,000
15,800,000

Amount.

$7,500,000 $18,600,000
8,700,000 21,700,000
9,100,000 22,800,000
8' 500,000 15,600,000
9,200,000 15,400,000
12,100,000 22,200,000
12,500,000 23,300,000
13,400,000 25,300,000
13,400,000 26,600,000
14,700,000 28,200,000
13,900,000 26,900,000
17,000,000 32,800,000

January
February...
March
April
May
June
July
August
September
October
November
December

Amount.

87.2 $14, 800,000
87.1 15, 800,000
87.3 18, 600,000
63.9 13, 100,000
58.6 14, 400,000
64.5 21, 700,000
65.2 23, 200,000
65.8 24, 700,000
69.3 25, 900,000
66.9 27, 600,000
67.6 26, 500', 000
67.4 32, 500,000

f EDEPAL PESEQVe BANK OP PHILADELPHIA
PERCENTAGE OP REQUIRED CASH DESERVE-AND PERCENTAGE or- CASH RESERVE
HElLD ON THE PIQ5T FRIDAY OP E:ACH WORTH
1316
PEB
PER
MAD APB MAY JUNE JULY AUG 5&PT OCT NOY DEC CENT
JAN
\QQ%

IQO*

90%.
60%

90%

&Q%
IQio
60%

5CY,

40%

masi

^^^^

WliM

mi ill

pfiM

1BWMBBl I H
1

• 10%

HKSBS

^ ^

3 S ^ Of NET DEPOSITS

7O'4
60%
50X
40£
30^
£or e
1O^'.
0

ACTUAL AMOUNT OP REQUIRED CASH RESERVE AND AMOUNT O P GOLD AKO
£ A 5 H ^EISTQVE HE:LD OR THE PIU5T PQIDAY O P EACH M O N T H
JfoUIQNS
DOLLARS

JAR

ft-E? MAR APR 1 AAY JUNE [JULY AUG 5£PT[QCT Noy

*NOTE.- THE HEAVY E>LACK U/4B PEPEE3eNTS THE AMOUNT OF* GOLD

CHART 1.

D&cDOLUGS

DISTRICT NO. 3

255

PHILADELPHIA.

II. RESULTS OF OPERATION.
Comparative statement of condition of the Federal Reserve Bank of Philadelphia.
Dec. 30, 1916.
RESOURCES.

Collateral notes—members..
Bills discounted—members
Bills bought in open market
United States bonds and notes.
Municipal warrants
Earning assets
Interest accrued on United States bonds
Cost of unissued Federal Reserve notes
Expenses paid in advance
Transit department expense
Furniture and equipment—general
Furniture and equipment—transit department
Organization expense
Due from Federal Reserve banks—net
Due from banks and bankers
Exchanges for clearing house, cash items, etc
Due from member banks—overdrafts
Federal Reserve notes on hand
National and Federal Reserve notes of other banks.,
Nickels and cents
Mutilated currency forwarded for redemption
Gold settlement fund
Gold redemption fund
Gold coin and certificates
Other lawful money
Reserve

$900,000.00
663,076.79
13,656,430.08
2,825,000. 00
465,112. 22
18,509,619.09
17,057.93
27,708.01
2,445. 83
1,367.18
15, 409.87
5,382,501.30
609,389.97
3,864,733.22

Dec. 31.1915.

$168,274.06
2,542,975.94
1,993,750.00
1,484,147.13
6,189,147.13
10,142.15
43,172.04

1,684.23
18,491.31
31,517.06
3,025,971.02

1,046,543.43
33,959.73
171,140.00
380,267.50
463,476.00
215,885.00
121.89
100.83
132,500.00
8,042,000. 00 9,695,000.00
100,000.00
16,988,892.50
7,445,485.00
466,154. 30 3,358,145.30
25,597,046.80 20,498,630.30
54,794,517.09

Total resources..

31,495,511.73

LIABILITIES.

Capital
-.
Profit and loss
Unearned discount and unearned interest
Government deposits
Due to member banks
Cashier's checks outstanding
Federal Reserve notes—net liability
Miscellaneous liabilities
Total liabilities..

5,228,100.00
5,269,600.00
89,966.68
39,559.33
14,009.25
3,145,549.05
787,178.48
44,965,072.26 25,424,376.56
26,015. 72
107.63
1,300,000.00
254.05
M, 794,517.09 31,495,511.73

The following statement shows the results of the operation of the
bank for the year 1916:
Profit and loss statement of year's operation.
Earnings, 1916
$417, 939. 27
Expenses of operation of the bank proper, exclusive of
transit department
$130, 742. 26
Cost of Federal Reserve notes used
16, 600. 00
Miscellaneous charges on account of note issues
1, 002. 79
Depreciation in furniture and equipment
15, 652. 78
Disbursements of transit department in excess of net service charge
4,000. 00
Total

167,997. 83

Excess of earnings
Deduct organization expenses

249, 941. 44
31, 517.06

Net earnings
Surplus, Jan. 1, 1916

218,424. 38

Total
218, 424. 38
Dividends paid Dec. 30, 1916, for period covered from Nov. 2, 1914, to
June 30, 1915
128, 457. 70
Profit and loss credit balance, Jan. 1, 1917

89,966.68

256

ANNUAL EEPORT OF THE FEDERAL RESERVE BOARD.

As a result of the operations for the year, a dividend was declared
on December 20 at the rate of 6 per cent per annum, for the period
from November 2, 1914, to June 30, 1915, amounting to $128,457.
After charging off all expenses of organization and paying the dividend, $89,966 remained in the profit and loss account.
The amount of earnings and current expenses, including the cost
of issuing Federal Reserve notes, for each month of operation during
the year 1916 is shown in chart 2 and the following table. It will
be seen that earnings have increased rapidly while expenses during
the year have been fairly stable. This table also shows the percentage of the net earnings to the capital stock.
MONTHLY EADN1NG5 AMD EXP&MSEiS

p£D££AL P&5E:DVE: E)AMK OP P H I L A D E L P M I A
THOUSANDS
OP BOLIABS

THOUSANDS

0? BOLIAIS

40
———.——\ wE

GS/

/
20

£0

CUE QEMT 1
10

*•** .

CHART 2.

DISTBICr KO. 3

257

PHILADELPHIA.

Earnings and expenses.
Earnings.

Month.

January

1916.

MayJune
July

August
September
October
November
December

$14,512
14,113
20,464
25,619
31,969
31,464
36,418
35,596
36,107
40,531
37,362
52,743

Net earnings.

(including
From sale
cost of
Percentage
Total Federal Re- Amount. to paid-in
of United Sundry
States se- profits earnings. serve notes
capital
curities.
issued).
stock.

From
investments.

February
March
April

Current
expenses

$214
17
378
12,910
298
299
1,713
1,869
299
324
343
1,473

$1,995
1,300
7,590
285

$14,726
14,130
20,842
38,529
32,267
31 763
38,131
37,465
38,401
42,155
45,295
54,501

$12,167
11,210
10,649
10,758
11,160
12 410
11,031
9,254
12,303
11,817
17,592
18,653

$2,559
2,910
10,193
27,771
21,107
19 353
27,100
28,211
26.0C8
30;338
27,703
35,848

0.6
.7
2.3
6.4
4.8
45
6.2
6.5
6.0
7.0
6.4
7.9

1
.Thisitem represents gross earnings less current expenses only, not including any deductions for depreciation on furniture and equipment or organization expenses.

The percentage of the net earnings to the capital stock for each
month of the year is also shown in chart 3.
PERCENTAGE OP NET EABNIRGS TO CAPITAL STOCK
fED£PAL T2e5CEVE BANK OF PHILADELPHIA
to. CENTJAM 1 f £B [MAP | APB JAAY \JURZ |JULY| AUG5£PT OCT|flOV|P&C

10*

/
At

Zio

O
CHART 3.

Referring to the statement of condition, it indicates that the operations of all the departments of the Federal Reserve Bank increased
largely during the year.

258

ANXUAL REPORT OF THE FEDERAL RESERVE BOARD.

Member bank reserve deposits increased $19,541,000 through the
operation of the Federal Reserve Act, which required payments to
the Federal Reserve Bank during the year of two installments of
reserves of member banks.
;
The balance to the credit of the United States Government shows
a large gain since January 1, 1916, when the Reserve Bank became
the fiscal agent of the Government.
Invested funds, including the items, bills discounted-members,
collateral notes-members, bills bought in the open market, United
States bonds, and municipal warrants, increased $12,320,000.
Reserve, including gold and lawful money in vault and the gold
settlement fund balance in Washington, increased $5,098,000.
The growth in total resources, cash reserve, and earning assets of
the Reserve Bank during the past two years is shown in the following chart:
CPOWTH IN P&SOUDCE5
f EDEQAL "Q£SEDV£ E>ANK Of PHILADELPHIA
$10,000,000

J-20,000,000

330,000,000

S4C,00O,000

350,000,000

CHART 4.

The variations in total resources, member bank reserve deposits,
cash reserve, and earning assets of the bank, by months during the
year, are shown in chart 5. The rise in member bank deposits in
May and November was due to the increase in the percentages of
reserve to be carried in the Federal Reserve Bank as required by the
Federal Reserve Act. Steady increase in this item is also due to
the continuous growth throughout the year of the amounts of
individual and bank deposits of member banks, thereby increasing

DISTRICT NO. 3

259

PHILADELPHIA.

the amount of reserve required to be kept with the Federal Reserve
Bank.
PEDEPAL DESE.BVE BANK OP PHILADELPHIA
MILLIONS
OP DGLIAB3

JAN

Pee>

APP

MAY JUN£ JULY A U G 5&PT O C T N o v D&C OPPOLlftftS

50,

\TOT,

GUBCE

/
1

—« — ^ ^
30

—

POSITS

Abt&l

•

Tc TAL G

20
X

TOTj

10
••

L £AP

10
"OYED/ 1A£NT DEPO: ITS
- ^

"— • • • >• •

0
CHART 5.

III.

INVESTMENTS OF THE BANK.

Considerable increase in the earning assets of the Federal Eeserve
Bank is noticeable by referring to chart 6 and the following-table,
which show the amount of the invested funds of the bank on the
first of each month:
Total invested funds.
Earnings.

Montli.

January.
February
March
April
May
June
July
August
September
October
November
December

1916.

Average
Total
daily
Average
investment amount of
rate of
operations. invested return from Total
. funds.
all
earnings.
invested
funds.

$3,012,
1,948,
6,542,
5,296,
6,362,
7,329,
7,318,
4,476,
7,571,
7,469,
9,462,
18,781,
85,771,600

722.182
140,448
140,662
950,526
719,120
120,064
119,076
357,542
728,745
881.183
972,828
239,398

2.21
2.18
2.16
2.24
2.25
2.24
2.37
2.42
2.48
2.53
2.53
2.80

$14,512
14,113
20,464
25,619
31,969
31,464
36,418
35,596
36,107
40,531
37,362
52,743

15,590,981

2.42

376,898.

260

AXKUAL REPORT OF T H E FEDERAL RESERVE BOARD.

INVE5TA\EMTS

OF- THE P&DE.BAU PESELBYC BAHK OP PHILADELPHIA

1
OFDOLlABSjULYi AUG OnPT OCT MOV D E CJAM PEB ' MAE |APR I MAY! JUNE JULYAUG

„

3EPT OCT N.CN D£C

MILLIONS

-TOTAL, EARNING ASSETS
= B I L L S BOUGHT
MUNICIPAL W A R R A N T S
• - UNITED 5TAT&3 &OKD5 AND NOTES

....*

BILLS D

£0

7
C H A R T G.

Reference to chart 7 and the following table shows that the* major
portion of the earning assets of the Federal Reserve Bank have been,
as a rule, paper of less than 60 days' maturity.
Maturities of invested funds (not including United States bonds or notes),
Maturities of amounts held on last Fridav of month.
Month.

1916.
January.
February
March
April
May
June
July
August
Septemt3er
October
November
December

l t o 10
days.

$921,264
767,035
709,942
642,838
1,873,387
1,588, 427
2,280,562
1,742,325
2,420,344
3,364,895
2,670,292
5,076, 416

11 to 30
da vs.

$835,274
849,429
1,679,007
2,047,223
4,896,803
2,872,628
2,640,270
2,932,987
2,918,411
2,615,853
5,111,535
4,666, 472

31 to 60
61 to 90
dars.
] days.

406,358
509,576
563,729
519,986
726,931
570,247
471, 783
848,354
604,153
454,234
903,828
176,413

91 days to j Total ra6 months, 'vested funds.

$340,284 $1,770,298
269,356
2,336,735
4,573,314
'322,767
2,446,459
301,090
2,167,563
961,886
3,357,641
1,315,597
3,441,849
1,531,671
3,739,104
546,085
3,878,941
73,013
3,559,581
68,974
2,304,225
82,593
3,121, 237
88,029

$5,273,488
4,732,131
8,848, 759
10,957,596
13,626,570
12,704,540
14,366,135
12,808,855
13,894,862
16,053,537
16,072,473
17,128.617

DISTRICT iSTO, 3

261

PHILADELPHIA,

MATURITIES OP INVESTMENTS (HOT INCLUDING UNITED STATES BONDS)
AT THE CLO3& Of- BUSINESS ON LAST FBIDAY OP EACH MONTH
AT TH£ F&D&PAL EfcSBEVE: BANK OF- PHILADELPHIA.
AP5I/AAY IJU.M& IJUL.YI AUCJlSEPTjOCT

CHART 7.
BILLS DISCOUNTED—MEMBERS.

The rediscount operations for the year 1916 amounted to $8,684,332,
as compared to $5,137,083 in 1915. Rediscounts were made for 45
member banks, of which 10 were in Philadelphia, 24 elsewhere in
Pennsylvania, 10 in New Jersey, and 1 in Delaware. These were the
result of 331 applications, covering 3,292 pieces of paper, averaging
$2,638 per piece. The smallest note was for $1.33, while the largest
was for $100,000. The minimum amount of rediscounted paper held
by the Reserve Bank at any time during the year was $70,030, on
October 17, while the maximum amount was $1,219,569, on July 19.
A summary of the year's operations is given in the following table:
Bills discounted—Members {exclusive of member banks' collateral notes).

Month.

Earnings.
Average
Banks
daily
Total
redisamount of
rediscount rediscounts Average
counting.! operations.
Amount.
on hand.
rate.

1916.

January
February
March. .*.
April
May
:
June
July
August
September
October
November
December

$242,773
109,247
212,010
922,680
1,590,123
945,730
1,380,125
739,515
521,346
87,303
382,521
1,550,959

$184,040
217,425
243,312
484,626
775,309
547,013
721,273
388,923
177,480
93,024
216,223
661,395

4.03
4.10
4.09
3.74
3.78
3.67
3.93
3.96
3.98
4.11
3.89
3.89

$629
707
845
1,487
2,488
1,646
2,400
1,307
580
324
691
2,183

143 j 8,684,332

392,504

3.90

15,293

262

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

At the beginning of the year the discount rates of the Federal
Reserve Bank were as follows: Three per cent for commercial paper
having a maturity not exceeding 10 days; 4 per cent for commercial
paper having a maturity over 10 days, not exceeding 90 days; 4-|
per cent for agricultural paper having a maturity over 90 days, not
exceeding 6 months; 3 per cent for trade acceptances and commodity
paper having a maturity not exceeding 90 days. These rates continued without change until July 5, when the rate for commercial
paper maturing within 10 days and the rate on commodity paper and
trade acceptances was advanced from 3 per cent to 3J per cent. On
September 21 the rate for commercial paper maturing within 10 days
was abolished and a rate of 3 | per cent was established for the discount
of paper with a maturity of not more than 15 days. On the same
day a rate of 3|- per cent was established for member bank collateral
notes with a maturity of not more than 15 days. Since that time
there has been no change in the discount rates. The rates and changes
are given in the following table:
Discount rates.
Changes made in rates.
Classes of discounts and loans.

Oct. 14,
1915.

July 6,
1916.

Commercial
paper:
I to 101 1days' maturity.
II to 30 days'
maturity.
1 to 15 days 7 m a t u r i t y . . .
16 to 30 days' maturity
31 to 60 days' maturity
61 to 90 days' maturity
Agricultural and live-stock paper: 91 days to 6 months' maturity
Collateral notes—members: 1 to 15 days' maturity
Trade acceptances:
I to 10 days' maturity
II to 30 days' maturity
31 to 90 days' maturity
Commodity paper:
1 to 30 days' maturity
31 to 60 days' maturity
61 to 90 days' maturity

Sept. 21,
1916.

3*
4
4

i Rates discontinued Sept.,21,1916.
Bankers' acceptances—authorized discount rate: Minimum, 2 per cent; maximum, 4 per cent.

COLLATERAL NOTES

MEMBERS.

Authority to make advances to member banks on their own
promissory notes having a maturity of not over 15 days was given by
an amendment to the Federal Reserve Act, approved September 7,
1916. Since September 21, when the discount rate was announced,
the Federal Reserve Bank has made loans to member banks on their
own notes amounting to $13,644,268, the amount of such notes on
hand December 30, 1916, being $900,000. The maximum amount

DISTRICT NO. 3

263

PHILADELPHIA.

held was $5,251,268 on December 21. Detailed figures of these
transactions are as follows:
Collateral

notes—members.

Earnings.
Number of Amount of Average
daily
banks bor- note opera- amount
on Average
rowing.
tions.
hand.
Amount.
rate.

Month.

1916.

September
October
November
December

$25,000
220,000
3,032,500
10,366,768

$4,167
90,000
493,133
3,775,613

3.5
3.5
3.5
3.5

$12
271
1,439
11,379

13,644,268

1,090,728

3.5

13,101

ACCEPTANCES.

By far the largest part of the Federal Reserve Bank's earning
assets consists of bankers' acceptances bought in the open market.
These acceptances originated in the exportation and importation of
goods to and from nearly all parts of the world and cover transactions
in chemicals, coal, coffee, copper, cotton, fish, flour, gold, grain, hair,
hides, machinery; meat, oil, pulp, railroad cars and materials, rubber,
ships, shoes, silk, steel products, sugar, tobacco, wool, and various
other kinds of merchandise. The total amount of acceptances
purchased during the year was $53,122,000, as compared to $7,566,000
in 1915. The amount of acceptances on hand has fluctuated between
$1,544,000, on February 15, and $14,816,000 on December 8. The
lowest rate at which they were bought was 2 per cent, and the highest
rate was 3J per cent, in December. There were no purchases of
domestic acceptances during the year. Details of the purchase of
acceptances are as follows:
Bills bought in open market.
Acceptances purchased.
Month.

January
February
March
April
May
June
July
August
September
October
November
December...

Bankers'
acceptances.

Trade
acceptances.

Total.

Earnings.
Average
daily
amount of
acceptances on Average
Amount.
rate.
hand.

1916.

$194,000
658,000
4,744,000
3,837,000
3,956,000
5,602,000
4.922,000
3; 582,000
6,360,000
5,749,000
5,514,000
6,651,000
51,769,000

$51,000
15,000
153,000
153,000
164,000
127,000
79,000
231,000
213,000
156,000
11,000

$194,000
709,000
4,759,000
3,990,000
4,109,000
5, 766,000
5,049,000
3,661,000
6,591,000
5,962,000
5,670,000
6,662,000

1,353,000 ! 53,122,000

367,000
674,000
751,000
972,000
036,000
611,000
990,000
662,000
624,000
883,000
352,000
102,000

2.08
2.07
2.05
2.03
2.05
2.10
2.17
2.28
2.42
2.45
2.43
2.58

8,585,000

2.31

$4,179
2,743
6,519
9,961
14,007
16,581
20,255
20,679
23,092
24,681
24,638
30,908
198,243

264

ANNUAL REPORT OF T H E FEDERAL RESERVE BOARD.
UNITED STATES BONDS AND TREASURY NOTES.

Since January 1, 1916, the Federal Reserve Bank has purchased
$2,500,000 of 2 per cent United States Government bonds at an average price of 99.88 per cent. Of this total, $1,000,000 were purchased
from member banks. On December 31, 1915, there were $1,993,750
of these bonds on hand, making a total of $4,493,750 subject to conversion under the terms of the Federal Reserve Act. In accordance
with the ruling of the Secretary of the Treasury, $2,849,000 were
converted into 30-year 3 per cent bonds and 1-year 3 per cent Treasury notes. All of the 30-year conversion three's have been sold at a
premium, resulting in a profit of $25,900. As the 2 per cent bonds
were purchased at a discount and converted into three's at par, the
bank derived a further profit of $9,734, making a total profit of
$35,634 from United States bond operations during the year. The
following table shows the average amounts of bonds and notes held,
with earnings, for each month during the year:
United States bonds and notes.
United States bonds.
Month.

January
February..
March..!...
April
May
June
July
August
September.
October
November.
December..

Earnings.
Earning
Average
daily
daily
amount on Average
amount on Average
hand.
hand.
Amount.
Amount.
rate.
Average

191G.

Average for the year

United States notes.

$2,809,
3,286,
3,905,
4,175,
4,000,
4,000,
3 ; 172,
2,935,
2, 819,
2,278,
1,874,
1,654,
3,076, 005

2.01
2.02
2.01
2.28
2.24
2.24
2.11
2.17
2.13
2.25
2.05
1.98
2.12

56,140 j

$818,000
818,000
818,000
1,174,000
1,174,000
1,174,000

3.00
3.00
3.00
3.00
3.00
3.00

$2,068
2,067
2,000
2,967
2,871
2,967

498,000

3.00

14,940

MUNICIPAL WARRANTS.

Warrants amounting to $7,823,000 were purchased during the year,
the average income yield being about 2.6 per cent. These warrants
were issued by cities, States, and townships of Arizona, California,
Connecticut, Georgia, Kentucky, Maine, Massachusetts, Missouri,
New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Tennessee, and Washington. Details are given in the following table:

DISTRICT KO. 3

265

PHILADELPHIA.

MunicipaI warrants.

Month.

January
February
March
April
May......
June
July
August
September
October
November
December

1916.

Average
daily
Amount of
warrants amount of
purchased. warrants
on hand.

$1,576
630,
855,
100,
862,
617,
889,
75,
434,
1,200,
378,
202,
7,823,000

IV.

Earnings.
Average
Amount.
rate.

962,000
240,000
318, 700
908,000
962,300
416,900
553, 400
285,900
302, 500
863,100
872,600

2.44
2.29
2.35
2.33
2.38
2.42
2.93
2.83
2.93
2.78
2.99
3.40

$4,897
5,395
6,449
6,352
7,880
5,889
5,680
6,129
5,490
7,932
4,571
2,519

2,675, 600

2.58

69,183

$2, 361,500

GENERAL BANKING CONDITIONS IN THE DISTRICT AND RELATIONS
WITH MEMBER BANKS.

The Philadelphia district has a population of 6,540,000 and an area
of 37,198 square miles. There are 632 national banks, 137 state
banks, and 231 trust companies in the district. Five national banks
have been organized during the year; two have gone into liquidation,
and one has failed.
The total resources of the national banks of the district amount to
$1,195,983,000; and the resources of state institutions to $915,084,000
making the total banking resources of the district $2,111,067,000,
exclusive of savings banks and private bankers. It should be noted
that trust funds which are held by the trust companies of this district
to an amount probably in excess of $1,000,000,000 are not included
in the above figures.
The Federal Reserve Bank is located in the only reserve city in the
district. Only thirty member banks, or less than 5 per cent of the
total number, are in Philadelphia. These have a capital and surplus
of $59,430,000 or 34 per cent of the total for all the banks of the
district and carry balances with the Federal Reserve Bank of $25,558,482, or 58 per cent of the total member bank deposits with the Federal Reserve Bank.
Chart 8 shows that the banking resources of this district have
gained materially during the last two years. The combined resources
of the national banks, state banks and trust companies have increased
approximately $294,000,000, or 16 per cent within a year, as shown
in the following tables. The trust companies have gained $152,000,000, or nearly 24 per cent, and the national banks $141,000,000,
slightly more than 13 per cent.

266

ANNUAL EEPOET OF THE FEDERAL RESERVE BOARD.

GQOWTH IK "Q£5OUQCE:S OF*.THE: NATIONAL BANKS* 5TAT& E>ANK5 AMD
T Q U S T CO/APANIEiS

§§§||||f

5TAT

ANSANKS

YEAE

IN THE: PHILADELPHIA

BESEDVEl

^^^gNATIOMAL bANK3

«5O0 OQO

|
a i,cxx3,000
«750,00O

OOO

^BjBSBi

DISTBIGT

ALL BANKS

*V.5O<>,ooo
«1.75C
3.OOO

se.oo qooo

ooo

1914 ^ 3
CAPITAL
5UDPUJ3
AND
1915 g i l l 1
UNDIVIDED
...r. ^ ^ • H ^ P * * "
PROFITS

jiiilBliliii

INDIVIOTJAL

Deposns

pPBHiBP- 1
.1914-

TOTAL

1315

S3
^

llliliiijlliiiliifi
1916

nmmim.m&iFm

•

CHART 8.

Combined total resources of the national banks, State banks, and trust companies in the
district.
State banks.

National banks.
State.

1915

1914

Delaware
New Jersey
Pennsylvania
Total..

1916

Delaware
New Jersey
Pennsylvania
Total

i 1915

1916

$17,689,000
$15,278,000
83,802,000
95,094,000
958,028,000 1,083,200,003

$3,804,000
9,412,000
104,109, 000

$4, 442,000
9,761,000
106,344,000

$5,095,000
9,612,000
107,069,000

1,003,478,000 1,0-55,108,000 1,195,983,000

117,325,000

120,547,000

121,776,000

$14,834,000
77,745,000
910,899,000

Total for all banks in this district.

Trust companies.
State.

1914

1915

1916

1915
$21,288, 000
45,916,000
574,471,000

$41, 008, 000
$37,321,000
$27,887, 000
137,479,000
130,909,000
52, 865,000
712,556, 000 1,533,628,000 1,638, 843, 000

$50,671,000
157,571,000
1,902,825,000

581,055,000

641,675,000

793,308,000 1,701,858,000 1,817,330,000

2,111,067,000

1916

1914

1914
$18,683,000
43, 752,000
518,620,000

267

DISTRICT NO. 3—PHILADELPHIA.

Combined total resources of the national banks, State banks, and trust companies in the
district—Continued.
PERCENTAGE OF INCREASE IN RESOURCES.
National banks.
State.

Delaware
New Jersey
Pennsylvania

Trust companies.

State banks.

All banks.

1915 over 1916 over 1915 over 1916 over 1915 over 1916 over 1915 over 1916 over
1914.
1914.
1914.
1915.
1915.
1914.
1915.
1915.
Per cent. Per cent. Per cent. Per cent. Per cent. Per cent. Per cent. Per cent:
16.5
14.8
14.0
31.0
9.9
23.3
3.0
15.8
1
16.2
3.7
15.1
5.2
1.5
5.0
5.0
14.6
2.2
0.7
10.7
24.0
6.9
16.1
5.1
13.1

Total

5.1

13.3

2.7
1

10.4

1.0

23.6

16.2

6.8

Decrease.

Combined statement of condition of member banks.
Comptroller's call of—
Sept. 12,1914.1 Sept. 2,1915. Sept. 12,1916.
RESOURCES.

$518,774,000
60,843,000
156,673,000
267,188,000

Loans and discounts
United States bonds
Other bonds, securities, etc.
All other resources
Total.

$527,799,000
61,438,000
198,582, 000
267,289,000

$597,371,000
58,812,000
244,462,000
295,338,000

1,003, 478,000 1,055,108,000

1,195,983,000

248,000
150,000

76, 814, 000
97,304,000
24,460,000
56,291,000
759,894,000
166,926,000
14,294,000

LIABILITIES.

Capital stock
Surplus
Undivided profits
National bank notes outstanding.
Individual deposits
Bank deposits
All other liabilities

875,000
761,000
20; 759,000
64' 197,000
570; 342,000
1591 796, 000
748,000

21, 100,000

58, 278,000
640, 860, 000
149, 604,000
868,000

1,003,478,000 1,055,108,000 I 1,195,983,000

Total.

1 The figures for 1914 include only those banks now in this district.

Banking and credit conditions within the district during the past
year have been such that there has not been much opportunity for
the Federal Reserve Bank to demonstrate its real usefulness to
member banks. The following table of borrowings by member banks
shows, however, that the Reserve Bank is assuming an increasingly
important position with its member banks.
Summary of borrowings by member banks in district JVo. 3.

Date of comptroller's call.

Dec. 31,1915.
Mar. 7,1916..
May 1, 1916..
June 30,1916.
Sept. 12,1916
Nov. 17,1916.
Dec. 27, 1916.

75284°—17

! Amount of
j Number of : rediscounts!
Total
Total
with
amount of amount of
I borrowing
Federal
! banks.
Reserve (rediscounts. borrowings
Bank.i
116
76
95
92
54
61
76

$1(38,274
215,307
519, 295
534,242
262,605
509, 607
4,257, 745

This amount includes collateral notes, members.

$646,482
492,126
924,948
942,990
468,262
St)4,569
4,452,354

$2,935,182
1,806; 126
2,757,948
2,636,490
1,483,762
1,825,381
5,708,151

268

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

The growth and development of business in this district during the
past year is evidenced by the increase in bank clearings. In Philadelphia the increase was $4,220,000,000, or 48 per cent, for 1916 over
1915; for the other cities in the district, $155,000,000, or 45 per cent,
over last year.
The clearings for the district, for Philadelphia alone, and for the
country banks of the district, by months during the past two years,
are shown in chart 9 and the following table. It will be noticed that
the clearings for Philadelphia and for the district, for November, 1916,
were nearly twice as large as in January, 1915.
Bank clearings.
Clearings,
1910.

Clearings,
1915.

City.

Alloona
^
Chester.
Harrisburg
Lancaster
Norristown
Philadelphia..
Reading
Scranton
Trenton
Wilkes-Barre.
Wilmington...
York
Total

Increase 1916
over 1915.

Per cent
increase
1916 over
1915.

$27,189,489
S31 235,885
39,780,519:
01 787,108
87,707, 7( 5
99, 946,150
85,067,489
98, 474,406
25,627,504
29, 415,156
8,803,633, 292 13,083, 317,712
95,820, 425
117, 472,070
165, 075,943
104,023,379
110, 304,782
99,501,058
92 539,060
87,017,610
150, 347, 014
107,730,002
53, 801,515
47,851,799

$4,046,396
22,006,589
12,178,391
13,406,967
3,787,652
4,219,684,420
21,652,245
1,052,564
10,803,724
5,521,480
48,617,552
5,949,710

15
55
14
1G
15
48
23
1
17
6
45
12

9,731,010,401

4,374,707,690

14,105,718,097

BANK CLCAQIWG5
PHILADELPHIA FEDERAL PESEQVE DISTDICT
1915
MILLIONS 1914 [
0FDOLUHJ5 DEC|JAM|FE5 MAB|APe|A^Y|jUNc|jULY|AUG|5EPTJ0CT|N0VJD£C lAN|rDE>|ftAB|AP2

2400
1200

/ .

800
«»—"

LIU

LPh !A

800

—

600

400

too
o

1200
1000

"-.

A1LL1OM5

\ ***^>

tooo

600

D I3TI

£j

1316

M.wljOKeljULYlAUclSEPTJOCTlMO1/ OFDOLLABS
1
1400

eoo
... ... . . . . . .

.{I

CIT

IfJJ

LPI !JA

D13

0
CHART 9.

The use of American bank and bankers' acceptances in financing
export and import business is increasing rapidly. The following
table shows aggregate acceptance liabilities of the member banks in

269

DISTRICT NO. 3—PHILADELPHIA.

Philadelphia at various dates during the past year. So far as is
known, nonmember banks in the district have not made any acceptances.
Date of comptroller's call:

Acceptance liabilities.

Dec. 31, 1915
Mar. 7, 1916
May 1, 1916..
June 30, 1916.
Sept. 12, 1916
Nov. 17, 1916
Dec. 27, 1916

$2, 809,000
5, 751, 000
6, 219, 000
5, 234, 000
5, 084, 000
8,640,000
8, 309, 000

The subject of the use of trade acceptances has been under earnest
discussion during the year and is one worthy of the attention of
trade organizations, member banks, and business men. A more
general adoption of this method of carrying the purchase of goods,
instead of the open book accounts, would be a step forward in good
banking practice.
Through the establishment of the collection system, active relations
maintained with all the member banks, it is believed, will grow more
intimate. Through the collection system, the Reserve Bank also
has direct dealings with about half of the nonmember banks of the
district, and it is expected that in the near future, direct relations
will be extended to all the banks in the district.
Some member banks still follow the policy of keeping only the
required portion of their reserves with their Federal Reserve Bank,
while others find it to their advantage to keep a larger portion with it.
As gold in the Federal Reserve Bank serves a much larger purpose
than in the vaults of the member banks, it is hoped that it will not be
long before all the banks will reduce their holdings of cash to the
minimum necessary for counter purposes and keep as much of their
reserve as possible with their Federal Reserve Bank. This would
also relieve member banks of the responsibility incident to keeping
on hand large amounts of cash. The following table shows the
changes in the reserve position during the past 18 months:
Reserve condition of member bcmlcs.
[000's omitted.]
In vault.
P a t e of comptroller's
call.

With Federal i With approved
Reserve Bank, reserve agents.

Excess.
Held.

Required.

Held.

1915.
Sept.2
Nov. 10
Dec. 31

Total.
Required.

48,299 ' 30,510
50,420 38,428
50,886 37,822

19,443 ! 16,625
20,238 17,550
27,267 24,092

98,752
94,407
75; 215

36,516
38', 428
30,957

166, 493
165, 065
153, 36S

89,657
94,406
92,872

76,836
70,653
60,496

55,568
51,157
46,863
55,485
51,633
53,492

28,899
26,712
34,108
41,294
47,443
62,114

25,954
26,106
33,013
34,856
44,308
44,038

93,868
87,232
73,487
80,821
78,036
66,690

33,309
S3,501
25,704
27,120
20,222
20,032

178, 335
165, 101
154, 45-8
177, 600
177, 112
182, 296

99,926
100,505
99,041
104,567
108,838
108,108

78,409
64,596
55,417
73,033
68,274
74,183

1916.
Mar. 7 . . .
May 1 . . .
June 30..
Sept. 12.
Nov. 17..
Dec. 2 7 . .

40,663
40,898
40,324
42,591
44,308
44,038

270

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

It is felt desirable to remind the officers and directors of member
banks that this bank is their institution and its officers would be
glad to have them call more frequently to discuss the affairs of the
Reserve Bank and other matters of common interest.
The Chairman wishes to express his deep appreciation of the cooperation and assistance rendered by the officers of banking institutions
in the district in furnishing information as to business conditions in
their communities and of the hearty way they responded to all
requests for such information.
V. THE FEDERAL RESERVE BANK AND THE GOVERNMENT.

Since January 1, 1916, the Federal Reserve Bank has been acting
as fiscal agent of the United States Government. At that time the
accounts in some of the national banks of Philadelphia were closed
and the balances amounting to about $800,000 were transferred to
this bank. Since then a portion of the receipts of the Government
has been deposited in the Reserve Bank daily, involving the handling
of a large amount of checks and cash. The volume of such deposits
varies considerably. The maximum amount to the credit of the
Government was $10,750,000 on July 8, when the receipts of the
internal-revenue office were especially large, due to the payment of
taxes on incomes.
The Reserve Bank has had intimate and active relations with the
sub treasurer at Philadelphia and the chief national-bank examiner of
the district, and it affords much pleasure to acknowledge the courteous attention and hearty cooperation which has been extended to
the bank by those connected with these departments.
VI. FEDERAL RESERVE NOTE ISSUES.

The issuance of Federal Reserve notes largely increased during the
year, as shown by the following comparative statement:
Dec. 30,1916.
Federal Reserve notes received from Comptroller of Cur$30,480,000
rency, from organization of bank
Federal Reserve notes returned to Comptroller of Currency for redemption and destruction, from organization of bank
.
6.150,410
7' 260,000
Federal Reserve notes on hand
17,069,590
Federal Reserve notes issued to the bank
Gold deposited with agent to retire outstanding Federal
Reserve notes:
Gold on hand
. .
. . . . $3,730,000
11,180,000
Credit balance with Federal Reserve Board
859,590
Credit balance in gold redemption fund
• 15,769,590
1,300,000
Paper held by agent to secure Federal Reserve notes

Dec. 31,1915.
$12,480,000
640,000
2,680,000
9,160,000
$4,160,000
5,000,000
9,160,000
None.

As a result of the issue of Federal Reserve notes, the gold in the
hands of the Federal Reserve Agent increased $6,609,590 during the
year. Much strength is added to the Federal Reserve Bank by the
accumulation of gold through the issue of Federal Reserve notes.
Due to the activity of business, a much larger amount of currency

DISTRICT NO. 3

271

PHILADELPHIA.

was used for pay roll and other purposes. The Federal Reserve notes
outstanding have increased from $9,160,000 to $17,069,590, which are
secured by a deposit of gold and commercial paper with the Federal
Reserve Agent. Should an unusual demand for loans be experienced,
the reserve of the bank could be increased through the release of all
the gold held by the Federal Reserve Agent by the substitution with
him by the bank of an equal amount of commercial paper. According to the statement of the agent of December 30, 1916, the bank's
gold reserve in that case would be increased nearly $10,000,000,
which is evidence of the potential strength of the gold fund accumulated through the issuance of Federal Reserve notes.
The amount of Federal Reserve notes outstanding, by months,
during the past two years, is shown in chart 10 and the following table:
Federal Reserve notes.
Amount
Amount
Amount
by
outstanding Amount
Amount outstanding held
bank
at begin- issued dur- redeemed.
at
end
of
at
end
of
ing
month.
ning of
month.
month.
month.

Month.

January..
February..
March
April
May
June
July
August
September.
October....
November.
December..

1916.
$9,160,
8,660,
7,687,
7,178,
6,805,
6,314,
7,312,
7,832,
7,363,
7,606,
8.473,
14; 120,

Total

1,472,700
900,000
680, 000
1,360,000
6.080,000
3,340,000
14,157,700

660,000
687,550
178,250
805, 7i)0
314,850
312,650
832,650
363,450
606,250
473,140
120,640
069, 590

$500,
1,297,
509,
372,
490,
474,
380,
469,
437,
493,
432,
391.

$325,000

Amount in
circulation
at end of
month.

$581,445
202,500
115,795
150, 695
158,470
633,520
510,650
443,440
472,170
425, 850
1,519,010
171,140

$8,098,555
7,485,050
7,062,455
6,655,055
6,156,380
6,679,130
7,322,000
6,920,010
7,134,080
8,047,290
12,601,630
16,898,450

16,248,110

i Of this amount, $5,510,410 were notes iinfit for circulation, which were delivered t o t h e Comptroller of

Currency for destruction. The balance, $737,700, were notes fit for circulation, which were reissued to the
bank by the Federal Reserve Agent.
fEDERAL DC :5EQVC
FEDEPAL DE:5&QVb
MILLIONS
OF D01UB5 J U N E JULY

AUG

SEPT. OCT

NOY

Dec' JAN

NOTES
OUTSTANDING
bAMK Of- PHILADELPHIA

F-Eb IAAQ APD MAY JUNE JULY AUG sePT OCT MOV DEC

16
/

•*—,

4
2

/AlLL!OMS
Of DOILAQS

10
Q

6
4-

———"

CHART 10.

272

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

The next table shows that note issues were heaviest during the fall
of the year and that all of the notes issued were of $5, $10, and $20
denominations.
Denominations of Federal Reserve notes issued during1916.
Month.

Fives,

Tens.

Twenties.

Total.

I
I

1916.

January
February . .
March
April
May
June
July
August
September..
October
November
December

i
j

$214,800

$110,200

480, 000
480,000

400,000 J 200,000
6^0,000 '
2,280,000 ! 2,040,000
1,660,000 |
560,000

480,656
160,000
80,000
720,000
1,760,000
1,120,000

680,000
1,360,000
6,080,000
3,340,000

3,974,800

4,430.200

14,157,700

S3 25,000
!

$512,700 |
200,000 ;

Total

5,752,700

1> 472,700
900,000

The issue of Federal Reserve notes covered by gold is not a matter
of any profit to the Reserve Bank, but is an expense equal to the
cost of printing and shipping them. Experience has shown that
this amounts to about 1 cent a note. As notes issued under these
circumstances are for the benefit of the public, it has been suggested
that the Government assume the cost of issuing them.
VII.

INTERNAL, MANAGEMENT OF THE BANK.
BOARD OF DIRECTORS.

In December, 1916, M. J. Murphy, of Clarks Green, Pa., was
reelected a class A director of the Federal Reserve Bank by the
member banks in group 3, for a term of three years ending December
31, 1919, and Alba B. Johnson, the only nominee for class B director,
was reelected by the member banks in group 1 for a similar term.
In connection with the election of directors, it is interesting to note
that as a result of the grouping of banks as required by the Act,
group 1 contains 210 banks having capital and surplus of $137,748,000,
or 79 per cent of the capital and surplus of all member banks in the
district; group 2 has 211 banks with capital and surplus of $26,217,000,
or 15 per cent of the total; and group 3, 211 banks with capital and
surplus of $9,653,000, or 6 per cent of the total for all the member
banks.
A number of changes have occurred during the year among the
class C directors. The term of George M. LaMonte, of Bound Brook,
N. J., expired December 31, 1915. By the transfer of the northern
part of New Jersey, in which Mr. LaMonte resided, to the New York
Federal Reserve district, he became ineligible for reappointment
and Vance C. McCormick, of .Harrisburg, Pa., was appointed to
succeed him as a director, while George W. Norris, a member of the

DISTRICT NO. 3

PHILADELPHIA.

273

Board, was appointed deputy Federal Reserve Agent and deputy
chairman. Mr. McCormick retired in July and J. Davis Brodhead,
of South Bethlehem, Pa., was appointed in September. In August
Mr. Norris resigned to become Commissioner of the Federal Farm
Loan Board, and Henry B. Thompson, of Wilmington, Del., was
appointed to his place and designated as deputy Federal Reserve
Agent and deputy chairman. Mr. Thompson has since been
appointed by the Board to serve for a three-year term, ending
December 31, 1919.
The men who retired from the board were experienced in financial
and commercial affairs; were highly esteemed as colleagues and respected as counsellors; and the severing of their connection with the
board was the cause of the deepest regret to their associates.
With one or two exceptions in midsummer, meetings of the board
of directors and of the executive committee have been held regularly during the year. All the loans and investments made were submitted to and acted upon by them, and discount rates and all other
matters of importance affecting the operation of the bank were considered by them. The directors have manifested, at all times, a deep
interest in the bank and have given much consideration to its affairs.
CHANGES IN OFFICIAL AND CLERICAL STAFF.

Thomas Gamon, jr., formerly chief clerk of the bank, was elected
assistant cashier in January, 1916.
There were 89 employees of the Reserve Bank at the end of the
year, as compared with 45 at the beginning; 28 men were added to
the force of the transit department; 2 to the teller's department; 5
to the bookkeeping department; 1 to the auditing department; and
2 were regularly assigned to handle the work incident to Government deposits.
The clerical staff has rendered faithful and efficient service. In
solving the many problems in connection with the development of
the operations of the institution, especially in connection with the
inauguration of the check collection system, which involved a large
amount of extra service, excess hours of labor were cheerfully given
and all the work most satisfactorily performed, evidencing the heartiest cooperation of officers and clerks.
WORK OF THE FEDERAL RESERVE AGENT7S DEPARTMENT.

On January 15, 1916, the Federal Reserve Board authorized the
appointment of an assistant to the Federal Reserve Agent, and
Arthur E. Post was appointed to the position.
The local office of the Federal Reserve Board has been maintained
in the Federal Reserve Bank as required by the Act, with a sufficient

274

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

force to do the work in connection with the issuing of notes, making
of reports, and other matters pertaining to the office.
VIII. TRANSIT DEPARTMENT OPERATIONS.
The number of items handled by this department has increased
rapidly, partly because of the gradual increase in the number of
banks using the system. Chart 11, together with the following
tables, shows the average number and amount of items handled
daily and the total number and amount handled each month. During
June, the last month of operation of the system then in force, a
daily average of 6,298 items were handled, as compared to 31,299 in
December under the new plan.
Transit department operations.
Average number of items handled daily.

Month.

1916.
January
February
March
April
May
June
July 1 to July 14..
July 15i t o July 31
August
September
October
November
December

On Philadelphia
banks.

On country bank!
in this district.

On banks in other
reserve districts.
Number.

Number.

Amount.

Number.

Amount.

1,272
1,262
1,087
1,155
1,247
1,503
1,684
2,322
3,438
5,695
8,279
8,941
8,957

$1,740,933
1,746,935
2,081,444
2,373,427
2,560,451
2,671,149
3,356,974
3,957,102
4,497,927
5,735,277
7,667,741
8,084,550
9,025,654

4,717
4,612
4,177
4,576
4,443
4,653
4,661
11,437
13,124
12,240
14,066
15,137
16,374

$464,830
432,936
423,187
464,105
459,918
471,700
504,481
1,375,391
1,516,512
1,589,865
1,754,711
1,806,792
2,046,101

Amount.

Total.
Number.

85 SI, 417,109 6,074
87 1,974,414 5,961
127 1,819,939 5,391
170 2,141,092
5,901
178 2,024,932
5,868
142 2,501,917
6,298
166 2,958,077
6,511
968 2,793,092 14,727
3,317,912 19,613
3,051
4,099,548 22,946
5,011
5,785 5,196,789 28,130
5,568 5,885,762 29,646
5,968 6,610,018 31,299

Amount.

$3,622,872
4,154,285
4,324,570
4,978,624
5,045,301
5,644,766
6,819,532
8,125,585
9,332,351
11,424,690
14,619,241
15,777,104
17,681,773

i The universal par collection system started July 15,1916.

Total number and amount of checks handled monthly.
On Philadelphia
banks.

On banks in other
On country banks. reserve districts.

Total.

Month.
Number.
January
February
March
April
May
June
July 1 to July 14.
July 15 to July 31
August
September
October
November...
December
Total

Amount.

Number.

Amount.

Number. Amount.

Number.

