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MINUTES OF THE
EXECUTIVE COMMITTEE OF THE
FEDERAL ADVIiiOiiY COUNCIL
FEBRUARY 1/, , r 16
The Executive Committee met at the call of the
President in the Federal Reserve Board room at the Treasury
Department in Washington, L.C., February 14, IS16 , at
10:30 A M .
Present:
Messrs. Jiajnes B. Forgan, in the chair, I .L,
Rue, I. G. Wing, W. S. Rowe and Merritt H. Grim, secretary,
Mr. T J. Record, member of the Council from District No. 11
was also present.
I'r. Forgan stated that Mr. Morgan fus in Europe and
couxa not be present at the meeting.
Mr* Rowe suggested thc^t the minutes of the previous
meeting of the Feaeraj. Advisory Council should be corrected to
record the names of members voting against certain recommendatiors of the Council.
The Secretary was instructed to make
the corrections as indicated.
On notion of Mr. Rowe, seconded by Mr. Wing, the committee
voted to recommend to the Council that the first paragraph of
Article VI should be changed to read as follows:
"Regular meetings of the Federal Advisory Council shall
held in the City of Washington on the third Tuesday
’of the months of February, May, September and November
*of each year.
The Chairman laia before the Committee the Topics
submitted by the Federal Reserve Board for the consideration of
the Council in Mr. Delano’s letter of January 4, 1916,
(A co^y
of thebe to ies is hereto aprended and made a part of these
minutes.^
The Committee prepared tentative statements on topics
K o . 1 and No. 2 for submission to the Federal Advisory Council
and adjourned until 3 P M .
/
Secretary.
V
MINUTES OF THS
EXECUTIVE COMMITTEE OF
THE FEDERAL ADVISORY COUNCII
FEBRUARY 14,1916
Afternoon session.
The -^ixccutive Committee reconvened at 4 P M .
Present:
Messrs. James B* Forgan, in the chair,
I.L.
Rue, D. G. ving, W. S. Rowe, and Merritt H* Grim, secretary,
also Mr. T. J. Record.
The Fifth Topic was taken up for consideration and a
tentative statement on same was prepared for the Federal Ad
visory Council, after which the Committee adjourned until
Tuesday, the 15th, at 9 A. M.
Secretary.
MINUTES OF THT.
EXECUTIVE COMMITTEE OF
THE I'TOmAI ArVISORY COUKCII .
FEBRUARY 15 , 1516 .
The Executive Coiu,..ittee met ts agreed tt 9 A M.
February 15, 1916. in the Board room.
Present: Messrs, James B. Forgan, I. L. Rue,
D. G. Wing, V»'.
Ro*e and Llerritt H. Grim, Secretary.
The Executive Committee took up the remaining
topics .
A tentative statement on Topic No. 3 was prepared
for the Council and in connection with Topic No. 4 it was decided
that both Mr. Forgan and Mr. Wing should submit to the Council
the statements praparedby them on this topic.
£
The Committee then adjourned.
Secretary.
/
/
MINUTES OF
THE EIDER AX ATVISORY COUNCIL
FEBRUARY 15,1916
A statutory meeting of ths Federal Advisory Council was held
in the Federal Reserve Eoc*rd room at the Treasury department in
Washington, 1), C. , at 10 A M February 15, 1916.
*
The following accredi ted members were present:
Messrs.
I . ft. wing, ifederal Reserve listrict No. I
I. L. Hue, Federal Reserve listrict No. 3
>. S. Rowe, 1ederal Reserve Listrict tio. 4
J. . , Norwood, Federal Reserve District lvIc . b.
Charles A Lyerly, federal Reserve Listrict No. 6.
James B. Forgan, Federal Reserve District No. 7.
C. T. Jaffray, Federal Reserve District No. 9.
S. I. Swinney, Federal Reserve District No. 10.
T. J. Record, Federal Reserve District No. 11.
Herbert Fleishhacker . Federal Reserve District No.
Jerritt
. Grim, Secretary.
•
Absent:
Mr. J. P. Morgan, accredited member from Federal Reserve
District No. 2; also a representative frora 3'ederal Reserve district
No. 8, which had not elected its member for this year.
The Pr esident, IIr. James B. Forgan, called the meeting to
order. He stated that the meeting had been postponed from its
scheduled date, January 18th, because some of the Federal Reserve
Banks bad not elected their members of the Council at that time;
that Mr. J. P. Morgan was in Europe and could not be rresent and
that District No. 8, had net yet elected its member for this year.
IIr. Por^an ax^o stated tha^ the Executive Committee ‘ad in
structed the secretary to make two corrections in the minutes of
the last Council meeting, copies of which had been sent to members,
so that the names of members voting against certain recommendations
of the Council would be sc recorded.
On motion of Hr. Rue, sec
onded by Lir. Wing, the minutes of the previous meeting of the
council, November 16, 1915, were approved, subjcct to the correc
tions as oraered.
The Chairman stated the t the next business would be the
election of officers of the Council and an executive committee
for the ensuing year.
Mr. Lyerly nominated irr . James T . Forger as ^resident and
there being ro other nomination on motion of r.rr . Lyerly, seconded
by Mr. Fleishhacker , the secretary was instructed to cast the
unanimous ballot of the members preuent for Jr. James B. Forgan
President for the ensuing year, which the secretary did and
Hj . Forgan was declared elected.
!
MINUTES OF
THE FEDERAL ADVISORY COUNCIL.
FEBRUARY 15, 1916
Continued page 2.
Mr. Fleishhacker nominated Mr. L. L. Rue as Vice-President
and thire being no oth^r nomination on motion of Mr. Fleishhacker ,
seconded by Mr. Rowe, the secretary was instructed to cast the
unanimous ballot of the members present for Mr. Rue as Vice-Pres
ident for the ensuing year, which the secretary did and Mr. Rue
T3&.& declared elected.
Mr. Fleishhacker nominated lor the three elective members
of the Executive Committee, Messrs. D. G. V ing , J. P . Morgan
and W. 3. Ro.ve , and there being no other nominations on motion
of Mr. Fleishhacker , seconded by Mr. Lyerly, the secretary was in
structed to cast the unanimous ballot of the members present for
these gentlemen as members of the Executive Committee for the
ensuing year, which the secretary did and Hbsbtb. ?*'ing, 'organ and
Rov/e *vere declared elected.
The President then culled for the report of the secretary
for the past year ending December 31, 1915 , which was read to the
meeting ana on motion of Mr. Fleishhacker it was a^crroved and
ordered placed on file.
( A copy of the secretary's report is
hereto attached and made a part of these minutes. )
Ur. Rue moved the reappointment of Mr. Merritt :T* Grim as
secretary of the Council for the ensuing year at the same salary,
seconded by Mr. Fleishhacker ana carried.
Mr. Lyerly moved that an assessment of $150 be levied on each
of the twelve Federal reserve banks as was done last year to
pay the secretarial and incidental expenses for the year 1915 ,
motion seconded by Mr. Fleishhacker and unanimously carried.
The President laid before the Council the recommendation of the
Executive Committee that the first paragraph of Article VT of the
By-Laws should be so amended as to. make the first two statutory
meetings of the year occur in February and Kay instead of in Janu
ary and April, and on motion of Ur. Record the first paragraph
of Article VI. of the By-Laws was amended to read as follows:
’’Regular meetings of the Federal Advisory Council shall
"be held in the City of Washington on the third Tuesday of
’the months of February, May, September and November of
‘each year. 1
The President then laid before the Council the Topics sub
mitted by the Federal Reserve Board in Mr. Delano*s letter of
January 4, 1916, along with the tentative statements on them
prepared by the Executive Committee.
After careful consideration the Council prepared the follow
ing statements on the Topics to be submitted to the Federal
Reserve Board by the President at the joint conference at
3 PM.
TOPIC FIRST,
The Federal Reserve Board's discount policy.
In considering this
subject we would like to have the Council address itself particularly to the
phase of the subject as to how the discount policy can be handled to bring
about a contraction of loans by the banks of the country* A great deal
has been said on the subject of the Federal Reserve Board's duty in bring
ing about contraction of credit at this time, and so discourage inflation,
but no concrete suggestion has been offered as to how this should or could
be effected.
An s.
The large amount of lawful money released by the reduction in the
legal reserve requirements of the national banks, which became effective with
the inception of the Federal reserve system, followed by the accumulation of
gold resulting from the balance of trade turning so largely in favor of this
country has formed the basis, the cuase and the incentive for the large ex
pansion of loans that has taken place among the banks of the country*
By maintaining the rediscount rates of the Federal reserve banks
higher than the current open market rates for comnercial paper the Federal
Reserve Board has done all in its power to prevent the facilities of the
Federal reserve banks being used to help along this expansion, except through
their open market transactions.
It is difficult to see how the Federal
Reserve Board can do anything practical to bring about a contraction of
credit as long as the janks of the country continue to carry idle a large
surplus of reserve money*
When this surplus is absorbed a change may be
expected and the Federal reserve banks will proba >ly be called upon to re
discount more or less freely the lines of commercial paper which the member
banks are now buying on the open market at low and unprofitable rates simply
to keep their funds employed. The influence of the Federal Reserve
Board can then be used to advantage.
By maintaining the present rediscount
rates or if necessary oy raising them the Board will be able to prevent still
further expansion and the member banks will be induced to raise their rates
which will tend to check expansion and to reestablish normal money market
conditions*.
Until such time comes and these conditions prevail we know of
no practical way i which the Federal Reserve Board can bring about a con
traction of loans by the banks of the country,
tie submit herewith marked Exhibit "A" a statement showing in
millions the increase in the principal items of the resources and liabilities
of the national banks between December 31, 1914, and November 10, 1Sj.j,
taken from their consolidated statements as prepared by the Comptroller
of the Currency,
This statement shows the total excess reserves
of the national b^nks to have been $891,000,000 on November 10, 1915.
TOPIC SECOND.
Section 11 of the Federal Reserve Act gives the Board power,
"To add to the number of cities classified as rsserve and
central reserve cities," etc.
Under this authority, the Federal Reserve Board could name the
city in 'which each Federal Reserve Bank is located as a central reserve
city.
The immediate effect would be to increase the reservee of those
cities from fifteen to eighteen, percent, and at the same time cause &
transfer of reserves in those cities to the Federal reserve banks, both
of which objects are desirable, and more easily accomplished at a
period of easy money and excess reserves*
The Federal Reserve Board
would be glad to have a recommendation from the Council on this subject.
Ans.
In accordance with ths requirements of the Federal deserve
Act reserve deposits of all member banks must ultimately be ^ept with
the Federal reserve banks.
Thereafter balances carried with national
banks in reserve and central reserve cities will no longer count as legal
reserve.
When these conditions of the Act have been complied with the
banks located in cities so designated can no longer perform the functions
of legal reserve agents and the terms "reserve city*’ and "central reserve
city" will lose their present significance.
The object of requiring reserve and central reserve city
banks to carry larger legal reserves than banks located in other cities
and towns has been for the better protection of the reserve deposits of
the banks for which they have acted as legal reserve agents.
When they
cease to act in this capacity the chief reason for their carrying larger
reserves than banks located in other cities will be eliminated.
We know of no good reason why banks located in the same
cities with the Federal reserve banks should, in consequence of that
fact, be placed on the increased basis required of central reserve cities
in the matter of their legal reserves.
After all the reserve deposits of the member banks have been
turned into the Federal reserve banks the terms "reserve city" and
"central reserve city" as now applied will become misnomers.
It may
then become desirable to designated the twelve cities in which the Federal
reserve banks are located as the reserve cities for the country, but there
will be no reason why their member banks should carry larger reserves than
are required of thoss in the cities now known as reserve cities.
The
probabilities are that many of the cities now acting as reserve cities
when the member banks in thsm csase to act as legal reserve agents will
seek to have their designation as such cancelled in order to avail them
selves of the lower reserve requirements applicable to other cities,
some of which will then be similarly situated to them.
3
TOPIC SECOND
Continued
Before we received the analysis of the reserve city
situation furnished by the Federal Reserve Board we had had prepared
for us a list of the present reserve cities, of which there are 56
including the three central reserve cities.
As our list in addi
tion to giving the population of these cities also shows their bank
ing power as measured by the capitalization of their banks both national
and state and as reserve deposits of state banks carried by the national
banks in these cities will have some bearing on the legal reserve which
they should be required to carry we submit the list herewith as Exhibit
"B."
Accompanying this list there is also a list of cities of
approximately equal population and banking capacity which are not now
reserve cities and of which there are ninety.
This list also shows
their banking power as measured by the capitalization of their banks«
In our opinion when the banks in reserve cities lose their
privilege of acting as legal reserve agents they should be placed
on a parity as to their legal reserve requirements with the banks in
other cities of equal banking capacity. These cities were designated
reserve cities at the request and by the voluntary action of the national
banks located in them and when their privilege of acting as reserve
agents is withdrawn, it would seem that these banks should be entitled
to resume their former status. If there is to be in the future any
discrimination in regard to the legal reserves carried by the banks in
different cities, it cannot continue to be based as it has been on the
fact that banks in certain cities have been permitted to act as legal
reserve agents for other banks.
If such discrimination is necessary
or desirable at all it might be based on a combination of their indi
vidual population and banking capacity as shown by the capitalization of
their banks or it might be related to the aggregate amount of bank de
posits carried by the banks in them.
In order to ehow the lack of uniformity in the legal re
serve requirements of the state banks in the different states we have
had prepared and submit herewith a synopsis of most of the state laws
on the subject. Exhibit "C.M
The fact that member banks in these so-called reserve
cities have to compete with non-member banks not subject to Federal
regulations in regard to their legal reserve requirements should not
be overlooked.
TOPIC THIRD
Can the Federal Advisory Council offer any suggestion in the
direction of facilitating the provision* of the Act in respect to
carrying out clearing operntions!
The Federal Reserve Hoard has
felt that the subject of clearing w*ss intimately connected with the
question of reserves and that it was probably best not to press the
Eiaticr or insis-t on any mandatory rule until th<* rc•.serves shsould have
been paid in.
It is evident, hor/ever, that before the
year of 1910 is over the proportion of reserves withdrawn from other
depositaries and paid into the reserve banks will be so considerable
thst the aem>>nos on th* reserve b«nks to tnk‘i c«re of the collection
not only of checice but of many other items, will be insisted upon
by member banks.
Ana,
The collection or clearing intra-district and inter
district atiecks by the Federal reserve banks as contemplated by the
Federal .eserve Aet iorms a complicated and difficult problem,
•specially so, m the language of the *ct is not clear in regard to
some of the details of the subject.
m understand the executive oPiesrs of the banks nave
had tuony conferences among themselves and some with the federal
Reserve jaoarei in an effort te develop a system that will serve the
purpose contemplated by the Act, that they have had a tentative intra
district plan on trial fer some time and that they also have a univer
sal system tow under consideration.
ihe subject is one of vaet detail in connection with which
an offhand opinion given by this Council, the members of which are
not in touch with its details, would be of little constructive
value er assistance.
