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THIRD ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF NEW YORK FOR THE YEAR ENDED DECEMBER 31, 1917 WASHINGTON GOVERNMENT PRINTING OFFICE 1918 L E T T E R OF T R A N S M IT T A L . Federal R eserve , Bank, , New York January 15 1918. Sir : I have the honor to submit herewith the third annual report of the Federal Reserve Bank of New York, covering the year 1917. Respectfully, P ie r r e Ja y , Chairman and Federal Reserve Agent Hon. W. P. G. H a r d i n g , Governor Federal Reserve Board Washington D. 0. , , , . T A B L E OF C O N T E N T S . Page. Officers and directors of the bank....................................................................... 6 Results of operation............................................................................................ 7-11 Balance sheet.............................................................................................. 7 Income and expenses.................................................................................. 8 Discount rates.............................................................................................. 10 Investments during 1917.................................................................................. . 11-20 11 Maturities of investments and loans.............. ............................................. Member bank rediscounts and advances..................................................... 11 Bankers’ acceptances and the discount market........................................... 15 Trade acceptances....................................................................................... 18 19 United States bond operations.................................................................... Municipal warrants...................................................................................... 20 Federal Reserve note issues......... ...................................................................... 20-22 Collections and clearings.................................................................................... 22-24 Collection system........................................................................................ 22 Gold settlement fund.................................................................................. 24 Transfer system........................................................................................... 24 Designation of reserve cities.............................................................................. 25 Relations with member banks................... ....................................................... 25 Relations with nonmember banks................. ................................................... 27 Accounts with foreign banks................................... ....................................... . 29 Fiscal agency of the United States................................................................... 29 Liberty loan campaigns.................................................................................... 30-45 War-savings and thrift stamps..................................... ...................................... 46 Organization of the bank............................................................... : .................. 46-49 Internal management........... ....................................................................46 48 Bank premises..... ....................................................................................... Election of directors.................................................................................... 49 General business conditions.............................................................................. 49-56 Banking position of the district during 1917............................................... 49 Money rates...................................................................................... .......... 51 52 Gold movement.................. ................ ........ ............... ............................ . Foreign loans............................................................................................. . 53 Foreign banking conditions....................................................................... . 53 New York Stock Exchange......................................................................... 54 Crops.......................... ................................................................................ 54 Exports and imports.................................................................................... 55 General business conditions........................................................................ 55 APPENDIX. Capital account reconciliation........................................................................... 57 Federal Reserve notes........................................................................................ 57,58 Summary of gold settlement fund operations..................................................... 58 Schedule showing when proceeds of items will become available.................... 59 Operations in United States Government obligations..................................... . 59,60 5 FED ER AL R E SE R V E B A N K OF N E W Y O R K . Officers. B enjamin Strong, Governor. R obert H. T reman, Deputy Governor, j E dwin R. K enzel, Assistant Cashier, William W oodward, Deputy Governor Joseph D. Higgins, Assistant Cashier. A rthur W. Gilbart, Assistant Cashier. (inactive). J. H erbert Case , Deputy Governor. A dolph J. Lins, Assistant Cashier. F red . I. K ent, Acting Deputy Governor. W. M. St . John, Acting Assistant Cashier. James F. Curtis, Secretary and Counsel. J. W ilson Jones, Acting Assistant Cashier. Louis F. Sailer, Cashier. L aurence H. H endricks, Assistant H oward M. Jefferson, Auditor, Cashier. Pierre Jay , Federal Reserve Agent. R. M. Gidney, Assistant Federal Reserve Agent. Directors. Class A : Term expire*. William Woodward, New York City........................................ December 31, 1919 Robert H. Treman, Ithaca, N. Y .............................................December 31, 1917 Franklin D. Locke, Buffalo, N. Y ..................................................December 31, 1918 Class B : Henry R. Towne, New York City............................................December 31, 1919 William B. Thompson, Yonkers, N. Y ................................. . .December 31, 1917 Leslie R. Palmer, Croton on Hudson, N. Y ............................. December 31, 1918 Class C: Pierre Jay, Chairman, New York City.....................................December 31, 1919 W. L. Saunders,1 New York C ity........................................... December 31,1917 George Foster Peabody, Deputy Chairman, Saratoga Springs, N. Y ..................................................................................... December 31,1918 1 Appointed February 9,1917, to succeed Charles Starek, who resigned January 31,1917. 6 FEDERAL RESERVE BANK OF NEW YORK ANNUAL REPORT R esults of O p e r a t io n . BALANCE SHEET. The following is a statement comparing the condition of the Fed eral Reserve Bank of New York on December 31, 1917, with that of December 30, 1916, and showing the increase and decrease in the various items of resources and liabilities : Dec. 31,1917. Dec. 31, 1916. RESOURCES. Loans and discounts: Bills discounted for member banks.......................................................... $225,117,913.30 Acceptances purchased................................................................................ 148,770,185.44 Rediscounts for other Federal Reserve Banks....................................... 25,191,033.66 United States bonds.................................................................................... 5,168,599.64 United States 1 year Treasury notes........................................................ 4,493,000.00 United States certificates of indebtedness............................................... 15,000,000.00 Municipal warrants...................................................................................... 510,701.32 Total investments..................................................................................... Reserve cash: Gold with Federal Reserve agent1............................................................ Gold redemption fund for Federal Reserve notes................................. Gold settlement fund................................................................................... Gold bullion.................................................................................................. Gold coin and certificates........................................................................... Legal tender notes........................................................................................ Silver certificates and coin .......................................................................... Total reserves............................................................................................ Other resources: Federal reserve notes and other cash....................................................... Items in process of collection..................................................................... Exchanges for clearing house and sundry cash items........................... Interest accrued on United States bonds................................................ Cost of unissued Federal Reserve notes................................................... Deferred charges and prepaid expenses................................................... Advances made for Treasury, United States, account expenses Lib erty loan and war savings com m ittees................................................. Total other resources.............................................................................. 424,251,433.36 $7,071,158.55 41,457,184.04 1,042,550.00 1,205,000.00 972,311.62 51,748,204.21 250.598.565.00 107,003,765.00 250,000.00 20,570,000.00 5,854,000.00 68,113,616.99 275.130.455.00 **i59,*32i, 257*50 31,322,275 00 11,188,200.00 8,925,743.85 4,077,274.80 1 0,0 00 ,00 0.0 0 649,944,655.84 302,410,497.30 59,752,685.24 48,091,790.20 26,429,660.74 73,620.28 13,865,897.46 23,077,418.64 2,503,168.21 12,501.88 235,598.86 8,753.52 20,458.22 360,350.01 134,728,564.69 | 39,703,338.57 Total resources........................................................................................... 1,208,924,653.89 | 393,862,040.08 LIABILITIES. Capital fund: Capital paid in .............................................................................................. Surplus........................................................................................................... Profit and lo s s ............................................................................................. 18,695,950.00 649,363.56 11,865,750.00 Total capital fund................................................................... ................. 19,345,313.56 12,028,813.98 163,033.98 i Inserted in 1916 report for purposes of comparison. 7 54006— 18------- 2 8 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W YORK. Dec. 31,1917. Deposits: Due to United States Government......................................................... Due to nonmember banks, deposit account............................................ Due to member banks—reserve balances................................................ Due to member banks—uncollected funds.............................................. Duo to other Federal Reserve Banks—collected funds........................ Due to other Federal Reserve Banks—uncollected funds................... Cashier’s checks outstanding..................................................................... Dec. 31, 1916. $11,870,767.74 $3,571,391.94 3,335,930.00 10,317,630.16 652,791,808.26 *"237*907,* 354.’ 87 35,553,478.43 18,552,984.84 7,610,609.86 12,373,721.91 5,158,779.75 2,085,975.49 188,275.81 4,821,683.09 Gross deposits............................................................................................ 731,458,687.29 274,679,704.86 Other liabilities: Depreciation reserve...... ............................................................................ Unearned discount and interest................................................................ Participation certificates Liberty loan bonds........................................ Federal Reserve notes outstanding 1........................................................ 205.880.00 1,348,238.04 227.970.00 458,338,585.00 107,003,765.00 Total other liabilities................................................................................ 458,120,653.04 107,153,521.24 Total liabilities.......................................................................................... 1,208,924,653.89 393,862,040.08 149,756.24 The great increase in many of the items of resources and liabilities may be traced quite directly to the changed conditions created by the amendments to the Federal Reserve Act approved June 21, 1917. These amendments greatly increased the balances of the member banks, placed on the balance sheet the entire note liability and the gold and lawful money held by the Federal Eeserve agent, permitted nonmember banks to open clearing accounts, and by establishing in the statute the rights and duties of State institutions as member banks prepared the way for the membership of a large number of these institutions. The remaining changes are largely due to the activities of this bank in rendering assistance to the Government and to its members in the financial operations entailed by the war. The changes in the balance sheet will later be commented upon in detail under the appropriate headings. in c o m e and expen se . The following statement shows the income and expense of the bank for the years 1916 and 1917: 1917 1916 INCOME. Bills discounted for members............................................................................... Acceptances bought................................................................................................ United States securities......................................................................................... Municipal warrants................................................................................................. Profit realized on United States bonds............................................................... Commissions received...................................................................................... Profit on bills sold.......................... ........................................................................ Penalties for deficient reserves.............................................................................. Service charges..................................................................... . ................................ Sundry profits.......................................................................................................... $2,455,532.87 1,843,324.87 378,668.40 66,470.41 14.335.50 38,537.54 8,077.03 18,565.29 80,922.53 24.779.51 $37,368.26 530,483.75 81,644.49 214,122.13 43,515.01 42,387.09 T o ta l............................................................... ........................................... 4,929,213.95 983,609.22 32,959.90 1,128.59 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N EW YORK. 1917 9 1916 EXPENSE. $18 , 3 0 1 .6 1 398 , 28 2 .8 1 55 , 550.91 329 , 096.98 343 , 76 4 .8 8 50 , 252.09 $10 , 76 8.34 215 , 3 0 7.5 1 45, 8 10 .0 4 1 5 1 , 200.36 95, 240.00 39 , 029.38 T otal........................................................ ............... ................................... 1 , 195 , 249.28 557 , 3 5 2 .1 2 Net earnings............... .................................................... ........... ........................ Profit and loss balance, Dec. 30,1916........................................ $163,063.98 Net debits during year........... ............................ ..... ................... 4,355.21 3 , 733 , 96 4 .6 7 426 , 2 5 7 .1 0 Directors’ fees, outside conferences, and Federal Advisory C ouncil........ Salaries................................................ ..................................................... ............. R e n t....................................................................................................................... General expenses.................................... ............................... .............................. Cost of Federal Reserve notes used................................................................... Assessment for expenses of Federal Reserve Board....................... ............. 158 , 7 0 8 .7 7 3 , 892, 6 73 .4 4 Deductions, Dec. 31,1917: Cost of unissued Federal Reserve notes charged o f f .. . . . . Depreciation reserve account set u p ...................... .............. 4 4 5 ,248.14 205,880.00 D ividends paid during 1917: T o liquidated banks....................................... ...................... l 176.54 Apr. 1, 1915, to Dec. 31, 1915, paid June 30,1917 ............... 474,776.12 Jan. 1,1916, to Dec. 31, 1917, paid Dec. 31, 1917................. 1,466,865.51 651 , 1 2 8 .1 4 Paid to Treasurer of United States as franchise tax, Dec. 31, 1917........... Carried to surplus.................. ................................................................... .......... 1 , 942 , 8 1 8 .1 7 649 , 3 6 3.5 7 649 , 363.56 Total............................................................................................................ 3 , 892, 6 73.4 4 The great expansion which has occurred in the business of the bank during 1917 is reflected not only in the increased earnings but also in the increased expenses for salaries, rent, and printing Federal Reserve notes, which will be referred to in more detail later. The item “ General expenses ” includes cost of furniture and equipment, stationery and printing, telephone, telegraph, postage, expressage, insurance, as well as the entire expense of operation of the transit department, including expenditures of the kind just mentioned, sala ries and rent. At the close of the year, after allowing for all cur rent expenses, and paying dividends to date as above indicated, charging off all assets of a nonliquidating character and setting aside a reserve for depreciation on United States 3 per cent conversion bonds and for certain obligations under the lease of the banking office, the Federal Reserve Bank, under the provisions of section 7 of the Federal Reserve Act, paid into the Treasury of the United States as a franchise tax $649,363.57, being 50 per cent of the net earnings to date, and carried a like amount to surplus fund. 10 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W YORK. D ISC O U N T 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: Month. 15 days or less 16 to 90 (includ days, in ing clusive. collateral loans). (Special.) Secured by Liberty Agricul bonds or United tural States pat>er 91 days certifi cates of to 6 months. indebted ness within 16-90 days. (Special.) 1-dav collateral notes in connec tion with Govern ment financing. Open-market purchases, bankers' acceptances. Trade accept ances. Author ized rates. Actual rates. Per cent. Per cent. Per cent. Per cent. Per cent. Per cent. Per cent. Per cent. January........................ February..................... March........................... April............................. M ay.............................. June.............................. J u ly.............................. A ugust......................... September................... October........................ N ovem ber................... December 1-20........... December 21-31.......... 3 3 3 3 3 3 3 3 3 3 3 3 31 5 5 5 5 5 5 5 5 5 5 5 5 5 3* 3* 3* 3| 2-4 2-4 2-4 2-4 2-4 2-4 2-4 3-4£ 3* 3h 3* 3* it 2 -4 2 -4 2 -4 2^4 21-4 2*-4 2f-4 2i-4 2i-4 2£-4 2M 1 2J-4 13 -4§ 2I-3! 3 -3§ 3 -4 3 -4 3 -4 3 -4 3|-4 3£-4 34-4 3?