31,791 $43,523,325 117,920 $11,620,757 2,136 $35,427,723 151,847
137,096
,996 45,411,514
29,033 40,179,514 106,067 " 957,538 I,""
•" —
"426,067 3,
1,417 49,138,325 145,544
29,341 56,198,999 112,786
51.386,203 141,628
138,528 4,
[, 083
27,729 56,962,252 109,816
957,845 1,610 52; 648,237 152,571
32,435 66,571, 738 115,526
65,049,832 163,758
264,212 3,6
39, 089 69, 449, 871 120,970
32,538,848 71,623
549,296
18,521 36,926,717 61,273
39,103,285 206,190
32,504 55,399, 443 160,123 19,255,471 M
92,825 121,444,031 354,350 40,945,825 13,563 89,583,625 529,564
573,658
125; 267 102,488,
142,385 143,381,917 306,006 39; 746; 631 82,389
206,992 191,693,522 351,645 '" 867, 772 144,625 j 129,919, 727703,262
363,005 133,634 141,258,294 711,514
214,600 194,029,195 363,280
223,934 225,641,340 409,348 51, 152,535149,206 165,250,451 782, 488

Amount.
$90,571,805
95,548,566
116,763,391
119,486,983
131,177,820
146,763,915
75,014,861
113,758,199
251,973,481
285.617,246
365,481,021
378,650,494
442,044,326

1,121,179 1,301,401,804 2,679,110 312,245,482 670,4541999,204,762 4,470,743 2,612,852,108

DISTRICT 3S*0. 3

275

PHILADELPHIA.

TBANSJT DEPARTMENT 0PEPATI0N5- AVEPAGE NLTOED OF ITEMS HANDLED DAILY
FEDGBAL PESEWE. BANK OP- PHILADELPHIA
1016
NUK5CB
NUMBCB
Of ITEMS

JULY|AUG|SE:PT|OCT |NQV|DEC JAM |P&b|MAP|Apa |MAY|JUNEPULY|AUG|S6PT|OCT |NOV|DEC OP ITEMS

35,000

30,000

35.QQ0

_ - » •

ITBMS ON ALL BANKS

3Q0OO

Jt&M3 ON BANKS IN THIS DISTRICT

— .-..-= IT CMS OH PHILADELPHIA BANKS
25,000

^ I f t « 3 . ON BANKS IN OTHEE DISTRICTS

20.000

15.000

10,000

5,000

/ '

25;ooo

i
//

20.000

13000

1Q0OO
....

5,000

/s
V

N O T E ; - T H E INAUGURATION OP THE INTCCDISTCICT COLLECTION SYSTEM ON JULY IS, BIG- CAUSED
THE INCPEA5& IN VOLUME OF E.TJ51N&S5 LIANOLCD IN J U L Y A N D SU5SEQUENT MQMTH3
CHART 11.

A glance at the chart, which is based upon daily averages, reveals
some striking changes under the new system. Checks on banks in
other reserve districts show a large increase. These items for the most
part come from Philadelphia member banks, some of which now send
practically all of their foreign items to the Federal Reserve Bank.
The number of items on Philadelphia banks also shows a large increase, the greater part of the gain coming from checks received from
other Federal Reserve Banks.
Under the regulations of the Federal Reserve Board for the handling of checks on nonmember banks, arrangements have been made
with 143 nonmember banks, outside of Philadelphia, for tire collection of their checks. Checks on all nonmember banks in Philadelphia, amounting to 69, are also handled, making the total number of
nonmember banks whose checks are handled through the collection
system 212.
In organizing the new check collection system, this bank is indebted to the officers and transit department managers of some of
the Philadelphia member banks for the helpful service they rendered.

DISTRICT NO. 4—CLEVELAND.

D. C. WILLS, Chairman and Federal Reserve Agent.

It was to be expected that the Federal Reserve Bank of Cleveland
from an earning standpoint would make a much improved showing
in its operations for 1916 over 1915. The increase in revenue,
however, did not come through rediscounting for member banks,
but from the reserve bank's open market transactions and from purchases, conversions, and sales of United States notes and bonds.
The net earnings for 1916 were sufficient to permit the charging off
of the entire item of organization expense which appeared in the
statement of December 31, 1915, and of all furniture and other
fixtures except vault equipment and mechanical equipment which
are being amortized.
On December -2 there was declared an initial dividend of 6 per cent
per annum for the period to June 30, 1915. This dividend, amounting
to $143,236.51, was credited to the accounts of member banks
December 30, 1*916, with previous advice, in order to give them the
opportunity of entering the dividend in their own earnings for the
current year.
On December 31, 1915, the bank had 110 per cent of its capital
in revenue-producing assets. At the close of 1916 this percentage
had risen to 363 per cent, the daily average in 1916 being 246 per cent.
The following table shows the daily average of invested funds,
earnings from investments, and rates of earnings for each month during the year:
Daily average invested funds.
Bills discounted,
members.

Bills b o u g h t
in open
market.

Municipal
warrants.

United States!
bonds.
;

Total invested
funds.

1916
January
February
March
April
May
June
July
August.
September
October
November
December

$414, 537.89
272, 072. 70
253, 643. 25
438, 402.00
284, 497.00
277, 443. 55
419, 584.00
282, 083.70
597, 913. 07
370, 686.10
271, 772. 87
• 1,205, 755. 34

$931, 173.58
976. 360.05
1,121 ,930.04
1,088] 989.00
2,613. 246.00
4, 400, 822. 83
6,595, 523.00
7,051, 901.80
7,284, 566.60
6,695, 266. 52
6,884, 224.51
9,589, 687.29

816,477.61 $2
954,676.i. 86
852,506..19
869,198.LOO
486.443.1.00
509,66 '.00
781,391..00
597,141..96
780,179.i.64
218,Sol...OS680.3' .16
12,953.

501,300.00
389,862.07
993,613.00
180,767.00
166, 642.00
614,333.00
653,358.00
375, 258.06
798.550. 00
878,430.96
739, 200.00
959,820.84

$6,713,439.08
7,592,971.68
9,221,692.48
11,175,356.00
14,550,828.00
15,802,266.38
18,449,856.00
18,306,385. 52
17,461,209.31
18,163', 244.64
17,575,574.54
21,468,216.82
277

278

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
Daily average invested funds—Continued.
Earnings.

January
February
March
April....
May
June..
July
August
September

;

$15, 721.61
16, 869. 29
20, 413.73
23, 300.29
29, 821. 61
1.46
31,
39, 826.01
40, 260.69
37, 634.77

Average
invested
funds.
Per cent.
2.70
2.71
2.62
2.53
2.44
2.48
2.55
2. GO
2.63

October...
November.
December.
Profits realized on United
States notes and bonds.
Total.

Earnings.

Average
rate on
invested
funds.

$44,904.20
40,031.23
51,124.91

Per cent.
2.74
2.72
2.75

391,927.80
37,228.53
429,156.33

RECAPITULATION.
Daily average of funds employed during year:
Bills discounted—members
Bills discounted—bought
Municipal warrants
United States notes and bonds

$425,175. 75
4,672,647.68
3,943,462.52
5,692,548.42

Total

14,733,834.37

Volume of business handled:
Bills discounted—members
Bills discounted—bought
Municipal warrants
United States notes and bonds

6,792,429.30
27,542,002.24
10,660,237.45
11,721,160.00

Total
Average rate of earnings for year:
Bills discounted—members
Bills discounted—bought
Municipal warrants
United States notes and bonds

56,715,828.99
Per cent.
4.25
2.29
2.97
2.54

Totalfunds employed

2.63

Earnings from discounts and investments:
Bills discounted—members
Bills discounted—bought
Municipal warrants
United States notes and bonds

$18,064.41
106,993.11
116,925.13
144,843.65

Total

386,826.30

Other earnings:
Sundry profits
Penalties....
Profits realized on United States bonds

1,779.47
3,322.03
37,228.53

Total
Average capital

429,156. 33
5,982,695.00
Per cent.
7.17

Rate of gross earnings on capital

The following is a comparative balance sheet as at the close of
business December 31 and 30, 1915 and 1916:
1916
RESOURCES.

Bills discounted for members
Bills discounted, bankers7 acceptances
Investments—short-time municipal obligations
United States bonds
Premium and accrued interest on United
States bonds
Cost of unissued Federal Reserve notes
Furniture, vault and other equipment
Expense, organization
Expenses paid in advance

$527,762.01
803,724.54

$1,006,773.50
10,153,694.75
2,684,589.64
7,979,460.00

2,846,067.50
2,357,000.00
$6,534,554.05

$21,824,517.89

103,808.13
42,757%61
20,187.08

297,660.08
39, .544. 25
20,163.92

55,774.4S
6,486.36

934.76
62,260.84

DISTRICT NO. 4

279

CLEVELAND.

1915

1916

EESOURCES—continued.

Dae from other Federal Reserve Banks, net...
Due from banks and bankers
Deferred debits
Gold coin and certificates
Gold settlement fund, Washington
Gold redemption fund

S3,657,895.98
129,610. 22
10,417,595.49

$2,101,321.01
$9, 593,320. 00
11,042,000.00

Legal-tender notes and silver certificates
Federal Reserve notes on hand
Other cash and coin
Mutilated currency forwarded for redemption
Other resources

$15,761,382.50
16,953,000.00
42,250.00
20,635,320.00
1,206,352. 00
271,405.00
110,082.85

32,756,632.50
484,417.00
588,935.00
91,816.77
140,000.00
28,554.65

31,088,048.57

70,478,278.51

5,941,150.00

4,385.85

6,021,800.00
94,797.44
37,978.59
974,809. 73
54,586,226.61
8,759,174.62
3,491.52

31,088,048.57

70,478,278.51

LIABILITIES.

Capital paid in
Profit and loss account
Unearned interest and discount
United
States Government
deposits
Due to member
banks (reserve
account)
Deferred credits
Other liabilities
Federal Reserve notes outstanding
Gold deposited with or to the credit of the Federal Reserve Agent
Reserve required
Reserve carried
Excess reserve

21,337.34
25,121,175.38

11,000,000.00

10,832,305.00

11,000,000.00
35 % = 8,056,961.16
94. 8%= 21,845,777. 65
59.8%= 13,788,816. 49

10,832,305.00
35 %= 17 482,104. 85
66.6%-33,282,180. 80
31. 6%= 15,800,075.95

The following is a detailed comparative statement of profit and loss
account for the years 1915 and 1916:
Profit and loss account.
1915

Earnings from—
Bills discounted, members
Bills discounted, bankers' acceptances
Investments—snort time municipal warrants..
United States securities
Sundry profits
Balance to organization expense
Profits realized on United States securities
Expenses:
Current expense
Cost of issued Federal Reserve notes.
Organization expense
Commission paid
Dividend paid
Profit and loss credit balance

$31,632.35

11,281. 48
55,971.66
15,515. 86
823. 88
55,774.48

1916

$18,064.41
106,993.11
116,925.13
144,843.65
5,101. 50
37,228.53

170,999. 71

429,156. 33

123,197.63
9,014.25
37,377. 56
1,410.27

185,251.94
5,870.44
143,236.51
94, 797. 44

170,6

429,156.33

Percentage of net earnings to average capital 3.98 per cent.

The record of business and banking.in district No. 4 for the year
again proves the self-contained character of the district. The
industries of the district not only were large beneficiaries of foreign
orders, but shared in an enormous amount the domestic prosperity
in such industries as steel, glass, rubber, petroleum, coal, electrical
goods, automobiles, etc. Its rail, river, and lake transportation was
taxed beyond capacity. Its agricultural products of corn, wheat,

280

ANNUAL KEPOET OF THE FEDERAL RESERVE BOARD,

oats, tobacco, sugar beets, hemp, etc., brought funds into the country
banks in unprecedented amounts. Labor has been attracted to the
district by the continuous advance of wages already high. In the
steel and coal industries the available supply of labor has been
insufficient and men by the thousands have been brought from other
parts of the country, principally from the South. This remarkable
situation has reflected itself in a number of directions. Trade of
all kinds reports record figures. Statistics of traction travel, amusements and hotels furnish an added evidence of purchasing power of
the people and their willingness to use it. Naturally the banks of
the district have participated in this increase of the district's wealth
and In its wide distribution. Savings banks and banks conducting
savings departments report record totals of deposits, and record
figures in the number of new accounts opened. The nation-wide
thrift campaign has also stimulated savings in this period of increased
earning power.
The following tables show the growth of resources during the year
of the member banks, also comparative figures of deposits in State
institutions as well as member banks in our three large centers. In
the four reserve cities of this district clearings show an increase for
the year of 36.5 per cent.
Nov. 17,1916. Nov. 10, 1915.
Member banks, total resources.
Deposits:
Demand
Time

I $1,198,514,751 $1,216,387,374
i
714,122,364
! 930, 705,126
170,171,543
i
235,112, 452

Comparison of deposits of the national banks in the three largest cities in district No. 4.
Nov. 17, 1916.

Cincinnati, Ohio.
Cleveland, Ohio..
Pittsburgh, Fa...

$97,410,620
146, 408,910
315,130,151

Nov. 10, 1915.

$31,512,677
102,884,342
223, 736,095

558,949,681 ! 408,133,114

Total..

Comparison of deposits of the State banks and trust companies in the three largest cities in
district ATo. 4State banks.

Trust companies.

City.

Cincinnati, Ohio
Cleveland, Ohio
Pittsburgh, Pa
Total

Date.

Amount.

Date.

Sept. 30,1916
do
Nov. 17,1916

$74,296,267
322,120,966
277,588,040

Sept, 25,1915
do
Nor. 11,1915

674,005,273

Amount.
$66,439,542
258,190,273
234,108,945
558, 738, 760

Investment houses found a ready market for their securities
within the district.

DISTRICT NO.

281

-CLEVELAND.

Generally the banks, member and nonmember, of this district
have had on hand funds available for loaning in excess of the demands
upon them, and there has been but slight demand for rediscounts
during the year. Partial failure of crops in some counties, a shifting
of public deposits in some communities, or other causes have led to
sporadic demand for more funds than could be supplied locally,
but in nearly every instance this demand has been short lived.
The following table shows the operations of the bank in rediscounts for member banks during the year, classifying the loans made
as to kinds and maturities:
Operations in discounts and investmants department, year 1916.
Bills discounted—members:
Commercial and agricultural paper
Trade acceptances
Member bank collateral notes
Total.
Average rate
Classification by maturities:
Within 10 days.....
11 to 30 d a y s . . . . ! . . . . .
31 to 60 days.
61 to 90 days
....
Beyond 90 days

$4, 232, 244. 04
175,185. 26
2, 385, 000. 00
per cent..

6, 792, 429. 30
4. 25
$2, 288,100. 00
3,203,600.00
778,100.00
376,000.00
146, 600. 00

Total.

6, 792, 400. 00

The demand for money and rates of interest on loans throughout
the district has changed very slightly during the year and there
has been no cause for serious modification of the rates of rediscount
in force at the Federal Reserve Bank of Cleveland. The following
table gives the rates at the beginning of the year, and the changes
made from time to time:
Maturities.
Over

Over
Over
Over
10 days 15 days
60 to
10 to
15 to
30 to
and less. and less. 30 days, 30 days, 60 days, 90 days,
inclusive. inclusive. inclusive. inclusive.
In force:
Jan. 1, 1916....
Mar. 10, 1916..
Aug. 1,1916..
Sept. 15,1918..
Jan. 1,1917....

In force:
Jan. 1, 1916..
Mar. 10, 1916.
Aug. 1, 1916..
Sept. 15, 1910
Jan.1,1917..

4
4

i
it

Open
market
purchases
Over
bankers'
60 to 90 of acceptdays.
ances.

Trade acceptances.

Agricultural and
live stock
paper over
90 days.

Not over
30 days.

5
5
5
5
5

34
3"
3
3
3

Over
30 to 60
days.

34
3"
3-J
3^
3|

4
34
4
4
4

2 to 4

2 to 4
2 to 4
2 to 4
2 to 4

282

ANNUAL KEPOET OF THE FEDERAL RESERVE BOARD.

Bankers7 acceptances form a considerable portion of the earning
assets of this bank. There is a comparatively small amount of such
business originating in this district, and practically all of these
acceptances purchased by the bank have been secured through the
Federal Reserve Banks of Boston and New York. At various times
acceptances of three member banks of this district were held. The
bank's officers have been constantly watchful of proper diversification
of the acceptance lines purchased, both as to character of business
and acceptors.
The following table succinctly shows the volume of business,
classification by maturities, and character of acceptances dealt in
during the year:
Bills bought in open market (acceptances).
Export and importDomestic
Total
Average rate
Classification by maturities:
Within 10 days
11 to 30 days
31 to 60 days
61 days to 3 months
Total

$27,237,096.49
304, 905. 75
per cent..
-

27, 542, 002. 24
2. 29
0
$1,542,425.48
5, 788, 427. 94
20, 211,148. 82
27, 542, 002. 24

This bank has been especially active in seeking to introduce in
industrial and commercial pursuits the use of trade acceptances in
place of open book accounts. What is known as the Trade Acceptance Primer, called "Why accept/' was compiled in this bank, and
through our agency over 120,000 of these pamphlets were distributed
in 40 cities located in 19 States. A great deal of progress has been
made and inquiries are received daily, not only from this district but
from all over the United States, concerning the methods and manner
of introducing this desirable change in relations between seller and
buyer.
Statistics are not available at present covering the volume of trade
acceptances now existing in the district.
While this bank has not been an active competitor in the general
market for Government bonds the volume of dealings by the bank
in these issues has been considerable throughout the year with substantial gain to the bank. The prices paid for bonds purchased have
been maintained at a low average, and the cost of securities owned
is less by a good margin than the present market price. The following
table shows the bonds purchased during the year and held at the
close of the year.

283

DISTRICT NO. 4—CLEVELAND.
United States note and bond operations.

Dec.
Purchased. Held
31, 1916.
2 per cent consols purchased in open market
2 per cent Panamas purchased in open market
3 per cent war loan 1918 purchased in open market.
3 per cent conversion bonds
4 per cent of 1925 purchased in open market
1-year Treasury notes
Total

$3,196,900
2,125,000
1, 401,060
1,000
1,629,200
50,000

$903,900
1,500,000
2,586,560
1,800
2,369,200
618,000

8,403,160

7,979,460

Average rate of earnings on United States notes and bonds, 2.54 per cent.

During the year the bank, in accordance with section 24 of the
Federal Reserve Act, has converted United States 2 per cent bonds
into 3 per cent 1-year Treasury notes and 3 per cent 30-year conversion bonds, as follows:
Conversion.
1-year 3 per cent Treasury notes received for 2 per cent bonds
30-year 3 per cent conversion bonds received for 2 per cent bonds
Total

On hand
Dec. 31.

$1,658,000
1,660,000

$618,000
1,800

3,318, 000

619,800

All of the conversion bonds have been disposed of except $1,800
par value, and several round blocks of the one-year Treasury notes
have been sold. Some sales of other Government bonds have been
made. The prices realized on all these transactions have resulted in
a substantial profit to the bank. The following table shows bond
sales during the year:
Sales:
3 per cent
3 per cent
3 per cent
4 per cent

Spanish war loan 1918
1-year Treasury notes
30-year conversion bonds
of 1925.

Total

1, 500
1, 090, 000
1, 659, 200
30, 000
2, 780, 700. 00

Proper steps are being taken looking to the conversion of an additional amount of 2 per cent bonds during next year under the authorization of the Treasury Department and in accordance with the act.
From the foregoing table it will be seen that the bank owns
$2,586,560 par value of the 3 per cent Spanish war loan bonds of 1918
and $2,369,200 of the 4 per cent bonds of 1925, the aggregate of which
is available as security for Federal Reserve bank notes. If an emergency should arise in which the Federal Reserve notes of the bank
would not suffice, this additional amount of currency would be
promptly issued. The Comptroller of the Currency has printed and
holds available for immediate issue $5,000,000 of bank notes of this
Federal Reserve Bank, which can be drawn upon when required.
75284°—17

284

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Iii its operations in relation to the short-term, borrowings of municipalities, as authorized under section 14 of the Federal Reserve Act,
this bank has been specially helpful to member banks and to the
municipalities served, There has been a constant effort on the part
of the bank to standardize loans of this nature and to make them
properly liquid investments, and this has been accomplished in practically every instance. The following table shows the volume of
business of this nature handled, the time for which the borrowings
were effected, and the average rate, as well as distribution and character of borrowings, whether State, county, city, town, or other
political subdivision.
Municipal warrants purchased.
City
State
County
Other

$10, 051, 988. 72
200, 028. 02
172, 845. 36
175, 375. 35

-----

Total
Average rate of earnings
Classification by maturities:
Within 10 days
11 to 30 days
31 to 60 days
61 to 90 days
Beyond 90 days to G months

per cent..
...

Total

10, 0(30, 237. 45
2. 97
0
381, 633. 20
2, 221, 525. 66
497, 590. 02
7, 559, 488. 57
10, 660, 237. 45

The reserve position of the bank has been maintained throughout
the year at a percentage without material variation. It has been the
general policy of the bank, under existing conditions to maintain a
reserve of 65 per cent to 70 per cent, so that the bank may be in
position in case of unusual demand or stress to meet calls upon it
without difficulty. The following table indicates the reserve position
of the bank at the close of each month throughout the year:
Changes in the reserve position of the bank during the year.
Required (35
percent).
January..
February.
March
April
.Time
July
August
September
October
IN ovember
December

Dollars.
8,820,538.
9,339,164.
9,124,846.
9,478,801.
12,138,429.
12,960,406.
13,781,843.
13,953,265.
14,178,013.
14,343,683.
17,489,737.
17,482,104.

Carried.
Dolh rs.
22,944, 786.20
23,545, 004.55
22,516, 944.20
20,508, 231.20
24,146, 093.00
25,220, 721.80
20,252, 246.05
26,678, 284.70
28,917, 315.75
28, 762, 925.75
37,826. 869.30
33.282' 180. 80

Per cent.

91
88.2
86
75.7
69.6
68.1
66.6
66.9
71.3
70.1
75.7
60. 6

Excess.
Dollars.
14,124,248.15
14,205,840.35
13,392,097.50
11,029,429.44
12,007,663.24
12,260,315.39
12,467,402.60
12,725,018.73
14,739,331.98
14,419,242.24
20,337,131.52
15,800,075.95

Per cent.

56.0
53.2
51.0
40.7
34.5
33.1
31.6
31.9
36.3
35.1
40.7
31.6

DISTRICT NO. 4

285

CLEVELAND.

Below are shown the number of member banks which have liquidated during the year, as well as the number of new national banks
formed, showing the total of member banks in this district to be 753
at the close of business for 1916. There is also indicated the distribution of member banks according to gross assets.
Member banks, district No. 4.
Number of member banks Dec. 31, 1915.
New banks organized

762
1
7(53

Closed by Comptroller of the Currency.
Liquidated

2
8

Number of member banks January 1., 1917..
Distribution:
In reserve cities
.. „
In other than reserve cities

10
753

.
45
708

753
Distribution according to assets.
Kentucky.
Under $100,000 assets
$100,000 t o $200,000
$200,000 to $300,000
$300,000 t o $500,000
$503,000 to $2,500,000
$2,500,000 t o $20,000,000
Over $20,000,000

Total

1
10
12
16
24
5
0

Pennsylvania.

Ohio.

1
31
41
52
197
46
5

West Vir- Total Nov. Total Nov.
ginia.
10, 1915.
17, 1916.

0
13
23
71
146
35
6

299

0
0
0
2
9
2
0

2
54
81
141
376
88
11

3
69
101
147
357
75
10

753

762

It has been reported to the Federal Reserve Bank that the reason
for the liquidation of the eight national banks above reported which
have converted into State banks was to enable them to make real
estate loans to a greater extent than permitted under the nationalbank act as amended, all • of the banks being located in rural communities.
There have been adjustments of the capital stock of this bank
owned by member banks by increases and reductions as shown by
the following statement, leaving a net capital stock of the bank at
the close of business December 31, 1916, of 120,436 shares, 50 per
cent of which is fully paid.
Total capital stock Dec. 31, 1915
Stock allotted member banks for quarter ending:
Mar. 31, 1916
June 30, 1916
Sept. 30, 1916
Dec. 31, 1916.
........:..

$11, 870, 300
$48, 800
47, 700
90, 700
68, 900
256,100

Total

12,132, 400

286

ANNUAL KEPOBT OF THE FEDERAL KESERVE BOARD.

Stock surrendered, quarter ending:
Mar. 31, 1916
June 30, 1916
Sept. 30, 1916
Dee. 31, 1916.

$31,200
9, 700
34, 900
13,000
$88,800

Total capital stock Dec. 31, 1916
Total paid-up capital stock Dec. 31, 1915
Subscriptions paid in quarter ending:
Mar. 31, 1916
June 30, 1916
Sept. 30, 1916
Dec. 31, 1916

12,043,600
5, 938,150
$24, 350
23, 900
45, 350
34,450

Total
,
Cash subscriptions refunded for surrender of stock, quarter
ending:
Mar. 31, 1916
$14, 400
June 30, 1916
6, 050
Sept. 30, 1916
13, 850
Dec. 31, 1916
10,100
Total paid-up capital stock Dec. 31, 1916

128,050
6, 066, 200

44,400
6, 021, 800

In its dealings with the trust companies and State banks of the
district this bank has maintained an attitude of willingness to give all
information requested concerning any of the features of the Federal
Reserve Act, and it has constantly evidenced a cordial spirit toward
all such institutions which have indicated or might show an inclination to join the Federal Reserve System. One large State institution in one of the important cities of the district is a member bank,
and it is understood that several large trust companies and State
banks are considering membership.
There can be no question that the year 1916 has witnessed further
progress in the development of cordial relations between the Federal
Reserve Bank and its member banks. There are quite a few of the
member banks which continue more or less evidence of disaffection,
but in the main all of these instances can be traced to an unwillingness to become informed concerning the facilities the system affords,
or more often to the lack of occasion for using the Federal Reserve
Bank or meeting its officers.
A table is appended giving the number of member banks for which
rediscounts have been made during the year, the number of separate
pieces handled, and the range of amounts of such rediscounts.

DISTRICT 1TO. 4
Accommodation

CLEVELAND.

287

of number hanks through discount and purchase of acceptances.
Banks
accommodated.

Kentucky
Ohio
Pennsylvania...
West Virginia..
Total.

50 !

Applications
handled.

Number
of pieces.

60
152
26
2

231
1,060
10*6
4

240

1,401

Amount of smallest note or bill rediscounted, $31.
Amount of largest note or bill rediscounted, $100,000.

Thirteen meetings of the board of directors have "been held during
1916, with an average attendance of seven. Twenty-five meetings
of the executive committee were held. The executive committee
always includes a quorum of members located in Cleveland, in order
to facilitate prompt action on rediscounts. The other members of
the committee alternate every 60 days.
Mr. John Stambaugh, treasurer of the Brier Hill Steel Co., Youngstown, Ohio, succeeded Mr. A. B. Patrick, of Salyersville, Ky., as a
class B director on January 1, 1916. Otherwise the personnel of the
board has remained the same as in 1915.
Mr. W. S. Howe, president of the First National Bank of Cincinnati
and class A director of this bank, was reelected for 1916 a member
of the Federal Advisory Council, and serves on the executive committee of the council.
At the beginning of the year no marked changes were made in the
internal organization of the bank, although owing to the resignation
of the then acting assistant cashier, the auditor, Mr. M. J. Fleming,
was made assistant cashier, the assistant auditor, Mr. W. F. Taylor,
was made auditor; and Mr. L. W. Manning, who had been a member
of the staff since the organization of the bank, was appointed assistant
secretary. During the first half of the year only minor adjustments
of duties w^ere made. Since the inauguration of the collection system, it has been necessary to double the force of employees, and a
number of changes in organization in the accounting and transit
departments have been made, as a result of experiments with the
aim of producing the best possible results. On July 1, the chief
teller, who had served since the organization of the bank, resigned,
to accept the position of secretary and cashier of a newly organized
State bank in Akron, Ohio, and his place was filled by the appointment of the assistant teller, Mr. C. L. Bickford.
In all, 7 employees who were on the roll January 1, 1916, have
since left, and there are 42 emlpoyees on the roll who were not in
the employ of the bank on that date. The total roll of officers and
employees is 65, including the department of the Federal Reserve
Agent.

288

AXXUAL REPORT OF THE FEDERAL RESERVE BOARD.

Conforming to the procedure suggested by the Federal Reserve
Board to be adopted by banks where the Deputy Federal Reserve
Agent is not active, the secretary of the Federal Reserve Agent,
Mr. Horace G. Davis, was appointed assistant to the Federal Reserve
Agent.
The executive and accounting offices of the bank have been located
on the second floor of the Williamson Building, on one of the principal corners of Cleveland. The tellers' department surrounds the
large armor-plate vault in the basement of the same building, and the
transit department occupies a room which adjoins the fourth floor.
This arrangement has proved satisfactory in respect to the transit
department, but has been more or less unsatisfactory otherwise. The
directors have therefore leased the corner room on the street floor
of the same building, which has been used until recently as temporary quarters of the Union National Bank. This location is being
prepared for our occupancy about the middle of January. These
new offices, while not elaborate, are a more dignified and appropriate
housing of the institution, and will permit of greater efficiency in
conducting the bank's business, beside being more convenient for
the member banks.
Two examinations of the bank were made during the year by the
Federal Reserve Board examiner and his staff. Complete copies of
the reports of both examinations were filed with the bank, and examined and initialed by each member of the board of directors. These
examinations included an audit of the funds and accounts of the
Federal Reserve Agent. The Federal Reserve Agent's funds are
also audited periodically by a special examiner of the Federal Reserve
Board.
On January 1, 1916, the Federal Reserve Bank of Cleveland became
a Government depository, having been authorized by the Secretary
of the Treasury to receive funds for the customs office and the collector of internal revenue. The balances at the close of each month
in this account of the Government are shown in the following table:
Government deposits.
January 3 . . . . . . . . . . .
January 3 1 . . . . . .
February
March
April
May. .
June

.
-

$258,851.37 July.
435,178. 31 August
726. 226. 28 September
891,449.89 | October
745. 676. 82 | November
908. 899. 28 December
3, 244, 249. 30

„.. $1, 948, 247. 84
2, 356, 055. 27
2, 241,487. 51
.. 1,481,872.76
1, 543, 696. 24
974, 809. 73

By the opening of this account, and also by our dealings in Government bonds through purchases, sales and conversions (April, July,
and October) active relations with the United States Treasury have
been established.

DISTRICT KG. 4—CLEVELAND.

289

The cordial spirit of cooperation between the officers of this bank
and the chief national bank examiner of the district continues.
By direction of the Comptroller of the Currency, the chief examiner
held two conferences of his examiners in Cleveland during the year.
The governor and chairman of the bank were present during part of
the deliberations on each occasion, by invitation of the chief examiner.
At the close of 1915 there were outstanding approximately
$11,000,000 of Federal Reserve notes of this bank. The policy
during 1918 has been to maintain this amount, except during a
period when there appeared to be no pressing demand, and notes
were being redeemed rather freely through the Treasury Department.
We were able during December to accommodate member banks
requesting new currency, by issuing in that month $2,700,000 of
Federal Reserve notes.
The deposit in the Federal Reserve Bank of gold certificates of
the $10 and $20 denominations, the retirement of emergency and
national bank currency of these denominations, and the increased
demand for such notes for pay-roll necessities have all tended to
a shortage of currency, and it has been the policy of the bank, where
practicable, to issue its Federal Reserve notes to meet the needs of
the district in this respect.
The following table shows the present status of the Federal Reserve
Agent's account for notes issued:
Cover of notes issued.
Gold certificates
United States Treasury gold order certificates

$1, 870,000. 00
87 350. 000.00

Gold redemption fund with United States Treasurer

10,220, 000. 00
612, 305. 00

Total

10, 832. 305. 00

Below are given the denominations of all Federal Reserve notes
issued and destroyed up to the close of 1910, and outstanding on
that date:
Denominations

of Federal Reserve notes issiiedt destroyed, and outstanding.
Denominations.

Fives
Tens
..
Twenties
Fifties
Hundreds....
Total
i Returned for destruction by Federal Reserve Agent
Returned for destruction by Federal Reserve Bank.
Returned for destruction by Treasurer of United States

Issued.
$3,600,000
3,840,000
5,440.000
950,000
730,000

Destroyed. Outstanding.
SI, 226,960
1,280,965
1,108,620
66,750
44,400

$2,373,040
2,559,035
4,331,380
883,250
685,600

14 560 000 i 3 727 695

10,832,305
$120,000
1,380,000
2,227,695
3,727,695

290

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

The following statement shows the inter-district movements of
Federal Reserve notes during the year.
FEDERAL RESERVE NOTES RECEIVED AND RETURNED.
Amounts of Federal Reserve notes of the several denominations received from other
Federal Reserve Banks for redemption or credit and returned to other Federal Reserve
Banks for redemption or credit by the Federal Reserve Bank of Cleveland for the period
Jan, 1, to Dec. SI, 1916.
Fives.
Exchanged with Federal
Reserve Bank of—

Boston
New York
Philad elphia
Richmond .
Atlanta
Chicago
St Louis
Minneapolis
Kansas City
Dallas
San Francisco
Total

Returned
to.

Received
from.

Returned
to.

$34,590
157,000
34,050
5,880
4.345
142,000
12,125
7 805
590
1,240
2,130

$3.750
309,250
12,480
10,250
6,705
8,720
7,205
14,170
11,680
5,100
3,090

$51,220
256,830
64,120
10,260
9,930
204,500
19,710
11,540
2,770
3,220
5,240

$5,760
116,070
21,440
15,970
9,150
1,270
4,600
11,910
9,610
8,620
2,230

$49,040
350,880
88,260
18,080
22,680
192,000
26,300
12.540
4,640
5,400
8,080

$560
56,140
10,500
19,420
8,140
4,800
2,980
6,500
4,280
8,660
2,280

401,705

192,400

639,340

206,630

777,900

124,260

Received
from.

Boston
New York
Philadelphia..
Richmond
Atlanta
Chicago
St. Louis
Minneapolis...
Kansas City
Dallas
San Francisco.
Total.

Received
from.

Returned
to.

$8,950
82;550
20,750
1,850
6,450
19,900
11,000
950
800
1,350
3, 700

1950
6,200

159,150

23,000

9,100
1,000
1,700
450
150
1,250
1,400
800

Returned
to.

Total.

One hundreds.

Fifties.

Exchanged with Federal
Reserve Bank of—

Twenties.

Tens.

Received j Returned
from. I to.
$6,200
65,600
14,100
2,600
5,400
13,600
5.900
l',100
'200
500
4,000

$2,800
12,100

119,200 t

Received
from.

Returned
to.

500
3,200

$150,000
912,860
221,280
38,620
48.805
572; 000
75,935
33,935
9,000
11,710
23,150

$13,820
299,760
44,420
57,340
26,895
17,190
15,235
33,130
26,820
24,280
11,600

24,200

2,097,295

570,490

2,600
1,900
700
400

The following statistics concerning the cost of Federal Reserve
notes are given:
Cost of Federal Reserve notes.

Janu ary
February
March
April
Mav
June .
July
August
September..
October
November
December
Total

'
;

Fives.

Tens.

Twenties.

$120,000
40, 000
140,000

$10,000

$80,000
80,000
80,000

40,000

80,000

1,140,000

440,000

720, 000

Hundreds.

Fifties.

Cost.

$324. 88
123.63
316.56

1
$200,000

$200,000

208.29

2, 676. 58
3, 649.94

DISTRICT NO. 4

291

CLEVELAND.

The banks in the cities of Cincinnati and Pittsburgh have maintained substantial excess deposits in the Federal Keserve Bank since
the inauguration of the collection system, by reason of their agreement that all checks upon them should be charged immediately to
their accounts.
Since the amendment of September 7 permitting a portion of
vault reserve of member banks to be carried in the Federal Reserve
Bank, an additional amount of excess deposits has been transferred
to the Federal Reserve Bank.
The following table shows the monthly averages of member bank
deposits and overdrafts.
Deposits.
January
February
March
April
May
June
July

Overdrafts.

-. 125,895,145.21
26, 774,042. 88 $5,443. 52
25,830,421.38 27, 415.10
27,520,077.65
34,598,527. 42
36, 552,713.60
38,504,879.57

3 7 282.87

Deposits.
August
September.
October
November..
December.
Average for year.

Overdrafts.

$39,381,867. 74 $4,372.74
41,198, 406. 77 51,790. 76
42, 534, 853.12
828. 87
53, 747,310.14
228.22
54, 586,226. 61
37,260,372. 67

7, 780.17

The bank has been almost free of overdrafts, and such as have
existed, being due to remittances through the collection system,
have been promptly liquidated and the reserve balances restored.
Since the organization on July 15 of the collection system, weekly
reports of net deposits of member banks have been required and with
very few exceptions have been regularly furnished.
The copies of called statements of condition of member banks, as
requested by the Comptroller of the Currency, have been promptly
received, and recently a duplicate copy of the reports of examination
by the national bank examiner has been supplied by the chief national
bank examiner of the district for the confidential use of the Governor
and the Federal Reserve Agent. These reports are carefully examined when received, and in this manner the officers of the bank have
kept in close touch with the condition of the various member banks.
There have been two failures of member banks during the year,
and from reports received three State banks have been obliged
to close their doors. The national banks which have been placed
in receivers7 hands failed by reason of mismanagement and bad loans.
At the close of business for the year 1916 the Federal Reserve
Bank of Cleveland had no past due paper upon its books, and had
not suffered any loss whatever by reason of charging oft doubtful
or worthless assets. The loans maturing September 28, 1916, and
October 1, 1916, to the city of Toledo, Ohio, upon pledge of current
revenues were not paid when due. Under a decision of the supreme
court of Ohio the city officials of Toledo had felt obliged to make
full payment of the city's sinking-fund assessments, and by so doing

292

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

depleted the funds on hand from current revenues to-such extent
that payment of the floating indebtedness could not be made. After
conference, it was agreed to extend the time of payment of the
warrants held by this bank pending sale of deficiency bonds then
in process of being issued. This deficiency bond issue has since
been sold, and payment of the entire amount due the bank, with
interest, is now being arranged.
Prior to July 15, 1916, when the general plan of clearings went
into effect, this bank had in operation a voluntary clearing system
in which 116 of our member banks participated. This system was of
course discontinued on the above date. Coincident with the inauguration of the present plan of clearing, the Federal Reserve Bank
became a special member of the Cleveland Clearing House Association, with clearing privileges and responsibilities only. The figures
appended show the progress made in collecting checks. The list
of State banks agreeing to remit at par is growing. The number of
items and volume represented are also increasing.
Clearings to July 15. 1916.
Daily average.
Number of
ilems.

January...
February.
March..!..
April
May
June
July

52,4-34
44,364
51,916
45,778
55,549
71,084
26,662

Amount.

Number of I
items. ; Amount.

$19,926,000
16,554,000
24,803,600
28,887,000
50,416,100
56,306,300
25,911,600

2,017
1,848
1.922
1,831
2,134
2,734
2,051

$766,361
689, 750
918,651
1,155,480
1,939,080
2,165,627
1,916,300

Clearings after July 15, 1916.
Daily average.
Number of
items.

Amount.

I Number of
I items.

Amount.

July
August
September
October...
November
December.

118,924
286,668
354,174
397,818
392,587
445,951

$54,310,350
120,685,287
163,662,697
189,574,370
219,220,650
209,933,421

i
!
i
1
j
i

9,148
10. 618
14, 167
15, 193
15, 704
17, 838

$4, 177,720
4, 469,825
6,546,508
7, 582,975
8, 768,826
8, 397,337

NOTE.—Number of State banks in collection system December 30, 496.

Through the gold settlement fund at Washington we have been
able to accept from our member banks, for credit, exchange on any
of the Federal Reserve cities. Our member banks are able to
replenish their reserves with us through deposits by their correspondents for our credit in the other Federal Reserve Banks, while we
agree to furnish exchange for excess balances. The demand from our
member banks for this service has been only nominal.

DISTRICT NO.' 4

CLEVELAND.

293

The establishment of the gold settlement fund has without doubt
contributed to equalizing exchange conditions, and a constant
scarcity of eastern exchange which existed in several centers of this
district before the fund was available has now disappeared altogether.
The following table shows the monthly aggregates of operations of
this bank through the gold settlement fund for the year:
Monthly totals of debits and credits to the Federal Reserve Bank of Cleveland in the gold
settlement fund.

January...
February.
March
April
May
Juno
July

Debits.

Credits.

$4,868,000
•4,163,000
8,290,000
6,440,000
8,418,000
11,904,000
12,714,000

$5,356,000
4,346,000
6,366,000
4,367,000
11,919,000
12,030,000
13,822,000

Debits.
August
September.
October
November.
December..

Total.

Credits.

$32,241,000
41,021,000
50,245,000
57,217,000
70,908,000

$30,773,000
43,219,000
49,017,000
65,162,000
67,963,000

308,429,000

314,340,000

Balance December 30,1915
Balance December 28, 1916

$11,042 000
16,953,000

The following is a comparative schedule of the borrowings of
member banks in this district, at the dates of reports:

With banks outside of district
With other -banks in district
With Federal Reserve Bank

Bills
payable.

Rediscounts,

Total Nov. Total Nov.
17, 1916.
10, 1915.

$752,000
1,203,927

$251,472
443,S79
274,853

$1,003,472
1,647,806
274,853

$1,347,520
2,824,540
540,161

970,201

2,926,131

4,712,221

28.3

9. 3

11.5

1,955,927

Total

_
Per cent of rediscounts in district with Federal Reserve
Bank
. .
Per cent of rediscounts in district with Federal Reserve
Bank 1915

3S. 2
4,0

Information relative to applications for fiduciary powers granted
under the provisions of section 11—k of the act, in accordance with
the regulations of the Federal Reserve Board, is shown in the following exhibit:
Powers granted.

Trustee only
.
Registrar of stocks and bonds
Trustee and registrar of stocks and bonds..
Trustee, executor, administrator, and registrar of stocks and bonds
Total
Applications pending trustee onlv
.. .
Registrar of stocks and bonds
Trustee and registrar of stocks and bonds..
For executor, administrator, and registrar.
Total pending

Pennsylvania.

Ohio.

Kentucky.

West
Virginia. Total.

2
1
2

5
2
8

3
1

1
4

1
2

1
3

Total
granted
since organization.

294

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

The following is a statement of the number of applications for
permission to serve as officers and directors of two or more banks,
under the .Kern amendment to the Clayton Act, handled by the
Federal Reserve Agent in conformity with the Board's requirements.
Interlocking

directorates.

Applications approved
Applications refused

205
11

Total
Applications pending

216
4

At the close of the year 1916 the Federal Reserve Bank of Cleveland occupies a position of unquestioned importance in its district.
The inauguration of dividend payments has caused member banks to
have a feeling of greater security in their investment in the capital
stock. The new order of banking, noninterest-bearing reserve
deposits, direct routing of checks and no remittance charge, liquidity
of assets representing demand deposits, more general use of borrowers' financial statements, and other desirable changes from the
old order, all have become better understood by banks and the
public, and the new procedure is steadily gaining favor. A great
advance has already been made, and the field of usefulness and
service of the Federal Reserve Bank for the future appears broad
and fertile. There is no question that the best banking opinion of
the district tends more and more to recognize the Reserve Bank's
ability to care for its members in an emergency and to meet its full
responsibilities on any occasion.
This bank now has a force of trained officers and emplo}7ees capable of handling its business satisfactorily and of expanding to meet
future progress and growth. The earnings of the bank are now sufficient to meet its current operating charges and dividend requirements. The amount of the earnings will probably be augmented
during the coming year so as to enable the bank to make payment
of an additional amount of arrears in the cumulative dividend.

DISTRICT NO, 5—RICHMOND.

CALDWELL HARDY, Chairman and Federal Reserve Agent.

FINANCIAL RESULTS OF OPERATION.

On December 31, 1915, the bank paid its first dividend at the rate
of 5 per cent per annum from the date of organization up to that
date, leaving a balance of $23,015.26 to the credit of profit and loss.
On April 1, 1916, a second dividend at the rate of 1 per cent per
annum was paid for the same period, making the 6 per cent per annum
to December 31, 1915. On December 28, 1916, a third dividend at
the rate of 6 per cent per annum was paid for the period commencing
January 1 and ending October 31, 1916.
All organization expenses have been charged off, furniture and
fixtures written down to a conservative figure, and all expenses incident to the operation for the full year have been charged off. After
providing for the April 1 dividend of $30,387.65 and the December
dividend of $167,534.69, a balance of $11,664.70 remains to the credit
of profit and loss. This leaves the bank in arrears at 6 per cent per
annum, which is the full rate the bank is permitted to pay its stockholders, only for the months of November and December. The
business of the bank has been conducted on an efficient and conservative basis, and the result should be satisfactory to its member
banks.
The comparative balance sheet for December 31, 1915-16, shows
a gratifying increase in the business of the bank. Deposits of member
banks show an increase of nearly $14,000,000, which reflects not only
the increase in the percentage of reserves which are required to be
kept with us by the member banks, but also the very largely increased
amount which is required to be kept against the much larger deposits
held by member banks themselves.
GENERAL BUSINESS AND BANKING CONDITIONS IN THE DISTRICT.

A summary of conditions throughout the district, as shown by our
monthly reports, evidences an extraordinary condition of continued
prosperity. Business in all lines, with a few exceptions, has been in
unprecedented volume and at high prices. Labor has been well employed at high wages, traffic has been somewhat impeded owing to

295

296

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

scarcity of cars, and raw materials of all descriptions have been difficult to obtain in satisfactory volume, even at the high prices which
have been ruling. Notwithstanding this, products of all descriptions
have not only sold freely but as a rule have been in urgent demand at
prices affording, in most instances, very satisfactory returns to the
producers,
Results from agriculture have been highly satisfactory and in
many cases were beyond any which had ever been obtained before.
Crops have been produced in only fair volume as a rule, some restricted sections having produced only very limited crops owing to
special conditions, particularly flood damage. Prices, however, have
been exceedingly high, average grades of cotton having sold as high
as 20 cents per pound and tobacco at an average of 18 to 20 cents per
pound. In some cases special grades brought even higher prices, the
average probably showing an increase of 100 per cent over any recent
prices,
ACTIVITIES OF THE BANK DURING THE YEAR.