IMi therefore hesitate to offer any suggestions
and will confine ourselves to On expression of our opinion to the
effect that until the Federal reserve banks can undertake the collection
of checks for non-member banks as well as for member banks, they are
not in a position to develop a check collection system that will be
economically effective in connection with the banking business of the
country as a whole*
In order to be economically effective a cheek
collection system must, it seese to tie, be practically universal.
All banks handle outside checks promiscuously through their treneit depart
ments and an organization that can only handle a part of them, and that the
smaller part, ctn afford but little assistance economically or otherwise
in connection with the handling of them.
TOPIC FuURTH
At the lstet meeting of the Advisory Council, the Council
recommended a reduction in the proportion of capital stock which should be
paid in by member banks to the Feueral reserve banks, baeing its con
clusions largely upon the argument that Federal reserve banks ou^ht
not to be compelled to compete with member banks in periods of infla
tion.
It is obvious that the necessity of earning dividends
upon the capital of Federal reserve banks held by member banks may be
regarded from opposite points of view.
On the one hand, it may be
Topic Fourth Continued said that if the Federal reserve bank is compelled to earn six per cent on a con
siderable capital, it will bo compelled to invest not only all ite capital, but a
good share of its reserve deposits, in rediscounts or in investments bought in the
open market, and so compete ?ith its? member banks u.t a time Then it mi ;ht be wiser
to stay out of the market»
On the other hand, it may be urged that the greater
dividend the bank has to eu.rn, tho more willing it w i ll be to have interest rates
stiffly maintained*
This la tte r reasoning is in the mind of those who suggest
that the Federal reserve bank should have no capital, hence no dividend requirements
so that they can offe r mon^y to th e ir member banks at ver' low r^tes of interest, or
actively compete "ith member banks in the open market.
"ithout developing this
argument in exten3o, it icay bs seen that the effect of reducing capital stock might
rasily be to make competition -jrlth member banks more keen, rather than less keen.
It arrears fairly obvious to the roard that there is probably a golden mean between
the extreme3 of public opinion on this question, and we should be very glad to have
the opinion o:' the Advisory Council, based on calculations, of the proportion of
capital an;i reserves vhich should he invested^ in normal times, to earn expenses and
dividend requirement3 f and the proportion which should be held uninvested, or in such
' liquid form a3 to be readily convertible into cash or credit.
Ana*
Inasmuch as some of the membership in the Federal Advisory Council
havs changed since the last meeting the question of a reduction in the proportion
of capital stock which should be paid in by member banks to the Federal reserve banks
▼as taken up a^ain for discussion.
^e believe that no reduction in the present paid-in capital stock of
the Federal reserve banks should be made at the present time for the following reasons:
^e bog to say that inasmuch t3 the deposits in Federal reserve banks
r i ll be la rg ely increased in Tfay next, with a further increase next November,that the
| proportion of cap ital to deposits w i ll stead ily diminish, that i f any considerable
number o f state banks join the system, as is to be hoped, the proportion T i l l be s t i l l
further reduced.
One of the criticism s madd Then the b i l l Fas before Congress ras
that there vould be 12 units and that no one vould have su ffic ie n t capital to command
r rr.ipect and confidence abroad.
? - 0 disparity cf capital between each mederil reserve bank and 3ome
of the larger ~embor banks in each d is t r ic t is mir'<ad„
It is sonceivible that under the provisions of the Act in regard vT
! purchase of 2 % govenment bonds, the Federal reserve banks may, in the course of a
■ few years, have not
Nnly a l l of their capital invested in these bond3, but part, of the
reserves of member banks as ^ell.
If two-th!rds of the paid-in capital oe returned, a number of the
banks would have core than th ’ remaining capital in government bond3 at the end of the
first y»ar,
The calling of unpaid subscriptions in times of emergency yould un! doubtedly be unsettling, not on}y to the banks, but would create alarm to the countryy
at large*
Foreirn banks used to large capital in their government and incorporated
banks would regard the small capital under which the banks would be operating as a
distinct sign of weakness.
*"e do not regard the deferring of the payment of dividends as of
sufficient importance to warrant such action at this time, particularly as the system
is as yet in i t 3 infancy and has not been tested during a time of stress.
7e cannot undertake to estimate the proportion of capital and reserve
deroeits which 3hould be invested in normal times by the various Federal reserve
banks to earn their expenses and dividend requirements*
Such proportions would vary
with the varying conditions prevailing in the different districts and these conditions
are subject to const ant change.
It **oul therefore seem imrractical to attempt to
®ake any estimate of it.
(Messrs, C* T. Jaffray, F,« F. Swinney and J* - Forman voted in the negative )
In connection with thia topic two reports having been made by the Executive Committee
Mr, Rue moved that it ia the aenae of this meeting that the capital of the federal
reserve banks should net at this time be reduced and that a committee be appointed
consisting of Ur,
ng and Mr, Rewe to prepare a report on this subject in conformity
with the views as expressed by a majority of the members present and to report at
the afternoon meeting* Motion aeconded by I/r. Lyerly and passed*
I
At an adjounned meeting in the af'ernoon Mr,, ^ing submitted a report on this topic
and on motion duly sdoonded it was adopted. ( Mr, Swinney, Mr, Jaffr^yiand
Mr, Forgan voting in the negifcive, as a^ove indicated)
Mr, Jaffray than moved that
t^ose **ho voted in the minority be permitted to make a separate report to the Federal
reserve ^oard on this topic.
i/otion seconded by Mr. Swinney and carried.
The
minority r e p o H is as follows:
Topic Fourth:
At the last meeting of the Advisory Council the Qouncil recommend
ed a reluct ion in the proportion of capital stock which should o& paid in by member
m banka to the Federal reserve banks, basing ita concluaiona largely upon the argu| ment that Federal reserve banka ought not te be compelled to compete with mender
banks in periods of inflation*
It is obvious that the necessity of earning divi
dends upon the carital of Federal reserve banka held ~>y member banks ray oe regarded
from orpoiite points of view* On the one hand, it may be said that if tha Federal
rese^y© Pank is compelled to earn six per cent on a considerable capital, it will be
compelled to invest not only all its capital but a good share of its reserve deposits
in rediscounts or in investments bought in the open market, and so compete with ita
member banka at a time when it might be wiaer to atay out of the market.
On the other hand, it may be urged that the greater dividend the bank has to earn,
the more willing it will be to have interest rates stiffly maintained.
This latter
reasoning i3 in the mind of thoae w?"o suggest th*t the Federal reserve bank ehould
h*ve no capital, hence no dividend requirements, ao that they can offer money to
their member banka at very low rates of interest, or actively compete with member
banks in the onen market,
Without developing thi3 argument in extenso, it may be
•een thit the effect of reducing capital stock might easily be to make competition
with member banks more keen, rather than less keen,
It appears faily obwious to the
Board that there is probably a golden mean between the extremes of public opinion
on thia question, ar i we ahouli be very s-lad to have the opinion of the Adviaory
Council, based on calcul^tiona, of the proportion of capital and reaerve which
should be invested, in n o m a l times, to earn expenses and dividend requirements, and
the proportion which ehould be held uninvested or in 8uch liquid form as to be readily
convertible into caah or credit.
Ana.
The capitalization of the Federal reaerve banks ia intimately
related to the queation of how much of their reaourcea they a'rould keep invested
wder normal conditions or during a period of abnormally easy money such as exists
at the rresent.
The Federal Reaerve Act provides for a aix per c*nt cumulative
dividend on the carital employed and if thia dividend obligation ia to be met the
larger the paid-in capital the larger muat be the amount of inveatmenta carried and
the greater will be the tempt it ion to incr * 3 3 investment a when money rates are low
and p r o f it s correspondingly small.
Topic Fourth (Continued)
This dividend obligation and the temptation to meet it by adopting a
policy of expansion in times of easy money when the banking and commercial in
terests of the country c a ll for a policy ju3t the reverse are the reasons for the
recommendation we made at our last meeting for a reduction in the amount of the
paid in capital of the Federal Reserve banks.
As a pra c tica l illu s tr a tio n we would call your attention to the present
situation in connection with the Federal Reserve Bank of Chicago, ^e refer to
the situation there because the Chicago bank stands midway between these banks
which show substantial earnings in exce33 of their operating expenses during the
past year and those which show expenses greater than earnings: “'"ith a ca p ita l of
£ 6 ,646,000.
Resources of
65,226,000
and Investments, averaging
12,000,000
the Chicago bank is now earning *500, a day above its operating expenses, or about
2 - 3 / 4 per cent per annum on it3 present paid-in ca p ital,
^ere its capital reduced to one^third of its present amount a3 recom
mended, i t s e a r n i n g 3 would be a l i t t l e over eight per cent and a l l temptation to
further increase its investments during the present expansion and e a s y money
market would be removed, w h i l e if its member b a n k s continue to be liable for the
f u l l amount of their subscriptions and double l i a b i l i t y andl these subscriptions
are made p a y a b l e at the c a l l of the Federal Reserve Board when a n d as they deem
it necessary or desirable to increase the bank’ s paid-in c a p ita l, its inherent
strength w i l l not be impaired*
It couli then make a statement in regard to its capital a3 follows:
Capital paid in
Capital subscribed by ipember banks payable on c a l l o f the federal Reserve Board Total capital subscribed by members
1 1 f073.334.
13,288,000
Double l i a b i l i t y of member banks
Total cap ital r e sp o n sib ility - - - - - - - -
13f 288f000
26,576,000
1 2 ,214,666.
"’H a it seeos to us would sho-r & sufficiently strong capital!ration
for all jyracMcal purposes.
Ths bank would not only be ahle without further
c-yarsior. to ray the ?ix p©~ cent dividend on its stock tc its member banks
but the ^ov‘>rmrent would be in a po3ition to realize a substart ial ah Are cf
the rrofits whenever conditions arise calling for active rediscounting by
the member banks.
Wo regard It u most un lea irabie that the banka should! continue
to roll up a liability to tho member banks for unpaid dividends. Such a
condition ru st inevitably reflect on their standing not only with the pub
lic md th-' ' irka
of th- country but with fo^ei gn banks.
***he impression
■a'ill be created that the Feiera] reserve banks are a failure so far is
their ability tG earn dividends is concerned.
Te can therefore only
repeat our former recommendation that the paid-in eapital should be re
duced to oneiithi^d of the amount that baa already been called in, and
th it. the unpaid capital to the full amount of the member banks* subscrip
tions for it should be left payable on th** call of the Federal Reserve
Poard.
~'e c m n o t undertake tc estimate the proro^tion of capital ajnd.
reserve deposits which should be Invested in normal times by the various
Federal Reserve qanks to earn their expenaoo ard dividedn retjuJ rements.
Such proportion **ou3 d vary with the v a r y ir - conditions prevailing in the
d iffe r e n t districts and these conditions ire subject to const m t -ban -e.
I t ’fould t.herofore seerr iirpracticul to attempt to ''ike any eat i mat 3 of i t .
^ere tho paid-in capital reduced as we have raeowm ’ od *d the banks »ould
not baveto compote unduly with member banka In normal or abnormally easy
times for such purpose and the amount to be invested by each bank during
such periods migrht sa fe ly be l e f t to the discretion of the executive
o f f ic e r s and directors under the guidance and supervision of th- Federal
Reserve Board#
Topic Fifth:
At the September meeting o f the Council, it recommended to tho
*bderal rejnrve Board that the Federal re-jerv® binks should not establish
jo in t agonclea in foreign ltnds, but tha*. this fie ld should be kept oesn
for mer.b^r banks.
F ince "b it time the Foderal P.e/se ve loari haj canvassed
the subject through the Federal Reserve agent of each d is t r ic t with a view
to ascertaining whether the larger banks in the various d istric ts would be
v i l l i - r to join in the p-mership of branches in foreign countries.
Tho r*r ll^s to those, i n q u i r i e s a r e n o t
encouraging as h a s been hoped
t h e y >?ou]d be for it a r r e a r s that w h i l e for a n u m b n r of rood reasons it
s e e m s u n r l3e t h a t the Feleral Reserve ’anks s h o u l d underta ke thia business,
t b e ^ o is a g^reat deal of hesitation on t h e part of m o s t m e m b e r h a n k s to
undertake it t h e m s e l v e s . ** A few barks a p p e a r to s h o w a e p irit of enterprise
in tV •> m a t t e r and t h e ^oand b e l i e v e s tbit, un ?er any -urcumstances the door
TOPIC FIFTH
Continued
ought to be opened as wide a? possible and that Congress should
be urged to do all it can to offer to member banks, singly or com
bined, the opportunity of entering these foreign fields*
In this connection some questions have occurred to the Board
in considering this mat'er upon which it will be glad to have the
views of the Advisory Council.
These questions are:
(a) Should the proposed amendment provide that others than member
banks be permitted to be stockholders in these banks which are to
operate under Federal charters in foreigr countries!
Ans. To this we woulc answer ”Yee
Under proper restrictions***
If so, should there be a provision that a majority of the stock
be held by member banks!
Ans.
This we consider desirable but it might be impractical
inasmuch as the stock would be marketable und the control might change
at any tiae.
would however approve an amendment to Section 25 of
the Federal Keserve Act which has been submitted to us end which reeds
as follows:
"Amend Section 25 sc as to permit national banks n ith a
capital of not less than f l , 000,000 to become stockholders in either do
mestic or foreign corporations chartered and licensed to do banking busi
ness in foreign countries, provided however that the total liability incurred
by reason of said ownership of stock in foreign banks shall not exceed
10 % of the capital and surplus of taid bank."
(Vote unanimous.)
(b) Would it not be advisable to provide that there should not be a
double liability with respect to the stock holders in such banks, but
only a liability up to the authorized capital.
Ans• We see no necessity for a double liability but only a
liability up to the authorised capital.
(l!r. Record voted "No.* ).
(c)
What if any should be the reserve requirements of these foreign
banks! If they are to receive deposits in foreign countries it would
subject them to great hazard of fluctuation of exchange if against these
foreign deposits they are required to keep reserves in the United States.
Ans. From the publisheo statements of foreign banks doing busi
ness in South American countries we notice that they seem to carry much
larger cosh reserves than are legally required of banks under our Federal
Reserve system and probably American banks organized to do business there
would have to do likewise,
<*e therefore think that no regulations need
be made as to reserves against deposits received in foreign countries.
For any deposits they may receive in the Jnited States they should be sub
ject to the reserve requirements applicable to member banks under the
Federal Reserve A ct.
(Vole unanimous).
(d) Should these foreign banks be required to be members of the
Federal reserve system!
Ans. tfe think it might be -veil to require that these banks
should be members of the Federal reserve system in order that they may be
brought under the supervision of the Federal reserve board and thus b e ^
come a part of the banking system of the country.
It would also be
advantageous to them to have the privilege of rediscounting and otherwise
ro iic nFTH
C
ontinued.
doing business directly with the Federal reserve banks, but it might be
accessary to place special restrictions on their rediseounte. (Vote unanimous)
(e)
Should these foreign banks be permitted to invest & definite
percentage of their capital «nd surplus in holdings of foreign banks
operating under local charters!
Ann. Yes.
