The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
FOURTH ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF PHILADELPHIA FOR THE YEAR ENDED DECEMBER 31, 1918 WASHINGTON GOVERNMENT PRINTING OFFICE 1919 FOURTH ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF PHILADELPHIA FOR THE YEAR ENDED DECEMBER 31, 1918 WASHINGTON GOVERNMENT PRINTING OFFICE 1919 LETTER OF TRANSMITTAL. Federal Reserve Bank, Philadelphia, Pa., January 15, 1919. Sir: I have the honor to submit herewith the fourth annual report of the Federal Reserve Bank of Philadelphia, covering the period from January 1, 1918, to December 31, 1918. Respectfully, yours, Richard L. Austin, Chairman and Federal Reserve Agent. Hon. W. P. G. Harding, Governor, Federal Reserve Board, Washington, D. C. TABLE OF CONTENTS Introduction........................................................................................................... Results of operation............................................................................................... Reserve position..................................................................................................... Discount rates......................................................................................................... Investments........................................................................................................... Bills discounted—members................................................................................... Bankers’ acceptances............................................................................................. Federal Reserve notes............................................................................................ Federal Reserve bank notes.................................................................................. Internal management of the bank........................................................................ Officers and directors...................................................................................... Department of examination...................................................... ,................... Collection department.................................................................................... Coupon department........................................................................................ Clearing department....................................................................................... General banking conditions in district and relations with member banks......... Acceptances up to 100 per cent............................................................................. Philadelphia Clearing House members.....................................•.......................... Fiduciary powers granted...................................................................................... Clayton Act applications....................................................................................... Fiscal agency of the United States....................................................................... Liberty loans.......................................................................................................... Certificates of indebtedness................................................................................... Capital Issues Committee...................................................................................... Business conditions in the district........................................................................ Bank clearings........................................................................................................ Commercial failures................................................................................................ Imports and exports............................................................................................... Freight-car movements.......................................................................................... Post office business....................... 1....................................................................... Resume of business conditions,by months............................................................ 3 Page. 5 5-10 10-14 15 15-22 22 23 23-26 26-27 27-34 27-29 30 30 31 31-34 35-38 38 38 -39 39 40 41-43 43 44-45 45-47 47-49 49 50 50 50-51 51-56 One Service to Member Banks -J FOURTH ANNUAL REPORT OF THE FEDERAL RESERVE BANK OF PHILADELPHIA. INTRODUCTION. , The report of the Federal Reserve Bank of Philadelphia for the year 1918 shows a great increase in operations over the previous year, and reflects the effect of the war on financial operations. The ease with which this district absorbed its allotments of the great Govern ment loans and financed the industries engaged in war work, was due to the greater availability of the credit resources of the country made effective through the Federal Reserve system. The banks of the district cooperated with the Government in its financing of the war to the fullest extent possible by loaning freely to subscribers to Liberty bonds, which they were able to do through the rediscounting facilities of the Federal Reserve Bank. RESULTS OF OPERATION. A comparative statement of the condition of the Federal Reserve Bank of Philadelphia is given herewith. ' Comparative statement of condition of the Federal Reserve Bank of Philadelphia. Dec. 31,1918. Dec. 31,1917. Dec. 30, 1916. $135,032,810.41 43, 787,151.29 3, Oil, 280.08 11,417,900.00 $4,008,400.00 31,903,836.94 18,390,067.91 9,649,950.00 10,000.00 $900,000.00 663,076. 79 13,656,430.08 2,825,000.00 465,112.22 193,249,141. 78 43,309.74 63,962,254.85 58,906. 44 511.99 2,055.51 25,580.56 18,509,619.09 17,057.93 27, 708.01 2,445.83 1,367.18 15,409.87 12,370,908.10 1,517,804.61 7,378,564.69 5,382,501.30 609,389.97 3,864, 733.22 RESOURCES. Collateral notes—members.... Bills discounted-r-members.... Bills bought in open market... United States bonds and notes Municipal warrants...................... Earning assets...................................................................... Interest accrued on United States bonds and notes.......... Cost of unissued Federal Reserve notes................................. Expenses paid in advance.......................................................... Transit department expenses.................................................... Furniture and equipment—transit department................. Bank premises................................................................................. Due from Federal Reserve Banks—net................................... Due from banks and bankers...................................................... Exchanges for clearing house, cash items, etc................... Uncollected items—Federal Reserve Banks........................ . Uncollected items—banks, member and nonmember____ Member banks—overdrafts......................................................... . Difference account........................................................................... Federal Reserve notes on hand.................................................. Federal Reserve bank notes on hand....................................... Due from Treasury—5 per cent fund Federal Reserve bank notes..................................................................................... . Notes of national and other Federal Reserve Banks........ . Mutilated currency forwarded for redemption.................... . Mutilated Federal Reserve notes.................................. ,......... . Nickels and cents............................................................................. Liberty loan bonds sold on instalment plan........................ . Miscellaneous assets......................................................................... 763,279.17 500,000.00 33,558,293.29 41,527,684. 40 12,029,710.01 59,024.31 1,527.68 11,739,400.00 332,037.00 „ 475.000.00 3,737,000.00 1,019,340.00 271.16 11,371.00 12,804.81 4,348,590.00 171,140.00 1,353,500.00 56,027.50 209.09 463,476.00 132,500.00 121.89 110,032.85 5 <6 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. Comparative statement of condition of the Federal Reserve Bank of Philadelphia—Con. Dec. 31, 1918. Dec. 31,1917. $85,583,245.00 7,900,000.00 37, 412,406.54 1,459,351.21 Dec. 30,1916. resources—continued. ■Gold with Federal Reserve agent........... Gold redemption fund1.............................. Gold settlement fund.................................. Gold coin and certificates........................... Bank of England sterling gold account. Gther lawful money..................................... 1,667,646.00 $63,945,755.00 1,500,000.00 32,101,000.00 19,064,667.50 3,675,000.00 1,189,996.10 134,022,648.75 1», 476,418.60 25,597,046.80 433,069,038.29 212,674,169.60 54,794,517.09 Capital.............................................................................. 7,562,450.00 Profit and loss.................................................................................... ■Surplus.................................................................................... 1,304,171.92 Unearned discount and interest.................................................. 153,540.69 Reserve for franchise tax................................................................ 1,304,171.92 Reserve for depreciation United States securities................ 116,131.00 •Government deposits.................................................................... 5,039,128.17 Due to other Fe'deral Reserve Banks........................................ 19,445,515.88 Uncollected items—Federal Reserve Banks.......................... 6,018,177.38 Uncollected items—member banks............................................ 40,453,645.33 Due to member banks.................................................................... 99, 720,124.95 Cashier’s checks................................................................................ 823,036.05 Federal Reserve notes outstanding............................................ 241,870,745.00 Federal Reserve bank notes outstanding................................ 9,258,200.00 Miscellaneous liabilities.................................................................. 6,142,150.00 220,238.27 5,228,100.00 89,966.68 160,902.51 39,559.33 5,387,488.53 3,145,549.05 103,000,930.13 435,026.66 97,325,755.00 44,965,072.26 26,015. 72 1,300,000.00 Reserve.............. Total resources $100,000.00 8,042,000.00 16,988,892.50 466,154.30 LIABILITIES. Total liabilities 433,069,038.29 1,678.50 254.05 212,674,169.60 54,794,517.09 1 In June, 1917, the statement was changed so as to include gold with Federal Reserve Agent under “ Gold redemption fund,” and “Federal Reserve notes” now represent gross liability for Federal Reserve notes, instead of only the net liability. The resources of the bank more than doubled during the year and are eight times greater than the figures for the close of 1916. On December 31, 1914, less than two months after the bank opened for business, the resources amounted to 821,501,000. Compared with December 31, 1917, figures at the end of 1918 indi cate an increase of 812,068,480 in the gold holdings and an increase of 8144,544,990 in the amount of Federal Reserve notes in circulation. The work of gathering in the gold in circulation throughout the district, which had been begun in the previous year, was continued, and the increase noted above is due largely to this work. The paid-in capital increased 81,420,300 during the year. This was brought about principally by the admission of State banks and trust companies, having combined capital and surplus of 838,812,917. The item “Federal Reserve bank notes” appears in the statement for the first time. Further reference to it is made hereinafter. Net earnings reached the large amount of 83,270,824, or 46 per cent on the average paid-in capital stock for the year. After payment of dividends of 8366,383.14 covering the period from July 1, 1917, to June 30, 1918, and 8216,825.56 covering the period from July 1, 1918, to December 31, 1918, there remained in the profit and loss account 82,608,343.91, one-half of which was placed to surplus account, the remainder, under the terms of the act, going to the Government as a franchise tax. ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. A5SE.T5 Federal Reserve bank of Philadelphia 1917 1916 Bills disc 7 8 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA Liabilities Federal Reserve Bank of Philadelphia 1917 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 9 Schedules showing profit and loss statement, monthly statement of earnings and expenses, and chart of earnings and expenses are. given below. Profit and loss statement. Earnings for 1918...................................................................................... $4/357, 740. 39 Expense of operation.......................................................... $596, 545.08 Cost of Federal Reserve currency (including expressage, insurance, etc.)................................................................ 243, 857. 27 Repairs, alterations, improvements, etc. ,to bank building. 31, 471. 31 Furniture and equipment—total amount charged off during year...................................................................... 215,042. 72 Total current expenses.................................................................. Net earnings for year................................................................................ Profit and loss, Jan. 1,1918....................................................................... 1, 086, 916. 38 3,270,824.01 220, 238. 27 Total............................................................................................... 3,491,062.28 Less: Depreciation on bank premises................................... 182, 604. 74 Amount transferred to account reserved for deprecia tion on United States bonds.................................... 116,131. 00 ---------------298, 735. 74 Net amount available for dividends, surplus, and franchise taxes. 3,192, 326. 54 Dividends paid: Date paid, June 29, 1918; period covered, 12 months. $366, 383.14 Date paid, Dec. 31, 1918; period covered, 6 months.. 215, 798. 06 Interest paid on stock surrendered............................. 1, 801. 50 Total dividend payments.............................................................. Carried to surplus fund....................... . ................................................... Transferred to account “reserve for franchise tax”............................... 583, 982. 70 1, 304,171. 92 1, 304,171. 92 Total...................... . ...................................................................... 3,192,326.54 Earnings and expenses. Expenses. Earnings. Defi Sun From cient dry invest reserve prof ments. penal its. ties. Total earn ings. Ex pense of opera tion. Note Depre ciation issues. charges. Total ex pense. Net earn ings. An nual rate of net earn ings. 1918. January... February.. March........ April.......... May........... . June........... July............ August.... September October... November. December. Total, 1918. Total, 1917. $181,212 $1,272 $696 $183,181 158,443 3,455 5,899 167,797 194,085 1,428 13,861 209,376 212,439 1,422 13,036 226,898 239,501 3,190 13,832 256,524 267,264 2,376 22,712 292,353 321, 741 3,012 7,158 331,912 365,628 3,212 1,497 370,339 407,492 3,472 302 411,266 506,544 2,876 171 509,592 691,796 2,900 1,081 695,777 684,810 1,169 16,755 702,734 $29,100 $1,320 $541 30,419 10,480 560 30,674 11,720 595 5,920 679 31,967 38,621 19,400 745 69,266 15,680 936 43,910 44 46,958 99 45,598 132 616 59,824 685 57,101 144,5.78 179,337 209,410 $30,962 $152,218 41,459 126,337 42,990 166,385 38,567 188,331 58,767 197,757 85,883 206,470 43,954 287,957 47,058 323,280 45,731 365,535 60,441 449,151 57,786 637,991 533,318 168,612 26.4 24.2 27.8 33.2 33.6 36.4 48.8 53.5 60.5 71.7 110.5 26.2 4,230,955 29,784 97,000 4,357,740 987,057 6,877 22,025 1,015,959 628,016 243,857 215,042 1,086,916 3,270,824 185,630 70,340 240 256,210 759,749 46.0 116019—19----- 2 12.2 10 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. RESERVE POSITION. While deposit liabilities of the bank have remained fairly steady, liabilities for Federal Reserve notes have increased from 897,325,755 to $241,870,745. The percentage of reserve against combined liabilities fell from 68.7 at the beginning of the year to 44.6 at the close. The lowest point reached was 39.6 per cent on November 22. ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 11 During November and December, owing to continued demands for unds and the consequent decline in reserve, the bank found it necessary to strengthen its reserve position by rediscounting with other Federal Reserve Banks. A chart showing the reserve position of the bank, and a’ table of its liabilities and reserve percentages, are given herewith. Reserve Position and deposit ano note liabilities -1917and 1918 Federal Reserve MILLIONS „ 0F Dollars bank oe Philadelphia 1916 j|b|m|a|m|j|j|a|s|o|n|d j |p|k|a|m|j|j|a|5|o|n|d I1 1 I i i I I 1917 340 320 300 280 260 ~t~ ~t" "t" t ~"l~ 1 1 1 I I 1 240 --1-1 ■11 - 11 1 1 11 • 11 220 200 "T-J--J-"i~-Ji i i i i i i "t" ~t" "t" i i i i i i 180 160 LJL_L_| 1— —1-1 -J _Tl rlP+P P+PP + PP + PP+P P+PP + PP + PP + P P+PP + PP + PP + P P+PP + PP + PP+P P+PP + PP + PP + P P+PP + PP + PP+P P+PP + PP + PP+P P+-P+PP + PP+P P-P-P + PP + PP+P 11 ■ iM ^t: P+-P+PP + PP + P 11 IM li II P+PP + PP + PP+P P+PP + PP+P P+P ~+_ -+y 0 P+P -+1 rTi P+P I I P+P Hi _ LI rTT P++ -++ I % if v/A i % 7% %% 1 I I Xi+ote Liabilities gXfXi -+^ -++++++H+++M+J b+++JM Hi+wW 140 120 100 80 1 60 40 - 20 888§888v *. 1 ' •.••+ p .'+<• - ■ ■ 88SB0C Ac$X£' *. -i- - ma - +8800881 ' ■ - . • ■ ■ ■■ p £21 X! -XX1+ AAaSoa © J y_ HEAVY BLACK LINE REPRESENTS PERCENTAGE OE RESERVE TO COMBINED LIABILITIES .J. Per CENT 100 90 80 70 60 50 40 30 20 10 12 Reserve position on last Friday of each month. Note. Deposit. 1918. January............................................ February......................................... March............................................... April.................................................. May................................................... J une.................................................. July.................................................. August............................................ September...................................... October............................................ November....................................... December...................................... $87,223,000 78,292,000 93,592,000 83,164,000 82,012,000 72,492,000 83,361,000 82,499,000 87,065,000 93,622,000 96,870,000 88,173,000 ‘ $91,430,000 102,176,000 114,262,000 121,076,000 133,759,000 147,430,000 162,918,000 185,243,000 199,772,000 214,793,000 223,730,000 233,480,000 Reserves. Total. $178,653,000 180,468,000 207,854,000 204,240,000 215,771, OCX) 219,922,000 246,279,000 267, 742,000 286,837,000 308,415,000 320,600,000 321,653,000 Total gold. $126,076,910 132,210,405 145,953,925 141,497,110 154,026,067 144,734,867 154,535,101 170,901,041 174,037,306 172,698,381 126,345,828 142,658,169 Other lawful reserve. $2,242,941 937,673 1,567,683 1,449,552 1,178,549 551,864 687,789 784,397 790,448 745,202 573,904 897,645 Reserve percentage. • Total. $128,319,851 133,148,078 147,521,608 142,946,662 155,204,616 145,286,731 155,222.890 171,685,438 174,827,754 173,443,583 126J 919', 732 143; 555; 814 Ratio of gold and lawful money to net deposits. Ratio of gold reserve to Federal Reserve notes in actual cir culation. Ratio of total reserve to net deposit and Federal Reserve note liabilities combined Ratio of gold reserve to Federal Reserve notes in actual circu lation after setting aside 35 per cent against net deposit • liabilities. 70.9 77.4 70.3 69.4 80.7 67.3 62.8 66.0 67.9 51.0 41.9 39.4 72.6 71.0 71.5 70.4 66.6 65.5 63.2 63.3 57.9 58.5 38.6 50.4 71.8 73.8 71.0 70.0 71.9 66.1 63.0 64.1 61.0 56.2 39.6 44.6 104.6 102.2 99.1 92.8 93.7 81.0 77.0 77.1 72.3 65.5 41.6 47.7 A N N U A L RE PO RT OF FE DER AL RE SE RV E BA N K OF P H IL A D E L P H IA Liabilities (net). ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 13 Movement of cash reserves, net deposits, Federal Reserve note liabilities, and the reserve percentage of the Federal Reserve Bank of Philadelphia during the calendar year 1918. [In thousands of dollars; i. e., 000 omitted.] Jan. 4... Jan. 11.. Jan. 18.. Jan. 25.. Feb. 1.. Feb.8.. Feb. 15. Feb. 21. Mar. 1.. Mar. 8.. Mar. 15. Mar. 22. Mar. 28. Apr. 5.. Apr. 12. Apr. 19. Apr. 26. May 3.. May 10. May 17. May 24. May 31. June 7.. June 14. June 21. June 28. July 5.. July 12. July 19. July 26. Aug. 2.. Aug. 9.. Aug. 16. Aug. 23. Aug. 30. Sept. 6.. Sept. 13. Sept. 20. Sept. 27. Oct. 4.. Oct. 10. Oct. 18. Oct. 25. Nov. 1.. Nov. 8.. Nov. 15. Nov. 22. Nov. 29. Dec. 6.. Dec. 13. Dec. 20. Dec. 27. Total cash reserve. Net • deposits. Federal Reserve notes in actual circulation. 1 2 8 118,722 126,288 123,748 128,320 125,780 146,161 129,839 133,148 138,889 143,622 142,095 144,934 147,522 151,129 151,488 151,709 142,947 152,660 158,236 152,714 141,331 155,205 159,644 154,463 140,084 145,287 147,889 158,810 157,676 155,222 153,997 155,525 167,165 168,678 171,685 177,666 179,090 187,183 174,828 182,089 178,634 187,206 173,443 161,412 131,274 185,592 120,988 126,920 134,187 128,147 132,306 143,556 79,587 SI,057 79,002 87,223 83,467 91,434 76,153 78,292 80,108 87,014 83,080 90,456 93,592 89,706 89,263 87,938 83,164 90,540 94,044 86,072 73,864 82,012 93,796 83,068 73,924 72,492 78,905 82,823 80,550 83,361 79,542 80,162 90,539 79,887 82,499 90,586 87,187 97,274 87,065 103,282 97,006 98,792 93,622 93,469 87,954 97,675 82,847 96,871 95,852 84,557 76,920 88,174 93,229 93,218 91,823 91,430 94,214 97,199 100,613 102,176 103,983 104,796 107,594 108,915 114,262 116,878 118,179 119,181 121,076 124,084 125,241 126,690 128,414 133,759 135,004 139,316 141,675 147,430 153,360 155,357 157,340 162,918 167,206 174,714 177,232 180,426 185,243 190,452 195,109 196,028 199,772 205,191 211,234 216,074 214,793 217,924 222,840 225,022 222,906 223,730 223,981 226,458 232,227 233,481 (2+3) Ratio of cash re serves to net deposit and Federal Re serve note liabilities combined. 4 6 172,816 174,275 170,825 178,653 177,681 188,633 176,766 180,468 184,091 191,810 190,674 199,371 207,854 206,584 207,442 207,119 204,240 214,624 219,285 212,762 202,278 215,771 228,800 222,384 215,599 219,922 232,265 238,180 237,890 246,279 246,748 254,876 267,771 260,313 267,742 281,038 282,296 293,302 286,837 308,473 308,240 314,866 308,415 311,393 310,794 322,697 305,753 320,601 319,833 311,015 309,147 321,655 68.7 72.5 72.4 71.8 70.8 77.5 73.5 73.8 75.4 74.9 74.5 72.7 71.0 73.1 73.0 73.2 70.0 71.1 72.2 71.8 69.9 71.9 69.8 69.5 65.0 66.1 63.7 66.7 66.3 63.0 62,4 61.0 62.4 64.8 64.1 63.2 63.4 63.8 61.0 59.0 58.0 59.5 56. 2 51.8 42.2 42.0 39.6 39.6 42.0 41.2 42.8 44.6 14 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA, ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 15 DISCOUNT RATES. The only changes in the discount rates during the year were made on April 8, when the 15-day rate for paper secured by Government obligations was increased from 3| to 4 per cent; the 16 to 90 day rate for such paper from 4 to 4| per cent; the 16 to 90 day rate for com mercial paper from 4| to 4j per cent; and the 16 to 90 day rate for trade acceptances from 4 to 4| per cent. It was considered inadvisable to increase further the discount rates, notwithstanding the heavy borrowings by member banks, resulting from the large subscriptions to Liberty bonds and United States certificates of indebtedness. Changes in discount rates during calendar year 1918. Rate in effect— Jan.1, 1919. Jan. 1, 1918. Apr. 8, 1918. 4 4 4 3i 4J 4 4} 4 4i 4 5 4 4 4J 5 4 4i 4i 5 4 4* Discounts maturing within 15 days, including member banks’ collateral notes.................................................................................................................................... Paper, including member banks’ collateral notes, secured by United States certificates of indebtedness, or Liberty loan bonds maturing within 15 days................................................................................................................ Paper maturing within 16 to 90 days.......................................................................... Paper secured .by United States certificates of indebtedness or Liberty loan bonds maturing within 16 to 90 days........................................................... Agricultural and live-stock paper maturing after 90 days................................ Trade acceptances maturing from 1 to 15 days....................................................... Trade acceptances maturing from 16 to 90 days..................................................... Bankers’ acceptances purchased at the market rate, subject to agreement. INVESTMENTS. The discount facilities of the bank were used extensively, loans increasing continually throughout the year. Total operations, exclusive of purchases of Government securities, amounted to $1,977,660,746, of which 77 per cent represented paper secured by obligations of the Government. The largest amount of borrowing at any one period occurred in connection with the issue of the fourth Liberty loan, earning assets increasing from $118,694,530 on Sep tember 28, the opening date of the campaign, to $209,449,707 on December 3. 16 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA Movement of principal earning assets of the Federal Reserve Bank of Philadelphia during the calendar year 1918. [In thousands of dollars; i. e., 000 omitted.] Discounted ! paper Other secured by United discounted States paper. war obliga tions. 1 Jan. 4... Jan. 11., Jan. 18.. Jan. 25.. Feb. 1.. Feb. 8.. Feb. 15. Feb. 21. Mar. 1.. Mar. 8.. Mar. 15. Mar. 22. Mar. 28. Apr. 5.. Apr. 12. Apr. 19. Apr. 26. May 3.. May 10. May 17. May 24. May 31. June 7.. June 14. June 21. June 28. July 5.. July 12. July 19. July 26. Aug. 2.. Aug. 9.. Aug. 16. Aug. 23. Aug. 30. Sept. 6.. Sept. 13. Sept. 20. Sept. 27. Oct. 4.. Oct. 10.. Oct. 18. Oct. 25. Nov. 1.. Nov. 8.. Nov. 15. Nov. 22. Nov. 29. Dec. 6.. Dec. 13. Dec. 20. Dec-27. 19,971 18,410 18,015 18,797 17,640 14,234 15,345 16,249 14,733 16,002 15,232 19,957 21,828 18,617 19,671 22,057 27,806 28,798 29,251 26,185 29,541 31,517 36,006 37,762 40,530 43,933 47,755 41,423 42,867 50,589 53,961 64,321 65,021 59,304 65,357 70,185 70,650 80,609 86,718 88,904 90,362 91,648 78,354 98,049 123,571 147,006 146,472 165,505 164,232 163,285 153,085 161,417 2 12,992 10,746 13,148 15,013 15,989 10,919 10,881 8,600 7,516 9,050 9,058 9,308 9,591 8,380 7,254 4,555 7,545 10,510 9,178 10,091 11,149 11,323 13,593 12,534 14,485 16,284 23,491 25,761 29,042 30,802 29,020 28,025 28,964 25,879 25,913 29,508 26,678 21,030 21,112 19,718 18,477 14,739 12,992 17,958 15,239 10,992 15,890 16,486 18,334 18,584 14,557 19,247 (1+2) Bills bought in open market. Total bills dis counted and bought. Per cent. (1+5) Total earning assets. S 4 5 6 7 32,963 29,156 31.163 33,810 33,629 25,153 26,226 24,849 22,249 25,052 24,290 29,265 31,419 26,997 26,925 26,612 35,351 39,308 38,429 36,276 40,690 42,840 49,599 50,296 55,015 60,217 71,246 67,184 71,909 81,391 82,981 92,346 93,985 85,183 91,270 99,693 97,328 101,639 107,830 108,622 108,839 106,387 91,346 116,007 138,810 157,998 162,362 181,991 182,566 181,869 167,642 180,664 18,364 17,045 14,269 14,179 13,860 13,260 17,738 18,264 17,475 18,901 19,172 18,172 x. 22,440 21,898 21,290 27,440 26,303 23,933 25,727 26,956 23,438 20,968 23,114 21,281 19,944 18,104 16,756 16,033 12,157 13,430 14,026 11,684 ■ 11,326 11,035 9,762 8,856 9,693 9,044 7,976 21,754 24,883 26,082 30,915 36,613 42,343 33,262 20,586 15,875 6,042 5,694 5,833 3,248 51,327 46,201 45,432 47,989 47,489 38,413 43,964 43,113 39,724 43,953 43,462 47,437 53,859 48,895 48,215 54,052 61,654 63,241 64,156 63,232 64,128 63,808 72,713 71,577 74,959 78,321 88,002 83,217 84,066 94,821 97,007 104,030 105,311 96,218 101,032 108,549 107,021 110,683 115,806 130,376 133,722 132,469 122,261 152,620 181,153 191,260 182,948 197,866 188,608 187,563 173,475 183,912 38.9 39.8 39.7 39.2 37.1 37.1 34.9 37.7 37.1 36.4 35.0 42.1 40.5 38.1 40.8 40.8 45.1 45.5 45.6 41.4 46.1 49.4 49.5 52.8 54.1 56.1 54.3 49.8 51.0 53.4 55.6 61.8 61.7 61.6 64.7 64.7 66.0 72.8 74.9 68.2 67.6 69.2 64.1 64.2 68.2 76.9 80.1 83.6 87.1 87.1 88.2 87.8 60,441 54,918 53,998 57,329 58,331 48,832 53,396 53,778 51,640 54,706 55,056 60,960 66,899 62,052 62,543 62,064 67,846 68,555 67,893 66,909 67, 796 67,298 76,187 74,894 82,364 81,711 91,036 86,149 86,995 97,800 99,586 106,589 107,879 98,776 103,591 111,107 110,779 115,251 121,411 136,001 139,391 138,069 145,791 160350 188,829 198,937 190,609 205,540 198,320 197,897 193,769 195,331 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 17 out the year. Of the 660 member banks in the district, 457, located in 355 cities and towns, borrowed from the bank during the year. The heaviest 116019—19----- 3 L ANNUAL REPORT OE FEDERAL RESERVE BANK OF 18 PTTTLADELPTTTA, transactions occurred on November 7, when total loan and invest ment operations amounted to $39,135,472. Total earnings from investments amounted to $4,230,955, compared with $987,057 the preceding year. The average rate of return from all classes of investments was 4.19 per cent, compared with 3.32 per cent in 1917, and 2.42 per cent in 1916. A chart showing discount operations, and tables showing total operations, average holdings, earnings, and rate of earnings are given below. Earning Assets Average daily Hand - i9is Philadelphia amount on Federal Reserve Bank oe Millions op Dollars Jan Feb MAR Apr May June July Aug Sept OCT Nov Dec “o o U. 5. SECURITIES i 40 . i 0 Bills Bought 40 40 20 WO n op Dollars 20 A ™/ \ 1 Millions JL.. £0 40 £0 6 0 180 180 ---- 1-----1----- 1— 1 160 160 140 140 120 120 100 100 80 I *60 40 £0 0 secured by u. £40 20 5. Government Obligations 1 I 1 £20 i 200 1 220 180 160 140 1 120 ! I I 1 1 ______________________ 160 a t '\i W 140 120 100 100 80 80 4 60 40 0 0 £40 200 180 20 80 60 40 ifS ill jjjj M l Bills Discounted j : . . j. . 1a& i. Jr„j .... L s, .E. J K WI vs IT;__ H ;_Iw-A' __ j_ _ iliiili ’ i,...;.: .1,...-L L ..... L--__ Total earning Assets 60 40 20 0 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 19 Loans and investments made, by months, 1918. Rediscounts of eligible paper for members and for other Federal Re serve Banks. Acceptances United purchased in States secur open market ities taken and from other Federal under repur chase agree Reserve ments. Banks. January.......................................................................... February........................................................................ March.. a................................................. April............................................................................... May................................................................................. June................................................................................ July................................................................................. August........................................................................... September..................................................................... October........................................................................ November...................................................................... December...................................................................... $36,200,982 31,868,368 29,416,927 42,382,588 74,005,094 94,760,656 134,466,076 160,967,563 161,218,400 221,693,196 359,648,434 511,014,436 $5,167,838 9,171,201 13,129,363 10,821,327 11,419,747 7,773,595 5,748,048 4,432,670 2,741,791 30,976,704 17,290,606 1,335,136 $9,786,450 6,030,000 9,344,500 4,818,000 Total, 1918.......................................................... Percent of total.......................................................... Total, 1917.......................................................... Percent of increase or decrease 1918 over 1917. 1,857,642,720 90.8 223,416,008 + 731 120,008,026 5.9 85,913,796 + 39 29,978,950 1.5 Total. $1,671,500 3,139,500 107,000 4,343,000 55,000 20,150 3,272,000 18,452,500 2,281,550 3,850,900 37,193,100 1.8 18,792,250 +258 Number of member banks accommo dated. Municipal warrants. 1918 Other United States securities purchased. 1917 ( January... February.. March........ April.......... May............ June.......... July.......... . August.... September October.... November. December. $10,000 Total, 1918................................................................ Per cent of total................................................................ Total, 1917................................................................ Per cent of increase or decrease 1918 over 1917.... 10,000 851,165,270 47,069,569 53,562,290 61,161,415 85,531,841 106,877,251 140,269,124 165,420,383 167,232,191 271,122,400 379,220,590 516,200,472 83,940,771 11,766,311 12,220,424 7,780,936 25,878,818 46,166,378 33,648,283 26,064,872 25,000,483 21,394,910 50,991,728 64,889,565 305 318 315 342 329,743,478 201 86 65 84 135 202 217 245 270 2,044,832,796 1,621,‘424’ -99 457 +520 Average daily holdings of the several classes of earning assets for each month and calendar year 1918. Bills dis counted. January.............................................. February........................................... March.................................................. April................................................... May..................................................... Jurie.................................................... July..................................................... August............................................... September......................................... October.............................................. November......................................... December.......................................... Bills bought. 