Total productive assets on January 1, 1916, amounted to about
$7,750,000, which, with varying fluctuations, reached $10,000,000 in
July* This increase was represented by an accumulation of holdings
in United States bonds commencing in February, and by some increase in bankers' acceptances and municipal warrants. During
this period there had been a decrease since January in bills discounted
for member banks of something over $1,000,000. From September
until December 1 there was a steady decrease in productive assets,
owing chiefly to a decrease in notes discounted for member banks
and to sales of United States 3 per cent bonds, the total volume of
productive assets declining by December 1 to $5,000,000. During
the month of December there was a gradual increase, the final total
of earning assets on the last day of the year being about $10,500,000.
This increase was represented almost exclusively by bankers' acceptances, and purchases from member banks in December of about
$2,000,000 of United States 2 per cent bonds.
In April, 1916, the bank was still carrying some volume of cotton
loans, which it was thought desirable to liquidate prior to the approach of another cotton season. Accordingly the rate on commodity paper was raised from 3 to 3-| per cent, effective April 24, and
these loans were gradually liquidated.
The $11,000,000 of bankers' acceptances purchased during the year,
as shown by Exhibit F, were almost exclusively those of our member
banks, only a few acceptances of nonmember banks having been purchased, and most of these with the indorsement of member banks.
The banks' operations in United States securities are shown in
Exhibit I. As will be seen, purchases of United States bonds,

•DISTRICT NO. 5—RICHMOND.

297

$4,335,250, have been exclusively from member banks. The amount
of conversions into 3 per cent bonds and notes is shown by the exhibit
referred to. It has been the bank's policy to pay our member banks
full rates for bonds (par and interest) rather than to seek a profit at
their expense out of these transactions.
The course of our legal cash reserve for the year is illustrated in the
chart, Exhibit J. The decline to 70 per cent on the last of April was
due to a decline in. deposits and an increase of $500,000 in bills discounted. The increase in May was due to an increase of deposits
resulting from the 1 per cent increase in reserves of member banks,
while the decline in'July from 80 to 70 per cent was due to the repayment to the United States Government of its special deposit of
$5,000,000. The increase in October was due to an increase in member banks' deposits following the imposition of penalties for deficiencies in reserves, and the further increase in November was due
to the increase of 1 per cent additional in member banks' reserves.
The decline again in December was due to the purchase of bankers'
acceptances and United States bonds.
The legal reserve of the bank during the latter part of the year was
not materially affected by the increased issue of Federal Reserve
notes for the reason that rediscounts of member banks were materially
reduced during that period, the bank being paid in gold, which was
turned over to the agent upon the withdrawal of the discounted bills
held by him as collateral for outstanding Federal Reserve notes.
Under these conditions, the bank having reduced its liability for
outstanding Federal Reserve notes, as required by law, was not
required to show a liability for such Federal Reserve notes (against
which the Federal Reserve agent held 100 per cent in gold) in its
statement, or to carry a gold reserve against them.
FEDERAL RESERVE BANK AND MEMBER BANKS.

There have been no changes in membership due to transfers from
and to other districts, our district having remained unchanged during the current year. The change in members and in capital stock
has been very slight, as will be seen by reference to Exhibit K.
Some recent changes in capitalization and surplus, particularly of a
few of the larger members, will necessitate some stock increases early
in the coming year.
Relations with member banks have, as a rule, been cordial and
satisfactory. The inauguration of the par collection plan in July
created conditions in which some friction had to be adjusted. The
charging up of matured collection items caused some impairment of
reserves, the items not having been fully covered, and the enforcement for the first time of penalties for such infringement caused
a temporary dissatisfaction in certain quarters.

298

ANNUAL REPORT OF THE FEDEEAL RESERVE BOARD.

There lias been considerable irregularity in the mails in the district, apparently owing to an effort to economize, and requests
have been made by member banks for additional time within which
to receive and cover collection items. Where these requests seemed
reasonable, as was frequently the case, concessions satisfactory to
the members have been made, and with the close of the year this bank
is having a minimum of friction in this regard, with a fairly full
maintenance of reserves. Some of the larger cities, notably Baltimore, have undertaken to maintain reserves with us sufficient to
make items on them immediately available. Member banks have
evinced a disposition to cooperate to a reasonable' extent in the collection of items on State banks.
Referring to Exhibit L herewith, it will be seen that during the year
202 banks were accommodated either through rediscounts or the
purchase of their acceptances, the combined amount of which
exceeded $45,000,000. While rates were low, and the demand from
members not urgent, the amount of accommodation extended indicated that the bank was of great service wTithin the district.
The general attitude of State banks has been one of antagonism
toward the Federal Reserve System. This attitude grows chiefly
out of their hostility to the collection system. Small country
banks are receiving at par miscellaneous checks, which they are collecting at considerable cost, generally by the maintenance of large
balances with correspondents, and aiming to recoup themselves by
the imposition of heavy charges for remittances of customer^' checks
on themselves. They are reluctant to yield these charges and consider reform in the collection system an invasion of their rights,
although, as a matter of fact, if they would place the burden of carrying their float on their own customers, who properly ought to carry
it, and lend out their idle and excessive balances now carried with
correspondents, they would profit. Such a policy would foster the
growth of their business and materially add to its volume and value.
State banks realize that they are receiving the benefit indirectly of
the Federal Reserve system and would not see it abandoned; yet
they are not willing to give it their support.
The establishment by member banks of differential rates for checks
on nonmember banks, which decline to remit at par, has been suggested as a possible help to the collection system, and the establishment of such differential rates has been strongly urged upon member
banks. A deterring factor against State banks joining the Federal
Reserve system is their unwillingness to be subjected to the present
limitations of United States Statute 5200. A possible amendment to
the national bank act exempting from this limitation all loans secured
on readily marketable, nonperishable staples, represented by warehouse, terminal, or other similar receipts, or bills of lading, has been

DISTRICT NO. 5

RICHMOND.

299

suggested as worthy of consideration, such loans to be limited to 90
days. Such an amendment would appeal to our national bank
members also.
The deposits of member banks, as shown by Exhibit M filed herewith, show an increase from about $11,000,000 to over $25,000,000.
We receive regularly from our members copies of reports to the
Comptroller of the Currenc}^ on each call for statements, also copies
of all examiners7 reports to the Comptroller of the Currency of examinations made. These are kept on file and carefully examined
with a view to passing intelligently on paper offered by member banks
for rediscount, particularly where banks appear to be borrowing
freely. The information given by these reports is invaluable, and the
close relations which we have established with the chief national
bank examiner of this district and his efficient staff have been of
material assistance, particularly in the handling of rediscounts for
members.
Credit statements have been given assiduous attention, and our
credit files are already quite extensive and growing in importance.
We are constantly using our best efforts to have our member banks
realize the importance of obtaining at regular intervals up-to-date
credit statements for their own information and protection.
There have been but two failures among member banks during the
year. The Fourth National Bank of Fayettevilie, N. C, closed its
doors on February 4. It had about $40,000 of paper under rediscount
with us at the time, for which we held additional collateral, but this
was taken care of within three months. When this paper had all
been paid or taken up this bank paid over to the receiver the amount
of the failed bank's holdings of our stock. The Williamstown National Bank of Williamstown, W. Va.7 closed its doors on November
15. It had no rediscounts with this bank; outstanding collection
items were paid or returned, and the amount of Federal Reserve
Bank stock will be paid over to the receiver in due course.
The bank has had during the year only a very small amount of
overdue paper, this being indorsed by the Fourth National Bank of
Fayettevilie. It was all paid within a reasonable time, as referred to
above. No overdue paper is held at the end of the year.
FEDERAL RESERVE BANK AND THE PUBLIC.

Open-market operations have so far been negligible, only five bills,
amounting to less than $100,000, having been purchased outside of
the district. Our discount rate policy has had a strong tendency to
reduce general rates for money to reasonable figures. The high
prices of agricultural products and the large profits from general
business have increased the deposits of member banks to unusual
figures. This has made money extremely easy and had a consid75284°—17
20

300

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

erable effect upon lending rates. We do not look for the indefinite
continuance of these abnormal conditions, but anticipate eventually
the hardening of rates, which will make business more remunerative
to the banks.
The unusual conditions above referred to and the high rates of
interest paid on deposits by competing member banks has caused
considerable complaint of unprofitable business. This bank's staff has
availed of every opportunity to foster and maintain cordial relations
between the public and our institution.
The following visits have been made and addresses or talks delivered by the officers:
Governor Seay: National Credit Men's Association at Norfolk,
Va., in February; South Carolina Bankers* Association at Kanuga,
N. C, June 20, and immediately following a visit made to the Virginia Bankers' Convention at Old Point Comfort; National Credit
Men's Association at Richmond, Va., December 8.
Vice Governor Peple: Tri-State Convention of Accountants at
Richmond, Va., April 13; Richmond Credit Men's Association at a
monthly meeting; District of Columbia Bankers' Association, Washington, D. C , May 5; a number of addresses at Mechanics Institute,
Richmond, Va., and to American Institute of Bank Clerks; visited
Washington in November for conference with Mr. Delano and Mr.
Hurley, of the Federal Trade Commission, concerning credit statements and audits, submitting report on same later.
Federal Reserve Agent: West Virginia Bankers' Association,
Wheeling, W. Va., May 25; Richmond Credit Men's Association, July
25; conference with chief bank examiner and his assistants, August
3? on general relations with member banks and examinations; attended conference with Federal Reserve Board on Clayton-Kern Act
cases on August 4; meeting of group 5, Virginia Bankers' Association,
at Pulaski, Va., October 7; National Credit Men's Association,
Richmond, Va., December 8.
Auditor W. E. Cadwailader, assistant to Federal Reserve Agent:
Group 3 of South Carolina Bankers' Association at Chester, S. C,
May 25; group 6 of South Carolina Bankers' Association at Lancaster,
S. C, May 26.
FEDERAL RESERVE BANK AND THE GOVERNMENT.

The bank has extended every possible service to the Government
in the transaction of its business, and is in a position to further extend this service by exercising eventually the present functions of
subtreasuries. Among other services rendered has been the making
of transfers to the Government for member banks, simply by debit
and credit entries on our books.

DISTRICT NO. 5—RICHMOND.

301

There was repaid to the Government in July a special deposit of
$5,000,000, but the current operations of the Treasury have resulted
in the carrying with the bank since that date of an average balance
of $3,000,000.
Our relations with the office of the Comptroller of the Currency
have been most cordial, and we have had the cooperation of the chief
bank examiner and his assistants to the fullest possible extent.
We have been called upon for reports on member banks applying
for the exercise of fiduciary powers, and our management is strongly
of the opinion that these powers should not be too liberally granted.
It will be exceedingly difficult for examiners to check up all possible
fiduciary liabilities, and with inexperienced employees the possibility of mistakes and errors in the conduct of such business is manifest. Unexpected liabilities might therefore develop, and where the
capital of banks is small might seriously affect the solvency of the
institution and the protection afforded to commercial and other
depositors.
FEDERAL RESERVE BANK AND NOTE ISSUES.

Operations in Federal Reserve notes are shown in Exhibit N; approximate average life of Federal Reserve notes in Exhibit 0 ; interdistrict movement of Federal Reserve notes in Exhibit P.
The general policy of this bank has been to supply member banks
with Federal Reserve notes whenever desired. Immediately after
the opening of the bank and for some time after, transportation
charges were paid on Federal Reserve notes. It was necessary, however, to stop this practice when the new collection system went into
operation. One of the features of this system was the payment by
the bank of charges on incoming Federal Reserve notes and lawful
money, in case the member bank was unable to supply exchange.
Even this led sometimes to possible imposition, but the cases were
rare and were promptly eliminated by efficient attention. It has
been the bank's policy in every way to encourage the circulation of
Federal Reserve notes and retain gold in the hands of the Federal
Reserve Agent rather than to pay it out to member banks.
There has been $1,000,000 of Federal Reserve bank notes printed
for this bank, but none have been used. In view of the contemplated gradual retirement of national-bank notes, we do not under
present conditions favor the use of Federal Reserve bank notes.
On the other hand, the extension and general use of Federal Reserve
notes would seem very desirable.
INTERNAL MANAGEMENT OF THE BANK.

The functions of the directors, executive committee, executive
officers, and other departments of the bank seem admirably adjusted

302

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

for the effective administration of the affairs of the bank. These
seem to be most wisely coordinated, and with the cordial cooperation which exists throughout our entire organization, have brought
efficiency to the highest degree and accomplished correspondingly
satisfactory results.
Board meetings have been most regularly attended by members,
the entire membership usually being present. The reading of the
minutes of previous meetings and their approval, as well as the
approval of the acts of the executive committee, is always first in
order. The governor reviews at each meeting the general status of
the bank as shown by the daily balance sheet, calling attention to
changes and matters of importance, all of which are freely and fully
discussed with and by the board. Letters of importance are read
and all subjects of interest and importance are reported. The
chairman of the board presides at all meetings, and, as Federal
Reserve Agent, reads all important correspondence with the Federal
Reserve Board or others, relating to his department, discussing
fully all matters under consideration.
During August, September, and October, in the neighborhood of
175 applications for permission to serve in two or more banks under
the Kern amendment to the Clayton Act wTere referred by the Federal
Reserve Board to the Federal Reserve Agent for investigation and
report. This involved detailed inquiries and investigations with
regard to the location and status of most of the banks in Washington
and Baltimore and numerous banks in other locations throughout
the district.
On October 20 an election circular was issued to 170 banks in
group 2 for the election of one class A director, and to 178 banks in
group 3 for the election of one class B director. As a result of the
election, out of 108 ballots cast by group 2, 100 were first choice for
Col. John F. Bruton, of Wilson, N. C, as class A director, and out of
77 ballots cast by group 3, 68 were first choice for Capt. James F.
Oyster, of Washington, D. C, as class B director, and these gentlemen were therefore reelected for a term of three years each, beginning January 1, 1917.
On December 19 the chairman was advised of the reappointment
by the Federal Reserve Board of Mr. James A. Moncure as class C
director for a three-year term, beginning January 1, 1917, and of
his designation as deputy chairman and Deputy Federal Reserve
Agent for the year 1917.
The governor, vice governor, cashier, and Federal Reserve Agent
meet daily at 10 o'clock, or as soon thereafter as the mails are distributed and read. AH communications of interest are reviewed and
discussed, thus keeping all of these officers in daily and constant
touch with current business of every description. A full inter

DISTRICT ;NT0. 5

RICHMOND.

303

change of views is had on all subjects with practically unanimous
decisions. Daily meetings of the executive committee are held at
12 o'clock, attended by the Federal Reserve Agent, the governor,
and the third member of the board if available, these meetings also
being attended by the vice governor and cashier. The passing
upon discounts is the chief function exercised at these meetings.
There has been the best possible service and cooperation on the
part of the employees.
Mr. J. W. Norwood, member of the advisory council, has, after
conferences with our officers before the meetings of the advisory
council, reported the result of these conferences and kept us in
touch with their spirit and results.
Mr. William Ingle, original chairman of the board of directors and
Federal Reserve Agent, resigned on February 3 (his resignation to
take effect on February 12), having accepted the presidency of the
Baltimore Trust Co., Baltimore, Md. He left behind him a high
record of efficiency and of prompt discharge of his official duties.
The present incumbent, Mr. Caldwell Hardy, was appointed on
March 7 a class C director to succeed Mr. William Ingle for his unexpired term to December 31, 1917, and designated chairman of the
board of directors and Federal Reserve Agent. He took office on
April 1, the official duties of the position between Mr. Ingle's retirement having been efficiently discharged by the deputy chairman
and Deputy Federal Reserve Agent, Mr. James A. Moncure.
On April 6 Mr. W. E. Cadwallader, auditor, was appointed also
assistant to the Federal Reserve Agent, the appointment being confirmed by the Federal Reserve Board on April 7.
The present bank premises and office are totally inadequate for
the requirements of the bank. It is located in an old store building
on Main Street, the main floor of which was first fitted up in very
primitive style for the use of a bank, and for which an annual rental
of $4,000 is paid.
The increase of force to a total of 63 due to the inauguration of the
collection system in July has necessitated the use of three floors in
the present building. The bank occupies seven large safes in the
modern vault of the First National Bank, for which it is paying an
annual rental of $2,100.
With the approval of the Federal Reserve Board, our board of
directors in April appointed a committee consisting of Messrs. Hardy,
Seay, and Moncure to consider and report on a site for a new bank
building. This resulted in the acquisition at a cost of $122,500 of a
site containing about 11,000 square feet, fronting 93 feet on Ninth
Street, opposite Capitol Square, running back 120 feet on Franklin
Street to a 20-foot lane, the front exposure being to the east and the
Franklin Street exposure to the south. It is little more than one

304

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

square from the post office, and very accessible to the entire financial
district of the city. Of all the sites available, this one was the most
reasonable in price per square foot, presenting also decided advantages over all other possible locations with reference to exposure,
light, and air. In addition to this, it was the only location in which
a bank building could be erected that would be entirely isolated
from all buildings on its four sides. Steps have been taken to procure plans for a suitable building to be erected at once on this site.
A general examination of the bank was made by the division of
audit and examination, Federal Reserve Board, as of March 28,
1916. This examination was most thorough, and conducted with
the greatest possible consideration for the convenience of the officers
and employees. Examinations were made of the accounts of Federal
Reserve Agent William Ingle on January 3, and again on February 11,
when he retired. The Federal Reserve Agent's accounts were again
audited on March 28, when Mr. Caldwell Hardy assumed office.
Mr. Hardy's accounts were audited on December 28. Efficient
examinations, such as these, are most gratifying as well as essential,
and it is a pleasure to report satisfactory results both to the examiners
arid the examined.
CLEARING PROBLEM.

Between January 1 and July 14 (under the voluntary collection
plan) the total number of items cleared was 582,935, amounting to
$431,174,700, or a daily average of 3,576 items, amounting to
$2,645,244.
From July 15 to December 31 (Exhibit Q herewith) under the new
collection plan the total number of items cleared was 2,020,065,
amounting to $891,077,800, or an average of 14,429 items per day
amounting to $6,346,842.
Comparison of these figures will show that under the new collection
system more than four times as many items are being cleared daily
on the average, while the amount is considerably more than doubled.
A comparison of these average figures with the averages for the last
months in the year would indicate a much greater ratio of increase.
The gold settlement fund has afforded facilities for receiving deposits from member banks in Washington and Baltimore, and making
payments to the Government for member banks; also for making
payments for the purchase from member banks of United States
bonds held by the Treasurer as security for circulation. It has also
provided a ready means of adjusting transactions between the
bank and Federal Reserve Agent by transfers to and from either's
account, beside rendering invaluable aid in the settlement of balances,
without the physical transfer of moneys, between the 12 Federal
Reserve Banks, in adjustment of the extensive and continuous

DISTRICT NO. 5

RICHMOND.

305

transactions between them. It is to be hoped that its efficiency may
be furthered in the near future through the adoption of daily gold
settlements between the 12 banks.
A recent canvass of the fifth district, at important clearing-house
points, indicates varying policies in regard to collection charges.
There is a largely prevalent custom among banks of receiving all
items at par, resulting in a considerable loss to the banks receiving
items under these conditions. These banks are either at considerable
direct expense in collecting such items, or maintain at central points
considerable balances with correspondents, on which there is a large
loss of interest, as an inducement to such correspondents to clear
these items at par. Where clearing houses have established uniform
collection charges on items received from depositors, there has not
been, as a rule, a proper differential established between items on
member banks of the Federal Reserve System, which clear items at
par, and State banks declining to remit at par. Efforts are being
made to correct these conditions in order that checks on member
banks of the Federal Reserve system may receive the preferential
consideration to which they are entitled.
SUMMARY OF CONDITIONS IN DISTRICT.

Attention is called to Exhibit R filed herewith. This chart shows
the fluctuations in our total productive assets, consisting of notes
discounted, bankers' acceptances, municipal warrants, United States
securities, and member banks collateral notes, total active assets at
the close of business for the year being $10,537,168.08.
The remarkable increase which has taken place in the last few
months of the year in the use of bankers' acceptances, and the
increased interest (as shown by our correspondence) in the use of. the
trade acceptance indicate a growing disposition on the part of the
bankers and the public generally to make full use of the facilities
offered by the Federal Reserve system.
The officers of this bank have lost no opportunity to spread and
increase the knowledge of the general principles, as well as the
technical details with reference to these two matters, and it is confidently expected that both the bankers' acceptance and the trade
acceptance will play a much larger part in the business of this bank
during the coming year.
The outlook for general business in 1917 is most encouraging.

306

ANNUAL EEPOBT OF THE FEDERAL RESERVE BOARD.

EXHIBIT A.—Earnings on loans, bankers9 acceptances, warrants and United States securities purchased and sundry profits.
Daily averages.

Volume.
Quarterly periods.
Amount.

6,479
6,418
5,985
2,208

$11,457,445.24
11,069,931.24
13,500,414. 48
14,526,978.17

1916.
Jan. 1 to Mar. 31
Apr. 1 to Juno 30
July 1 to Sept. 30....
Oct. 1 to Dec. 3 1 . . , .
Total

Pieces
handled.

Pieces. ,!

21,090 | 50,554,769.13

Extra earnings.

1916.
Jan. 1 to Mar. 3 1 . .
Apr. 1 to June 30..
July 1 to Sept. 30..
Oct. 1 to Dec. 31..

Earned
(actual).

Mini- Anticimum
charges. pations.

Balances
current.

11,680,108.47
8,164,041.37
9,058,222.49
6,912,779.55
58

$3,627
3.592
3.673
3.453
366

7,953,961.26

3.594

Sundry profits.

Discount and interest.

Quarterly periods.

Annual
rate of
Days
in
income,
period. earned
(actual).

Total.

Total
Profit on Penalties!
credits to
sales of
Misearnings.
for
United deficits
cellain neous.
States reserves.
securities.

$69,259.14 $31.76 $109.33
72,917. 63 19.77 197.36
83,643. 76 14.74 144.82
60, 005. 97
11. 36 342. 20

$69,400.23
73,134.76
83,803.32
60,359.53

$3,575 $4,554.37
8,942 7,836.02

Total
285,826.50 77.63 793.71
Add excess of service charges over transit expense
Gross earnings.

286,697.84

12,517 12,390.39

$69,400.23
$19.71 73,154.47
46.60 91,979. 29
77,224.33
153.09 311,758.32
1,033.17
312,791.49

EXHIBIT B.—•Comparative expense accounts.
Year 1916,
exclusive
of transit

Current:
Federal A d v i s o r y
Council
Assessment Federal
Reserve Board expenses
Directors' fees
Legal
SalariesOfficers
Clerical staff
Watchman
Other
Traveling expenses—
Directors
Officers arid clerks
Federal R e s e r v e
Agents' conferences.
Governors'
conferences
Per diem allowances,
directors
Telephone

$150.00

$86.59 ,

11,743.48
3,760. 00
1,425. 00

6,709. 80
3,260. 00
941.12

31,427. 97
26,789.12
648. 33
1,774.23

25,977.79
24,736.18
1,026.46
1,389. 50

2,505. 38
406. 93

1,951.07

320. 89
1,444.78
1,840. 00
391. 31

Year 1916,
exclusive
of transit
expense.

Year 1915.

454. 70
201. 76
850. 98
1,880. 00
305. 77

Current—Continued.
Telegraph
Postage
Expressage
Rent (including outside vaults)
Fidelity insurance
Light, heat, and
rjower
Printing and stationery
Repairs and alterations
Miscellaneous

Year 1915.

$225. 79
3,408.91
779. 71

$270. 70
2,910. 93
2,712. 23

6,034. 00
1,498. 85

5,822. 92
1,862. 24

901.11

672.10

3,576.79

4,038.80

44.78
3,160. 58

1,780.15
1,677. 97

Total current
104,257.94
Organization
Cost of Federal Reserve
18,247.82
notes
Depreciation of equip3,713.95
ment

91,519.76
14,770. 68

Total

5,178.38
1,527.42

\ 126,219.71 | 112,996.24

DISTRICT NO. 5

307

RICHMOND.

EXHIBIT C.—Capital stock as of Dec. 31, 1916.

Number of members.
National. State.
Maryland
District of Columbia.
Virginia
West Virginia
North Carolina
South Carolina
Total.

Shares to

which enShares
titled Nov. allotted.
Total, 17, 1916.

Allotments.
Short.

14
144
104
81
74

96
15
145
104
81
78

16,389
8,118
19,211
8,479
7,573
7,690

16,065
8,098
19,055
8,463
7,570
7,672

327
20
160
22
40
18

513

519

67,460

66,923

587

Over.

4
6
37
50

Dividends.
5

6 per cent
paid from
Jan.l to
Oct. 31,
1916.

6 per cent
unpaid to
Dec. 31,
1916. i

$803,250.00 $49,400.32
404,900.00
24,178.47
952,750.00
56,821.17
25,331.03
423,150.00
22,462.37
378,500.00
383,600.00 I 22,779.05

$41,367.82
20,129.47
47,295.25
21,098.93
18,699.17
18,944.05

$8,032.50
4,049.00
9,525.92
4,232.10
3,763.20
3,835.00

3,346,150.00 I 200,972.41

167,534.69

33,437.72

pareofC|not°-f

Per

ce lt

1916.

Maryland
District of Columbia.
Virginia
West Virginia
North Carolina
South Carolina
Total.

EXHIBIT D.•—Comparative balance sheets (condensed).
Dec. 31, 1916.

Dec. 31, 1915.

ASSETS.

Cash:
Gold reserve
Legal tender, silver, etc.
Other cash and cash items.
Total cash
Transit items (deferred debits, net).
Overdrafts
Productive assets:
Loans and bills purchased
Municipal warrants
United States securities
Par values
Deduct unearned discount
Add accrued interest.
Liquid values
Real estate, furniture, and equipment
Deferred charges

$24,532,111.00
64,938.40

i $15,445,785.00
;
99,230.65

24,597,049.40
1,708,107.87

! 15,545,015.65
; 1,041,719.80
$26,305,157.27
179,491.01
5,078.46

$16,586,735.45
1,161,905.12
Q6,776.15

7,213,968.08
60,750.00
3,262,450.00

7,650,865.56
82,271.76

10,537,168.08
20,310.96

7,733,137.32
27,369.46

10,516,857.12
4,033.20

7, 705, 767.86

133,475.77
14,034.57

10,520,890.32

7,705,767.86
9,500.00
17,368.34

147^ 5io. 34
37,158,127.40

25,548,052.92

LIABILITIES.

Deposits
Due to other Federal Reserve Banks.
Federal Reserve notes:
Issued
Redeemed
Outstanding
Liability to shareholders:
Capital stock
Undivided profits

28,512,966.44
1,457,347.26

16,091,237.66
29,970,312.70

31, 015,600 00
27, 185,600 00

15,630,000.00
9,550,000.00
3,830,000.00

3,346, 150 00
11, 664 70

3,357,814. 70
37,158,127.40

6,080,000.00
3,353,800.00
23,015.26
3,376,815.26
25,548,052.92

308

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
EXHIBIT D.—Comparative balance sheets {condensed)—Continued.
Dec. 31, 1916.

Dec. 31, 1915.

LIABILITIES—continued.

Contingent:
Obligation to purchase United States
bonds
Cumulative dividend to date (undeclared

$1,070,000
33,437.72

$30,387.65

EXHIBIT E.—Comparative profit and loss accounts—Dividends and undivided profits.
Year 1916.

Gross earnings:
On loans and investments

Year 1915.

$286,697.84

Profits on securities sold
Service charges (net over transit expenses)
Penalties for deficiencies in reserves
Miscellaneous

$319,096.16
483.50

12,527. 84
1,033.17
12,390.39
142.25

Deduct:
Expenses
Net profit for year
Balance undivided profits Dec. 31, 1915

$312, 791.49

579.66

126, 219.71

144, 624.71

186, 571.78
23, 015. 26

174, 954.95

209, 587.04

Dividends declared:
5 per cent Nov. 16, 1914, to Dec. 31, 1915
1 per cent Nov. 16, 1914, to Dec. 31, 1915
6 per cent Dec. 31, 1915, to Oct. 31, 1916

30,387.65
167,534.69

BQIIUPA of undivided Drofits
Add 1916 profits applied to 6 per cent cumulative dividend to Dec. 31,1915, balance of 6 per cent cumulative
dividend to Dec. 31, 1915, paid Apr. 1, 1916

151, 939.69
197, 922.34
11, 664.70

23, 015.26
7, 372.39
30,

387.65

EXHIBIT F.—Productive assets acquired during the year 1916, classified as to rates.
2 per cent.
United States bonds
Bankers' acceptances
Commodity pap T
Warrants
Trade acceptances
Notes unsecured
Member banks' collateral notes
Notes secured by agricultural products
Notes secured by live stock
Notes secured by merchandise
Total.

Total.

3{ per cent. 3J per cent.

$4,335,250.00 I
| $11,051,810.13 140,000.00
3,570,679,67
I
461.790.63

4,335,250.00 I 15,084,280.43

4 per cent.
United States bonds
Bankers' acceptances
Commodity paper.
Warrants
Trade acceptances
Notes unsecured
Member banks' collateral notes
Notes secured by agricultural products.
Notes secured by live stock
Notes secured by merchandise

3 per cent.

40,000.00

4>, per cent. 5 per cent.

$220, 866. 65
3,455,165.23
60, 750.00
1,468,509.91
2,715,500.00

7,920,791.79

Total.

$4,335,250.00
11,312,676.78
7,025,844.90
$7,021.33
529,561.96
40,637.87
1,509,147.78
18,639,060.68 $2,762,318.67 $836,901.00 22,238,270.35
560,000.00
3,275,500.00
5,558.75
289,702.13
284,143.38
1,632.33
22,348.23
20,705.9016,467.00
16,467.00
19,568,036.16

2,762,318.67

844,092.08

United States securities purchased at 2 per cent since converted to 3 per cent, $2,142,800.

50,554,769.13

DISTRICT NO. 5

309

RICHMOND.

EXHIBIT G.—Discounts, and bills purchased during the year 1916.
Maturities as of date of acquisition.
10 days
and less.

11 to 30
days.

31 to 60
days.

61 to 90
days.

Over 90
days.

Total.

Notes
$366,221.71 $3,657,026.79 $7,166,861.65 $10,444,528.68 $932,148.88 $22,566,787.71
Member banks collateral I
notes..
2,275,000.00 1,000,500.00
3,275,500.00
Trade acceptances..
15,887.13 367,064.33
744,718.47
381,477.85
1,509,147.78
Commodity paper..
166,614.00 1,907,078.48 2,416,153.19! 2,334,699.23 201,300.00 7,025,844.90
Total discounts... 2,823,722.84 6,931,669.60 10,327,733.31 13,160,705.761,133,448.88 34,377,280.39
Bankers' acceptances.. .1 710,480.00 6,200,962.07 2,319,781.36 2,081,453.35
11,312,676.78
Municipal warrants.
'
257,021.33
529,561.96
70,750.00
201,790.63
Grand totals

|3,534,202.84! 13,132,631.67 12,904,536.00 15,443,949.74 1,204,198.88 46,219,519.13

EXHIBIT H.—Discount rates, current, from Jan. 1, 1916, to Dec. SI, 1916.

Date effective.

Commercial paper.
Trade acceptances.
AgriMember
Comcultural
banks
modity
paper
paper^
collateral
only, 91 maturity
From
From
notes, Maturity 31
Maturity j
days
to
6
61
to
90
to
60
60
days*. 60 days.
15 days. 30 days.
months.
days.
days.
days.

1916.
Jan. 1 (effective since
Oct. 21, 1915)
Apr. 22
Aug. 4
Sept.7
Oct. 6

4
31
3£

EXHIBIT I.—Operations in United States securities during the year 1916.
•

2 per cent. 3 per cent.

Purchased:
Members
Open market
Converted

$4,335,250

Total

2,192,450

Balance Dec. 31, 1916

2,192,450

Sold

2,142,800

United
States
notes.

Total.

S4,335,250
$1,072 800 SI, 070,000
1,072,800
1,072,800

1,070 000

4 335 250
1,072,800

1,070,000

3,262,450

310

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
EXHIBIT J.
FEDERAL RESERVE BANK ^RICHMOND

of Ley at Reserve
JAN.

FED.

MAR.

APR.

MAY

Cash/or ih e 5W/» (916
JULY

JUNE

AUG.

SEPT.

NOV.

OCT.

DEC.

£>Cf>03IT»

, JQQ

""•100 '"'•
.n.- §«J ..
**-

• -90

Ji-W

ftrt

,J
/"

-••n"»5 -.

fit'

nr*,

* T

"*• 05 ~-

•"• 7 5

•

• eS"-

"— 5 5

PERCENTAGE

OEPolrrs

50
JAN.

FEB.

MAR.

DEC.

PtflCENTASC

TO MET.

EXHIBIT K.—Capital stock.
[Analysis for the year 1910.]
District of Columbia.

Maryland.

Virginia.

Banks.

Shares.

Banks.

Shares.

Banks.

10,008

7,932

137

18,781

Balance Dec 31,1915
Additional allotments on increased capital
or surplus. .

Shares.

318

107

17,226
300

7,992
15

137

18,888
2

16,926

14
1

7,977
121

137
8

18,886
169

Liquidations during t h e year

98
2

8,098

145

19,055

Balance Dec. 31 1916

16,926
861
16,065

8,098

145

19,055

Reduction on decreased capital or surplus.
Additions to membership during t h e year.

West Virginia. North Carolina. South Carolina.

Total.

Banks. Shares. Banks. Shares. Banks. Shares. Banks. Shares.
Balance Dec 31,1915.
Additional allotments on increased
capital or surplus
Reduction on decreased capital or
surplus

104 I 8,390
!

168

7,503

508

67,145

508

67,945

508

67,528

800

7,799

8,4(33

7,792

227

555

104 | 8,463

84
3

7,830
260

79
1

7,711
39

525
6

68,083
1,160

7,570

7,672

519

66,923

;

Liquidations during the vear
104

:
i

8,463

7,553

7,484

Additions to membership during t h e
year

7,631

104 ! 8,4S7

104

Balance Dec. 3i, 1916

417

DISTRICT XO. 5

RICHMOND.

311

EXHIBIT L.—Rediscounts, and acceptances purchased—Distribution by States.
Jan. 1 to Mar. 31,1910.
Banks accommodated.
Maryland
District of Columbia
Virginia
West Virginia. - North Carolina
South Carolina
Total

Amount.

Apr. 1 to June 30, 1916.

July 1 to Sept. 30, 1916*

Banks accommodated.

$425,089. 37
2
186,702.28
43 2,035,388.70
10
182,416.55
35 2,916,924.55
50 3,942,293.08
11

151

9,688,814. 53

Maryland
.. .
District of Columbia
Virginia
West Virginia
North Carolina
South Carolina
Open market purchases.

3
18
4
24
27

Amount.

230,402.71
1,648,880.35
183,016.97
3,877,417.96
2,843,224.20

1
34
8
41
55

S3.996,798.31
152,928.09
1,252,821.04
138,519.35
4,268,533.23
3,276,107.44

14 j 10.034.524 99

145

13,085,767.46

12 81,844,982.80
41
36
50

Oct. 1 to Dec. 31, 1916.
Banks accommodated.

Amount.

83,381,880.30
506,930.39
2,420,443.06
69,093. 83
2,150,070.56
3 425 892.05
326,540.00

Total period.
Banks accommodated.
18

4
59
13
48
60

Amount.

Balance under discount
Dee. 31,1916.

,048,750.78
,082,903.47
- .357,533.15
573,646.70
, 212,946.30
487,576.77
326,540.00

$2,576,373,37
409,528.34
311,479.31
41,500.00
1,297,075.23
2,251,471.83
326,540.00

84 | 12,280,850.19
202 j 4i ,089,957.17
7,213,9C8.08
1
NOTE.—Total of bankers' acceptances included i n t h e above figures ($11,312,676.78). Purchases from
member banks were distributed as follows: Maryland, $8,339,225.01; Washington, D . C , $50,000; Virginia,
$554,625.59; North Carolina, $400,326; South Carolina, $1,641,900.18; open market, $326,540.
Total

EXHIBIT M.—Daily averages by months during the year 1916.
Member banks, Government Overdue
deposits.
deposits.
paper.
January
February
March
April
May
June
July
August
September
October
November
December
Year .

$11,199, 805. 77
11,483, 882. 66
11,536, 144. 10
11,545, 076. 04
13,249, 437. 88
14,901, 902. 86
15,956, 127. 43
16,330, 973. 91
16,615, 271.11
20,013, 963. 91
23,466, 288. 63
25,486, 796. 81

658,432. 64
328,866.43 $2,120.77
875,443.03 11,070.64
420,260.32 11,342.10
346,514. 23
872.20
191,234. 58
671,597.44
320,534. 36
968, 816. 83
594,049. 51
921,533.37
845,308.45

15,999,616. 04 5,014,378.72

2,109.27

312

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

E X H I B I T N .—Operations

in Federal Reserve notes from

Nov. 16, 1914, to Dec. 31, 1916.

Units—denominations.
Fives.
Received from Comptroller
I 1,740,000
Received from Federal Reserve Bank
197,000
Received from Treasurer of United
States (fit notes)
2,860
Received by Comptroller from
Treasurer "of United States for
destruction and credit of Federal
Reserve Agent's account (unfit
notes)
.'
482,804
Total

Twenties.

Tens.

HunFifties. dreds.

940,000 440,000
121,500 51,000

36,000
12,000

220

1,270

194,000

79,115i

8,1931

2,422,664J1,256,770 570,335M 56,237

Issued to Federal Reserve Bank
1,815,860!!, 006,770 463,220
Returned to Comptroller of the
Currency for destruction, including notes returned by United
States Treasurer for credit of Federal Reserve Agent's account
194,000 79,1154
Notes on hand at end of month
56,000 28,000"

201

4,414

765,345|

1,233

8,193
10,300

1,233
3,450

56,237
8,125
17,575

35,600

6,469,280
40,084,880

11,853 4,317,
7,1703,330,764

2,422,664 1,256,770; 570,3,354

Values.

8,000 3,164,000 $29,500,000
2,600 384,100
4,080,000

37,744j

Actually destroyed as per certificates
received from Washington
I 499,2241 192,680 78,505^
Balance in hands of public, includ|
ing Federal Reserve Banks
1,136,776) 691,320; 333,494^

Total

I Pieces.

785,3454:
201,750"

31,015,600

6,569,280
2,500,000

11,853 4,317,859-il 40,084, 880
l,228j

779,7624

6,522,080

3,322 2,182,487! 20,477,920

E X H I B I T O.—Average lives of Federal Reserve notes redeemed by Treasurer of United
States from the time issued by Federal Reserve Agent until received by comptroller for
destruction.
Fives.

Tens.

To Feb. 27, 1916, pieces.
Average life in days

134,140
405 |

To Dec. 31/1916
Average life in days

502,804 I 194,000
419
454

46,390 i
387 !

Twen-

Fifties.

Hundreds.

Total.

21,470
432

2,640
388

482
398

205,122
404

79,1154
486-:

8,193
493

1,233
487

785,345^
435

NOTE.—The first lot redeemed (205,122 pieces) had been accumulated by the Treasurer and was reported
handed to the comptroller for destruction Feb. 27, 1916; it is obvious that the figures arrived at would
not properly reflect in such a situation actual lives of such notes. The figures for the entire redemption
to Dec. 31, 1916, will, of course, be bettered as time passes by accumulating redemptions from the beginning. Averages should be more reliable with each succeeding year's redemptions considered as part of
the whole.

313

DISTRICT NO, 5—RICHMOND.

E X H I B I T P.-—Amounts of Federal Reserve notes of the several denominations received
from other Federal Reserve Banks for redemption or credit and return to other Federal
Reserve Banks for redemption or credit during the year 1916.
Fives.
Exchanged with Federal
Reserve Bank of—

Boston
Ne w York
Philadelphia
Cleveland
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

....
. ..
....

Total

Received
from.

Returned
to.

Received
from.

Boston
New York
Philadelphia
Cleveland
\tlanta . . .
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco

. .

Total

Returned
to.

$3, 280
65,910
16,385
5, 830
48, 270
760
2,515
1,510
3,390
3,620
945

$55,320
1,008,110
149,940
15,970
144,390
97,500
17, 760
4,610
1,340
5,040
3, 440

$6,800
113,070
30,940
10, 260
53, 760
160
2,850
3,430
4,050
7,920
1,320

$58,380
947,860
142,780
19, 420
93,480
104,500
17,640
7,200
2,420
5, 780
6,600

1,233,650

152, 415

1,503,420

234, 560

1,406,060

Received
from.

One hundreds.

Returned
to.

$25, 850
•273,950
55,100
9,100
17,350
42,300
5,100
2,950
850
2,950
6,850

$1,100
22,050

442,350

Received
from.

Returned
to.
$2 600
43,800

1,850
2,100
300
100
100
450
1,350
400
29,800

174,200

Through Richmond clearing house. 134,958
On other points in district 5
1,681,761
On points in other Federal Reserve
districts
203,346
Direct to members in other Federal Reserve districts
None.

2,020,065

135,820

Received
from.

Returned
to.

400

$15 0^0
286, 290
67,865
38,620
144 310
2,600
8,125
7,800
10 090
19, 830
5,045

53,000

4,759,680

605,595

2,600
3,200
400

July 15 to Dee. 81, 1916.

Amount.
Number
of items.

SI, 240
41,460
20,540
18,080
36 980
980
2 660
2,760
2,200
6 940
1,980

SI85,000
3,181,220
494, 715
57,340
395,875
328,000
53, 840
19, 200
5,610
16,675
22,205

Average daily (140
business days).

Number
of items.

Returned
to.

Total.

$10,100
117,300
18,000
2,600
5,200
14,200
1,500
600
700
400
3,600

E X H I B I T Q.—Clearing operations for the period from

Total

Received
from.

S35,350
834,000
128, 895
10,250
135,455
69,500
11,840
3,840
300
2,505
1,715

Fifties.
Exchanged with Federal
Reserve Bank of—

Twenties.

Tens.

Amount.

$255,405,300
383,532,000

964
12,013

SI, 824,324
2,739,514

252,140,500

1,452

'891,077,800

14,429

Equivalent
cost per
Average $1,000 with
amount
service
per item. charge at
1* cents per
item.
No charge.
.0548

1,801,004

$1,892
228
1,240

6.364,842

441

.0283

. 0101

314

ANNUAL EEPORT OF THE FEDERAL EESEEVE BOARI>7
EXHIBIT R.

FEDERAL RESERVE BANK of RICHMOND
Chart of Productive Assets for the YearJ9l6
MILLIONS

OAN.

MAR.

FEB.

APR.

MAY

JUNE

05a

^ _

si
*\Jh—S

k, N^A «^^^—^*~

SEPT.

AUG.

.JULY

OCT.

N0V,

opc.

MILLIONS

"Ml

7J °*

•

Balances

Dec. 31,1916

- S J f c —2#

—

toial Productive Assefs

^
MILLIONS

tTAN,

i """- . : - - . . :
MAR,

10,537,100.08
u

1 —

V'
'*

—

v \

'—O-- / - " - ^
, Bankers Acceptances
4334,372.^1
<M«^f.Member6anksCoiyeralNo?eS 3 4 2 . 5 0 0 .
Municipal Warrante
60,750.
U.S. Securities - ^ 3,262.450.

APR,

n-:

-J'"' U " ^
/—1

MAY

JUNE

—

—1&—
—-=*-

—

I —•

>—~y~AUG.

SEPT.

OCT.

NOV.

DEC.

MILLIONS

DISTRICT NO. 6—ATLANTA.

M. B. WELLBORN, Chairman and Federal Reserve Agent.

The bright outlook at the beginning of the year has been realized
in a prosperity extending throughout the sixth Federal Reserve
district. The effectiveness of the Federal Reserve System has been
more fully demonstrated and its early popularity crystallized into
fixed public opinion as to its great commercial value and aid in the
development of industrial and agricultural activities. In submitting
the Second Annual Report of the Federal Reserve Bank of Atlanta,
there are presented some of the main factors of the year's operations,
with a summary of business and banking conditions.
FINANCIAL RESULTS OF OPERATION.

(a) Earnings, expenses, dividends, etc.: A comparative statement,
marked " Schedule No. 1," is attached hereto showing earnings and
expenses for the calendar years 1915 and 1916; amounts of net
earnings and rates for the respective periods; also amounts required
to pay the 6 per cent dividends.
(b) Comparative balance sheets for December 30, 1915.and 1916;
schedule No. 2, attached, shows combined results of the Atlanta
office and the New Orleans branch.
(c) Profit-and-loss statements for 1915 and 1916. (See schedule
No. 3, attached.)
GENERAL BUSINESS CONDITIONS.

While there may be a weak spot here and there, the general business conditions of the sixth Federal Reserve district are considerably
above normal, with expectations of further development to higher
levels.
The excessive rains and winds of July caused considerable damage
to agriculture and especially to the cotton crop of middle and southern
Alabama. The fruit crops of the district, though light, were up to the
standard in variety and quality and sold at increased prices over
previous years. The tobacco fields of Tennessee produced the largest
crop in many years. The demand has been good and prices are
ranging high. Sugar and rice crops have been the most satisfactory
for many years.
75284°—17

315

316

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

The rigid economy experienced in the previous year was productive
of larger interest in diversification, and there was an especially marked
increase in cattle and hogs throughout the district. The establish*
ment of packing-house plants in a number of places has given an
added impetus to cattle and hog raising.
Production of iron and steel products continued at a high point
throughout the year; pig-iron prices reaching $20 per ton, the highest
mark in many years. Orders run well into the middle of the coming
year.
War conditions caused more distress in the lumber market and in
naval-stores fields than in any other activity in this district. Lately
lumber has strengthened materially, and naval-stores products are
firmer and more steady.
Phosphate production continues below normal. Zinc and graphite
mines have been operating at full capacity. Coal operators were
considerably handicapped by low prices and car shortages.
In the general trade wholesalers and retailers have had a very
satisfactory year.
Labor conditions have been quite satisfactory during the year,
with the exception of shortage during the last few months, due to
emigration of negroes to the North.
Financial conditions are excellent, and bank deposits continue to
grow. Very little change in rates has been noted during the past
12 months. Fall and winter collections were good.
FEDERAL RESERVE BANK AND MEMBER BANKS.