(fcr. Forgan, Jr. jflsishheoker, Ur* Swinnsy and
Itr. Record voted "Mo*")
(f)
what restrictions should be placed upon these foreign bonks
for their opt ration*? in the united States}
For instance - they mi&ht be
permitted to accept deposits only where these deposits are incidental te
transactions in foreign countries*
tn the other hand, it would appear
that they should be permitted to receive deposits jm don an a or on tjj-o
from other banks, particularly from those for which they will act as cor
respondents or agents in foreign countries.
Ans*
i*e would recommend that in the matter of receiving deposits
in the United States such banks should be restricted to such deposit* as
are incidental to transaction* in foreign countries.
(Vote unanimous)
(g)
houla these foreign bnnks be permitted to SdCipt and should
their "bankers * cc-ieptances1* be eligible for rediscount with the Federal
reserve banks?
Ans. If their acceptances are restricted to such as w^row out of
transactions involving the importation or exportation of goous" and other
wise conform to the requirements of the Federal ilesarve Act we see no reason
shy they should not be permitted to cake thee or ^hy they should net be
eligible for rediscount with or purchase by the Federal reserve bonks.
(Vote unanimous)
The question of the Comptroller's ruling in regard to
bsnks issuing cotw ercial letters of credit -ms informally discussed, it
bain*, decided to confer in formally with the Federal isserve board at the
joint conference i.a regard to this matter.
/he attention of the Federal Advisory Council was then
directed to the proposed amemitoeat to K.R. 15657, entitled an Act to
supplement existing laws against unlawful restraints and monopolies and for
other purposes, approved October 14, 1914.
ifee nmendment in the form of a
provision to be added to the second paragraph of Section 8 of seid **ct reacts
as follow*:
"And provided further that nothing in this Act shall prohibit any
officer, director, or employe of any member bank, or a Class A director of a
Federal reserve bank, from bein^ an officer, director or employe of ons or
core other banks, banking associations or trust oompeniee, whether organised
under the laws of the United States, or any State, if such other bank, bank
ing association, or trust company is not in substantial competition with such
member bank.
Nothing contained in this amendment shall impair the powers
delegated to the Federal Reserve Board in faction 11 of this Act, to prosecute
violations of the sn»e.**
MINUTES
FEDERAL ADVISORY COUNCIL
Feb. 15, 1916,
Concluded.
un motion it was unanimously resolved that this Council
approves of said proposed amendment and advises the Federal Reserve
Board to recommend and support the enactment into lav of the said
amendment at the present session of Congress.
(Motion by Mr. Fleishhacker, ssconded by Mr. Rue. )
The Council then adjourned until 3 P 11. at which time a
joint conference with the Federal Reserve Board had been arranged
for.
Secretary.
MINUTES
03? THE JOINT CONFERENCE
OF THE
FEDERAL RESERVE BOARD
AND
t h : federal advisory council.
Fe b r u a r y i6,
i ?16
a s cx.rr. ngod o joint meeting with the Federal Reserve
Boara was held in the Federal Reserve Board room in the
Treasury department at 3 ? M.
Present: Hon.. V7. G. McAdoo, Secretary of the Treasury,
Governor C. o. Hamlin, Vice-Governor F. A. Delano, Messrs.
W. P. G, Harding, P. M. Warburg, A. C. Miller, Secr3tary
H. Parker Wiilis and Assistant Secretary Sherman
Allen of ths
Federal Reserve Board , and •
Messrs. James B. Forgan, president, L.L*Rue, Vice-^residcnt, D . G. V/ing , VT. S. Rov/e, J. ». Norwood, Charles A. Lyerly,
C. T. Jaffray, 3. F. Swinney, T. J. Record, Herbert Fleishhacker
tnd Uerritt H. Grirr , Secretary, of the Federal Advisory
Council.
Hon. W. G. McAdoo called the meeting to orier and after
a fe c, ropriate remarks withdrew calling Governor Famlin
to the chair.
Governor Hamlin tYtr. asked Mr. Forgan as President of the
Federal Advisory Council to readhis report on the Topics submi ted tc the Council by the Federal Reserve Hoard.
M r . lorgan then r^ad the report of the Federal Advisory
Council after which the members present joined in a general
discussion of the topics and other matters tertaining tc the
Federal reserve system, including the ruling of the Comptroller
of the Currency in re&ara tc banks issuing commercial letters
of credit.
This iratter was informally left to the Federal
Reserve Board for adjustment.
The joint conference then adjourned.
Secretary.
Federal Advisory Council.
476.
Memorandum of Topics
Suggested for Consideration by the
Federal Advisory Council,
on
January 18th, 1916
First:
The Federal Reserve Board's discount policy.
In considering
this subject we would like to have the Council address itself par
ticularly to the phase of the subject as to how the discount policy
can be handled to bring about a ^contract ion of loansjby the banks of
the country.
A great deal has been said on tho subject of the Fed
eral Reserve Board's duty in bringing about contraction of credit at
this time, and so discourage inflation, but no concrete suggestion
has been offered as to how this should or could be effected.
Second:
Section 11 of the Federal Reserve Act gives the Board power,
"To add to the number of cities classified as reserve
and central reserve cities", etc*
Under this authority, the Federal Reserve Board could name the city
in which each Federal Reserve Bank is located as a central reserve
city.
The immediate effect would be increase the reserves of those
cities from fifteen to eighteen per cent, and at the same time cause
a transfer of reserves in those cities to the Federal Reserve Banks,
both of which objects are desirable, and more easily accomplished at
a period of easy money a,nd excess reserves.
The Federal Reserve
Board would be very glad to have a recommendation from tho Council
-
476.
2 -
on this subjoct.
Third:
Can the Federal Advisory Council offer any suggestion in the
direction of facilitating the provisions of the Act in respect to
carrying out clearing operations?
The Federal Reserve Board has
felt that the subjoct of clearing was intimately connected with
the question of reserves and that it was probably best not to
press the matter or insist on any mandatory rule until the reserves
should have been paid in.
It is evident, however, that before the
year of 1916 is over the proportion of reserves withdrawn from other
depositaries and paid into the Reserve Banks will be so considerable
that the demands on the Reserve Banks to take care of the collection,
not only of checks, but of many
other items, will be insisted
upon by member banks.
Fourth:
At the last meeting of the Advisory Council, the Council recom
mended a reduction in the proportion of capital stock which should be
paid in by member banks to the Federal Reserve Brinks} basing its
conclusions largely upon the argument that Federal Reserve Banks
ought not to be compelled to compete with member banks in periods
of inflation.
It is obvious that the necessity of earning dividends
upon the capital of Federal Reserve Banks held by member banks may be
regarded from opposite points of view.
On the one hand, it may be
said that if the Federal Reserve Bank is compelled to earn six per
476.
cent on a considerable capital, it will be compelled to invest not
only all its capital, but a good share of its reserve deposits, in
rediscounts or in investments bought in the open market, and sc
compete with its member banks at a time when it might be wiser to
stay out of the market.
On the other hand, it may be urged that
the greater dividend the bank has to earn, the more willing it
will be to have interest rates stiffly maintained.
This latter
reasoning is in the mind of those who suggest that the Federal Re
serve Bank should have no capital, hence no dividend requirements,
so that they can offer money to their member banks at very low
rates of interest, or actively compete with member banks in the
open market..
Without developing this argument in extenso, it may
be seen that the effect of reducing capital stock might easily be
to make competition with member banks more keen, rather than less
keen.
It appears fairly obvious to the Board that there is prob
ably a golden mean between the extremes of public opinion on this
question, and we should be very glad to have the opinion of the
Advisory Council, based on calculations, of the proportion of
capital and reserves which should be invested, in normal times,
to earn expenses and dividend requirements, and tho proportion
which should be held uninvested, or in such liquid form as to be
readily convertible into cash or credit.
Fifth:
At the September meeting
of the Council, it recoirmended to
the Federal Reserve Board that Federal Reserve Banks should not
establish joint agencies in foreign lands, but that this field
should be kept open for member banks.
Since that time the
Federal Reserve Board has canvassed the subject through the
Federal Reserve Agent of each District with a view to ascertain
ing whether the larger banks in the various Districts would be
willing to join in the ownership of branches in foreign countries.
The replies to these inquiries are not as encouraging as has
been hoped they would be for it appears that while for a number
of good reasons it seems unwise that the Federal Reserve Banks
should undertake this business, there is a great deal of hesita
tion on the part of most member banks to undertake it themselves.
A few banks appear to show a spirit of enterprise in
the matter and the Board believes that under any circumstances
the door ought to bo opened as wide as possible and that Congress
should be urged to do all it can to offer to member banks, singly
or combined, the opportunity of entering these foreign fields.
In this connection some questions have occurred to the
Board in considering this matter upon which it will be glad tc
have the views of the Advisory Council.
(a)
These questions are:
Should the proposed amendment provide that others than
member banks be permitted to be stockholders in these banks which
are to operate under Federal charters in foreign countries?
If
so, should there be a provision that a majority of the stock be
- 5 -
(b)
476.
Would it not be advisable to provide that there should
not be a double liability with respect to the stock holdings
in such banks, but only a liability up
(c)
to the authorized capital?
What, if any, should be the reserve requirements of
these foreign banks?
If they are to receive deposits in foreign
countries it would subject them to great hazard of fluctuation of
exchange if against these foreign deposits they are required to
keep reserves in the United States.
(d)
Should these foreign banks be required to be members
of the Federal Reserve System?
(e)
Should these foreign banks be permitted to invest a
definite percentage of their capital and surplus in holdings of
foreign banks operating under local charters?
(f)
What restrictions should be placed upon these foreign
banks for their operations in the United States?
For instance -
they might be permitted to accept deposits only where these de
posits are incidental to transactions in foreign countries.
On
the other hand, it would appear that they should be permitted to
receive deposits on demand or on time from other banks, particularly
from those for which they will act as correspondents or agents in
foreign countries.
(g)
Should these foreign banks be permitted to accept and
should their ’’bankers1 acceptances" be eligible for rediscount
with the Federal Reserve Banks?
- 6 -
Ths Federal Reserve Board would "be glad to have the
Advisory Council consider the whole subject and make any
suggestions as to these and any other questions involved.
1/4/16.
511.
Washington, D. C ., January 24, 1916,
ANALYSIS OF THE RESERVE CITY SITUATION.
First:
Under Clause
(e) of Section 11, of the Federal Reserve
Act, the Federal Reserve Board is authorized and empowered:
nTo add to the number of cities classified as
reserve and central reserve cities under exist
ing law in which national banking associations
are subject to the reserve requirements set forth
in Section twenty (should be 19) of this Act; or
to reclassify existing reserve and central reserve
cities or to terminate their designation as such."
Second:
The Reserve requirements at the end of thirty-six months
after the Banks were organized - i. e, until November 2, 1918,
will be as follows:
At the end of 36 months from the starting of the banks,
(ioe. November 2,. 1918) the member banks will have the option
of keeping the following percentages of their demand deposits
in the manner indicated, depending upon their location:
Ik)
Membe r
Bank
Located
In
Required
Minimum
In own
Vaults
Required
Minimum
Federal
Reserve
Bank
Vaults
(cl
Reserve
Which at
Option of
Member Bank
may be Kept
in Federal
Reserve
Bank or in
Own Vaults
(a)
h i
Total
Total of
(b) and (c) Reserves
Central )
Reserve )
Cities )
6%
7%
5%
12%
18%
Reserve )
Cities )
5%
6%
4%
10 Jo
15%
Country)
Cities )
&Towns )
4%
5%
3/o
af0
12%
511.
- 2 -
Third:
Under Section 19, of the Federal Reserve Act, which is
the Section making provision for ths payment of reserves into
the Federal Reserve Banks, the Banks in cities already known
as central reserve cities or hereafter so defined, are required
to pay in their reserve deposits at once, whereas, banks in
reserve cities and non-reserve cities are given three years in
which to transfer their reserves.
Fourth:
There are in the United States at the present time three
central reserve cities and fifty-e»© reserve cities.
G-rouping
these cities according to the twelve Federal Reserve Districts,
the list appears as follows:
List of Central Reserve and Reserve Cities, G-rouped by Districts
and According to Population,
DISTRICT No. 9:
DISTRICT No. 1:
(*) Boston
Population
670,585
(*) Minneapolis
St. Paul
Population
301,408
214,744
DISTRICT No. 2:
(*) New York City
Albany
4,766,883
100,253
DISTRICT No. 3:
(*)Philadelphia
1,549,008
DISTRICT No. 4:
(*)Cleveland
Pittsburgh
Cincinnati
Columbus
560,663
533,905
364,463
181,548
DISTRICT No. 10.
(*) Kansas City, Mo.
Kansas City,Kans.
Denver
Omaha
S.Omaha,Nebr.
St.Joseph,Mo.
Oklahoma C.ity
Wichita,Kans.
Pueblo,Colo.
Lincoln,Nebr.
Topeka,Kans.
Muskogee,Okla.
248,381
82,331
213,381
124,09 6
26,259
77,403
64,205
52,450
44,395
43,973
43,684
25,278
-3 -
-511-
DISTRICT No. 5:
DISTRICT No, 11 :
Baltimore
558,485
Washington
331,069
(*) Richmond
127,628
Charleston,S.C. 58,883
San Antonio
(*) Dallas
Houston
Ft. Worth.
Galveston
Waco
DISTRICT No. 6:
New Orleans
(*)Atlanta
Birmingham
Nashville
Savannah
Chattanooga
96,614
92,104
78,800
73,312
36,981
26,425
DISTRICT No. 12 :
339,075
154,389
132,685
110,364
65, 064
44,604
(*) San Francisco 416,912
Los Angeles
319,198
Seattle
237,194
Portland
207,214
Spokane
104,402
Salt Lake City 92,777
Tacoma
82,972
DISTRICT No. 7 :
(*) Chicago
2,185,283
Detroit
465,766
Milwaukee
373,857
Indianapolis 233,650
Des Moines
86,368
Sioux City,Ia. 47,828
Dubuque
38,494
Cedar Rapids 32,811
DISTRICT Hu. 8:
(*) St. Louis
Louisville
687,029
223,928
Federal Reserve Cities marked with (*)
Fifth:
In order to study the reserve situation from the standpoint
given under the law, a list of cities having a population of 100,000
or more, in each District, is herein shown, also, a list of cities
having 50,000, but less than 100,000,
It will be noticed that there
are fifty cities in the United States having a population of more than
100.000, and fifty-four cities having more than 50,000, but less than
100.000.
For the convenience of the student of this question these
cities are grouped by Federal Reserve Districts.
(See nxhibit A )
EXHIBIT,
a
LIST OF CITIES IN UNITED STATES
HAVING A POPULATION CF OVER
ONE HUNDRED THOUSAND
Classified as to Federal Reserve Districts
nTSTRICT NO. 1:
(*)
Boston, Hass.
Providence,R *I .
Worcester, Mass.
New Haven,Conn.
Fall River, Mass
Lowell, Mass.
Cambridge, M a s s ,
Bridgeport, Conn
DISTRICT NO. 7;
670,585
224 ,326
145,986
133,605
119 ,2 95
106,2 94
104,839
1C2,054
(*)
Chicago,111
Detroit,Mi ch .
Milwaukee,W i s .
Indianapolis,Ind.
Grand Rapids , Mich
DTSTPTCT NO. 8 :
(*)
DISTRICT NO. 2 :
(*)
New York City
Buffalo, N.Y.