831,990,666 815,582,286 26,462,460 16,792,076 26,466,272 19,578,914 29,444,641 23,873,444 39,987,333 25,205,982 51,902,348 20,680,337 70,513,203 15,106,579 88,101,492 11,640,219 100,833,261 9,830,323 105,708,472 26,254,322 151,510,450 30,326,700 180,015,946 5,838,714 Average for year 1918........ Per cent............................................. Average for 1917.................. Per cent of increase or decrease 1918 over 1917............................... 75,556,041 74.8 9,923,917 18,375,123 18 2 14,916,598 4-658 + 23 United States securities. 89,017,042 10,311,798 12,150,505 10,362,697 3,962,400 4,732,850 3,006,351 2,562,608 3,976,516 6,172,614 7,649,618 11,963,835 Munici pal warrants. 82,580 10,000 968 7,135,005 1,068 7.0 4,268,208 ,’628,'228 +68 -100 Total. 1917 856,592,574 $14,931,136 53,576,334 18,235,230 58,196,659 16,717,766 63,680,782 20,325,853 69,155,715 26,796,594 77,315,535 29,541,435 88,626,133 29,509,799 102,304,319 31,787,718 114,640,100 34,467,512 138,135,408 29,005,633 189,486,768 43,187,433 197,818,495 62,337,298 101,067,237 100.0 29,736,951 29,736,951 + 239 ..................... 20 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA, Earnings from loans and investments for the calendar year 1918. Bills dis counted. Bills bought in open market. United States securi ties. Munici pal warrants. January................ February....... March.. 1...................... April...................... . May..... .................. June........................ July....................... August.................. September............ October.................. November........... . December.............. $105,896 81,895 91,247 98,800 141 698 182 914 258 924 316 525 363 644 394057 551,142 654,358 $47,639 46,912 63,175 80,108 ' 85,775 70 973 54,375 41,849 34 364 99 344 125,349 24,847 $27,666 29,600 39,659 33 530 12 027' 13,377 8,441 7,254 9 482 13 1-12 15,303 24,'002 $9 35 3 Total.......... Per cent of total. 3,241,101 76.6 756,313 17.9 233,489 5.5 49 Total. 1918 1917 $181,212 158,443 194,085 212 439 239,501 267 264 321, 741 365 628 407 492 506,544 691,796 703; 207 $36,836 42,145 43,664 46,938 69 525 4,230,955 100.0 987,057 76 934 85? 997 HO’ 911 94? 804 8J,170 121?412 194,717 Calculated annual rates of earnings from loans and investments. Bills Bills dis bought counted members. in open market. United States Municipal securi warrants. ties. Total. 1918 January.......................... . February....................... . March............................... April................................. May................................... June.................................. July................................... August.............................. September...................... October............................ November....................... December..................... 3.89 4.03 4.05 4.08 4.17 4.28 4.32 4.23 4.38 4.38 4.42 4.27 3.59 3.64 3.79 4.08 4.00 4.17 4.23 4.23 4.25 4.45 4.29 5.01 3.61 3.74 3.84 3.93 3.57 3.43 3.30 3.33 2.90 2.50 2.43 2.36 4.49 4.56 4.56 3.77 3.85 3.92 4.05 4.07 4.20 4.27 4.20 4.32 4.31 4.32 4.18 Average for 1918. Average for 1917. 4.29 3.73 4.12 3.18 3.27 2.90 4.59 2.89 4.19 1917 2.90 3.01 3.07 2.90 2.98 3.16 3.43 3.33 3.34 3.41 3.42 3.67 3.32 The maturities of the bank’s earning assets on the last Friday of the year are shown in the following table: Maturities— Total. Within 15 days. From 16 to 30 days. From 31'to 60 days. From 61 to 90 days. 1. Bills discounted—members: Secured by Liberty bonds and certificates— Member banks’ collateral notes.................................................... N onmember bank paper, indorsed by member banks____ All other bills...................................................................................... Member banks’ collateral notes other than above specified.... Commodity paper...................................................................................... Trade acceptances..................................................................................... All other bills not above specified...................................................... Over 90 days. $133,280,937.08 .................................. .................................. 28,135,988.40 628,682.03 18,618,684.30 Total................................................................................................... 2. Acceptances bought: Bankers’ acceptances— Foreign.................................................................................................. Domestic............................................................................................... Dollar exchange bills (sec. 13, amended)......................................... Trade acceptances— Foreign.................................................................................................. Domestic............................................................................................... $159,235,029.85 Total................................................................................................... 3. Rediscounts for other Federal Reserve Banks....................................... 4. Municipal warrants.......................................................................................... 5. United States short-term securities............................................................ 1,188,459.64 825,000.00 42,500 00 Grand total...................................................................................... 161,248,489.49 17,117,138.63 $16,781,121.71 $2,691,127.46 $1,948,246. 28 $8,766.57 180,664,291,87 1,797,205.05 1,180,540.62 250,000.00 20,526.00 293,516.92 1,599,100.36 167,194.75 4,290,227.82 2,115,941.03 500.00 3,248,271.67 9,166,000.00 10,034,000.00 9,174,766.57 * 193,946,563.54 Amounts of the several classes of discounted paper held by the Federal Reserve Bank and the Federal Reserve agent on above dates: Amount. $170,032.15 300.00 47,213,022. <54 133,280,937.08 Total bills discounted......... . 180,664,291.87 21 Agricultural paper............................ Live-stock paper............................... Commercial and industrial paper Allother, N. S................................... A N N U A L RE PO RT OF FE DER AL RE SE RV E BA N K OF P H IL A D E L P H IA . Distribution by maturities of paper and short-term inve. ' nents held by the Federal Reserve Rank and the Federal Reserve agent at close of business Dec. 27,1918. 22 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. It is difficult to estimate the probable time in which members can clear up all their “war paper” at the Reserve Bank. Not very much progress can be made until the Government has completed its war financing. If prior to the next bond issue considerable liquidation in business should take place, it would release funds for investment in United States* certificates of indebtedness and possibly prevent material increase in the loans of the bank. In pursuance of the policy of banking institutions, loans not essential to the prosecution of the war were very largely curtailed, while loans for war purposes were greatly expanded, and it is the latter class of loans in which there is the possibility of considerable contraction owing to the ces sation of the war. In the meantime it should be the policy of the Federal Reserve Bank to use every effort to bring about as rapidly as possible the liquidation of war paper and at the same time do everything it can to encourage legitimate business by extending as far as possible necessary credit facilities. BILLS DISCOUNTED---- MEMBERS. Bills discounted for members constituted the major part of the loan operations, the amount of such discounts increasing throughout the year. The maximum loans in any one month were made in December, the total being $511,014,436. The number of banks rediscounting commercial paper was rela tively small. By far the largest amount of borrowing was on notes secured by Government obligations, as this was more convenient, the rates of discount were less, and much of the necessity for borrow ing arose out of the subscriptions to Government bonds and certifi cates of indebtedness. The amount of trade acceptances discounted was $5,650,053, compared with $726,078 the preceding year. Many inquiries were received regarding the use of these acceptances, and an increasing number of concerns is employing them. The movement toward their use, however, has apparently not yet made marked progress in this district, although the advantages of their adoption are recog nized. Bills discounted during each month, distributed by classes of paper. For member banks. Secured by Trade ac Government ceptances All other. obligations. January................ February............. March.................... April...................... May....................... June...................... July....................... August.................. September........... October................ November........... December............ §7,964,580 20,683,056 11,439,160 30,063,101 55,890,797 66,997,771 77,023,763 110,986,997 136,022,458 189,441,414 324,175,834 473,947,739 §118,747 §28,117,655 120,612 11,064,700 957,654 17,020,113 762,997 11,556,490 355,851 15,720,246 451,466 25,376,674 513,811 56,928,502 557,442 35,721,623 347,038 24,848,904 182.300 25,699,482 522; 651 34,949,949 759,484 36,307,213 Total, 1918 1,504,636,670 32,803,226 5,650.053 323,311,551 726,078 189,896,704 Total, 1917 For other Federal Reserve Banks. $2,038,200 1,934,745 13,701,501 6,370,000 Total discounts. 1918 $36,200,982 31,868,368 29,416,927 42,382,588 74,005,094 94,760,656 134,466,076 160,967,563 161,218,400 221,693,196 359,648,434 511,014,436 24,044,446 1,857,642,720 1917 §565,122 1,682,222 3,009,293 2,385,421 20,445,040 42,724,903 22,175,858 18,170,441 18,934,001 16,819,730 31,478,602 45,025,375 223,4i6,008 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 23 BANKERS’ ACCEPTANCES. Bankers’ acceptances purchased amount to $120,008,026, com pared with $85,913,796 the preceding year. Most of the bills were purchased for our account by the Federal Reserve Bank of New York. As yet there is no real market for bankers’ bills in Philadelphia outside of the Federal Reserve Bank, and until the present urgent demand for money subsides and the banks have funds for investment in such paper it will be hard to establish one. It is hoped that ulti mately such a market will be established and that all banks will invest a certain portion of their funds in bankers’ acceptances, which will serve the double purpose of giving them an asset of the greatest liquidity and at the same time further the development of inter national commerce and banking. This bank has purchased from its members all bills offered by them, and has at times made large purchases in the New York market when bills of the banks in this district were offered there. Acceptances bought in the open market and from other Federal Reserve Banks. Open-market purchases. Bankers’ ac-. Trade ac ceptances. ceptances. January................ February.............. March.................. . April...................... May...................... . June....................... July........................ August.................. September........... October................. November............ December............ Purchases from other Federal Re serve banks. $274,572 9,000 79,005 $5,017,518 7,558,697 3,999,257 2,985,450 652,719 1,352,500 I Total, 1918 Total, 1917 77,254,080 83,976,401 25,000 24,139 20,526 10,358,157 10,397,406 432,242 1,937,395 42,321,704 Total. 1918 $5,167,838 9,171,201 13,129,363 10,821,327 11,419,747 7,773,595 5,748,048 4,432,670 2,741,791 30,976,704 17,290,606 1,335,136 1917 82,107.327 10,058', 886 4,610,296 5,268,807 5,404,559 3,441,475 11,472,425 7,450,793 6,056,282 4,565,180 19,479,626 5,998,140 120,008,026 85,913,796 FEDERAL RESERVE NOTES. Federal Reserve notes supplied satisfactorily the currency needs of the community. The establishment throughout the district of large shipyards and munitions plants necessitated huge pay rolls and demands for currency were incessant. Notes of the denomination of $20 were especially in demand and seemed to disappear from circu lation. The bank has rendered a distinct service to its members in the matter of furnishing currency, which had formerly been done by the Subtreasury. The amount of money shipped to the bank by members and non members averaged $1,750,000 daily and required the services of 30 employees to assort and count it. 24 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. Federal Reserve notes outstanding reached the high mark of $243,142,700 on December 26. The act now provides for the issue of Federal Reserve notes in the denominations of $500, $1,000, $5,000, and $10,000, but so far none have been issued. The re quired gold reserve of 40 per cent against Federal Reserve notes in actual circulation was maintained throughout the year. Following is a comparative statement of condition of the Federal Reserve agent’s accounts, notes in circulation, denominations issued, notes outstanding at close of each month, and interdistrict movement of notes. Comparative statement of the Federal Reserve agent's accounts. Dec. 31, 1918. Dec. 31, 1917. Dec. 30, 1916. RESOURCES. Federal Reserve notes on hand...................................................... Federal Reserve notes outstanding............................................. . Federal Reserve notes sent to Comptroller of Currency for destruction........................................................................................ . Bills to secure Federal Reserve notes......................................... . Funds to redeem Federal Reserve notes: Gold coin and certificates on hand...................................... . Lawful money on hand............................................................. Gold redemption fund.............................................................. . Gold with Federal Reserve Board........................................ $17,640,000.00 241,870, 745.00 $10,160,000 97,325,755 $7,260,000 17,069,590 64,909,255.00 159,787,037.99 17,994,245 34,855,506 6,150,410 1,300,000 4,220,000 3, 730,000 4,966,755 54,759,000 859,590 11,180,000 13,296,465.00 72,286, 780.00 Total.......................................................................... ................. . 85,583,245.00 63,945,755 15,769,590 Total resources........................................................................ . 569,790,282.99 224,281,261 47,549,500 Federal Reserve notes received from the Comptroller of the Currency (gross amount).............................................................. Collateral received from Federal Reserve Bank.................... . Provision for redemption of Federal Reserve notes.............. . 324,420,000.00 85,583,245.00 159, 787,037.99 125,480,000 34,855,506 63,945,755 30, 480,000 1,300,000 15, 769,590 Total liabilities........................................................................ . 569,790,282.99 224,281,261 47,549,500 LIABILITIES. Federal Reserve notes issued and in actual circulation. Outstand ing at be ginning of month. January................. $97,325,755 February_______ 97,189,075 March................. 108,092,605 April....................... 121,670,730 May.................... 129,464,095 June........................ 144,478,990 July........................ 158,401, 790 August.................. 175,166,890 September............ 198.282.750 October................. 210.526.750 November............ 231, 742,950 December............. 233,832, 740 Issued during month. Re deemed. $2,640,000 $2, 776,680 13,600,000 2,696,470 15,800,000 2,221,875 9,900,000 2,106,635 19,200,000 4,185,105 18, 740,000 4,817,200 20,500,000 3,734,900 28,420,000 5,304,140 15,460,000 3,216,000 24,260,000 3,043,800 6,420,000 4,330,210 16,520,000 8,481,995 In actual circulation at Held by end of month. Outstand Federal Re ing at end serve Bank at end oi of month. 1918 | 1917 month. $97,189,075 108,092,605 121,670,730 129,464,095 144,478,990 158,401,790 175,166,890 198,282, 750 210,526, 750 231, 742,950 233,832,740 241,870,745 $5,185,420 3,873,545 6,359,360 7, Q.49,647 10,019,565 10, 755, 755 10,419,305 12,688,355 10,100, 720 15,617,340 7,141,825 12, 758,740 $92,003,655 $16,087,095 104,219,060 20,849,495 115,311,370 24,337,435 121,814, 448 29,097,125 134,459,425 33,179,915 147,646,035 39,888,820 164, 747, 585 41,351,040 185,594,395 43,202,660 200,426,030 51,026,510 216,125,610 61,113,105 226,690,915 78, 424,400 229,112,005 92,977,165 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 11601&—1&---- 4 25 26 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. Denominations of Federal Reserve notes issued during 1918. Total. Tens. Fives. Twenties. Fifties. Hundreds. 1918 January... February.. March......... April........... May............ June............ July............ August.... September. October... November. December., $440,000 1,640,000 900,000 3,680,000 3,180,000 4,380,000 4,700,000 3,020,000 2, .500,000 740,000 4,520,000 $240,000 6,280,000 4,400,000 3,000,000 6, 400,000 4,200,000 5,520,000 8,120,000 5,680,000 4,680,000 1,320,000 4,120,000 $2,000,000 6,480,000 7,360,000 5,200,000 7,520,000 9,760,000 10,000,000 11,600,000 5,360,000 14,080,000 3,360,000 6,880,000 $400,000 400,000 1,200,000 400,000 1,200,000 800,000 600,000 3,200,000 1,000,000 1,800,000 600,000 1,000,000 Total 29, 700,000 53,960,000 89,600,000 12,600,000 $2,640,000 13,600,000 15,800,000 9,900,000 19,200,000 18,740,000 20,500,000 28,420,000 15,460,000 24,260,000 6,420,000 16,520,000 $6,060,000 4,040,000 5,280,000 4,400,000 8,400,000 1,000,000 4,100,000 10,700,000 14,700,000 17,000,000 17,920,000 191,460,000 93,600,000 $1,200,000 400,000 400,000 800,000 800,000 400,000 1,200,000 400,000 5,600,000 1917 Interdistrict movement of notes. Boston.... New York. Cleveland. Richmond. Atlanta.... Chicago.... St. Louis.. Received lrom. Returned to. $1,734,700 26,000,590 4,465,900 3,281,000 976,740 1,575,500 651,995 $2,101,400 41,454,750 7,037,500 4,728,250 1,402,100 3,061,500 655,500 Received from. Returned to. $150,000 106,050 393,300 195,530 $418,000 655,250 307,150 533,260 Total, 1918.................... 39,531,305 Total, 1917.................... 8,006,790 62,354,660 14,960,902 Minneapolis............................. Kansas City............................ Dallas........................................ San Francisco.................. .. FEDERAL RESERVE BANK NOTES. The Pittman bill, which became law on April 23, 1918, provided for the issuance of Federal Reserve bank notes of the denominations of $1 and $2. These notes took the place of silver certificates, which were retired from circulation, and the coin securing them was melted down and disposed of as bullion. At the close of the year, $8,926,163 of these notes were in actual circulation. These were secured by $825,000 one-year Treasury notes, and $8,855,000 United States certificates of indebtedness deposited with the Treasurer of the United States. As the purpose of issuing Federal Reserve bank notes was their substitution for silver certificates in order that the silver might be used in supplying the urgent demand for silver bullion, efforts were made to obtain all the silver certificates possible, and a considerable amount of such certificates was shipped through this bank for can cellation. Tables showing denominations issued and amount outstanding at end of each month are given on the following page. ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 27 Federal Reserve bank notes issued and in actual circulation. Outstand ing at be ginning of month. August.............................................. September...................................... October............................................ November....................................... December........................................ $800,000 2,628'000 3' 728' 800 5' 816^000 Issued during month. $800,000 1,828^000 1,096; 000 2'117'000 3; 564^000 Outstand Redeemed. ing at end of month. Held by bank at end of month. $448,322 429,784 190; 358 271,140 332,037 $800,000 2,628,000 3,722,800 5,816,000 9,258,200 $1,200 23^800 12i; 800, In actual circulation at end of month. $351,678 2,198;216 3', 532; 442 5,544;860 8; 926;163 Federal Reserve bank notes issued. One dollar. Two dollar. Five dollar. August............................................................................... September........................................................................ October.............................................................................. November........................................................................ December......................................................................... $800,000 1,288,000 872,000 1,436,000 1,964,000 $200,000 224,000 280,000 440,000 $340,000 401,000 1,160,000 $800,000 1,828,000 1,096,000 2,117,000 3,564,000 Total....................................................................... 6,360,000 1,144,000 1,901,000 9,405,000 Total. INTERNAL MANAGEMENT OF THE BANK. OFFICERS AND DIRECTORS. Richard L. Austin, Chairman and Federal Reserve Agent: Henry B. Thompson, Deputy Chairman; E. Pusey Passmore, Governor; Edwin S. Stuart, Deputy Governor; William H. Hutt, Deputy Governor. Class. Name. Group 1... Joseph Wayne, jr., president Girard National Bank, Philadelphia, Pa. Francis Douglas, cashier First National Bank, Wilkes-Barre, Pa. Group 3... M. J. Murphy, c/o A. B. Leach & Co.,bankers,New York City. Group 1... Alba B. Johnson, president Baldwin Locomotive Works, Philadelphia, Pa. ■B. Group 2... Edwin S. Stuart, merchant, Philadelphia, Pa........ Group 3... Charles K. Haddon, vice president Victor Talking Machine Co., Camden, N. J. (■Richard L. Austin.............................................................. 1 Henry B. Thompson,president U. S. Finishing Co., | New York City. (Charles C. Harrison............................................................ A' Group 2... c. Residence. Term expires. Philadelphia, Pa.......... Dec. 31,1920 Wilkes-Barre, Pa......... Dec. 31,1921 Clarks Green, Pa.......... Dec. 31,1919 Rosemont, Pa............... Do. Philadelphia, Pa.......... Camden, N. J................ Dec. 31,1920 Dec. 31,1921 Philadelphia, Pa.......... Wilmington, Del.......... Dec. 31,1920 Dec. 31,1919 Philadelphia, Pa.......... Dec. 31,1921 Mr. Levi L. Rue, president of the Philadelphia National Bank, was reelected a member of the Federal Advisory Council to represent the Third Federal Reserve District for the year 1918. Mr. Charles J. Rhoads, who had been governor since the organiza tion of the bank, resigned on February 8, 1918, to undertake war work with the Y. M. C. A. The follow’ing minute relative to hi3 withdrawal was adopted by the board of directors: The directors of the Federal Reserve Bank of Philadelphia desire to record their appreciation of the services rendered this bank by Mr. Rhoads as its governor, since organization, and the great reluctance with which they have accepted his resignation. 28 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. In their judgment, no one could have filled the office more capably than he has filled it, or have secured for the Federal Reserve system greater support, cooperation and confidence on the part of the banks and trust companies in this district. Since his resignation was presented on December 19, 1917, the directors have hoped that he might be induced to withdraw it. His decision, however, has been unalterable. His purpose in resigning to devote his abilities to the humanitarian work incident to the war deserves the particular admiration of all who know those abilities, as the directors of this bank have learned to know them. While regretting the termination of Mr. Rhoads’s association with this bank, the directors appreciate the serious conviction and sense of duty which led to his resignation. They also recognize what he will contribute to the work upon which he enters, needing as it does just such ability, character, and purposes as Mr. Rhoads will bring to it. Mr. E. Pusev Passmore, then vice president of the Franklin Na tional Bank, Philadelphia, was elected to succeed Mr. Rhoads, on February 8, 1918. Mr. Frank M. Hardt, deputy governor and cashier of the bank, resigned on June 30, to accept the position of vice presi dent and treasurer of the Philadelphia Trust Co. Upon motion duly made and seconded, a minute reading in part as follows was unani mously adopted by the board of directors: It is the desire of the board that this record be made of the regret with which Mr. Hardt’s resignation has been accepted and of the appreciation with which his valuable services will be remembered. Absolutely unsparing of self, the bank’s interests were at all times foremost with him. To its organization, its accomplishment, its service to its members and to the Nation, he has constantly given his every effort, and all have borne the mark of rare ability. Mr. William A. Dyer, then vice president and treasurer of the Cam bridge Trust Co., Chester, Pa., a member of the Reserve system, was elected cashier on May 29, 1918. The office of deputy governor being vacant, Mr. William H. Idutt, treasurer of the University of Pennsyl vania, was elected to the position on May 29, 1918. Mr. James M. Toy, an employee of the bank, was elected an assistant cashier on May 29, 1918. A vacancy in the board of directors was caused by the death on September 24, 1918, of Hon. George W. F. Gaunt, a class B director, whose term would have expired on December 31, 1918. A minute reading in part as follows was adopted by the board of directors on October 2, 1918: The directors of the Federal Reserve Bank of Philadelphia have learned with sorrow of the death on September 24. 1918. of George W. F. Gaunt, a director of this bank since its organization. His fellow directors have decided by this minute to express their admiration of his useful and honored life, as well as their appreciation of the service he has rendered this institution. They also desire to express their deep sympathy for his family. Mr. Charles K. Haddon, of Camden, N. J., was elected by group 3 banks to succeed Mr. Gaunt. Mr. William II. Peck, president of the Third National Bank, Scranton, Pa., a class A director, whose term expired on December 31, 1918, was made ineligible for reelection bv ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 2^ an amendment to the Federal Reserve Act. Mr Peck was one of the original directors of the bank. Mr. Francis Douglas, of Wilkes-Barre, Pa., was elected by group 2 banks to succeed Mr. Peck. The results of the regular election for a class A and a class B director, held from November 19 to December 3, are shown below. Votes cast for class A and B directors. First choice. Candidates. Second choice. Third choice. Fourth choice. Fifth choice. Group 2, Class A. John Barbey, president, Keystone National Bank, Reading, Pa............................................................................ David Barry, cashier First National Bank, Johnstown. Pa.................................................................................. Francis Douglas, cashier First National Bank, WilkesBarre, Pa................................................................................. Montgomery Evans, president Norristown Trust Co., Norristown, Pa...................................................................... Frank Hastings, president Second National Bank, Altoona, Pa............................................................................ 7 15 36 24 31 5 21 23 46 23 82 24 7 4 5 22 44 28 8 18 7 19 29 26 30 91 19 21 37 24 26 7 48 . 12 14 35 14 2 48 43 12 47 52 12 18 37 22 9 7 89 Group 3, Class B. Charles K. Haddon, vice president Victor Talking Machine Co., Camden, N. J.............................................. Elmer E. Low, farmer, Lime Ridge, Pa.......................... John C. Ogden, superintendent Cambria Steel Co., Johnstown, Pa....................................................................... Henry W. Stokes, manufacturer, Philadelphia, Pa... E. H. Zeigler, farmer, Madisonburg, Pa.......................... . At the end of 1917 the bank had 6 officers and 186 clerks and other employees, compared with 11 officers and 419 clerks and other em ployees at the end of 1918. Departments. Number of em ployees, 1918. BANK. Officers.......................................................... .. Analvsis.............................................................. Auditing.............................................................. Bookkeeping...................................................... Building*(porters, charwomen, etc.).... Chauffeurs.......................................................... 'Coupon Discount.............................................................. Examination..................................................... Federal Reserve agent................................... Filing.................................................................... Mail...................................................................... Miscellaneous.................................................... Money.. ?............................................................ Pages'.................................................................... Printing.. Runners and guards....................................... Secretaries...”.................................................. Departments. Number of em ployees, 1918. BANK. 11 8 14 22 29 3 5 16 2 5 8 5 10 42 9 7 23 4 Telegraph............................................................ Telephone........................................................... Transit................................................................ Vault custodian................................................ 3 3 103 3 335 GOVERNMENT. Liberty loan...................................................... Government depositary................................ Government check.......................................... liberty loan statistics.................................... J ibertv loan committee................................ Capital Issues Committee............................. 48 25 11 5 3 3 95 The hank secured early in the year the building at 925 Chestnut Street, formerly occupied hv the Penn Mutual Life Insurance Co. The building is centrally located and is very near the city’s main post ■office. 30 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. DEPARTMENT OF EXAMINATION. The large increase in the number of State bank and trust company members made it necessary to arrange for keeping informed about them and to provide for such examinations and inspections as might be necessary. Mr. W. W. Paddock, a national-bank examiner in this district, was engaged as Federal Reserve examiner and put in charge of this work. On August 15 he resigned to accept a position as bank examiner for the Federal Reserve Board, and Mr. Walter T. Grosscup, a bank examiner under the Commissioner of Banking of New Jersey, was engaged to fill the position. COLLECTION DEPARTMENT. For several months after the institution of the collection depart ment, the greater portion of its business was received from other Federal Reserve Banks. At the present time only a comparatively small part is received from that source. The service charge of 10 cents an item was discontinued on July 1, 1918, and while this bank does not now make any charge for its service, items are sometimes subject to charges made by the collecting banks. The number of items handled is given herewith: Items Number Number received. paid. returned. 1918. January.............................................................. February.............. ................. ........................... March.................................................................. April.................................. . ............................... May...................................................................... June...................................................................... July...................................................................... August................................................ . ............. September.......................................................... October............................................................... November.......................................................... December........................................................... 255 244 322 413 385 725 1,090 1,637 2,190 1,148 1,096 1,356 248 217 290 354 324 609 946 1,487 1,992 891 903 1,156 7 27 32 59 61 116 144 150 198 257 193 200 Total........................................................ 10,861 9,417 1,444 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 31 COUPON DEPARTMENT. The paying and handling of coupons representing interest on the various issues of Liberty bonds involved a large amount of work, and a special department was organized for this purpose, in which there are five clerks. This force had to be considerably augmented, however, at interest-paying periods. The number and amount of coupons handled are given herewith: Number. 1918. January................................................................ February............................................................. March.................................................................... Amount. August............................ ..................................... September.......................................................... October................................................................ November.......................................................... December.............................. ............................. 76,567 170,048 8,863 8,293 437,577 260,664 228,068 87,304 240,287 527,434 201,274 430,314 Total.......................................................... 2,728,361 April................... . ................................... May.............. '........................................................ .Tune....................................................................... July.......................................................... , ( . | ; 1 $260,907 53,536 19,640 36,977 2,411,898 1,298,396 410,094 160,573 1,184,568 1,496,681 1,534,622 2,220,509 11,735,022 CLEARING DEPARTMENT. Figures showing transactions through the gold settlement fund and operations of the check-collection department of this bank are given herewith. Gold settlement fund operations for 1918. Net gain for month. Total debits. Total credits. January.... February... March.......... April.......... . May............ June............. July.............. August____ September. October..., November.. December.. $415,180,000.00 315,386,000.00 355,155,000.00 381,900,000.00 501,538,000.00 392,768,150.00 482,715,084.04 445,511,503.93 419,890,371.99 582,848,438.89 559,740,694.24 587,504,336.75 $398,545,000.00 317,496,000.00 350,796,000.00 39[5,872,000.00 486,382,000.00 396,833,750.00 480,182,928.90 441,633,156.58 401,108,491.94 613,455,461.56 . 561,393,246.55 591,128,137.77 $16,635,000.00 Total. 5,440,137,579.84 5,434,826,173.30 61,342,382.54 Net loss for month. $2,110,000.00 4,359, (XX). 00 13,972,000.00 15,156,000.00 4,065,600.00 2,532,155.14 3,878,347.35 18,781,880.05 30,607,022.67 1,652,552.31 3,623,801.02 56,030,976.00 Balance at close. $48,736,000.00 46,626,000.00 50,985,000.00 37,013,000.00 52,169,000.00 48,103,400.00 50,635,555.14 54,513,902.49 73.295.782.54 42,688,759.87 41,036,207.56 37.412.406.54 32 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 33 Chech clearing and collection. AVERAGE DAILY NUMBER AND AMOUNT OF CHECKS HANDLED. On Philadelphia banks. Num ber. 1918. January.............................. February........................... March.................................. April.................................... Mav...................................... June.................................... July..................'.................. August................................ September........................ October.............................. November......................... December.......................... Amount. 14,057 $18,783,831 14,924 15,903,733 14,572 17,123,767 14.356 17,086,630 13,347 22,216,373 11,354 22,021,806 10,199 23,748,311 9,867 20,331,686 11.356 23,604,779 17,134 27,768,625 17,668 28,833,029 21,219 27,723,766 Average.................. 14,171 Average for 1917.. 12,087 22,095,528 12,273,306 On banks else where in district. On banks in other reserve districts. Num ber. Num ber. Amount. Amount. 24,115 $3,563,853 20,952 2,990,444 22,686 3,189,916 19,690 3,052,656 23,990 3,953,230 26,928 4,453,483 34,570 4,320,728 29,856 4,138,372 32,149 4,635,734 32,532 5,164,894 33,182 5,216,339 40,851 5,670,185 11,672 $12,556,526 10,880 10,812,264 11,199 11,450,111 10,641 7,393,766 12,154 12,379,149 13,494 11,860,297 16,254 12,0Sl,782 14,858 10,252,070 15,798 11,201,015 16,808 12,938,592 17,503 11,278,488 20,461, 10,299,623 28,458 17,674 14,310 7,481 4,195,819 2,581,355 11,208,640 8,825,030 Total. Num ber. Amount. 49,844 $34,904,210 46,756 29,706,441 48,457 31,763,794 44,687 27,533,052 49,491 38,548,752 51,776 38,335,586 61,023 40,150,821 54,581 34,722,128 59,303 39,441,528 66,474 45,872,111 68,353 45,327,856 82,531 43,693,574 56,939 37,603 37,499,987 23,679,692 TOTAL NUMBER AND AMOUNT OF CHECKS HANDLED MONTHLY. On Philadelphia banks. Number. Amount. 1918. Januarv.............. February -.......... March..!............ April.................... May..................... J une.................... July..................... August................ September........ October.............. November......... December.......... On banks elsewhere in district. Number. 373,263 $444,252,374 511,935 328,332 349,882,128 460,945 364,293 428,094,175 567,149 365j 502 488,379,621 626,986 347,022 577,625,699 623,739 283,843 673,199 254,971 593,707,781 86U 251 266”, 422 548i955;519 806,120 272,536 566,514,715 77i;587 445,482 721,984,258 845,819 424,030 691,992,700 796', 373 530,471 693,094,152 1,021,290 Amount. $79,369,064 65,789,777 79,747,911 92,660,184 102,783,982 111.337,087 108,018,187 111,736,048 111,257,607 134,287,251 125;192;142 141,754,639 On banks in other reserve districts. Number. 276,667 239,359 279,990 303,473 316,010 337,368 406,358 401,163 379,172 437,031 420,082 511,528 Amount. $192,237,928 237,869,807 286,252,776 326,469,658 321,857,862 296,507,430 302,044,570 276,805,911 268,824,350 336,403,397 270,683,703 257,490,566 Total. Number. Amount. 1,161,865 $715,859,366 1,028,636 653,541,712 l', 211,432 794;094; 862 i;295;961 907,509,463 i; 286”, 771 1,002,267i 543 1; 294,410 958,389,670 1,525,580 1,003,770,538 1,473,705 '937; 497; 478 1,423,295 946,596,672 1,728,332 1,192,674,906 1,640,485 1,087,868,545 2,063,289 1,092,339,357 Total, 1918. 4,256,167 6,655,028,275 8,569,393 1,263,933,879 4,308,201'3,373,447,958 17,133,761 11.292,410,112 Total, 1917. 3,648,181 3,704,029,949 5,339,710 778,780,708 2,364,38112,663,681,129 11,352,272 7,146,491,786 1 Disbursements, transit department......................................................................................................................... $167,520 Cost per item..................................................................................................................................................... cents.. 0.97 Cost per $1,000 ......................................................................................................................................................... do.. 1.48 34 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 35 GENERAL BANKING CONDITIONS IN DISTRICT AND RELATIONS WITH MEMBER BANKS. There has been no change in the boundary lines of the Third Federal Reserve District, the territory comprised being as follows: Delaware (population 215,160). ' New Jersey, southern part (population 652,499), counties: Atlantic.' Cape May. Mercer. Burlington. Cumberland. Ocean. Camden. Gloucester. Salem. Pennsylvania, eastern part (population 5,764,952), counties: Adams. Bedford. Berks. Blair. Bradford. Bucks. Cambria. Cameron. Carbon. Center. Chester. Clearfield. Clinton. Columbia. Cumberland. Dauphin. Montour. Northampton. N orthumberland Perry. Philadelphia. Pike. Potter. Schuylkill. Snyder. Sullivan. Susquehanna. Tioga. Union. Wayne. Wyoming. York. Delaware. Elk. Franklin. Fulton. Huntingdon. Juniata. Lackawanna. Lancaster. Lebanon. Lehigh. Luzerne. Lycoming. McKean. Mifflin. Monroe. Montgomery. The banking resources of national banks in the district increased 8 per cent during the year, and State institutions 14 per cent, making an increase in the combined banking resources of 10 per cent. Banking resources, district No. 3. [000 omitted.] Capital. Surplus. Pennsylvania: National banks (537).. State institutions (353) $74,474 81,113 $94,853 115,572 Total resources. Undi vided profits. Indi Bank vidual deposits. deposits. $24,998 28,213 $817,442 $162,455 $1,293,164 $1,209,999 14,090 1,113,693 823,516 981,001 1918 176,545 2,406,857 1917 Total (890)................... 155,587 210,425 New Jersey: National banks (72)... State institutions (42). 6,295 5,640 7,177 5,064 3,210 1,702 58,754 64,473 1,637 5,386 128,256 80,544 109,515 71,563 53,211 1,640,958 2,191,000 Total (114)................... 11,935 12,241 4,912 123,328 7,023 208,800 181,078 Delaware: National banks (20).... State institutions (25). 1,459 3,396 1,542 2,034 700 1,106 14,063 30,747 542 545 20,229 66,306 19,297 56,041 Total (45)..................... 4,855 3,576 1,806 44,810 1,087 86,535 75,338 Totals: National banks (629).. State institutions (420). 76,228 90,150 103,571 122,671 28,908 31,022 906,943 918,737 164,629 1,441,649 20,022 1,260,544 1,338,811 1,108,664 Total (1,049), 1918... (997), 1917........ Digitized forTotal FRASER 166,378 226,242 59,930 1,825,680 184,651 2,702,193 159,422 204,617 78,516 1,589,826 238,775 2,447,474 36 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. Combined statement of condition of member national banks. Date of comptroller’s call. Sept. 2, 1915. \ Sept. 12, 1916. Sept. 11, 1917. Aug. 31, 1918. RESOURCES. Loans and discounts.................................... Liberty bonds................................................. Other United States bonds........................ Other bonds, securities, etc........................ All other resources......................................... $527,799,000 $597,371,000 61,438,000 198,582,000 267,289,000 58,812,000 244,462,000 295,338,000 $647,542,000 23,903,000 67,804,000 ■ 283,356,000 316,206,000 $635,753,000 66,791,000 142,412,000 271,998,000 323,395,000 Total....................................................... 1,055,108,000 1,195,983,000 1,338,811,000 1,440,349,000 •Capital stock.................................................... Surplus........................................................ . Undivided profits....... .................................. National-bank notes outstanding............ Individual deposits....................................... Bank deposits.................................................. A11 other liabilities........................................ 77,248,000 98,150,000 21,100,000 58,278,000 640,860,000 149,604,000 9,868,000 76,814,000 97,304,000 24,460,000 56,291,000 759,894,000 166,926,000 14,294,000 76,708,000 99,037,000 28,766,000 55,596,000 877,549,000 166,175,000 34,980,000 76,178,000 103,468,000 28,908,000 54,212,000 905,834,000 164,629,000 107,120,000 Total....................................................... 1,055,108,000 1,195,983,000 1,338,811,000 1,440,349,000 LIABILITIES. There were 628 national bank members at the beginning of the year; 5 went into liquidation, and 8 new banks were organized, making 631 national bank members at the end of the year. There were 7 State bank members at the beginning of the year; 22 new institutions were admitted, making 29 State bank members at the end of the year, and the total number of member banks 660. While the number of State institutions in the district which have already joined the Federal Reserve system is 29 out of 259 eligible institutions, yet those which were members at the end of the year represented 54 per cent of the resources of all eligible State institu tions. Among the trust companies and State banks which have joined the system are included the largest in Philadelphia and in some other parts of the district. While applications for membership are coming in slowly, bankers seem to appreciate the advantages of membership, and there is every reason to hope that most of the institutions will eventually come in. Such State institutions as have become members have availed them selves freely of the discount facilities of the bank. Our relations have been materially profitable and helpful; members speak with satisfaction of the results and have been of much assistance in obtaining new members. The banking departments of the States in the district have sent us, upon request, copies of reports of examinations of State bank mem bers, which rendered it unnecessary to have special examinations made by our own examiners. One of the effects of trust companies joining the system has been somewhat of a change in the investments of such companies. A number of them now carry lines of paper eligible for rediscount at ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 37 the Federal Reserve Bank, making their assets, to that extent, more liquid than heretofore. The list of State institutions which are now members is given herewith. The fq-st seven joined in 1917. State banks and trust companies in the Third Federal Reserve District admitted to mem bership in the Federal Reserve system. Name of bank. 1. Girard Trust Co., Philadelphia, Pa....................................... 2. Miners Deposit Bank, Lykens, Pa......................................... 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. Philadelphia Trust Co., Philadelphia, Pa........................... Commercial Trust Co., Philadelphia, Pa............................. Camden Safe Deposit & Trust Co., Camden, N. J........... Wilmington Trust Co., Wilmington, Del............................ Pennsylvania Co., Philadelphia, Pa...................................... Fidelity Trust Co., Philadelphia, Pa............ ........................ Dime Deposit Bank, Wilkes-Barre, Pa............................ Security Trust & Safe Deposit Co., Wilmington, Del... Markle Banking & Trust Co., Hazleton, Pa....................... Rittenhouse Trust Co., Philadelphia, Pa.......................... . Cambridge Trust Co., Chester, Pa.......................................... Williams Valley Bank, Williamstown, Pa......................... Dauphin Deposit Trust Co., Harrisburg, Pa..................... Gloucester City Trust Co., Gloucester City, N. J............. Provident Life & Trust Co., Philadelphia, Pa................... Princeton Bank & Trust Co., Princeton, N. J.................. Bank of Commerce, Philadelphia, Pa................................... West Philadelphia Title & Trust Co., Philadelphia, Pa. Colonial TrpstCo., Philadelphia, Pa.......... ......................... American Bank of Commerce, Scranton, Pa...................... Equitable Trust Co., Wilmington, Del................................ Drovers & Merchants Bank, Philadelphia, Pa.................. Swedesboro Trust Co., Sweaesboro, N. J............................ Northern Central Trust Co., Williamsport, Pa................. Susquehanna Trust Co., Williamsport, Pa......................... Logan Trust Co., Philadelphia, Pa........ ............................... Wayne County Savings Bank, Honesdale, Pa................... Capital. Surplus. 82,500,000 50,000 1,000,000 1,000,000 500,000 1,000,000 2,000,000 5,000,000 200,000 600,000 100,000 250,000 250,000 50,000 300,000 100,000 2,000,000 100,000 300,000 500,000 272,725 312,987 500,000 200,000 100,000 500,000 400,000 1,000,000 200,000 87,500,000 110,000 4,000,000 1,750,000 800,000 500,000 5,000,000 16,000,000 150,000 700,000 500,000 50,000 125,000 45,000 300,000 25,000 5,000,000 150,000 140,000 500,000 272,725 34,480 500,000 40,000 20,000 150,000 300,000 250,000 325,000 Deposits.i 837,423,775.82 484,000.00 23,731,531.48 14,035,264.64 8.599.346.84 13,527,713.10 25,434,553.61 22,515,615.07 1,371,346.36 4,410,486.64 3,437,176.86 1.426.965.39 5,137,308.15 302,058.38 3.188.925.85 548,816.56 10,271,978.37 1.428.965.39 1,640,000.36 4,154,985.28 2,910,197.41 378,027.41 3,693,216.23 540,986.29 615,174.43 2,631,339.68 2,029,433.60 7,509,445.22 2,663,000.00 i Exclusive of Government deposits. In the fall of the year 95 per cent of total borrowings by member banks represented borrowings from the Federal Reserve Bank. Prior to June, 1917, when the first Liberty loan was issued, the bulk of the loans had been made with correspondent banks. The banks of the district have always been conservative, and their borrowings usually small, but during the past year they subscribed liberally to Liberty bonds and United States certificates of indebtedness, which necessitated a great increase in the amount of their borrowings. This, however, was less than anticipated, as early in the war the necessity for conserving capital and credit was appreciated and the policy of curtailment of credit for purposes not essential to the prose cution of the war was undertaken and generally maintained through out the district. Holdings of Liberty bonds by national banks of the district on September 11, 1917, amounted to $23,903,000; on December 31, 1917, $48,066,000; on June 29, 1918, $64,071,000; and on November 1, 1918, $152,007,000. As the Government was constantly in the market for funds money rates were high throughout the year, 6 per cent being the prevailing 38 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. rate for paper. The banks bought comparatively little. Transac tions in municipal, industrial, railroad, and public-utility securities were also at a minimum owing to restrictions on credit and the diversion of funds to investment in Government bonds. At the time of the influenza epidemic the staffs of banking institu tions, in common with other business concerns, were in some cases so seriously affected that the operations of the banks could not be car ried on without outside help. Upon the request of several institu tions, this bank furnished them clerks from its staff which enabled such banks to carry on their operations. ACCEPTANCES UP TO 100 PER CENT. During the year the Bank of North America and the First National Bank, both of Philadelphia, were authorized to accept drafts up to 100 per cent of their capital and surplus. The increase in acceptance liabilities of member banks is given herewith: Date of comptroller’s call. Amount. Dec. 31,1915........................................................................................................................................................... Dec. 271916........................................................................................................................................................... Dec. 3L 1917........................................................................................................................................................... Nov. 1,1918............................................................................................................................................................ $2,809,000 8,309,000 14,165,000 25,683,000 PHILADELPHIA CLEARING HOUSE MEMBERS. In the latter part of the year the ratio of loans to deposits of the Philadelphia Clearing House was above 100 per cent. The relation of loans to deposits is shown in the following table: Philadelphia clearing-house members, 1918. [000 omitted.] Loans, dis counts, and invest ments. Deposits. Bank. Individual. Total. Ratio of loans to deposits. Per cent. January........................................................................ February...................................................................... March............................................................................ April.............................................................................. Mav................................................................................ June............................................................................... July................................................................................ August.......................................................................... September................................................................... October......................................................................... November.................................................................... December.................................................................... $579,246 578,976 587,344 606,940 619,773 623,872 611,044 613,842 630,491 716,478 743,957 713,802 $164,861 167,232 169,717 166,408 164,976 170,239 155,531 166,494 168,869 167,562 159,622 159,665 $456,806 448,754 450,834 467,529 463,732 454,517 439,783 451,144 474,576 461,075 479,005 464,080 $621,667 615,986 620,551 633,937 628,708 624'756 595; 314 617,638 643,445 628,637 638,627 619,645 . 93.2 94.0 91.7 95.7 98.6 99.8 102.7 99.4 98.0 113.9 116.5 115.1 ANNUAL REPORT OP FEDERAL RESERVE BANK OF PHILADELPHIA. 39 FIDUCIARY POWERS GRANTED. The applications of the following banks for fiduciary powers in accordance with section 11 (k) of the Federal Reserve Act as origi nally enacted were approved in 1918: Atglen National Bank, Atglen, Pa. National Bank of Boyertown, Boyertown, Pa. First National Bank, Danville, Pa. Conestoga National Bank, Lancaster, Pa. South Bethlehem National Bank, South Bethlehem, Pa. Wyoming National Bank, Wilkes-Barre, Pa. National Bank of Topton, Topton, Pa. First National Bank, Williamsport, Pa. Western National Bank, York, Pa. The Phelan amendment to the Federal Reserve Act, which became law on September 26, 1918, in addition to authorizing the Federal Reserve Board to permit banks to act as trustee, executor, adminis trator, and registrar of stocks and bonds, also permitted the granting of the right to act as guardian of estates, assignee, receiver, committee of estates of lunatics, or in any other fiduciary capacity in which State banks, trust companies, or other corporations which come into competition with national banks are permitted to act under the laws of the State in which the national bank is located. No permit can be issued to any national banking association having a capital and surplus less than the capital and surplus required by State law of State banks, trust companies, and corporations exercising such powers. The minimum capital required for institutions exercising fiduciary powers in Pennsylvania is .$125,000; in New Jersey, $100,000; in Delaware, $25,000. By capital is meant the amount actually credited to capital and takes no account of surplus. The applications of many institutions which desired authority to exercise fiduciary powers could not be approved owing to their not having sufficient capital. The following institutions were granted these powers under the new act: Merchants National Bank, Allentown, Pa. Third National Bank, Scranton, Pa. South Bethlehem National Bank, South Bethlehem, Pa. Swedesboro National Bank, Swedesboro, N. J. First National Bank, Williamsport, Pa. First National Bank, Woodbury, N. J. Western National Bank, York, Pa. \ CLAYTON ACT. Only a few applications for permission to serve as director under the terms of the Clayton Act and Kern amendment were received during the year, the bulk of such applications having been made in the fall of 1916. 40 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. FISCAL AGENCY OF TIIE UNITED STATES. The Federal Reserve Bank has been brought prominently before the public through its activities as fiscal agent of the Government in the placing of the Liberty bonds and certificates of indebtedness. There has been a realization of the importance of the system through the comparative ease of the money market that was maintained dur ing the war and the facility with which the financial transactions of the Government were carried through. The following shows subscriptions to the four Liberty loan issues: Subscriptions to the four Liberty loan issues. FIRST LOAN. States. Delaware....................................... New Jersey................................... Philadelphia................................ Pennsylvania (not including Philadelphia)........................... Apportion ment. 86,136,000 8,817,400 94,964,750 Per cent of Number of population Amount subscribed. Allotments. subscribers. subscrib ing. 811,917,850 11,702,700 145,172,950 $6,136,100 8,812,100 96,809,650 No record. No record. No record. No record. No record. No record. No record. No record. 53,339,150 63,515,750 53,389,750 163,257,300 232,309,250 165,147,600 Per capita subscrip tion. 850.00 17. 60 80.50 16.70 35. 70 SECOND LOAN. Delaware........................................ 87,705,700 17,527,950 New Jersey................................... Philadelphia................................ 139,499,950 Pennsylvania (not including Philadelphia)........................... 108,067,200 88,314,200 18,188,150 234,901,000 272,800,800 6.9 7.9 13.6 835.00 27.30 130. 00 309,033 7.9 31.40 623,575 9.6 58.50 825,391,400 24,990,850 142,230,650 50,873 164,573 651,931 21.3 24.7 36.2 894. 00 37.40 93.00 87,705,700 16,950,400 148,327,350 16,570 52,849 245,123 118,946,900 107,200,650 380,350,250 280,184,100 THIRD LOAN. $8,474,500 Delaware....................................... New Jersey................................... 19,379,400 Philadelphia................................ 139,499,950 Pennsylvania (not including Philadelphia)........................... 101,587,640 825,391,400 24,990,850 142,230,650 169,350,600 169,350,600 1,003,551 26.4 37.00 268,941,490 361,963,500 361,963,500 1,870,928 28.8 54.50 895.50 63.50 167.00 FOURTH LOAN. Delaware....................................... 816,013,280 38,694,970 New Jersey................................... Philadelphia................................ 259,198,000 Pennsylvania (not including Philadelphia)........................... 202,000,000 822,621,300 42,363,450 306,870,950 822,621,300 42,363,450 306,870,950 58,647 206,516 502,700 24.6 31.2 27.8 228,907,950 226,907,950 1,003,268 26.5 59.50 515,906,250 598,763,650 598,763,650 1,771,131 27.3 92.00 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 41 LIBERTY LOANS. Two campaigns for the sale of Liberty bonds were conducted dur ing the year, and from the standpoint of distribution the third Lib erty loan campaign was by far the most successful, 1,870,928 sub scribers having been obtained. It should be said, however, that the work of the fourth Liberty loan was hampered very much by the influenza epidemic, which was at its height during the campaign. At one time more than half the loan workers were ill, or else occupied in nursing the sick; also theaters, churches, schools, etc., were closed and it was found necessary in soliciting subscriptions for the fourth loan to appeal for large subscriptions rather than a great number of subscribers. Previous to the opening of these campaigns the work of the organ ization of the various committees had been completed, a conference was held of the secretaries of all the districts into which the Phila delphia Federal Reserve District had been divided and opportunity afforded to familiarize themselves with the details of the loan and the work they were about to undertake. The intensive work of the campaigns was begun on the first day. One of the objectives of the campaigns was the obtaining of small subscriptions and this was greatly facilitated by the cooperation of banks in agreeing to take subscriptions for bonds to be paid in installments at the rate of $1 a week for $50 bonds and proportion ately larger amounts based upon the denomination of the bonds sub scribed for. Subscriptions placed under these conditions involved the banks in a great amount of work and much expense. . A committee that played a large part in making the campaigns a success was that having charge of all publicity matters for the dis trict. It forwarded to all organizations and subcommittees posters, buttons, etc., for use in the campaigns and attended to all the news paper'advertising, etc. In connection with this committee a press bureau was established, which kept in touch with the newspapers of the district, and through the hearty cooperation of the papers a large amount of space was allotted in them for news incident to the campaigns. As no funds could be provided out of the proceeds of the sale of bonds for advertising purposes, all newspaper advertis ing for the campaigns was contributed by manufacturers, merchants, banking institutions, insurance companies, and other corporations of the district. The cost of such advertising was very large and the country is under great obligation to those who contributed so gener ously for this purpose. In addition to the newspaper publicity, two innovations of marked value were adopted before the opening of the third campaign. A replica of Bartholdi’s Statue of Liberty was erected on Broad Street, 42 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. Philadelphia, immediately south of the city hall, at which, almost continuously, night and" day, during the entire period of the third campaign, there was public speaking, band concerts, and other demonstrations, which created a spirit of enthusiasm and gave encouragement to the workers. During the fourth campaign, owing to the influenza epidemic, public assemblages were forbidden, con sequently no meetings were held around the statue. From the bal cony of this statue the Secretary of the Treasury, Hon. W. G. McAdoo, delivered an address on April 6, at the opening of the third campaign. Another feature which was very helpful was the publication of the “Liberty Line,” a journal issued weekly by the committee, through which every worker was informed as to the operation of the campaigns and the methods being used by the various organiza tions and committees to promote the work. The encouragement and help given by these suggestions and advice was instructive and stimulating. In the emergency during the fourth Liberty loan campaign caused by the epidemic the Boy Scouts were called upon and rendered inval uable service, temporarily performing many of the duties of the reg ular workers. Special reference should be made of the work of the industrial committee for the city of Philadelphia, which secured $78,000,000 subscriptions to the third and $164,000,000 to the fourth loans. The industries of the city were divided into 19 groups, 136 trade com mittees being organized to work in these groups, and 1,800 workers enrolled. The committee issued a daily bulletin, stating the progress made. In this district, whose population contains a large percentage of foreign born, the foreign-language division had an important part to play. It urged “Americanization”—the speaking of the American language, adopton of American customs, and, above all, the owning of Liberty bonds. The executive secretary spoke in eight different languages throughout the district. The response was spontaneous from all nationalities and an interesting feature of the canvas was that the German-Americans made the best showing of all in the city of Philadelphia, with over twenty millions of bonds to their credit in the fourth loan out of a total foreign sale of thirty-three millions. In the Philadelphia Federal Reserve District, as elsewhere, the services of the women were invaluable in the loan campaigns. In the third campaign their organization was on State lines, and did not cooperate so closely with the Liberty loan committee, but in the fourth' campaign their organization was coextensive with that of the central Liberty loan committee of the district. They took an important part in the house-to-house canvass throughout the city, ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 43 made public addresses, visited schools, and maintained booths in the streets of the cities and towns of the district, at which subscrip tions were received. Their organization was well carried out, and, if possible, more completely marshaled than that of the men. UNITED STATES CERTIFICATES OF INDEBTEDNESS. About 7 per cent of each issue of United States certificates of in debtedness was allotted to this district, the allotments being placed with the banks of the district in amounts proportionate to their resources. Previous to the third Liberty loan this work was per formed by the officers of the bank, but as the amount of the issues increased they were unable to continue it and the matter was placed in the hands of Mr. John H. Mason, of Philadelphia, as director of sales. The district has oversubscribed its quota for almost every issue. In connection with these operations, 647 of the banks availed them selves of the opportunity to become depositaries of United States loan funds, as a result of which the payments made for the purchase of certificates were withdrawn gradually from the banks, thus making the purchase of certificates by the banks much more facile. The results of the subscriptions are given in the following table: Number of banks and of other subscribers, also amounts subscribed to certificates of indebtedness. Six issues f Seven issues preceding the I preceding the third Liberty fourth Liberty loan. i loan. National banks: Number subscribing............................................................................................. Per cent of total in district................................................................................ Amount subscribed.............................................................................................. State banks: Number subscribing............................................................................................. Per cent of total in district................................................................................ Amount subscribed.............................................................................................. Trust companies: Number subscribing............................................................................................. Per cent of total in district................................................................................ Amount subscribed.............................................................................................. Other banks: Number subscribing............................................................................................. Per cent of total in district................................................................................ Amount subscribed.............................................................................................. Individuals, corporations, etc.: Number subscribing............................................................................................. Amount subscribed........................................................................... .................. Total: Number of banks subscribing........................................................................... Per cent of total in district................................................................................ Number of individuals, corporations, etc., subscribing.......................... Amount subscribed.............................................................................................. 