In accordance with the resolution passed by the Federal Reserve
Board, "That all of Louisiana north of the parishes of Vernon,
Rapides, and Avoyelles remain in the eleventh Federal Reserve
district; and that the remaining part of the State of Louisiana now
in the eleventh district be transferred to the sixth Federal Reserve
district/' the Federal Reserve Bank of Dallas transferred the
member banks within said territory to the Federal Reserve Bank
of Atlanta. The governor of the Federal Reserve Bank of Atlanta,
under resolution adopted by the board of directors, was authorized
to enter into an agreement with the Federal Reserve Bank of Dallas
to assume on the part of the Atlanta bank the responsibility for the
cumulative dividends to be determined after the payment by the
Dallas Bank of all the earned dividends up to the time of the transfer.
On January 1, 1916, the capital stock of the Federal Reserve Bank
of Atlanta amounted to $4,844,800, representing a paid-in capital
of $2,422,400. During the year the capital stock was increased by
2,678 shares, with a decrease of 2,126 shares, making a net increase
of 552 shares, the paid-in capital as of December 31, 1916, being

DISTRICT NO. 6

ATLANTA.

317

$2,450,000. Twenty-two banks were added to the system and 21
banks withdrawn, including liquidations, consolidations, etc.
The records of the State banking departments in the several States
in the sixth Federal Reserve district show 36 charters granted to
State banks in the year 1916, with 55 withdrawn on account of failures, liquidations, and consolidations.
While the most pleasant relations continue to exist between the
Federal Reserve Bank of Atlanta and its member banks, and there
is no opposition as a whole to the Federal Reserve system, there
exists a certain amount of dissatisfaction on the part of a number
of the member banks due in a large extent to the par-clearing system.
During the first year of operations some of the member banks
seemed to have a hesitancy in furnishing the credit statements
required, but this has been entirely overcome, and the member banks
now promptly furnish any credit statements desired. These statements are more uniform, and the banks now find it far easier to
secure complete statements from their customers than was the case
prior to the Federal Reserve requirements. Through experience in
rediscounting paper with the Federal Reserve Bank the member
banks have a better understanding as to the class of paper eligible,
and these requirements are being reflected in the paper carried in
their portfolios, so that we now find the member banks with more
paper eligible for rediscount with Federal Reserve Banks than at
the close of the previous year.
DISCOUNT ACTIVITIES OF THE FEDERAL RESERVE BANK.

Schedule No. 4, attached hereto, shows the discount operations,
rates, etc. The accommodations requested by member banks have
not been very heavy, and we have at all times been in a position to
take care of their needs.
STATE BANKS.

During the year a few State banks have entered the system by
converting into national banks. The American Trust & Savings
Bank of Birmingham, Ala. (capital and surplus, $750,000), and the
Bank of Iota, Iota, La. (capital and surplus, $25,000), joined the
system, retaining their State charters.
MEMBER BANK DEPOSITS

EXCESS DEPOSITS

OVERDRAFTS.

Schedule No. 5, attached hereto, shows the gross balances, overdrafts, required reserves, uncollected balances, and deficient reserves,
by States, in the district as of close of business December 31, 1916.

318

ANNUAL REPOET OF THE FEDERAL RESERVE BOARD.
REPORTS AND EXAMINATIONS.

From time to time the chairman of the board reports to the
Federal Reserve Board regarding the condition of member banks,
and during the past year it was found necessary in only one instance
to have an examination made by the Federal Reserve Bank of the
condition of a member bank.
During the year there has been no failure of a national bank in
the sixth district, while there have been numerous failures of State
institutions in the several States in the district.
The overdue paper on hand consists of $1,863.65, representing balances due on discounts handled for the First National Bank of Wartrace, Tenn., declared insolvent by the Comptroller of the Currency
December 16, 1915. These amounts are now in litigation, and it is
expected that the account will eventually be closed with little, if
any, loss to the Federal Reserve Bank of Atlanta.
THE FEDERAL RESERVE BANK AND THE PUBLIC,
OPEN-MARKET OPERATIONS.

Through "Open-market operations/' the Federal Reserve Bank of
Atlanta has been enabled to render valuable service, especially in
the distribution of such products as rice, sugar, naval stores, and
cotton. The operations through this medium, largely confined to
the past three months, involving the purchase of $8,779,500 of
bankers' domestic acceptances and $3,764,500 bankers' foreign
acceptances, have aided materially as an auxiliary in the promotion
of trade and commerce, and have been of great value in facilitating
and broadening the field of activity for member banks.
TRADE ACCEPTANCES.

Considerable progress has been made in the development of trade
acceptances. Business men are becoming more favorably impressed
with the substitution of trade acceptances for open accounts, and
the hesitancy of establishing their use for fear of questioning their
customers' credit is being overcome. Again, the merchants realize
the advisability of taking discounts and being able to buy in less
restricted markets by the use of the trade acceptance.
EFFECT OF THE DISCOUNT-RATE POLICY OF THE BANK UPON GENERAL
MARKET RATES.

In view of the fact that there is a plethora of money in the East,
eastern bankers are coming into this territory offering to take the
best paper at rates lower than the established rates of the Federal
Reserve Bank. It is not deemed advisable, under present condi

DISTRICT NO. 6

ATLANTA.

319

tions, that our rates should be increased until there is a corresponding increase of rates in the financial centers. The paper held by the
Federal Reserve Bank of Atlanta is largely composed of notes based
on commodities in storage, bankers' acceptances, and trade acceptances for goods bought and sold.
Schedule No. 6, attached hereto, is a comparative statement of
the amount of rediscounts with Federal Reserve Bank and bills payable and rediscounts with other than Federal Reserve Bank, as shown
in the Comptroller's report of condition of member banks as of November 10, 1915, and November 17, 1916.
PUBLIC RELATIONS WORK.

The public relations work of the bank has been largely restricted
to the active personal work of the chairman of the board and the
governor of the bank, supplemented by the personal work of the
directors. The chairman of the board and the governor of the bank
have delivered a number of addresses during the year at bankers'
conventions and elsewhere. Monthly reports of business conditions
and interviews on matters of bank interest have been furnished to
the newspapers. Pamphlets on acceptances, credit statements, warehouse receipts, etc., have been sent to the member banks from time
to time.
THE FEDERAL RESERVE BANK AND THE GOVERNMENT.
Since the withdrawal by the Government on July 10, 1916, of the
$5,000,000 special deposit, the balance standing to the Government's
credit with us, including our New Orleans branch, has varied in
amounts from $1,000,000 to $3,000,000, but owing to the fact that
we never know when we may be called upon by the Treasurer of the
United States to transfer a large part of the balance to some other
Federal Reserve Bank we can scarcely use it with safety as loanable
funds for rediscounting purposes or as a reserve against Federal
Reserve notes issued.
Except to the extent that we are a designated depository for any
checks and warrants drawn on the Treasurer of the United States,
we have no business relations with the United States Treasury, other
than those any bank may have in the redemption of unfit currency,
national bank notes, and Federal Reserve notes. When Federal
Reserve Banks are permitted to discharge more of the functions of the
subtreasuries the deposits of Government funds with the banks could
be greatly increased and the Federal Reserve Banks could be of much
more service to their respective districts as well as to the Government in the payment of Government obligations and in supplying
their respective districts with coin at considerably less expense than
is possible under the present sub treasury system.

320

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

It is very desirable, from the standpoint of general business interests, that the reserve position of the Federal Reserve Banks be
strengthened, as would be the case were they made depositories of
much larger amounts of Government funds. It would be practicable
to greatly increase the amounts of Government deposits with the
Federal Reserve Banks if they were permitted to take over some of
the business of the sub treasuries.
The close relations between the Federal Reserve Bank and the
office of Comptroller of the Currency have proven very valuable.
Information in the office of the chief examiner for the district is available to the chairman of the board and Federal Reserve Agent.
FEDERAL RESERVE BANK AND NOTE ISSUES.

It has been the policy to issue Federal Reserve notes and concentrate as large an amount of gold in our vaults and in the gold fund at
Washington as possible. Outstanding Federal Reserve notes on
December 31, 1916, amounted to $25,919,530 and were secured by
$4,284,869.62 of discounted paper and $21,648,430 of gold.
Schedule No. 7, attached hereto, shows the denominations of Federal Reserve notes issued and the cost of these notes.
The interdistrict movement of notes shows only a limited number
of notes being returned by this bank to other Federal Reserve Banks,
with the exception of notes to the Federal Reserve Banks of New
York, Richmond, and Dallas. Of the $1,806,960 notes returned by
us during the year ending December 31, 1916, $376,965 were returned
to the Federal Reserve Bank of New York; $395,875 were returned
to the Federal Reserve Bank of Richmond; $736,585 were returned to
the Federal Reserve Bank of Dallas, or a total of $1,509,425 out of
$1,806,960 returned to all Federal Reserve Banks.
The excess of notes returned to Richmond and Dallas compared
with the amount of notes returned to other banks can probably be
accounted for by the fact that the Richmond and Dallas districts
border on the Atlanta district. The amount of notes returned to
New York is small in comparison with the amount of notes of this
bank received from the Federal Reserve Bank of New York, amounting to $2,691,730, out of a total of $4,515,135 received from all banks.
By the end of 1916 damaged and mutilated Federal Reserve notes
sent to the Comptroller of the Currency for cancellation and destruction amounted to $3,835,470.
The Federal Reserve Agent endeavors to keep on hand at all times
a large supply of Federal Reserve notes of all denominations and has
adopted the policy of having printed and available at Washington a
sufficient supply of notes for emergency purposes. A few days prior
to the threatened railroad strike the Federal Reserve Agent caused

DISTRICT NO. 6

ATLANTA.

321

to be shipped to Atlanta and to have placed in the subtreasury at
New Orleans an extra supply of Federal Reserve notes in view of the
threatening interruption of shipping facilities.
INTERNAL MANAGEMENT OF THE BANK.

The internal management of the bank continues with the same
relationship as to division of work between the bank proper and the
office of the chairman of the board.
The same manner of selection of an executive committee is in force.
The directors are very faithful in attendance at meetings of the board
and meetings of the executive committee. All applications for rediscounts are submitted to the executive committee on the day
received and advice as to action of the committee mailed to member
banks on the same day. A detailed written report of the operations
of the bank is mailed to each director a week in advance of the monthly
meeting of the board of directors.
At the January, 1916, meeting of the board of directors, Mr. Charles
A. Lyerly, of Chattanooga, Tenn., was reelected a member of the
advisory council, representing the sixth district. Upon invitation
from the chairman of the board, Mr. Lyerly has frequently appeared
at meetings of the board and discussed matters which were up for
consideration by the advisory council.
Mr. Joseph A. McCord was reelected governor of the bank for the
year 1916.
Mr. J. M. Slattery, deputy secretary, was elected assistant to the
Federal Reserve Agent.
At the August meeting of the board of directors, Mr. J. B. Pike,
tendered his resignation as cashier to accept the vice presidency of
the Heard National Bank of Jacksonville, Fla. Mr. M. W. Bell,
assistant cashier, was elected to fill the vacancy. Mr. W. S. Graves
was elected assistant cashier.
November 1 Mr. R. H. Hemphill, manager of the credit bureau,
resigned. The vacancy caused by his resignation will be filled at the
January meeting of the board of directors.
The inaugeration of the par-clearing system necessitated the employment of 24 additional clerks and the enlargement of our banking
quarters.
Mr. Edward T. Brown, deputy Federal Reserve Agent, continues
to serve only in the absence of the Federal Reserve Agent.
At the December election of directors, Mr. F. W. Foote, class A
group 2, director, and Mr. W. H. Hartford, class B, group 3, director,
were reelected without opposition for a period of three years from
January 1, 1917.

822

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
BANK QUARTERS AND VAULT FACILITIES.

In view of the fact that the lease of our present quarters will expire
in November, 1917, we approached our landlord for a proposition
looking to a new lease for another year. The new rental demanded
was $12,500 per annum. Our present lease for three years averages $9,600 per annum. Our board of directors then took up for
consideration the question of purchasing a lot and the erection of a
permanent home.
After considering the matter fully in ail of its phases and, especially
in view of the large proposed increase in rent, our board decided it
would be much more economical to own a building. We had offered
to us many available lots, in our very thorough canvass of the real
estate situation in Atlanta, and purchased a site 90 by 202 feet on
Marietta Street, within two blocks of the post office and the express
office. Aside from a saving in rent, a building of our own would
afford better and more ample vault facilities and a more conveniently
arranged banking room.
The board of directors of the Federal Reserve Bank of Atlanta
believe that a Reserve Bank, as well, if not more so than a member
bank, can well afford to own its own building. We usually have such
a large amount of idle funds in excess of our own legal reserve that
the payment of a rental under these circumstances might be considered an unnecessary tax on our earnings and the sum thus saved
in owning our building would contribute very materially toward
meeting our dividend requirements.
EXAMINATION

OF FEDERAL

RESERVE BANK AND FEDERAL
AGENT.

RESERVE

During the year the Federal Reserve examiners have made two
complete examinations of the bank and special Federal Reserve examiners have made four examinations of the Federal Reserve Agent's
department.
GOLD SETTLEMENT FUND.

It would be difficult to overestimate the value of the services
rendered to the Federal Reserve Bank by the operations of the gold
settlement fund. It has obviated the necessity for the shipment of
millions of dollars in settlement of balances between Federal Reserve
Banks, thus relieving the banks of effecting those settlements, and
entirely eliminating the risk that would attend the movement of
large amounts of currency. There are no suggestions to be offered
as to improvement of methods in handling transactions through the
gold settlement fund, except that later on, with the further development of the collection systems of the banks, it may become desirable
to have settlements made at more frequent intervals than once a week.

DISTRICT NO. 6—ATLANTA.

323

THE CLEARING PROBLEM.

Schedule No. 8, attached hereto, shows the transit operations for
the year, by months, to July 15 and after July 15; together with the
cost of operation and revenue since the transit department was
inaugurated on the latter date.
NEW ORLEANS BRANCH, FEDERAL RESERVE BANK OF ATLANTA.

The branch bank of the Federal Reserve Bank of Atlanta comprises
that part of Louisiana and Mississippi located in the sixth Federal Reserve district and in addition thereto the counties of Mobile and Baldwin, Ala. During the year there were added to the sixth Federal Reserve district, and allotted to the branch bank, the 15 member banks,
situated in northern Louisiana, and transferred from the Federal
Reserve Bank of Dallas; one new national bank and one State
bank, making a total of 42 banks allotted to the branch bank.
Little change has been made in the operation of the branch; and,
the result of the year's business has been very satisfactory. While
the volume of business during the first six months was small, during
the latter half of the year there was quite an increased demand.
The branch has engaged largely in open-market operations, with rates
ranging at the beginning of the season from 2 | to 2\ per cent, and
for the past six months from 2\ to 3J per cent. The volume of this
class of paper amounted to $7,579,128.26, principally domestic
acceptances of 90 days' maturity, about 80 per cent of which were
purchased from member banks and about 20 per cent from nonmember banks. Bills discounted amounted to $2,997,129.96,
largely commodity paper offered by the member banks in New
Orleans. Member banks outside of New Orleans discounted only a
small amount of commercial paper. Offerings of trade acceptances
have been very limited, totaling $223,237.
The earnings of the branch bank for the year 1916 amount to
$62,051.95, with a total expense of $28,649.69, leaving net earnings
of $33,402.26. The branch bank is only charged with the actual
expenses of operation of the branch and no proportionate charge is
made for administrative and general operative expenses of the
parent bank. A charge is made for their proportionate share of the
expense of the Federal Reserve Board. The reserves of the parent
bank are available for, and are used by the branch bank.
Including the manager of the branch bank and the representative
of the Federal Reserve Agent, there are a total of 11 employees,
with a total monthly compensation of $1,305.
The system originally adopted of appointing a representative of
the Federal Reserve Agent at New Orleans to represent the Federa]
Reserve Agent in transactions involving the issuance of Federal
Reserve notes, has proven entirely satisfactory. During the year

324

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

there was issued to the branch bank a total of $2,380,000 in Federal
Reserve notes. A sufficient quantity of all denominations of Federal
Reserve notes are always kept on deposit with the Assistant Treasurer of the United States at New Orleans, to meet the requirements
of the branch bank.
SCHEDULE 1-A.— Comparative statement of earnings and expenses of Federal Reserve
Bank of Atlanta {including New Orleans branch.)
Nov. 16,
1914 to Dec.
31, 1915.
EARNINGS.

Bills discounted and bought:
Bills discounted—member banks
Bills bought in open market
Investments:
United States securities
Municipal warrants
Commissions received
Purchase United States bonds
Sundry profits
Total earnings.

EXPENSES.
Assessment, expenses Federal Reserve Board.
Federal advisory council
Governor's conferences
Federal Reserve Agent's conferences
Salaries:
Officers
Clerks
Watchmen
Directors:
Fees
Per diem
Traveling
Officers and clerks, traveling expenses
Legal fees
Rent.
Telephone
Telegraph
Postage
Expressage
Premium on-fidelity bonds..
Light, heat, and power
Printing and stationery
Repairs and a l t e r a t i o n s . . . .
All other expenses
,

Total expenses of operation
Cost of Federal Reserve notes issued
Organization expenses
Depreciation of furniture and equipment.

$141,774.27
52, 473.79

$230,020.43
88.63

40, 725.41
5,101. 85
153.07
1,530. 27
20,185.94

1,541.13
201.45
4,608.73

261,944.60

236, 460.37

1,546.82
357.68
., 095.89
182.60

4,831.60
402.63
958.37
223. 76

016.63
317.33
258.15

29,106.53
26,546.00
2,654.32

790.00
038. 00
251.46
299.44
400.00
572.18
348.69
569.63
569. 70
661. 87
192.23
141. 76
240.33
205.55
583.92

5,485.00
2,593.00
3, 892.16
1,463.23
1,304.10
8,664.90
313.59
548.75
3,704.83
8.47
1,851.67
91.23
4,803.14
107.20
3,885.82

116,639.86
12,166.93

103,440.30
24,573.70
23, 597.22
2,316. 76

3,830.71

Total current expenses.

132,637.50

153,927.98

Gross earnings
Less total expenses..

261,944.60
132,637.50

236,460.37
153,927.98

Net earnings

129,307.10

82, 532.39

SCHEDULE 1-B.—Capital stock and dividend.
Name.
Paid in capital stock Dec. 30, 1916:
Alabama
Florida
Georgia....:
Lquiaisna
Mississippi
Tennessee
Total

Number
of banks.

Atlanta.

New
Orleans.

91 |$506,950.00
2
55
323,000.00
109
691,150.00
22
18
92
482, 800.00

$33,000.00

389 2,004,200.00

445,800.00

29,650.00
117,150.00

Combined.

$539,950.00

323,000.00
691,150.00
295,650.00
117,150.00
482,800.00
2.450,000.00

DISTRICT NO.

325

-ATLANTA.

SCHEDULE 1-B.—Capital stock and dividend—Continued.
Number
of banks.

Name.
Atlanta office
New Orleans branch
Dividend accrued for six months ending June 30, 1916,
payable Jan. 2, 1917:
Alabama
Florida.
Georgia
Louisiana.
Mississippi
Tennessee
T o t a l dividend t o J u n e 30,1916 .

. . .

Dividend accrued for six months ending Dec. 30,1916:
Alabama
Florida
Georgia
Louisiana
Mississippi
Tennessee
Total dividend to Dec. 30,1916
Total dividend for 1916 at 6 per cent
6 per cent dividend earned and paid to Dec. 31,1915 .

New
Orleans.

Atlanta.

Combined.

347
42
$14,394.06
9,596.93
19, 774.60

$990.00
8,409.55
3,508.85

14,267.31

$15,384.06
9,596.93
19, 774.60
8,409.55
3,508.85
14,267.31

58,032.90

12,908.40

70,941.30

15,103.60
9,682.16
19,804.58

990.00

16,093. 60
9,682.16
19,804.58
8,840.13
3,514.50
14,426.60

8,840.13
3,514. 50
14,426-. 60
59,016.94

13,344.63

72,361.57

117,049.84

26,253.03

143,302.87
129,198.00

SCHEDULE 2.—Statement of the condition of the Federal Reserve Bank of Atlanta (including New Orleans branch).

RESOURCES.
Bills discounted—members..
Bills bought in open market
Bills discounted—past due
Member banks—collateral notes.

Dec. 30, 1916.

Dec. 31, 1915.

$2,412,269.37
4,447,696.96
1,863.65
550,000.00

5,074,293.25
71,665.22

Total bills discounted and bought.
Investments—municipal warrants
Other United States bonds on hand
Interest accrued on United States securities.
United States gold notes

7,411,8
40>,509.00
1,710,000.00
14,386.66
824,000.00

330,147.58

Total.
Expenses paid in advance
Cost of unissued Federal Reserve notes
Furniture and equipment
Cost of unissued Federal Reserve bank notes.
Bank premises

2,949,895.66

330,147.58

517.43
19,914.87
12,282.26
400.00
102,500.00

9,484.98
6,228.92

Total.
Due from other Federal Reserve Banks
Due from member banks—overdrafts
Due from banks and bankers
Exchanges for clearing house
Checks and other cash items
Deferred debits (transit account)
Total deductions from gross deposits

!, 145,958.47

135,614.56

15, 713.90

5,312,435.71
4,819.11
341,704.52
825,242.33
21,806.71
5,117,731.24

1,001,921.68
77,012.60
43,878.76
229,464.60
23,633.83

11,623,739.62

1,375,911.47

National bank notes and Federal Reserve notes of other banks
Federal Reserve notes on hand
Nickels and cents
Mutilated currency forwarded for redemption

1,677,795.00
1,241,765.00
160.83
180,000.00

1,072,970.00
1,276,610.00
36.81
148,000.00

Total.
Gold settlement fund
Due from Treasury of United States, gold redemption fund.,
Gold bullion and coin
Gold certificates (including clearing-house certificates)
Silver certificates (including clearing-house certificates)
Legal-tender notes (including clearing-house certificates)
Silver coin

3,099,720.83

2,497,616.81

7,439,000.00
348,778. 29
1,354,671.07
3,891,860.00
67,467.00
13,752.00
1,407.00

3,717,000.00
307,512.36
1,421,189.90
3,412,100.00
75,950.00
34,400.00
23,403.80

Total reserve...
Total resources.

13,116,935.36

8,991,556.

38,337,736.01 | 21,356,904.2

326

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD. .

SCHEDULE 2.—Statement of the condition of the Federal Reserve Bank of Atlanta (including New Orleans branch)—Continued.
Dec. 30, 1916. Dec. 31, 1915.
LIABILITIES.

Capital paid in.
Profit and loss..

$2,450,000.00
10,120.04

$2,422,400.00
82,532.39

2,460,120.04

2,504, 932.39

9,522.43
12,631.55
1,557.47
460.64
2,483.24

35,170.82

Total.
Unearned discount—bills discounted—members.
Unearned discount—bills bought
Unearned interest—investments
Reserved for sundry expenses
Service charges (net receipts)

26,655.33

36,347.31

3,821,076.20

5,000,000.00
291,520.84
8,760,634.30

Total..
Government deposits
Due to other Federal Reserve Banks.
Due to member banks
Expense checks
Cashier's checks outstanding
Deferred credits
Return item checks
Dividend checks
Gross deposits

850.32
326.17

5,762,247.41
21,812,983.12
1,007.06
52,828.06
58,727.49
50.00
70,941.30

13,669.45

31,579,860.64

14,065,624.59

38,337, 736.01

21,356,904.29

1,708,440.00
6,984,642.35

1,900,000.00
4,441,399.59

8,693,082.35
13,116,935.36

6,341,399.59
8,991,556.06

4,423,853.01

2,650,156,47

Federal Reserve note liability.
Total liabilities.
Reserve required on Federal Reserve notes 40 per cent.
Reserve required on net deposits 35 per cent.
Total required reserve
Reserve carried, 54.3 per cent
Excess over required reserve, 19.3 per cent

SCHEDULE 3. —Profit and loss account.
Atlanta.

New
Orleans.

Combined.

$91,302.60
108,590.05

S15.386.48
46,665.47

$106,689.08
155,255.52

199,892. 65

62,051.95

261,944.60

45,644.47
58,191. 47

13,208. 27
15,436.42

58,852. 74
73, 627.89

Total expenses for 1916
Difference account ending Dee. 30

! 103,835.94
1
151.87

28.644.69
5.00

132,480.63
156.87

Total expenses for 1916
Net earnings:
Gross earnings for 1916
Less expenses for 1916

1 103,987.81

28,649.69

132,637.50

199,892.65
103,987.81

62,051.95
28,649.69

261,944.60
132,637.50

95,904.84

33,402. 26

129,307.10

Earnings:
Six months ending June 30, 1916
Six months ending Dec. 30, 1916
Total earnings for 1916
Expenses:
Six months ending June 30, 1916
Six months ending Dec. 30, 1916

Net earnings for 1916
Net earnings for 1916
Profit and loss reported Dee. 31, 1915
Adjustment New Orleans branch profit and loss account
Earnings received from Federal Reserve Bank, Dallas, June 29, 1916.

82,532.39
142. 25
1,156.77

Total net earnings to date
Less dividends paid:
June 30, 1916, from Nov. 16, 1914, to Dec. 31, 1915
Dec. 30, 1916, from Jan. 1, 1916, to June 30, 1916

129,198.00
1 70,941.30

Total dividends paid
Premium on surrendered stock paid during 1916

200,139.30
2,879.17
203,018.47

Profit and loss carried forward

"*83,'83L4i
213,138.51

Total dividend payments to member banks.
Profit and loss carried by Atlanta office
Profit and loss carried by New Orleans branch.

129,307.10

10,120.04
7,691.23
2,428.81

10,120.04

• DISTRICT NO. 6

ATLANTA.

327

SCHEDULE 4.—Discount operations.
Discount rates prevailing during year 1916:
Paper maturing within 90 days.4 per cent rate during entire year.
Paper maturing over 90 days.. 5 per cent rate during entire year.
Trade acceptances
3 | per cent during entire year.
Commodity paper
3 per cent up to May 20, 1916; 3J per cent May 20
to Aug. 17, 1916; 3 per cent Aug. 18 to Dec. 31,
1916.
Member banks,collateral notes. 3J per cent Sept. 15 to Dec. 31,1916.
Bills discounted for members during 1916:
Within 10 days
$294, 500
After 10 days, but within 30 days
4,485,000
After 30 days, but within 60 days
6, 990, 600
After 60 days, but within 90 days
9,420, 900
Over 90 days
15132,100
Total bills discounted for members
Bills bought in open market during 1916:
Prevailing rates—
Bankers' acceptances—
Domestic
Foreign

22, 323, 200

Total bills bought
United States bonds bought
Bonds bearing 2 per cent
Bonds bearing 3 per cent

12, 544,000

3 per cent Feb., Mar.? and Apr.
3 to 4 per cent May; 2 to 4 per cent May
to Dec. 31, 1916.
Trade acceptances
5 per cent to Oct. 1, 1916; 3^ to 5 per cent
Oct. to Dec. 31, 1916.
Domestic bankers' acceptances bought
$8, 779,500
Foreign bankers' acceptances bought
3, 764,500
in open market
in open market during 1916:
interest
interest

2 per cent bonds converted into 3 per cent conversion
bonds and 1-year Treasury notes
2 per cent consols, on hand
3 per cent 1918 bond, on hand
United States bonds sold to member banks

$2, 590, 500
5, 000
_
$2, 595, 500
1, 653, 900
875,100
5, 000
61, 500

—
2,595,500
Investments in municipal warrants made during 1916:
Prevailing rates: Jan. to Aug., 5 per cent; Aug., 3£ per cent; Sept., 3J to 5 per
cent; Oct. to Dec. 31, 3J to 5 per cent.
Maturities—
Within 60 days
$8, 700
Within 90 days
15,100
Over 90 days
396, 500
$420, 300
School warrants, State of Georgia
396,500
School warrants, Miller County, Ga
5,000
Warrants, city of Columbia, Tenn
7, 700
School warrants, Gadsden County, Fla
2, 000
Warrants—City of Canton, Miss
6,100
School warrants—Beauregard Parish, La
3,000
420,300

328

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

SCHEDULE 5.—Due to and due frqm member banks, at the close of business Dec. 30, 1916.
(Showing gross balances and overdrafts for the Atlanta office and New Orleans branch, also required
reserve, uncollected balance and deficient reserves for the Atlanta office only; New Orleans branch
figures not available.]
Number
of banks.

State.

Gross balances.

Overdrafts.

Alabama
Florida
Georgia
Tennessee

91 $3,356,960.74
55 2,794,611.46
107 5,624,071.11
92 4,595,512.32

Total Atlanta office
New Orleans branch

345
42

16,371,155.63
5,441,827. 49

4,819.11

387

21,812,983.12

4,819.11

Total

S3,123.13
1,005.86
690.12

Required
reserve.

Uncollected
balances.

Deficient

Alabama..
Florida....
Georgia—
Tennessee -

$2,489,381.00
2,041,662.00
3,765,745.00
3,157,752.00

$450,579.86
423,853.79
1,147,384.59
838,092. 48

$105,087.05
93,234.54
162,114.10
165,209.66

Total

11,454,540.00

2,859,910. 72

525,645.35

reserves.

SCHEDULE 6.—Comparative statement of member banks, rediscounts with Federal Reserve
Bank, and bills payable and rediscounts with other than Federal Reserve Banks, as
shown in Comptroller's Condition Reports, Nov. 10, 1915, to Nov. 17, 1916.

States.

Date.

Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.
Nov.

Alabama
Florida
Georgia
Tennessee
Mississippi and Louisiana
Total

Bills payable
Rediscounts and rediswith Federal counts with
Reserve
other than
Bank.
Federal Reserve Banks.

10.1915
17.1916
10.1915
17.1916
10.1915
17.1916
10.1915
17.1916
10.1915
17.1916

$1,650,249
742,161
988,691
403,625
2,643,320
509,138
764,691
414,975
888,189
1,050,436

$2,311,044
1,055,930
1,732,733
707,500
3,316,133
481,500
1,264,559
672,000
1,539, 783
975,000

Nov. 10,1915
Nov. 17,1916

6,935,140
3,120,335

10,164,252
3,891,930

SCHEDULE 7.—Federal Reserve notes.
T O T A L N U M B E R O F N O T E S I S S U E D I N 1915 A N D 1916.

1915

Fives
„.
Tens
Twenties
Fifties
Hundreds
Total

1916

Total.

Number.

Amount.

Number.

1,244,000
672,000
240,000
10,600
8,000

86,220,000
6,720,000
4,800,000
530,000
800,000

604,000
344,000
192,000
13,400
4,000

$3,020,000
3,440,000
3,840,000
670,000
. 400,000

1,848,000
1,016,000
432,000
24,000
12,000

$9,240,000
10,160,000
8,640,000
1,200,000
1,200,000

2,174,600

19,070,000

1,157,400

11,370,000

3,332,000

30,440,000

Amouni.

Number.

Amount.

DISTRICT NO. 6

329

ATLANTA.

SCHEDULE 7.—Federal Reserve notes—Continued.
FEDERAL RESERVE NOTES UNISSUED ON HAND AND TOTAL PRINTED.
Unissued on hand.
Number.
Fives
Tens
Twenties .
Fifties
Hundreds

Amount.

Printed.
Number.

Amount.

1,312,000 $6,560,000
684,000 6,840 000
960,000
48,000
600 000
12,000
800,000
8,000

3,160,000 $15,800,000
1 700,000 17 000 000
480,000
9,600,000
36 000
1 800 000
20,000
2,000,000

2,064,000

5,396,000

15,760,000

46,200,000

Cost of issuance of 2,174,600 notes in 1915, amounting to $19,070,000, at $11.30 per 1,000 notes, or
$1.29 per $1,000
$24,573. 70
Cost of issuance of 1,157,400 notes in 1916, amounting to $11,370,000, at $10.61 per 1,000 notes, or
$1.08 per $1,000
12,226.93
Cost of issuance of 3,332,000 notes to date, amounting to $30,440,000, at $11.06 per 1,000 notes, or
$1.11 per $1,000.
36,840.63
Cost of 2,064,000 unissued notes on hand, amounting to $15,760,000, at $9.65 per 1,000 notes, or
$1.26 per $1,000.
19,914.87
Cost of manufacturing 5,396,000 notes, amounting to $46,200,000, at $10.52 per 1,000 notes, or $1.23
per $1,000
56,755.50

SCHEDULE 8.—Transit department operations {including New Orleans branch) from
July 15 to Dec. 30, 1916.
NUMBER OF ITEMS CLEARED.
Clearing house.

Within district.

Other districts.

Total.

July
August
September.
October
November.
December..

8,253
21,199
23,851
24,781
27,542
30,365

78,351
187, 111
226,747
263,476
268,728
283,909

8,112
24,911
29,008
33,913
32,840

94,716
253,221
279,606
322,170
329,110
343,272

Total

135,991

1,308,322

157,782

1,602,095

$9,709,760. 49
25,857,784. 65
36,028,775.15
48,555,273.30
49,718, 737.19
49,390, 802. 85

$5,127,957.27
18,980,491.97
25,359,874. 42
34,031,714.98
36,908,492.39
33,270,835. 66

$20,849,803.17
59,175,609.37
80,403,276.16
107,084,442. 42
115,051,926. 67
111, 802,909. 96

' 121,427,503. 43 219,261,133.63

153,679,366.69

494,368,003. 75

AMOUNTS CLEARED.
July
August
September
October
November
December
Total
Average number of items handled daily
Average amount of items handled daily

I
|
|
I
j

$6,012,085.41
14,337,332. 75
19,014,626.59
24,497,454.14
28,424,733109
29,141,271.45

11,362
$3,506,156.05

330

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Revenue and expenses of the transit department, Federal Reserve Bank of Atlanta,
July 15 to Dec. SO, 1916.
Atlanta.

Service charges (net receipts)

7,772.73

New
Orleans.

$2,286.04

from

Combined.

$20,058.77

EXPENSES.

SalariesOfficers
Clerks
Officers' and clerks' traveling expenses .
Rent
Telephone
Telegraph
Postage
:
Expressage
Light, heat, and power
Printing and stationery
All other expenses
Total expense of operation
Depreciation of furniture and equipment.
Total transit department expense...
Total revenue received.
Less expense
Excels of revenue over expense...

850.00
7,8.54.17
546. 25
1,023.02
12.80
3.79
2,835.48
4.00
1,126. 34
1,135. 70

529.00
2.20
14.65
106.43
103.11

850.00
8,421.00
546.25
1,273.02
12.80
3.79
3,364.48
2.20
18.65
1,232.77
1,238.81

15,391.53
411.49

1,572.24
200.27

16,963.77
611.76

566.85
*250." 66'

15,803.02

1,772.51

17,575.53

17,772.73
15,803.02

2,286.04
1,772.51

20,058. 77
17,575.53

1.969.71

513.53

2. 4S3. 24

DISTRICT NO. 7—CHICAGO.

0. H. BOSWORTH, Chairman and Federal Reserve Agent.

GENERAL BUSINESS AND BANKING CONDITIONS IN THE DISTRICT.

General business conditions in the seventh Federal Reserve Bank
during the year 1916 have been satisfactory, the result of increasing
and sustained activity in practically all lines. The banks report
rising deposits and low-interest rates. =
FINANCIAL RESULTS OF OPERATIONS.

The net earnings of the Federal Reserve Bank of Chicago for the
year have been $403,206 (after charging off $25,000 from furniture
and fixtures account and $5,113 to cover the cost of printing
Federal Reserve notes issued) equivalent to 6 per cent on the
average capital employed.
A dividend of $75,873.47 was declared payable July 15, which discharged the cumulative dividend obligations of the bank up to March
31, 1915.
A dividend of $284,775.25 was declared payable December 27, 1916,
which discharged the dividend obligations accruing up to January 1,
1916, leaving but one year's dividends in arrears.
ACTIVITIES OF THE BANK DURING THE YEAR,
DISCOUNT OPERATIONS.

Out of a total membership of 992 member banks, 212 have rediscounted $23,178,116.94 of paper during the year at rates varying
from 3J to 5 per cent, according to the maturity of the notes. Of
this amount $16,065,839.77 was commercial and industrial paper, the
remainder, amounting to $7,112,277.17, consisted of agricultural or
livestock paper. Included in the commercial paper submitted was
$105,177.45 of trade acceptances.
Under a recent amendment to the Federal Reserve Act, member
banks are permitted to borrow from Federal Reserve Banks on their
promissory notes, provided such notes mature within 15 days and are
secured by paper which would be eligible for rediscount, or by United
States Government bonds. Eight member banks of this district have
75284°—17

331

332

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

availed themselves of this privilege and borrowed $5,417,500 in this
manner at a rate of 3 J per cent, which amount is included in the total
of rediscounts shown above.
OPEN-MARKET OPERATIONS.

First. Bankers7 acceptances amounting to $27,060,584.62, all maturing within 90 days, were purchased during the year. Of this
amount $26,605,811.05 consisted of bills drawn against exports or
imports. The balance, amounting to $454,773.57, were drawn against
domestic shipments or goods in storage. The acceptances purchased
consisted almost entirely of bills drawn against and accepted by banks
located in New York and Boston. Member banks7 acceptances,
amounting to $3,244,446.05, were purchased. Thus far member
banks located in this district have not availed themselves to any great
extent of the accepting privilege granted by the Federal Reserve Act.
The export and import acceptances appear to be confined largely to
banks located at the seaboard. Rates on acceptances purchased
varied from 2 to 3J per cent, according to the maturity of the bills
and the financial standing of acceptors.
Second. United States Government bonds to the amount of
$8,644,100, all having the circulation privilege, were purchased during
the year. Bonds aggregating $8,303,100 were purchased direct from
member banks, the balance being bought from brokers. United
States 2 per cent bonds, amounting to $4,035,400, were converted
into $2,518,400 United States conversion 3 per cent bonds, due
1946, and $1,517,000 United States Treasury one-year 3 per cent
notes. Practically all of the United States Government 3 per cent
conversion bonds have been placed in the hands of the public through
sa/les in the open market.
Third. Municipal warrants purchased during the year amounted to
$9,733,300, represented by bonds and warrants issued by 73
municipalities and States. Maturities ranged from 10 days to 6
months and rates varied from If to 4 per cent.
CHANGES IN RESERVE POSITION.

The Federal Reserve Bank of Chicago has held strong cash reserves
during the year. During the month of January the cash reserves
against net deposits were as high as 87.2 per cent. This percentage
gradually declined until 70.4 per cent was reached in July. From
that time on the reserve position of the bank was gradually strengthened until 79 per cent was reached in December.
THE FEDERAL RESERVE BANK AND MEMBER BANKS.
There has been no change in the district lines during this year.
The Federal Reserve Board, however, on October 13 granted an

DISTRICT NO. 1—CHICAGO.

333

appeal from certain Wisconsin bankers for transfer from the ninth
district (Minneapolis) to this seventh district, effective January 1,
1917. The details of this transfer have been worked out and on that
date 25 counties in Wisconsin will come into this district, adding
52 banks with a combined capital and surplus of approximately
$7,632,900 to the seventh Federal Eeserve district and $1,750,219.92
to the reserve deposits of the Federal Reserve Bank of Chicago.
There has been no failure of any member bank in the district during
the year.
The number of member banks has been decreased by 14, eight
liquidating and six converting into State banks.
The number has beenincreasedby the addition of 7, six new national
banks and one State bank joining the system.
The membership now consists of 984 national banks and 8 State
institutions, the latter being the following:
Albion, Mich., Commercial & Savings Bank.
Chicago, 111., Central Trust Co. of Illinois.
Elmhurst, 111., Elmhurst State Bank.
Joliet, III., Commercial Trust & Savings Bank.
Madison, Wis., Bank of Wisconsin.
Milwaukee, Wis., Badger State Bank.
Saugatuck, Mich., Fruit Growers State Bank.
Sioux City, Iowa, Bankers7 Loan & Trust Co.
During the year one small bank was examined by this bank due to
persistent overdrawing of its account with the Federal Reserve Bank.
THE FEDERAL RESERVE BANK AND THE GOVERNMENT.

The Federal Reserve Bank of Chicago was appointed fiscal agent
of the United States Government, effective January 1, 1916. On
January 3, the first business day of the year, the collector of customs
and the collector of internal revenue began depositing their collections with this institution. Since that date transfers of Government
funds have been made by member banks for the credit of the United
States Government. On July 19, $5,000,000 was withdrawn from
the account and transferred to the Treasurer of the United States for
the credit of the Treasurer's general account at Washington, D. C.
All other charges to this account represent pension checks and Treasury warrants deposited by member banks. Seven hundred and
thirteen thousand and three checks were paid during the year. The •
average balances on deposit were as foliows:
January
February
March
April
May
June

$683, 000
546, 000
791, 000
1,126, 000
2,002,000
6, 260,000

July
August
September
October
November
December

$7, 460, 000
5, 431,000
3,488,000
3,190,000
l, 985, 000
2,149,000

334

ANNUAL REPORT OF THE FEDEEAL RESERVE BOARD.
FEDERAL KESERVE NOTE ISSUES.

The general policy of the bank in reference to the issue of Federal
Reserve notes can best be stated by reciting a resolution passed by
the Board of Directors on November 12, 1915, as follows:
"Upon motion it was declared to be the sense of the Board that
the Federal Reserve Bank of Chicago should not attempt to buy gold
through the issue of Federal Reserve notes unless and until the
Federal Reserve Act be so amended as to expressly permit same to
be done and until Federal Reserve notes may be counted as legal
reserve by member banks and7 the expense of printing the same be
assumed by the Government.'
Upon reconsideration of the matter on October 27, 1916, the following resolution was adopted:
"Resolved, That the governor and officers of the bank shall use every
means of supplying tne member banks with Federal Reserve notes
in the denominations they may require, with the end in view not
only of meeting their requests, but also of conserving the gold reserve
of the77bank and of accumulating gold with the Federal Reserve
Agent.
The bank called on the Federal Reserve Agent during the year to
issue $4,500,000 of Federal Reserve notes. The outstanding notes
in 1916 were all covered by an equal amount of gold deposited with
the Federal Reserve Agent.
During 1916 the Federal Reserve Agent ordered $5,000,000 of new
Federal Reserve notes shipped to him as an emergency supply, and
they were stored in the vaults of the Chicago Clearing House.
In April, 1916, the Comptroller of the Currency, at the request of
the Federal Reserve Agent, shipped $15,000,000 additional Federal
Reserve notes to the subtreasury at Chicago, subject to his order.
We therefore have on hand in Chicago, ready for use at a moment's
notice, $15,500,000 of new Federal Reserve notes. In addition, there
are printed and ready at Washington for shipment on telegraphic call,
to the bank $50,620,000 additional notes. It is felt that this stock
will be sufficient to meet any possible emergency that may develop,
and that it is large enough to forestall any currency panic that otherwise might occur.
Five million dollars of Federal Reserve Bank notes (secured by
United States bonds with the circulation privilege) have been printed
and are ready for use at any time needed. These notes are issued
'under the same conditions as notes issued by the Government to the
national banks.
EFFECT OF THE DISCOUNT-RATE POLICY OF THE BANK ON GENERAL

MARKET RATES.

Our executive committee from time to time, and the board of
directors at each monthly meeting, have given careful consideration

DISTRICT NO. 1—CHICAGO.

335

to the subject of discount rates, and in determining the same have
been influenced by the general business situation current and by the
rates maintained by the large commercial banks.
Money-market conditions during the past year, owing to the large
surplus funds available, have been such as to justify the Federal
Keserve Bank in following the prevailing rates rather than undertaking to regulate the same, a procedure which might have been
necessary had there been a tendency toward abnormally high rates.
Generally speaking, it may be said that our rates for the rediscount of bills maturing up to 90 days have been practically in accord
with those made by commercial banks to their best customers,
whereas our rates on longer maturities—that is, from 90 days to 6
months—have been slightly firmer than the going rates on commercial paper, though lower than those received by the member banks
offering such bills for rediscount.
Under these circumstances it is questionable whether the policy
followed has materially affected the general market rates, the effect,
if any, being of a sentimental character, tending to keep rates up
rather than bear them down.
PUBLICITY WORK OF THE BANK AND THE ATTITUDE OF THE PUBLIC
TOWARD THE FEDERAL RESERVE SYSTEM.

The publicity work of the bank during the past year has been
conducted through personal interviews, correspondence, and attendance by the bank's officers at some of the conventions and group
meetings of bankers. It has been gratifying to observe that many
of the member banks, which at the outset, because of compulsory
membership or for other reasons, were not entirely friendly to the
system, have come to a realization of the substantial benefits which
accrue to them and are now stanch supporters of the new banking
system.
There is abundant evidence that the attitude of the public toward
the Federal Reserve system is one of increasing confidence in its
ability to perform the functions and accomplish the objects for which
it was established.
INTERNAL MANAGEMENT OF THE BANK.

There have been held 13 directors7 meetings and 47 executive committee meetings. During the year the executive committee has been
composed of one director of each class, the governor, and the secretary, as follows: George M. Reynolds, James B. Forgan, C. H. Bosworth, James B. McDougal, W. F. McLallen.
Weekly meetings of the committee have been held, and all discounts, loans, and purchases of paper or securities have been submitted to the committee and approved by it.

336

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

The bank was examined twice during the year by the examiner
and force of the Federal Reserve Board, namely, on March 13 and
August 25. These examinations were very thorough. Copies of
the reports of examinations were furnished the bank and circulated
among the directors, read by each, and a certificate to this effect
signed by each director on the report.
CLEARINGS AND GOLD-SETTLEMENT FUND.

From January 1 to July 15 the voluntary collection system was in
operation. Under this system checks were handled only on such of
our member banks as (under resolution of their boards of directors)
authorized us to charge the items to their accounts the same day
they were deposited with us. This system proved unsatisfactory,
because only 114 banks participated in it, and owing to the fact that
reserve balances were heavily impaired by charging checks against
the accounts of the member banks on the day of transmittal, the
member banks being unable to anticipate the volume of items which
might be charged to their account in any one day.
CLEARING AFTER JULY 15, 1916.