Newark,N .J .
Jersey City,N . J .
Roche ster,N .Y .
Syracuse,N .Y .
Paterson, N.J.
Albany,N .Y .
766,883
423,715
347,469
267,779
218,149
137,249
125,600
100,253
Philadelphia,Pa.
Scranton,Pa.
St. Louis, Mo.
Louisville, K y .
Memphis,Tenn.
(*)
Minneapolis,Minn.
St,Paul,Minn.
301,408
214 ,744
DISTRICT NO. 10;
Kansas City,Mo.
Denv-er , Colo .
Omaha, Nebr.
1,549,008
129,687
687,029
223 ,928
131,105
DISTRICT NO. 9:
DISTRICT NO. 3 :
(*)
2,185,283
465,776
373,857
233 ,650
112,571
248,381
213 ,381
124,096
DISTRICT NO. 11:
DISTRICT NO. 4 :
DISTRICT MO. 12:
(+)
Cleveland,Ohio
Pi 11sburgh,P a .
Cincinnati,Ohio
Columbus,Ohio
Toledo,Ohio
Dayton, Ohio
56 0,663
533,705
364,463
181,548
168,497
116,577
(*) San Franc isco,Cal.
Los Angeles, Cal.
Seattle, Wash.
Portland, Ore.
Oakland, Cal.
Spokane, Wash.
416,912
319,198
237,194
207,214
150,174
104,402
DISTRICT MO. 5 :
' )
Baltimore, M d .
Washington, D.C.
Richmond, Va.
558,485
331,069
127,628
This list totals 50 Cities.
Note:
-IU~STRTflT Nr;, fi;
(*)
New Orleans,La,
Atlanta,Ga.
Birmingham, Ala.
Nashville, Tenn.
339,075
154,879
13 2,685
110,364
Federal Reserve Cities
are marked with (*).
A)
(Sheet No.2 )
(Exhibit
LIST OF CITIES IN UNITED STATES
HAVING A POPULATION OF OVER
FIFTY THOUSAND
BUT LESS THAN ONE HUNDRED THOUSAND
Classified as to Federal Reserve Districts.
nTRTRTCT NO. 1:
Hartford, Conn.
New Bedford, Mass.
Lynn, Mass.
Springfield, Mass.
Lawrence, Mass.
Manchester, N.H.
Portland , M e ,
Holyoke, Mass.
Brockton, Mass.
Pawtucket, R.I.
DISTRICT NO. 6:
98,915
96,652
89,336
88 ,926
85,892
70,063
58,571
57,730
56,878
51,622
Savannah,G a .
Jacksonville, Fla.
Mobile , Ala.
DISTRICT NO. 7:
Des Moines, l a ,
Peoria, 111.
Ft. Wayne, Ind.
Terre Haute, Ind.
South Bend, Ind.
SpringfieId, 111,
Saginaw, Mich,
DISTRICT NO. 2:
Yonkers, N .Y .
Troy, N .Y .
Utica, N.Y.
Elizabeth, N.J.
Hoboken, N.J.
Bayonne, N.J.
Passiac, N.J.
79,803
76,813
74,419
73,409
70,324
55,545
54,773
65,064
57,699
51,521
86,368
66,95 0
63,933
58,157
53 ,684
51, 677
50,510
DISTRICT NO. 8:
Evansville, Ind.
69 ,647
DISTRICT NO. 9:
Duluth, Minn.
78 ,466
DISTRICT NO. 3:
DISTRICT NO. 10:
Trenton,N .J .
Reading, Pa.
Camden, N.J.
Wilkes Barre,Pa.
Harrisburg, Pa.
Johnstown, Pa.
Altcona, Pa.
Allentown, Pa.
96,815
96,071
94,538
67,105
64,186
55,484
52 ,127
51,913
DISTRICT NO. 4:
Youngstown, 0.
Akron, 0.
Erie, Pa.
Covington, K y .
Canton, 0.
79.066
69.067
66 ,525
53 ,270
50,217
Kansas City, Kas.
St. Joseph, Llo.
Oklahoma City, Okla.
Wichita, Kas.
82 ,331
77,403
64,205
52 ,450
DISTRICT NO. 11:
San Antonio, Tex.
(*) Dallas, Tex.
Houston, Tex.
Ft. Worth, Tex.
96,614
92,104
78,810
73 ,312
DISTRICT NO. 12:
Salt Lake City, Utah
Taccma, Wash.
92,777
83,743
DISTRICT MO. 5:
Norfolk, Va.
Charleston, S .C .
This list totals 54 Cities
67,452
58 ,833
Note:
Federal Reserve City marked (*)
S ix tK :
-6 -
-5 1 1 -
The question naturally arises, whether this problem
1
of greater reserves in certain banks than in others should be ap
proached,
(•-)
From the standpoint of the population
of the city, on the theory that the banks in
cities of considerable population are more vul
nerable, e. g. liable to a run, than banks in
country districts;
i
(b)
Based on the theory of the size of the bank,
banks with large deposits being more vulnerable
than banks of smaller deposits; or
5c)
Based on the theory that different reserves
should be kept against different classes of deposits.
For instance, one basis of reserves against individual
deposits, and a higher percentage against bank deposits.
If we proceed on the population theory, we can go ahead
under the Act as it is •
or we can even combine the population
theory with that of geographical location, with that cf distance
and relations of the Federal Reserve Bank as a convenient agency.
If, however, we proceed under proposals (b) or (c), we must ask for
an amendment to the Federal Reserve Act,
It may be said with a
good deal of justice that it is unfair to apply a different rule
of reserves to a small bank in the suburbs of a large city, which
is, to all intents and purposes, a country bank , than applies to
a country bank a few miles further away.
However, this is an in
justice which might be remedied by giving the large city banks the
right to operate branches in the same city.
If some intelligent solution of this problem is not
found, complaint will certainly be made by banks in central reserve
cities that they are required to maintain reserves on a basis of say
18% while given no privileges under the Act ( after the three year
period) which do not apply to banks in smaller cities.
The
result is certain to be that pressure will undoubtedly come
to reduce
reserve requirements down to the fifteen per cent
or even to the twelve per cent level.
Already banks in non
reserve cities are asking to have their reserves reduced to
nine per cent.
Seventh:
In order to show the effect on Federal Reserve Banks of
giving Federal Reserve Cities the designation of Central Re
serve Cities as proved in Section 11 of the Act, a table has
been prepared showing the ratio to capital and available re
serve deposits.
This table shows that in New York this ratio
is . 9 per cent whereas in the three Southern Districts, ex
cluding special Government deposits of $5,000,000 each, it
varies from 31.9 to 34.4 per cent.
In order to show what
the effect would be of requiring banks in these Federal Re
serve Cities to carry IS per cent reserves instead of 15 per
cent reserves, all of which should be paid in at once, an
other table has been prepared to show the results of this
designation.
(See Exhibit B
In the case of the Minneapolis District, on account of
the close proximity and great competition
existing between
St. Paul and Minneapolis banks, both of these cities have
been treated as Central Reserve Cities.
' ' 0
STATEMENT OF
COITAL and RESERVE DEPOSITS
-alsoPERCENTAGE OF CAPITAL TO THE COMBINED AMOUNTS OF
CAPITAL AND 65 $ OF RESERVE DEPOSITS
(Figures as of December 1,1915)
(In thousands of dollars)
iFedsral
|Roserve
Bank of
Paid-in
Capital
BOSTON
5,171
27,252
17,714
22,885
22.2
11,061
. 171,144
111,244
122>305
9*0
PHILADELPHIA
5,270
23 , 72 s
15,423
20,693
25*5
CLEVELAND
5,931
2U,U36
15,SS3
21,814
27.2
RICHMOND
3,35^
( a ) 15,149
( b ) 10,149
9,347
6,597
13,201
25 . 4
9,951
33-7
NE7 YORK
Reserve
Deposits
65 Porcent Paid-in c a p ita l Percentage of ca p ita l
Reserve
plus 65$ of Re to sum of Capital and
Deposits serve Deposits 65^ o f Reserve Deposits.
ATLANTA
2 ,U2l
( a ) 12,100
(b) 7,100
7,865
4,615
10,286
7,036
23<5
34.4
CHICAGO
6 ,6 4 i
52,545
34,154
Uo,795
16.3
ST.LOUIS
2,7 so
12,502
8,126
10,906
25.5
uin:teapolis
2,497
13,557
8,812
11,309
22*1
KANSAS CITY
3 , 03c
13,632
8,900
11,930
25 .4
3ALUS
2,756
( a )l4 ,0 5 3
(b) 9,053
9,135
5,585
11,891
8 ,6 4 l
23*2
17,331
11,265
15,207
25.9
( 3 ) 397, 48 9 : 258 , 36s
( ^ 322 , 4:9 24S,61S
303^72
313.222
17-5
13.1
SAN FRANCISCO 3-„9'42
54,354
;total
f1*-3'
(a) incluiiVD 0: $5 , J00,000 of G-overnnont Funds,
(b) Exclusive of $5,000,000 of Government Funds.
V isio n , Rsports & S t a t i s t i c s ,
1/25/16.
31.9
*
V
.*V
FEDERAL RESERVE DEPOSITS OF NATIONAL BANKS LOCATED IN THE NINE FEDERAL .RESERVE CITIES NAMED, AND ST. PAUL;
ALSO ADDITIONAL RESERVE DEPOSITS REQUIRED IN CASE THESE CITIES ARE MADE CENTRAL RESERVE CITIES.
(Figures in thousands of dollara taken from Comptroller's report for November 10, 1915)
Net Amount
on which
reserve is
computed.
Due from Federal
Reserve> Bank.
Nov. 10, 1915(a)
Per ct. Amount
Reserve
required after
Nov. 16. 1915
Per ct.
Amount
Reserve required
if the cities
named were made
Central Reserve
Cities
Amount
Per ct.
Excess
over amount held
on Nov. 10.1915(a)
Per ct.
Amount
Excess over amount
required after
Nov. 16. 1915.
Per ct.
Amount
BOSTON
313,195
2.95
99,253
4
12,528
7
21,924
4.05
12,671
3
9,396
PHILADELPHIA
363,144
3.50
12,713
4
14,526
7
25,420
3.50
12,707
3
10,894
CLEVELAND
88,778
3.16
2,801
4
3,551
7
6,214
3.84
3,413
3
2,663
RICHMOND
.31,848
3.23
1,027
4
1,274
7
2,229
3.77
1,201
3
955
ATLANTA
23* 659
4,58
1,084
4
946
7
1,656
2.42
572
3
710
ST. PAUL
MINNEAPOLIS
68,749
82,175
2.52
2,66
1,733
.2,188
4
4
2y750
3,287
7
7
4,812
5,752
4.48
4.34
3,079
3,564
3
3
2,062
2,465
KANSAS CITY
84,377
3.55
2,994
4
3,375
7
5,906
3.45
2,912
3
2,531
DALLAS
24,152
3.34
806
4
966
7
1,631
3.66
885
3
725
142,084
2.69
3,827
4
5,683
7
9,946
4.31
6,119
3
4,263
TOTAL
For nine F. R.
Cities and St.
Paul.
1,222,, 161
3.14
38,426
4
48,886
7
85,550
3.86
47,124
3
36,664
SAN FRANCISCO
(a )
As shown "by C o m p t r o lle r * s r e p o r t .
Keport of Secretary Federal Advisory Council
fo r year 1915
January 30, 1915
Received from 12 Federal Reserve Banks $150 each,
Disbursements:
Expenses attending four meetings of the Federal Advisory
Council in Washington, three meetings of the Executive
Committee in Washington and one meeting of the Executive
Committee in Hew York as follows
Date
1915
R R Fare
berths
Hotel
meals
isols.
Total
Jcn.18-20
457.
#26.10
$7.50
$90.60
Apr.19-20
51.
26.70
8.80
86.50
Sep.20*21
68.25
28.35
8.22
104.:::2
;Jov .15-16
51.
22.56
C.21
79.76
$103.70
#30.73
J361.6C
Total
#227.25
Total traveling expenses
Stenographers
Stationery, leather case, postage, etc.
Salary 12 month*
Balance in bank, First national, Chicago,
December 31, 1915
"
*
---- &P¥f2—
Vi ? Foder »'
}ioard*». di ;cunt ulioy
la cows 14$r I n t i x&
uuojact to would Jika t<
.y« th- Council .*ddr**» itself j.trtisuXar .y to th*
h.-i of k> n eu.Jt.jt
? tc her- th dJ ;icuat foXiey *um U» fc*adl*i< te bri»&
,ov*‘ ... Qv *-r Lion ol’ ic^ns ^ tr . v-.„;>*» of th- country.
A great 6su
h .fc i.-vii- *..■«.Id on the subject of th*.- F*d*r*l E*s*rwe Board** duty in brin*/■i . o u t contraction of credit at thi® ti^t, and so d i s c c u * i n f l a t i o n ,
luI r w je.neret-’ su.:-;pestles K. « tee.. of 1 »r edas tc- bow this ob>uid or could
Cc ''if JCtlid .
i
.
h» Xarge cu ount
x:■-v*Ji K-.v.snta «i
rv
of lawful aenty released oy the reduction An t.o
th* national o»nkS* vhleh *•**&* * f ytiw-3 wiU
. -it r
r e ; . - if ■»
. fe ll*
I?.* u c * v - ..tio»
1'
g o l i ’ ■*v*»u 1 1 i r . f r o r . t h s t a L n a # o f t r & d * t u r n i n g 0 0 l a r & e l y i n f u v c r o f t h i s
c o u n t r y h. s l o r ? *d t h a I x s i s , t h e cat* ** .*no th*- i n c e n t i T * f o r t h * I »rg* * x ~
■
-y «saintainin*
th* red iscou n t ratee of th? . *d*r *1 r e «-nr** tanks
higher tj . n f: e current *j *n market r a te s fo r co. a-nrcia) paf.er th r*dleruX
Pa
:•:* Bo • .'■• Icr..- .11
i t . j, -^vr ti ->r-; v'-nt th-. ‘ 3ii.it is * of i f
Federal rstarve banks b*iag ***4 to h*Xp along thii *aipiilHli*a» *a*ept through
th i i oj #n
*1 k t trnitsastioas.
It it < iff icult to set hot. th# F*d**r *A
tv* Bo.»r-- c r, do a*jythlR& pra® : m l to brino ?*liout ■» contraction 01
ti
-,
L"
t ' ' ,
... ..:
‘. C -....! }\
.u,
r.
-.a
Vf --c
>y.
v"r.3.-i ii -
.h* ,» rtd r e s 'v . r v t 0 ^ . ' . ' * • ]
o r-- . r 1 a s f r s c i y thf» l i n e a o f
0
tu y ir .
: n th* *.j-*n ir - ^ r k e t
t
<1.: ! 0 o -. •
l . "...