-4 35-4* 1Acceptance rates advanced Dec. 7. To assist the Government financing, a special rate of 3^ per cent was established on May 22 for discounts maturing within 90 days secured by United States certificates of indebtedness or Liberty bonds. On June 13 a special rate of 2 per cent to 4 per cent was established for advances on member banks’ one-day collateral notes secured by eligible commercial paper or United States Government obligations in connection with Government financing, and loans were made be tween June 5 and June 12 at the rate of 2J per cent. Subsequently, loans of this character were made at the prevailing rate for maturities within 15 days. During the early part of the year the bank’s 90-day discount rate continued, as in preceding years, to be above the open-market rate for commercial paper. Since the declaration of war, however, it has been substantially below the open-market rate for such paper. The change in the relative position of the two rates, however, led to no marked increase in the discounting of this class of paper. Substan tially all of the rates of the bank were increased about one-half of 1 per cent shortly after December 15, when the period of Government financing relating to the second Liberty loan had been completed, in order to bring the rates of the bank on commercial paper more nearly in line with the rates prevailing in the open market, and in order to stimulate liquidation of its discounts in anticipation of future A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . 11 demands upon its credit facilities which will arise during succeeding periods of Government financing. I nvestm ents of the F ederal R D u r in g eserve B ank of N ew Y ork 1917. M A T U R IT IE S OF IN V E S TM E N TS A N D LOAN S. The following statement shows the maturities of investments, other than United States securities and warrants, held by the Federal Reserve Bank of New York December 31, 1917: Discounts or ad vances based on commercial paper. Discounts or ad vances based on United States securities. Bankers’ accept ances. Within 15 days.............................. 16 to 30 days................................... 31 to 60 days................................... 61 to 90 days...................... ........... $55,972,882.45 7,261,070.62 32,153,380.52 16,327,611.46 $81,494,809.69 1,028,580.10 51,977,627.14 4,093,924.98 $17,172,201.88 22,354,778.42 82,644,978.39 26,598,226. 75 $154,639,894.02 30,644,429.14 166,775,986.05 47,019,763.19 Total............ ........................ 111,714,945.05 138,594,941.91 148,770,185.44 399,080,0/2.40 Total. M EM BER B A N K DISCOUNTS A N D ADVANCES. The early months of 1917 showed the usual small volume of ad vances and discounts for member banks, but, as the Government financing, which commenced shortly after our entrance into the war, began to assume important proportions, the discount facilities of the Federal Reserve Bank were availed of generally, and as the time for payments due June 15 on the first Liberty loan approached there was a rapid increase in the volume of acceptances purchased in the open market and discounts for member banks. The discounts for member banks, w^hich amounted to less than $1,000,000 on June 1, bad increased on June 19 to $163,000,000, while acceptances increased between the same dates from $36,000,000 to $89,000,000 and rose on June 27 to $103,000,000. Total investments rose from $66,000,000 on June 1 to $279,000,000 on June 19. The contraction was only slightly less abrupt than the expansion, for by August 15 the total investments of the bank had fallen to $68,000,000. This sudden expansion of $213,000,000 in 19 days, which exceeded by $104,000,000 the largest amount of clearing-house certificates ever outstanding among the New York Clearing House banks, w^as due to two causes, which were also operative during the period of Government financing incident to the second issue of Liberty bonds. First, the withdrawal by interior banks of deposits kept with New York institutions in order to make payment in their respective Fed 12 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W YOR K . eral Reserve districts for United States certificates of indebtedness and for Liberty bonds purchased by such banks or through them. Interior banks usually make these payments by drafts on New York banks, which are sent to the Federal Reserve Bank of New York for collection through the clearing house and for settlement through the gold settlement fund. By this method the reserves of the New York banks are depleted and gold is transferred to the interior. To main tain their reserves the New York banks are obliged to come to the Federal Reserve Bank for discounts or advances. Usually these have been required only for short periods, running from a few days to a few weeks, because the funds gradually find their way back to New York, also through the gold settlement fund, as the United States Government makes most of its advances to the allied Governments and pays a large proportion of its own expenditures through the Federal Reserve Bank of New York. Second, the requirement for the creation of an immense volume of bank credit represented by short-term certificates of indebtedness, which the Government issues to provide itself with funds in antici pation of the sale of bonds. The total volume of these certificates outstanding in connection with the period of financing which ended with the first Liberty loan was $868,205,000, of which this Federal Reserve district took $479,962,000, or 53 per cent. When these credits are created by the banks, the law does not require any reserves to be maintained against them, but, as they are gradually drawn into the Federal Reserve Bank and disbursed by the Government, they are transformed from Government deposits, free of reserves, into in dividual deposits, requiring reserves, and, therefore, requiring larger balances to be kept with the Federal Reserve Bank. As the allied Governments, to whom the bulk of the funds has thus far been distributed, make payments to interior points the banks have to dis count with the Federal Reserve Bank to maintain their reserves. When these funds reach interior banks, balances withdrawn from New York for the payment of Liberty bonds are gradually built up again and the New York banks relieved of their strain. Each sale of bonds is, therefore, the culmination of a period of Government financing which begins with tremendous expansion of bank credit in favor of the Government and ends with what is in effect, though not literally, a conversion of these short-time bank credits into long-time investment credits, namely Liberty bonds. This conversion enables the banks to contract their position some what and, by canceling the credits they have obtained at the Federal Reserve Bank, thereby contract the position of the Federal Reserve Bank as well and prepare it for another similar period of financing. During the period of financing ending with the payments for the second Liberty loan, the total amount of United States short-term A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . 13 certificates of indebtedness issued throughout the country was $2,925,296,000 (including $690,000,000 due June 25, 1918, issued in anticipation of tax payments then due) of which the banks in this Federal Reserve district purchased $1,961,613,500, or 67 per cent. The increased volume of the temporary financing in this period, compared with that of the preceding period, involved larger move ments of funds to and from the interior, larger fluctuations in bank reserves and considerably larger recourse to the credit power of the Federal Reserve Bank. The first issue of certificates in connection with this period was on August 9. On this date the total loans and investments of the bank were $78,000,000. On November 30, 15 days after the first payment for the Liberty loan bonds, they had grown to $522,000,000, an increase during this period of financing of $444,000,000. On one day, November 30, the increase was $111,000,000. On December 15, the maturity date of the last issue of certificates of indebtedness, the decrease in loans and investments was $219,000,000, indicating in a very striking way the effect of the Government cer tificates of indebtedness upon the discount activities of the Federal Reserve Bank. The chart on the following page shows graphically the closeness of the relation between the Government’s short-time financing on cer tificates of indebtedness and the expansion of the loans and invest ments of the Federal Reserve Bank of New York. 14 January February March April May July August September October November December ANNUAL *1,400000,000 OF *1400000000 . »i£OQyOM/rtO T H E D O T T E D L IN E SHOWS T H E AM OUNTS O F U .S . C E R T IF IC A T E S O F IN D E B T E D N E S S P U R C H A S E D AND O U T S T A N D IN G IN T H E S E C O N D F E D E R A L R E S E R V E D IS T R IC T DURING 1917 EEPOET THE SOLID LIN E SHOWS THE TOTAL LO ANS , DISCOUNTS AND IN V E S T M E N T S O r T H E F E D E R A L R E S E R V E BANK OF NEW YORK D U RING 1917 *1,500,000000 . ♦i,3oo,ooopa _ . *1£O O yO O Q 0O O *1,100000000 *U OO0OO0OO. *1,000j30tp0 . *, , • 300,000,000 . * 900.000.000 *800000000 . •800,000,000 1000 000,000 *30*000,000 . *300,000,000 *200000,000 *100000000. *100000,000 Financing period of fhe first Liberty Loan Financingperiod ofthe second Liberty Loan Sgecjal iaxfiaytr e$IeMtdnezt YORK. *200000000 . NEW *500,000,000 *400000000 OF *500000000 _ *400000000 . BANK *7OOyOOO0OO *600000,000 RESERVE * ?OOfOOO,OOC . * 500,000,00c FEDERAL ♦U0Q.000JXW A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . 15 The following is a statement of discounts for and advances to member banks, by months, during 1917, together with similar trans actions during 191G: 1916 1917 Month. Number of items. Number of items. Amount. $598, lf.2.06 148 January........................................................................ 317 171 F ebruary...................................................................... 1,925,351.05 73 3 ,0K2.583.13 March............................................................................ 237 249 A pril.............................................................................. 149 523 M ay............................................................................... 6.545.273.25 307 June.............................................................................. 2,034 552,976,458.11 325 1,346 116 262,366.105.28 J uly............................................................................... 241 1.254 August.......................................................................... 53.024.394. 21 1,625 319,543,993.34 September.................................................................. 105 O ctober........................................................................ 2,544 2 ,3S2,893,110.97 177 N ovem ber.................................................................... 2,663, f 67,291.90 79 9,122 December................................................................... 262,232,974.93 567 T otal.................................................................. 22,484 6,511,274,921.48 2,505 Amount. $125,655.65 9S. 304.35 304; 638.35 267 149,950.15 2.439.223.25 191,290.38 343,405.34 235,491.37 586.851.00 560,583.29 1,035,118.65 3,213 715,293.90 17,977,996.38 22,329,581. SI The immense volume of discounts and advances made during October and November, 1917, are due to the fact that many of the banks which borrowed most heavily did their borrowing for periods of from one to five days only, in order to readjust the amounts at each renewal to the requirements of their condition. In this way their borrowing became almost as flexible as if their loans had been on demand. The following figures show certain data concerning the discounts of 1916 and 1917: 1917 Number of applications received................................................................ Amount of applications received................................................................ Amount of applications accepted and discounted or advanced u p o n .. Largest application........ ............................................................................... Smallest application...................................................................................... Number o f pieces of paper discounted or advanced u p on ..................... Largest piece of paper discounted or advanced upon....................... . Smallest piece of paper discounted or advanced upon........................... Average size of notes discounted or advanced upon............................... Number of banks rediscounting.................................................................. 2,513 $6,528,455,050.30 $6,513,225,285.60 $167,000,000.00 $50.00 22,484 $147,000,000.00 $25.00 $289,682.67 322 1910 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 B A N K E R S ’ ACCEPTAN CES AN D T H E DISCOU NT M A R K E T . This year has witnessed a continued increase in the volume of bankers’ acceptances created and a steadily broadening open market in which they circulate. At the close of the year 1916 it was stated that there were outstanding about $250,000,000 of dollar accept ances, including bills of foreign origin on American merchants. It is not improbable that the volume of such paper in the United States at the close of 1917 is from four to five hundred million dollars. 54006—18------8 16 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W YOR K . The increases, while general in all classes of bills eligible for dis count with Federal Reserve Banks, are most notable in the bills aris ing from domestic transactions and from the increasing trade be tween the United States and the Orient. The following table, gathered from reports made to public offi cers, shows the amount of acceptance liabilities of national banks in district No. 2, and of State banks and trust companies in the State o f New York: September, 1917. September, 1916. National banks......................................................................................................... Trust companies..................................................................................................... State banks............................................................................................................ $73,717,000 91,424,509 7,355,910 $44,300,877 68,588,558 2,787,995 Total................................................................................................................ 172,497,419 115,677,430 The more general recourse during the year to bankers’ credits for financing the large seasonal movements in commodities is an indica tion of a wider understanding and appreciation, by the borrower and banker alike, of the advantages of this form of financing transactions that in themselves furnish the means of discharging the obligations incurred by the taker of credit and the acceptor. With the increased volume of business, the number of accepting banks and purchasers of bills also has steadily increased. The names of many well-known institutions located in the larger cities of the country have now become known as acceptors through their accept ances offered in the open market in New York. Also, dealers report an increasing interest on the part of out-of-town banks as investors in prime bills, evidenced both in the number of new buyers and the volume of their purchases. Indicative of the increase are the reports of two houses whose sales this year have in each case exceeded $300,000,000 and neither of which handled over $60,000,000 of bankers’ bills last year. The larger number of dealers and bill brokers special izing in bankers’ acceptances is another indication of the widening interest in the development of the open market. The New York open-market discount rates during the year have advanced gradually until they were at the close about 1 per cent higher that at the end of last year. They have, nevertheless, been the most stable of all the money rates during the period. The purchases of the Federal Reserve Bank of New York have materially assisted in this stabilization, especially at times when, owing to the temporary requirements of the banks in this district and elsewhere, bills were offered in large volume for resale in the market or directly to the Federal Reserve Bank, and also when, during periods of adjustment incident to the large financial operations of the Government, the A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K. 17 market’s absorption of newly accepted bills was more or less inter rupted. On the whole, however, purchases by the Federal Reserve Banks have been at rates determined by the law of supply and demand in the open market. By reference to the table showing the monthly purchases of ac ceptances by this bank for itself and other Federal Reserve Banks, it will be seen that during March and April, when the open-market rates fell below those at which this bank was willing to purchase, practically the entire volume of acceptances was taken by the open market, and as a result the bill holdings of this bank decreased from $39,000,000 on January 2 to $15,000,000 on April 18. When the rates for money stiffened in June, incident to the transfers between New York and interior points, the market rates rose above those of the Federal Reserve Bank and bills were taken in large volume by this bank, w7hose holdings of bills increased $66,000,000 during June. During the period of easy money, which began shortly after July 1, market rates again fell below those of the Federal Reserve Bank and liquidation of its bills again occurred. The situation was reversed again as the demand for money increased and the time for payment on the second Liberty loan approached. By selling a large volume of its bills early in November to other Federal Reserve Banks which had not been drawn on so heavily by their members, this bank was placed in a position to maintain fairly stable rates for the purchase of bills during the strained period between November 15 and Decem ber 15, on which latter date its holdings of bills aggregated $115,000,000. The somewhat higher rates that have obtained during the year, and the resulting wider demand have tended to diminish the distinction that has existed in the open market between the rates at which the acceptances of member banks and other well-known acceptors, pri vate bankers, and others, were sold. This tendency to equalize the open-market discount rates for equally prime bills, makes for greater stability and freer use of dollar bills of exchange in foreign markets, where the fine grades of distinction existing here were not under stood. The Federal Reserve Bank has assisted in this equalization by its forward quotations for and purchase o f prime bills to arrive from the foreign countries of origin, as well as by its recognition of the indorsements of both foreign banks and domestic banks and bankers. In its purchases the Federal Reserve Bank has, by differential rates, emphasized its preference for indorsed paper and the shorter maturities; that is, for paper that has been sold in the market and is re-offered indorsed by the original and subsequent purchasers and is approaching maturity. This ordinarily enables a bank that carries 18 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K. a secondary reserve line of bankers’ acceptances to make an addi tional profit or higher average yield on bills carried by purchasing the longer bills at higher rates, and when they come, say, to within 30 days of maturity, indorsing and selling them to the Federal Reserve Bank at the minimum rates obtaining for short-time paper, and reinvesting the proceeds in new long bills. A large proportion of the bills now bought by the Federal Reserve Bank bear one or more banking indorsements. This development in the practice of the market in New York, which has occurred within the year, is in accordance with the long-established practice in the open markets of Europe and constitutes one o f the most significant evidences o f the appreciation by our banks and bankers of what will be the logical development of a larger open market in this country and of the normal functions of a Federal Reserve Bank as a bank o f rediscount rather than one o f original discount. The monthly purchases of acceptances and indorsed trade bills by this bank for itself and for other Federal Reserve Banks have been as follows: For account of Federal R e serve Bank of New York. For account of other Federal Reserve Banks. Number of items. Number of items. Month. Am ount. Am ount. January___ February. . March......... A pril........... M ay............ June............ J uly............ August....... September. O ctober___ N ovem ber. December.. 133 1,004 84 437 1,278 4,G25 1,019 439 4,467 2,835 3,079 4,476 »2,G05, 561.06 20,242j 314.18 1,763, 414.47 9 ,687j 414.49 28,839, 604.60 83,248; 507.98 25,012, 533.62 12,512, 824.39 62,434, 840.29 50,307, 095.52 61,395, 915.90 106,915, 574.17 396 1,311 230 591 1,459 1,947 1,991 1,672 356 523 314 105 $7,465,453.54 21,619,722.70 4,727,936.26 11,617,300.68 21,526,022.56 24,474,515.37 21,921,403.75 19,553,401.32 5,628,313.38 6,524,838.02 7,267,878.15 593,045.18 Total. 