On July 15 the voluntary collection system was superseded by the
present collection system through which checks on all member banks
in the 12 districts, as well as checks on nonmember banks, are collectible without exchange charges. The adoption of the new collection system greatly increased the par facilities offered member banks
and increased materially the volume of items handled. On the
attached table showing the operation of the transit department it
will be noted that the average number of items handled per day
since the opening of the new collection system is as follows:
Amount.
Checks on Chicago banks
Checks on banks in this district
Checks on other districts

$5,684,481.20
1,859,673. 80
3,711,958.48

Total daily average

11,256,113.48
Chicago items.

Our district.

Date.
Number.
July 16-31
August
September
October
November
December
Total
Average per day

26,279
89,244
83,260
90,805
91,984
99,237

Amount.
$57,673,134.06
115,875,114.43
135,178,663.64
152,270,253. 48
17i; 434,101.78
180,449,534.92

480,809 812,880,802.31
5,684,481.13
3,362

Number.
69,654
175,273
248,900
276,095
281,641
295,973

Amount.
$13,873,432.86
36,383,889.23
45,903,705.85
55,146,740.94
57,901,032.92
56,724,551.69

1,347,536 I 265,933,353.49
9,423
1,859,673.80

DISTRICT HO. 1

337

CHICAGO.

Other districts.

Grand totals.

Date.
Number.
July 16-31..
August
September.
October
November.
December..
Total
Average per day.

Amount.

152,901
198,639
157,086
103,938
96,894

$44,685,120.73
84,735,187.81
96,066,112.41
84,826,665.65
108,367,171.46
112,129, 805. 69

758,526
5,304

530,810,063. 75
3, 711,958. 48

Number.

Amount.

145,001 $116, 231, 687.65
417,418 236,994,191.47
530, 799 277,148,481.90
523,986 292,243,660.07
477,563 337,702,306.16
492,104 349,303,892.30
2,586,871 1,599,624,219.55
11,186,043.49

Government checks.
Items.
January..
February
March
April
May.
June
July
August...

Amount.

78,727 $6,376,384.49
45,514 4,618,311.46
40,334 4,370,834.34
81,023 6, 727,139.31
49,491 4,337,814.12
39,862 4,067,992.07
93,446 9,469,184. 42
51,806 6,540,089.27

Items.
September
October
November
December
Total
Average per day

Amount.

43,729
87,911
53,328
47.832

$7,404,969.73
8,784,634.81
6,443,904.72
5,598, 768.71

713,003
2,376

74,740,027.45
239,133.42

To provide for the increased amount of work in the transit department, 24 additional employees were engaged and 1,183 additional
square feet were provided by building an extension to the mezzanine
floor of the bank at our own expense, without increasing our rent.
The collection system is working satisfactorily, the number of items
handled on banks in our own district showing an increase each month.
While the volume of items on other districts during the last three
months of the year shows a decrease each month, this is owing to the
fact that banks having a large volume of items on other districts have
been encouraged to route the items direct to the other Federal Reserve
Banks.
As a result of the operation of the Federal Reserve Bank collection
system, exchange charges in the reserve cities of this district fixed by
clearing-house rules have been either reduced or abolished on all
checks which can be collected through the Federal Reserve Banks.
SERVICE RENDERED TO THE BANKS BY THE GOLD SETTLEMENT FUND.

By referring to the tables showing the volume of transactions
through the gold settlement fund, it will be seen that the volume of the
transactions has greatly increased during the year, the average weekly
transactions through the gold settlement fund being as follows: Debits,
$15,357,000; credits, $14, 319, 000; balances, $14,265,000.

338

ANNUAL EEPOET OF THE FEDEEAL RESERVE BOARD.
Transactions through the gold settlement fund weekly.
[000's omitted.]

Week ending.
Jan.

Feb.

Mar.

Apr.

May

June

July

6
13
20
27
3
10
17
24
2
9
16
23
30
6
13
20
27
4
11
18
25
1
8 . .
15
22
29
6

Debits.

Credits.

Balance.

$10,498
15,013
7,480
9,840
4,456
6,299
5,738
7,134
6,587
12,338
6,004
8,784
7,547
9,309
7,857
7,554
8,320
8,776
9,083
12,819
13,044
15,577
12,314
11,488
10,037
16,207
12,921

$9,782
7,221
5,785
7,547
6,241
8,530
3,923
8,316
12,779
10,213
7,962
7,039
6,599
7,250
7,393
9,385
8,915
12,969
10,736
10,614
15,090
9,844
12,813
11,784
12,290
11,139
12,612

$2,372
10jl64
11,859
14,152
12,367
10,136
11,951
10,769
4,577
6,702
4,774
6,519
7,467
9,526
9,990
8,159
7,564
3,371
1,718
3,923
1,877
7,610
7,111
6,815
4,562
9,630
9,939

Week ending.
July 13
20
27
Aug. 3
10
17
24
" 31
Sept. 7
14
21
28
Oct. 5
13
19
26
Nov. 2
9
16
23
Dec. 1
7
14
21
28
Total

Debits.

Credits.

$11,068
10,767
18,855
17,535
' 15,531
13,984
17,193
16,910
17,775
17,505
22,729
21,260
23,961
21,223
20,187
25,792
26,472
26,535
24,616
37,017
24,024
24,522
26,735
28,192
25,125

$9,991
13,951
16,912
14,051
16,016
11,037
16,335
15,856
15,745
12,518
26,278
23,268
19,248
17,270
23,312
28,298
27,001
24,887
24,452
30,728
26,391
21,341
20,900
32,643
31,370

798,567

774,570

Balance.
$11,016
7,832
9,775
13,259
12,774
15,721
16,579
17,663
20,193
25,180
21,631
19,623
24,336
28,289
25,164
22,658
22,129
23,777
23,941
30,230
27,863
31,044
36,879
32,428
26,183

CONCLUSION.

During the summer Mr. E. T. Meredith, of Des Momes, class C director, accepted nomination to the governorship of Iowa and tendered
his resignation.
The term of C. H. Bosworth as class C "director and chairman and
Federal Reserve Agent expired on December 31, and Mr. Bosworth
having declined reappointment, Mr. William A. Heath was elected
by the Federal Reserve Board as chairman and class C director for
the term expiring December 31,1918. At the same time Mr. Meredith
was reappointed as class C director for the term expiring December
31,1919.

DISTRICT NO. 8—ST. LOUIS.
WILLIAM MCC. MARTIN, Chairman of the Board and Federal Reserve Agent.

FINANCIAL RESULTS OF OPERATION.

During the year 1916, the earnings of the Federal Reserve Bank
of St. Louis amounted to $286,158.53. For the same period, the
expenses of the bank were $145,140.98, leaving net earnings of
$141,017.55. The organization expense, carried over from last year,
amounted to $97,169.29. This was all charged off during this year,
leaving a net gain from the opening of the bank to December 31, 1916,
of $43,848.26.
All organization expenses and operating expenses having been
cared for, the board of directors of the Federal Reserve Bank of
St. Louis declared a dividend of 6 per cent, payable December 30,
1916, for the period from the opening of the bank to March 31, 1915.
The first installment of capital stock of this bank was paid in on
November 2, 1914, and on such installments the dividend commenced
at that time.
After the payment of this dividend there remained on December 31,
1916, undivided profits amounting to $12,748.15.
The ratio of expenses to earnings, which for January was 174.4
per cent, steadily decreased throughout the year, until for December
this ratio was 37.35 per cent.
COMPARATIVE BALANCE SHEETS FOR DECEMBER 31,1915-16.

There is attached to this report, as Exhibit A, a comparative statement of the condition of this bank as of December 31, 1915, and
December 31, 1916.
This statement discloses an increase in earning assets of
$8,814,675.68, the increase being very large in all classes of investments, except bills rediscounted for member banks. The latter
show an increase of only $80,859.45. The principal source of income
during 1916 were open market purchases of bankers' acceptances.
Deposits, both gross and net, also show a very large increase. The
total reserve cash increased from $9,165,162, on December 31, 1915,
to $16,187,123 on December 31, 1916. However, due to a considerable increase in net deposits during the year 1916 and to the
fact that we had more money invested, the percentage of cash reserve
against all liabilities shows a reduction from 82.1 to 60.8 per cent.

339

340

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

PROFIT AND LOSS STATEMENTS FROM THE OPENING OF THE BANK
THROUGH 1915 AND FOR THE YEAR 1916.

During the year 1914, our earnings were entirely confined to bills
rediscounted for member banks, and for the month and a half we
were in operation that year the earnings amounted to $9,462.97.
For the year 1915 our earnings from bills rediscounted for member
banks were $44,835.51. During 1916, our earnings from this source
amounted to $46,041.34.
Attached hereto, as Exhibit B, is a profit and loss statement. This
shows a decided increase in all other forms of earnings.
Current expenses for the year 1915 were $130,735.74. Current
expenses for 1916 were $124,571.63, showing a slight decrease.
GENERAL BUSINESS AND BANKING CONDITIONS IN THE

DISTRICT.

The year 1915 closed with business houses, generally speaking,
busy. Country merchants were buying freely. There had been a
steady and normal improvement throughout the year, and the indications were that the year 1916 would be a period of unusual prosperity.
The beginning of the new year showed a continued and steady
improvement in business conditions in all lines, increasing from month
to month. Its close found business at an extremely high level.
During the year prices of commodities have steadily increased, but
at the close of the year have not reached a point which has curtailed
the demand. The year closes with a steady demand for both luxuries and necessities, for although prices have increased, many manufacturing and business concerns have increased the wages of their
employees or have given them Christmas bonuses.
The agricultural portions of the district are in especially good
condition. It is true that the major crops—cotton, corn, wheat, and
oats—showed a considerable reduction in comparison with last year,
but this was made up in the prices that the farmer received for them.
In some portions of the district farmers paid bonuses to the banks to
take up their loans before maturity, and at the same time increased
their deposits in the banks. The hay crop, on the whole, was the
largest ever raised, and this means that there is an abundance of
food for live stock.
The cotton crop in this district came through the year in better
condition than the cotton crops in other sections. It moved very
rapidly in this district and the banks in the cotton sections were
able to handle the situation with a minimum of outside help.
There was a car shortage throughout the year, and this had considerable effect on business in general. Because it was difficult to

DISTRICT NT>. 8

ST. LOUIS.

341

get prompt shipments, in the last months of the year there arose an
unusual demand for shipments in the near future.
A comparison of this year's combined averages of crop yields, by
States in this district, gives the following results, counting the 10-year
average at 100 per cent: Kentucky makes the best showing, with
102.5 per cent; Tennessee next, with 101 per cent; then comes Illinois, with 95.7 per cent; followed by Arkansas, with 92.4 per cent;
then Missouri, with 78.8 per cent; and Mississippi, with 67.4 per
cent.
The condition of the winter wheat in this district is estimated to
be 3.9 per cent below last year and 4.6 per cent below the 10-year
average. However, the weather is seasonable, and the snowfalls
should help the wheat considerably.
According to the report of the St. Louis National Stock Yards,
which fairly reflects the movement of stock in this district, on December 31, 1916, there had been an increase in the receipts of cattle
during 1916 over last year of 208,621 head. There was also an increase in the shipments of cattle over last year of 43,978 head. Receipts of hogs for 1916 showed an increase over the previous year of
465,646 head, and shipments of hogs showed an increase of 79,335
head. The receipts of sheep during 1916 had increased 22,697 head
over 1915, and the shipments had increased 14,388 head. Receipts
of horses and mules during 1916 showed a decrease, as compared
with the previous year, of 3,794 head, and the shipments showed a
decrease of 11,628 head.
Postal receipts and clearings throughout the district show a general
increase for the year. While there has been some increase in building,
this has not kept pace with the increase in other industries.
The year ends with all the banks in this district having deposits
at a high level. At the beginning of the year the average rate charged
by banks to customers, in the larger cities, was approximately 5 per
cent, with the rates in the smaller communities somewhat higher.
As the year ends, the rates charged by St. Louis banks are from 4 to
4J per cent, and the rates to customers in other portions of the district
range from 5 to 8 per cent.
ACTIVITIES OF THE FEDERAL RESERVE BANK DURING THE YEAR,
DISCOUNT OPERATIONS.

Total rediscounts accepted by this bank during the year 1916
amounted to $8,842,666,57. Of this amount $5,379,940,45 consisted
of notes or single-name paper; $626,226.12 of trade acceptances or
two-name paper; $1,534,000 of commodity paper; and $1,302,500 of
notes of member banks secured by eligible commercial paper as col

342

AXXUAL REPORT OF THE FEDERAL RESERVE BOARD.

lateral. From the opening of the bank on November 16, 1914, to
December 31, 1915, the total rediscounts accepted by the bank
amounted to $8,231,082.92. Thus there was an increase in the
amount of rediscounts accepted by the Federal Reserve Bank during
1916 over the first 13^ months of the operation of the bank of
$611, 583.65. Of the total amount rediscounted for member banks
$502,608.09 represents the amount of paper discounted for 18 banks
in Arkansas, $719,457.99 the amount discounted for 32 banks in Illinois, $404,000.6a for 10 banks in Indiana, $907,697.17 for 10 banks
in Kentucky, $485,674.73 for 7 banks in Mississippi, $2,234,594.09
for 26 banks in Missouri, and $3,588,633.90 for 11 banks in Tennessee.
During 1916 there were 3,133 notes rediscounted for member
banks. During the first 13J months of the bank's operations 3,828
notes were accepted, showing a decrease of 695 in the number of
notes handled.
Attached hereto as Exhibit C is a table showing the volume of rediscounts accepted from each State each month, the total amount
accepted from each State during the year 1916, and the number of
banks in each State rediscounting each month.
REDISCOUNT RATES.

No changes of any importance were made in the discount rates of
this bank during the year. On March 23, 1916, a rate of 3 per cent
was established on trade acceptances maturing within 60 days. On
September 16 a rate of 3 per cent was established on promissory notes
of member banks secured by collateral having maturity of not exceeding 15 days, and the same rate was made applicable to rediscounted paper maturing within 15 days. On November 20 the rate
on agricultural paper maturing from 91 days to six months was lowered from 5 to 41 per cent. On December 29 the rate on commercial
paper and promissory notes of member banks maturing within 15
days, and on commodity paper maturing within 90 days, was increased from 3 to 3 J per cent.
The following schedule shows the rates in effect at the first of the
year and the changes made during the year:

10 days.

3
3
3
3
3J

3
3
31

Com90 days. 6 months. modity
paper.
4
4
4
4
4

5
5
5

CO CO CO CO CO

Jan. 1, 1916
Mar. 23,1916
Sept. 16, 1916
Nov. 20, 1916
Dec. 29,1916

15 days.

Trade acceptances.
60 days.

f
3
3
3

90 days.

Collateral
notes.

3
3
31

DISTRICT NO. 8

ST. LOUIS.

343

Attached hereto as Exhibit D is a table showing the rediscount
operations of this bank classified by maturities, classes of paper,
and months in which rediscounted.
Of the total amount of paper rediscounted by this bank, 10.06 per
cent was of 10 days- or less maturity; 33.14 per cent of 11 to 30 days
maturity; 22.71 per cent of 31 to 60 days maturity; 29.10 per cent of
61 to 90 days maturity, and 4.97 per cent of 91 days to 6 months
maturity.
ACCEPTANCE BUSINESS.

This bank during the year 1916 purchased a total of $20,681,821.58
bankers^ acceptances, practically all of them through the Federal
Reserve Banks of New York and Boston. Only $242,500 of acceptances were purchased in this district.
Rates on these acceptances, net to the bank, have ranged from If
to 3J per cent. The average rate during 1916 was 2.34 per cent.
Domestic bankers acceptances amounting to $1,532,365.64 were
handled during 1916. Of all of the acceptances purchased during
the year $8,253,041.87 were bought from member banks and
$12,428,779.71 were purchased from nonmember banks.
UNITED STATES BOND OPERATIONS.

During the year all of the United States bonds purchased were
bought in the open market. Our total purchases amounted to
$2,419,000. We converted $1,786,100 United States 2 per cent
bonds into $895,100 of 3 per cent conversion bonds, without the
circulation privileges, and $891,000 of one-year Treasury notes.
The bank sold during 1916 $295,100 of the 3 per cent conversion
bonds. At the close of the year there were on hand, against which
circulating notes could be issued, $1,080,000 United States 3?s of
1918 and $522,900 United States 2's, consols of 1930. This bank
has not as yet issued any circulation against Government bonds.
MUNICIPAL WARRANTS.

We purchased during 1916 a total of $3,582,000 par value municipal
warrants at rates ranging from 2J- to 3f per cent. The average
rate on these warrants was 2.72 per cent.
The classification of these warrants by character of issuing bodies
is as follows:
Town warrants
City warrants
County warrants
State warrants

$183, 000
2, 999, 000
10, 000
390, 000

344

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

CHANGES IN THE RESERVE POSITION OF THE BANK DURING THE YEAR.

In January the bank commenced with a reserve against deposits
(after deducting 40 per cent reserve against Federal Reserve notes
outstanding) of 80.8 per cent. During January and Februray a
considerable number of national bank notes were paid in by member
banks chiefly in settlement of clearing-house balances in St. Louis
until we held $3,000,000 of them. This so reduced our reserve
that on February 18 the reserve against deposits was 43.8 per cent.
Steps were immediately taken to prevent member banks from depositing national bank notes, and a gradual reduction of the notes on
hand and conversion into reserve money raised the reserve to 68.8
per cent on April 21.
In May a reduction in Government deposits by a transfer of
$3,000,000 in gold reduced the reserve to 59.3 per cent and during
the months of June and July an increased investment of $2,000,000
further tended to decrease the reserve, the figures on July 28 being
52.8 per cent. During the remainder of the year the reserve gradually increased, and on December 30 the reserve carried was 60.8
per cent.
THE FEDERAL RESERVE BANK AND MEMBER BANKS.
CHANGES IN MEMBERSHIP DUE TO TRANSFERS FROM AND TO OTHER
DISTRICTS.

There has been no change in the boundary lines of this district
during the year, and therefore no change in membership due to transfers from and to other districts.
MOVEMENT OF MEMBERSHIP WITHIN THE DISTRICT.

On January 1, 1916, the Federal Reserve Bank of St. Louis had
467 member banks, and its authorized capital stock was $5,565,000,
of which $2,781,000 was paid in.
During the year nine new national banks became members of this .
bank, increasing its authorized capital stock in the sum of $24,100,
Four of these new national banks were conversions of State institutions into national banks. The other five were new institutions.
One hundred and twenty-one member banks applied for and were
allotted 464 additional shares of stock of this bank, further increasing its authorized capital in the sum of $46,400.
During 1916 six member banks, having a total of 141 shares of
stock of this bank, surrendered their membership through liquidation. One, having 150 shares, surrendered its holdings through
receivership proceedings, and three surrendered a portion of their
holdings, aggregating 69 shares, on account of reductions in their

DISTRICT NO. 8

ST. LOUIS.

345

capital or surplus. This decreased the capital stock of this bank
in the sum of $36,000. The six member banks which liquidated
were each converted into a State institution.
At the close of the year 1916 this bank had a total of 469 member
banks, and its authorized capital was $5,599,500, of which $2,799,750
was paid in. Over 1915 this shows a net increase of two in the number of member banks and a net increase in paid-in capital stock of
$18,750.
RELATION TO NATIONAL BANKS, STATE BANKS, AND TRUST COMPANIES.

During the first year of this bank's existence it was not unusual
to hear a member bank state that it had no paper that was eligible
for rediscount with the Federal Reserve Bank. Sometimes the
statement was made that a bank could not do business with the
Federal Reserve Bank because there was too much "red tape. 7
Now member banks have ceased making such statements. This is
because we have been able to show practically all of our banks that
the majority of the paper they have in their portfolios is eligible
for rediscount, and when they have rediscounted with us they have
found that in reality there is no "red tape' 1 at all, but that their
rediscounts are handled promptly and in a manner extremely satisfactory to them.
This bank has at all times done everything in its power to be of
real assistance to its member banks, and the officers have considered
it a privilege to explain the workings of the Federal Reserve system
and to have an opportunity to show how, through the Federal Reserve
Bank, the member banks can obtain a real benefit. It is believed
that if there is any lack of understanding between the Federal
Reserve Bank and any of its member banks it is because the member
bank has not given the Federal Reserve Bank the opportunity for
conference.
Circulars have been issued explaining fully the operations of the
bank, but at times it has been very discouraging to discover that the
circulars have not been read. There have been instances where officers of member banks have visited us and asked certain questions,
saying that it would be a great help if they could do certain things.
We have been able to answer their questions by handing them a
circular issued by this bank showing that, in some instances as long
as for two months, had the banker read the circular he might have
been receiving a benefit. It is our effort never to issue an unnecessary circular, and it would be a great gratification to this bank and,
we believe, a help to the member bank not only in accommodation,
but frequently in profits, if our circulars were not laid down until
read and thoroughly understood. If there is any question about it,
the officers of this bank will take great pleasure in answering inquiries.

346

ANNUAL EEPORT OF THE FEDERAL RESERVE BOARD.

ACCOMMODATION OF MEMBER BANKS THROUGH DISCOUNTS AND THE
PURCHASE OF ACCEPTANCES.

Below is given a table showing the number of different member
banks offering rediscounts from each State each month during 1916,
the total number of different banks offering rediscounts from the
whole district each month, the number and percentage of different
banks offering rediscounts from each State during the year, and the
number and percentage of different banks offering rediscounts in
the whole district during the year.

Arkansas..
Illinois....
Indiana...
Kentucky.
Mississippi.
Missouri...
Tennessee.
Total

41 22 30

25 19

67
157
61
67
17
80
20

26.8
20.4
16.4
14.9
41.2
32.5
55.0

469

24.5

In an earlier part of this report the amount of accommodation
rendered member banks through rediscounts has been given in detail.
The member banks in this district have practically made no acceptances based on imports or exports, and only toward the close of the
year have they begun to make domestic acceptances. These acceptances, so far, have amounted to $1,231,600 and have come in great
part from Memphis.
Money has been exceptionally easy throughout the year. The obligations for money borrowed by member banks have been smaller in
amount than usual, and this has been reflected in the extent of
accommodaitons requested from this bank. Last year 129 different
member banks rediscounted with us. This year, while the total
amount of rediscounts shows a slight increase, the number of banks
accommodated was only 114, showing a decrease of 15.
We have continued the policy of requiring financial statements
either made by the borrowers or by the borrowing bank in every
instance where paper has been accepted by us. This policy is resulting in the defining of credit terms and the standardizing of credit in
this district.
The following table shows the total borrowings of member banks
in this district on the dates of the different calls of the Comptroller

DISTRICT STO. 8

ST. LOUIS.

347

of the Currency during 1916, the amount rediscounted with the Federal Reserve Bank of St. Louis, and the percentage of such rediscounts of their total borrowings:
Rediscounted
Total "bor- with
Fed- Peroentrowings. eral Reserve
Bank.

Bate of call.

Mar. 7,1916
May 1,1916
June 30,1916
Sept. 12,1916
Nov. 17, 1916

i
I
!
j

•.

PETITION

OF LOUISVILLE

FOR

$2,205,000
1,932,000
1,809,000
3,719,000
3,642,000

A BRANCH

$675,000
534,000
584,000
1,076,000
1,954,000

30.6
27.6
32. g
28.9
53.6

BANK.

On July 5, 1916, the board of directors of the Federal Reserve
Bank of St. Louis received a petition from member banks located in
Louisville asking for the establishment of a branch of this bank in
that city and requesting a hearing. This hearing was set for September 20, and on that day a committee of 10 gentlemen, of which Mr.
Embry L. Swearingen, president of the First National Bank of
Louisville, was chairman, came before the board of this bank. On
their behalf, Messrs. John W. Barr, jr., F. M. Gettys, and Percy H.
Johnston presented the arguments for a branch. Later, on December 21, another hearing was held in regard to this matter before the
Federal Reserve Board at Washington. At this writing the petition
is still under consideration.
MEMPHIS AGENCY.

At the request of member banks in Memphis, and in order to assist
them every way in our power during the cotton season, on September
25 this bank sent Mr. T. C. Tupper, manager of the credit department, to open an agency in that city. He rented an office and the
necessary safe deposit space.
Notes, trade acceptances, and bank acceptances, secured by warehouse receipts issued by the Memphis Terminal Corporation, were
rediscounted for member banks and the collateral held in the
custody of our agent. In this way substitutions of one receipt for
another were permitted without delay and inconvenience. The
bank's representative had complete charge of the collateral, but
could only have access to the safe deposit boxes containing it, in the
presence of a representative of a bonding company. On October 11,
Mr. W. H. Glasgow, assistant to the Federal Reserve Agent, relieved
Mr. Tupper, and will remain in charge of the office until it is closed.
Member banks in Memphis used the facilities offered freely, and
up to December 30, 1916, this bank had accepted paper secured by
75284°—17
23

348

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

warehouse receipts for cotton in the custody of the Memphis agency
to the amount of $1,640,500.
It is proposed to maintain the Memphis office to the close of the
cotton season, and unless something occurs the season will end earlier
than usual. It now seems that the office may be closed by February
1, 1917. It is felt that the maintenance of this office has been of
material assistance to Memphis member banks, supplying them with
the necessary funds to move the crop in the territory tributary to
that city.
MEMBER BANKS* DEPOSITS IN EXCESS OF RESERVE REQUIREMENTS AND
OVERDRAFTS.

The following figures, taken from the copies of reports of condition
received from member banks, rendered under calls of the comptroller, and from the books of this bank, give a comparison of the
member banks' deposits with us with their reserve requirements:
Minimum
reserve
required.

Mar. 7,1916..
May 1,1916..
June 30, 1916.
Sept. 12,1916

$13,520,000
14,269,000
16,391,000
17,512,000

Balance
shown by
Federal Reserve Bank
books.
$15,405,000
14,392,000
18,270,000
18,936,000

$1,885,000
123,000
1,879,009
1,424,000

On March 7 a comparison of our member banks' reserve balances
on our books with their minimum reserve requirements as calculated
from copies of their reports of condition indicated that 243 members
were deficient in their reserves, and that 227 members were maintaining balances equal to or in excess of their reserve requirements.
The total amount of deficiencies was $800,000, and the total excesses
$2,685,000. Most of the deficiencies were from small banks, and the
majority of the excesses were from banks in reserve cities, particularly St. Louis.
On May 1 the total number of member banks deficient in their
reserves was 281, and the total number maintaining balances equal
to or in excess of their reserve requirement was 189. The total
amount of deficiencies was $943,000 and the total amount of excesses
was $1,066,000.
No figures in this connection are available for June 30 and September 12.
From November 1 to 12, inclusive, 121 member banks showed
deficient reserves and were penalized on the deficiency, the total
amount of penalties being $1,259.86.
The following is a record of overdrafts of member banks:

349

DISTRICT 1^0. 8—ST. LOUIS.
Number.
7, 1916
M a y 1, 1916

21
15

Amount.
$38,670.00
56,953.00

Number. Amount.
June 30, 1916
Sept. 12, 1916

0
0

While a great many overdrafts existed prior to June 30, there is
now only an occasional overdraft.
PENALTIES FOR RESERVE DEFICIENCIES.

On October 26 the bank sent out a circular advising that it would
assess penalties, beginning November 1, 1916, for impairment of
reserves. Banks were advised that this penalty would be a sum
equivalent to an interest charge on the amount of the deficiency of 2
per cent per annum above the 90-day discount rate of this bank for
commercial paper. Since that date to the close of 1916 the bank
assessed penalties amounting to a total of $2,036.01 for impairment
of reserves.
PERIODIC REPORTS REGARDING CONDITION OF MEMBER BANKS; EXAMINATIONS OF MEMBER BANKS.

Copies of reports of condition made to the Comptroller of the Currency are sent to the Federal Reserve Agent and are analyzed by his
department.
It has been necessary for this bank to make but one examination
during the year. This was an examination of a State institution
which is a member, and was made because the State banking department could make but one examination. In order to comply with the
provisions of the Federal Reserve Act, requiring at least two examinations of each member bank each year, the Federal Reserve Board
instructed that an additional examination be made.
BANK FAILURES WITHIN THE DISTRICT.

There has been but one failure of a member bank in district No. 8
during the year. We were fully informed as to the condition of the
bank for several months prior to its failure, and the closing of its
doors gave us no uneasiness.
GRANTS OF FIDUCIARY POWERS.

Up to the close of 1916 the applications of 22 national banks in
this district for permission to act as trustee, executor, etc., under section 11 (k) of the Federal Reserve Act, had been granted by the Federal Reserve Board. Sixteen of these permits were granted in 1915
and six in 1916. More applications for fiduciary powers have come
from those portions of our district located in Indiana and Kentucky
than from any of the other States in this district.

350

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Attached hereto as Exhibit E is a list of the national banks in this
district which have been granted fiduciary powers up to December
31, 1916.
OVERDUE PAPER.

This bank has no overdue paper on hand.
BILL OF LADING DRAFTS.

On January 29, 1916, this bank issued a circular, advising that it
would handle bill of lading drafts. The following is a record of the
drafts we have handled, both as to number and amounts and the
returns thereon:
Number
of drafts.

1916.
February
March
September
October
November
December

Total
amount of
items handled.

1
SI, 830.00
A
6,193.8S
30
193,327.19
317 1,780,012.28
236 1,895,138.79
65
384,708.81

Total
interest
charged.

$2.03
3.60
147.59
1,271.70
1,162. 71
267.33

All drafts have been forwarded to a bank in the town where
payable for collection and remittance to the Federal Reserve Bank
of the district in which the collecting bank is located. We have
never had a draft returned unpaid. Our most extensive operations
in this connection have never required more than a few hours time
each day of one of our best clerks. The bills of lading attached to
the drafts have covered shipments of flour, rice, wool, hides, cotton
seed and cotton, the larger part of them being represented by cotton.
OPEN MARKET OPERATIONS OF THE FEDERAL RESERVE BANK.

This bank has purchased United States bonds in the open market,
municipal warrants, and a large number of bankers' acceptances.
As stated previously in this report, practically all of these acceptances
have been purchased through the Federal Reserve Banks of New
York and Boston, and it was not until the latter part of this year that
we purchased any acceptances from banks within the district.
Detailed information in regard to these acceptances is given in an
earlier part of this report.
EFFECT OF THE DISCOUNT RATE POLICY OF THE BANK UPON GENERAL
MARKET RATES.

Money has been plentiful in practically all of the banks throughout
the year, and it has been somewhat a problem with them to keep it
invested. Rates have been low, but due to the abundance of funds^

DISTRICT NO. 8—ST. LOUIS.

351

it can not be said that the discount rates of the Federal Reserve Bank
have had any especial effect upon the general market rates, except to
stabilize them.
ATTITUDE OF THE PUBLIC TOWARD THE FEDERAL RESERVE SYSTEM.

While the Federal Reserve system has not been solely responsible
for the great and continued prosperity during the past year, at the
same time there seems no question but that business would not have
been conducted so freely and with such confidence, had not the Federal Reserve system been in existence to make the general public
feel that conditions were sound and there existed an adequate
financial machinery to control credit and facilitate exchange. Quite
frequently during the year, large wholesalers have made the statement that they did not believe the country merchants would be
buying as they were if the Federal Reserve system were not in
existence.
As yet, however, the general public does not understand the Federal
Reserve system as it should. It would seem that the newspapers
throughout the district could not carry an item of more news interest
than the rediscount rates of the Federal Reserve Bank of the district.
An effort has been made to get these rates to all newspapers in this
district at least once a week, but they do not seem to be giving the
space to them that their value warrants, especially the country
papers and farm papers.
In this district, manufacturers and distributors have made little
effort to introduce the trade acceptance, though this bank has a rate
on such paper having maturity not exceeding 90 days, one-half
per cent lower than its 30-day discount rate on notes, and the use
of them would relieve sellers from carrying the entire credit burden
as imposed by the open book account method.
The general public has confidence in the Federal Reserve system,
and is beginning to realize that every bank which is a member has
a strength and solidity that no bank outside the system presents.
THE FEDERAL RESERVE BANK AND THE GOVERNMENT,
GOVERNMENT DEPOSITS.

The Government deposits in this bank during 1916 averaged
approximately $3,000,000 per day, the maximum balance being
reached on July 15, when a total of $5,935,837.01 was shown. Owing
to transfers at different periods, to other Federal Reserve Banks
through the gold settlement fund these deposits have had a great
influence on the gold reserve position of this bank, a total withdrawal during May of $3,000,000, reducing the reserve about 10 per
cent.

352

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
RELATION TO THE UNITED STATES TREASURY.

In addition to the transactions incident to the deposit account
kept with this bank by the Treasurer of the United States, we take
care of transactions with the Treasury Department for member
banks, including transfers of funds and deposits for the 5 per cent
funds of member banks. Contrary to the opinion expressed by several
authorities, the deposits for the redemption of national bank notes
of member banks have not worked any hardship on us. In fact,
such transactions have been scarcely noticeable in the current volume
of the daily business.
RELATION TO THE COMPTROLLER'S OFFICE.

The Comptroller's Office and this bank have cooperated with each
other in every possible way throughout the year. Copies of all reports
of examinations of member banks, made under the supervision of
the chief examiner of this district, have been promptly filed with the
Federal Reserve Agent. The chief examiner and his assistants have
given us all the help in their power.
THE FEDERAL RESERVE BANK AND NOTE ISSUES.
GENERAL POLICY IN THE MATTER OF NOTE ISSUES.

During the year, this bank laid down as a general policy that,
notwithstanding the cost to it of Federal Reserve notes, it would
issue them freely whenever there was a possibility of conserving gold
or reserve money by their use. I t is felt that this bank should
consider itself a money reservoir for this district, and so far as in its
power it should render a service to member banks by giving them,
without question, any kinds of money in any denominations needed
the moment the need is expressed. The banks seldom need gold,
but they do need notes of different denominations. Where the
demand has been for fives, tens, or twenties:—denominations in which
Federal Reserve notes are printed—we have issued them freely.
Except for one-dollar and two-dollar bills which were scarce in this
district during the crop moving season we were able to supply our
member banks with money in any denomination required.
SUBSTITUTION OF FEDERAL RESERVE NOTES FOR GOLD AS CIRCULATING
MEDIUM.

Our general policy in regard to note issues, as above outlined, is
resulting more and more in Federal Reserve notes becoming the
circulating medium and gold being conserved in this bank. However,
the substitution of Federal Reserve notes for gold has not progressed
as rapidly or gone as far in this district as we would like. It is still

DISTRICT NO. 8

ST. LOUIS.

353

not uncommon to find gold certificates paid out over the counter
for pocket money by both member and nonmember banks when
Federal Reserve notes would serve just as well. While member
banks are believed to be making an effort to deposit their gold in
this bank, nonmember banks seem to have quite a number of gold
certificates which they are paying out freely.
COVER OF NOTES ISSUED.

At the close of the year 1916 the total amount of Federal Reserve
notes of this bank outstanding was $16,889,730. Of this amount,
$12,542,730 were covered by gold deposited with the Federal Reserve
Agent and $4,347,000 by rediscounts hypothecated with him. In
other words, the bank has eliminated its liability on all its outstanding
Federal Reserve notes by depositing gold with the Federal Reserve
Agent, except to the extent of $4,347,000, which is its present net
note liability. Against this net liability of $4,347,000 the bank has
set aside a 40 per cent gold reserve.
DENOMINATIONS OF NOTES ISSUED.

Attached hereto as Exhibit F is a table showing amounts of each
denomination of Federal Reserve notes issued to the Federal Reserve
Bank of St. Louis, and dates of issue, for the period 1914-15 and the
year 1916.
An examination of this table indicates that the demand has been
mostly for fives, tens, and twenties, there being practically no demand
for notes of the $50 and $100 denominations.
In both 1915 and in 1916 the demand was heaviest in the months
of September, October, and November, due to the moving of crops.
AVERAGE LIFE OF NOTES ISSUED.

It is rather difficult to ascertain with exactness the average life
of the Federal Reserve notes issued by this bank. The life of a
note depends upon the use to which it is put, and this constantly
varies. On the theory that the notes of smaller denominations
change hands more frequently and are therefore subject to greater
wear, they should not last as long as notes of larger denominations
which change hands less frequently. This is borne out by the fact
that of the $2,610,270 notes of this bank which have been sent to
the Comptroller of the Currency for destruction, $1,632,205 were of
the $5 denomination, $751,015 of the $10 denomination, $214,300 of
the $20 denomination, and $12,750 of the $50 denomination, though
the total amount of the $5, $10, and $20 denominations outstanding
were each substantially the same. Thus, in this district, the higher
the denomination the longer the life of the note.

354

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

At the close of 1915 there were outstanding $4,197,000 in $5 Federal Reserve notes, $2,870,940 in $10 notes, $1,928,560 in $20 notes,
and $200,000 in $50 notes, most of which were issued in September,
October, and November, 1915. As above stated, at the end of 1916
only $1,632,205 of $5 notes, $751,015 of $10 notes, $214,300 of $20
notes, and $12,750 of $50 notes had been redeemed and canceled.
INTERDISTRICT MOVEMENT OF NOTES.

Attached hereto as Exhibit G is a statement showing the amounts
of Federal Reserve notes of this bank received from other Federal
Reserve Banks for redemption or credit, and the notes of other
Federal Reserve Banks returned by this bank to them for redemption
or credit, from January 1, 1916, to December 30, 1916.
During the year 1916 the Federal Reserve Bank of St. Louis
received from other Federal Reserve Banks $1,378,790 of its Federal
Reserve notes, and returned to other Federal Reserve Banks
$3,282,705 of their Federal Reserve notes, showing that we returned
$1,903,915 more notes of other banks than we received of our own.
Chicago and New York sent us for redemption more of our notes
than any other districts, and we returned for redemption more notes
to the Kansas City and Dallas Federal Reserve Banks than to the
Reserve Banks of any other districts.
REDEMPTION AND DESTRUCTION OF NOTES.

On January 25, 1916, the Federal Reserve Board, at the request
of the Secretary of the Treasury and in accordance with the provisions of section 16 of the Federal Reserve Act, requested the
Federal Reserve Agent at St. Louis to transmit to the Treasurer of
the United States in Washington an amount in gold equal to 5 per
cent of all outstanding Federal Reserve notes of the Federal Reserve
Bank of St. Louis which were covered by a deposit with him of gold
or lawful money. The purpose of this fund was to enable the United
States Treasurer to redeem the notes presented to him by holders
other than the bank itself. When notes are sent by the Federal
Reserve Bank to the United States Treasurer for redemption, the
Agent, under instructions from the United States Treasurer, makes
settlement direct with the bank, usually by requesting the Federal
Reserve Board to transfer from his account with the Board to the
account of the bank in the Gold Settlement Fund an amount in gold
equivalent to the value of the notes received by the Treasurer for
redemption.
In accordance with the above instructions, on January 31, 1916,
the Federal Reserve Agent at St. Louis deposited with the Treasurer
of the United States, in Washington, $440,000 in gold, being approxi

DISTRICT NO. 8—ST. LOUIS.

355

mately 5 per cent of the notes of this bank outstanding at that time
covered by a.deposit with him of gold or lawful money, and additional deposits have been made from time to time, as notes were
redeemed, in order to keep the amount up to the required 5 per cent.
Up to the close of 1916 the following notes of the Federal Reserve
Bank of St. Louis, unfit for use, had been redeemed and destroyed:
Fives
Tens
Twenties
Fifties

$1, 632, 205
751,015
214, 300
12,750

Total

2, 610,270

Only unfit notes are redeemed out of the Agent's redemption fund,
and when this is done they are turned over to the Comptroller of
the Currency for destruction.
The Federal Reserve Bank of St. Louis has also maintained a
redemption fund with the United States Treasurer, out of which
the Treasurer redeems all fit notes presented to him and returns
them direct to the bank for further circulation.
Of the $2,610,270 unfit Federal Reserve notes redeemed by the
Treasurer of the United States, $1,480,000. were shipped to him by
the Federal Reserve Bank of St. Louis and $1,130,270 by other
parties.
COST OF FEDERAL RESERVE NOTES.

The total cost of Federal Reserve notes issued during 1916, on a
basis of 1 cent per note, was $10,400. This does not include the cost
of shipping Federal Reserve notes to Washington by this bank or
other parties, for redemption, and the return of fit notes to the bank.
In the past year it has cost us approximately $100 a month for the
return of our Federal Reserve notes to the United States Treasurer for
redemption, figured on the basis of $0.1952 per $1,000 for unfit notes
shipped by this bank and $0.4188 per $1,000 for notes returned by
other parties.
FEDERAL RESERVE BANK NOTES.

During the year, this bank has not found it necessary to issue any
of its circulating notes secured by United States Government bonds.
FEDERAL RESERVE AGENTS AND NOTE ISSUES.

Attached hereto as Exhibit H is a statement showing the Federal
Reserve notes received by the Federal Reserve Agent from the
Comptroller of the Currency, giving the dates received, amounts, and
denominations. This statement covers both the period 1914-1915
and the year 1916.
During the last year, six shipments of Federal Reserve notes,
aggregating $12,940,000, were received by the Federal Reserve Agent

356

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

from the Comptroller of the Currency, all of them during September,
October, and November, when there was a heavy demand for notes
in this district.
There is also attached as Exhibit I a summarized statement of the
receipt and disposition of all Federal Reserve notes by the Federal
Reserve Agent, from the opening of the bank to the end of 1916, as
well as of all funds and securities under his control.
INTERNAL MANAGEMENT OF THE BANK.
FUNCTIONS AND WORK OF DIRECTORS, EXECUTIVE COMMITTEE, OFFICIAL AND CLERICAL STAFF, MEMBER OF ADVISORY COUNCIL.

At the election of directors held in this district during the latter
part of 1915, Mr. Frank O. Watts, president of the Third National
Bank of St. Louis, was elected by the banks in group 2 to succeed
himself as a class A director, and Mr. David C. Biggs, vice president of
the International Shoe Company of St. Louis, was elected by the
banks in group 1 as a class B director, to succeed Mr. Murray
Carleton, each to serve for three years from January 1, 1916.
Our board of directors has met regularly on the first and third
Wednesdays in each month. In all, 25 meetings of the board were
held during 1916, at all of which there was a quorum present, with
the exception of 3 meetings.
Under the by-laws, the executive committee consists of five, and
during the year 1916 was composed of the governor, chairman of the
board, and Messrs. Walker Hill, Frank O. Watts, and David C. Biggs.
This committee meets twice a week. During the early part of the
year it met on Mondays and Thursdays at 10.30 a. m. In September
it began meeting on Mondays at 2 p. m. and on Fridays at 10.30 a. m.,
and continued this arrangement throughout the year.
Before the offerings are presented to the executive committee they
are submitted by the credit department at a meeting of all of the
officers of the bank, who pass, upon them before they are reported to
the executive committee.
Mr. Frank O. Watts has represented this bank the past year as a
member of the Federal Advisory Council.
CHANGES IN PERSONNEL, AND IN THE ORGANIZATION OF THE DEPARTMENTS, INCLUDING THE FEDERAL RESERVE AGENT'S OFFICE.

During the year there was no resignation from our board of directors, nor was there any change in the official force. Due to increased business, the bank found it necessary to add 15 men to the
clerical force, and it now has a total of 53 on its pay roll. The bank
believes that it has a highly efficient force and is able, without confusion, to take care of any situation that may arise in this district.

DISTRICT NO. 8—ST. LOUIS.

357

There has been no change in the personnel of the Federal Reserve
Agent's Department. The Deputy Federal Reserve Agent, Mr. T. C.
Tupper, was also in charge of the credit department of the bank,
which included also Mr. W. H. Glasgow, assistant to the Federal
Reserve Agent.
The Federal Reserve Agent has compiled each month statistics in
regard to business conditions in this district. The chief sources of
these statistics are letters of inquiry sent to business houses throughout the district and letters to farmers located in different portions
of the district. Every effort is made to have these statistics as reliable as possible, and it is hoped that these reports, published in the
Bulletin of the Federal Reserve Board, give a dependable and accurate
index of conditions during each month.
OFFICE AND VAULT FACILITIES; BANK PREMISES.

During the last week in December, 1915, the Federal Reserve
Bank moved into its permanent rented quarters in the Federal
Reserve Bank Building, located on the northeast corner of Broadway and Pine Street.
All of our departments are located on the second floor of this
building in such a way that, on entering the door, one can see all of
the officers and employees.
It is a light, commodious banking room, accessible to the street
without the use of elevators, and we desire that everyone interested
in the bank will visit these quarters whenever they find it possible.
An effort is made to have all member banks feel that they not only
have a bank, but also a home in our office.
Our vaults are located in the basement of our building, are among
the best in the United States, and are ample for our needs.
EXAMINATIONS BY FEDERAL RESERVE EXAMINER.

During the year the Federal Reserve Board has made two examinations of this bank, one as at the close of business May 2 and the
other as at the close of business November 27. It also examined
the Federal Reserve Agent's department on these dates and also on
March 11. These examinations were not hurried or superficial in
regard to anything. They were thorough and, for that reason, extremely satisfactory to the officers and directors of this bank.
THE CLEARING PROBLEM,
CLEARING TO JULY 15, 1916.

Prior to July 15 our clearing operations were confined to the
handling of checks on approximately 370 of our member banks.
These banks had voluntarily agreed to our charging to their account,

358

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

on the day received by us, all checks drawn on them. This plan
went into effect in May, 1915, and was operated until the early part
of July, 1916. The number of the member banks availing themselves of our clearing privileges remained about the same throughout
the entire period.
CLEARING AFTER JULY 15, 1916.

Since July 15, 1916, at which time the clearing plan proposed by
the Federal Reserve Board went into effect, we have been clearing
items on all of our member banks and on such nonmember banks as
we could collect at par either through member banks, direct, or
through nonmember banks. We are now clearing items on all
member banks and 877 nonmember banks in this district. The
number of nonmember banks availing themselves of our clearing
privileges is constantly increasing.
Attached hereto as Exhibit J is a table showing the operations of
our present clearing system.
SERVICE RENDERED TO THE BANKS BY THE GOLD SETTLEMENT FUND.

Through the medium of the gold settlement fund we have been
able to extend to our member banks facilities whereby they can convert funds in other Federal Reserve cities into available exchange
with us as quickly or quicker than the}^ could formerly. The operation of the gold settlement fund has also stabilized exchange on other
Federal Reserve cities and done away with the fictitious exchange
market that previously existed and which fluctuated to such an
extent as to make it very difficult for banks to be able at times to
dispose of or obtain the necessary exchange.
CLEARING-HOUSE CHARGES.