:
tc ^ aj l sir fundi- *ps{ l*y*4«
10,
r
ui
;
:
iz
.. "
..
or
3
■
;
.
e o s o ^ t ry
^
1,
The inf luen*f» of th* F »d*r< i Re
.»'v .ntUi.y.
ty
it;
. r o t iiiu l^ t u -• ^ v u ;. o*1 ictfvi \> }.io k t?
itn-»ab»r
0.0
ur-. r o f iA *.1
< ■•■..•» # i
ly
r a is in g
K; iint-»
th * » th «
;
rv*
■ j;
i-
Bo4*i'd w i l l b e « .b l* t o
.it
|i r * * » n t * # 1 X 1
.
which will t e n d t s * fe * a k © x ^ n o i o n a n d t c r e s o t t i i l i s h nor»«*X r?o n « y p ^ a rk s t
•jo.5*i . t i on. .
lin t
c-, 5? t i r e -?oi. •*. a r d t ) .--as •cc*ftd i l i o n s «<r a v a i " w* k«or« o f
r o • r \ 3 t i 3 uX
t r 1?
c f 1c
i r . ♦ '^ ic ) - t h ^ F ^ d * r .<X R * a e r v e Bo r d
t ) % ta K g r , f th w c o u n t r y -
•’A.
or
lio n *
•
th e ia s r a a M i
of thi CMrronci
of
th s
L r.'n ,-
...oout a c c n
ti 1 j>
n*>tio m *X
t lp a l
■- .= 'b * r
.i*ri
-
”
i-
■ "''
i t e m s o f t h y r < j* o u r o « » a n d
B X , 1 9 1 4 , a n d llcw e.t b * r 1 0 ,
lia b ilit ie s
XMlbt
.
..
. ) : ■ < ...
If •
' .. us , vi-v i
T ) i i * otatna^nt s h o w * th#' t o t a l a x e * * * r * * * r w * »
I •:
*
,C 0 C ,C .;UC
!'• M o vem ber
10*
1915
;
Second:
Section 11 of the Federal Reserve Act ^ives the Bo^jd power,
"To add tc tha nuwber of cities classified a® reservs
and c e n t r a l r e s e r v e c i t i e s , M etc.
Un er this authority, the Federal Reserve Boarc. could naffia the city in
1b ioc .ted -*e a central feservo city.
diutt
ff ect % oui
.Inore
x e,.-irve a cf those cities
free fifteen to sightee* per cent, and at the save tiae cause a trans,er f re;-.~r- -s j.r these citiet: tc the federal reserve b^nks, both
•.fcicr
.a c h Federal Reserve Bar
..xj/ ocject- :■>ro ua3.,.r» J
nd n or
period of easy ’oney and excess reserves*
eily *.ccoi?n llshed at a
Th® Federal Reserve
Board ¥Ould be glad to have a recottanendation fro& the Council on
t; L:
U jsct*
In accordance with the requirement® of the Federal Heserve
Act r e s e r v e
deposits
the F e d e r a l
reserve banks.
bankt
?n
reaerve and
reserve.
bank
’’’h e n
located
of
> ill
conditions
cities
v .rry
t o i n s habanks
serves
lur^sr
le^al
teen for
for
to act
object
the
th r.
titi^
of
•r t
iv.\.ej
■.ill t
A .
:■
,d
he
-ir
ir a l l
id
been
nation
ccuov as le^ai
cor i li e c w i t h the
th?
fuijcti-_rui
Jity" anc
''central r e s e r v e
centra’
reserve city banks
cities ind
significance•
protection
chirf
r
other
^ o 6 ood
th
longer
nc
located
of
in oth e r
the r e s e r v e
ac te d as le^al r eserve agent
in
be ke^-t w i t h
carried with
longer perform
tens* "reserve
r
*son for
their
cities T ill
rson w h y
r ir.h f.h,s ^ a d e r a l r e s e r v e b u n k s
: i th .. i n c r
e
/.f
turns
better
b .riks l o c a t e d
t.
Act have
car. n o
reserves than hanks
c a p a c i t y tl
'e k n o w cf
of t h e
of r e q u i r i n g r e s e r v e
h i oh t h e y ha v e
thi
balances
.itiee w i l l n o
so d e s i g n - t e d
Io k * their present
Th©
it:
Thereafter
central reserve
these
in
a l l xoa,t^»r b u n k o ;r.juet u l t i m a t e l y
r e s e r v e a g e n t s and the
city**
tc
of
t
d o , o s i t a of t h e
.
ceaae
larger r e
be eliminated.
banka located
should,
‘‘"'hen t h e y
mrryinj
in
in
th e aa^e
c o n s e q u e n c e of t h a t
of c ;■
/ • ■ v"'j jJ.t:',.-;
reserves.
r s n e r ’’ ; detoi i t s
Federal reserve
of
t-\inkr t h e t e r s s
a ember
*'r •>s e r v e
L-aiiks h a v e
been
c i t y ” and
tl re erve c it y ” as b o w applied w ill become ttisnon&rs.
It m a y
h; :<irr.bl* to dheignat® the t. elve c i t i e s in which the F e d e r a l
, k
located
i t
r • e r v e c i t i e s fc, tl
country, jut t h e r e
r
c.- -••'} y t h e i r • t r ie r h a n k s should c^rry l&r&tr reserves t h a n
«lred of ,h©fco i;» th. c i t i e s no, . nov n
re'itfrve ciiir ti.
The
ii it;
r :r
, y 1 v
U ,jr.. n
iCtin
:' ^ :»rve c it ie s
.gents w i l l
•
tc .
th^ir deai^natiesi as such cancelled in crciei to ^vaii the»•-••eiv.. . of
lower reserve requirentente a:.; l i e .-bl?:-- to other c i t i e s , soce
cf v dch i l l then -c s i i i l t r l y situated t th-:
E ffo rt.
rectsivaa the aualyele o f th** r « » e rve city
situ tica furnished wy th» Federal ti#nerve fcc^iu we had hud prepared
for ..- u list o f the ^ reseat reserve aitiue, o f hniem there w * i>6
ir;iuuin tl t.;.rt*
ri^arva ^itiea.
As o u r listin awii~
1 ic n
-v .
th ®
o v u la t io n
oi
ti
»oe s i t i e e
a le o
& © «»
f c h o ir
t u a fc ~
a
..*>
ti . sajpitall s*tIon of Ihfii faenke ooth national
-nv
h.t;
i r torva uw^oeite of ,>t.-t« w u k # a^rried by the r^ticnuj.
L-.aikj in th
jiiioe *111 h«*ve *01,.- oa iln*; on th© legal reserve whiah
.
_ :r i
1*
.....-..I-., tht iiet i- . t . *ith -j r*i*io it
Aaet■■•■.. M a y i o ^ thie liet a - tv i»
litrt of cioiee 01
approximately e^u^l fQpulution ar*<..a *. m i n i n g 3a;*aity
ioh are not r.o-v
r e s e r v e 3 i ' i i - Q j .cid o f « r h io h t h 10
n in e t y .
Vhie list aide ehove
their . .^hir . j power «.# laeajurvd »y the 3 *.: italixation of their ban*e.
In our opinion when tha cank.3 j.n reserve o i t i e e l o e e
tu e ir
:-i* lle ,>
f x 3 t i n tc ..a le ,u. r« ;arve .- .•.ntt they s h o u l d oe r laded
on b purity - 3 tc thwir le ^ a i re .erva requxreaanta with t h e Minus in
ot"
- ‘ 0 ,uai bankin.- 3 ** .*0 i t y .
’-he••*.•- ji t i e ;* were a e s i ^ u t e a
n*
;; vg
l.~r ■. i 0 3
.... i
...i ;
. th j
;?
i"
:.r ti /u and
.
;
t o rt 3 ur c; t h i i r
d . - . . . . ....
re ^ u e e ..
.?n,
it
Xomter
.
••
-.v
•v o x u n W rv
lu s t ie r
of
th #
n u t iv n u j
?hen t h o - i r ;i ivile ,© of aotin*. aa reserve
*. e u l c
. -e
o th .
t
th
status.
r-: ,, . t •
t.
If
l «.
h
t h iv e
there
banka
la t o
s h o u ld
he
in
.»t .i : v t to 3 --i r i e d
be
the
E n t it le d
any
o a n K o i*
future
;/ t h t
di-f» rent cities, it ounr.ot continue tc he u.
it hae ceen on the
feet that hunks in oertain oities hiWl bean permitted to act u# legal
r«6f. .
Ter 0thHr
•*
If M •
M
tioa is neseseary
blw at * U
Bl^ht he baeed 011 a aoaiolnwticn of their indi~
vldu&l C[ uiuti' :* und *ankin^ capacity ao ei oeri by the oatituliiatUn 0*
theii .-.iike er i - i.ic_ht oe relatei to the ^^e^at« an aunt of Dank depceitsi carried by the canke in them.
01
er to show the la ok of u iforr?lty in the le al reeerwe ieo.u5.reJ'-entv 01 tho et^tt? b a n ’
^e in tiw t iiferent et»t»B w.i ir tTi
hac
r -,; ..* .vu an;' Jui.viit . re?;ith a eynoj ole o£ rest c f the etat^ lav 3 on
th : Luojjst.
. ju i oit *D^.
•; ;^c.
,' -v£» ber l-^nKti in th*: t joe. li«o r> •;;!V6
oitifi® .iav*
’.
■
• ;.o ..-a .:t i *it i ren-ise cer ^unke not euoject to f;atr-x
re^ul^licne in rcy ru to their le^al r^.:-trve result .-.Renta moulu not
be ovtjrlooknu.
fifth
At th* S * p t e » b * r m e e t i n g of
f-josr:
**
ale3
Joint
01 er for
in f o r e i g n
thy
e
ould
land*,
«ut t h a t
join
T h e rej l i e s
hoped
Counoil,
it r * c o n ? « n d * d to th*
9 i ' . b.jiks s h o u l d
:i n o e t h u -
oe w i l l i n g to
ts h:i« i ^ e n
th*
.•
subject
ij»r .a.inin<
far ii ;,n sour.tr ie*>.
■.iging
that
.•s a b a r b ^ n k & .
ha* canvassed
Districts
.i :
this fiwld
tU®
n o t est,dsli.,i
should
thy F e d e r a l
be kep t
R eaerve Board
Umi F e d e r a l B e s e r v e A g e n t of e a c h D i e i.t th^r th< lux ^ar u ^ n k e i n tlvc Vc.r
01
in th*> o w n e r s h i p
to t h e n #
t h e y ’srould b e f o r
inquiries
o r a n o h * * in
~rts n o t
,u e n c o u r -
it app*aris t h a t w h i l e f o r a
nui b » r of g o o d r -i e o n s it eeeai* u n i e e t h a t
ehould u n d e r t a k e t h i < c u a i n e c e . t h e r e ie a
the Federal Reserve dank*
e a t d * u i of h e s i t a t i o n on
the part of m o a t r.*r b*r b a n k * to u n d e r t a k e it tl sir.s o l v e * .
A f t * banks wijj ear to show a s p ir it of s-nteri r ise ir; the
matter ir '
«? Bo^r believer tl .it under .*/•; aircuruvtunoea tha door
ou jht zo oe ojene. *s *»ide >.» possible and that Congress should bs urged
to do i l l i t cun tc offe r to s*ir ber tank*, ein--;ly or corniced, the
opportunity of entering these foreign f i e l d * .
I.- this c o n n e c t i o n sots q u e s t i o n * h a v e o c c u r r e d t.o th- B oa r i
in jcriiiderin.r th i* n a t t e r u- on w h i c h it «rj} i oe ,lu. to have ths vie**
of the Adviccry C o u n c i l .
^hese
q u e s t i o n * ar e s
HI o u l : the p r o p o s e d
amendment
rovide
Berber a n k s be p e r m i t t e d tc- be at© c.< h o l d e r s
to operate under F e d e r a l c h a r t e r * in f o r e i g n
An*.
To
thi.
-•
Any, should sn th.
X.
it ould .iul .j;3t thafe to
th? se fcrei^r leroeite
•
Jr. thee*
o t h e r u tf
b a n k s t/hich
are
count
, .
ou lc a n s w e r py * * * 1*
s.
ut '***•-<ooity dor
liao l i i y uj tr the uut- o r i zed ci itai.
(s) ':Tho;t, i f
thot
,
.. V
. .ooblv liability uir c
re*erva requirements of the**
.iO
0 ■ i 1u
1 ie
:
roat h^zaro cf fluctuations of exck dfi^e if against
required to keer reo ?rvee ir. the United
.
■r.f.. <>■: .
larger c<ueh reeerv** thi&n are le g a lly required of banks under our Federal
HeaufVv;
probably M erioaa bank?- organised ' c do ou sine as there
tould have tc 1 li ke dee.
*re therefore think th
no regulations need be
♦
Bade as to reserves against deposits received in foreiJ& countries.
For any d e j osit3 they ray receive in the United States*they should be
subject to the reserve requirements an licable to Etenber banks under
ths Federal Reserve Act.
(d)
Should these foreign banks be required to be rterbers cf the
Federal reserve systeit'
ins.
a thin* it rri^v ce well to require that thsee >
should vb members of ths Federal reuerve systeir in order that they
be brought under the supervision of the Federal Reserve Board and thu.>
part cf the i n k i n g aysten of the country.
It vould
si.
advantfe sous tc ther to have the privilege of rediscounting and other
iaa loin^j business directly with the Federal reserve oanks, bu1
: J..ht
bt. necessary to plu.ce special restrictions on their rediscounts.
(e)
Should these foreign Ocinks be perritted to invest a definite
vercentage of th e ir capital and surplus in holdings of forsi j b^ni 3 oper
a t i n - under l o c - 1 charters?
Ans.
>s.
Yr. ' crc-*n i sited tc be' recorded f. voting
’f)
"I.ax restriction s should be laced upo' these foreign b*jn.-. f
fo; lJ''ill oj-sj. tione in the United *‘t ites?
Tor instance - they
ijh t be 5 rrr.itted to accept deposits only -here these deposits are
inei vntu. tc transactions in forex^n countries.
n the other hand
1,
o«ic
: e«ur that they should ce permitted to receive deposits
on ^«r.vand oi cn ti^ae froaj other banks,
articular!y from those for vhic
they t i l l act <j.s correspondents or agents in foreign countries.
Ans.
vould recei " nc th.--.t- in the matter of receiving
de ,o»i
in t.
United states such banks should be restricted to such
<Ja;.caito b >r incident to transactions in foreign countries.
{./, fnoult these foreign banks be permitted tc accept and should
th ir **Li\ 'jr s
reserve banks?
aces tmcee" b*- fcli^ib’.s for rediscount with the Federal
An.. If their acceptances are restricted to ouch as M~ro out
of transact ion* involving the ir crttior; or saj ortaiion of cods* and
oth-»r ■■■i
conforr :o th--* requirement * cf ths Federal ueosrve Act
see no reason
they should not be pern i t lid to nako thern or why they
should not be e lig ib le for rediscount »ith or purchase by the Federal
r9serve bank3.
c
41
in t uliene
inc
rMWWH
•( U*e
U i HUU h
t
el III
i m ^ r ai9 i»i%
bwfcS
oveuw io9 m i|
UbM friai their toiif«lidiii«i
M
*K
the ceftptreller el t&* ourrMvy
I m r t m i»
Central m »
{M N IH
la*TM«»
Id
rv« i« Sou****
aitiee
.. Ifc*** ___
Lean#
30ft
133
119
8 >6
Beaikf
tt
U£
U»
333
Bai front M i n i **••• 3*s&9
99
13
12
iO?l
One trm A M H N A^ente
43
II
Due f m , fc*«ke
apeeie
13&
Le&&le (2>eerefct*)
«lft-
fe t a n<-. *.-^ron«e in
IHese p i m m f
133
ft
30
133
S
3
it*
-J L
&V0
230
l*»«n4 i**>e*ltn
446
£50
n**
. flL.
lM rt«s« in '.nee** &e»*rv»
iv « i Vlvlli
-J i.