23,876 464,965,600.67 10,895 152,919,830.91 Classification: Im port and exp ort.................................... Dom estic...................................................... Indorsed trade bills of foreign origin___ Bills drawn to furnish dollar exchange.. Domestic trade acceptances.................... Total.. 387,550,190.57 69,323,528.03 5,755,352.44 1,971,529.63 365,000.00 141,757,370.47 8,370,560,56 2,452,116.94 346,786.94 464,965,600.67 152,919,830.91 TRADE ACCEPTAN CES. Reports from different parts of the country indicate a rapid in crease during the year in the use of trade acceptances and, in view o f the widespread interest in this subject, this bank has published and distributed to all banks in this district a pamphlet giving in formation concerning the advantages to be derived from the sub stitution of trade acceptances for open book accounts. The great A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . 19 demand for the pamphlet evidences the consideration now being given by the business interests to the adoption of this system. The Trade Acceptance Council has been organized, composed of representatives from the United States Chamber of Commerce, the American Bankers Association, and the National Association of Credit Men, which plans to inaugurate a campaign of education on the use of trade acceptances. The council has the full support of the Federal Reserve Bank in this work. U N IT E D STATES BOND OPERATIONS. Following advice from the Federal Reserve Board that it would require the Federal Reserve Banks to purchase on April 1, 1917, United States bonds amounting to $15,000,000, or so much thereof as might be offered for sale on or before March 21 by the Treasurer o f the United States, the Federal Reserve Bank o f New York pur chased, during the first quarter of 1917, from member banks and in the open market $2,560,000 of United States 2 per cent bonds bear ing circulation privilege and has converted $3,552,500 (including bonds held over from 1916) into $1,776,500 30 year 3 per cent conversion bonds, and $1,776,000 one year 3 per cent gold notes of the United States, neither o f which has the circulation privilege. No further purchases of the 2 per cent bonds have been made, as the Federal Reserve Board, on April 18, advised that in view of the coming issue o f United States bonds bearing interest at 3^ per cent, it would not require the Federal Reserve banks to purchase bonds convertible into obligations bearing only 3 per cent. This was fur ther confirmed by resolutions adopted by the Federal Reserve Board on June 21. On March 31 the bank purchased from the Government $20,000,000 of 2 per cent certificates of indebtedness maturing June 30, 1917, which were carried to maturity. In connection with its work as fiscal agent in selling later issues o f certificates of indebtedness and the two issues of Liberty bonds, referred to elsewhere in this report, the bank has from time to time purchased from holders of such certificates varying amounts which were either carried to maturity, or after a short interval, resold to those from whom purchased. It has also on several occasions pur chased direct from the Government certificates of indebtedness pay able within a few days, bearing interest at 2 to 4 per cent, the pur pose being to avoid constant withdrawals of Government funds on deposit with depositary banks. The bank purchased Liberty bonds of the first issue amounting to $1,500,000 to be held and delivered to holders of certificates which it issued in denominations of $10, five of which could be converted into a $50 bond. Liberty bonds to unim 20 A N N U A L REPORT OF FEDERAL. RESERVE B A N K OF N E W Y O R K . portant amounts were also purchased from subscribers to the first issue who had defaulted in their payments. Details of the transac tions in United States bonds will be found in the appendix. M U N IC IP A L W A R R A N T S. Municipal warrants, which, during 1915 and 1916 were purchased in substantial volume when the resources of the bank were not being otherwise drawn upon, disappeared almost entirely from its invest ments during 1917. The following statement records the purchases during the year. Month. For account of For account of Federal R e other Federal serve Bank of Reserve New Y ork. Banks. Am ount. Am ount. $4,240,000 3,225,000 25,000 September................................................................................................................. $2,760,000 2.425.000 50,000 1,000,000 Total................................................................................................................ 6.235.000 7,490,000 February................................................................................................................... Average rate for year, 3.04. FEDERAL RESERVE NOTE ISSUES A N D T H E A C C U M U L A T IO N OF GOLD. The policy of issuing Federal Eeserve notes freely and of main taining the interchangeability of Federal Eeserve Bank deposits and notes, which was described in the last two annual reports, has been pursued consistently throughout the year. The amendment to the Federal Eeserve Act of June 21 provided, among other things, that all Federal Eeserve notes in actual circula tion should be included by the bank among its liabilities, and that it should include among its assets the gold held by the Federal Eeserve agent as security for such Federal Eeserve notes. The gold delivered to the Federal Eeserve agent is thus treated as collateral to Federal Eeserve notes instead of, as formerly, a payment to reduce the bank’s liability, and the Federal Eeserve Bank is made joint custodian of the funds so held. Up to June 15 all outstanding Federal Eeserve notes of this bank were secured dollar for dollar by gold or gold certificates. On that date, however, rapid increases in the bank’s loans and discounts made it desirable to make a partial substitution of commercial paper for gold as security for the Federal Eeserve notes, thereby increasing the gold reserve of the bank, and $25,000,000 was thus substituted. On June 22 an additional $75,000,000 was sub stituted, and since that date, in accordance with the spirit of the amendment above referred to, the gold held by the Federal Eeserve A N N U A L REPORT OF FEDERAL. RESERVE B A N K OF N E W Y O R K . 21 agent has been maintained in substantially the same proportion to the net liability on Federal Reserve notes as the proportion of gold held by the bank has borne to its deposit liability. The accumulation of gold throughout the year by the issue of Federal Reserve notes in exchange therefor has added materially to the strength of the bank. To assist in this strengthening process the Federal Reserve Bank on August 10 invited the cooperation of all the national banks, State banks, and trust companies in the district and offered to pay the cost to such banks of forwarding to it gold or gold certificates and to ship Federal Reserve notes free of expense to any such bank forwarding gold or gold certificates. Later it also offered for a limited period to accept gold coin at its face value without deduction for loss by abrasion. The response to these offers has been extremely gratifying not only in the amount of gold accumulated but in the splendid cooperation given by banks in the district, member and nonmember alike. Mem ber banks outside of New York City sent in, between August 10 and December 31, gold and gold certificates amounting to $10,776,000. Nonmember banks outside of New York City sent in gold and gold certificates amounting to $9,312,000. The amounts of gold received from the New York City banks were, of course, far larger. Many of the nonmember banks in New York under authority of the amend ment to the Federal Reserve Act, which permitted accounts to be opened for clearing purposes, deposited with the Federal Reserve Bank large amounts of gold or gold certificates which they had held in their vaults. Arrangements effected in the early autumn by which the Treasury at Washington and the Subtreasury at New York were supplied with Federal Reserve notes to meet demands for new currency have also assisted materially in the substitution of Federal Reserve notes for gold certificates in general circulation. The amount of Federal Reserve notes of this bank in actual circu lation at the end of 1916 was $93,426,100. At the end of 1917 the amount in actual circulation was $397,353,805. This large increase does not represent wholly a substitution of Federal Reserve notes for gold. Owing to the increase in the gold supply of the bank from other sources it is impossible to estimate at all accurately what part of the total was so accumulated. It is evident, however, that a sub stantial volume of notes has been issued not covered by gold, which therefore constitutes an expansion of our circulating medium. This, of course, is both natural under the circumstances and in ac cordance with the letter and spirit of the Federal Reserve Act, since Federal Reserve notes are, with the exception of gold, the principal expanding and contracting element in our currency. The higher prices for labor and materials and the greater velocity of business 22 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . and trade require larger amounts of currency to be carried as till and pocket money. The same demand has manifested itself for silver and other coins. The Federal Eeserve Bank issues whatever notes the banks of its district require for use of their customers, but the expansion should be regarded as entirely healthy since no one is compelled to receive Federal Eeserve notes in payment of debts and since they are redeemable in gold on demand. The redemption of Federal Eeserve notes unfit for circulation since November, 1914, has amounted to $119,141,435. The cost of printing the notes has again increased and is now on the basis of $10.80 per thousand bills as against $10.58 last year. It is interesting to note that while the demand for notes during the latter part of 1916 was heaviest for the $5 denomination, it has since changed so that the tens have been issued in largest amounts and the proportion of twenties issued has distinctly increased. The demand for fifties and hundreds is also heavier, and were notes of denominations of $500, $1,000, $5,000, and $10,000 available, they would doubtless be taken in important amounts by many banks in the larger cities of the district which have need for currency of this size and are, at present, obliged to hold gold certificates and pay them out when necessary. C o l l e c t io n s and C l e a r in g s . T H E COLLECTION S Y S T E M . The check collection system described at length in the last annual report has been continued in operation during the year, and the fol lowing table shows the various classes and amounts of items handled: [000’s omitted in columns headed “ A m ou nt.” ] Items on other Federal Reserve banks. Items on banks in other Federal Reserve districts. Items on banks in district N o. 2. Items on New Y ork Clearing House banks. 1917. January............. F ebruary.......... March................ A pril.................. M av................... June................... July.................... August.............. September........ October............. N ovem ber........ December......... 058 $8,789 502 5,324 587 7,088 539 7,340 497 7,915 41G 11,021 530 7,417 579 11,903 509 8,847 548 0,555 558 8,305 460 6,219 307,754 $173,484 020,470 $122,700 325,307 109,128 540,298 105,120 400,508 202,489 021,938 145,303 407,718 221,139 702,285 101,083 421,991 248,045 830,591 180,598 412,261 250,540 859,104 234,054 373,514 230,115 800,893 220,080 350,429 239,075 914,070 258,070 382,888 206; 021 883,781 210,208 510,575 325,528 975,047 299,880 534,942 330,002 907,104 894,848 580,907 339,860 1,005,090 913,370 114,978 81,733 94,901 90,874 123,702 103,170 132,153 129,921 94,548 132,314 122,932 145,124 $383,380 348,895 459,020 070,211 937,049 1,137,009 1,037,054 978,327 809,452 1,859,980 1,805,131 1,059,028 138,710 141,085 135,047 145,580 205,797 201,008 227,791 280,931 311,473 358,020 442,049 439,220 Amount. Number. Amount. Number. Amount. Number. Amount. Number. Amount. Number. i l Month. U nited States Treasury checks. $35,217 39,129 45.165 39,401 39,771 43,346 05,037 100,413 138,245 102,534 174,127 217,073 Total...... 6,383 97,383 5,086,914 3,002,098 9,853,283 3,758,040 1,432,410 12,140,348 3,029,189 1,099,458 r r ANNUAL. REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . 23 The collection system was extended on September 10, 1917, to include the collection of notes, drafts, bills of exchange, and other collection items. As the handling of items of this kind presents problems quite different from those involved in handling checks, a service charge of 10 cents per item is made, in addition to such col lection charge as may be imposed by the collecting bank. In case a collction item is returned unpaid, a charge of 10 cents is im posed to be paid to the bank presenting the item for payment. No charge, however, has been made for the collection of coupons other than the charge made by the collecting bank plus mail or express charges. As far as possible, items are sent direct to their place of payment, and, when payable outside of the district, the collecting bank is permitted to make remittance either direct to the Federal Reserve Bank of New York in New York exchange, or, if more con venient, in available exchange, to any other near-by Federal Reserve Bank for the credit of this bank. During the early months of the year the number of banks which agreed to remit to the Federal Reserve Bank of New York at par for items draw^n upon them included all but 90 out of the 1,019 banks in the district, and, on April 1 this bank announced its readiness to accept at par, subject to the usual per item charge, checks on every bank in the district. Checks on those banks which did not agree to remit at par were collected through express companies and through local agencies established by the Federal Reserve Bank. A number of banks on which items were at first collected in this man ner have since agreed to remit at par, and it is hoped that in the interest of the development of the par collection system, the re mainder will also in time adopt the same course. On May 31, this bank announced the completion of arrangements with other Federal Reserve Banks for the issuance and sale by mem ber banks of drafts available for immediate credit at any of the 12 Federal Reserve Banks. Under this arrangement, any member bank may draw its draft on its Federal Reserve Bank and have it made available for immediate credit at par in any of the 12 Federal Re serve cities. Under the regulations of the Federal Reserve Board, the Federal Reserve Bank has throughout the year assessed penalties on member banks which have failed to maintain their reserve deposits with the Federal Reserve Bank at the amount required. The member banks report monthly the average reserve required to be kept by them with the Federal Reserve Bank and impairments of this reserve are ascer tained by comparing the figures reported by the banks with the aver age actual reserve shown by the Federal Reserve Bank’s books during such month. The penalty, which the board has fixed at a rate of 2 per cent above the 90-day discount rate, has been at the rate of 6 5400G—IS-----4 24 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y OR K . per cent during the year. The amount collected was $18,565.29, and the average number of banks penalized each month, 12. GOLD S E TTLE M E N T F U N D . The operations of the gold settlement fund have become of even greater importance than heretofore in connection with the broadened activities of the Federal Reserve Banks since the entrance of the United States into the war. The banks in other Federal Reserve dis tricts have made payments on account of subscriptions to certificates of indebtedness and Liberty loan bonds to a very important extent by drawing upon their New York correspondents. Payments by this bank to other Federal Reserve Banks during the year through the gold settlement fund totaled $8,692,024,000, and payments received from other Federal Reserve Banks totaled $8,426,893,000, the net amount paid being $265,131,000. Transfers in immense volume have been made from other Federal Reserve Banks to this bank, both as a natural movement of funds and also for account of the Treas urer of the United States. It seems probable that without the facili ties of the gold settlement fund, these heavy transfers could have been accomplished only at considerable expense and with an unfor tunate disturbance of domestic exchange at times when it was of the utmost importance that no disturbance should occur. Through the courtesy of the Treasury and subtreasuries these transfers have been made without the shipment of any gold or gold certificates, and at a trifling cost for telegrams and clerical work. The amendments of June 21 provided that the Treasurer of the United States should receive deposits of gold from Federal Reserve Banks or Federal Reserve agents for credit of their accounts with the Federal Reserve Board. The gold settlement fund since June 29 has therefore been carried on the books of the Treasurer of the United States as a deposit repayable in gold to the Federal Reserve Board, which administers the fund. T H E TRAN SFER SYSTEM . Telegraphic transfers have been made for member banks without limit as to amount and without charge other than the cost of the telegram. That they have become an important part of the exchange operations of the bank, is shown by the following table giving the volume of transactions during the last six months: Month. July................................... August............................. September....................... Daily average amount. Daily average number of transfers. $31,801,000 28.536.000 30.893.000 31 35 38 Month. O ctober............................ N ovem ber........................ Decem ber........................ Daily average amount. $37,304,000 47,191,000 50,308,000 Daily average number of transfers. 48 73 70 ANNUAL* REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . D e s i g n a t i o n of 25 R eserve C it ie s . Under the provisions of section 11 of the Federal Reserve Act, the Federal Reserve Board has designated Buffalo, N. Y., as a reserve city, effective January 1, 1918. R e l a t io n s W it h M em ber B anks. In Federal Reserve District No. 2, including New York State, Fair field County, Conn., and the following counties of New Jersey: Ber gen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Pas saic, Somerset, Sussex, Union, and Warren, the number of member banks on December 31, 1917, was 667, as compared with 625 on December 31, 1916, the location of the members being as follows: Number of banks. Location. Connecticut (Fairfield C ounty).............................................................................................................. New Jersey.................................................................................................................................................. New Y ork, Borough of Manhattan.............................................................................................. 56 New York, elsewhere.................... '........ ....................................................................................... 462 15 134 518 Total. 667 During the year 41 State banks and trust companies were admitted to membership, making a total of 43 such members, the names of the institutions and the amount of their gross resources at the time of last available official statement being as follows: Bank or trust com pany. Connecticut: Bridgeport.. New Jersey: Montclair.................... Passaic......................... Plainfield.................... R ah w ay....................... New York: Batavia....................... B rooklyn..................... D o ......................... D o ......................... D o ......................... Buffalo......................... D o ......................... Elmira......................... New Y ork C ity .......... D o ......................... D o., D o. D o. D o. Do. Do. Do. Do. Do. D o. D o. Do. Do. Bridgeport Trust Co. Bank of Montclair........................... Passaic Trust & Safe Deposit C o. Plainfield Trust Co......................... R ahw ay Trust Co........................... Bank of Genesee.......................... Brooklyn Trust Co...................... Franklin Trust Co....................... Manufacturers Trust Co............. . Peoples Trust Co......................... Buflalo Trust C o......................... . Citizens Commercial Trust C o .. Chemung Canal Trust Co........... Bank of America.......................... Bank of the Manhattan C o....... Bankers Trust C o........................ Central Trust C o......................... Columbia Trust Co....................... Corn Exchange Bank 1............... Equitable Trust Co..................... Fidelity Trust C o........................ German American B an k........... Germania B ank........................... Grace & Co.’s Bank, W . R ........ Guaranty Trust Co...................... Irving Trust Co.1......................... Mercantile Trust & Deposit Co. Metropolitan Bank...................... 1 x\dmitted to membership prior to Jan. 1,1916. $7,866,545.08 3,408,669.31 7,130,181.05 8,749,434.09 398,276.67 1,151, 906.81 80,541, 258.38 35,397, 147.55 15,031, 812.26 31,376, 550.02 9,624, 217.56 18,971, 655.31 7,301, 857.80 53,142, 536.95 77,352, 106.80 348,716, 132.77 227,145, 177.86 116,889, 761.33 161,838, 224.38 308,484, 680.75 15,588, 505.06 11,743, 400.68 9,007, 106.55 6,675, 523.47 701,118, 796.37 39,724, 638.23 7,373, 524.48 41,620. 741.62 26 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . Location. N ew Y ork—Continued. Bo ................................. Do ........... Do Do ................................. Do ............... Ogdensburg. ............... Oneida.. ...................... Rom e . .. .. ........... Syracuse U tica. . ........... Do ...................... Do ...................... W atertown .. ....... ............. Total......................................... Bank or trust com pany. Metropolitan Trust C o.................................................. New Y ork Trust Co....................................................... Pacific B ank................................................................... Scandinavian Trust Co................................................. Union Trust C o.............................................................. United States Mortgage & Trust C o.......................... United States Tru^t Co....................... ! ....................... St. I awrence Trust C o................................................. Madison County Trust & Deposit Co........................ R om e Trust C o............................................................... City B an k........................................................................ Citizens Trust Co........................................................... Oneida County Trust C o.............................................. Utica Trust & Deposit C o............................................ Northern New Y ork Trust Co..................................... Resources. $72,199,002.79 84,935,886.36 16,866,754.73 16,944,327.51 86,701,578.94 96,068,096.07 77,455,086.50 929,679.49 2,224,325.64 3,627,405.80 8,239,911.66 10,641,931.22 2.428.746.94 11,850,975.96 7.151.603.95 2,851,735,682.75 The payments to capital stock of the Federal Eeserve Bank made by these institutions amounted to $6,773,700; their reserve deposits on December 31, 1917, were $241,680,500.43 and the amount of their rediscounts and loans with the Federal Eeserve Bank on that date were $69,693,287.12. . Ten national banks in the district were liquidated during the year, of which five went out of business for one reason or another and five were converted into trust companies. Twelve new national banks have commenced business in the district this year. The relations with member banks during the year have been more active, not only owing to the transactions which the Federal Eeserve Bank has had with each member, as well as nonmember, bank in con nection with subscriptions to Liberty bonds and with many of them in connection with sales of certificates of indebtedness, but also owing to the increasing number of member banks which have had occasion to rediscount or obtain advances during the year, the total number of such banks having been 322. With the New York City banks the relations and cooperation have been particularly close. New York City being the principal money market and the finan cial center of the country, it became apparent when the United States entered the war that the banks of this city not only had a duty to perform to the Government and to their own customers, but had a responsibility to the whole country as well. They have recognized and carried out these obligations in a spirit of whole hearted patriotism, and frequently at a sacrifice of normal banking profits. By close cooperation among all the important banks of the city, every requirement of the Government has been promptly and fully met, and a generous amount of the resources of these banks has been placed at the disposal of the Federal Eeserve Bank for the general stabilization of the money market. Had this spirit and this recognition of responsibility been lacking among the New York City A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . 27 bankers, the heavy financial burdens imposed upon the banking system could not have been discharged without both inconvenience and embarrassment to the Government and serious disturbance to the money markets and the business of the country. Joint meetings of the clearing house committee and the executive committee of the directors of this bank have been held periodically, and this bank has been appointed as settling agent by every member of the New York Clearing House, including the Subtreasury of the United States, thereby enabling all clearing-house balances to be settled on the books of this bank, without the use of any currency whatever in such settlements. This arrangement is of great value to the Federal Eeserve Bank in preventing the drain on its gold which would otherwise occur. The machinery of the Federal Eeserve Bank for the rapid creation of credit in hitherto unprecedented vol ume having been tested during both the first and the second Liberty loan financing periods, there seems to be no longer any inclination to doubt the practical value of the system; on the contrary, among both the country and the city banks there seems to be a general recog nition of the indispensability of the system to our banks in their con duct of the immense operations incident to the financing of the war. R e l a t io n s W it h N onmem ber B anks. The relations with the State institutions, as indicated in the fore going paragraph, have also become active through transactions with many of them in certificates of indebtedness and with all of them in Liberty bonds. The transactions of the bank acting as fiscal agent of the Government have been on exactly the same basis with nonmem ber as with member banks, and no distinction has been made between the two classes in respect of the deposit of Government funds. Under authority of the Federal Eeserve Board, a Federal Eeserve Bank is authorized to accept from member banks paper discounted with them by nonmember banks, provided it was given to purchase or carry Liberty bonds or certificates of indebtedness, but only a very small volume of such paper has been presented to this bank for dis count. Nonmember banks have also cooperated cordially and ef fectively with the Federal Eeserve Bank by turning in gold coin and certificates in exchange for Federal Eeserve notes. The only note of discord in the relations with State institutions has been that which manifested itself in the development of the collection system. As already stated, a small number of State in stitutions are unwilling to remit at par to this bank for checks drawn upon them, and this bank, much to its regret, has been obliged to collect such checks at par either through express companies or by the establishment of local collecting agencies. 28 ANNUAL, REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . The amendment of June 21, 1917, permitted nonmembers to open acounts for clearing purposes with the Federal Reserve Bank and enabled them to contribute their gold to the strength of the bank. Balances thus carried with the Federal Reserve Bank at one time aggregated $84,268,259.73, but the entrance into the system of the larger institutions reduced the amount of such balances to $10,317,630.16 on December 31. The entrance of the United States into the war has effected a great change in the attitude of State banks and trust companies toward membership in the Federal Reserve system. On August 1, the Northern New York Trust Co. of Watertown, N. Y., and on Sep tember 28, 1917, the St. Lawrence Trust Co. of Ogdensburg, N. Y., became members, and following the entrance of the Guaranty Trust Co. of New York City, which joined on October 4, the great majority of the larger State institutions in New York City as well as a num ber from other places in the district have become members. Several factors contributed to this important movement: First, the amendment of June 21 under which the rights and duties of State institutions as members of the system were prescribed by law instead of being left to regulation by the Federal Reserve Board. Second, the opinion of the Attorney General of the United States, dated September 10, to the effect that State institutions joining the system were not subject to the restrictions of section 8 of the Clay ton Act. Third, and by far the most important, the proclamation of the President of October 13, appealing to State institutions to join the system as a national duty. Although the majority of the larger institutions have already joined the system there are, nevertheless, approximately 260 State banks and trust companies in the district with sufficient capital to qualify them for membership. Many of them are actively consider ing applying for membership in the near future, and it is hoped that before long the great majority of the State institutions will join, thereby coordinating and concentrating the entire banking power of the district and enabling every member bank in the district to give the fullest cooperation and assistance to the Government in financing the war. The following extract from the report of the executive committee of the United States Trust Co. of New York City to its board of trustees is typical of the patriotic attitude which has led so many of the larger institutions to join the system: During this company’s entire corporate existence we have steadfastly adhered, in theory and in practice, to what we believed to be the fundamental distinction between a trust company and a bank. This distinction has hereto fore rendered direct membership in the admirable Federal Reserve system neither necessary nor helpful to us. Our designated depositary banks have A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . 29 fully represented us in that system, and our business being strictly confined to that of a trust company as distinguished from the general banking business, we have heretofore considered only our own interest in determining the ques tion of membership in the system. The situation is now, however, radically changed. The appeal of President Wilson and the urgent money needs of the country make it the duty of every financial institution to come forward with all the moral as well as financial aid which it can lawfully furnish. Whether the facilities afforded by membership in the reserve bank are useful to us or not, whether the conditions of membership would, having in view the restricted character of our business, in fact result in a slight pecuniary loss to us or not, such considerations are in our opinion as of no weight whatever, in view of the vital importance to our country under existing conditions of omitting no act which can, either directly or morally, either by the furnishing of resources or the exhibition of a spirit of hearty cooperation, tend to strengthen the financial system of the Nation. R e l a t io n s W it h F o r e ig n B anks. Under authority of paragraph (e) of section 14 of the act, and with the approval of the Federal Reserve Board, the Federal Reserve Bank of New York on May 3, 1917, concluded reciprocal arrange ments with the Bank of England, appointing the latter its corre spondent and agent. On June 20, 1917, the Federal Reserve Bank under its agreement with the Bank of England made payments in New York amounting to $52,500,000 against gold in like amount earmarked and held in London by the Bank of England for the account of the Federal Reserve Bank of New York. Pursuant to arrangements with other Federal Reserve Banks and with the ap proval of the Federal Reserve Board, participations in this transac tion were allotted to other Federal Reserve Banks to the amount of $34,387,500. On February 24 this bank applied to the Federal Reserve Board for authority to appoint the Bank of France its correspondent and agent, and approval was granted on February 26. Correspondence and ar rangements of details are in progress looking to the completion of the relationship contemplated. On August 23, with the approval of the Federal Reserve Board, a preliminary agreement was concluded between the Federal Reserve Bank of New York and the Bank of Italy providing that each should act as a correspondent of the other, which was confirmed by the board of directors of this bank on September 5 and by the superior council of the Bank of Italy on September 24. Negotiations are in progress for the arrangement of reciprocal relations with certain other foreign banks. T he F is c a l A gency or the U n it e d S tates. During the early part of 1917 the operations of this bank as fiscal agent and depositary of the United States were limited as before to 30 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W YO R K. receiving from Government collectors of customs and internal reve nue their various receipts and paying checks and warrants drawn upon the Treasurer of the United States and coupons of United States bonds. Immediately following the entrance of the United States into the war, however, the functions and responsibilities of the Federal Ee serve Bank as fiscal agent of the United States were enlarged at the request of the Secretary of the Treasury to include the following: (a) The sale and redemption of certificates of indebtedness; (b) The sale and delivery of Liberty bonds, the payment of cou pons thereon, the exchange of bonds of small denomination for bonds of large denomination, and vice versa, and the conversion of bonds of one issue into bonds of another issue ; (c) The administration of deposits of the United States Govern ment in depositary banks in this district resulting from sales of cer tificates and bonds, and the examination, approval, and custody of the securities pledged to secure such deposits; (d) Later, the sale of war-savings stamps and thrift stamps. At all times throughout the period in which the bank has per formed these functions and undertaken these responsibilities as agent of the Treasury Department its work has been lightened and its bur dens made possible by the vigorous and cooperative way in which the bank has been supported in the various requests and recommenda tions which it has made. The method of conducting these operations will be described in the succeeding paragraphs. C ER TIFICATES OF IN D E B TE D N E SS. On March 27 the Secretary of the Treasury offered to Federal Ee serve Banks $50,000,000 certificates of indebtedness due June 30, 1917, at 2 per cent. This bank subscribed for $25,000,000 and was allotted $20,000,000, the balance being taken by the other reserve banks. On April 19 the Secretary of the Treasury offered for subscription through Federal Eeserve Banks $200,000,000 of 3 per cent certificates of indebtedness due June 30, 1917, for which subscriptions were re ceived in this district aggregating $135,650,000, and a similar amount allotted. This issue, like some of the later ones, was oversubscribed, and $68,205,000 was issued beyond the original amount offered. In subsequent issues allotments were restricted to the amount originally offered. From the following table it will be seen that, out of a total of $3,843,501,000 offered, the subscriptions received through this bank amounted to 67 per cent and the amount allotted through this bank amounted to 64 per cent of the total. The largest volume of A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . 31 these certificates outstanding at any one time in this district during the first Liberty loan financing period was $479,962,000, and during the second Liberty loan financing period was $1,467,543,000. The cooperation of the banks in this district, particularly of those in New York City, in purchasing these certificates, was of a most gratifying character. Individual bank subscriptions during the second Liberty loan financing period ran as high as $145,000,000 and $150,000,000. Of the 1,076 banks (not including savings banks) outside of New York City, 308 purchased certificates of indebtedness, but of these only about one-half were what might be termed regular purchasers. The others participated in only one or two of the issues. United States certificates of indebtedness issued during 1917. Date of issue. Rate of interest. Maturity date. Total amount of issue. A m ount subscribed through Fed eral Reserve Bank of New Y ork. $50,000,000 268’, 205,000 200,000,000 200,000,000 200,000,000 300,000,000 250,000,000 300,000,000 400,000,000 300,000,000 685,296,000 690,000,000 $25,000,000 135,650,000 98,512,000 175,231,000 116,000,000 211,054,000 188,837,000 204,347,000 212,100,000 179,475,000 543,683,000 494,070,500 i $20,000,000 135,650,000 98,512,000 125,300,000 100,500,000 175,000,000 152,938,000 204,347,000 212,100,000 179,475,000 543,683,000 494,070,500 3,843,501,000 2,578,959,500 2,441,575,500 Am ount allotted through Fed eral Reserve Bank of New York. P e r cent. Mar. 31.......................................... May 10.......................................... May 25.......................................... June 8............................................ Aug. 9............................................ Aug. 28.......................................... Sept. 17......................................... Sept. 26......................................... O ct. 18.......................................... Oct. 24........................................... Total................................... 2 3 3 3^ 3; 3■ 3i 3i 4 4 4 4 June 30,1917 ........d o ............ July 17,1917 July 30,1917 ........d o ............ N ov. 15,1917 Nov. 30,1917 Dec. 15,1917 ........d o ............ N ov. 22,1917 Dec. 15,1917 June 25,1918 i N ot offered for public subscription, but taken b y Federal Reserve B ank of New York. In order that payments for the largo amounts of certificates of indebtedness subscribed for in this district might not disturb the banking situation, arrangements were made beginning with the issue of April 25 to redeposit as large a portion as possible of the funds paid in. This, in effect, amounted to a payment for the certificates by credit on the books of the subscribing banks, and in later issues this was the practice actually pursued. In this manner disturbance to the money market from the absorption of this large volume of certificates was reduced to a minimum. The Federal Reserve Bank itself purchased from time to time various amounts of 4^hese certifi cates of indebtedness from banks and bankers, and on several occa sions advanced substantial amounts to the Treasury for temporary requirements through the purchase of special certificates running for a few days, not included in the totals above referred to. The sale of certificates of indebtedness in anticipation of both Liberty loans enabled the banks to create the short credit required by the Government pending the creation of long-time credit through the 32 A N N U A L REPORT OP FEDERAL RESERVE B A N K OF N E W YOR K. purchase of bonds by investors. With each issue of bonds the short bank credits were, in effect, converted into long investment credits. F IR ST L IB E R T Y L O A N . On May 3 the Secretary of the Treasury announced an issue of $2,000,000,000 3^ per cent 15-30 year Liberty loan bonds exempt from all taxes, except estate or inheritance taxes, imposed by authority of the United States or its possessions or by any State or local tax ing authorities. In making the announcement the Secretary advised that the sub scription books would close on June 15, and requested the Federal Eeserve Banks in each district to act as a central agency for receiv ing subscriptions, taking payment of subscriptions and delivering the bonds after allotment. He also requested the Federal Eeserve Banks to form an effective organization and carry on an energetic campaign for the successful flotation of the loan. The governor of the Federal Eeserve Bank of New York ap pointed a Liberty loan committee for the district, composed of 12 New York City bank presidents and private bankers, together with an alternate for each. At the first meeting of this committee, on May 7, the governor of the Federal Eeserve Bank was appointed chairman, the secretary of the bank was appointed secretary, and a plan of organization was determined upo'n which involved the ap pointment of subcommittees on distribution, on publicity, and on the receipt and payment of subscriptions. An executive manager was also appointed. The committee met daily except on Saturdays throughout the campaign, and on several occasions, at the request of the Treasury Department, sent subcommittees or representatives to Washington to confer upon some of the many details which were required to be settled in connection with securing and receiving sub scriptions and delivering the bonds. The committee on distribution consisted of 12 members, and owing to the active nature of the work assigned to this committee alternates were also appointed. The chairman of the committee was a member of the Liberty loan committee. ’ All of the members were partners of leading bond houses or officers of banks or corporations having bond departments. This committee had charge of organizing the campaign to obtain subscriptions to the loan throughout the entire •district, and met daily during the campaign.The committee on publicity carried on a well-organized, vigorous, and effective publicity campaign, reaching all parts of the district, and included in its activities the organization of meetings, the cre ation of a speakers’ bureau, which supplied speakers for over 1,000 meetings, the use of large quantities of newspaper and periodical A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . 33 news and advertising space, largely contributed by advertisers, and the distribution of posters and other literature. Most of the staff of the publicity department were volunteers from banks, bank ing houses, and newspapers, and the cooperation of many and varied interests was given ungrudgingly to further the efforts of the com mittee. The committee on receipt and payment of subscriptions organized a staff of about 300 men and women loaned by New York banks, bond houses, and insurance companies to serve during the period of the campaign and of the subscription payments. This force worked tirelessly in handling the immense amount of detail incidental to the receipt, allotment, and adjustment of subscriptions and the receipt of payments. Some confusion was apparent at times, owing to lack of opportunity for careful organization, to the fact that the entire force were volunteers, and to the unfamiliarity of most of the banks with transactions of the character involved; but, considering the magnitude of the task and the circumstances attending it, the work was handled with reasonable promptness and efficiency. The com mittee received subscriptions amounting to $1,186,788,400 from 978,959 subscribers. Interim certificates were issued as partial or full payment was made on the bonds, the total number of pieces of such certificates being 2,090,524. The total number of pieces of bonds of the first Liberty loan issued to December 31 was 1,181,469. During the campaign it became apparent that the department dealing with the subscriptions to and deliveries of bonds should become an integral part of the Federal Reserve Bank, and on October 1 the Federal Reserve Bank took over the department, released most of the staff to the institutions by which they had been loaned, and began the organization of a permanent staff. Early in the campaign an informal statement was issued from the Treasury Department indicating the extent to which subscriptions might be expected from each of the Federal Reserve districts on the basis of their respective banking resources. Although the quota of subscriptions expected from the Second Federal Reserve District was $600,000,000, one of the early decisions of the Liberty loan committee was to establish $1,000,000,000 as the minimum amount of subscriptions which the committee should endeavor to obtain in this district, and the whole campaign was organized to this end. The campaign fell naturally into two divisions: (a) New York City; (b) places outside of New York City. CAMPAIGN IN N EW YOEK CITY. In New York City the campaign was organized largely along pro fessional and occupational lines, and the following committees were 34 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W YOR K . appointed, each composed of leading men in their respective occupa tions : National banks. State banks. Trust companies. Savings banks. Railroads. Industrial corporations. Public utilities. Insurance. Municipal employees. Stock exchange houses. Professions. Lawyers. Engineers. Architects. Physicians. Dentists. Savings and loan associations. Sale of “ baby ” bonds. Real estate. Automobile trade. Wholesale merchants. Retail merchants. Hotels. Printing houses. These committees were composed entirely of volunteer workers, a very large number of whom participated actively in the campaign. To supplement the wTork of these occupational committees, a group of about 400 bond salesmen organized in teams with captains, made a house-to-house canvass in New York City with substantial results. The total amount subscribed in New York City was $987,269,450. CAM PAIGN OUTSIDE OF N E W YOBK CITY. To assist and advise in the compaign outside of New York City five subcommittees of the distribution committee were appointed, their respective territories being eastern New York, central New York, western New York, northern New Jersey, and Fairfield County, Conn. These five district committees were composed of partners of leading bond houses. They did not become responsible for or undertake local selling campaigns, but acted in an advisory capacity, assisted in organizing local committees and maintained di rect contact between the district headquarters at the Federal Eeserve Bank and the various local committees, helped the work of the local committees, and furnished them all the literature and material avail able as the campaign progressed. Owing to the compactness of the Second Federal Eeserve district it was possible to have this form of organization, permitting direct contact with headquarters instead of contact through the medium of subcommittees, and ex perience has demonstrated its effectiveness and desirability where possible. The governor of the Federal Eeserve Bank wrote a letter to the banks in this district outside of New York City, asking their officers, in consultation with other bankers in the same place, to undertake the formation of local committees to secure subscriptions for the bonds. Each locality was advised of the amount of subscriptions which it was expected to obtain, the amount being based largely on local bank ing resources. These local quotas proved helpful to the local com ANNUALi REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . 35 mittees by giving them a definite figure toward which to direct their campaigns. No uniform plan of organization was proposed. Each committee was free to operate in the manner which it consid ered most effective, some making short campaigns after thorough advance preparation, while others carried on the campaign during the entire selling period ending June 15. In all some 231 local Liberty loan committees were formed, nearly all of which worked with remarkable zest and enthusiasm, and a large number of the localities covered by these committees exceeded the quotas assigned to them by the Federal Reserve Bank, based on the expectation of raising $1,000,000,000 in the Second Federal Reserve district. The total amount subscribed outside of New York City was $199,518,950. T H E C A M P A IG N I N G EN ER AL . The progress of the organization at first was hampered by lack of opportunity for preliminary preparation and to unavoidable delay in settling important details of the issue until the campaign had been in progress for some time. These handicaps were in large meas ure overcome and an effective organization was developed through the large number of efficient and experienced men in every part of the district who were willing, as a patriotic duty, to devote their whole time and energy to the campaign. Early in the campaign a women’s committee for the district was organized in cooperation with the w'omen’s Liberty loan committee, and headquarters were established in New York. An organization was effected for the canvass of New York City, as wTell as in some of the larger places outside of New York City, and very effective wrork was done by the committee and by a large number of women who volunteered to assist in obtaining subscriptions. On June 10 the Treasury Department began the publication of the amount of subscriptions reported in each of the 12 Federal Reserve districts. The first publication, w7hich was only one w^eek before the close of the campaign, showed a total of $1,300,000,000, the subscriptions reported for this district being $588,000,000. At the same time publicity was given to the subscriptions reported in the various localities in this district. Although undoubtedly the figures published by the Treasury Department 'were below the amount of subscriptions which had actually been made up to the date of publication, owing to the slowness w7ith which returns were made by the banks outside of the Federal Reserve cities, the publicity which was given to district and local quotas stimulated very great activity throughout the last w^eek of the campaign, and when the books closed in this district it was found that the total subscriptions 36 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K. had exceeded the $1,000,000,000 aimed at and actually amounted to $1,186,677,400, out of a total of $3,035,226,850 for the entire country. The following table shows the number of subscribers, the amount of subscriptions, and the allotments actually made, subdivided into five different classes graded as to size of subscription. A m ount of Num ber of subscribers. subscriptions. Am ount. $50 to $10,000...................................................................................... $10,050 to $50,000............................................................................... $50,050 to $100,000.............................................................................. $100,050 to $250,000........................................................................... A bove $250,000.................................................................................. Total......................................................................................... Allotm ent. 973,614 $274,019,550 3,582 778 | 172,693,700 285 79,173,300 700 660,901,850 $274,019,550 127,460,850 35,628,000 180,723,250 1,186,788,400 617,831,650 978,959 The banks of the district, almost without exception, threw them selves into the campaign with energy and enthusiasm, working early and late to obtain subscriptions, agreeing to loan at moderate rates to bond purchasers who wished to borrow, operating for purchasers of small denomination bonds, partial payment plans which entailed much additional clerical work and supervision, taking custody of bonds for safekeeping, and subscribing themselves for substantial amounts of bonds. Without such complete cooperation on the part of the banks the great success of the loan could not have been achieved. The bond houses placed themselves at the disposal of the Liberty loan committee, and the general organization of the selling cam paign was placed almost wholly in the hands of the experienced bond men who thus volunteered. Besides organizing the campaign they also secured a large volume of subscriptions from their clients. Employers of labor in industrial centers and elsewhere cooperated by bringing the bonds to the attention of their employees, and pro viding partial payment plans by which small denomination bonds could be purchased and paid for gradually out of salaries or wages. The campaign called forth a patriotic effort of great intensity on the part of many thousands of volunteer workers who devoted themselves to the one purpose of making the loan a tremendous success. SE C O N D L IB E R T Y L O A N . On September 27 the Secretary of the Treasury announced that he would offer for subscription between October 1 and 27 three bil lion or more dollars of United States 4 per cent, 10-25 year, converti ble gold bonds due November 15, 1942, the exact amount of bonds to be issued depending on the amount of subscriptions received. He stated that he hoped subscriptions in excess of $5,000,000,000 would be received from not less than 10,000,000 subscribers, and that bonds would be allotted in excess of $3,000,000,000 to the extent of not A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . 37 over one-half of the amount by which the subscriptions exceeded $3,000,000,000. The new series of bonds were made subject to (a) State or inheritance taxes, (b) graduated additional income taxes, commonly known as surtaxes, and (c) excess profits and war profits taxes now or hereafter imposed by the United States. As before, informal apportionment was made by the Treasury De partment of the amounts expected to be raised in the various dis tricts, the quota of the second district being a minimum of $900,000,000 (proportionate share of $3,000,000,000) and a maximum o f $1,500,000,000 (proportionate share of $5,000,000,000). The Liberty loan committee determined from the outset to endeavor to reach the maximum figure set for the district. The headquarters organization was continued for the second Liberty loan campaign with certain changes which made for greater effectiveness and with great expansion in the number of committees and number of workers who volunteered their services. The Liberty loan committee was enlarged from 12 to 15, and the distribution com mittee from 12 to 22. The publicity committee was not reappointed, but its work was carried on by a director of publicity. The commit tee for handling bond subscriptions was not reappointed, as its work had been assumed by the Federal Eeserve Bank. No executive man ager was appointed, but an executive secretary was appointed for the distribution committee and the executive committee of the distri bution committee was enlarged to include the director of publicity, with a view to obtaining coordination at headquarters of all efforts at distribution. The campaign, as before, was organized in two main subdivisions: (a) New York City; (b) the district outside of New York City. TH E CAMPAIGN ! X NEW YORK CITY. The work in New7 York City was organized on the same general lines as in the preceding campaign, but with ample time for prepara tion the field was covered much more intensively. The various occupational committees o f the first campaign were increased, and with the assistance of an advisory trades committee the following committees were organized and active during the campaign, covering over 30,000 concerns in Greater New York through the medium of approximately 15,000 volunteer workers: Art dealers, art publishers, etc. Automobile and allied. Bakers and confectioners. Banks, national. Banks, State. Banks, savings. Blanket. Books. Brewers. Butter, eggs, and cheese. Caps. Carpenters. Carpet and rug. Cement workers. 38 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K , Chemical and drug. Children’s dress manufacturers. China, toy, and house furnishing. Cloaks, suits, and shirt manufacturers. Coal. Collars and cuffs. Corset. Cotton goods. Decorators. Department stores. Distillers. Dry dock and repair company of Brooklyn. Electrical. Elevator manufacturers. Pish. Fur. Furniture. General contractors. Glove. Hardware. Hats. Hide and leather. Hotels. Industrial committee. Insurance companies. Iron League. Jewelry. Laces, trimmings, etc. Ladies’ garments. Leather-glove industry. Leather goods (sm all), trunks and bags. Lighting fixtures. Linen. Lumber. Machinery and machine tool. Marble. Meat, wholesale and retail. Men’s clothing. Mens’ neckwear. Men’s underwear. Metal ceiling. Metal doors and windows. Metal furring. Milk. Mosaic. Municipal employees. New York Cotton Exchange. New York Produce Exchange. New York Stock Exchange, houses. Notion. Ornamental iron workers. Painters. Paints and varnishes. Paper boxmakers. Paper manufacturers. Perfumery and soap. Plastering. Plumbers. Poultry. Produce and fruits. Professions. Public utilities. Real estate. Refrigerator manufacturers. Restaurants. Retal grocers. Ribbon. Roofers and sheet metal. Rubber. Savings bank. Shipping, import and export. Shirts, pajamas, and boys’ blouses. Shoe retailers and jobbers. Shoes, wholesale and retail. Silk and velvets. Spice. Sporting goods. Stationery. Steam and hot water. Steam railroads. Storage warehouse and van owners trade. Sugar trade. Suspenders and garters. Talking machines, pianos, and musical instruments. Tile. Tobacco. Toilet preparations, specialties. Trust companies. Umbrellas and cane. Upholstery and lace curtains. W all paper. Wholesale grocers. Wine. W ire workers. Women’s cotton and silk underwear. Women’s dress and waist industry. Women’s hosiery and knit underwear. Women’s millinerv. Women’s neckwear. Women’s organizations. Woodworkers. Woolens and worsted. Wrapper and kimono manufacturers. Yarns and art goods. A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y OR K . 