Since the establishment of the Federal Reserve Bank, the St.
Louis Clearing House has changed its rules so that the general public
is receiving some benefit from the reduction in exchange charges
brought about by the Federal Reserve system. In some instances,
where heretofore depositors have been charged as high as $2 per
$1,000, they are now charged only 25 cents per $1,000. In St.
Louis it is the practice to charge customers a different rate for checks
cleared through the Federal Reserve Bank and checks on nonmember
banks which decline to remit at par.
The Louisville Clearing House has also amended its rules, but not
to the same extent as the St. Louis Clearing House.
Memphis has made no change in its clearing-house rules. They
are exactly the same as they were prior to the inauguration of the
Federal Reserve collection system, except that the national banks

DISTRICT NO. 8

ST. LOUIS.

359

have obtained permission from the clearing house to remit at par
for checks on themselves received from their Federal Reserve Bank.
There has been no change in the rules of the Little Rock Clearing
House since the establishment of the Federal Reserve Bank. It
does not require its member banks to charge exchange on out-oftown items received from local customers. It, however, does require
that banks charge for remitting on checks drawn on themselves,
except, like Memphis, the national banks have obtained permission
from the clearing house to remit at par for checks on themselves
received from their Federal Reserve Bank.
The Texarkana Clearing House has done away with all rules relative to exchange charges, leaving it discretionary with each bank.
It is hoped that during the coming year clearing houses throughout
the district will more generally amend their rules, so that the general
public will get the benefit of a greater reduction in exchange charges.
VISITS BY MEMBERS OF THE FEDERAL RESERVE BOARD.

We have had the privilege of visits from a number of the members
of the Federal Reserve Board throughout the year. On March 15,
Gov. W. P. G. Harding and Mr. F. A. Delano made a 24-hour
visit. On May 24, Mr. A. C. Miller, having come to St. Louis to address the Missouri Bankers' Association, met with us. Mr. Paul M,
Warburg, on his way to address the annual convention of the American Bankers' Association, visited us on September 23, and on September 30 he and Gov. Harding, returning from that convention,
made us another brief visit. Mr. Delano was with us again on October 9.
It is always a pleasure and greatly appreciated by our officers and
directors when members of the Federal Reserve Board come in personal contact with them and can discuss local conditions on the ground.
SUMMARY OF CONDITIONS IN DISTRICT.

The year 1916 has been an extremely prosperous one for District
No. 8. Activity in all lines of business has increased to record levels,
except the building industry, which, while it has increased, has not
kept pace with other lines.
The Federal Reserve Bank of St. Louis has had its part in giving
confidence to business to expand. The bank itself, which closed the
year 1915 with a deficit of $97,169.29, has made up this deficit and
in addition has earned sufficient to enable it to pay a 6 per cent
dividend from the opening of the bank to March 31, 1915, and leave
a surplus of $12,748.15 on hand.
This bank has made considerable progress in the establishment of
its clearing system, and it is believed that at least 80 per cent of our

360

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

member banks find it satisfactory. We also feel sure that our member banks are beginning to understand how easily they can rediscount with us and that this bank is making every effort to be of real
assistance to them. The general public unquestionably has the
greatest confidence in the Federal Reserve system.
During the year the Federal Reserve Bank of St. Louis has shown
a steady and satisfactory development. The real results are not
shown in the dividends it has paid, but in the sound basis for business
it has created.
EXHIBIT A.— Comparative statement of condition, 1915-16.
Dec. 31,1915. Dec. 31,1916.
RESOURCES.

Bills discounted—members
Bills bought in open market
Investments—municipal warrants
United States bonds
United States gold notes

$1,219,852.09 $1,300,711.54
661,230.23 7,036,819.35
341,552.60
575,879.71
970,000.00 2,202,900.00
None.
891,000.00

Total earning assets
Premium on United States bonds
Interest accrued on United States bonds
Furniture and equipment
Cost of unissued Federal Reserve notes
Expenses paid in advance
Expense—organization
Total
Due from Federal Reserve Banks
Deferred debits—transit account
Due from member banks—overdrafts
Due from banks and bankers
Exchange for clearing house

3,192,634.92

12,007,310.60

None,
4,850.00
20,346.13
22,363.46
1,763.79
97,169.29

17,303.15
19,161.17
28,688.75
19,763.00
849.30
None.

146,492.67

85,765.37

4,890,210. 45 20,389,339.94
None. 3,065,478.15
46,126.91
15,595.22
None.
71,067.46
9.75
15,221.21

Total deductions from gross deposits

4,936,347.11 23,556,701.98

Gold coin and gold certificates
Gold settlement fund
Gold redemption fund, United States Treasurer
Other lawful money

2,971,600.00 11,088,000.00
6,072,000.00 3,395,000.00
25,050. 00
254,850.00
96,612.00 1,449,273.00

Total reserve cash

9,165,162.00

National-bank notes and Federal Reserve notes, other banks
Federal Reserve notes on hand
;
Nickels and cents

16,187,123.00

651,855.00
817,460.00
25.62

Total other cash

1,469,340.62

1,238,201.08

Total resources

18,909,977.32

53,075,102.03

LIABILITIES.

Capital
Undivided profits
Unearned discount and interest
Discount on United States bonds bought
Government deposits
Due to Federal Reserve Banks
Due to member banks"
Cashiers' checks

781,000.00 2,799,750.00
None.
12,941.49
8,909. 70
26,791. 25
17,565.64
None.
671,363.51 2,614,398. 56
069,873. 74 12,332,388.18
076,849. 50 30,924,797.50
283,668. 56
15,430.91

Gross deposits

16,101,755.31 45,887,015.15
—
None.
4,347,000.00
746.67
1,604.14

Federal Reserve notes—bank liability
Reserved for sundry expenses
Total liabilities

Reserve carried against all liabilities
per cent..
With Federal Reserve Agents to retire outstanding Federal Reserve notes..

18,909,977.32

53,075,102.03
60.8
12,542.730.00

DISTRICT NO. 8

361

ST. LOUIS.

EXHIBIT B.—Comparative profit and loss statement, Nov. 16,1914, to Dec. 81, 1916.
Nov. 16, 1914,
Jan. 1 to
to
Dec. 31, 1915. Dec. 31,1916.
Earnings from:
Bills discounted—members
Bills purchased—acceptances
United States bonds
Municipal warrants
Exchange
Interest on bill-of-lading drafts
Appreciation on United States bonds..
Depleted reserve penalties
Profit on United States securities sold.
Sundry profits

$54,298. 48
6,387.06
7,488.21
16,324.65
3,071.29
None.
None.
None.
None.
33.55

$46,041.34
81,598.79
70,362.41
31,618.94
30,000.00
2,782.73
17,873.14
2,036.01
3,776.50
68.67

Total.
Expenses:
Current expenses
Organization expenses prior to Nov. 16,1914..
Federal Reserve Board assessments
Cost of Federal Reserve currency issued
Commissions paid
.
Transit department disbursements (net)

87,603. 24

286,158. 53

150,601.73
5,854.30
15,425.65
12,120.00
770. 85
None.

124,571.63

184,772.53

145,140.98

Total.
1914-15 loss on operation transferred to organization expense..
1916 profit on operation
1914-15 organization expense amortization

9,749.62
10,720.00
None.
99.73

97,169.29

141,017.55
97,169.29
43,848. 26
31,100.11

1916 surplus available for dividends
Dividend paid Dec. 30, 1916
Undivided profits, Dec. 31, 1916

12,748.15

EXHIBIT 0.—Table showing volume of rediscounts accepted by the Federal Reserve Bank
of St. Louis from each State each month, the total amount accepted from each State during
the year 1916, and the number of different banks in each State rediscounting each month.
Illinois.

Indiana.

Banks. Amount.

Arkansas.
Banks.

Amount.

$86,418.23
33,699.94
57,870.34
26,767.60

January
February..
March
April
• May
June
July
August
September.
October
November.
December..

$26,286.41
18,817.85
23,806.40
37,836.43
29,273.10
76,897.97
32,639.28
67,994.39
168,384.06
5,820.20
14,852.00

45,618.79
91,315.35
69,923.50
56,275.94
38,385.83
79,957.70
43,621.88

Total.

502,608.09

719,457.99

Mississippi.

Missouri.

Kentucky.
Banks.

Amount.

$96,500.00
25,928. 85
5,992.00
16,840.00
6,409.00
5,052.50
37,628.00
5,057.00
840.00
134,179.21
69,574.04

113,300.00
38,660.19
17,020.00
40,218.02
27,030.00
1,000.00
35,408.57
23,368. 64
231,129. 75
9,804.50
440,007.50
30,750.00

404,000.60

907,697.17

Tennessee.
Total.

Banks.

Amount.

January
February
March
April
May
June
July
August
September..
October....
November..
December..

$19,782.33

Total.

485,674.73

56,463.83
11,489.88
32,817.47
30,558.40
27,939.56
26,600. 68
157,503.57
81,176.32
29,192. 69
12,150.00

Banks.

Amount.
$157, 609.29
75;586. 58
59,000.98
84,868. 77
428,933.06
100,065.47
171,526.93
310,686.93
192, 865.92
46,242.00
42,239.80
564 968.36
2,234,594.09

Banks.

Amount.
$183,847.46
8,835. 39
13,981.94
22,577.21
7,402.43
64,026.31
151,774.72
278,274. 64
916,683.41
1,001,500.00
351,837. 28
587,893.11

$583,743.72
201,528.80
234,135.49
240,597.91
621,467.95
323,219.44
548,232. 41
781,905.78
1,723,682.65
1,317,108.06
1,012,809.01
1,254,235. 35

3,588,633.90

8,842,666.57

362

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

EXHIBTT D.— Table showing the rediscount operations oj the Federal Reserve Bank of
St. Louis, classified by maturities, classes of paper, and months in which rediscount ed.
1
10 days
! and less.
Notes:
January
February
March
April
May
June
July
August
September
October
November
December

days to
11 to 30 days. 31 to 60 days. 61 to 90 days. 91
6 months.

107,316.61
37,895.51
11,403.21
421.44
56,812. 00
5$0. 58

$90,678. 74
14, 755. 39
7,797. 06
33,065.89
238, 704.69
48,861.02
57,023.98
387,752.25
285,415.64
53,977.72
149,000.00
77,329. 72

$162,926.44
82,395.46
57,350.21
48,749. 86
90,499.41
55,952.70
108,769.41
90,546. 86
324,415. 78
51,797.03
132,534.50
167,283. 69

348,202.95

1,444,362.10

1,373,221.35

1,774,451.33

2,620. 68

13,830.95
1,751.23
16,774. 75
41,763.61
24,538.98
15,145.10
12,149.15
43,453.96
10,860.20

14,532.33

4,840.71
51,155.88

1,593.75
1,720.50
10,241.01
1,868.12
2,741.07
23,069.14
1,845.30
5,843.07
100,682. 56
5,618. 78
32,481.03
531.12

236,264. 52

188,235.45

169,522.38

626,226.12

13,000. 00
222,500.00
66,000.00
156,000. 00

123.000.00
301,000.00
23,000.00

110,500.00
449,000.00
40,000. 00
30,000. 00

246,500.00
972,500. 00
129,000.00
186,000.00

457,500. 00

447,000.00

629,500.00

1,534,000.00

$40,000.00

93,803.60
....

Total
Trade acceptances:
January
TVbrnarv
March
April
May
June
July
August
September
October
November
December
Total

279.91
3,253.29
3,508. 38
624.71
1,406.42
13,044.47
7,465.91
32,203. 77

Commodity paper:
September
October
November
December
Total
Members' collateral
notes:
S eptemb er
November
December

$213,236.82 $44,324.01
23,223.37
77,682.85
93,667.87 42,165.53
73,920. 78 41,229.65
121,665.59 49,234.70
88, 760. 83 91,099.01
217,555.97 40,318.70
189,155.46 20,792.33
419,509.53 47,167.17
7,810.00
155,119.13
6,924.50
53,171.80
71,004.70 25,413.75

Total.

439,702. 72

6,139.06
331.64
2,957.96
77,103. 85
68,457.54

$551,166.01
198,057.07
200,980.67
196,966.18
593,907.99
284,673.56
530,984.67
726,142.41
1,087,911.33
269,125.32
398,442.80
341,582.44
5,379,940.45
32,577. 71
3,471. 73
33,154. 82
43,631. 73
27,559.96
38,545.88
17,247.74
55,763.37
189,271.32
75,482. 74
50,366. 21
59,152.91

!
10,000.00
500,000.00

200,000.00
425,000. 00
167,500. 00

Total

510,000.00

792,500.00

Grand total

890,406.72

2,930,626.62

200,000.00
435,000.00
667,500. 00
1,302,500.00
2,008,456. 80 2,573,473. 71 439, 702. 72

8,842,666.57

E X H I B I T E.—National banks in district No. 8 which have been granted fiduciary powers,
under section 11 (k) of the Federal Reserve Act, up to December SI, 1916.
Trustee, executor, administrator, and registrar of stocks and bonds:
First National Bank, Anna, 111.
Ayers National Bank, Jacksonville, 111.
First National Bank, Pittsfield, 111.
City National Bank, Evansville, Ind.
Old State National Bank, Evansville, Ind.
First National Bank, Mt. Vernon, Ind.
Citizens National Bank, Tell City, Ind.
First-Hardin National Bank, Elizabethtown, Ky.
Farmers National Bank, Glasgow, Ky.
Henderson National Bank, Henderson, Ky.
First National Bank, Hopkinsville, Ky.
Citizens National Bank, Lebanon, Ky.
Marion National Bank, Lebanon, Ky.

DISTRICT NO. 8

363

ST. LOUIS.

Trustee, executor, administrator, and registrar of stocks and bonds—Continued.
Boone County National Bank, Columbia, Mo.
Exchange National Bank, Columbia, Mo.
Citizens National Bank, Sedalia, Mo.
Merchants-Laclede National Bank, St. Louis, Mo.
Central-State National Bank, Memphis, Tenn.
Trustee, executor, administrator, and registrar of bonds:
Morganfield National Bank, Morganfield, Ky.
Trustee, executor, and administrator:
Nokomis National Bank, Nokomis, 111.
Bedford National Bank, Bedford, Ind.
First National Bank, Versailles, Mo.

EXHIBIT F.— Table showing the dates, denominations, and amounts of the issues of
Federal Reserve notes to the Federal Reserve Bank of St. Louis during the period
1914-15 and the year 1916.

Date.
Dec.
1, 1914..
Dec. 14, 1914..
Aug. 18, 1915..
Aug. 25, 1915..
Sept. 10,1915..
Sept. 18,1915..
Sept. 21,1915..
Sept. 28,1915-.
Oct. 5, 1915..
Oct. 29, 1915.Nov. 12,1915..
Nov. 22,1915-.
Nov. 29,1915..
Dec. 20, 1915..

Fives.

Tens.

$260,000
150,000
97,000
210,000
200,000
80,000
320,000
900,000
300,000
480,000
525,000
15,000
200,000
460,000

$160,000
50,000

$110,
200,
404,
360,
440,000

240,
21,
240,
200,
100,
240,
280,
60

88,560
160,000
80,000

520,000
320,000
360,000

480,000
240,000
240,000

400,000
400,000

400,000 ..
160,000 j..

$40,
400,
352,
400,
240,
560,
360,
360,
480,
200,
400,

$400,000
243,600
240,000
320,000

$50

None.

560,000
400,000

5,152,000

3,763,600

8,022,940

5,692,160 j

9,196,500

$150,000
1,000,000
1,000,000
1,000,000
560,000
1,000,000
1.000,000
1,000,000
501,600
1,000,000
1,000,000
100,000
1,000,000
1,000,000
500,000

640,000
400,000

2,895,950

1,000,000
1,020,000

200,000

Total to Dec. 30, 1916...! 7,092,950

Total.
$500,000.
200,000
97,000
210,000
389,500
400,000
800,000
900,000
1,500,000
1,040,000
1,125,000
15,000

$200;000

1,928,560

240,000
320,000

Hundreds.

$80,000 |.

520,000
400,000
440,000

75284°—17

Fifties.

100,940
160,000
400,000

4,197,000 | 2,870,940

May 4,1916
Sept. 14,1916
Sept. 19,1916...
Sept. 23,1916
Sept. 30,1916
Oct. 3,1916
Oct. 6,1916
Oct. 13,1916
Oct. 16,1916
Oct. 20,1916
Nov. 1,1916
Nov. 3,1916
Nov. 6,1916
Nov. 13,1916
Dec. 5,1916

Twenties, j

None, j 11,811,600
200,050

None.

21,008,100

364

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
E X H I B I T G.—Federal Reserve notes received and returned.

[Amounts of Federal Reserve notes of the several denominations received from other Federal Reserve
Banks for redemption or credit and returned to other Federal Reserve Banks for redemption or credit
by the Federal Reserve Bank of St. Louis during 1916.]
Tens.

Fives.
Exchanged with Federal
Reserve Bank of—

Boston
New Y o r k . . .
Philadelphia
Cleveland
Richmond
Atlanta
Chicago

Minneapolis
Kansas City
Dallas
San Francisco
Total

Received.

Returned.

Received.

Returned.

Received.

$9,290
183,000
10,175
7,205
2,515
24,665
306,000

$3,400
68,790
5,375
12,125
12,840
100,230
30,550

$10,870
127,770
10,740
4,600
2,850
23,240
161,000

$6,350
95,320
6,990
19,710
18,760
151,520
3,310

$7,340
97,120
7,960
2,980
2,660
19,000
71,500

$1,100
40,360
3,840
26,300
20,640
105 240
14,440

11,820
13,060
43,520
5,150

57,260
843,605
304,285
16,835

8,430
19,560
44,550
5,270

49,290
335,270
389,300
9,350

5,340
10,980
38,240
3,840

32,220
107,280
255,380
10,040

616,40P

1,455,295

418,880

1,085,170

266,960

616,840

Hundreds.

Fifties.
Exchanged with Federal
Reserve Bank of—

$700
3,150

$300
6,900

11,900
5,450
3,150
1,050

5,900
1,500
6,000
600

$28,000
430,890
30,175
15,235
8,125
94,005
545,500

$12,150
214,520
16,205
75,935
59,190
366,140
49,950

200
400
15,800
700

500
6,450
54,250
1,400

14,100
1,000

25,790
44 000
142,110
14,960

140,070
1,292 605
1,017,315
38,625

76,550

88,000

37,400

1,378,790

3,282,705

Boston
New York
Philadelphia .
Cleveland
Richmond....
Atlanta
Chicago

$500
23,000
1,300
450
100
27,100
7,000

Minneapolis
Kansas City
Dallas
San Francisco
. .

Total.
Received.

Returned.

Received.

Returned.

Received.

Total

Twenties.

800

Returned.

E X H I B I T H.— Table showing the Federal Reserve notes received by the Federal Reserve Agent
from the Comptroller of the Currency during the period 1914-15 and the year 1916.
1914-15.
Date.
Nov 16 1914
Nov 27 1914
Oct. 2,1915
Nov. 1,1915
Total

Fives.

Tens.

Twenties.

Fifties.

Hundreds.

Total.

$2,160,000

$840,000

1,000,000
1,200,000

1,000,000
1,000,000

$400,000
800,000
800,000

$400,000

$3,000,000
400,000
3,200,000
3,000,000

4,360,000 ! 2,840,000

2,000,000

400,000

9,600,000

1916.
Sept 5 1916
Oct 4 1916
Oct 12 1916
Oct 25 1916
Nov 6 1916
Nov 22 1916

Total received to Dec. 30,
1916

$520,000 $1,520,000
480,000
800,000
1,000,000
1,520,000
720,000
900,000
960,000
1,000,000

$960,000
720,000
960,000
480,000
400,000

$3,000,000
2,000,000
1,960,000
2,000,000
2,020,000
1,960,000

3,220,000

6,200,000

3,520,000

12,940,000

7,580,000

9,040,000

5,520,000

$400,000

22,540,000

365

DISTRICT NO. 8—ST. LOUIS.

EXHIBIT I.—Statement of receipts and disposition of Federal Reserve notes by Federal
Reserve Agent from opening of the Federal Reserve Bank of St. Louis, and offunds and
securities in his possession on Dec. 30, 1916.
Federal Reserve notes received from Comptroller
Notes issued to Federal Reserve Bank
Notes returned by Federal Reserve
Bank to Federal Reserve Agent... $1, 496, 500.
Fit notes returned by United States
Treasurer to Federal Reserve Agent
11, 600.
Unfit notes received by comptroller
from United States Treasurer for
destruction
2, 610, 270.

of Currency
$22, 540,000.00
$21, 008,100. 00
00
00
00
4,118, 370. 00

Federal Reserve notes outstanding
16, 889, 730.00
Federal Reserve notes in hands of Federal Reserve Agent
3, 040, 000. 00
Gold for retirement of Federal Reserve notes:
In hands of Federal Reserve Agent
$5,164, 600. 00
Credit balance in gold redemption fund
868,130. 00
Credit balance with Federal Reserve Board....
6, 510, 000. 00
12, 542, 730. 00
Rediscounts in hands of Federal Reserve Agent to secure Federal
Reserve notes
4, 350: 506. 38
EXHIBIT J.— Table showing the operations of the clearing system of the Federal Reserve
Bank of St. Louis from July 15, 1916, the date on which the present clearing plan, proposed by the Federal Reserve Board, went into effect, to Dec. 15, 1916.

Average
number of
items
handled
daily.

1916.
July 15 to Aug. 15
Aug. 16 to Sept. 15
Sept. 16 to Oct. 15
Oct. 16 to Nov. 15 .
Nov. 16 to Dec. 15

5 474
7,780
8,814
9,388
10,039

Average
amount of
items
handled
daily.

$2,451,748.83
4,330,971.40
5,677,716. 85
6,904,130.84
8,402,904.03

Average
Average
number of
amount of
items
items
sent
sent
daily by
daily by
Number of member
member
banks
Number of nonmember
banks
direct to
member
banks on
direct to
other
banks
which we
in the
can handle Federal other Federal
Reserve
Reserve
district.
items at
Banks for
Banks
par.
our account,
for our
account, not actually
handled
not actually
handled
by us.
by us.

469
469
468
469
469

734
763
805
851
881

3,369
7,517
8,294
9,437
9,739

$665,348.29
1,127,293.35
1,731,342.81
2,015,666.17
1,837,642.17

DISTRICT NO. 9—MINNEAPOLIS.

JOHN H, RICH, Chairman and Federal Reserve Agent.

The ninth Federal Reserve district embraces the following territory:
Population.

Area—

The State of Montana
The State of North Dakota.
The State of South Dakota
The State of Minnesota
The north one-third of Wisconsin 1
The northern peninsula of Michigan
A total of
1

|
j
j
|
...|

Sq. miles.
146,382
70,183
76,868
80,358
23,273
15,774

376,053
577,056
583,888
2,075,708
481,515
319,501

413,338 i

4,413,721

As modified by the Federal Reserve Board's redistricting decision of Oct. 12,1916.

The territory thus determined extends approximately 1,500 miles
east and west and 600 miles north and south and is an area of peculiarly diversified interests. It is a heavy producer of copper and iron
and has important lumber interests. It is, at the same time, largely
agricultural and contains great areas given over to farming, stock
raising, and dairying, which are so important as to largely determine the character of the service rendered by the Federal Reserve
Bank of Minneapolis. The district has comparatively few large centers. The larger proportion of the member banks are located in
rural communities and serve farming, stock raising, and dairying
districts.
AGRICULTURAL CONDITIONS, 1916.

Agricultural conditions during 1916 were peculiar. The continued rains which hampered the fall work in 1915 left the ground well
filled with moisture when freezing weather came on. Heavy snows
during the winter produced a very high stage of water in the early
spring, which, with frequent rains, further impeded field work and
made it difficult for many farmers to properly prepare the ground.
As a result many fields were insufficiently cultivated. The spring
growing season was very favorable, and the small grain crops obtained an excellent start, although corn planting was late, and this
crop was in many cases replanted because the seed had rotted in the
ground. Small grains continued to make excellent progress during
the early summer, while corn advanced slowly. Excessive heat com-

367

368

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

ing at the time when the grains began to mature, created very severe
damage and was accompanied by excessive rust and blight. Over
considerable sections of North and South Dakota and Minnesota
wheat sustained severe damage, the total yield being far short of a
normal crop. Corn, however, made fair progress and produced a
fair to good crop in most localities.
The shortage of approximately 100,000,000 bushels in the wheat
crop of the district was to a very considerable extent offset by gradually rising prices, which, soon after the crop began to move, approached the highest levels known in years. In common with wheat
prices on all other small grains advanced materially, and farmers were
able to realize for grain of the poorest quality prices which in previous years have seldom been realized for the finest grades. This
condition, coupled with the fact that there had been a pronounced
disposition to hold over good wheat from the previous crop, resulted
in the disbursement of large sums of money, since the greater part
of the old wheat moved at high prices with the new crop. The
heavy returns thus received by grain growers tended to relieve the
depression that would otherwise have existed in the grain-growing
districts.
An extremely satisfactory market prevailed during the year for
practically all other items of farm production. Stock receipts at the
important South St. Paul market ran considerably in excess of 1915
for every item except sheep. Wool, of which there is a heavy production in western North and South Dakota and Montana, commanded the highest prices growers had ever known. Dairy products,
eggs, poultry, and potatoes, of which the district produced only a
fair crop, and similar items likewise commanded excellent prices.
In quality the 1916 grain crop of the district was poor. A large
amount of the wheat produced was small, shrunken, and light in
weight. The barley crop ranked somewhat better in quality, and corn
was fair to good. A severe car shortage beginning during the height
of the grain moving and becoming more and more pronounced toward
the end of the year, seriously hampered the handling of the crop and
interfered with milling operations. Many interior mills closed down
and some of the large mills in Minneapolis were compelled to cut
down their production. Severe restrictions on cars moving into
eastern territory likewise hampered practically all of the lines of
business depending to any extent on the car supply.
Although the total grain production was far short as compared
with the previous year, the extremely high prices created an unusual
demand for crop-moving purposes, which was effectively met by the
Federal Reserve Bank, which issued for this purpose a total of
$8,500,000 in addition to Federal Reserve notes previously issued and
available in part, as against approximately $8,000,000 during the

369

DISTRICT NO. 9—MINNEAPOLIS.

previous crop-moving period. The prompt support of the Federal
Reserve Bank was of substantial value to the farmers, and for the
second time enabled the ninth Reserve district to handle the financing
that is incident to grain moving, independent of any aid or assistance
from eastern money centers, which in former years had met the heavy
calls for currency.
BUSINESS CONDITIONS, 1916.

The early part of 1916 was characterized by moderate business
activity and quiet condition over the district as a whole. Retail and
wholesale trade quickened perceptibly with the opening up of spring
farm work, and business began to show an upward tendency, which
lasted through the year. By early summer there was a noticeable
improvement, not only in trade but industry as well, and the final
figures for the year in practically all lines showed substantial increases
over 1915. The improved purchasing power of farmers, due to the
prevailing high prices, was notably evident in retail merchandising
operations and in its effect upon all the lines of trade particularly
dependent on conditions in the agricultural areas. Collections were
excellent and most concerns closed the year with a substantial reduction of uncollected accounts.
City and country banks were in a strong position throughout the
year and had comparatively small occasion to rediscount. Deposits
were substantially increased as compared with the previous year.
The banking position of the district in 1916 is shown by the following
table:
Member banks' capital, deposits, loans, and discounts.
Member
banks.
Dee. 31
Mar. 7
May 1
June 30
Sept. 12
Nov. 17

1915.

Capital.

$56,196,000

1916,

740
746
749
757
759

56,411,000
57,056,000
57,141,000
57,650,000
57,726,000

Surplus.

Deposits,
demand.

Deposits,
time.

Loans and
discounts.

$28,903,572 $296,528,888 $187,226,827 $420,714,658
29,058,000
29,026,000
29,116,000
29,149,000
29,173,000

296,927,000
299,484,000
296,105,000
308,564,000
339,449,000

196,501,000
207,182,000
212,128,000
218,474,000
223,227,000

440,824,000
452,685,000
456,890,000
472,350,000
499,014,000

Member bank reserves at comptroller's calls.

Dec. 31.
Mar. 7 . . .
Mayl...
June 30..
Sept. 12..
Nov. 17..

1915.
1916.

Average excess reserve

Keserve
held.

Reserve
required.

Excess.

$135,473,174

$56,189,161

$79,284,012

142,425,000
132,081,000
115,606,000
121,063,000
133,946,000

59,564,000
59,065,000
56,951,000
60,787,000
66,089,000

82,861,000
73,016,000
58,655,000
60,276,000
67,857,000
$70,325,000

370

ANNUAL EEPOBT OF THE FEDERAL RESERVE BOARD.

Rates were low and free from fluctuation during practically the
entire year, although with a gradually improving demand.
Conditions throughout the year were such as to demand comparatively few changes in discount rates. Upon receipt of authority from
the Federal Reserve Board, the Federal Reserve Bank of Minneapolis,
on March 18, established a 3^ per cent rate on trade acceptances,
and, pursuant to the same authority, put in force a 4 per cent rate
on 15-day collateral paper, effective September 20. The prevailing
discount rates for the year and the dates upon which changes were
made are shown in the following table:
Discount rates.
15 days.

Jan. 1....
Mar. 18..
May 15..
July 25..
Sept. 20.
Dec. 3 1 . .

30 days.

Trade
ances.

90 days. 6 months. accept-

60 days.

Percent. Per cent. Per cent. Per cent. Per cent. Per cent.
4
4
5
4
4
5
4
4
5
4
4
5
4
4
5
4
4
5
4*

Con>
modity
paper.
Per cent.
3
3

Discount operations of the bank during the year are shown in
the following table, giving, by months, the number of applications
received, number of banks served, number of items discounted, maturities, and balances at the end of each month:
Rediscount operations.
Number of
applications
received.

Number
of banks
served.

Number
of items
received.

January . . .
February..
March
April
May
June
July
August
September.
October...
November.
December.
Total

625

Maturing
60 days.
January. ..
February...
March
April
May........
June
July
August
September..
October
November..
December..
Total

$14,700
11,923
21,172
22,551
53,527
42,655
178,674

417

82,603
544,995
101,911
441, 274

$40,224
36,087
18,318
12,059
20,133
62,200
170,333
169,151
110,690
92, 821
55,369
85,082

1,730,615

872,467

214,630

$18,277
0
0
0
691
1,871
632
433
0
0
795
0

$6,230
2,369
721
5,621
5,503
19,988
35,951
326,923
20,470
552,281
14,611
788,923

3,222 1

37,699

1,779,591

$109,556
46,253
71,159
81,635
247,249
353,579
341,593
159,752
129,127
117,336
219,583
176,252
2,053,074

Maturing
30 days.

145
96
117
146
281
409
441
400
237
259
321
370

Maturing
over 90
days.

Maturing
90 days.

Maturing
10 days.

Total.

Balance end
month.

$188,987 $1,042, 218.36
96,632
903,093.29
111,370
765,502.57
121,866
655,833.57
327,103
679,890.04
480,293
946,687.11
733,183
1,520,072. 71
870.889
1,847, 708.94
342.890
1,881,215. 20
1,307,433 2,503; 768.86
401,269
l,270; 986.13
1,491,531 1,985. 182. 75
6,473,446

16,002,159.53

371

DISTRICT NO. 9—MINNEAPOLIS.

Operations of the bank in the purchase of acceptances are shown
in the following table, giving totals of bills bought, by months,
together with maturities of the same:
Acceptances bought.
60 days.

30 davs.
January...
February.
March
April
May
June
July.
August
September.
October
November.
December..
Total.
1

$25,213.24
7,230.58
44,324.82
152,870.36
135,142.35
268,598.08
70,952.44
216,453.52
279,192.45
389,413.92
411,688.86
513,605.67

SI, 473. 73

2,968.14
10,251.64
30, 789. 72
9,400.80

54,884.03

Total.
$200,522.80
219,291.43
364,822. 69
381,408.10
492,625.22
857,791.05
1,259,867.20
826,646.87
722,180. 88
974,115.76
1,032,114.35
3,638,351.97

$225,736.04
227,995.74
409,147.51
534,278.46
627,767.57
1,126,389.13
1,333,787. 78
1,053,352.03
1,032,163.05
1,372,930.48
1,443,803.21
4,151,957.64

2,514,686.29 10,969,738.32 | i 13,539,308.64

Of this total $11,160,726.64 was based upon foreign trade and $2,378,582 upon domestic trade transactions.

Discount rates for commodity paper were 3 per cent from January
1 to May 15, and on the latter date were advanced to 3J per cent, the
rate remaining unchanged for the balance of the year. In the ninth
Reserve district the chief application of commodity paper is to the
discount of farmers' paper collateralled by grain-elevator receipts.
The operations under the commodity rate are given in the following
table, showing maturities and totals, by months:
Commodity
10 days.

January..
February.
March....
April
May......
June

July.
August
September..
October
November..
December..
Total.

paper.
30 days.

$600

60 days.

I 90 daj-s.

$3,600.33

2,311

1,015.00
2,820.00 !

2,911

7,435.33 !

$1,015.00
304.50
4,907.57
913. 63
1,015.00
406.00
1,015.00

9,576.70 |

Total.

$1,319.50
9,107.90
913.63
2,030.00
5,537.00
1,015.00

19,923.03

A rate of 34 per cent was established for the discount of trade
acceptances on March IS, continuing unchanged throughout the year.
The growth of this class of business has been very slow, due partly
to the reluctance of larger concerns to alter the established practice
of years, and partly to the fact that the extremely low money rates
have militated against such use of acceptances as can reasonably be
expected in a year of normal rates. There is, however, evidence of
a larger use of this class of paper than is generally supposed, with

372

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

the probability that commercial firms and banks hold substantial
amounts which do not come to the attention of the Reserve Bank.
The discount of trade acceptances during the year is shown in the
following table:
Trade acceptances, by maturities and months.
10 days.
May
December

Total

30 days.

60 days.

90 days.

Total.

$17,723.00

$557.00
19,092.00

$4,312.00

$557.00
41,127.12

17,723.00

19,649.00

4,312.00

41,684.12

Pursuant to the authority of the Federal Reserve Board, a rate of
4 per cent was established on October 20 for the discount of 15-day
collateral notes of member banks. The rate remained in force
without change throughout the remainder of the year. The operations under this rate were as follows:
Collateral notes—member banks.
October
November
December

$500, 000
12, 795
543, 200

Total

1, 055, 995

Operations of the bank in United States bonds during the year are
shown in the following table, giving the amount purchased, the
amount sold, and the amounts of bonds converted.
United States bond operations.
Conversions into—

2 per cent
3 per cent
4 per cent

'
•

Purchases.

Sales.

3 per
cent
bonds.

$1,478,500
893,420
181,000

$40,000
699,400

$698,600

Treasury
notes.
$700,000

Present bond holdings of the bank are distributed as follows:
2 per cent.
3 per cent bonds
3 per cent Treasury notes
4 per cent
Total

$1, 064, 900
1,196, 440
700, 000
181, 000
3, 142, 340

Below are given the holdings of United States bonds and Treasury
notes, by months, and the average earning rates per month:

373

DISTRICT NO. 9—MINNEAPOLIS.
United
States
bonds.
408,277
687,500
069,200
396,800
378,100
812,300
512,600
420,200
369,400
928,500
616,500
446,100

January
February..
March./....
April
May
June
July
August
September.
October
November.
December..

Treasury
notes.
July
August..
September.
October
November.
December..

$350,000
350,000
350,000
688,700
700,000
700,000

Average
rate.
2.11
2.46
2.19
2.40
2.22
2.27
2.15
2.12
2.18
2.22
2.22
2.08
Average
rate.
2.95
2.95
3.05
3.00
3.05
2.95

The following table shows the volume and maturities of municipal
warrants bought during the year, together with the average amounts
held, by months, and the average earning rates and classification by
issuing public bodies:
Municipal warrants.
MATURITIES.

Within 10 days
30 days
60 days
90 d a y s . . . . . . .
Over 90 days

$75, 766. 67
106, 344. 69
748,161. 28
153,931.58
2, 650, 591. 96

Total

3, 734, 796.18
RATES 2\ TO 4J.

January
February
March
April
May...
June

1916.

State
Municipal
Other

Average
amount
held during month.

Average
rate.

$960,241
1,169,300
1,340,800
1,433,700
1,926,800
1,387,600

3.27
2.93
2.39
2.19
2.29
2.55

Average
amount
Average
held durrate.
ing month.

July
August
September
October
November
December

1916.
$1,069,900
1,054,400
1,041,600
1,674,900
1,281,400
675,100

2.81
2.88
2.91
2.82
2.86
3.11

Classification of securities by charter of issuing public bodies.
$111,925. 82
2, 892, 665. 45
730,204.91

Total

3, 734, 796.18

374

ANNUAL BEPOBT OF THE FEDERAL RESEEVE BOARD.
GOLD SETTLEMENT FUND.

The rapidly increasing usefulness of the gold settlement fund,
created in Washington by the Federal Reserve Board, for the adjustment of balances between Federal Reserve Banks, is demonstrated
by the following tabulation, giving the average debits and credits
on settlement dates for each month, and the average balances due
this bank for each month, during the year:

January...
February..
March
April
May
June
July
August
September.
October...
November.
December.

Debits.

Credits.

$76,750
116,000
264,600
122,750
141,250
485,166
616,250
2,695,600
5,130,500
5,719,250
5,748,250
5,488,400

$263,600
189,750
130,166
117,500
113,200
357,166
590,000
2,144,000
3,601,400
4,642,400
3,788,711
5,473,200

$3,767,000
4,073,750
4,380,166
4,643,250
4,682,600
4,939,571
7,745,000
3,886,571
3,657,800
4,396,000
7,002,428
8,141,600

REDISTRICTING DECISION.

The so-called Wisconsin bank case was reopened before the Federal
Reserve Board through informal hearing August 8, following which
the Board on October 12 issued an order reducing the Wisconsin
territory allotted to the ninth Reserve district and transferring the
portion so affected to the seventh Reserve district. The change
in the Wisconsin boundary lines leaves within the ninth Federal
Reserve district approximately one-third of that State, comprising
the northwestern counties. The line of division is, roughly, a a
irregular boundary following county lines from the southwestern
boundary of the State of Minnesota at the Mississippi River, in a
northeasterly direction to the Wisconsin-Northern Michigan boundary, at a point where the eastern boundary of Florence County, Wis.,
intersects the State line. The decision removed from the ninth
district 25 counties, within which were located 52 member banks,
having an aggregate capital and surplus of $7,634,900 at the time of
the filing of the order for transfer, and having a paid-in capital in
the Federal Reserve Bank of Minneapolis of $229,400, and deposited
reserves of $1,376,429.89.
Pursuant to the decision of the Federal Reserve Board, the transfer
of membership was made effective January 1, and 52 banks in the
territory involved were transferred from the Federal Reserve Bank
of Minneapolis to the Federal Reserve Bank of Chicago. During the
year 1915 the Federal Reserve Bank of Minneapolis enjoyed a
growth of membership of 26 banks, bringing the total membership
at the beginning of the year up to 734. There was a further increase

DISTRICT NO. 9

MINNEAPOLIS.

375

of 29 institutions to membership during 1916, bringing the membership up to 763, and a loss of four members through liquidation,
giving a membership of 759. The transfer of the 52 banks affected
by the redistricting decision left the ninth Reserve district at the
close of the year with a net membership of 707 banks.
RELATIONS WITH MEMBER AND NONMEMBER BANKS.

The movement of State banks into membership has been very
encouraging. There was received into membership during the year
the largest State bank in Minnesota, which preserved its State bank
identity, together with a considerable number of other State banks
well distributed over the six States that in whole or in part form the
ninth Federal Reserve district, which took membership by the process of conversion into national banks. From organization to the
close of the«year 40 different State institutions had taken membership, 39 of which were by conversion.
The relations of the Federal Reserve Bank to the State banking
departments of various States have been pleasant and marked by
valuable cooperation. The officers of this institution have at all
times made it clear that in presenting to State banks the opportunities for membership acquired by the provisions of the Federal Reserve
Act, there was no thought of indicating a preference as to the course
to be pursued, and have sought to leave the alternative methods of
acquiring membership entirely to the judgment of their officers and
boards of directors, believing that the Federal Reserve system should
be in no sense competitive with the State banking departments and
State banks of the various States.
There has been an encouraging growth of understanding between
the Federal Reserve Bank and its members, and closer relations have
been built up during the year. Member banks have been kept
thoroughly informed as to the gradual development of the functions
of the reserve institutions and of their rights and privileges under
the law. There has been prompt and effective action to meet their
demands and requirements in every instance where opportunity
offered. Substantial service was rendered during the year in meeting the demands of the agricultural sections during the spring planting season, in financing the crop movement and in meeting the
requirements of members in agricultural sections during the fall
period.
The district was remarkably free from emergencies or conditions
necessitating rediscounting, and the volume of business coming to
the Reserve Bank from this source showed the added influence of
the strong position of practically all the members, and was even less
than may be expected in a normal year. The average through the
year showed some improvement over the previous year. This was
due, not to banking or business conditions, but to a wider knowledge

376

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

on the part of the members of the rights afforded them under the
act.
The course of accounts from which the principal revenue of the
bank is derived is shown in the following tabulation, giving the
amounts of rediscounts, collateral notes, bills bought, United States
bonds and investments held at 15-day periods throughout the year:
Earning assets.
Rediscounts.
Jan. 1 . . .
Jan. 1 5 . .
Feb.1...
Feb. 15..
Mar. 1 . . .
Mar. 15..
Apr. 1 . . .
Apr. 15..
May 1 . . .
May 15..
June 1.- .
June 15..
July 1 . . .
July 15..
Aug. 1...
Aug. 15..
Sept. 1 . .
Sept. 15.
Oct.l...
Oct. 15..
Nov. 1...
Nov. 15..
Dec. 1 . . .
Dec. 15..
Dec. 30..

$1,244,616
1,139,845
996,168
940,704
825,420
804, 780
760,811
707,343
591,256
584,418
658,758
816,819
974,445
1,216,683
1,825,423
1,946,234
1,828,698
1,891,211
1,881,215
1,688,664
1,752,016
1,272,211
1,079,180
1,054,598
1,651,983

15-day collateral
notes.

$500,000
3,000
203,000
333,200

Bills
bought
(acceptances).

United
States
bonds.

$477,806 $1,328,820
548,203 1,392,820
490,710 1,487,200
481,844 1,646,700
558,710 1,876,700
631,373 2,047,700
773,099 2,313,700
1,042,407 2,463,700
1,076,356 2,648,200
1,227,806 3,293,700
1,325,746 3,727,600
1,653,109 3,842,400
2,009,816 3,862,940
2,231,052 3,862,940
2,531,802 3,824,940
2,954,490 3,748,640
2,934,054 3,748,540
3,024,349 3, 723,540
3,050,630 3,645,340
2,964,047 3,620,340
2,533,602 3,567,340
2,606,860 3,167,340
2,956,921 3,166,340
5,748,336 3,142,340
6,200,000 3,142,340

Investments
(warrants).
$910,513
880,243
1,087,262
1,398,745
902,384
1,414,227
1,381,242
1,418,424
1,670,206
1,925,662
2,077,814
1,218,974
820,852
1,032,142
1,045,740
1,069,002
992,127
1,010,236
1,277,311
1,754,345
1,487,574
1,229,095
645,806
691,665
569,665

Very encouraging and continuous increases in bills bought, consisting of acceptances, largely based on the export and import business of the United States, and upon the domestic movement of grain
is shown by the above figures. While the rate obtained was uniformly low, the very high quality and liquidity of such paper has
made it an especially desirable investment, and the revenue obtained
therefrom is entirely satisfactory. A substantial increase in the
amount of United States bonds held, and the very satisfactory average of investments, consisting of State, municipal, and other warrants, should also be noted. The character of these operations suggests that the normal course of business will be toward the creation
of a revenue out of acceptances bought, United States bonds and
investments, affording a surplus over and above the ordinary operating expenses of the institution. This point was reached at midyear and removed the possibility of an undue interest in the accumulation of revenue from rediscounting operations. The Federal
Reserve Bank was thus placed in the peculiarly independent position of being able to say to its members that it had acquired the
ability to cover expenses and part of its dividend without reference
to profit from rediscount. It acquired, therefore, the ability to
hold its resources in a highly liquid form and conserve its financial

DISTRICT NO. 9

377

MINNEAPOLIS.

strength against unusual demands or emergencies as may overtake
the institutions affiliated by membership.
Member banks are to be especially commended for the interest
they have shown in complying strictly with the requirements of the
act with reference to the character of paper offered for rediscount
and statements accompanying the same. The rediscount paper
held by the reserve bank during the year has been in practically
every case supported by a full and complete statement of the maker.
There has been an encouraging growth in the practice on the part
of member banks of extending their credit files to cover all borrowers,
and many such institutions have found this course greatly to their
advantage. Experience has proven that by careful and persistent
work, member banks have been able not only to complete such files,
but to secure the cooperation of their customers. They have accomplished during the year a large amount of valuable educational
work along this line in their home communities.
The gradual improvement in deposits, consisting of reserves and
excess balances of member banks, continued throughout the year,
the figures being substantially increased by the additional reserve
payments of November 16. With respect to the member banks,
the general disposition was to maintain an excess over the reserve
required by law, but with the development and broadening of check
clearing operations there were many instances in which it was found
necessary to send notice of an impairment of reserve through overdrafts. The course of member bank deposits is shown by the following table, giving balances at the close of business on the last
day of each month during the year:
Member bank

January
February
March
April
May
June

$14,463, 496. 56
14, 664, 346. 33
15,172,306.41
15, 780, 778. 42
18, 908, 860. 08
19, 378, 658. 91

deposits.

July
August
September
October
November
December

$19, 800,406. 51
20,316,086.22
21, 597, 934. 29
23, 615, 796. 20
29, 335,175. 34
29,534,961. 87

The reserve position of the bank during the year is indicated in
the following tabulation showing the average reserve held, by months,
and percentage of reserves:
Reserves—Percentages.
Average

January..
February.
March...
April
May
June

$7,149,158
7,538,035
8,355,710
8,763,040
10,424,546
12,044,156

Average

Percent-

72.4
73.4
70.3
67.3
62.9
64.6

July
August
September
October...
November.
December.