41
61
a^*i
L;p^—
13Tfl.3*3
m
333
118-
Kit1341,
iq « l
m * l fc*eee<? neeerw Sev*i6 f lVlS
AcittU
—s ^ “
j k l
SB&fiiB
fete b&Bk*
Yetnl inere*** 1* fltpeeite
31
m
13*
ui
341
#31
"Exhibit B"
P o p u la tio n
Banking
____________Capital
Haw York
Chloftfto
St. Louis
*,766,680.
2,500,000
687,000
S ta te
fl-mfca
$470,632,100.
#236,978,000 1233,687,100
141,1278,200.
70,882,767
70,426,800
80,273,00029,140,000
81,133,000
m
103 y5 BO
Albany
184,873
A tlanta
5849605
Baltimore
1749100
Birminghan
745,139
Boston
1,881,065
Brooklyn
36,583
Cedar Rapids
60,427
C hariestont S.C«
58,576
Chattanooga
406,706
C incinn ati
656,975
Cleveland
209,722
Columbus
118,482
D allas
253,161
Denver
99,144
Bea H eines
554,717
D etroit
39,650
Dubuque
99,528
?ort Worth
41,076
Oalreston
108,172
Houston
265,578
In d ian ap olis
96,854
Kansas City,Ke
289,879
•
•
Uo
46,028
Lincoln
465,367
Los Angeles
237,012
Louisville
428,062
Milwaukee
353,460
Ifinneapolia
41,263
lfuskogee
115,978
V &shrille
366,484
Hew Orleans
86,158
Oklahoma City
155,455
Oai'iha
1,683,664
Philadelphia
571,984
Pittsburgh
271 ,833
Portland,Oreg
52,840
Putblo
154,674
Riohmond
83,974
St* Joseph
241,999
St. Paul
113,567
Salt Lake City
119,447
San Antonio
448,502
Pranoiftoo
68,361
Satannah
N a tio n a l
Banks_
m
x
#12 316
14 4f9
52 705
6 615
112 305
53 240
2 328
3 926
5 067
36 138
46 360
7 116
9 643
12 267
6 938
31 828
2 116
6 406
2 096
14 623
17 331
1 975
20 628
«
l£» 464
25 015
15 156
15 808
24 581
1 285
6 205
19 190
2 176
10 111
181 334
136 308
12 860
1 264
18 480
2 973
13 252
7 831
7 055
83 280
8 362
s im &
000
500
740
440
000
300
000
000
000
000
010
000
920
000
000
000
500
000
000
700
000
000
890
000
000
000
000
000
000
930
000
000
000
030
600
000
000
930
000
000
000
000
340
900
$4,700,000
8,636,000
20,644,710
3,335,000
53,519,000
4 ,3 1000
1,212,000
2,609,000
3,338,000
24,092,000
16,199,000
4,936,000
6,815,000
8,028,000
3,415,000
10,250,000
730,000
4,458,000
872,000
7,250,000
9,680,000
923,000
11,629,000
1,657,000
9,833,000
8,087,000
10,243,000
17,361,000
1,196,000
4,906,000
6,730,000
1,769,000
8,261,000
62,412,000
49,623,000
8,1$7,000
974,000
10,463,000
1,908,000
10,395,000
3,389,000
4,066,000
49,061,000
1,826,000
17,616,000
5,793,500
32,061,030
3,280,440
58,786,000
48,890,300
1,116,000
1,317,000
1,729,000
12,046,000
30,161,010
2,180,000
2,828,920
4,239,000
3,523,000
21,578,000
1,386,500
1,948,000
1, £24,000
7,373,700
7,651,000
1,052,000
8,999,890
807,000
15,182,000
7,069,000
5,565,000
7,220,000
89,000
1,299,930
12,460,000
407,000
1,650,000
118,922,030
86,665,600
4,673,000
290,000
8,017,930
1,065,000
2,857,000
4,442,000
2,989,000
34,219 ,340
6,536,900
RS,S?MV?. CITIES (C on tin u ed)
population
Banking
Hatlon&l
gjvi.Ua2
2 > n k i .-
So. Omaha
(See Omaha)
So&ttl®
Sioux C ity
Spokrino
Taoom
Topaka
V&OO
Washington
Wiohita
2 6,3 9 4
3 3 0 9854
55,588
142f 990
108,094
47 9914
3 2 ,7 5 6
3 5 8 |679
67 , 847
| 1 2 ,1 3 8 ,1 0 0
S , 0 89 ,0 00
7 ,1 5 1 ,0 0 0
3 ,0 8 3 ,0 0 0
1 ,8 8 6 ,0 0 0
4 ,0 4 8 ,0 0 0
2 8 ,7 1 9 ,9 7 0
2 ,2 1 5 ,8 0 0
$ 3 ,9 1 5 ,0 0 0
1 ,9 3 5 ,0 0 0
3 ,0 5 7 ,0 0 0
1 ,2 3 7 ,0 0 0
620,000
2 ,3 0 2 ,0 0 0
1 2 ,3 0 0 ,0 0 0
1 ,1 7 0 ,0 0 0
Cities with a population of 30,000 or more and having a
UATTOHAX* banking Capital of $1,000,000 or morm m b ioh are
not Reaarre Cities
Banking
SM U Jal
Ala
Mobile
»
!| ifontgowejy
t i t t l e Rook Ark
c *a if
j Oakland
•
1 faoramento
•
f 5an lego
ij Bridgeport Conn
*
Ij Hartford
•
j law Haven
fi
1 ?ater bury
1 film lnrton D el
i Idokscnville 71%
•
i ftwpa
Utc n
0*
Ida
JoUa
Aurora
111
«
^aoitur
•1
X. St. Louis
•
Joliet
«
Peoria
•
Rcokfcrd
Springfield ft
ftransYills Xnd
•
Port % i w
e
farre Haute
Iowa
IHtetloo
Covington, Ky
ft
Lexington
ij Shreveport l a
Me
Portland
Uaaa
Brockton
•
if fall Rirer
•
Haverhill
ft
Holyoke
•
towell
•
Lynn
»
Isir Bedford
•
1 Pittsfield
•
i Springfield
it
L Worcester
1 Ormd Ha i In ?floh
•
Saginaw
Minn
Duluth
Manchester H.H.
Atlantic Cy ff. J.
ft
Canden
•
J*reey City
•
S m rk
•
Patornon
ft
Trenton
36,500
43*300
551100
190,800,
64,800
51,115
11*,400
100,900
147,000
84,700
9?,161
73,100
51,500
45,415
31,700
33,600
36,500
72,l00
37,400
70,700
53,700
59,400
72,100
74,300
64, SCO
74,100
56,500
39,700
34,000
63,000
65,700
126,900
47,700
64,000
112,100
100,300
114,600
37,500
105,200
160,500
125,700
54,BOO
91,900
76,900
53,300
104 ,300
300,133
399,000
136,300
109,200
|3 ,379,300
3,509,000
5,059,000
7,440,$40
5,87,' ,775
3,686,100
4,557,100
16,563,000
11,359,100
3 §537,000
7,125,175
5,354,000
3,126,000
3?,841,000
1,72 8,000
1,440,000
1,669,000
1,7*6,000
1,503,000
4,940,000
2,i19,000
3,261,000
3,211,000
3,449,000
3,665,000
2,590,000
1,853,000
4,394,600
2,509,000
7,564,000
1,693,000
6,538,000
8,917,000
3,173,000
4,583,700
3,641,000
7,679,000
1,976,000
8,538,000
9,336,500
7,064,000
2,886,000
5,423,000
6,834,000
3,662,000
4,167,000
11,880,000
ZV ,773,000
5,465,000
4,519,000
national
a.yfea—
$2,292,000
2,605,000
1,543,000
2,331,000
J?,769,000
1,735,000
* ,947,100
8,378,000
6,068,800
1, 6*^6 ,000
1,348,170
4,604,000
1,743,000
1,959,000
1,616,000
1,340,000
1,338,000
1,100,000
1,172,000
3,620,000
1,969,000
2,071,000
1,850,000
2,203,000
£,120,000
1,505,000
1,470,000
3,063,000
1,909,000
3,305,000
1,100,000
3,025,000
1,992,000
1,961,000
1,650,0^*0
2,049,000
5,116,000
1,150,000
3,200,000
2 ,83 £ ,000
3,444,000
1,200,000
4,816,000
1,413,000
1,572,000
1,882,000
2,974,000
12,118,000
2,150,000
2,430,000
State
Banks
$1|087
904
3,511
5,109
3,103
1,966
1,610
8,188
5,290
1,901
5,783
750
1,383
88^,
112
100
351
656
331
1,320
250
1,190
1,361
1,346
1,545
1,085
383
1,331
600
4,259
593
3,513
925
1,212
? ,933
1,592
2,563
826
5,338
6,504
3,620
1,636
607
5,421
2,110
2,285
8,846
10,655
3,335
2,069
300
000
000
840
775
100
000
000
300
000
OOO
000
OOO
000
000
000
000
OOO
000
000
000
OOO
000
000
OOO
000
000
800
000
000
000
000
000
000
700
000
000
OOO
000
500
000
OOO
000
000
000
000
000
OoO
000
000
B ulking
i'tii.ul'lt lop
1'
'
j
I
i
Amatordam
2 V.
Buffalo
Almira
J*meetotrn
Roohestar
Syraouss
Troy
Utloa
Charlotte, n c .
AVron
Ohio
Canton
Dayton
Springfield
Toledo
Youngstown
Allentc ti , p%.
Chester
me
Harris burg
Johnstown
lino*star
VdJTeespc rt
Itew C a stle
Hewing
Soranton
fll^ e s b a r r *
W illiamsport
Yoric
Protidenos R I*
Columbia y
s c.
T nn
Knoxville
Vamphls
7 IX
Austin,
SI Paso
Va
lynohburg?
Horfolk
Ronnoke
va
Huntington
tfhonllnf?
UCroses
V is
36,100
461,300
37,900
35,700
230,747
152 ,5.14
77,738
83,676
38,837
52,938
39,139
125,509
30,804
187, $40
104,4B9
61,901
40,935
73,79a
70,754
66,583
50,269
46,743
40,751
107,594
144,081
75,£18
33,499
50,543
250,025
34,058
3 8 ,3 0 0
146,113
34,016
51,936
32,389
88,076
41,929
4 3,572
43,097
31,522-
t l 993,000
so 905,000
2 539,000
8 248,300
14 988,000
11 418 ,000
5 £35,000
3 332,500
3 384,000
2 633 ,000
3 701,000
4 333,000
2 160,000
11 555,600
5 925,000
4 £54,000
£ 7*1,000
3 431,000
3 717,650
3 215,000
5 972,000
2 655,100
3 464,000
8 471,000
11 036,OCO
9 442,000
4 572,000
4 348,900
25 409,673
3 51*99,040
3 405,000
8 418,000
2 337,000
4 225,000
4 197,000
7 314,000
2 656,000
2 265,400
5 749,200
1 478,000
H a tlo n & l
State
■iVliiJI___
IHnkfl
$1,279,000
12,693,000
1,109,000
1,0^7,300
4,273,000
4,451,000
3,054,000
5,100,000
2,431,000
1,460,000
1,2*9,000
3,337,000
1,766,000
6,341,0r>O
3,100,000
2,725,000
fi,005,000
2,050,000
1,3-3,000
i,ftoo,ooo
£,532,0^0
1,207,000
2,779,000
4,764,000
6,256,000
3,973,000
2,909,000
2,894,000
9,419,000
2,602,000
2,578,000
2,9^3,000
1,951,000
2,758,000
3,084,000
4,758,000
2 ,1# 6,000
1,297,000
1,825,000
1,200,000
$ 714,000
IS,2IS ,000
1,227,000
1,161,000
10,313,000
6,962,0^*0
2 ,181,000
3,232,500
953,000
1,193,000
2,412,000
996,000
400,000
5,214,600
2,825,000
1,529,000
776,000
1,361,000
4,192,650
1,425,000
3,440,000
1,448,100
685,000
3,707,000
4,780,000
5,469,000
1,663,000
1,454,900
15,990,675
697,040
827,000
5,435,000
406,000
1,467,000
1,113,000
2,556,000
530,000
968,400
3,924,200
278,000
S T AT U nr WHIClt Xtu&JXM ALA
AIU .ao h si:se^ c m
C itie s
Arisona
Arkansas
Connecticut
Delaware
Florida
Idaho
Mains
M ississip p i
Montana
Vsrada
lew Hampshire
lew J ersey
Hew Mexico
Ho. Carolina
Wo, Dakota
Rhode Isla n d
So. Dakota
Vermont
Test V ir g in ia
fyoming
1
4
1
z
1
1
Combined
P o o u la tio n
1
1
2
Combined H'ltionol
JanVlng C ti ltal
L e ss than raquirod population
05,000
$1,500,000
409,000
iy , 0 0 0 ,0 0 0
93,000
1.340.000
124,000
6.340.000
31,700
1.610.000
63 ,000
3,300,000
L s s s »than required population
»
m
w
1
6
■.
m
70,000
1.410.000
1,1041700
231100 ,000
L a *s th a n inquired population
38,800
2.430.000
lea f* than required population
Si50,000
9.400.000
L ess than r«)ulitd population
*
»
•
•
86,000
3.120.000
Less than rsquirod population
ms m.-. c m
Alabama
(Biminrfham) 2
Illinois
(Chisago)
7
Indiana
(Indpls)
3
Kentucky
(Louisville) 2
Louisiana
(Mow Orle ns)l
Massachneistts
(Boston)
10
Uiohi^an
(Detroit)
3
So.Carolina
(Charleston) 1
Virginia
(Rlohfond}
3
Ylsoonsln
(Milwaukee) 1
99,000
4,800,000
i: ,000,000
211,200
6,100,000
96,!?,00
4,500,000
34t000
1,900,000
932,000
24,000,000
180,000
4,000,000
34,000
2,600,000
162,300
9,900,000
31,522
1,200,000
A nummary of ths fo rejoin*? statements discloses tv>* following
conditions existing now.
T^ere a m three (3) Central Besorre Cities,
and flfty-t* rce(53) Koserve Cities#
There aro ninety ( 9 0 ) oltlos having a population of thirty (SO)
thousand or more and WATIOTTAL BA>T IT!0 Cajttal of $1,000,000 or mors
*hloh are not Resorve Cities*
*
Thar# %ro twenty (20) states in whioh that* **• no Beserrs Cities*
in oleren (XI) of these states there are one or n o w cities having a
population In okooss of thirty thousand (30,000) and National Banking
Capital of 11,000,000 or more*
Thera ars te n ( 10) states in whioh thore i s o n ly ons Bs»«rrs C ity
and in which there ara onǤ or more c i t i e s h a v in g a p o p u la tio n in axoess
of 30,000 and N a tio n a l Banking C a p ita l of ' l l 000|000 or more*
pOTZs
Ths n a t io n a l iian k in ^ Act r e q u ir e s a o i t y to have a p o p u la tio n
of 25,000 or more to q u a lif y a s a fiescrve C ity .