39 A house-to-house canvass of Greater New York was conducted by the metropolitan canvass committee with the assistance of some 35,000 volunteer workers. The entire city was divided among these workers on the basis of election districts and the workers in each election dis trict were furnished with the names of all the voters in the district. The results o f this house-to-house campaign were far more effective than those accomplished in the first campaign with less detailed preparation. A number of booths were operated in public squares, on crowded street corners, and in hotels, which served not only as centers for the receipt o f subscriptions and the sale of $50 and $100 bonds, but also as places from which addresses could be made. In order that subscriptions received at public meetings, booths and theaters, as well as by the metropolitan canvass committee, might be promptly allocated to banks situated near the residences of sub scribers, a subscription department was organized which at one time had as many as 150 workers. This department distributed a very large number of subscriptions, avoided much confusion and conges tion which would otherwise have occurred, and made many subscrip tions effective which otherwise would not have been followed up. A very successful parade of trade and other organizations, with about 50,000 people in line, and led by a British tank, was held on the day after Liberty Loan Day. The German submarine “ UC-5,” which had been captured by the British and sent over for exhibition during the campaign, was set up in Central Park, rechristened “ U-Buy-A-Bond,” and visited by hundreds of thousands of people. The total subscriptions received in New York City was $1,140,629,300. TH E CAM PAIGN OUTSIDE OF N E W YORK CITY. The general plan of organization which had hitherto prevailed was continued during the second Liberty loan campaign. In order to assist the various local organizations more effectively, the five district committees at headquarters were increased to eight, each committee having a somewhat smaller territory to cover. Through these eight district committees the central Liberty loan committee and the headquarters organization were kept in close touch with the work in every part of the district, and invaluable assistance was ren dered in determining the membership of the local committees, all of which were appointed by the chairman of the central Liberty loan committee. The number of local committees operating in the second compaign was about 1,050, as compared with 231 in the first campaign. As a suggestion to the local committees a plan book was issued outlining certain methods of operation which had been found effective. Partial payment cards were furnished upon request to 40 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y ORK. local committees for use in industrial establishments and banks. As in the first campaign, quotas were assigned to each locality, and local publicity given to the progress in filling these quotas resulted in many cases in rivalries between places and an increased volume of subscriptions. Each local committee laid out its plan of organization along the lines which it considered best adapted to its territory, and while a great variety of appeals was made through meetings, adver tising, circularizing, and otherwise, the most effective method every where of securing actual subscriptions appeared to be a personal canvass properly planned and directed. The total subscriptions received from places outside of New York City was $409,824,200. TH E CAM PAIGN IN GENERAL, The publicity work during the second Liberty loan compaign was under a director of publicity and subdivided into four bureaus— news, advertising, features, and service. The news bureau placed news items and articles with newspapers and periodicals o f all kinds. It obtained approximately 16,000 col umns of newspaper publicity, exclusive of advertising. Among the 2,436 newspapers of the district it placed 41,800 articles, 2,752 edi torials, 1,116 cartoons, 489 photographs, and 2,000 articles in foreign language newspapers. The bureau had a staff of 40 well-known writers who volunteered their services. The advertising bureau obtained 1,563 pages of paid newspaper advertising, of which 353 were in New York City. This space was obtained entirely from advertisers who either donated space they had themselves contracted for, or furnished the means of obtaining space, no space being requested from the newspapers themselves. Much of the advertising was illustrated. Forty-five million pieces o f literature were distributed. Eighty thousand square feet of elec trical and painted sign space was donated, a 24-foot poster prepared in cooperation with the national organization was pasted upon all unused billboards of suitable size in the district, and various other novel devices were employed. The feature bureau dealt with the publicity and educational work in theaters and moving-picture houses, among labor organizations, boards of commerce and trade, clubs, societies and fraternal organ izations, churches and church societies, farming and agricultural so cieties, political parties* and foreign language organizations and newspapers. It also arranged the Liberty loan parade in New York City, the exhibition of the captured German U-boat and the British tank, and the flight of aeroplanes over New York City. The service bureau had charge of the routine work of the publicity, including the purchasing, information, stenographic, bookkeeping, A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y OR K . 41 filing, auditing, poster and literature distribution, shipping, mes sengers, mail, and telephone departments. The speakers’ bureau was continued during the campaign as an independent organization. It had about 150 speakers and furnished speakers for about 1,000 meetings, indoors and outdoors, both in New York City and in other parts of the State. As in the first campaign the four-minute men rendered invaluable service. The commissioner of education in New York State appointed two representatives to act at headquarters during the campaign, and through the cooperation of the school authorities, State and local, a very effective campaign was carried on among the teachers and pupils of the schools of New York State. The women’s committee in the second campaign had its head quarters with the men’s committees, and a much more detailed or ganization was perfected. The women’s Liberty loan committee, with headquarters at Washington, appointed a chairman for the district and chairmen for each of the three States represented in the district, although in the case of chairmen for New Jersey and Con necticut, parts of their districts were outside of the Second Federal Reserve District. The women not only carried on an effective cam paign in New York City, but formed committees in 479 other places outside of New York City, and, although organized separately, co operated harmoniously w7ith the men’s committees throughout the campaign and secured subscriptions in excess of $41,000,000. The campaign opened October 1 and closed October 27, and was therefore about two weeks shorter than the preceding campaign. It soon became evident that in order to secure $1,500,000,000 of sub scriptions, the maximum amount assigned to this district, it would be necessary for a considerable volume of the subscriptions to be carried by credit. Accordingly, the phrase “ borrow and buy ” was used freely in all parts of the district, and the banks in New York City and many other places cooperated generously by offering to make loans on the bonds at the coupon rate of interest. It was felt that the obligation of the borrowers to pay off their loans on Liberty bonds during the months succeeding the campaign would be an important stimulus toward effecting the necessary savings. As in the preceding campaign, the central Liberty loan committee and the distribution committee at headquarters met daily, and the staff at headquarters was increased greatly over that of the preceding campaign. The banks and bond houses throughout the district again gave the heartiest cooperation. Almost the entire work throughout the district was carried on by volunteers who labored with untiring energy and zeal to make the loan a success. The number of workers throughout the district was probably over 100,000, and their devo 42 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y ORK. tion to the cause in which they were enlisted was inspiring and beyond all praise. The publication of the subscriptions received in the 12 Federal Reserve districts was begun by the Treasury Department on October 15. As before, reports of subscriptions came in slowly until the last week, but the early publication of the subscriptions received as com pared with the subscriptions expected wTas given much publicity and attention in the newspapers, and undoubtedly had the effect of stimu lating rivalry betwTeen the various districts and greatly increasing the amount of subscriptions received. The subscriptions received from soldiers and sailors, largely on the partial-payment plan, aggregating $53,000,000, appeared as part of the subscriptions received in this district, since whenever necessary they w^ere financed, at the request o f the Secretary of the Treasury, through a group of New York banks. On October 15, the Treasury Department began to furnish this bank with actual bonds in denominations o f $50, $100, $500, and $1,000 for sale over the counter during the campaign. About $59,000,000 worth of these bonds wTere sold in this district during the campaign and a much larger amount could have been sold had the bonds been available. The total amount of subscriptions received in this district was $1,550,453,000, and the total number of subscribers 2,178,359, the dis tribution being as follow's: Size of subscriptions. Number of subscribers. Am ount subscribed. Allotm ent. $50 to $10,000.................................................................................. $10,050 to $50,000 ........................................................ ........... $50,050 to $100,000.......................................................................... $100,050 to $^00,000.......................................... ; ............................ A bove $200,000................................................................................ 2,170,201 5,889 1,099 414 756 $441,100,700 168,3^6,200 100,722,650 68,166, 700 772,136,750 $441,001,200 168,326,200 90,790,900 51,374,800 412,874,350 T otal..................................................................................... 2,178,359 1,550,453,000 1,164,367,450 On October 27, at the close of the campaign, the central Liberty loan committee issued the following statement which accurately summarizes the campaign: The second Liberty loan has been a complete success. How high the over subscription will go can not be known for several days. It is estimated that tho total siibseripii^'s - ; • of $1,500,000,000, and what is equally important, the total number of subscribers in this Second Federal Reserve District is greatly in excess of the number o f subscribers to the first loan. Both in the total amount received and in the number of subscribers, the results are beyond our expectations. The reports from the other Federal Reserve districts would indicate a similar surpassing of the estimates. This great success of the loan has been due to two factors. The first is the spontaneous outburst of patriotic feeling and effort that has been common to the whole country. The second is the excellent work of the organizations in A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . 43 •every Federal Reserve district. Without this latter the campaign could not possibly have gained its stupendous success. Naturally our own observation has covered particularly the Second Federal Reserve District. A s to this we desire to go on record as stating that we have never before witnessed such an extraordinary response in the w*ay of organized, effective work, and unremitting, intelligent effort. From the moment the cam paign sta rted this spirit w a s m an ifest, and as tim e w ent on it daily grew in loyalty and intensity. The record which the Second Reserve District has made is, indeed, a proud one, and it is a record achieved by the united effort of all— by the villages and hamlets throughout the State as much as by the larger towns and cities. To all the workers who have thus made this result possible we wish publicly to make this expression of our appreciation. O f greater import even than the secu rin g o f a grea t loa n fo r the G overn ment has been this unparallel evidence of a Nation bound together and ani mated with a single spirit of mutual good-will and devotion to the country. RECEIPTS AND DELIVERIES. The receipt of subscriptions and payments for the second Liberty loan was handled by the officers and about 150 permanent employees o f the Federal Eeserve Bank. Owing to arrangements which had been made to print the bonds, more rapidly no interim certificates were issued in connection with the second Liberty loan, and the work of the bond-issue division of the bank was accordingly much simplified. The terms of payment prescribed by the Treasury Department were as follows: Two per cent with application; 18 per cent on November 15, 1917; 40 per cent on December 15, 1917; 40 per cent on January 15, 1918. From November 15 to 19 the following payments for bonds were received: In f u l l: By banks ________________________________________________________ $S07, 858, 086 Individuals _______________________________________________________ 15,010, 080 Cash sales during campaign___________________________________ 59,051 ,30 0 20 per cent payments_________________________________________________ 8S1, 919, 866 67, 320,114 949, 239, 980 These payments were made in the following manner: By book credit________________________________________________________ By Treasury certificates of indebtedness____ ________________________ By c a sh _______________________________ ________________________________ 687, 741, 746 153, 972, 000 107, 526, 234 949, 239, 980 Between Saturday noon, November 17, and Monday noon, Novem ber 19, deliveries of bonds were made by registered mail and over the counter to a total of $237,342,550, which, added to the amount pre viously sold for cash, made total deliveries to that date o f 44 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K. $296,393,850, or 1,062,918 pieces. The amount of bonds delivered up to and including December 31, was $746,180,100, and the number o f pieces, 2,170,665. The bond-issue division of the Federal Reserve Bank also under took the exchange of interim certificates of the first Liberty loan into definitive bonds, and definitive bonds of the first issue into definitive bonds o f the second issue. The number o f employees engaged in this work at its busiest period was 125; the number of pieces received from owners for conversion to December 31, 1,624,336; and the num ber issued, 1,887,188. This division also undertook to exchange $1,000 bonds of both issues for equivalent amounts o f bonds of smaller de nominations, and vice versa. Up to December 31 the number o f pieces handled was 171,804. L IB E R T Y L O A N EXPEN SE. The expenses incurred by the bank'in handling the Liberty loans were made with the understanding that the bank would be reim bursed by the Treasury Department for its expenditures. The fol lowing itemized list shows the expenses on account o f the first and the second loans, as well as the amounts for which the bank was reim bursed up to December 31, the figures for the first loan including all expenses of departments engaged in handling matters relating to this loan up to December 31: First loan. Advertising______________________ Buttons and badges___________ Bond-issue division_____________ C ircu la rs________________________ General expenses______________ Posters and signs______________ Publicity_________________________ Postage__________________________ Rent ___________________________ Salesmen_________________________ $68. 89 2 ,1 9 2 . 86 127, 120. 12 40, 455. 08 45, 978. 34 18, 861. 85 10, 281. 84 12, 937. 9 4 41, 1 9 5 .1 3 9, 008. 37 Telephone, telegraph, and ship ping-----------------------------------------S tation e ry ______________________ Traveling expenses_____________ Miscellaneous___________________ $4, 357. 23, 079. 6, 729. 3, 085. 91 19 27 00 T o t a l_____________________ 345, 351. 7 9 Reimbursed to Dec. 31, 1 9 1 7 — 297, 310. 39 Net amount d u e _______ 48, 041. 4 0 Second loan. Department. Bond issue and certifi Government cates of in deposit. debtedness. Salaries........................................................ Traveling expenses................................... Printing and stationery........................... E quipm ent................................................. E xpress....................................................... Telegraph and telephone......................... Postage........................................................ R e n t............................................................. Newspapers and directories.................... Miscellaneous............................................. ! $126,873.65 24,923.14 169,990.35 18,901.33 11,274.01 18,615.28 10,363.57 18,568.93 1,081.48 138,714.97 222,861.62 539,306.71 3,055.45 1,935.64 24.00 145.86 $32,851.15 22,003.68 64,818.89 6,595.79 5,079.41 6,968.87 7,705.03 6,891.39 224.00 43,628.71 98,374.07 21,304.10 196,766.92 i Total................................................. ! Reimbiirsfid to Deo. 31. 1917__________ ______ _______ 1 $26,261.49 2,664.08 97,382.24 1,071.04 5,318.27 11,205.71 336.71 2,768.10 827.48 75,026.50 $16,176.30 P etty cash fu n d ......................................... Net amount due............................. Publicity. $51,584.71 255.38 6,159,24 9,842.90 876.33 439.98 2,321.83 6,973.80 6.00 19,913.90 i, 629.98 1,391.60 .72 Total . Distri bution. 542,362.16 242,379.94 299,982.22 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y OR K . 45 G O V E R N M E N T DEPOSITS. The act of Congress approved April 24, 1917, under which the first Liberty loan was made, authorized the Secretary of the Treasury to deposit in such national banks, State banks, and trust companies as he might designate, upon the pledge of security, the proceeds arising from the sale of bonds and certificates of indebtedness. The respon sibility for the appointment of depositaries, the receipt and approval of security, and the deposit and withdrawal of funds were placed upon the Federal Eeserve Bank under the instructions and super vision of the Treasury Department. Duly qualified depositary banks were permitted to pay for certificates of indebtedness as well as Liberty bonds by opening book credits therefor in favor of the Treasury. A very large proportion of the deposits in depositary banks were created in this way, and the transfer of funds and dis turbances to the money market were thereby reduced to a minimum. During the first loan period a special department with 32 employees, in charge of a volunteer committee appointed by the Federal Eeserve Bank, the chairman of which was made an acting deputy governor, undertook all the work connected with the management of Govern ment deposits. During the second loan period this department, with 54 employees, was operated as a department of the Federal Eeserve Bank, with the same committee acting in an advisory capacity. During the first loan period 306 banks qualified as depositaries by pledging collateral of a specified character with the Federal Eeserve Bank. In order to facilitate the pledging of collateral, local cus todians were appointed in 49 cities of the district. The largest amount of collateral held at any one time against redeposit of certi ficate of indebtedness funds was $172,000,000; the largest amount of securities held against redeposits of Liberty loan funds was $367,280,044 with local custodians and $274,518,118 in the vault of the Federal Eeserve Bank. The largest amount of Government funds on deposit at any one time was $171,091,000 of certificate of indebted ness funds on June 11 and $304,353,448.12 of Liberty loan funds on July 5. As the Treasury Department had stated that banks making payment for Liberty bonds by the use of certificates of indebtedness would receive preferential treatment in the apportionment of Gov ernment deposits, a readjustment of such deposits in depositary banks was accordingly made on July 19. During the second Liberty loan campaign the redeposited funds were handled in the same manner but, at the request of this bank, a larger number of banks qualified as depositaries, 531 in all. The number of local custodians of securities was increased to 50. The largest amount on deposit with depositary banks was $1,306,118.990.43 on November 30, while the largest amount of securities held 46 A N N U A L REPORT OP FEDERAL RESERVE B A N K OF N E W Y O R K . was $1,943,625,476.27 on December 1. In order to be prepared for similar work during tlie next loan the department has been main tained intact and banks have been encouraged to retain their status as depositaries and to leave their securities pledged with the Federal Eeserve Bank for this purpose. The number of qualified deposi taries on December 31 was 530, and collateral held aggregated $858,534,219.80. W A R -S A V IN G S A N D T H R IF T ST A M P S. Shortly before December 1 the Federal Eeserve Bank was re quested by the Secretary o f the Treasury and the National WarSavings Committee, acting under the Treasury regulations, to main tain a supply of war-savings stamps and certificates and thrift stamps and cards for sale to agents o f the first and second class, also to trans mit applications for agencies when duly approved to the Treasury Department. The following supply o f stamps was received prior to December 31 : War-savings stamps (pieces)____________________________________________ 4 ,0 00,0 00 Thrift stamps (pieces)___________________________________________________ 3 ,5 00,0 00 of which on December 31 the following amounts had been sold or consigned to agents: War-sav ings s tamps. Thrift stam ps. Total. New Y ork C ity.............................................................................................. N ew Y ork State outside Now Y ork C ity................................................. New Jersey...................................................................................................... Connecticut.................................................................................................... Pieces. 242,022 50,S68 19,920 4,400 Pieces. 785,421 144,100 43,628 8,600 Pieces. 