578 i 90.31 §123,319,500 601 93.18 $200,957,500 147 86.90 $15,188,508 200 68.26 §61,990,000 202 87.44 $93,859,000 118 45.56 §8,685,000 100 $5,129,000 148 §2,505,500 33 §886,000 896 75.17 148 §196,500,000 959 90.99 33 $316,020,000 9 44 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. CAPITAL ISSUES COMMITTEE. Early in the year the Capital Issues Committee appointed sub committees at each of the Federal Reserve Banks. The chairman of the board of directors of each Federal Reserve Bank acted as chair man of the subcommittee, and the governor of the Federal Reserve Bank as vice chairman. Richard L. Austin, chairman, appointed the following committee for the Philadelphia Federal Reserve district: E. P. Passmore, vice chairman; Clarence M. Clark, John Gribbel, Albert A. Jackson, Lewis Lillie, Howard S. Graham, Robert W. Daniels, Charles Fearon, George H. Frazier, A. C. Dinkey, Thomas S. Gates, Charles C. Harrison, jr., Walter C. Janney, Horatio G. Lloyd, W. S. Maddox, John S. Newbold, F. B. Snyder, Ira Vaughn, Joseph Wayne, jr., and Charles W. Welsh, all of Philadelphia: John Brooks, Scranton, Pa.; Benjamin E. Mann, Lancaster, Pa.; George K. Reilly, Harrisburg, Pa.; Fer dinand, W. Roebling, jr., Trenton, N. J.; H. B. Schooley, WilkesBarre, Pa.; and L. Scott Townsend, Wilmington, Del. A good deal of educational work was necessary to bring this matter to the attention of bankers and the general public. Notices were given to the press for publication in all the newspapers of the district. Communications reflecting the policy of the Government and stating in detail the procedure which should be followed by those interested in issuing securities were sent to all bankers, corporations, and munici palities interested in the issue of securities, and the necessary staff was provided to take care of. the work. Ninety-three thousand copies of a pamphlet entitled 11 Economy the Gospel in England” were dis tributed. For some months the work of the committee continued on a purely voluntary or unofficial basis. On April 5, 1918, however, the War Finance Corporation Act was approved and under it district com mittees were reappointed in each Federal Reserve district throughout the country, all new issues of securities being submitted to and passed upon by the district committee in whose district the issues originated and then referred to the Washington committee for final action. In order that the work of the district committee might be carried out in the most expeditious and effective manner, a permanent executive committee, a secretary, and an assistant secretary were appointed. The executive committee consisted of: Richard L. Aus tin, chairman; E. P. Passmore, vice chairman; Clarence M. Clark, Howard S. Graham, John Gribbel, Albert A. Jackson, and Lewis Lillie. Other members of the main committee were called in rotation for a period of 60 days to serve with the executive committee, and Messrs. Charles W. Welsh, Charles Fearon, John S. Newbold, and Joseph Wayne, jr., gave their assistance in this manner. Arthur E. Post, assistant Federal Reserve agent, was named as secretary of the ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 45 committee, and Edward V. Kane, of the firm of Edward V. Kane & Co., was appointed assistant secretary. The capital issues committee of this district passed upon 182 applica tions, approximating $139,830,339. Of 149 these, applications, approximating $98,888,649, were approved, while 22 applications, approximating $40,941,690, were disapproved. In the case of 11 applications, securities aggregating $10,215,000 were tied up, under agreement not to be sold during the period of the war. Aside from those officially disapproved, prospective issues approximating $75,- 000,000, which would serve no military or economic purpose, were, m response to the committee’s arguments, discouraged and post poned. While it was not part of the committee’s duty to pass upon the merits of any issue of securities, its functions being confined to the •question of timeliness as applied to the Government’s war needs, the large and increasing number of doubtful issues of miscellaneous stocks pertinently suggests the desirability of continued Federal supervision, with a view to the protection of the public from reckless and unscrupulous promoters. Supervision and restraint, with penalty-enforcing power, are especially important in view of the persistent efforts of promoters to exchange their shares for Liberty bonds. The effect of this business upon the market price of Gov ernment issues is obvious, since the latter are promptly converted into cash as soon as an exchange has been effected. Simultaneously with the closing of the work of the Capital Issues Committee at the end of the year, Chairman Hamlin, of the main committee at Washington, addressed a letter to the chairman of the committee for this district, reading in part as follows: As we approach the end of our work, it is the sincere wish of the committee and myself that you and the other members of the Philadelphia district committee may realize how grateful we are for the splendid patriotic cooperation you have given us. We all know that the idea back of the Capital Issues Committee would have had little effect without the help of the district committees, which have shown themselves to be composed of the most intelligent, loyal, and unselfish men that could be gathered together in the service of the Government. The district committeemen scattered throughout the country, and not we here in Washington, have been the bulwark of the committee. We know it and appreciate it and the success of the control of capital issues is due very largely to the efforts of yourself and your associates. The work throughout has been arduous, difficult, and to a large degree thankless, but we are assured by the Treasury Department that it has been of tremendous value, and every member of your committee has a right to be proud of his part in it. BUSINESS CONDITIONS IN THE DISTRICT. The large number of plants for the manufacture of iron and steel and all their products in this district made it naturally one ol the most important centers for the production of munitions of war. The largest plants for the manufacture of guns and small arms are 46 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. located here, including the several plants of the Baldwin Locomotive Works, Midvale Steel & Ordnance Co., Bethlehem Steel Co., numbers of steel-casting plants, and the great shipyards along the Delaware River. There was no unemployment in the district throughout the year. All lines of industry were hampered by the scarcity of labor, this scarcity being aggravated by reductions in the number of workers through enlistments and draft calls. Wage earners were attracted to munitions factories, shipyards, and other war plants by the high wages paid. The competition for labor and the steadily increasing wages resulted in much shifting of labor and consequent inefficiency. The employment of women in new lines of work did much to relieve the labor scarcity. After the signing of the armistice many plants either closed down or reduced operations, and in so doing released thousands of workers. This, hi connection with the return of some thousands more from military service, improved the labor situation greatly, but as yet there appears to be no surplus of labor. Old shipyards were greatly enlarged and extended, new ones created, and the industrial area along the Delaware River witnessed an almost unthinkable expansion in shipbuilding. The Emergency Fleet Corporation let contracts to 11 yards in the district for the delivery of 3,442,577 dead-weight tons, equivalent to one-fourth of the tonnage provided Lor in the national shipbuilding program. Ten of the yards are manufacturing steel ships and have received contracts from the Fleet Corporation for a total of 412 ships, with an aggregate tonnage of 3,407,577. They employ very nearly 100,000 persons, the majority of whom are skilled workers. Up to November 30, 1918, the number of vessels delivered and launched was 79, of an aggregate tonnage of 523,442. Ninety-four ships of 765,120 total tonnage were in process of construction. The other shipyard is for the construction of wooden ships and has received awards for 10 wooden steamers of 3,500 dead-weight tons each. The total value of the above contracts is 8689,390,000. The war’s demands threw an immense amount of work upon the textile machinery of the district, the orders placed for underwear, hosiery, other knit goods, and material for clothing being sufficient to absorb all the productive capacity of the mills. At times, every loom in the district was employed in making cloth for the Govern ment. While operations were much embarrassed by the shortage of labor and by difficulties in obtaining supplies, yet large quantities of goods were produced. Building operations, apart from those incident to war work, were the •smallest on record for years. Inability to secure financial accommodation and the high cost and scarcity of materials and labor brought building for strictly civilian purposes almost to a ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 47 standstill. Builders regard the prospect for active operations as good and are anticipating a better supply of labor and lower prices for materials following the curtailment of Government operations. The coal output of the district has, for the most part, been in excess of the two previous years. The severe shortage, due to scarcity of cars and other transportation difficulties, which was so disastrous last winter, has been avoided this winter. While a heavy loss in production was occasioned by the influenza epidemic, the situation at the end of the year showed considerable improvement, it being apparent that all requirements for fuel could be supplied. The production of anthracite coal for 1918 amounted to 88,840,000 tons, indicating but little change from the high figures of the im mediately preceding year. Reports of the production of bituminous coal indicate an increase for th6 year of about 18 per cent. The year 1918 has been successful for the farmers in the district. There was no unusual damage from frost or storm, the greatest damage being caused by a prolonged drought during part of the summer, which hurt particularly the potato crop. The estimated total acreage of the nine principal crops in Pennsyl vania was 8,379,054 tons, an increase of 320,219 over 1917. The estimated total value of these crops was $377,000,000, which is $25,000,000 more than 1917. The tobacco production was 58,000,000 pounds, an increase of 14 per cent over the preceding year. The aver age price was 25 cents per pound, compared with 22 cents last year. At the close of the year, the condition of wheat in the ground was 111 per cent, compared wdth 91 per cent a year ago, while that of rye was 109 per cent, 17 per cent more than the preceding year. The truck farmers in New Jersey had generally good crops. The tomato crop was very good, but the berry crop was short, in some places being only 25 per cent of normal. The hay and rye crops were unusually large. In Delaware, pasturage, hay, and dairying were about normal in production, but above normal in profit. The apple crop was 50 per cent above the 10-year average. The peach crop, which was only half the normal one, was worth $1,000,000. There were normal crops of tomatoes and other vegetables, with prices 50 per cent higher than prewar figures. BANK CLEARINGS. Bank clearings in the district for the year reached the high est level ever recorded, the maximum for any one month being $2,003,307,000, during October. The following chart and table show comparative volume of clearings for each month, 1915-1918. 48 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA Bank Clearimgs Philadelphia federal Reserve’District jan |fe6|aar|apr1may|June|July|aug|5ept|oct1mov|dec ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 49 Clearings in the third district. Philadelphia. 1918 District out side of Philadelphia. Total for district. Per cent increase or decrease compared with 1917. January................ February............. March.................... April...................... May........................ June....................... July---.................. August.................. September........... October............... November........... December............ §1,522,827,616 1,223,305,964 1,427,175,557 1,579,825,000 1,711,945,000 1,700,306,000 1,765,812,000 1,734,638,000 1,610,611,000 1,886,419,000 1,781,704,327 1,772,418,777 $98,170,474 81,216,156 101,811,793 120,777,000 111,232,000 107,643,000 115,622,000 107,676,000 104,638,000 116,888,000 103,117,922 106,031,694 $1,620,998,090 1,304,522,120 1,528,987,350 1,700,602,000 1,823,177,000 1,807,949,000 1,881,434,000 1,842,314,000 1,715,249,000 2,003,307,000 1,884,822,249 1,878,450,471 + 8 - 2 - 2 + 12 +16 + 12 +31 +26 +20 + 19 +15 +14 Total, 1918, Total, 1917. 19,716,988,241 17,197,733,209 1,274,824,039 1,174,144,540 20,991,812,280 18,371,877,749 +14 COMMERCIAL FAILURES. The number of commercial failures fell sharply, and in October there were only 19 in the Third Federal Reserve District, which is the lowest number recorded in some years. It is interesting to note that during other wars the experience has been that the inflation of commodity prices reached its peak about the time that peace comes definitely in sight, followed by a period of a few months in which there was a marked decline in the number of commercial failures. A decline in commodity prices generally followed the termination of the war, which in turn was followed bv a sharp rise in the num ber of commercial failures. According to Bradstreet’s commodity index number, prices have been gradually declining since the apparent peak reached last July, so that an increase in the number of failures may be expected. Bradstreet’s report of commercial failures in the Third Federal Reserve District, classified as to capital employed. $5,000 and less. $5,000 to $20,000. $20,000 to $50,000. 7 7 4 1 4 3 2 2 January............................ February............................................ March................ April.................................................... May............ June.................... July.................................................... August.............................. September............................ October............... November........ December......... 71 68 54 36 48 33 28 30 28 16 20 23 2 3 3 3 1 2 Total, 1918.............................. Total, 1917........................... 629 35 27 11 14 $50,000 to $100,000. $100,000 to $500,000. 2 2 1 1 2 1 1 3 9 2 2 2 Total. 1918 79 78 63 39 56 33 29 32 32 19 26 26 1917 75 51 61 56 61 45 48 49 40 65 60 63 512 674 50 ANNUAL REPORT OE FEDERAL RESERVE BANK OF’PHILADELPHIA. IMPORTS AND EXPORTS. The foreign business through the port of Philadelphia was quite heavy throughout the year, a1 though exports were not as large as in the preceding year. Imports were uniformly greater than during 1917. Business through the port of Philadelphia. Imports. Exports. 1918 1917 1918 1917 January.... February.. March.......... April............ May............. June............. July............. August........ September. October.... November.. December.. $38,975,065 26,534,875 32,903,058 39,962,456 40,919,371 26,786,000 28,493,000 39,307,314 54,356,000 38,650,995 28,920,174 31,224,722 $43,634,046 57,652,322 38,879,748 39,889,979 42,507,832 41,284,111 21,451,383 57,381,188 24,093,366 62,724,000 32,309,000 40,158,000 $7,082,709 8,021,153 10,082,475 13,086,630 13,533,749 9,932,000 11,181,681 8,387,120 9,567,000 8,776,160 8,850,830 6,069,889 $9,093,450 9,041,989 7,488,047 11,103,862 11,424,218 14,304,452 8,953,507 9,247,078 8,276,928 4,486,000 4,106,000 4,446,000 Total. 427,033,030 501,964,975 114,571,396 101,971,531 FREIGHT-CAR MOVEMENTS. During the early part of the year the movement of freight by rail roads in the district was seriously hampered by congestion at ter minal points, fuel shortage, and unusually cold weather. Begin ning with the month of May conditions showed much improvement. Eastbound shipments of bituminous coal at Lewistown Junction, on the Pennsylvania Railroad, were 18 per cent larger than the pre ceding year. Pennsylvania Railroad freight-car movements at Lewistown Junction. Bituminous coal eastbound. January... February.. March........ April.......... May............ June........... July............ August.... September October... November. December. Total.. Coke eastbound. Miscellaneous eastbound. Miscellaneous westbound. Total. 1918 1917 1918 1917 1918 1917 1918 1917 1918 33,397 37,728 44,505 42,502 53,156 54,479 53,614 54,562 55,101 53,396 43,464 45,297 41,132 35,216 45,843 41,192 45,785 42,824 41,367 40,442 38,215 38,009 40,031 32,193 3,111 3,692 4,279 5,816 5,608 5,114 5,566 5,277 4,709 4,737 4,133 4,076 5,563 4,290 5,751 5,552 5,643 6,034 6,366 5, 796 5,596 5,503 5,404 4,449 17,946 21,822 33,325 34,331 34,234 32,581 34,115 33,697 31,787 31,635 33,441 33,993 33,820 31,024 38,833 39,103 38,085 34,382 33,057 30,618 31,766 30,211 26,917 19,300 7,908 10,509 14,524 17,196 18,333 19,018 21,459 17,238 16,884 15,821 15,358 15,216 21,047 18,733 24,629 24,375 26,201 26,257 25,479 24,775 22,821 20,834 17,641 9,958 62,362 73,751 96,633 99,845 111,331 111,192 114,754 110,774 108,481 105,589 96,396 98,582 101,562 89,263 115,056 110,222 115,714 109,497 106,269 101,631 98,398 94,557 89,993 65,900 571,201 482,249 56,118 65,947 372,907 387,116 189,464 262,750 1,189,690 1,198,062 1917 POST OFFICE BUSINESS. The business of the post offices throughout the district was con siderably ahead of last year, both in postal receipts and money-order transactions. Increased industrial activity resulted in a heavy increase in the use of the mails. ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 51 Postal and money-order business. Postal business. Money-order business. Post office at— Allentown, Pa.......................................................................... Atlantic City, N. J.................................................................. Altoona, Pa............................................................................... Camden, N. J............................................................................ Harrisburg, Pa......................................................................... Lancaster, Pa............................................................................ Lebanon, Pa.............. ............................................................... Philadelphia, Pa...................................................................... Trenton, N. J................................................ ........................... Wilkes-Barre, Pa..................................................................... Williamsport, Pa..................................................................... Wilmington, Del..................................................................... 1918 1917 $343,514 480,929 241,825 422,751 701,948 276,280 75,869 11,730,505 668,231 804,233 354,827 226,253 681,965 $266,749 372,626 180,894 343,359 626,976 226,946 63,820 10,505,242 543,725 442,749 277,661 205,136 471,830 1918 1917 $694,929 $591,399 856,649 1,643,848 2,146,215 318,737 348,491 33,077,822 781,922 3,265,560 778.196 318,281 1,634,200 663,064 1,159,072 1,731,978 278,888 312,759 26,724,046 * 628,827 2,545,547 646,367 289,350 967,631 RESUME OF BUSINESS CONDITIONS. January.—General business was disturbed by the inauguration of “heatless Mondays,” -which caused the shutting down of industry for several days for the purpose of relieving the freight congestion and expediting the distribution of coal. All branches of business directly connected with the war continually absorbed more and more of the productive capacity of the district and gave constant employment to labor at high wages. Labor conditions were unsatisfactory and much complaint was made about the shifting of workers and the loss inci dent to the continual reemployment of men. Iron and steel plants operated at about 30 per cent of capacity in the middle of the month, the situation being worse than at any time since the beginning of the war. Iron and steel producers were hampered not only by their inability to secure coal and coke, but by the sweeping embargoes on outgoing traffic. Retail trade was much better than might have been expected after the holiday season. The demand for necessities was preeminent, the demand for luxuries declining. The money market was quiet but firm. Call money ruled at 6 per cent, and choice commercial paper from 5f to 6 per cent. February.—Aside from the interruption in business caused by the closing down order on Mondays, there was no important change in conditions, manufacturers as a rule continuing to operate to as near capacity as circumstances permitted. Retail trade was ahead of last year, both in quantity of goods sold and in value of sales. Due to the railroad congestion, large quantities of finished goods accumu lated, which resulted in curtailing production and the tying up of much capital. The iron and steel industry was still partly paralyzed by the lack of fuel and transportation facilities, production being about 50 per cent of capacity. The banks were unable to accumulate surplus funds owing to the continuous purchases of Treasury certifi cates of indebtedness and the renewal of notes by their customers, whose business was seriously hampered by the railroad freight tie-up. Rates for money advanced slightly, commercial paper selling at 6 per cent, a slight concession being made, however, for the best names of short maturities. 52 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. Marek.—Favorable weather conditions and the consequent easing up of the fuel situation resulted in increasing activity in many lines of industry. There was a strong retail demand for seasonable ap parel. Considerable difficulty was experienced in obtaining adequate help, and necessary advances in wages added to the already greatly increased cost of doing business. The moderation in the weather permitted of steady improvement in the movement of freight cars. The supply of sugar showed some increase, but flour was scarce and substitutes hard to get. Iron and steel production recovered slowly, plants running at from 60 to 75 per cent of capacity. The impossi bility of securing heavy leathers limited the production of turned shoes. The textile mills ran to capacity. Money rates remained high, the market being on a 6 per cent basis. Very little choice com mercial paper was offered, but there was a liberal supply of the medium grade. Banks were preparing for the third Liberty loan campaign. The Philadelphia institutions rediscounted in consider able volume, borrowings by out-of-town banks being comparatively small. April.—The industrial capacity of the district was devoted increas ingly to the production of materials essential to the conduct of the war. This was accomplished through the extension of the system of Government priority orders, which controlled the distribution of raw materials. Many concerns which had been engaged in the pro duction of nonessentials diverted their plants to the manufacture of some kind of war materials and supplies. The gradual shifting of labor to the more essential war industries, in addition to the diffi culties in obtaining supplies, reduced the output of nonessential goods. Although buyers displayed conservatism, the volume of sales in retail lines was very satisfactory. Business during the first part of the month was slightly behind that of last year because of an early Easter and bad weather. On account of high wages, wage earners were the principal purchasers of goods, being able to buy goods which they had previously been unable to purchase. Proprietors of small stores in some of the large cities closed their stores and took employment in the shipyards and other places where they could earn more moneyFarmers financed themselves by cash payments, due, apparently, to the prosperity brought about by high prices during the last few years. The use of bank loans or notes to implement dealers to finance such transactions fell off to a very noticeable extent. Some industries were embarrassed by the rapidly increasing costs of production and inability to secure a sufficient supply of labor. Money rates remained firm, the prevailing rate for commercial paper being 6 per cent. May.—The industries of the district were almost completely ad justed to a war basis. Retail trade was about 40 per cent ahead of last year. Business was hampered considerably by scarcity of many kinds of raw materials and the inadequate supply of competent labor. ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 53 The production of iron and steel was about 95 per cent of capacity. The economy campaign resulted in an easing in the food situation. Motor trucks came more and more into use as the congestion increased around the principal industrial centers of the district. Shipments between cities were made on regular schedules maintained by numer ous companies .operating trucks. A firm money market prevailed, 6 per cent being asked on both call and time loans. Borrowings by member banks were not as heavy as anticipated, and the third Lib erty loan was floated apparently without any undue strain on the money market. June.—General confidence in the business situation was denoted by the liberal advance buying throughout the district. Retail de mand for seasonable merchandise continued active, although the steady decrease in the variety of goods offered by the leading stores and the uniformly high prices caused a well-defined tendency toward economy. In all lines increasing difficulty was experienced in replen ishing supplies. The railroad freight-car movement improved greatly and coal moved more freely. The crops throughout the district were reported up to the average for the past 10 years. The building situa tion continued quiet, new construction being confined almost exclu sively to the erection of buildings for the Government or war indus tries. The money market remained firm at 6 per cent. Increased activity was noted in the sale of bonds and other securities. July.—Notwithstanding the shortage of supplies affecting prac tically all lines, marked activity in general business continued, the demand for most kinds of merchandise being greater than the supply. Midsummer influences were not very noticeable. Business at the South Jersey seashore resorts was quiet. Hotels which were normally crowded in July were not half filled, and the stores felt the effects of war-time economies. There was little inclination among the major ity of people to go away for any extended time. Many who formerly went to the seashore or mountain resorts for the better part of the summer remained in or about town. The shipyards and war indus tries in the vicinity of Philadelphia absorbed workmen from all points, and created a severe shortage of rentable property. The stringency was not relieved materially by new home construction, as building was still quiet. Difficulty in obtaining financial accommodation and high costs and scarcity of materials and labor continued to operate as restrictive factors in this industry, which was at the lowest mark for a decade. Prospects of early-sown crops faded somewhat owing to the prolonged dry weather, but the shading of estimates thus rendered necessary was not material. The rate for money ruled at 6 per cent. The market was freed from much unnecessary financing by the Capital Issues Committee and the banks responded to the war needs of the Government by curtailing their credits to nonessential industries. Business on the Philadelphia Stock Exchange was dull, although 54 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. there was continued absorption by investors of high-grade railroad securities. August.—General business throughout the district was back to substantially the maximum level of a year ago. The demand for goods necessary to the conduct of the war was sufficient to more than employ all available machinery and labor. The distribution of goods through the jobbers and retailers was satisfactory and collections were very good. The coal situation was more satisfactory mainly because the car supply showed improvement. The wool business was taken over by the Government. No wool was sold for civilian purposes, and all importation of foreign wools was suspended, except for Government use. The largest possible tonnage of iron and steel was being turned out, the July output of iron being better than for any similar month and the number of furnaces in blast the greatest ever known. Government financing and the requirements of business maintained an active demand for money. Rates throughout the district continued firm at 6 per cent for nearly all classes of loans. The large subscriptions of banks to United States certificates of indebtedness caused them to restrict credits wherever possible, and the tendency was to curtail accommodations to lines of business not necessary to public welfare or essential to the conduct of the war. Sentiment was helped by the announcement that the interest rate of the fourth Liberty loan would not be higher than that of the third loan, and increasing confidence in the security markets was noted. September.—Business conditions throughout the district continued favorable, trade in most lines surpassing last year’s records. Manu facturers in all important lines operated to the fullest extent permit ted by the available supplies of materials and labor. Retailers reported a steady demand for all kinds of staple commodities, but experienced difficulty in obtaining sufficient merchandise to meet the requirements of their customers. Retail distributors of women’s wearing apparel did a large business, the demand for high-class goods being greater than ever before. Wholesale dry-goods houses reported the receipt of large orders, but in some instances, actual sales ran behind those of last year owing to the physical impossibility of getting out orders, due to the deficiency in the supply of labor. The raw cotton market was unsettled by the price-fixing plans. Textile mills continued very busy. Money was still quoted at 6 per cent. Banks sought little or no paper from brokers and loans were scrutinized closely. October.—Efforts to increase the output of iron and steel plants and other industries which had large Government contracts caused improvement in both the number of hands employed and in the quan tity of production. Retail trade showed a large increase during the month up to the beginning of the influenza epidemic. Since that time the number of customers visiting the stores decreased about ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. 55 one-third and the volume of sales from 30 to 50 per cent, and working forces of all business concerns were affected very much; at times as many as one-third of the employees were unfit for duty. The epidemic also greatly affected the coal output, causing a decline in the production of anthracite of from 250,000 to 300,000 tons per week, some of the collieries being compelled to close. The scarcity of pig iron became more acute, there not being enough of any grade to take care of the demand. Results of the efforts to speed up pig iron production are reflected in the figures for September, which show a daily average of 113,942 tons, the highest in the history of the industry. Financial transactions were overshadowed by the Liberty loan campaign. The minimum rate for paper remained at 6 per cent. During the month Bradstreet’s report showed only 19 failures in the district, the lowest for a long time. November.—A more normal business situation resulted from the waning of the influenza epidemic. Retail trade improved wonder fully and merchants expressed the belief that the buying during the balance of the year would more than make up the loss caused by the epidemic. While there was a strongly defined tendency to mark time, with a view to determining the probable extent of readjust ment after the war, the consensus of opinion was that the period of readjustment would be relatively short, to be followed by an era of industrial activity. Overtime and Sunday work were abolished in war and shipbuilding industries. The situation with regard to supplies of fuel reflected considerable improvement, despite the loss in output occasioned by the influenza epidemic. There was a down ward tendency in cotton yarn prices while the Government was adjusting contracts. Some wool was released by the Govern ment for civilian use. Sentiment among builders was particularly optimistic, as they looked for a pronounced increase in activity with the removal of Government restrictions and the probable increased supply of labor that was expected to follow a curtailment of Govern ment construction. The prevailing rate for paper was 6 per cent, with banks buying very little. December.—The readjustment to peace conditions proceeded very rapidly and with much less disturbance to business than was generally expected, especially in industrial lines, where the principal effect of the ending of the war appeared to be reflected in the elimination of overtime work. Retail trade was exceptionally good, retailers of men's wearing apparel reporting business 25 per cent ahead of December, 1917. With the war over, the public believed there was no further need for stringent economy and felt free to purchase liberally all kinds of goods. Thousands of wage earners were released through the closing of munition plants, but no large surplus of unemployed was expected. The iron and steel and textile mills, 56 ANNUAL REPORT OF FEDERAL RESERVE BANK OF PHILADELPHIA. « 60 which, had been pushed to the utmost for the past few years on war work, experienced a let-up in the strain with the cancellation of war orders, the amount of accumulated civilian orders not bein large. The outlook, however, was considered bright. Dealers i automobile pleasure cars were very optimistic regarding the future. The money market in Philadelphia remained firm at 6 per cent. Public participation in the speculative markets was at a low ebb, owing to money restrictions and uncertainty regarding the readjust ment period and the future of the railroads. o
@FedFRASER