**c
Proposed Substittf* for
Fifth Paragraph of Section Thirteen
of tho
Federal uossrvo A o t
Any member bank nay accept or agree to accept or pay
draft* or bills of exchange drawn upon it and growing out of
transactions involving the importation or exportation of goods
having net sore than tix monthe' eight to run and may undertake
that another meu.ber bank or a foreign bank or banker shall accept
or pay any such drafts or bills of exchange drewn upon sueh member
bank or foreign bank or banker, and may indemnify any member batik
or foreign bank or banker against the acceptance or payment of any
such bills of exchange drawn upon such other member bank or foreigh bank or banker, but no bank shall aoeept or agree to accept or
pay such bills, or undertake that others shall accept or pay such
bills, or indemnify ethere against the acceptance or payment of
such billo to an amount equal at any one time in the aggregate to
nore than one-half of its paid up and unimpaired capital stock and
surplus, except by authority of the Federal Reserve Board, under
sueh gsneral regulations as said Board may prescribe, but not to
exceed the capital etesk and surplus of sueh bank, and such regula
tions shall apply to all banks alike regardless of the amount of
capital stoek and surplus.
In addition to the powers granted in the preceding para
graph of th is Seetien, any member bank bay accept or agree to ac
cept er pay drafts or b i l l s of exchange drawn upon it and payable
at si^ht and may undertake that any other member bank or foreign
bank or banker shall accept or pay si&ht Dills drawn on sueh other member
bank er foreign bunk or banker and tuny indemnify any other member bank
er foreign ban* or banker against the acceptance or payment by such
member bank or foreign book or banker of any such sight drafts
er b i l l s of exchange drawn upon such member bank or foreign bank
or banker, but no menber bank sh a ll accept or agree te aecept or
pay such sig h t b i l l s , or undertake that others sh a ll accept or pay
such sig h t b i l l s , or indemnify others against the acceptance or pay
ment of ouch sig h t b i l l s to an amount equal at any one time in tho
aggregate to more than t*o n ty - fiv e per cent of i t s paid-up and
unimpaired c a p ita l stock and surplue, except by authority of tho
Federal Koserve Board, under ouoh general regu lation s as said
Board may proscribe but not to exceed fifty per cent of
the capital stook and surplus of sueh bank.
EXHIBIT "C"
RESERVE REQUIREMENTS OF
STATE BANKS.
F iJDEllAL RESERVE DISTRICT NO. 1,
LAINE
Laws of 1904, Chapter 48, Section 80.
Truet and banking companies to keep 15 % reserve on
depoeits withdrawable on demand or within ten daye.
Cash reserve
to be lawful money or national bank notes*
| of the 15 % may be kept in national bonks or
trust companies located in New England or New York-approved by
benk examiner.
v of the 15 % may consist of bonds of the United
States, the district of Columbia, any of the New England states and
of other states specifically mentioned.
Trust companies joining the Federal reserve system shall
be subject to the reserve requirements of the Federal Reserve Act in
substitution of the above state provision.
NEW HAMPSHIRE
Session lvws of 1915, Sections 27 and 28, Chapter 109.
15 % reserve required on commercial deposits, t, to be
in lawful money of the United States, gold and eilver certificates,
Federal reserve notes or national bank notee,
§ may be balance
due from other banks approved by the bank commissioner.
Trust companies joining the Federal reserve system
shall be subject to the reserve requirements of the Federal Reserve
A c t i n substitution of the above state provision.
VEKLONT
Laws of 1910, Chapter 158, Section 33.
15 % reserve against commercial deposits,
3 % on savings
deposits.
3/5 of the reserve to be ia cash anu in balances in
banks, authorized as reserve agents.
of the 3/5 to be in cash.
Balances in State banks and national banks in same County
accepted as 1 of cash requirements.
2/5 of the reserve may be in United Statee bonds or State
or bonds
bonds,
of any United States city of 200,000 inhabitants or more.
FEDERAL RESERVE DISTRICT NO 1*
continued.
kASSACKUS&TTS
Laws of 1902,
Section 50,
Chapter 115.
15 % cash reserve in vault required on bank’s liability
for circulation and deposit.
Lavs of 1910,
Chapter 377.
Trust Companies shall keep reserve of 15 /£ of demand
deposits and of deposits withdrawable within 30 days.
Trust com
panies in Boston, however, to keep 20 %•
No reserve required
on savings deposits nor on certificates of deposit running longer
than 30 days.
Trust companies joining the Federal reserve system
shall be subject to the reserve requirements of the Federal Reserve
Act in substitution of the above state provision.
CONNECTICUT
Laws of 1915, Chapter 118.
State banks and Trust companies to keep 12 % reserve
on dernnnd deposits, 5 % on time.
4/L2ths in gold and silver coin, demand obligations of the
United States or national bank notes in vault.
The remainder with reserve agents or in bonds which are
legal investment for savings banks in State.
Reserve agents must be
a Federal reserve bank or banks which are members of the Clearing
House in New York, Boston, Philadelphia, Chicago or Albany} Or
national banks, state banks or trust companies in Nsw Haven, Hartford,
Bridgeport, or waterbury approved by the Bank Commissioner.
RHODE ISLAND
C^ J -
Revised laws of 1909,
Chapter 236, Sections 1
3.
Banks and Trust companies to keep 15 % reserve against ag
gregate deposits.
2/5ths in gold or silvsr coin, demand obligations of
United States or national bank notes in vault.
3/5ths in balance with
other banks designated and approved by bank commissioner.
Reserve agents include only banks and trust companies in
and members of the Clearing house association of Providence; national
banks and banks and trust companies in Nsw York, Boston, Philadelphia,
Chicago and Albany, approved by the Bank commissioner and which maintain
a 25 % reserve according to the National Bank Act, banks in Providence,
members of the Clearing House maintaining required reserve may be re
serve agent for any town in Rhode Island.
m aauL itsatfx nzstruct no
2.
?i£w YORK
Laws of 1914, Chapter 369# Sections 38, 111, 112, 166,
196, and 1 9 7 ,
1st Class cities have a population of 175,000 or more.
2nd Class cities have a population of 50,000 and less
then 175,000.
3rd Class all other cities.
Reserve Depositories are designated by the Superintendent.
No bank shall be a depositary unless its capital and surplus is:
$1,000,000 if in a borough with 2,200,000 people,
750.000 if in a borough with 1,000,000 or more and less
than
2,200,000 or in a city
of
400,000 or m o r e .
500.000 if located elsewhere in the State.
If located in a borough of 2,200,000 people or core a
bank cannot be a depositary for another bank with more capital and sur
plus than its own unless the depositary's capital and surplus exceeds
42,000,000.
Depositaries may also be banks with capital and surplus
of *2 ,000,000 er morein Chicago, Boston and Philadelphia, such banks
to make reports to Superintendent and submit to examination if required.
Banks may deposit with other moneyed corporations if ap
proved by a vote of the majority of the board, exclusive of such direc
tors as are directors, officers or trusteesof the corporation designated.
Banks shall keep reserve:
It a borough of 2,000,000 or more 18 %t 12$ of which shall Oft in vaults,
In a borough of 1,000,000 or more and less than 2,000,000 15
10 % of which shall be in vaults,
Elsewhere in state 12 %t
4 % in vaults.
une-half of the cash reserve shall 'ue golu, jcld coin,
♦
gold certificates, or U.S.notes;
the remainder any other U.S.money
except Federal reserve notes.
A bank becoming a member of the Federal reserve system shall
keep it *5 reserve as required in that Act.
If such a bank is in a bor
ough of 2,000,000 or more the remainder of its reserve shall be kept in
vault.
Pi'llVATK BANKS
•15 % reserve if in a city of t h e first class,
1C ^ in every other city,
l/lOth of required reserve to be in vault, the remainder
in state or national banks or trust companies.
FKDERAL RESERVE DISTRICT NO 2.
Njnv YORK
Continued
C ontined
TRUST COMPANIES
Depositaries for Trust companies must be approved by
majority of Board.
Trust Companies must keep the following reserve
against aggregate demand deposits:
15 % if in a borough of 2,000,000 or more,
10 % in vault.
13 ], if in a borough of 1,000,000, or more and less than 2,000,000;
8 % in vault.
10 i elsewhere in State.
If located in cities of first and second class, but not
falling isrithin above subdivision, then 4 % in vault.
Klsevhere 3 %,
One-half of reserve in vault to be in gold, gold coin,
U.S.
gold certificates,
U.S. notes, remainder in any U,5» currency other than
federal reserve notes.
Trust companies joining the Federal reserve system shall be
governed by the reserve requirements of that Act.
NK».- JERSEY
Statues of 1910,
Section 20 of Chapter on banks.
All bonks shall keep reserve of 15 % on demand deposits;
3/5ths in balances from solvent banks.
2/Sths in vault.
SAVINGS BANKS
May keop uninvested 10 i* of their deposits either in vault
or in other banks in Ne v Jersey, State or national; or in Trust companies
incorporated in New York or Pennsylvania, or in National banks in New
York or Pennsylvania approved by a majority of Board.
TRUST COMPANIES
lb % reserve on demand deposits.
4/sths in other solvent banks and trust companies;
l/5th in vault.
Trust companies may become members of the Federal Reserve
system .
FEDERAL RESERVE DISTRICT MO
3.
PENNSYLVANIA
Pepper and Lewis' rdgert of la^s of 1907,
Vol. i, page 598.
Every bank of deposit to keep reserve:
15
on demand deposits
l/3 in vault in United States currency or national
bank notes or Clearing House certificates representing lawful money deposited*
1/3 may be in bonds of the United States, Pennsylvania
or other bonds authorised as investments for Savings banks.
The remainder in banks and trust companies in Pennsyl
vania approved by Commissioner, or in banks and trust companies in Reserve
cities.
SAVINGS BANKS
l i i f o n all time deposits in banks and trust companies in
Pennsylvania approved by Bank Commissioner, or in banks and trust companies
in Reserve cities, or in United States money and national bank notes,
Clearing house certificates or bonds of Pennsylvania or of cities and
counties in Pennsylvania or other bonds authorized for savings investments.
Uot more than v& to be in bonds.
DELAWARE
Laws of 1909,
Chapter 162.
Bonks, private briks and trust companies
more than 50,000 shall keep r e s e r v e of:
in cities of
15 % on demand deposits,
4 in lawful money of the United States or national
bank notes.
'ilie remainder in banks or trust companies in Delaware
with a capital of §50,000 and surplus of #50,000, approved by Insurance
Commissioner, or in any bank or trust company, or private banks so approved
in Philadelphia, New York or Baltimore.
KlseT/here in the state 10
4. a s above .
reserve on demand deposits,
Demand deposits include those payable in thirty days.
Banks and Trust companies may join the Federal Reserve
system.
NEW
JER3KY
See d i s t r i c t
. 0 , £.
JfKDBRAL H&3KRVK DISTRICT NQ 4 .
OHIO
Laws
of 1911,
House bill 227,
Section 9759.
Commercial Banks
15$ of total deposits
of time deposits
6% of demand deposits, and in vault in lawful money or natLonal bank notes,
Remainder in other banks approved both by
B o a r d of directors ana Superintendent of Banking.
Savings Banks
10$of time deposits;
15*of demand deposits.
6 t of demand and 2 % of time deposits in vaults;
3/\L0ths of reserve on time deposits may be invested
in bonds and other securities approved by statute;
Remainder in other banks approved by directors and
Superintendent.
Lay become member of Federal
leserve system.
K^TUCKY
1915 Statute, Section 564,
Article 11.
Banks end Trust Companies to keep reserve
12$ on demand deposits •
5% on time and savings.
I n reserve or central reserve cities
15/' on demand
5% on time and savings
in vault;
T h e remainder in other banks.
Demand deposits are those payable within thirty
days.
Banks may join the Federal Reserve system.
PENNSYLVANIA
See /District Ho. 3.
WEST VIKGIN1A
Code of 1913, volume 27, Sections 3C46 and 3047.
All b a n k s shall k e e p r e s e r v e :
1 5 i o n demand deposits
3/5ths may b e due frocs National banks or other
<46st Virginia State banks, and in any other solvent bank approved
by Supervisor.
FEDERAL RtfSKRVE DISTRICT No. 5
MARYLAND
Laws of 1910, Chapter 219, Section 61.
Svery bank (other than a savings bank without
capital stock) shall keep as reserve:
15$ of demand deposits
b% in vault,
10^ in banks or trust companies in .Varyland,
or elsewhere spproved by directors.
TRUST CUfcPANISS
15$ of demand deposits,
1G> in banks approved by directors,
5% in such banks as are so approved or in
registered bonds of the United States, Maryland, or City of Baltimore,
or of any other city or county of Laryland approved by Commissioner,
Securities deposited with State Treasurer counted as
part of required reserve.
Cash items not collected are not reserve*
>v;ST Vlri-JllUA
See district Mo. 4.
VIRGINIA
Pollard’s 1904 code, Volume 1, Section 1173-A.
Ho reserve requirements against deposit liabilities, but
2 5 % against circulation to be kept in vault*
May become member of the Federal Reserve system.
NORTH CAROLINA
Halted Statutes of 1908, Volume 1, Chapter 7, Section231.
All banks and trust oompanies to keep reserve:
1 5 t of aggregate deposits
2/5ths in vault
SAVINGS b>ms
5 ■ of a;,,.re .ate deposits in "ev^ilnble funds
SOUTH CAROLINA
No reserve requiremente.
Permission ^iven to join the r'ederal Reserve system.
DISTRICT OF COLUMBIA
Section 162, Compiled etatutefj, D i s t r i c t of Columbia.
,
All savinga and other banks ^re subject to the provisions of
the r e v i s e d statutes, and all acts of Congress:, appliCR^^e to National Banking
ss oc
i a t i o n s , so far as same may be applicable^, to such saving* or other banks.
DigitizedA for
FRASER
FEDERAL H^SKRVii DISTRICT Ho, 6
GEORGIA
Georgia C iv il Cods, Volume 2 , Section 2276,
banks and banking corporations to keep ae reserve:
25 % of demand deposits which may be cash, due from
banks or the market value of all stocks and bonds actually owned*
tiay become member of the Federal Reserve system*
FfrQipftA
Compile Laws of 1914, Chapter 2, Article 8, Section 2710«
Every banking company shall keep a reserve:
20 % of aggregate deposits,
2/5ths in vault
3/5ths due from bunks or in bonds of the United
States, of Florida, Counties and Cities of Florida approved by the Comptroller#
TSNN£SSflB
1913 Session Laws, Bill
Jo. 174,
Banks, firms, persons and corporations doing a banking
business shall keep a reserve of 1 0 % on demand deposits either in cash
or banks*
ALABAMA
Code of 1907, Volume 2, Section 3543.
business sh H
Banks, persons, firms or corporations doing a banking
keep as reserve:
15$ of demand deposits
3/5ths may be due fron. banks*
Kay become msmber of the Federal Reserve eysttn.