1,027,443 195,068 63,548 13,000 T otal......................................................................................................... 317,310 981,749 1,299,059 O r g a n iz a t io n of t h e B a n k . IN T E R N A L M A N A G E M E N T . During the year the directors of the bank held 36 meetings. The executive committee, consisting of the governor or deputy governor, the chairman, and four of the directors (all of the directors serving upon it in turn), held 170 meetings. The committee on State bank membership held 26 meetings and other special committees held 14 meetings. At the first meeting of the directors held in 1917 the officers of the bank were reelected for the ensuing year. With the increased scope of the activities of the bank, many additions to the staff of the bank, both official and clerical, have become necessary. J. Herbert Case, vice president of the Farmers’ Loan & Trust Co. o f New York, was A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . 47 elected deputy governor September 26 and entered upon his duties October 8. George W. Davison, vice president of the Central Trust Co. of New York, served as acting deputy governor from June 6 to July 31, during which time he conducted in a volunteer capacity the Government deposit department of the bank. Fred I. Kent, vice president of the Bankers’ Trust Co. of New York, was elected acting deputy governor September 26 to take charge of the licensing of exports of coin, bullion, and currency under the President’s procla mation o f September 7, and of other matters pertaining to foreign exchange. He resigned December 31 to act for the Federal Reserve Board in handling these and similar matters. Two additional as sistant cashiers were elected during the year, Arthur W. Gilbart on June 6, and Adolph J. Lins on September 5. Two acting assistant cashiers were also elected on September 5 to take charge of the bond issue division of the bank, W. M. St. John, assistant cashier of the National Bank of Commerce of New York, and J. W. Jones, manager of the Long Island branch of the Irving Trust Co. On January 1, 1917, the bank had 9 officers and 164 clerks; at the; close of the year the staff consists of 16 officers and 829 clerks, the increase having been made necessary by the general expansion of the bank’s business in all departments, and particularly by work con nected with the Government financing. Following is a list o f de partments and the number of employees in each. P>A N Tv DEPARTMENTS. Number of employees. 29 Auditing and examination________ Bookkeeping and statements_____ 15 Chief clerk _________________________ 7 11 Collection __________________ ___ _____ Credit _______________________________ 11 Distribution._______________________ 5 21 Discount ____________________________ Federal reserve agent____________ 5 F ilin g _______________________________ 18 General bookkeeper________________ 1 Mail teller__________________________ 17 officers’ mail_____ __________________ 2, 3 Miscellaneous______________________ Money_______________________________ 37 Night force_________________________ 13 Note teller__________________________ 8 Pages________________________________ 9 Paying teller_______________________ 2 Porters_____________________________ 17 Receiving teller____________________ 3 Return item and messenger depa rtmant-------------------------------------17 Secretaries____________ ____________ 3 B A N K DEPART ME NT S— COnt illU e d . N um ber o f em ployees. S h ip p in g _________________ ______ 5 S t a t is t ic s _______________ ______ 5 S te n o g r a p h ic____________ ______ 23 S u p p ly___________________ _____ 2 T elephon e op era tors_________ ______ 6 T r a n s it_______________________ _ 167 V a u lt__________________________ _ 2 W atchm en and floorm en ____ _ 25 W ire tra n sfers_______________ 496 T o t a l__________________ GOVERN M ENT DEPARTMENTS. Bond e x c h a n g e ______________ B on d is s u e __________________ ( i <yvernm eat ch eck ___________ G overnm ent d e p o s it-------------C ertificate o f in debted ness— 99 ___ 129 ___ 19 ___ 52 ___ 34 T o t a l __________________ G rand t o t a l_____ ._____ 829 48 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W YO R K. The year 1917 has made heavy demands on the staff of the bank. The necessity of transacting promptly an unprecedented volume of business, in inadequate and crowded quarters, with many new and inexperienced clerks has thrown a strain on every member of the staff which has been none the lighter on account of the great amount of night work involved. In spite of the overwhelming tasks which have often been imposed upon the bank in connection with the Gov ernment financing, the work of the bank has been kept up and a spirit of cheerfulness and loyalty has prevailed among its employees throughout the year. In recognition of increased living costs which war conditions have brought about and of the high pressure under which the entire staff has worked during the past nine months, the directors, at the close of the year, with the approval of the Federal Reserve Board, sup plemented the normal compensation of all employees below the rank of cashier by an additional payment equal to 15 per cent of annual salaries not exceeding $1,500, and 10 per cent of salaries exceeding $1,500. At the cloSe of the year the staff of the bank consisted of 498 men and 351 women. Plans are being matured for the conduct of edu cational courses for both men and women, which will stimulate their interest in the work of the bank and afford opportunities for de velopment and advancement. B A N K P R E M IS E S . During the year the offices occupied by the bank, at the time of the last report, on the ground and fifth floors of the Equitable Building, have been outgrown. The bank has, accordingly, engaged such addi tional space on the fourth and fifth floors of the Equitable Building as could be obtained and has also found it necessary to lease the entire building at 50 Wall Street. The Liberty loan committee and the departments which handle Liberty bonds have been placed on the fourth and fifth floors of the Equitable Building, while the transit, securities, Government deposit, collection, and bookkeeping depart ments of the bank and part of its auditing staff, have been trans ferred to 50 Wall Street. The total amount of space occupied at the close of 1917 was about 65,000 square feet. The capacity of the large vault installed a year ago has become so taxed with Liberty bonds and other matter relating thereto that it has become necessary again to avail of the courtesy of the New York Clearing House Association and to use one of its vaults to store currency. A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . 49 E L E C T IO N O F D IR E C T O R S . To fill the vacancies caused by the expiration on December 31,1917, of the term of Robert H. Treman and William B. Thompson, as direc tors of class A and class B, respectively, an election was held from November 20 to December 6. Of the 224 banks in the group which voted this year (banks having capital and surplus from $66,000 to $200,000) only 91 chose electors and 84 actually voted. The follow ing candidates for the vacancies were nominated: For class A director: P. A. Canfield, of Kingston, N. Y., nomi nated by 1 bank; John C. Leggett, of Cuba, N. Y., nominated by 3 banks; Robert H. Treman, of Ithaca, N. Y., nominated by 53 banks; C. P. H. Vary, of Newark, N. Y., nominated by 1 bank. For class B director: Jacob Rice, of Kingston, N. Y., nominated by 1 bank; William B. Thompson, of Yonkers, N. Y., nominated by 54 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: P. A. Canfield, 0; John C. Leggett, 2; Robert H. Treman, 79; C. P. H. Vary, 2. For class B director: Jacob Rice, 1; William B. Thompson, 83. Mr. Treman was declared elected class A director and Mr. Thomp son class B director, each for a term of three years beginning Jan uary 1, 1918. On January 31 Charles Starek, class C director, resigned and the Federal Reserve Board on February 9 filled the vacancy thus occa sioned by the appointment of W. L. Saunders to serve for the unex pired term. He has been reappointed for the three-year term be ginning January 1, 1918. On December 22 the Federal Reserve Board redesignated Pierre Jay chairman of the board and Federal Reserve agent for 1918. M E M B E R O F A D V IS O R Y C O U N C IL . On January 3 the directors reelected J. P. Morgan, of New York City, a member of the Federal Advisory Council from Federal Reserve District No. 2 for the year 1917. G B A N K IN G eneral P O S IT IO N B u s in e s s OF T H E C o n d it io n s . D IS T R IC T D U R IN G 1917. The following table gives comparative figures for important items in the statement of members of the New York Clearing House Asso- 50 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W YOR K . ciation, State banks and trust companies in New York State, and national banks in this district (in thousands of dollars): New Y ork clearing hous? banks: Loans, discounts, and investments........ Gold and lawful m on ey............................ On deposit with Federal reserve bank. Net demand deposits................................ Net time deposits....................................... National-bank note circulation............... State banks and trust companies in New York State: Loans and investments................................... Due from banks, bankers, and trust com panies............................................................... Cash in vault...................................................... Due from Federal reserve bank..................... Customers’ liability on acceptances.............. Deposits............... *............................................. Bills payable and r^sidcounts........................ National banks in district No. 2: Loans and discounts........................................ Customers' liability on lett:rs of credit and acceptances..................................................... United States bonds and notes and certi ficates of indebtedness.................................. Stocks and bond s.............................................. Due from Federal rassrve ban k ..................... Cash in vault...................................................... Due from banks and bankers......................... Due to banks and bankers.............................. United States deposits..................................... Deposits, demand and tim e............................ Bonds and sscurities borro v ed ...................... Bills payable and rediscounts........................ 1 Includes United States deposits. Dec. 30,1916. Dec. 29,1917. $3,339,450 439,065 193.698 3,334,272 159,785 28,955 $4,118,775 106,228 561,439 1 3,88'.,273 198,492 34,104 N ov. 29, 19'6. Nov. 14, 1917. . 2,626,604 3,076,129 373,610 235,240 307,692 124,772 183,367 110,159 3,449,427 (2) 83,041 3,121,992 521 Dec. 27, 19 6. Decrease. Increase. $779,837 $332,837 *’ 367*74i 551,001 38,707 5,149 449,525 65,918 110,46S 183,367 27,118 327,435 97,155 Nov. 20, 1917. 2,238,642 2,522,568 62,495 73,529 11,034 87,420 600,792 22^, 662 355.830 211,865 1,190,571 (2) 2,316,488 8,540 18,976 96", 189 616,236 448,346 879,769 45,504 218,684 122,3P0 190,866 1,072,48 7 699,495 2,587,6c8 94,435 224,812 2 283,926 233,440 20.999 118)084 699,495 271,150 85,895 205,836 Not shown separately. Among the important changes shown in the statement of the New York Clearing House banks is the transfer of approximately threefourths of the banks’ holdings of gold and lawful money from their vaults to the Federal Reserve Bank, due to changes in reserve re quirements, discussed earlier in this report, and also to the entrance of practically all of the large State banks and trust companies of the city into the Federal Reserve system. Loans, discounts, and in vestments show an increase of $779,000,000, or 23.5 per cent, due prin cipally to investments in or loans upon United States Government securities, the amount of such investments and loans on December 28, 1917, being $604,000,000. Because of withdrawals of deposits from this center by banks in other districts, the increase in net deposits has been much less, totaling only $590,000,000. The proportion of gold and lawful money in vault and deposited with Federal Reserve ^ank to the aggregate net deposit liability shown above decreased from 18.15 per cent at the end of 1916 to 16.35 per cent at the end of 1917. Loans and investments of State banks and trust companies in New York State increased $449,000,000, while deposits show a much smaller increase, the difference being offset almost entirely by an in crease in bills payable and rediscounts of $97,155,000. Reserve de- A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . 51 posits of $183,000,000 have been placed with the Federal Eeserve Bank, reducing cash in vault by $110,000,000 and balances with banks and bankers by $06,000,000. The most important increases in the figures for national banks in the Second Federal Eeserve District are $880,000,000 in holdings of United States obligations, offset in part by an increase of $699,000,000 in United States deposits. Loans and discounts show an increase of $284,000,000, which is slightly greater than the amount of the in crease in demand and time deposits. Beserves carried with the Fed eral Eeserve Bank show an increase of $219,000,000, reflecting trans fer of cash from vaults to the Federal Eeserve Bank. The increase in the amount of bills payable and rediscounts of national banks and State institutions, whose reports are summarized above, from $19,000,000 to $322,000,000, is the most significant indi cation of the strain which has come upon the banking machinery of the district, the major portion of the rediscounting and borrowing having been with the Federal Eeserve Bank. M ONEY RATES. Money rates were relatively low in the early months of 1917 and continued so until some time after the declaration of war on April 6. Commercial paper was sold freely at rates ranging from 3 to 5 per cent; bankers’ acceptances were sold on a basis of 2J to 3f per cent; call money rates were at or below 2| per cent, and rates for time money approximated those for commercial paper. A distinctly firmer tendency became apparent as the Government’s preparations for placing the first Liberty loan progressed. Call money often touched 6 per cent, and with the higher call rates and the desire of the banks to keep their funds in available form, time loans on stock exchange collateral became difficult to obtain. Member banks in New York City availed themselves freely of the rediscount and loan facilities of the Federal Eeserve Bank, with the result that, though rates were very firm, stability unknowTn in former periods of strain was given to the money market. Only once during the period of financing the first loan did call money go above 6 per cent. Fol lowing the installment payment on the first loan due June 28 and the maturity of certificates of indebtedness which had been issued in anticipation of the loan, rates for call money and commercial paper became easier and continued so for some weeks. As the time for placing the second Liberty loan approached, rates again advanced, commercial paper advancing from 4|-5 per cent in early August to 5-5J per cent in the early part of September, and 5^-6 per cent in October, where it remained until payment of the first installment on the second Liberty loan was made on Novem 52 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y OR K . ber 15, when it declined to 5|-5f per cent. Another upward turn came during the last week of the year and carried the rates again to 5|-6 per cent. The call money rate advanced early in September and ruled close to 6 per cent, with one loan of $50,000 on September 25 at 7 per cent. Early in October, however, when the actual cam paign for placing the second Liberty loan began, the rate declined to 4 per cent and remained steady at about that figure throughout the month of October and the first half of November, the steadiness in the supply of accommodation having been accomplished largely through the cooperation of all the banks in New York City with the Federal Reserve Bank and the Liberty loan committee. During the last few months of the year the rates quoted on time loans or collateral were 5^-6 per cent and during the last week of the year call money rates again stiffened and held close to 6 per cent. The tendency throughout the year has been toward firmer rates for loans of all kinds, and the preference given to Government bor rowings tended to diminish somewhat the supply of credit available to other borrowers. Commercial paper and banker’s acceptances, be cause of their availability for rediscount with the Federal Reserve Bank, have been less affected than loans on stock exchange collateral and have found a reasonably favorable market. GOLD M O V E M E N T . The United States Treasury statement of money in circulation, dated January 1, 1918, shows gold in the country $3,040,439,343, as compared with $2,864,841,650 on January 1, 1917, an increase of $175,597,693. The gold production of the United States and its dependencies in 1917 was $84,456,600. Imports of gold from all sources during the year were $553,713,000. Gold exports were $372,171,000, mainly to South American countries, Cuba, Spain, Japan, and India. On August 13 the Federal Reserve Board requested the Federal Reserve Bank of New York to obtain information relative to the amount and destination of gold exports from this district to foreign countries. On September 7 the President declared an embargo on gold, silver, and currency shipments out of the country, placing in the hands of the Secretary of the Treasury and the Federal Reserve Board the enforcement of this embargo and granting discretion to issue permits for exports where not contrary to the public interest. Since that date, the Federal Reserve Bank has received and passed upon applications originating in this district for permission to ex port gold, silver, or currency and transmitted such applications with its recommendation to the Federal Reserve Board for final action. A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W YORK. 53 FOREIGN L O A N S. In the last annual report extensive foreign borrowings during the war were listed. During 1917 such borrowings almost entirely ceased, the principal loans placed being $250,000,000 British Govern ment one and two year secured notes in January, $8,098,250 ten-year bonds of the Province of Buenos Aires in February, $100,000,000 French Government two-year secured notes in March, $4,000,000 fiveyear bonds of Genoa, Italy, $2,400,000 twelve-year notes of Bolivia, $100,000,000 one-year notes of the Dominion of Canada sold in August, and British treasury bills placed in several issues of $15,000,000 each by Messrs. J. P. Morgan & Co., the amount of this issue outstanding at any one time not having exceeded $100,000,000. During 1917 the Secretary of the Treasury, under authority of Con gress, has advanced to the Governments of Great Britain, France, Italy, Russia, Belgium, Servia, and Roumania a total of $3,656,129,750, receiving in exchange interest-bearing obligations of those nations. FOREIGN B A N K IN G C O N D IT IO N S. The following statements show the condition of three leading European banks toward the end of 1916 and 1917: BA N K OF ENGLAND. Dec. 27,1916. Circulation.................................................................................................... Public deposits............................................................................................. Other deposits............................................................................................... G o/em inen t ?ecurities................................................................................ Other securities............................................................................................ R eserve........................................................................................................... B ullion........................................................................................................... Proportion of resources to liab ility...................................... per cen t.. £39,675,000 52.116.000 126.726.000 57.187.000 106.461.000 33.079.000 54,304,915 18.49 Dec. 27,1917. £45,943,000 42.003.000 124.161.000 58,30?, 000 94.888.000 30.843.000 58,337,469 18.56 B A N K OF F R A N C E . Dec. 28,1916. F ra n c s. G old.............................................................................................................. S ilver.............................................................................................................. Discounts and advances.............................................................................. Circulation..................................................................................................... Deposits...................... .................................................................................. Treasury deposits......................................................................................... 