11,636,484
10,563,422
9,797,841
10,807,855
13,979,832
16,529,748

Pereent-

61.5
54.5
53.7
55.1
65.2
61.7

378

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Member banks have been prompt to forward tabulated copies of
statements rendered at the comptroller's calls within the year.
These were used as a basis for the periodic checking of capital stock
accounts.
THE FEDERAL RESERVE BANK AND THE PUBLIC.

The work of the year has been characterized by a growing appreciation on the part of the general public of the services afforded by
the Federal Reserve Bank and the relation of this service to the
maintenance of stablefinancialconditions within the district. During
a period of comparative quiet, when deposits have been uniformly
high in all banks, and when the demand has not been sufficient to
afford the reserve bank opportunity to come into intimate contact
with any great proportion of its members, opportunities to demonstrate the full measure of service that may be expected from such
an institution have been comparatively few. There have, however,
been certain local conditions affording the bank an opportunity to
exert a helpful influence. Such opportunities were afforded through
the failure of the grain crop in portions of North and South Dakota
and Minnesota, through the demands of crop moving during the
fall period, to which previous reference has been made, through
assistance to stock men, and through support of member banks that
were heavily drawn upon during the closing months of the year by
country correspondents.
The influence of the discount policy of this bank upon rates paid
by bank customers throughout the district is not easily traced. It
undoubtedly has manifested itself, not so much in the amount of
the rate as in the volume of credit extended. In the stock and
agricultural districts the facilities afforded by the Reserve Bank
enables many member banks to continue to extend credit at reasonable rates, where, without the ability to rediscount, there would
undoubtedly have been some restrictions on loans. The steadying
influence of the Reserve Bank rates has been quite noticeable, and
the district has been unusually free from the fluctuations in bank
rates shown in previous years.
Some of the larger banks have had. occasion either to rediscount
or to present 15-day collateral notes, but the greater volume of the
rediscounts of the bank have come from country communities and
from comparatively small institutions. The paper thus taken has
been very largely agricultural, and the credit extensions resulting
from the rediscounts have been to farmers, stock growers, and
business men at outsiae points in the district. The service of the
bank in equalizing credit conditions by providing support to member
institutions where it was needed has been of a substantial character.

DISTRICT NO. 9

MINNEAPOLIS.

379

Member banks have had the double advantage of being able to
discount direct with the Reserve Bank at very reasonable rates, or of
going to their correspondents with their paper and their discounting
it upon a favorable basis, as compared with previous years. The
rates of the larger city banks to their correspondents have shown a
tendency to seek about the same level as the discount rates of the
Reserve Bank.
THE FEDERAL RESERVE BANK AND THE GOVERNMENT.

In its capacity as fiscal agent of the United States Government, the
functions of the bank are not yet fully developed. In accordance
with instructions of the Secretary of the Treasury, it has received and
held Government deposits during the year, showing the following
balances at the close of business each month:
Government deposits.
January
February
March
April.
May
June

$187,270.12
543,315. 73
496,918.72
440, 826.60
689,252.52
800, 846. 01

July
August
September
October
November
December

$886,116.14
1,041,839.32
1,096,800.65
940,519.39
841,639.03
886.438. 00

In its relations with the Treasurer's department and the Comptroller's office, the bank has enjoyed the fullest and most complete
cooperation of the departmental heads and their staffs.
INTERNAL MANAGEMENT OF THE BANK.

The directors of the Federal Reserve Bank of Minneapolis showed
a keen interest during the year in the progress of the institution.
Directors' meetings were well attended, and thorough and searching
consideration was given to all of the details of operation, current
progress, and opportunities for the further development of the usefulness of the institution. The work of the board of directors has been
notable for the cooperation and harmony with which it has been
prosecuted. The executive committee followed, as in the previous
year, the practice of meeting at noon on every business day, and has
kept in close and constant touch with all the activities of the bank,
giving especially rigid and careful attention to the rediscount of paper,
purchase of acceptances, bonds, and investments.
The clerical staff has rendered excellent service, and shows but a
small increase, with the exception that the development of checkclearing operations during the mid-year period, and the rapidly increasing volume of work, necessitated a large increase in the clerical
force of that department, and the creation of considerable expense
which is, however, recoverable through the service charge.
75284°—17

380

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

The bank was represented on the Advisory Council at all of its
sessions during the year.
The new vault facilities, completed October 1, 1915, provided for
the complete segregation of the funds of the Federal Reserve Agent
and the funds of the bank, and the methods adopted at that time
have proven extremely satisfactory during the year. The bank enjoys
the use of two vaults, one of which was available upon the occupancy
of our present quarters. It contains two large and especially heavy
chests and affords facilities for the safe keeping of the tellers' funds,
and storage space for books and documents.
The new vault is exclusively a money vault and is employed for the
holding of all of the funds of the Federal Reserve Agent, and all of the
funds of the bank, except the tellers' cash. It is of extremely heavy
construction and is believed to be one of the strongest safes in the
Western States. It has complete electrical protection and is inspected
and guarded by a special watchman day and night.
The bank was examined by the chief examiner of the Federal Reserve Board and his staff in March and November. Both examinations were of the closest and most searching character and were accompanied by extended conferences between the chief examiner and the
official staff of the bank as to minor details of operation.
CHECK CLEARING AND COLLECTION.

Important changes, involving a considerable expansion in the
transit department, have occurred in check clearing and collection
during the year. During the first six months of 1916 the so-called
"voluntary" collection system was in operation. This provided for
immediate credit for checks deposited with the Federal Reserve Bank
drawn on banks which had agreed that their checks were to be charged
to their account on day deposited, provided such checks were deposited
by banks which had likewise agreed as to checks drawn upon them. In
practical operation this plan was not especially successful. The actual
collection of checks was limited as to number and amount, and the
chief benefit resulting from the participation of this bank in clearing
operations was to increase the number of banks on the par lists of
member banks. During this period the daily average number of
items was 185 and the average daily amount of items was $125,138.
On July 15, 1916, the collection system formerly in operation was
discontinued and the present check clearing and collection system, as
authorized and established by the Federal Reserve Board, was adopted
and put into operation. The immediate effect was a large increase in
the par list. The ninth Reserve district contains 3,408 banks, of which
1,858 are on the par list of the Reserve Bank. A total of 302 banks
have been added to the par list since July 15, an increase reflecting"
creditably on the management of this department.

DISTRICT NO. 9

MINNEAPOLIS.

381

The number of items handled and the amount of clearings and collections have shown a constant and continuous increase.
On July 1, 1916, the Federal Reserve Bank established a St. PaulMinneapolis clearing house for the handling of inter-city checks. This
is separate and distinct from the current operations of the transit
department, and has proven of great value in adjusting inter-city
transactions by enabling all of the banks of one city to promptly and
expeditiously collect all checks drawn on the banks of the other city.
The resulting balances are settled on the books of the Federal Reserve
Bank. The service provided has proved efficient and very satisfactory to the banks concerned.
Owing to the operation of this plan the Federal Reserve Bank considers as reserve on day of receipt checks on all St. Paul banks as well
as those on Minneapolis banks. The operations of the Twin City
clearing house from its organization to the close of the year 1916 were
as follows:
Clearings through Federal Reserve Bank, 1916.

July
August
September
October

$63,180, 272. 59
76, 388, 551. 28
88, 227, 585. 25
113, 996, 837. 88

November
December
Total

$122, 975, 218. 32
109,069, 589. 72
573, 838,055. 04

The operations of the transit department, showing total of checkclearing and collection operations from July 15 to the close of the
year were as follows:

Clearing statistics.
Clearings.
Date, 1916.

Average
number
daily.

July 15 to 31
August
September
October
November
December....

!
j
|
\
i

Average
amount
daily.

573 S305,781.45
560,990.97
1,171
886,190.00
1,960
2,110 1,156,280.00
2,373 1.370,004.09
2,319 \, 215,468.61

Other Reserve Banks.

Member and nonmember.
Average Average
amount number
per item. daily.
$583.65
479.07
444.20
548. 00
577.33
524.02

Average
amount
daily.

Average Average
amount number
per item. daily.

2,000 $203,360.00
343,759.98
3,606
7,831
649,424.83
10,616
917,965.52
12,255 1,085,057.70
12,906 1,022,133.01

Clearings.

$101.68
95.33
82.93
86.47
88.54
79.19

Average
amount
daily.

54 $183,040.56
197
353,555.90
403
619,092.63
520 1,075,729.20
542 1,004,786.70
579
771,424.65

Member and nonmembers.

Service charge Average
number
out-of-town
remittance
checks 1J
Average
letters
cents equal
amount
to cost per
sent out
per item.
$1,000.
daily.
$3,389.64
1,794.70
1,536.21
2,068.71
1,853.85
1,331.60

Other reserve banks-

7.9
8.1
9.7
9.8
9.1
10.2

402
509
1,015
1,073
1,155
1,158

Direct to members of
other districts.

w
o
w
O

Date.
Number.
1916.
July 15 to July 31
August
September
October
November
December
Total

Amount.

Number.

Amount.

Number.

Amount.

Number.

Amount.

28,003
97,376
195,791
276,030
294,129
322,655

$2,847,350.14
9,283,124.11
16,239,017.79
23,869.852.48
26,043,407.80
25,553,325.35

748
5,105
9,564
12,721
12,1,50
13,662

510,656.12
977,315.96
779,338.70
309,954.31
935,873.12
662,286.25

13
226
535
800
869
821

$69,160.25
590,337.47
1,734,911.15
2,157,936.31
2,199,433.23
2,623,330.23

258,209 134,440,093.69 1,213,984

103,836,077.67

53,950

82,175,124.46

3,264

9,375,108.64

8,027
31,628
48,755
54,8.53
56,959
57,987

$4,283,659.19
15,152,040.16
21,657,096.96
30,084,802.40
32,875, 779.67
30,386,715.31

W
i
©

DISTRICT NO. 9

MINNEAPOLIS.

383

FEDEEAL RESERVE NOTES.

The policy of the bank with respect to the issue of Federal Reserve
notes has not been altered or changed during the year. Careful consideration has been given to every method of promptly meeting the
currency needs of the district, and an additional issue of $9,880,000
has brought the total of Federal Reserve notes in circulation at the
close of the year up to more than twenty million dollars. Such alteration in policy as has occurred, if any, was entirely confined to a more
active effort than in 1915, to substitute Federal Reserve notes for
gold, withdrawing the latter from circulation for storage in the bank
vaults. Many obstacles present themselves when any attempt is
made to thus acquire gold holdings, yet the careful pursuance of the
policy of encouraging the deposit of gold has had very satisfactory
results, with a continued improvement in the gold position of the
bank during the year. The cooperation of interested member banks
has been a valuable contributing factor in obtaining this result.
Federal Reserve notes issued by this bank have uniformly had
throughout -the year the full gold cover of 100 per cent. The denominations and issue by the Federal Reserve Agent's department of new
and used notes during the year are shown in the following table:
FcrWaJ Reserve note issues.

Fives:
New
Used

$2, 840, 000
880, 000
$ 3j 720, 000

Tens:
New
Used
Twenties:
New
Used
Fifties:
New
Used
One hundred:New
Used
Total:
New
Used

2, 480, 000
775, 000
,

3, 255, 000

2, 320, 000
255, 000
—
2, 575, 000
70, 000
50, 000
120,000
170, 000
40, 000
210,000
7, 880, 000
2, 000, 000
9, 880, 000

The following table shows the destruction of unfit Federal Reserve
notes in the Treasury Department at Washington, the total held by
the bank and the Federal Reserve Agent's department pending destruction, and the total of destroyed and unfit notes for the year:

384

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
Redemption and destruction of notes.
Destroyed at Washington
$895, 955
Held to be destroyed:
Bank
$1, 200, 000
Agent
500, 000
___:
lt 700, 000
Total destroyed and unfit for use

2, 595, 955

The inter-district movement of Federal Reserve notes issued by
this bank is disclosed in the items in the following table, showing
receipts from other Federal Reserve Banks. The items showing
shipments to other Federal Reserve Banks indicate Federal Reserve
notes segregated and returned by the Federal Reserve Bank of Minneapolis to the bank of issue.
Inter-district Reserve note
Boston.

movement.
New York.

Philadelphia.

Received Shipped Received Shipped Received Shipped
from.
to.
from.
to.
from.
to.
January...
February..
March
April
May
June
July
August
September.
October
November.
December..

$7,000
4,000
4,000
4,000
4,000
5,000
3,000
8,500
8,000
7,000
6,000
8,000

SI,185
255
1,000
1,000
1,000
1,000
2,000
2,000
1,000

Cleveland.

$62,350
56,950
65,900
56,300
28,100
47,000
56,500
82,900
62,200
63,400
74,600
64,600

$14,540
9,115
8,000
9,000
17,500
15,000
14,000
16,000
10,000
13,000
11,500
9,000

Richmond.

$3,690
4,000
4,000
5,000
5,000
2,000
4,000
4,000
6,000
5,000
4,000
5,000

$4,060 !
2,000
1,500
2,000
3,850
2,980
3,000
3,640
3,700
3,000
3,400

$4,075
2,360
1,500
2,500
4,000
2,500
3,000
4,000
2,500
3,000
2,500
2,000

Chicago.

$675
2,000
1,000
1,000
1,375
1,750

$1,780
420
2,000
1,000
3,000
1,000
2,500
2,000
1,500
2,500
1,000
'500

St. Louis.

1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000

Atlanta.

Received Shipped Received Shipped Received
from.
to.
I from.
to.
from.
January...
February..
March
\pril
May
June
July
August
September.
October
November.
December..

$850
290

$2,260
1,075
o 530
1,070
1,920
1,940
2,670
1,250
1,000
1,040
2,135

Shipped

to.

$2,395
545
2,000
1,000
3,000
3,000
2,500
3,500
1,000
3,000
2,000
1,500

Kansas City.

Received Shipped Received Shipped Received Shipped
from.
to.
from.
from.
to.
to.
January

February.
March
April
May
June
July
August
September.
October
November.
December..

$159,500
96,000
175,000
157,000
226,000
207,000
160, 000
258, 000
229, 000
225,000
140,000
254,000

$6,870
3,510
4,000
4,000
6,000
5,000
4,000
6,000
3,500
4,000
4,000
2,500

$3,500
20,895
11,800
7,545
15,980
4,350
8,500
16, 400
11,200
12, 400
13, 700
13,800

U, 935
355
2,000
1,000
4,000
2,000
2 000
3,500
1,500
3,500
2 000
2,000

$7,630
4,475
3,490
1,770
2,480
1,480
2, 500
5,675

$10,755
6,275
5,500
7,000
12,500
10,000
10,000
14,500
9,000
14,000
11 500
10,000

DISTRICT NO. 9

385

MINNEAPOLIS.

Inter-district Reserve note movement—Continued.
Dallas.

San Francisco.

Received Shipped Received Shipped
to.
from.
to.
from.
January
February..
March. .^"...
April
May
June
July
August
September.
October
November.
December..

$3,455
1,250
2,300
1,500
2,135
1,300
2,215
1,110
1,500
3,425
1,500

$5,240
3,325
2,500
4,000
5,500
5,000
4,000
7,000
3,500
5,000
3,000
3,500

$6,870
3,765
5,425
5,375
3,910
4,430
4,315
4,370
6,920
10,865
25,615
17,410

$6,685
4,215
10,100
9,000
28,000
14,500
12,000
21,000
12,000
15,500
12,000
8,500

A longer period of observation will be required before a definite
determination as to the average life of a Federal Reserve note can
be reached. Obviously, the conditions existing within the district,
the amount of use which a note receives before falling into the hands
of another reserve bank and being sent back for redemption, and
other factors, will have an important bearing upon this subject.
Considering the cost of printing and engraving Federal Reserve
notes, which is borne by the issuing Federal Reserve Bank, the question is important. Observation to this date would indicate that a
long life can not be expected of these notes, although many of them
will go out into circulation and remain in the hands of the public for
long periods. The experience so far had with notes sent by commercial banks to the Treasury Department at Washington for credit
and destruction, indicates that the proportion of such notes held out
and returned to this, bank as being still fit for use will be at all times
small. This is accounted for by the fact that commercial banks will
not ordinarily send notes to the Treasury Department for destruction
unless received over their counters, and they have already had such
use as to be unfit for further circulation. The experience of the year
indicates that a considerable proportion of the notes caught by the
Federal Reserve Banks in other districts and returned in accordance
with the law to this bank for redemption are fit for issue a second
time. Experiments made during the year with the laundering of
Federal Reserve notes have been only partially successful.
The bank may undoubtedly look forward to a period when the
reissue of used Federal Reserve notes will be very small in proportion
to the amount of new notes put into circulation. There is an increasing demand upon the part of the public for fresh, clean money. The
chief usefulness of the used notes so far reissued has been to take care
of the temporary crop-moving demand in the fall of the year. As the
demand for fresh money grows, the bank will be obliged to meet an
increasing cost for the currency thus issued.

386

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

The following tables show Federal Reserve notes received and
issued since organization, amounts destroyed, and stock on hand, also
details of issue and cost:
Notes received and issued.
Denomination.
Fives
Tens
Twenties
Fifties . . .
One hundreds

Received Returned
from comp- to agent
by bank.
troller.

Issued to
bank
(new).

Reissued
to bank
(used).

Destroyed
at Washington.

On hand.

$9,180,000 $1,237,000 $8,500,000
890,000 7,440,000
8,120,000
285,000 5,440,000
6,400,000
180,000
50,000
400,000
320,000
40,000
400,000

$882,000
775,000
255,000
50,000
40,000

$467,735
289,910
132,310.
2,400
3,600

$1,035,000
795,000
990,000
220,000
80,000

21,880,000

2,002,000

895,955

3,120,000

24,500,000

2,502,000

New notes issued to bank and cost.
Cost.
Federal Reserve notes issued to bank Nov. 16,1914, to Dec. 31,1915
Federal Reserve notes issued to bank Jan. 1,1916, to Dec. 31,1916
Total
Amount of notes destroyed at Washington to Dec. 31,1916
Amount of unfit notes held by agent Dec. 31,1916
Amount of unfit notes held by bank Dec. 31,1916

Amount.

$18.701. 27 $14,000,000
% 866. 06
7,880,000
28, 567.33 21,880,000
895,955
500,000
1,200,000

Total
Balance of notes fit for use on which all costs have been paid

2,595,955
19,284,045

In addition to the new Federal Reserve notes issued by the Federal
Reserve Agent to the bank during 1916 there was a reissue of
$2,000,000, making a total of $9,880,000 for the year. As soon as
new notes are taken from the agent the full cost is charged to expense
at the rate of $36.04 per thousand sheets of notes. This rate will be
in effect until we have used up our original order of $30,000,000, the
cost on further preparation of notes being at the rate of $34.37 per
thousand sheets.
The following table shows the details of the cost of printing Federal
Reserve notes, the items making up the cost per thousand notes, and
the cost per thousand dollars of the various denominations delivered
at Minneapolis:
Number Maximum
of plates. number
notes.

Denomination.

19 $3,800,000 $2,800,000
7 1,400,000
816,000
3
600,000
252,000
2
400,000
16,000
o
400,000
30,000

Fives .
Tens
Twenties
Fifties
One hundreds
Total

Number
of notes
printed.

. . .

6,600.000

3,904,000

Cost of
plates.
$1,274.00
469.37
201.15
134.11
134.11
2, 212. 74

DISTRICT NO. 9
Cost per 1,000 notes

387

MINNEAPOLIS.
{undelivered).

Plates
Paper
Printing

$0. 335
1.167
7.508

Total

9.01
Cost per $1,000 (delivered).
[Based on present rates.]
One
Twenties. 'Fifties. hundreds.

Fives.

Tens.

10.0671
.2334
1.5017

$0.0335
.1167
.7508

$0.0167
.0584
.3754

$0.0067
.0233
.1502

$0.0033
.0117
.0751

Undelivered
Postage
Insurance

1.8022
.05
.12

.9010
.0960
.12

.4505
.0480
.12

.1802
.0192
.12

.0901
.0096
.12

Delivered

1.9722

1.1171

.6185

.3194

.2197

Plates
Paper
Printing

The Bureau of Engraving in Washington has been inconvenienced
during the year through the shortage of dyestuffs, banks experiencing some difficulty with respect to the paper situation. These
obstacles have been to a considerable extent surmounted, with a
corresponding improvement in the wearing quality and workmanship
of the notes.
It has been the practice of the Federal Reserve Agent's department throughout the year to maintain in the vaults of the bank an
average amount of $5,000,000 in new and unissued Federal Reserve
notes of the denominations chiefly required by the banks of the district, and to request shipments from the reserve supply held by the
Treasury Department in Washington to offset from time to time
issue of notes by the bank.
It was the practice during the fall and winter a year ago to gradually accumulate used notes in fit condition returned by the bank
to the Federal Reserve Agent, storing them against prospective
crop moving demands. This method has proven effective in guaranteeing an immediate and adequate supply of notes against all
demands.
The notes so held, together with all gold and collateral standing
against notes in circulation, are kept in a special vault compartment, separate and distinct from the vault accommodations of the
bank, and subject to entry only by the Federal Reserve Agent, or
his representative,, Methods for handling and protecting such funds
have been made the subject of special study and investigation, and
are believed to afford the fullest possible degree of protection.
ELECTION OF DIRECTORS.

Pursuant to law, a circular announcement of an election to fill
one vacancy each in class A and class B was issued to the 301 banks
composing group 1, on October 2. As a result thereof 132 banks

388

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

qualified by selecting electors, and the electors in due process cast
121 ballots. For the vacancy occurring in class A, Mr. E. W. Decker,
of Minneapolis, received 118 votes and was declared reelected for a
second term of three years, beginning January 1. In class B,Mr. F. R.
Bigelow, of St. Paul, received 119 votes and was declared reelected for
a second term of the same period, beginning at the same date.
On December 19 the chairman received official notification from the
Federal Reserve Board of the reappointment of Mr. John W. Black,
of Houghton, Mich., as class C director for a three-year term, beginning January 1.
An increased interest was manifested as compared with the election of one year before in which groups 2 and 3 participated, but the
ballots cast were far short of the total number of banks entitled to
vote, and many institutions did not avail themselves of the very
important rights enjoyed under the law in making their independent
nominations and casting their ballots.
PAYMENT OF FIRST DIVIDEND.

It was with special satisfaction that the officers and board of directors, upon authorization of the Federal Reserve Board, were
permitted to announce the payment on December 30th of the first
dividend, at the rate of 6 per cent established by law, covering the
first eight months of operation of the bank, to all stockholders of
record on June 30, 1915. The disbursement so required amounted
to $57,720, and a substantial balance remaining after payment of the
dividend was transferred to profit and loss account.
The course of business during the year indicates that incident to
the increasing effectiveness of the service rendered by the bank
there is a corresponding improvement in its revenues, and that its
gradual development constantly adds to its ability to meet the obligations imposed by law.
The bank closes the year with a substantial increase of activity in
all departments, with closer and more effective touch with its membership, and with an increased confidence on the part of the general
public. It appears to be clear that it is making rapid progress
toward efficient performance of the functions devolving upon it
under the law, and toward a full degree of banking service to its
members and of service to the public at large that may be expected
of it,
CONCLUDING REMARKS.

The policy of the bank throughout the year has been to conduct
its operations carefully, economically, and efficiently. Wherever
possible, it has avoided incurring expense, believing that its first
obligation was to liquidate the cost of organization and make provision for the wiping out of its fixtures and equipment account.
The cost of Federal Reserve notes has been charged off from month

389

DISTRICT NO. 9—MINNEAPOLIS.

to month as the note circulation has expanded, and the expense incident to circulation in excess of $20,000,000 has thus been written off.
The results of careful adherence to this policy have been substantial
and are disclosed in the comparative general balance sheets of 1915
and 1916, which follow.
The satisfactory result of the year could hardly have been accomplished without the loyal and intelligent cooperation of the official
and clerical force of the bank. The staff at the end of the year
remains approximately the same as a year ago, the only exception
being the increase in the force employed in the transit department
incident to the rapid expansion of check clearing operations.
In all the departments there has been keen interest in the success
of the bank's operations, and the officers and employees have
demonstrated a spirit which has been of the utmost value in solving
numerous problems presenting themselves from day to day, and
bringing about adjustments incident to the establishment of thoroughly efficient methods of work. In an institution only 26 months
old, established to have a practical usefulness in a new and untried
field, the problem of organization and of the development of settled
and effective methods of work has been difficult. The bank closes
the year after having reached a high degree of operating efficiency.
In all departments there is ample evidence that the adjustments
involved in establishing settled policies and methods have been
satisfactorily accomplished.
Statement of condition Dec. SI, 1916.
Condition
Dec. 31, 1916.

Condition
Dec. 31,1915.

$1, 985,182.75
6,199,999.55
3,178,687.85
569,664.72
15,607.73
59,274.19

$1,244,615.71
477,806.40
1,328,820.00
910,513.28
6,473.42
54,159.64
32,341.71
19,932.85

RESOURCES.

Bills discounted—members
Bankers' acceptances
United States bonds and notes
:
State and municipal warrants
Accrued interest on United States securities
Furniture and equipments (including new vault and safes)
Organization expense
Cost of Federal Reserve notes, unissued
Expenses paid in advance.
Due from other Federal Reserve Banks
Due from banks and bankers, also deferred debits to members..
National bank notes and Federal Reserve notes, other banks...
Federal Reserve notes on hand
Other lawful money
.Gold certificates and gold coin
Gold in settlement fund
LIABILITIES.

Capital
Profit and loss
Discount and interest unearned
Discount on United States bonds
Withheld for Federal income tax
Government deposits
Cashier's checks
Due to other Federal Reserve Banks.
Due to member banks
Gold with Federal Reserve Agent to retire outstanding Federal Reserve
notes

16,295.18
1,250.00
3,598,997.07
3,449,929.61
18,800.00
2,374,585.00
179,552.47
8,775,637.00
7,064,000.00

4,390,694.20
8,945.00
868,390.00
21,416.95
2,747,298.00
4,355,000.00

37,487,463.12

16,466,407.16

2,609,700.00
44,541.27
36,274.45
22,534.74
176.25
886,437.51
5,680.45
4,347,156.58
29.534,961.87

2,546,850.00

1, 822. 20
26,340.33
13,865,362. 24

37,487,463.12

16,466,407.16

20,484,045.00

18,963.25
7,069.14

390

ANNUAL EEPOKT OF THE FEDERAL RESERVE BOARD.
Profit and loss account—1916.

Gross earnings Jan. 1, 1916, to Dec. 31, 1916
Less :
Assessment for expenses Federal Reserve Board
Cost of new Federal Reserve notes issued during year
Operating expenses

$238,108. 68
$8, 962. 07
9, 866. 06
79, 877. 70
98, 705. 83

Excess of earnings over current expenses
:
Less the following items charged off:
Organization expense
Depreciation of furniture and fixtures
Dividend for period Nov. 2, 1914, to July 1, 1915

139, 402. 85
32, 341. 71
4, 800. 00
57, 719. 87
—

Balance carried forward

94, 861. 58
44, 541, 27

Gross earnings by months—1915 and 1916.
1916
January.
February
March...
April
May
June
July.....

1915

11,471.21
10,909.70
11,724.58
12,480.69
15, 782. 63
17,154. 86
20, 350. 25

4,269.52
4,014.08
4,932.92
5,109. 33
5,942. 45
6,741. 82
9,038. 91

1916
August
September.
October
November..
December..
Total

25,074.83
27,170.94
30,212.02
28,660. 58
27,116.39
238,108.

1915
10, 766. 40
10,966.71
13,371.14
12,333.42
12.122.61
99,609.31

Classification of earnings.
1916
Bills discounted, member banks
Bankers' acceptances
United States bonds and notes
State and municipal warrants
Sundry profits including interest on transfer drafts.
To! al

$60,937.81
50,098. 78
69,266.49
34,267.09
23,538. 51

$50,488. 75
5,247.90
18, 793. 25
20.930. 82
4,148.59

I 23b, 108. 08 Ik. L;09. 31

DISTRICT NO. 10—KANSAS CITY.

CHARLES M. SAWYER, Chairman and Federal Reserve Agent.

FINANCIAL RESULTS OF OPERATION.

The year has witnessed a greater redundancy of loanable funds in
the banks of this district than ever before. As a consequence, and
owing to the lack of requests by member banks to rediscount, the
investment operations of this bank have been confined largely to
open-market transactions, under the provisions of section 14 of the
Federal Reserve Act. This report will, however, show an earning
account in excess of expenses and current dividend requirements.
Statement attached hereto and designated Schedule A shows a comparative income, profit and loss account as of December 31, 1915
and 1916.
Out of the current earnings it has been possible to pay dividends
to June 30, 1915, as well as to charge off all organization expenses.
Surplus earnings now on hand indicate the further liquidation of
cumulative dividends at an early date. This favorable result,
attained during a period of lax demand for rediscounting, reasonably assures the ultimate payment of full dividend with the return
of normal conditions.
Schedule B herewith is a comparative detailed statement as of the
close of business December 31, 1915 and 1916. The material increase
in the amount due to member banks has been due primarily to the
payment of reserve installments required on May 16 and November
16, 1916, and further to the amendment to the Federal Reserve Act
permitting member banks to carry with Federal Reserve Banks any
portion or all of the cash reserve previously required to be carried
in their vaults. The response to the Board's circular setting forth
the desirability of a further concentration of gold in the Federal
Reserve Banks, through the privileges of this amendment, has been
highly gratifying.
The large increase in balances due to and from other Federal
Reserve Banks, as reflected by the comparative statements, is a
result of the interdistrict clearing operations. The amount due from
banks and bankers, shown in the statement of December 31, 1916,
represents nonmember items in process of collection, handled in

391

392

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

accordance with the provisions of the new collection plan. Other
items in the comparative statement which show material variation
are discussed in full under the proper heads elsewhere in this report,
GENERAL CONDITIONS.

At no time in the history of the section embraced within the
boundaries of district No. 10 have general commercial conditions
been so active and satisfactory as during the current year. Wholesalers, jobbers, and retailers have regularly reported unprecedented
and increasing sales, with collections far above the average. Manufacturing facilities have been generally taxed to capacity. Building
permits and engineering activities were reported in increasing volume, while post-office receipts, bank clearings, and deposits have
gone forward by leaps and bounds, each succeeding month adding to
previous records. Mineral and oil industries have enjoyed recordbreaking prosperity.
While agricultural production has not been as large as in previous
years, increased market prices have more than offset the shortage,
and farmers have prospered as never before. Labor conditions have
been satisfactory, except that a general shortage has existed in
almost every line. Voluntary wage increases have been common,
and such differences as have occurred between labor and employers
have been amicably adjusted through compromises. At live-stock
markets high prices have prevailed, many records being broken in
receipts as well as in prices paid. Bank deposits have been unprecedented, but the general lack of demand and low level of interest
rates have doubtless resulted in no greater profit to banks, if, indeed,
the profits have equaled those of preceding years. Railroad earnings have been highly satisfactory when consideration is given to the
lack of cars, high cost of materials and supplies, and the general
increase in operating expenses. There has also been some diminution
in tonnage occasioned by smaller crops. The high levels reached in
prices of farm products have naturally been followed by an increase
in price of many necessities of life.
INVESTMENT OPERATIONS.

Schedule C herewith is a report of rediscounts for member banks
during the year, distributed by States and maturities as of date of
discount, also the volume of business by months, record of the nature
of the paper discounted, number and average amount of notes rediscounted, maximum and minimum amount held, and number and
amount of offerings rejected in whole or in part. It will be interesting to note from this schedule that practically all of the requests to
rediscount came from points outside of the larger cities of the district,
the offerings consisting largely of agricultural and live-stock paper.

DISTRICT NO. 10

KANSAS CITY.

393

As soon as the recent amendment to the Federal Reserve Act permitting member banks to obtain funds from Federal Reserve Banks
against their own promissory notes became effective, a general letter
was addressed to the members of district No. 10, outlining the provision and announcing the rate approved for this form of credit. Inasmuch as these notes are acceptable for only 15 days, and conditions
prevailing in this district have not made it necessary to seek temporary relief because of immediate need, no large volume of this paper
has yet been offered. It is confidently believed that in periods of
unusual happenings, uncertainty, or stress, local or general, this privilege will be thoroughly appreciated and widely employed, especially
by the larger banking institutions. Natural conditions and usages
in this district make 15-day paper an unfamiliar credit transaction,
but, nevertheless, a sufficient number of these offerings have been
handled to indicate that at all times this form of credit will be requested to some extent.
While the volume of trade acceptances handled up to date has
been small, yet an active interest is being manifested in this class of
paper by commercial and credit associations in this district, and this
interest has been stimulated in every way possible by the official
staff of this bank. It is also gratifying to note that a number of
member banks are encouraging this method of settlement of accounts.
Schedule D is a statement of bankers' acceptances purchased, number of items in this class, and classification by rates and maturities.
Schedule E reflects the number and amount of warrants purchased,
rates obtaining, classification by maturities, and subdivision of the
aggregate amount in municipal and State warrants.
The major portion of acceptances and municipal warrants were
purchased for our account by the Federal Reserve Banks of Boston
and New York, the warrants consisting of issues of eastern municipalities. It will be observed that in the purchase of acceptances by
far the larger amount has been based upon transactions involving the
importation and exportation of goods, although a small amount of
acceptances based upon domestic transactions have also been handled.
There is a growing interest in domestic acceptances, as authorized by
the amendment to section 13 of the Federal Reserve Act, and it is
anticipated that with the return of normal conditions the use of this
instrument will play a larger part in commercial transactions.
Schedule F gives a full and complete record of all transactions in
United States bonds, providing descriptions of the different issues
handled, the purchase prices, sales, the conversions of 2 per cent
bonds, and the amount of the several issues on hand at the close of
business December 31, 1916.
In the early part of the year the directors of this bank concluded
to purchase United States bonds to the extent of $10,000,000. Prac

394

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

tically all of such bonds were purchased which were offered for sale
by the member banks in the district, either directly to this bank or
through the United States Treasurer, under the provisions of section
18 of the act. In order to obtain protection for the loaning power of
this bank, the circulation privilege was exercised upon $8,000,000 of
bonds so purchased. It was not anticipated that this currency should
be put into use except in the event of unusual demands, and, with the
exception of $2,000,000, these notes were held in vault. The $2,000,000 were put into circulation for purposes of practical illustration and
to familiarize the banks and the public with this form of currency.
Following the successful consummation of this plan, the entire
amount placed in circulation was retired by a deposit of gold with the
United States Treasurer.
Schedule G is a recapitulation of investment transactions as detailed in previous statements affecting these operations, and supplies information as to the average holdings of the several classes,
with the total earnings thereon, and the average annual rates obtained on each class of earning assets.
In Schedule H will be found the monthly changes in the reserve
position of this bank during the year, covering percentages carried,
required, and percentages in excess over requirements. The reserve
of this bank for the year has averaged in excess of 60 per cent.
MEMBER BANKS.

There have been no changes in the membership due to transfers
from or to other districts within the year. The movement of membership within the district shows a small net decrease, as per Schedule I, giving a record of the additions and withdrawals from membership, together with the effect on the total capital stock of this
institution. The larger number of liquidations of national banks
has been by reason of conversions to the State system in Nebraska.
The controlling influence in such cases as have come to tha attention
of the officers of this bank has not been dissatisfaction with the
national system nor with membership in the Federal Reserve Bank,
but because of the popularity of the Nebraska law guaranteeing
deposits.
Relations existing between this bank and its members have become
more and more cordial with a growing appreciation of the functions
of the Federal Reserve Bank and its vital part in the national financial plan. An increasing familiarity with the provisions of the law
and the privileges thereunder has had a favorable effect. No effort
has been spared to make the facilities of the greatest service to the
banks of the district. The policy has been as liberal as the conditions and the law would permit.

DISTEICT NO. 10—KANSAS CITY.

395

The dispatch with which discount operations may be effected
through the Federal Reserve Bank has thoroughly demonstrated to
those who have tested its facilities that the early criticism with respect to cumbersome details was without foundation. This fact has
been fully demonstrated notwithstanding that the policy of the
executive committee, while liberal, has at no time sacrificed the
higher prerequisites of liquid commercial paper. On the contrary,
the experience has been that this committee in passing on offerings
has been able to exert an influence resulting in a better knowledge
of what constitutes paper available for discount and to induce bankers within the district to observe finer distinctions in credit extensions.
In the main there seems to be manifested a thoroughly cooperative spirit. The real difficulty encountered has been in bringing
about a viewpoint national in its scope, the natural tendency being
to consider the results of the operation of the Act from a purely
local standpoint.
At every opportunity State banks and trust companies have been
kept in touch with the purposes of the system, and it is believed that
these institutions are becoming more and more cognizant of the
accomplishments and possibilities of the Federal Reserve Act. Since
membership is entirely voluntary on their part, however, although
many of them have doubtless considered joining the system, but one
trust company and two State banks have thus far applied for and
been granted membership in this institution. Some misapprehension doubtless still exists, but through correspondence, public addresses, and personal association with our officers at conventions and
elsewhere, much progress has been made in creating a better understanding of the law and its purposes.
There is submitted herewith in Schedule J a showing of the average deposits of member banks with this bank, indicating excess and
deficient balances, for the period from January 1 to May 16, May
16 to July 15, July 15 to November 16, and from November 16 to
December 31, inclusive. These divisions are intended to exhibit the
volume of deposits prior to the call for installments of reserves due
May 16 and November 16, and prior to the inauguration of the general clearing plan July 15 and subsequent thereto, because of the
changed conditions affecting reserve funds due to the provisions of
the new clearing plan. The figures given after July 15 deal only
with net balances and eliminate from consideration credits produced
by items in course of collection.
The schedule discloses that the average of deficient balances slightly
exceeds the average of excess funds, with the result that the aggregate
deposits of member banks have been less than the legal requirement.
This condition is not so marked since the inauguration of the general
75284°—17
26

396

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

clearing plan, the provisions of which establish a penalty for the
purpose of maintaining the required reserve balances. While this
penalty was not assessed within the year 1916, the banks have been
fully informed on the subject, and penalties will be assessed beginning with the month of January, 1917.
There is further supplied in Schedule J a monthly record of the
average number of accounts overdrawn and the average amounts of
overdrafts. The amounts involved have been inconsiderable in proportion to the aggregate deposits, and have not been due to a tendency to ignore requirements on the part of any particular member
bank, but have been the result of error, oversight, delayed mails, or
imperfect records, speedily adjusted in nearly every case. It became necessary during the year, in a few instances, to carry small
amounts of overdue paper pending provision therefor by discounting
banks. This, however, was invariably occasioned by lack of proper
attention on the part of member banks, and the average amount was,
proportionately small.
The cooperation of the Comptroller of the Currency has resulted in
copies of all statements of member banks, made upon official call,
being filed with our records, and these reports are at all times available for the use of the executive committee in passing upon offerings
for discount. Complete statistics are compiled from these reports
for ready reference. Prior to June 1, 1916, brief reviews of reports
of examination of member banks were secured from the chief national bank examiner, when found necessary. Since that date copies
of all reports of examinations made by the examiners attached to
that office have been furnished for the bank's credit files, so that at
this tune there is available at least one such current report on each
member bank. This arrangement is appreciably more satisfactory,
such files being immediately available, enabling a saving of time in
matters under consideration. The reports of examination of the
State bank members, as made to the respective State banking departments, have been found to be in acceptable form, and the State
bank commissioners have at all times cooperated in every possible
manner.
It is gratifying to note that there has not been a failure of any
national bank in the district during the year. The failure of but one
State bank has been reported.
PUBLIC RELATIONS.

In district No. 10 the attitude of the general public toward the
Federal Reserve Bank is apparently one of friendliness and favor.
It can not be said that this is because the average citizen has thoroughly digested the provisions of the Federal Reserve Act and comprehended the fundamental principles underlying. Nor indeed could

DISTRICT NO. 10

KANSAS CITY.

397

it be said, in the case of the average citizen, that this sentiment is
due to a personal recognition of the influence exerted over general
business conditions by the operation of the Federal Reserve Bank
but rather to the recognition of the fact that there exists for the individual, for the business interests, and for the general public, a
bulwark of strength, a safeguard against turbulent conditions, and
a modern banking system adapted to the commercial and financial
needs of all interests. That the larger business and financial concerns have appreciated the influence exerted, and the stability provided by the existence of the system, can not be questioned. Public
appreciation of the influence of the Federal Reserve Act is developing
in a marked degree, as evidenced by the recognition given by trade
bodies and other organizations. This has been especially noticeable
in the matter of furthering the use of the trade acceptance.
Open-market operations of this bank have been treated under
another head, and the effect thereof in connection with the relation
of the bank to the public can not be measured in this district by
reason of the fact stated that, aside from the purchase of Government
bonds which provided a market for member banks to dispose of
their bonds, these transactions have consisted of investments allotted
through an agreement with eastern Federal Reserve Banks.
Although the volume of discounts handled by this bank has not
been large, it seems to be generally conceded that the existence of
the bank, the outlet offered for liquid paper, and the rates quoted,
have undoubtedly had a tendency to stabilize rates.
This institution has no department especially established to conduct publicity, or public relations work, and what has been accomplished along" this line has been merely incidental to other activities.
The newspapers of the district have been uniformly friendly and
courteous, and have opened their columns freely to items of general
public interest having to do with the general operation of the bank.
Public meetings have been addressed by the officers at every opportunity, and this feature, it is believed, has had much to do with the
better understanding of the law by the public and the favorable impression that is everywhere apparent. A furtherance of the general plan of public relations work is believed to be desirable. The
monthly business review, covering conditions in the various industries of the district, is given special attention, and has resulted in
closer relations with all the important activities. Copies of this
review are distributed freely, and have been eagerly sought by the
best publications.
Since January 1, the date upon which Federal Reserve Banks
were designated as fiscal agents of the Government, the activities
have been confined to current operations of the general account of

398

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

the Treasurer of ~the United States. The volume of Government
business transacted is shown in Schedule K.
Relations between this bank and departments of the Government
with which inter-communication has been found desirable have been
most satisfactory. There has been every evidence on the part of
the United States Treasury and the comptroller's office of a desire
to cooperate. Direct relations of this bank with the Comptroller of
the Currency have been indicative of a helpful attitude. The cooperation on the part of the chief national bank examiner of the district
has been especially cordial.
NOTE ISSUES.

The general policy of this bank has been to further the use of
Federal Reserve notes as the medium of exchange in the hands of
the public wherever it could be done with a resultant accumulation
of gold and gold certificates.
Schedule L indicates, with other information, the amount of
Federal Reserve notes outstanding, or in circulation, the amount
of gold coin and gold certificates held against the circulation, Federal
Reserve notes on hand, rediscounts to secure Federal Reserve notes,
and the gross amount of such notes received from the Comptroller
of the Currency.
Schedule M shows in detail the number of Federal Reserve notes
by denominations and aggregate amounts received by the Federal
Reserve Agent, issued to the bank, returned to the Comptroller of
the Currency since organization, and on hand at close of business
on December 30, 1916.
It is obvious that any computation of the average life of Federal
Reserve notes in circulation would result in nothing more than an
estimate. It is fair to assume, however, that notes issued within
the year 1916 have not been destroyed except by some unusual
happening. Upon the theory, therefore, that the total destruction
to date has been from the issues prior to 1916, the nearest approach
to a conclusion would show an average life of the notes issued in
this bank in excess of tested experience with other issues. This is
apparently an inaccurate estimate, and it is believed, with longer
experience than has been possible under the Federal Reserve Act,
that some more definite conclusion may be reached.
The number of mutilated notes on hand, as shown in this schedule,
is accounted for by the fact that until recently no adequate arrangement was arrived at, relieving the Federal Reserve Agent of the
responsibility for losses without undue expense in shipment. As soon
as a satisfactory plan was accepted an order was placed for the necessary perforating machine, the receipt of which has been delayed. No
Federal Reserve notes have, therefore, been forwarded for redemp

DISTRICT NO. 10

KANSAS CITY.

399

tion from this bank. The amount of notes returned to the Comptroller of the Currency consists of those forwarded direct to that office
from other sources.
Schedule N will show the trend of Federal Reserve notes of this
district and the extent to which they have circulated and been returned
from other districts, as well as the record of such notes of other districts received by this bank and returned to the issuing bank.
All cost incidental to the issue of Federal Reserve notes prepared
for the use of this district, whether put into circulation or held in
reserve, is charged to a special account as paid and prorated into
extraordinary expense of the bank as the notes are delivered by the
Federal Reserve Agent to the bank for circulation. The cost for this
district, exclusive of the expense incidental to the return of notes of
this bank by other Federal Reserve banks and the cost of redemption,
is approximately 1 cent per note. Inasmuch, however, as the cost
per note is proportionately larger for the smaller denominations, as
compared with the cost per thousand dollars of issue, it is manifestly
impossible to set up a figure as the actual cost per thousand dollars,
because of the varying denominations requested. The experience
thus far would approximate $1 per thousand on the average circulation of all denominations, taking into consideration only the actual
cost of manufacture and transportation.
The expense incident to the return of the notes of this bank by
other Federal Reserve banks has averaged about 25 cents per thousand dollars, which, proportionate to the issue, would add to the
estimated per thousand dollar cost herein given almost 4 cents. In
addition to this, it is estimated, on the basis of the entire circulation,
that the expense of redemption will increase the per thousand dollar
cost so that the figures available at this time would justify a gross
estimate of $1.10 per thousand dollars of the average circulation
should the percentage of denominations issued remain as they have
been in the past. It will be understood that the figures here given
are approximate estimates, and Schedule O of this report will exhibit
the total Federal Reserve notes issued for circulation and the actual
expense of the issue, as well as other detailed information from which
the conclusions stated have been reached.
Of a total amount of $8,000,000 of Federal Reserve bank notes,
which were prepared for this bank, $2,000,000 were used in demonstrating the practicability of the issue and circulation of these notes,
as previously referred to in this report. In order to avoid the tax on
this circulation an equivalent amount of gold has been deposited with
the Treasurer of the United States, and the net unissued amount of
Federal Reserve bank notes is now $6,000,000. As the one-half per
cent tax per thousand annually on this circulation, added to the cost
of issue, is in excess of the cost of Federal Reserve notes, it is not con

400

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

templated that any further use will be made of the Federal Reserve
bank notes, of which the entire $6,000,000 are now held in vault,
except in emergency.
It has been the policy of the Federal Reserve Agent to have on
hand at all times an ample amount of Federal Reserve notes, not
only to supply the usual requirements but to meet any occasion that
might arise. To this end approximately $3,000,000 of these notes,
largely in smaller denominations have been carried in vault unissued.
In addition thereto $3,000,000 was transferred and has been held in
the subtreasury at St. Louis, available upon short notice. It has
furthermore been the policy to have printed and in stock in Washington Federal Reserve notes sufficient to bring the aggregate to an
amount approximating the total note issuing power of this bank.
MANAGEMENT.

It has been deemed advisable to continue the regular meetings of
the board of directors on the second and fourth Thursdays of each
month during the current year. These meetings have been attended,
as a rule, by the full membership, and in addition to an examination
and approval of the actions taken by the executive committee, full
reports of the operations of the bank have been considered and future
policies discussed and outlined. Applications for fiduciary powers
are submitted for any special information which any of the members may have. The members have shown a marked degree of interest in the affairs and policies of the bank and have given of their
time and talents to a furtherance of its successful operation.
Previous to June 22, 1916, the executive committee, consisting of
the governor, the chairman of the board of directors, and one member of the board of directors met daily. This arrangement was found
expensive and cumbersome and on the date named a resolution was
offered which authorized the governor and chairman of the board to
pass upon the daily offerings, the third member meeting with them
in executive committee weekly to pass upon their actions, all offerings
of member banks being reviewed as well as investments made. The
member of the board acting upon this committee has been changed
monthly. In addition to approving investment transactions, the executive committee acts as a subcommittee of the board of directors
in suggesting changes in discount rates, directing matters of routine,
approving current bills paid, and passing upon matters affecting the
employment and remuneration of employees. The record of the
proceedings in executive committee meetings is preserved, and a
digest of the minutes of these meetings reported to the board of
directors.
The official staff consists of the governor, the chairman of the board,
who is also Federal Reserve Agent, and the secretary-cashier. The

DISTRICT NO. 10

KANSAS CITY.

401

governor receives and presents the offerings of the member banks,
conducts correspondence with them with relation thereto, and is
joint custodian of the moneys and securities of the bank. The
secretary-cashier has immediate charge of the clerical force. He is
also the joint custodian of the moneys, securities, and rediscounts,
and acts as secretary of the bank, of the executive committee, and
of the board of directors. The Federal Reserve Agent receives,
issues, and redeems all Federal Reserve notes, and has in his possession, in addition thereto, gold, moneys, and collateral deposited with
him for the issuance of Federal Reserve notes, maintains all records
relating thereto, has immediate charge of the credit files, and is
the local representative of the Federal Reserve Board. As chairman
of the board of directors this officer is kept in close touch with the
current operations of the bank by membership and attendance in
the executive committee meetings and meetings of the board of
directors. In addition to the staff described, an assistant to the
governor was elected early in the year, who has served in an official
capacity, sharing the functions of the governor as well as those of
the secretary-cashier.
The member of the Advisory Council of this district has taken an
active interest in matters which pertain to that office, and from time
to time attends meetings of the board of directors to discuss with
them topics suggested for consideration at the council sessions.
The relations of the officers, directors, and Advisory Council member
have been marked by a spirit of cooperation in promoting the welfare
of the Federal Reserve System.
Schedule P included in this report shows the number of officers,
employees, and the pay roll per month, in the various departments.
On January 1 of the present year the election of J. C. Mitchell, of
Denver, Colo., succeeding Gordon Jones, class A director, of the same
city, became effective. In the same month Charles M. Sawyer was
appointed to succeed J. Z. Miller, jr., as chairman of the board and
Federal Reserve Agent, and F. W. Fleming was appointed as vice
chairman and deputy Federal Reserve Agent to succeed Asa E.
Ramsay, resigned. In October, L. A. Wilson presented his resignation
as class B director, effective January 1, 1917, by reason of his removal
from the district. The election conducted in December resulted in
the selection of H. W. Gibson, of Muskogee, to fill the unexpired term
of Mr. Wilson, while W. J. Bailey, class A director, and M. L. McClure,
class B director, were elected to succeed themselves.
At the annual meeting in January the following official staff was
elected: E. F. Swinney, member of the advisory council, succeeding
himself; J. Z. Miller, jr., governor, succeeding Charles M. Sawyer;
Jerome Thralls, secretary-cashier, succeeding himself. On February
10, Jerome Thralls, secretary-cashier, resigned. At this same meeting

402

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

J. L. Cross was elected assistant to the governor. On March 14, Arch
W. Anderson was elected secretary-cashier to succeed Jerome Thralls.
On February 1, M. A. Thompson was appointed assistant to the
Federal Reserve Agent. These changes naturally brought about
more or less reorganization in all departments. The work of the
bank is being carried on in a capable and efficient manner.
Bank premises, office, and all facilities are the same as shown in the
last annual report. The location and equipment have been found
satisfactory in every way for the proper and expeditious conduct of
the business.
Examinations of this bank have been conducted by the Federal
Reserve examiners of the staff of the Federal Reserve Board in the
usual manner.
CLEARING OPERATIONS.

The clearing operations of this bank up to July 15 of this year were
in accord with the plan in force as amended and reported in the
annual report for 1915, under which this bank was collecting for
members of district No. 10 items on other members and on Federal
Reserve cities. The immediate credit and debit principle was applied
with certain provisions to eliminate items that would deplete member
bank balances if handled. As the member banks became familiar
with the practices they were more reconciled to the innovation of
handling intradistrict items as outlined. I t is believed that a real
service was performed in a limited way, pending the adoption of a
general clearing plan by the Federal Reserve Board, covering both
inter and intra district operations.
Schedule Q gives a brief record of the volume of transit business
handled prior to the inauguration of the new plan which went into
effect July 15, the subdivisions of city and country items, and daily
averages, as well as like information for the period subsequent thereto
and to the close of the year.
At the time the first announcement was made of the method to be
employed under the general clearing plan now in operation the
official staff of this bank gave special attention to simplifying the
detailed operations and fully informing the member banks on all
subjects pertaining thereto. The soundness of the underlying principles was emphasized and no effort spared to provide a thorough
familiarity with the methods to be employed in putting them into
effect. At the same time all nonmember banks in the district were
canvassed and their support solicited for this nation-wide plan
inaugurated for the purpose of establishing improved clearing methods
and extensive par facilities. The general letters addressed both to
members and nonmembers were followed up with care and correspondence conducted in a thorough and careful manner. The result
was that in the early stages a large majority of the member banks

DISTRICT NO. 10—KANSAS CITY.

403

indicated their willingness to handle the items on nonmembers
located in the same city, and a goodly portion of the nonmember
banks entered into agreement to remit for their own checks, and in
some cases for their competitors7 checks, at par. The further progressive steps have been quite satisfactory and the use made of the
facilities provided in connection with the present general collection
system has shown a steady increase.
The provisions of the new plan were put into practical operation
with dispatch and very little attendant difficulty, and the changed
conditions affecting transit items have been satisfactorily met.
Under the interdistrict plan a larger volume of items has been collected for banks of other districts, while the increase in the sendings
by members of this district has been more gradual. The service
charge imposed has evidently deterred, to some extent, the participation on the part of member banks. This is especially true in the case
of the smaller items. Experience since July 15 has been that the
average amount of the individual items will exceed the average
amount prior to that time.
The objection most generally raised by nonmember banks to enlisting in cooperation has been due to the fact that during the year
1916 no provision was made to supply banks remitting at par with
return postage. This practice has been customary on the part of
other collection agencies and will be adopted by this bank after January 1. It is believed that this small consideration will be reflected
by an increased number of nonmember banks on the par list. The
effect of the campaign in behalf of universal par clearings in district
No. 10 has resulted in more serious consideration being given this
subject from the viewpoint of the right to deduct exchange for purposes of revenue only, and there is every reason to believe that influence exerted in this direction is more real than may be apparent
from the actual volume of business handled through the transit department of this bank.
In this Federal Reserve city the local organization known as the
country clearing house has recognized the par list of the Federal Reserve Bank by amending its rules so as to extend the benefit thereof
to all banks and their customers. Reports from like organizations
in the district indicate that in the larger cities, where country items
are handled to some extent through the local clearing houses, there
has been some evidence of the influence exerted by the Federal Reserve clearing system. Gradual slight modifications were made by
the clearing houses in their charges, so that such benefit as is experienced from the operation of the Federal Reserve clearing plan may
be transmitted to the customers. This movement has not taken
definite shape nor been widely extended, but there is every reason
to believe that the advantage of facilities provided by the Federal

404

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

Reserve Banks has extended to the original indorser of items, and
that as time goes on this movement will be more pronounced. Such
transition is naturally gradual, due to reciprocal and Ipng-established
relations existing between commercial banks, but the information
obtainable at this time would lead to the conclusion that where any
change in method has been made it has been in recognition of and
in conformity with the principles enunciated and the practices employed under the general clearing plan.
The service charge in this district was established at 1J cents per
item, applicable to all country items actually handled and reforwarded
by this bank. The funds accumulated by this charge have practically offset the expense incidental to the operation of the transit
department, in which has been included the equipment and all expenses of this department except overhead administration charge.
With the facilities already provided an increased volume of business
can be handled without proportionate increase in the expense of
handling, and it is anticipated that gradually this charge may be consistently reduced.
The reserve balances have been well maintained in the aggregate,
although analysis of accounts and correspondence have developed that
a number of bankers have not thoroughly familiarized themselves with
the effect of deferred time schedules on the available reserve.
Observers of the operation of the gold settlement fund and its effect
on the trend of exchange and credit as between the Federal Reserve
districts are confirmed in the opinion that this method of settlement
relieves the unnecessary forward and backward flow of funds and
employs an economic principle which experience has demonstrated
to be of vital importance in the interrelations between the several
sections of the country. That the operation of this plan has tended
to stabilize the exchange market and properly distribute credit
throughout the country, without large expense, as well as to meet
the varying demand due to seasonal needs, is obvious. The service
rendered to banks is apparent to those who have given thought to
the subject, but probably has not been fully appreciated by some
bankers in the smaller cities and towns. From an accounting standpoint it has materially simplified transactions with other Federal
Reserve Banks, and from a practical standpoint enabled the Federal
Reserve Bank to meet the demands of this section without pyramiding or depleting funds or absorbing a large volume of float, and to
exert an economic influence which has resulted in a like experience
for many of the larger banks of the district.
SUMMARY.

While the fact has been kept in mind that earnings are not the
essential feature in the successful operation of a Federal Reserve

DISTRICT NO. 10

405

KANSAS CITY.

Bank, yet, in the face of an unusual plethora of loanable funds in the
hands of member banks during the past year, the earnings have been
sufficient to eliminate the extraordinary expense incurred in organization, to pay all operating expenses, and to partially liquidate the
cumulative dividend requirements. The general increase in resources
enables this institution to exert a more pronounced influence on the
financial affairs of the district. The year has brought an era of prosperity to all lines of industry. The lack of demand from member
banks has prompted the purchase in the open market of a volume of
high class, low rate investments, including a large amount of United
States bonds. The period has witnessed a noticeable improvement
in the public appreciation of the purposes and benefits of the Federal
•Reserve Act and its operations, although this would doubtless have
been more apparent had conditions made necessary a wider employment of the credit facilities. The successful inauguration of and increasing cooperation in the much discussed clearing plan have been
noteworthy. The existence of the Federal Reserve Bank of Kansas
City has unquestionably had a strong bearing on the commercial life
of this district and on the stabilization of interest rates.
SCHEDULE A.—Income—Profit and loss account at close of business Dec. 30, 1916, and
Dec. 31, 1915.
Year ending Year ending
Dec. 30,1916 Dec. 31,1915.
Earnings from—
Bills discounted for member banks
Bills bought—Acceptances
Trade acceptances
United States bonds
Municipal warrants
Profits on United States securities sold
Sundry profits
Appreciation profit, United States bonds..
Exchange
Total earnings.
Expenses:
Federal Reserve Board assessments..
Federal Advisory Council
Governor's conferences
Federal Reserve Agents' conferences.
SalariesBank officers
Clerical staff
Special officers and watchman
All others
Directors' fees
Directors' per diem allowance
Directors' traveling expenses
Officers' traveling expenses
Legal fees
Rent
Telephone
Telegraph
Expressage
Fidelity bond premiums
Light, heat, and power
Printing and stationery
Repairs and alterations
All other expenses not specified herein.
Operating expenses

$84,571.71
29,601.03
186,411.19
14,366.41
14,407.50
181.91
34,463. 96
962.96

$64,257.59
7,831.51
391.10
20,630.85
9,575.48
673.76

6.67

103,360.29

10,574.64
305.85
1,244.74
423.08

5,928.48
357.10
924.13
717.20

25,972.81
32,231.06
805.00
1,599.42
3,705.00
2,385.00
3,628.04
633.31
600.00
7,949.96
495.29
351.55
6,457.19
824.85
1,226.52
979. 50
3,136.34
213.36
4,108.18

28,820.82
34,915.95
2,591.83

109,850.69

125,979.32

3,480.00
4,316.00
4,662. 51
514. 72
1,501.20
9,538.85
607.18
572.17
10,347.01
103.24
1,354.28
1,241.00
9,171.34
86.63
4,227.68

406

ANXUAL REPORT OF THE FEDERAL RESERVE BOARD.

SCHEDULE A.—Income—Profit and loss account at close of business Dec. 30, 1916, and

Dec. 31, 1915—Continued.
Year ending Year ending
Dec. 30,1916. Dec. 31,1915.

Extraordinary expenses:
Commissions paid
Cost of Federal Reserve notes issued
Cost of Federal Reserve Bank notes (including taxes)
Amortization charges—Federal Reserve notes
Amortization charges—organization expenses (1/24)
Depreciation, furniture and equipment

$20,436.16
5,790. 54
5,523.16
26,484.44
3,900.00

$861.03

Total extraordinary expenses

62,134.30

861.03

Total all chargeable expenses

171,984.99

126,840.35

192,981.68

-23,480.06

Net earnings or deficiency
Less dividends paid
Less organization expenses

$66,706,95
34,768.71

Net earnings to profit and loss account

101,475.66
91,506.02

SCHEDULE B.—Comparative detailed statement at close of business Dec. 30, 1916; Dec. 31

1915.
Dec. 30, 1916. Dec. 31,1915.
RESOURCES.

Bills discounted—members
$479,067. 72
3,945,180.94
Bills bought in open market
35,820. 74
Member banks collateral notes
163,813.65
Municipal warrants
6,000,000.00
United States bonds to secure circulation
2,492,850.00
United States bonds on hand
85,887.20
Premium and discount on United States bonds
53,978.18
Interest accrued on United States bonds
963,000.00
United States gold notes
Expense, organization
2,062.70
Expenses paid in advance
Cost of unissued Federal Reserve notes
27,614.85
Furniture and equipment.
15,982.54
Furniture and fixtures, recoverable
25,978.29
Cost of unissued Federal Reserve Bank notes
983.82
Transit expense, recoverable
11,952,040.60
Due from other Federal Reserve Banks
17,688.57
Due from member banks—overdrafts
1,029,956.21
Due from banks and bankers
10,899. 57
Exchanges for clearing house
6,415.95
Checks and other cash items
4,602,501.65
Deferred debits (transit account)
Due from United States Treasurer, 5 per cent fund (account Federal Reserve
300,000.00
Bank notes)
107,645.00
National bank notes and Federal Reserve notes of other banks
6,000,000.00
Federal Reserve Bank notes on hand
517,120.00
Federal Reserve notes on hand
26.75
Nickels and cents
21,235,500.00
Gold settlement fund, credit balance
Due from United States Treasurer, gold redemption fund (Federal Reserve
150,095.00
notes).
371,195.00
Gold bullion and coin.
5,793,590.00
Gold certificates
30,131.00
Silver certificates
113,845.00
Legal-tender notes
1,287.00
Silver coin

$428,872.29
3,580,463.35

66,532,157.93

20,518,071.05

Total resources.
CAPITAL STOCK LIABILITIES.

Capital paid in
Unearned interest and discount
Government deposits
Due to other Federal Reserve Banks
Due to member banks
Expense checks
Cashier's checks outstanding
Federal Reserve Bank notes
Net liability Federal Reserve notes
Reserved for taxes
Profit and loss undistributed earnings
Total

—

288,015.84
2,151*650.66
8," 862.18
52,984.44
9,879.48
11,252.52
31,828.85
15,000.00
1,849,365.44
11,783.74
5,000.00
363.85
348,318.00
564,850.00
2.07
2,464,000.00
107,000.00
3,933,700.00
4,535,310.00
43,694.00
70,375.00

5,500.00

3,037,800.00
3,073,950.00
17,748.50
54,665.89
275,778.80
492, 750.72
10,336,961.54
44,191,246.07 14,930,086.68
764.61
2, 767. 76
1,373.07
6,000,000.00
2,540,000.00 "2'666,'666." 66
2,829.32
91, 506. 02
! 66,532,157.93

20,518,071.05

SCHEDULE C.—Discount operations for the year 1916.
REDISCOUNTS FOR MEMBER BANKS, DISTRIBUTED BY STATES, AND MATURITIES AS OF DATE OF DISCOUNT.
Number of Number of Number of
member
banks
transbanks
accomactions.
Dec. 31.
modated.

State.
Colorado
Kansas
Missouri
Nebraska
New Mexico.
Oklahoma...
Wyoming

Total.

Maturities.
10 days
and less.

122
224
54
193
9
305
36

44
223
74
147
19
351
4

$50,000.00
58,458.32
25,714.00

943

862

VOLUME BY MONTHS.
January
February...
March

April
May
June
July
August
September.
October
November..
December..

, $1,364,554.05
458,476.65
. 796,893.95
564, 124.44
627,*21.49
824, 726.89
819,464.19
356,489. 80
393,936.23
253,458.19
211,327.61
147,826.29

Total

6,817,699. 78

Over 10
to 30 days,
inclusive.

Over 30
to 60 days,
inclusive.

Over 60
to 90 days,
inclusive.

$83,132.59
493,552.52
61,105.59
193,653.29
58,166.48
575,596.15

$126,258. 77
510,782.99

37,247.26

$50,867.03
239,464.21
208,922.77
40, 738.88
13,598.33
256,369.02

171, 419.58

809,960.24

1, 465,206. 62

2,137,525.98

504.366.27
335,027.57
84,670.10
574.210.28
2,210.00

NATURE OF P A P E R DISCOUNTED.
"Trade acceptances
$190,931. 87
Commodity paper
360,000.00
Agricultural, secured by live stock
3,302,906.91
Agricultural, no collateral
1,964,199.53
Industrial
379,200.24
Commercial
504,640.49
Member banks' collateral loans
115,820.74

Over 90 days.

Total.

$135,102.30 $445,360.69
682,359.70 1,984,617. 74
179,569. 59
979,678.22
313,944.65
883,364.39
137,386.33
293,821.24
775,424.91 2,218,847.62
9, 799. 88
12,009.88
2,233,587.36

6,817,699. 78

Balance
on hand
Dec. 31.
$6,428.74
144,097.44
46,036.97
226,686. 78
10,870.23
77,173. 70
3,594.60
514, 888. 46

MISCELLANEOUS.
5,526 notes discounted, average amount
SI, 210.98
4 collateral loans, average..
28,955.00
Maximum amount Jan. 3 . . 3,427, 767.46
Minimum amount Dec. 27.. 464,648.90
OFFERINGS REJECTED.
In part, 148 offerings, 317
notes
$361,341.59
In whole, 22 offerings, 142
notes
157,597.62

Total

6,817,6 9.78

Total rejected

518,939.21

SCHEDULE OF DISCOUNT RATES IN EFFECT DURING YEAR.

Date effective.
Dec. 3, 1915..
Apr. 12,1916.
July 24, 1916.
Sept. 18, 1916.

10 days.

11 to 30
days.

31 to 60
days.

61 to 90
days.

91 days
to 6
months.

Commodity
paper.

Trade
acceptances.

Member
banks'
collateral
loans.

s
w
9

fin

408

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
SCHEDULE D.—Open-market transactions for the year 1916.
BILLS BOUGHT (BANKERS ACCEPTANCES).

557 items purchased in above period,
total
$8,191,082.48
At following discount rates:
2 per cent
2-JV per cent
2J per cent.
2 | per cent
2-j^ per cent
2f per cent
2^ per cent
2 | per cent
2 | per cent
2& per cent
2\i per cent
2 | per cent
3 per cent
3 J per cent
3i per cent
Total

1,156. 125.93
163; 169.52
295: 220.13
581, 651.88
325, 707.66
552, 688.86
1,253, 956.22
1,303. 004.09
435, 488.68
101, 753.07
104. 170.00

By maturities at date of purchase:
Up to 30 days
' 30 to 60 days
60 to 90 days
Total

$358,354.69
1,451,320.71
6,381,407.08
8,191,082.48

Classification:
Domestic
Export or import

449,300.00
7,741,782.48

Total

8,191,082.48

560^ 734.73
1,188! 695. 41
34; 876. 34
133. 839.96

8,191,082. 48

SCHEDULE E.—Open-market transactions for the year 1916.
WARRANTS.
39 purchases made, total (maturity
value)
$1,946,840. 70
At following discount rates:
2J per cent
2J per cent
2.30 per cent
2f per cent
2.40 per cent
2 J per cent
2.55
per cent
2T9g per cent
2f per cent
2.70 per cent
2f per cent
2.90 per cent
3 per cent
3-^s per cent
3.35 per cent
3 | per cent
3§ per cent
3 | per cent
Total

By maturities, at date of purcha
Up to 30 days
30 to 60 days
60 to 90 days
90 days to 6 months

35,127.08
553,341.39
251,906.16
Total
111,057.91
12,150. 00 Classification:
60,375.00
Municipal warrants.
60,000.00
State warrants
25,307.50
375,318. 23
Total
109,368.78
95,635. 53
50,725.00
105,170. 83
50,000.00
8,000. 00
25,000. 00
6,114. 63
12,242. 66

$60,052.08
235,646.23
227,225.54
1,423,916.85
1,946,840.70
1,845,036. 81
101,803.89
1,946,840.70

1,946,840. 70

SCHEDULE F.—Open-market transactions for the year 1916.
UNITED STATES BONDS.
Par value.

Price.

$69,800
3,750
525,250
2,650,000
1,000,000
2,332,200
100,000

99|.
99&.
99|.
•fa disct.
fa disct.
Par.
fa prem.

PURCHASES.

2 per cent consols, 1930

6,681,000
2 per cent Panamas, 1936

6,500
350,000
162,000
518,500

99|.
fa disct.
Par.

DISTRICT NO. 10

409

KANSAS CITY.

SCHEDULE F.—Open-marhet transactions for the year 1916—Continued.
U N I T E D STATES BONDS—Continued.
Par value.

Price.

2 per cent Panamas, 1938.

$250,000
88,000

A disct.
Par.

4 per cent, 1925.

. 125,000 111.
700, 000 1111.

PURCHASES—continued.

338,000

825,000
Total purchased..

8,362,500

2 per cent consols, 1930.
3 per cent, 1918
3 per cent conversion.
3 per cent conversion.

110,000
300

Par.

25,000
923,000

iSI:

948,000
1,058,300

Total sold
CONVERSIONS.
Delivered to United States Treasury.
Date.

2 per cent 2 per cent 2 per cent
consols, Panamas, Panamas,
1938.
1930.
1936.

Received from United States Treasury.

Total.

Conversion
bonds,
series
1916-1946.

One-year Treasury notes.

Series Apr. 1,1916. $410,000
Series July 1,1916. 206,000
Series Oct. 1,1916. 347,000

$820,600
412,400
88,100

356,500

250,000

$820,600
412,400
694,600

$410,600
206,400
347,600

Total. 1,321,100

356,500

250,000 1,927,600

964,600

Apr. 1,1916
July 1,1916
Oct. 1,1916

Total

963,000

Total.

$820,600
412,400
694,600
1,927,600

UNITED STATES SECURITIES ON HAND DEC. 31.
Amount.
2 per
2 per
2 per
3 per

cent
cent
cent
cent

consols of 1930
Panama, 1936
Panama, 1938
conversion bonds, 1946

$7,401,250
162,000
88,000
16,600

Amount.
3 per cent Treasury notes, 1917
4 per cent bonds, 1925

$963,000
825,000

Total

9,455,850

SCHEDULE G.—Discount and investment operations for the year 1916—Average amount
of each class of earning assets held, total earnings, and average annual rates thereon.

E a m i n g

Bills discounted—members
Bills bought in open market
Warrants
United States securities
Total

Average
rate.

$1,771,504
1,237,692
582,360
8,555,169

$84,571.71
29,601.03
14,366 41
186,411.19

4.77
2.39
2 47
2.18

12,146,725

314,950.34

2.59

410

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
SCHEDULE H.-—Reserve position
[Monthly averages.!

Month.

PercentPercent- Percent- age exage re- cess over
age
carried. quired. requirements.
75.8
76.4
52.4
51.5
48.5
56
63.1

January, 1916
February, 1916
March, 1916
April, 1916
May, 1916
June, 1916
July, 1916

40.8
41.4
17.4
16.5
13.5
21
28.9

35
35
35
35
35
35
35

SCHEDULE I.—Membership—Additions

PercentPercent- Percent- age exage re- cess over
age
quired.
carried.
requirements.

Month.

August, 1916
September, 1916
October, 1916
November, 1916
December, 1916
Yearly averages

62.9
60.7
57.5
66.6
67.8

35
35
35
35
35

27.9
25.7
22.5
31.6
32.8

61.6

26.6

and withdrawals and effect on the total capital

stock.
ADDITIONS.
Capital subto
Number scription
Reof banks. Federal
serve Bank
stock.

State.

Colorado . . .
Kansas
Missouri
.
Nebraska
N e w Mexico
Oklahoma

..
:I

. . . . .

Wyoming
Total

Capital a n d
surplus of
member
banks.

3
5
1

$5,700.00
12,400.00
30,000.00

$63,500.00
302,480.45
500,000.00

6
3

23,900. 00
5,500.00

407,500. 00
104,000.00

77,500.00

1,377,480. 45

WITHDRAWALS.

Capital
Number
of banks. surrendered.

State.

Colorado
Kansas
Missouri
Nebraska
New Mexico
Oklahoma
Wyoming
Total.

...

. .

Capital a n d
surplus of
member
banks.

$17,700.00

$295,000.00

75,400.00

1,223,000.00

25,500. 00

419,250.00

118, 600. 00

1,937, 250. 00

SCHEDULE J.—Member bank deposits.
NET DAILY AVERAGES FOR THE YEAR 1916.
Month.
January
February
March
April
May I t o l 5 .
May 15 to 31
June
July 1 to 15.

Amount.
$15,377,420
16,345,980
16,616,210
16,571,210
17,471,120
21,415,520
21,686,180
21,024,750

Month.
July 15 to 31.
August
September..
October
Nov. I t o l 5 .
Nov. 15 to 30
December...

Amount.
$24,042,111
24,620,080
24,817,490
27,028,960
28 980,933
35,474, ()32
36,395,381

DISTRICT ISO. 10

411

KANSAS CITY.

SCHEDULE J.—Member bank deposits—Continued.
EXCESS RESERVES AND DEFICIENCIES, DAILY AVERAGES FOR THE YEAR 1916.
Excess
reserves.

Period.
Jan. 1 to Apr. 30 (based on call Mar. 7).
May 1 to 15 (based on call May 1)
May 1 to July 15 (based on call June 30)
July 15 to 31
August
September
October
Nov. 1 to Nov. 15
Nov. 15 to Nov. 31
December (estimated)

U, 852,800
1,625,400
1,133,700
1,325,315
1,068,78a
1,143,270
1,130,200
2,373,000
1,898,400
2,227,544

Deficiencies.
$2,448,700
2,855,900
3,818,908
1,455,573
1,533,157
1,589,950
1,560,323
1,838,339
2,168,860
2,064,057

SCHEDULE K.—Government account, from Jan. 1916, to Dec. 30, 1916.
Total amount deposited to credit of United States Treasurer
Total amount of warrants paid
Total amount transferred by order of United States Treasurer
Balance to credit of United States Treasurer Dec. 30, 1916
Average daily balance for year

$18, 503, 000
14, 978, 000
3, 250, 000
275, 000
988, 700

SCHEDULE L.—Federal Reserve Agent's statement of Federal Reserve notes on hand, outstanding, received from Comptroller of the Currency, canceled, and coverage of total
issue as of Dec. SO, 1916.
RESOURCES.

Federal Reserve notes on hand
Federal Reserve notes outstanding
Rediscounts to secure Federal Reserve notes
Gold to retire Federal Reserve notes on hand
Credit balance in gold redemption fund
Credit balance with Federal Reserve Board

$4, 370, 000
1,064, 760
14, 260, 000

$3, 753, 000.00
22, 234, 760.00
2, 545, 111. 66

Total
19, 694, 760.00
Federal Reserve notes sent to Comptroller of Currency for destruction. 2,132, 240.00
Total
50, 359, 871. 66
LIABILITIES.

Federal Reserye notes from Comptroller of Currency, gross amount
Collateral received from Federal Reserve Bank
Provision for redemption of Federal Reserve notes
Total
75284°—17

28,120, 000.00
2, 545, 111. 66
19, 694, 760.00
50, 359, 871. 66

412

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

SCHEDULE M.—Federal Reserve notes, statement of Federal Reserve Agent, from organization to Dec. SI, 1916.
Number of pieces.

Received from comptroller
Received from Federal Reserve Bank
Received from Treasurer of United States
(fit notes)
Received by comptroller from Treasurer
of United States for destruction and
credit of Federal Reserve Agent's account

Fives.

Tens.

Twenties.

HunFifties. dreds.

2,608,000
348,800

820,000
79,700

284,000
10,700

16,000
5,900

$28,120,000
3,050,000

4,000

300

3,000

297,558

Total

Aggregate
amount.

Issued to Federal Reserve Bank
Returned to Comptroller of the Currency
for destruction, including notes returned
by United States Treasurer for credit
of Federal Reserve Agent's account
Fit notrs on hand
Mutilat ed notes on hand
Total

6,025

427

3,254,358

50,260
950,260

300,725

22,327

4., 000

2,132,240
33,305,240

2,613,400

812,600

265,600

17,900

200

27,420,000

297,558
172,000
171,400

50,260
72,000
15,400

6,025
28,000
1,100

427
4,000

3,800

2,132,240
2, 720,000
1,033,000

3,254,358

950,260

300,725

22,327

4,000

33,305,240

SCHEDULE N.—Federal Reserve notes received and returned.
[Amounts of Federal Reserve notes of the several denominations received from other Federal Reserve
Banks for redemption or credit and returned to other Federal Reserve Banks for redemption or credit
by the Federal Reserve Bank of Kansas City during the period since Jan. 1,1916.]

Boston
..
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St Louis
Minneapolis
Dallas
San Francisco
Total

...

Returned
to.

Received
from.

$175
3,940
210
590
300
2,740
1,225
13,060
5,700
16,310
2,070

$18,960
235,620
15,900
9,610
4,050
18,670
514,500
335,270
41,300
77,550
26,940

2,344,105

46,320

1,298,370

. .
. - .

Si Lo'-">is
Minneapolis
Dallas

San Francisco
Total

Returned
to.

$180
6,480
560
4,640
2,420
6,080
1,180
10,980
9,800
35,820
4,300

105,030.

451,470

82,440

Total.

Returned
to.

$3,600
34,850
3,400
1,250
450
3,100
17,500
6 450
950
32, 750
4,200

$250
850

$300
1,200

800
850
250
50
400
200
1,950
10,550

200
700
400
100

16,150

108,500 !
1

Returned
to.

$8,540
113,680
9,760
4,280
2,200
12,230
117,000
107,280
14,940
41,460
20,100

Hundreds.
Received
from.

Received
from.

$780
12,530
780
2,770
1,340
6,530
340
19,560
13,800
44,220
2,380

Received
from.

Boston
.
New York ...
Philadelnhia
Cleveland
Richmond
Atlanta

Received
from.

$17,900
378,500
16,850
11,6S0
3,390
25,615
847,500
843,605
60,340
107,680
31,045

Fifties
Exchanged with Federal Reserve Bank of—

Twenties

Tens.

Fives.
Exchanged with Federal Reserve Bank of—

Received
from.

Returned
to.

200
700

$49,000
762,650
45,910
26,820
10,090
59,615
1,496,500
1,292,605
117,530
259,440
82, 285

$1,685
25,000
1,550
9,000
5,610
16,000
2,895
44 000
29,500
98,500
20,000

3,800

4, 202,445

253,740

DISTRICT NO. 10

KANSAS CITY.

413

SCHEDULE 0.—Federal Reserve notes—Federal Reserve Agent.

Issued to bank, 1916
.'
Received by comptroller for cancellation and destruction
Mutilated Federal Reserve notes on hand
Federal Reserve notes on hand, new, unissued
Cost of unissued notes for the year
Cost of notes issued for the year

$14, 400,000. 00
2,132, 240. 00
1, 033, 000. 00
2, 720, 000. 00
36, 798. 49
20,436.16

The cost estimate of issued notes was made on the following basis:
Cost per $1,000:
Fives
$2. 218
Tens
1.172
Twenties
65'
Fifties
.
34
Hundreds
245
Federal Reserve notes of the Federal Reserve Bank of Kansas City received from
other districts amounted to $4,202,445. Shipment cost averaged 25 cents per $1,000,
and is not included in the above schedule.

SCHEDULE P.—Official

and clerical staff.

Number of officers
Number of employees in various departments

4
48

MONTHLY PAY-ROLL—EMPLOYEES.
Department.

Number

Federal Reserve Agent's office and credit bureau
General clerical force, including discount, auditing, and all other departments except
transit
Transit department (recoverable through service charges)
Total

Monthly
salaries.
$365.00

19
1,913.33
26
1,565.00
48 ! 3,843.33
)

SCHEDULE Q.—Recapitulation, city and country clearings, Dec, 1914, to Dec. 30, 1916,

inclusive,
Number of items.
City.
1914 (December)
1915.....
1916 (to July 14, inclusive)
1916 (July 15 to Dec.
30, inclusive)
Total

5,860
134,219
78,229
303,644
521,952

Country.
69,773
1,849,767
1,214,570
1,259,216
4,393,326

Amounts cleared.

Total.

City.

Country.

75,633
1,983,986

$17,559,936.75
297,183,974.98

$21,082,772.04
413,007,012.52

$38,642,708. 79
710,190,987.50

1,292,799

149,992,445.19

224,807,003.08

374,799,448.27

1,562,860

317,971,832.66

527,182,424.44

845,154,257.10

4,915,278

782,708,189.58 jl, 186,079,212.08 1,968,787,401.66

Total.

414

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.
Federal Reserve Bank of Kansas City, July 15, to Dec, 30, 191G.
MEMBER BANKS.
City.

Total.

Amount.

Items.

Amount.

Items.

19,631
48,135
51,776
62,112
60,000
61,990

$33,658,455.38
43,123,948. 04
48,207,314. 69
61,974,274.72
65,334,535. 40
68,673,304.43

66,846
147,893
152,679
170,330
173,493
188,821

$11,842,438.68
27,777,320.16
31,118,316.65
43,127,447.29
48,132,501.40
48,630,284.67

86,477
196,028
204,455
232,442
233,493
250,811

$42,500,894.06
70,901,268.20
79,325,631.34
105,101,722.01
113,467,036.80
117,303,589.10

303,644

317,971,832. 66

900,062

210,628,308.85 1,203,706

528,600,141.51

Items.
July 15-31
August
September
October
November
To Dec. 30
Total

Country.

Amount.

ITEMS ON OTHER, DISTRICTS.
Country.

City.
Items.
July 15-31
August
September
October
November
To Dec. 30
Total

Amount.

Items.

Amount.

Total.
Items.

Amount.

1,175
2,476
2,560
2,997
3,2G0
3,128

$16,815,491.27
36,572,172.92
42.216,235.74
55,006,122.88
60,393,860.27
60,523,176.06

2,126
6,770
8,088
15,609
15,852
14,668

$297,333.05
1,187,539.45
1,674,024. 76
3,350,403.23
5,334,721.03
4,479,347. 41

3,301
9,246
10,648
18,606
19,112
17,796

$17,112,824.32
37,759,712.37
43,890,260.50
58,356,526.14
65,728,581.90
65,002,523.47

15,596

271,527,059.14

63,113

16,323,3G9. 56

78,709

287,850,428. 70

STATE BANKS.
Amount.
July 15-31..
August
September.
October
November.
To Dec. 30.

None.
20,436
54,066
62,852
67,601
75,490

None.
$2,013,651.85
5,255,636.50
7,140.001.12
6,859,493. 78
7,434,903. 64

Total

280,445

28,703,686. 8

DAILY AVERAGE.
City.
Items.
July 15-31.
August
September
October...
November
To Dec. 30

Amount.

1,402 $1,475,604.00
1,851 1,658,613.00
2,071 1,928,292.00
2,389 2,383,626.00
2,500 2,722,272.00
2,479 2,746,932. 00

Transit.
Items.
5,010
6,830
8,695
9,684
10,842
11,284

Amount.
$2,068,233.00
2,598,103.00
3,210,568.00
4,177,845.00
5,071,690.00
4,842,708.00

DISTRICT NO. II—DALLAS.
W. F. RAMSEY, Chairman and Federal Reserve Agent.

FINANCIAL RESULTS OF OPERATION,
EARNINGS, EXPENSES, DIVIDENDS, ETC.

While Federal Reserve Banks were not organized for profits—a consideration always held to be subsidiary to the benefit of the system,
and in no sense a test of its usefulness!—it is gratifying to report that
the Federal Reserve Bank of Dallas has made good headway in this
respect, and has paid its members a dividend at the rate of 6 per
cent per annum from the date of the capital stock payments, at the
organization of the bank, to April 30, 1916. On January 7, 1916, our
board of directors declared a dividend at the rate of 6 per cent per
annum from the opening of the bank to June 30, 1915, and on September 15 declared another dividend at the rate of 6 per cent per
annum covering the operations to December 31, 1915. On November 28, 1916, the board declared a third dividend of 6 per cent per
annum to and including April 30, 1916, payable December 30, 1916.
After paying these dividends, there was sufficient margin left in the
profit account to take care of any depreciation of furniture and
fixtures, bank building, etc.
There are attached hereto Exhibit A, Statement showing earnings
and expenses of the bank for the year 1916 and since organization
and Exhibit B, Comparative balance sheets for December 31, 1915-16.
GENERAL BUSINESS AND BANKING CONDITIONS IN THE DISTRICT.

Trade conditions in the eleventh district are, almost without
exception, ail that could be desired and more than could reasonably
be hoped for. Crops in most parts of the district were good. The
production of wheat, never large, considering the size of Texas,
was scarcely up to the average, but the quality of the grain was
excellent and its price very high. Corn and hay crops were about
average and sufficient for home consumption. The rice crop was
better than usual, with very attractive prices. There has been some
depression in the lumber trade, a little slowing down of production,
and even more slowing down in sales, due in part to car shortage
and somewhat more to interference with export business. The livestock industry has prospered, although there is just now a tendency
to lower prices of both cattle and sheep, which, while gratifying to

415

416

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

the consumer, is not at all comforting to the producer. Both wool
and mohair have borne high prices, and the volume of trade in both
articles has been well above the average in other years. Mining in
the western part of the district has been conducted on a very large
scale and the copper mines have been profitable beyond any precedent
in previous years. Production of petroleum during the past year has
remained about stationary, but prices have been high and returns
large. The factor of controlling and overshadowing importance has
been the very large crop of cotton produced in this district. In
the territory covered by Texas and the portions of Louisiana and
Oklahoma comprised in this district the crop for the current year
will not be less than 4,000,000 bales, of a value in money (including seed) of but little less, if any, than $400,000,000. This has
given, in connection with the other features noted above, a prosperity to this district which has never before been known. A cause
contributing to the present prosperity of the district has been the
close and rigid economy with which the crop was produced. Another
most gratifying factor of the whole situation is the fact that this
prosperity is very widely and generally distributed over a very great
portion of the district and somewhat evenly among all classes and
grades of farmers.
The conditions above noted have found reflection in very generally
increased deposits in all the banks of this section. Detailed figures
are not available at this time, but on October 16 of this year the
increase in deposits of member banks in the reserve city banks of
Dallas, Fort Worth, Waco, San Antonio, Houston, and Galveston,
over like figures for a corresponding date in 1915, amounted to more
than $80,000,000, and in Dallas alone there had been an increase of
more than $25,000,000. In Houston there had been an even larger
increase. According to, conservative estimates the gain in all the
banks in the State within a year has been approximately 70 per
cent. With such an immensely increased purchasing power the
improvement in both retail and wholesale trade which has followed
would be expected. In postal receipts a considerable increase has
been observed in all the principal cities and towns of the State, and
it is a fair inference that similar increases will be found in the smaller
towns and villages. All the clearing houses in the State show remarkable increases. There has as yet been no considerable gain in building
permits, and real estate is so far showing little activity. The large
increase in the cost of living has attracted attention and has undoubtedly worked great hardship on the laboring classes and generally
on persons with fixed incomes derived from personal services, or
dependent on rents or interest on moneys and dividends from stocks
and bonds. Labor, both skilled and unskilled, has been and is well
employed in practically all lines and in most, if not all, parts of the

DISTRICT NO, 11

DALLAS,

417

district. We have been immune from strikes or lockouts and there
is generally a very friendly feeling between capital and labor. It is
believed that the present season of prosperity will continue throughout
the current year without serious diminution. It should, and we believe
will, find expression in better housing and a broader and more generous investment in articles and merchandise which make for more
comfort in the home. The coming year will beyond doubt witness
large investments in farming lands which have shown some depreciation since the beginning of the present European war, with the
expected result of an appreciable stiffening of the price of such
properties.
The situation of the banks is both unusual and fortunate We
have witnessed and are witnessing a period of increasing deposits
without a parallel and a time of liquidation without a precedent.
All the banks have increased their cash reserves. There has been a
considerable softening of interest rates. The promise of immediate
profits is not inviting. Some of the banks are buying commercial
paper, but, as a rule, in moderate amounts and only of the highest
grade. In a situation provocative of extravagance and inflation it
is indeed a pleasure to be able to chronicle a very general attitude of
conservative waiting and practice. Our own judgment is that with
the beginning of 1917 there will be such a broad revival of legitimate
trade and industry as will bring into requisition a large amount of
the funds of the banks at fair rates and in legitimate as well as
profitable lines of endeavor.
The operations of this bank in the main have been very satisfactory.
The attitude of our member banks is one of cordial good will, with
but few exceptions. There is a more general disposition to cooperate
with us than seemed apparent even in the beginning of the year.
Our business has brought us into very close personal touch with most
of them. Within the past two years we have at different times rediscounted paper for more than 400 of the 621 member banks in the
district to an amount aggregating $46,000,000. Our banks appreciate
our efforts to promote their welfare and have given us the strongest
assurance of their cordial good will and their promise of active and
friendly cooperation.
ACTIVITIES OF THE FEDERAL RESERVE BANKS DURING THE YEAR,
DISCOUNT OPERATIONS.

Discount operations of the bank have steadily grown, and, as indicating the extent to which we have served our member banks during
the past year, there is attached a statement (Exhibit C) showing the
total number of banks accommodated, the total amount of redis

418

ANNUAL REPORT OF THE FEDERAL RESERVE BOARD.

counts accepted, as well as the number of new banks which we have
served in 1916. All offerings have had the attention of our executive committee, after careful analyses of credit statements and eligibility of the paper, by our credit information department. It has
been the policy of the officers of this bank, both by correspondence
and personal contact, to explain the workings of our discount machinery, and in every way possible to assist our member banks in
taking advantage of this service, and to impress upon them the fact
that where the paper was eligible for rediscount under our regulations, it was a comparatively easy matter to make use of our facilities.
Our member banks have gradually become familiar with our methods,
and the amount of paper returned, because of failure to meet the requirements of our executive committee, has been negligible.
The year just closed has afforded a fair opportunity for testing the
discount operations of the Federal Reserve Bank. It can hardly be
said to have been such a year as to put the system to the supreme test,
yet it has fully demonstrated the service which the Federal Reserve
Banks are capable of rendering and their ability to stabilize financial
conditions. There is no doubt that this fact is appreciated by a majority of our member banks, and the passing year has cemented the
friendly relations already existing between this institution and its
members.
Changing seasons and conditions naturally produced fluctuations in
our discount operations. The height of our discounting season was
reached on September 6, when bills discounted and bought held by
this bank aggregated $8,291,647.03, classified as follows:
Bills bought in the open market
Bills discounted—members

$649, 292. 00
7, 642, 355. 03

Our discounting operations at this date were the largest in the history of the bank. The crop moved very rapidly, however, and when
liquidation commenced the demand became light, until on December
2 our loans were at the minimum figure of $2,421,928.31.
There has been no occasion to make any extensive changes in our
discount rates in the past year. There has been no change in the
rates on commercial paper, as demand has always been sufficient to
warrant the present rates, and on account of the comparatively easy
conditions prevailing there seemed to be no necessity for raising the
same.
There is attached hereto (marked Exhibit D) a table showing the
amounts of paper discounted in 1916, classified by maturities.
On account of the excellent prices obtaining for cotton and farm
products in this district during the past season these commodities
have been rushed to market and the amount of commodity paper

DISTRICT NO. 11

DALLAS.

419

handled by this bank has been negligible. Cotton has brought the
highest price in the history of the crop, and there was of course no
storage of the same to any extent. Early in the fall our board of
directors appointed a committee, consisting of the three class B directors, to give special attention to the handling of the crop, and to
encourage in every way the gradual marketing of farm products,
through the medium of commodity paper. There were few offerings
of this class of paper, however, and our facilities in this respect were
not availed of to any considerable extent.
As in other sections of the United States, the trade acceptance
system is in its infancy in this district, and there is much to be done
before it will come into popular use. This bank has not handled this
class of paper in any great volume. It ha