5,075,914,550 294,869,000 1.937.278.000 16,678,817,000 2.260.224.000 15,003,000 Dec. 27,1917. F rancs. 5,351,524,800 247,656,889 2,136,760,143 22,336,799,276 2,913,741,500 253,858,163 IM P E R IA L B A N K OF G E R M A N Y . Dec. 30,1916. G old................................. ................................................................................ Loans and discounts..................................................................................... Circulation................................................................... .................................... M a rk s . 2.520.473.000 9.603.767.000 8.054.652.000 Dec. 31,1917. M a rk s . 2,405,5*0,000 14.596.100.000 11.467.740.000 54 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . N E W Y O R K STO CK E X C H A N G E . During the early months of the year, trading on the New York Stock Exchange both in stocks and bonds was quite active, but fol lowing our entrance into the war the tendency has been toward much lighter trading at decreasing prices. Bond prices had for some time shown downward tendencies and this movement quickly extended to stocks when it became apparent that companies which had profited greatly from war activities prior to our becoming a belligerent would not continue to be permitted to make and retain abnormal profits. As a result of this factor and the competition of Government securities, prices have shown an almost continu ous downward trend and have reached levels lower than any recorded since the autumn of 1914. The New York Times record of the aver age prices of 50 representative stocks at the high point in 1917 was 90.40 on January 4, 1917, as against 101.51 on November 20, 1916, and 65.88 at the end of 1917, while the low of 57.43 for the year was touched on December 20. The price of 40 representative bonds at the beginning of 1917 was 88.63; the high for the year 88.48, Janu ary 26; low, 74.21, December 20; close, 76.80. A decided upward turn in the last week of the year, reflected in the figures given, fol lowed the announcement of Government control of railroads. The following record of comparative figures shows the volume of stocks and bonds dealt in on the New York Stock Exchange for the past seven years. Shares. 1917........................................................................................................................... 1916........................................................................................................................... 1915........................................................................................................................... 1914........................................................................................................................ 1913........................................................................................................................ 1912........................................................................................................................... 1911........................................................................................................................... $184,536,371 230 060.900 173.155 644 45.989,158 76.134 996 118.452.676 127,376,149 Bonds. $1,052,346,950 1,133.935.300 955.525.200 460.472.500 497,158,600 645 300.000 878,933,700 CROPS. As crop planting time approached in the spring of 1917, realiza tion that the world’s food supply was in danger of falling materially below demand led to vigorous efforts throughout the country to in crease the yield of staple products. This movement was greatly stimulated by the extremely high prices which such products com manded. As a result, a very much increased acreage was planted with resulting heavy yields of several of the more important com modities, though wheat production, upon which attention naturally centered, did not increase very greatly over the short crop of 1916. The corn crop of 3,159,494,000 bushels, valued at $4,053,672,000, the A N N U A L REPORT OP FEDERAL RESERVE B A N K OF N E W Y OR K. 55 oats crop of 1,587,286,000 bushels, valued at $1,061,427,000, and the potato crop of 442,536,000 bushels, valued at $543,865,000, are the largest on record. Other crops whose production established records were rye, sweet potatoes, beans, onions, cabbages, and tobacco. The cotton production is estimated at 10,949,000 bales. EXPORTS A N D IM PO R TS, During the early months of the year exports and imports at the port of New York ruled very materially above those of the preced ing year, but in later months have only approximately held their own as compared with a year ago, the difficulties of obtaining ship ping space having contributed to the later restriction of foreign trade. Shipments to and from Europe, other than those made by the Government, have shown reductions, while there has been a sub stantial gain in trade with South American countries. Exports from this customs district for the calendar year 1917, not including Gov ernment shipments, aggregate $2,937,000,000, a gain of $147,000,000 over last year, and imports aggregate $1,360,000,000, a gain of $103,000,000. G EN ER AL B U SIN E SS C O N D IT IO N S. The early, months of 1917 were marked by great business activity, hampered in some degree by difficulties of transportation and em bargoes on freight shipments which the railroads found it necessary to impose. During the late spring, following our declaration of war against Germany, there was a temporary recession of activity in retail lines, occasioned, apparently, by a tendency of large sections of the popu lation to economize. This movement, which created widespread apprehension among dealers in articles in the nature of luxuries, was short lived, and, with the coming of fall, business in most lines re vived and became very active, the most marked exception being the building trade, which continued very quiet throughout the remainder of the year. There have been very far-reaching adjustments in business and industry; such lines as machinery, munitions, steel products, cotton and woolen textiles and clothing and similar activities being stimu lated by war conditions. On the other hand, the automobile indus try, manufacturers of household furniture, manufacturers of various building materials, and many other lines have experienced curtail ment of business to a marked degree, but this curtailment has, ap parently, not been sufficiently great to offset the expansion in essential war industries; consequently excessively keen competition for rail 56 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W YORK* road transportation facilities, for fuel supplies, and for the products of steel mills has taken place, with the result that the railroads, though doing all in their power to cooperate in handling the unpre cedented volume of traffic pressed upon them, have been unsuccessful. Coal production and distribution, though 50,000,000 tons above the normal output, is still estimated by the United States Fuel Adminis tration to be 50,000,000 tons short of the amount required for con sumption. Constantly increased difficulty in obtaining and retaining labor supply has been experienced by practically all industries, and heavy advances in the wage scales and salaries have been made in recogni tion of the higher costs of living. Prices of materials have increased steadily, and in many cases rapidly, so that the whole level of pro duction cost and the selling price of finished products is materially higher than at the beginning of the year. Bradstreet’s index number for commodity prices for December 1, 1917, is $17.8113 as compared with $13.6628 December 1, 1916, an increase of over 30 per cent. The tendency on the part of business and manufacturing interests is to proceed with great caution in the purchase of materials and the manufacture of goods, buying orders being restricted, so far as pos sible, to immediate needs. APPENDIX. Capital account reconciliation, Jan. i, 1917, to Dec. 81, 1917. Capital paid in Jan. 1, 1917____ .___________ _______ ___________________ Sundry increases: Due to increase in capital and surplus of mem ber banks____________ ____________________ _____ _ $473,150 Due to organization of new national banks- — . 55, 500 Due to admission of State banks and trust companies ................. ............. ............................. . 6, 391, 300 _ — ----- ---- $11,805, 750 6, 919, 950 18, 7So, 700 Sundry decreases: Due to decrease in capital and surplus of mem ber banks________________ ___ ,_____________ Due to banks liquidated _____ _____ _ 2, 250 98, GOO ----------- Paid-in capital Dec. 31, 1 9 1 7 „ — 100,850 18, GS4, 850 Summary of Federal Reserve notes. Total issued to bank: 1914, 1915, 1916__ 1917 ______ _ 160, 480, 000 415, 000, 000 575, 4S0, 000 Less notes unfit for circulation retired 1914, 1915, 1916_______________________________________ _ $53, 476, 235 Less notes unfit for circulation retired 1917_.__.__ 65, 665, 200 --------------------Amount outstanding Dec. 31, 1917________________ ________ ___ As follow s: In actual circulation____________ ___ __________ Held by Federal Reserve Bank Dec. 31, 1917 119,141, 435 456.338,565 397, 353, 805 58, 9S4, 760 On Dec. 31, 1917, the Federal Reserve agent held against Federal Reserve notes: Gold certificates_________ _ __ ________________ ____ — _________ ______250,598,565.00 Commercial paper___________________ ____ ______________________ 206,538,872.84 57 58 A N N U A L REPORT OF FEDERAL RESERVE BA N K OF N E W Y OR K. Total of Federal Reserve notes paid out by the Federal Reserve Bank of New York , by months, 7,9/7. T o member banks. T o nonmem ber banks. January........................... ......................................................................................... February................................................................................................................... March........................................................................................................................ A pril.......................................................................................................................... M ay............................................................................................................................ J une........................................................................................................................... J u ly ............................................................................................................................ A ugust....................................................................................................................... Septem ber................................................................................................................ October...................................................................................................................... N ovem ber................................................................................................................. December.................................................................................................................. $9,164.000 40.294.000 38.757.000 32.994,500 25.578.000 27.006.000 25.598.000 30.686.000 33,950.250 40.436.000 54 231.000 70.240.000 $670,000 3.914.500 2.644.000 3.657.000 2.066.000 2.424.000 1.361.000 3.122.000 7.450.500 12,857,800 6.487.000 4.346.000 Total paid to nonmember ban ks.................................................... ........ 428,934.750 50,999,800 50,999,800 Total received from Federal Reserve agent............................................ 479.934.550 415,000.000 Movement of Federal Reserve notes between Federal Reserve Bank of New York and other Federal Reserve Banks, Jan. to Dee . 31, 1917. From Federal Reserve B ank of— Atlanta................................................. Boston................................................... Chicago................................................. Cleveland............................................. Dallas.................................................... Kansas C ity......................................... Minneapolis.......................................... Philadelphia........................................ R ichm ond............................................ St. Louis............................................... San Francisco...................................... T otal...........................................j Notes of Federal Reserve Bank of New York received. T o Federal Reserve Bank of— $1,236,500.00 ; A tlanta................................... 9.482.800.00 Boston................................................. . Chicago................................ 3,425 000.00 1.250.300.00 Cleveland......... .............. Dallas................................................ 599 420.00 Kansas C ity......... 127, 750.00 Minneapolis...................................... 390 500.00 Philadelphia.................................... 11,169,902.50 R ichm ond............................. 999.100.00 St. Louis.................................... 922.200.00 San Francisco.................................... 393.580.00 29,997,052.50 T otal........................ Their notes shipped. $3,030,710 3,018,450 1,698,920 1,725,105 964,265 929,160 792,325 5,818,700 3,600,750 661,150 2,560,440 24,799,975 Summary of gold settlement fund operations, Jan. 1, 1917, to Dec. 31, 1917. From or to Federal Reserve Bank of— Am ounts received and paid by the New York Federal Reserve Bank in settlement of accounts due. Received. Net loss Paid. Boston........... Philadelphia. Cle veland____ R ichm ond___ A tlanta........... Chicago........... St. Louis....... . Minneapolis.. Kansas C ity... Dallas............. San Francisco, II, 269, 785,000 1.986.687.000 1.114.627.000 790.701.000 256.241.000 1.196.324.000 338.856.000 235.475.000 240.207.000 227, 794,000 770.196.000 II, 289, 707,000 1.665.135.000 935.299.000 875.366.000 352.552.000 1.505.874.000 335.296.000 338.041.000 203.552.000 280.949.000 910.253.000 T otal..., Loss___ 8,426,893,000 265,131,000 8,692,024,000 Net gain. 119,922,000 $321,552,000 179,328,000 3,560,000 84.665.000 96.311.000 309,550,000 102,566,000 *36,’ 655,*000' 53,155,000 140,057,000 541,095,000 806,226,000 265,131,000 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . SCHEDULE SH O W IN G W H E N T H E PROCEEDS OF ITEM S 59 W ILL BECOME AVAILABLE. Immediate credit: New York (Manhattan, if received by 9 a. m .). One day after receipt: Boston, Philadelphia, Richmond, Baltimore, and Roanoke. Two days after receipt (business days) : Members of clearing houses in Cleveland, Cincinnati, Chicago, Atlanta, Minneapolis, St. Paul, St. Louis, Kansas City, Mo., Kansas City, Kans. Banks in Connecticut, Delaware, Dis trict of Columbia, Maine, Maryland, Massachusetts,1 New Hampshire, New Jersey, New York,1 Pennsylvania,1 Rhode Island, Vermont, and Virginia.1 Four days after receipt (business days) : Members of clearing houses in 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, W est Virginia, and W is consin. Eight days after receipt: Banks in Arizona, California, Colorado, Idaho, Louisiana,1 Montana, Nebraska Nevada, New Mexico, North Dakota, Oklahoma, Oregon, South Dakota, Texas1 Utah, Washington, and Wyoming. N o t e . — Two-day items we forward on Saturday will be available T uesd ay; four-day items we forward Thursday will be available Tuesday, and those forwarded Friday and Saturday on Wednesday. Operations in United States Government obligations during 1917. Purchased from United States Treasurer. Issue, Under section 18. Conversion 3s, 1917-1947............ $1,776,500.00 2 per cent consols, 1930.............. 2.105.000.00 100, 000.00 Panama Canal, 1916-1936.......... Panama Canal, 1918-1938.......... 225.000.00 521.000.00 1-year notes due Jan. 1 ,1 9 1 8 ... 1-year notes due Apr. 1,1918... 1.255.000.00 1-year notes due July 1,1918... 1-year notes due Oct. 1,1918... 3 per cent, 1908-1918................... 50,000.00 3£ per cent 15-30 year Liberty loan bonds of 1917................. 3J per cent 15-30 year Liberty loan bonds of 1917 (bonds and interest purchased)....... 4 per cent 10-25 year second Liberty loan bonds of 1917... 2 per cent certificates of indebt edness due June 29,1917----3 per cent certificates of indebt edness, dated A pr. 25, 1917, due June 30,1917........... 3 per cent certificates of indebt edness, dated May 10,1917, due July 17,1917..................... 3J percent certificatesjof indebt edness. dated May 25,1917, due July 30,1917.................... 3Jper cent certificates of indebt edness, dated June 8,1917, due July 30,1917.................... 3J percent certificates of indebt edness, dated Aug. 9,1917, due Nov. 15,1917.................... 3$ percent certificates of indebt edness, dated Sept. 17, 1917, due Dec. 15, 1917, called for payment t e c . 9, 1917........................................... Other purchases. Purchased open market. $222,550.00 "'900,'666.'66' $1,532,000.00 750.000.00 955.000.00 1,500,000.00 26,200.00 57,386.68 25,000.00 ,, 3,429,698.50 Sold, con verted, or re deemed dur ing 1917. $521,000.00 $1,255,500.00 2,327,500.00 50.00 100, 000.00 1,125,000.00 520,000.00 1, 000.00 2,787,000.00 750.000.00 955.000.00 50,000.00 1,118,900.00 53,535.54 3,851.14 2,600.00 3,859,198.50 18.950.000.00 18.950.000.00 7.332.000.00 1.500.000.00 8.832.000.00 814,000.00 2.590.000.00 3.404.000.00 4.977.000.00 1.846.000.00 6.823.000.00 5.005.000.00 5.005.000.00 40.115.000.00 42.677.000.00 * E xcept banks in citi s referred to. 2 Held for delivery to holders of participation certificates and not included in earning t *407,300.00 20,000,000.00 20 000 000.00 2,562,000.00 Balance on hand P ec, 31,1917. ets. 60 A N N U A L REPORT OF FEDERAL RESERVE B A N K OF N E W Y O R K . Operations in United States Government obligations during 1917—Continued. Purchased from United States Treasurer. Issuei. U nder section 18. percent certificates of indebt edness, dated Aug. 28,1917, due N ov. 30,1917.................... 4 per cent certificates of indebt edness, dated Sept. 26, 1917, due T ec. 15, 1917, called for payment T ec. 11, 1917........................................... 4 per cent certificates of indebt edness, dated Oct. 11,1917, due Oct. 18,1917..................... 4 per cent temporary loan dated Oct. 16, 1917, due Oct. 18,1917........................... 4 per cent temporary loan dated Oct. 17, 1917, due Oct. 18, 1917........................... 2 per cent temporary loan dated Oct. 29, 1917, due Oct. 31,1917............................. 2 per cent temporary loan dated N ov. 15, 1917, due N ov. 19,1917............................ 2 per cent temporary loan dated N ov. 19, 1917, due N ov. 20,1917............................ 4 per cent certificates of indebt edness, dated Oct. 24, 1917, due T ec. 15, 1917.................. 4 per cent certificates of indebt edness, dated N ov. 30, 1917, due June 25,1918........... Other purchases. Purchased opi'n market. Sold, con verted, or re deemed dur ing 1917. Balance on hand Dec. 31,1917. $65,045,000.00 $65,045,000.00 6,026,000.00 §100,000,000.00 6,026,030.00 100,000,000.00 10,000,000.00 10,000,000.00 ............. 20,000,000.00 20,000,000.00 20,000,000.00 20,000,000.00 150.000.000.00 150.000.000.00 150.000.000.00 150.000.000.00 621,000.00 59.992.000.00 59.992.000.00 42.540.000.00 28.161.000.00 $15,000,000.00 United States bonds surrendered for conversion during 1917: United States 2 per cent consols, 1930___________________________ $2, 327, 500 United States Panama Canal, 1916-1936__________________________ 100, 000 United States Panama Canal, 1918-1938________________ _________ 1,125, 000 3, 552, 500 Received by conversion during 1917: Jan. 1 : United States 1-year 3 per cent notes due Jan., 1 9 1 8 ... United States 3 per cent convertible bonds of 1917-1947____ Apr. 1 : United States 3 per cent convertible bonds of 1917-1947United States 1-year 3 per cent notes due Apr. 1___________ 521,000 521, 000 1,255, 500 1,2 5 5 ,0 0 0 3, 552, 500 Amount 1-year notes sold_____ __________ ___ ___ ___ _______________ Amount of conversion bonds sold_________________ __ ___ __________ _ o 520,000 521,000
@FedFRASER