LOUISIANA
Uarr's Anatated Rev. Statutes, Volume 1, Section 370,
K very
banking association shall keep a reserve:
25/Z of demand deposits
8% in vault
17; in other banks.
May become a member of the Federnl
leserve system.
MISSISSIPPI
Session laws,
Chapter 123,
Section 57
In cities of les° thun 5 0 , 0 0 C :
1 5 ^ o f demand d e p o s i t s ,
7 1. of t i m e o n u s a v i n g s deposits
iither i n v a u l t s or i n s o l v e n t banks.
1914
In c ities
of m o r e
than
5 0* 0 0 0 .
25 /C of demand deposits,
10 i of time and fnvings deposits,
(Either in v a u l t
(solvent banks.
FKfiERAL RESERVE DISTRICT NO
7.
ILLINOIS
No reserve requirements.
IOWA
Code of 1897, Section It ft7 .
STATE BANKS
State banks in cities of les^ than 3,000 to keep a reserve:
10 % of total deposits.
Ia all other cities 15 % of total deposits.
|ths may be due from State or National banks.
SAVINGS BANKS
Savings banks doing a commercial business in cities less
than 3,000, to keep a reserve:
15 % of demand deposits
8 % of time deposits
In other cities
20 i* of demand deposits
8
of time deposits.
.xclusive savings banks 8 % of total deposits in cash funds
Jths may be due from state and national banks.
I,:DIANA
Burns’ annotated statutes 1914, Section 3369.
fHvinfts banks may keep not to exceed a reserve of 20 %t
deposited in state banks in Indiana os or in any national bank.
L 1v/s of 1913, chapter 193.
Trust Companies receiving commercial deposits shall keep
on hand or in bank in cash or in current funds 15 % of aggregate commercial
deposits.
MICHIGAN
Hovell's statutes of 1913, Section 6420
Eofth bank shall keep as reserve 15
of toted deposits.
In cities of more than 100,000 20 % of total deposits.
in vault, remainder due from banks approved by Commissioner.
»
fray become members of Federal reserve system.
FEDERAL RESERVE DISTRICT NO. 7
Continued
WISCONSIN
Law a of 1911, Chapter 94,
Section 2024-2030
15
% of total deposits either in vaults or in other banks
selected by directors and approved as reserve banks by commissioner.
Reserve Banks:
25 % of total deposits either in vaults or in banks
approved by commissioner.
Cash items not reserve.
3AVINGS BANKS
5 % of total deposits in vaults or in reserve banks designated by commissioner,
TRUST COMPANIES
( Laws of 1915, Chapter 176 )
12 % of total deposits, either in vaults or
approved by commissioner.
banking institution
I.-y become members of the Federal reserve system.
FEDERAL RESERVE DISTRICT MO* 8
MISSOURI
Law* of 1915,
Section 71, Article 2.
E v e r y bank shall maintain 15 % reserve of demand deposits
if locrted in a city of 25,000 or over and less than
200,000.
6> in vaults.
Banks located elsewhere, maintain 15 % of demand deposits.
(No provision seems to be made as to how this reserve should be carried
or for cities of specified population other than above. )
In cities over 200,000 Federal reserve notes shall not count
as part of reserve on hand.
Banks joining the Federal reserve system shall be subject
to the reserve requirements of the Federal reserve Act in substitution of
the above provision.
TRUST COMPANIES
Laws of 1915,
over;
Section 138,
Article 2.
16 /, of demand deposits if located in a city of 200,000 or
7 % in vault*.
15 r of deposits if located in a city of 25,000 or over and
less than 20C,0C0;
6 % in vault*.
15 > of demand depoeits if located elsewhere in the state.
(No provision *eem* to be mad* a* to how this reserve should be carried).
Trust companies joining the Federal Reserve system shall be
subject to the reserve requirements of the Federal Reserve Act in substitu
tion of the above provision.
In cities of over 200,000 Federal reserve notes shall not
count as part of reserves on hand.
ILLINOIS
See Id strict ;io. 7.
TENNESSEE
See district No. 6.
ULS5ISS 1 H >I
See District No. 6.
INDIANA
See Listrict
;io.
7,
KENTUCKY
See D i s t r i c t Mo. 4 .
F3D8RAL RESERVE DISTRICT NO. 8 .
Continued.
ARKANSAS
Laws of 1913, Section 25, Act 113.
ivory bank shall have on h«nd reserve of 15 % of deposits.
"A part of said 15
shall be in vaults.
Remainder may be kept with other banks approved by Commissioner.
Banks acting as reserve agents for other banks shall keep
20 % reserve of its total deposits.
2/5ths shall be in vaults.
Remainder may be kept with other banks approved by
Commissioner
FEDERAL RESERVE DISTRICT NO 9 .
1‘IMKESQTA
Laws of 1915,
Chapter 362.
In reserve cities (as designated by Federal law)
15 % of demand deposits,
5 % of time deposits.
:
Klsevhere 12 % of demand deposits,
5 % of time deposits.
l/4th in vault, remainder in solvent banks.
Reserve banks, except those approved by Commissi onet* shall have
a capital and surplus of $25,000 or more.
Banks may become members of the Federal reserve system.
&ICKIGAN
See Federal Reserve District No. 7.
WISCONSIN
S ee Federal Reserve District No 7.
MONTANA
Session laws of 1915,
determined
Section 50, Chapter 89
Banks (not reserve agents) shall keep:
15 f, of total deposits either in vaults or other banks
by directors and approved by Superintendent.
Banks acting os Reserve agents:
25 i of total deposits either in vault or otKer banks
determined ly directors and approved by superintendent.
State and national banks in reserve and central reserve cities
designated by P'ederal authority ) or in a city of the first or second
cla ss i n r o n t o n a ar e eligible to be reserve banks.
(as
Cities of the first class are those having 1 0 , 0 0 c or more;
C i t i e s of t h e second class are those having les? than 1 0 , 0 0 0
and m o r e
thnn
5,000.
let balances to be the basis of computing reserves.
B a n k s may | o i n the Federal reserve systec•
JTKDSRAL RESERVE DI3TIXCT JO.
9.
Continued.
NOKVH JAKQYA
La w s
of 1915,
Compile laws for 1913,
Chapter 58.
Section 5170 as amended by
After deducting the amount due to other banks a bank shall
keep as reserve:
20 % of demand deposits
10 % of time deposits
2/5ths in vault
3/Sths in banka approved by State Bank board.
C a s h items not reserve.
20 /. of
8 % of
5 'L of
2/3ths
3/5ths
SAVINGS BANKS:
demand deposits
time certificates
savings subject to notice.
in vault*
in banks approved by the State Bank Board.
May become members of the Federal reserve system.
SOUTH DAKOTA
Laws of 1915,
Chapter 102, Section 31.
/very bank shall keep a® reserve:
20 % of total deposits.
The Boara of irector^ to determine what portion shall be
kept in other banks approved by £xamiaer, which banks are to keep 25 % re
serve either in approved banks or in vault.
Cash items are not reserve.
Overdrafts to be deducted from c a s h means before percentage
of reserve is computed.
TRUST COfePAKiaS.
25 t of matured obligations and deposits
3/4ths may be in banks approved by Examiner.
FEDERAL RESERVE DISTRICT NO. 1 0 .
KANSAS
Laws of 1915, Chapter 89
Kach bank shall keep as reserve:
In cities of less than 50,000 when its credits due other
banks are lees than 20 % of its total deposits:
1 2 % of demand deposits
5 % of time deposits
4 A 2 t h s in vault
8 A 2 t h s in vault or in other banks.
Except in cities of lees than 1,000 with approval of
Commissioner 3 A 2 t h s in vault.
In cities ef less than 50,000 when credits due other banks
are not less than 20 % o f total deposits and in cities of 50,000 or more.
15 % of demand deposits
5 % of time deposits
5 A 5 t h s in vault and
10A5ths in vaults or in other benks.
The Commissioner may refuse to count as reserve balances in
banks whose stockholders are stockholders in the depositing bank.
Demand deposits are those payable within thirty days.
TRUST COMPANIES
25 % of demand deposits
10 % o t time deposits
In the same manner as state banks.
United States bonds and loans secured by United States, State
County and Municipal bonds acceptable in lieu of deposits in banks.
COLORADO
Laws of 1913, Section 25.
Svery bank, exoept savings banks, 20 % ot its deposits.
Savings banks, 15 % of savings deposits and 20 % of its
o t h e r deposits.
All banks shall hold 20 % of reserve in vault.
Remainder of reserve may be kept in other banks designated
by the bank examiner, as reserve banks.
Every reserve bank in this state shall keep reserve of
25 % of total deposits.
2 0 % in vaults.
Remainder in banks approved
by t h e bank examiner.
MISSOURI
See F e d e r a l Reserve D i s t r i c t No. 8 .
FJBDKRAI RESERVE DISTRICT NO. 10
Continued.
NKBRASKA
Session laws of 1913,
Chapter 85
15 % of aggregate deposits,
l/3 in vaults.
In cities of more than 25,000:
20 % of total deposits,
2/5ths in vault.
Ilemainder in banks approved by Banking hoard.
SAVINGS iiAHKS:
in available funds.
\emainder in banks approved by Banking Board.
5
% of aggregate deposits
&ay become members of Federal reserve system.
.,Yua:;o
Session laws of 1913,
Chapter 4,
Section 4032.
20 % of total deposits either in vault or in banks approved
by State Examiner.
TttUST COMPANIES
Laws of 1913, Chapter 105,
Section 4):
10 % of its savings deposits in vault or in national banks
or in state banks in V/yoming.
Hm
KKXICQ
Session laws of 1915,
Section 28, Chapter 67.
12 f. of total deposits,
40 i, of 'vhich shall be in vaults.
Kemainder in Federal reserve bank or national bank9 or in
gtato banks with a capital of $25,000 or more, designated as deserve banks
by the Kxaminer.
FEDERAL RESERVE DISTRICT NO. 10
Continued.
OKLAHOMA
Session laws 1915, Chapter 58, Section 267.
In tOTms or cities of l*s33 than 2,500:
15 % of total deposits
2/3 rde nay be due from banks approved by Conmissioner.
1 / 3 rd in vaults.
Banks designated ae reserve depositories:
20 % of total deposits in above proportions.
STRICTLY SAVINGS BANKS
10 % of deposits in vault,
10 £ in U.S., State, County, School or Municipal bonds of
Oklahoma worth not less than par.
Ho provision seems to be made Tor banks ia cities of
more than 2,500.
FEDERAL RESERVE DISTRICT NO. 1 1 .
TEXAS
Sayles Statute* 1914, Vol. 1, Article 377.
£very banking corporation shall keep as reserve:
25 %. of demand deposits
10 % in vault,
15 % in bank, State or National, approved by Commissioner
having capital of >50,000 or more.
Deposits in any one bank shall
not exceed 20 % of the total deposits,
capital and surplus of depositing
bank.
SAVINGS BANKS
Article 406.
15 % of all assets, either in vaults or on deposit with
state or national banks approved by.Commissioner with capital of $50,000
or more, but not to excesd 20 % of total deposits, capital and surplus of
such savings bank.
SAVINGS DEPARTMENT IN COte&ERClAL BANKS
(Article 435)
15 % o f all snvings deposits in vault.
ARIZONA
Statutes of Arizona of 1913, Title 4,
Article 293.
15 % of aggregate deposits
2/5ths in vaults,
3/5ths in other banks approved by Comptroller.
Savings banka are excepted from this requirement, but
no other requirement concerning them is made.
LOU SI ANA
See Federal Reserve Listrict No. 6.
OKLAHOMA
See
Federal Reserve District M o • 10.
NSW KEXICO
See Federal Reserve District Rl> 10.
FEDERAL RKSKRVE DISTRICT NO. 12.
CALIFORNIA
Statutes of 1915, Section 20, Chapter 608.
COMMERCIAL BANKS
18 % of total deposits if located in a city of 100,000 or over.
15
of total deposits if located in a city of 50,000 or over
and less than 100,000.
12 % of total deposits if located elsewhere in the State,
2s
-L in vaults in gold, gold coin, US gold certificates, J S notes.
l/Gth in vaults, in any United States currency.
Remainder in vault® or with reserve depositaries.
Superintendent shall designate depositaries which shall be state
banks or national banks in Califonnia. These depositaries in judicial townships
and in cities of less than 50,000 shall keep reserve according to the requirement
for banks in cities having a population of 50,000 or more find not less than
100,000.
Bank3 and national bank*? to be depositaries shall hi ve capital
end surplus :
;.250,000 :f in a city of 300,000 or more,
200.000 if in a city of 100,000 or more, but less than 300,000
150.000 if in a city of 50,000 or more,but less than 100,COO
100.000 if elsewhere in State.
Depositaries may be banking corporations with capital and sur plus of £1,000,000 or more located in New York, Chicago, Boston, St Louis or
Philadelphia.
SAVINGS BANKS AND SAVINGS S£PARTM£NTS _
of total deposits
2^r % in vault,
t
2 k % eitherin vault or in United States bonds or in reserve
depositaries as designated above, except that no savings bank or savings depart
ment need keep in vault a larger reserve than 400,000.
Excess of this amount
may be kept in reserve depositaries.
Not more than 5 % of tstal deposits may be deposited in any one
bank, except with the consent of the Superintendent.
Not more than 15 % of total deposits shall be kept with all
other banks, except with the consent of the Superintendent.
Savings banks can receive bank deposits only from other savings
banks and such deposits shall c unt as reserve for the depositing ban*c only
up to 1C,> 00.
Superintendent of banks ha^ power to limit the amount depos
ited by one commercial bank with another commercial bank.
Banks may become members of the Federal reserve system.
ARIZONA
See Federal
leserve District No. 11.
FEDERAL RfiSERVJS DISTRICT NO. 12
Continued.
IDAliU
Laws of 1911, Chapter 124, Section 39
Every bank and trust company shall have on hand 15 % of its
aggregate depoeits.
6 * in vaults,
9 % in solvent banks.
Cash items not considered.
SAVINGS DEPARTMENTS IN TRUST COMPANIES
Chapter 187, Section 4,
laws 1913.
5% in vaults of its savings deposits.
Any bank in this state is aut orized to join the Federal
reserve system and shall be subject to the reserve requirements of the
Federal toserve Act in substitution of the above state provisions.
NEVADA
Laws of 1912, paragraph 629, Section 14.
Every bank shall have on hand 15 % of entire deposits
f may be kept in solvent brinks approved by examiner.
-a in vaults.
Banks acting as reserve agents, keep as reserve 25 % of deposits,
Above proportion.
10
STRICTLY SAVINGS BANKS OR "RUST CO^PAIISS
on'head in available funds,
% of deposits
\ may be kept
with solvent banks.
All banks authorized to subscribe for and purchase stock of
Federal reserve banks and become members of any Federal reserve bank.
UTAH
Laws of 1911, Section 23 to 25, Chapter 25,
Commercial banks shall have on hand lawful money equal to 15 %
of deposits and demand liabilities.
l/8th in vault
7/8th* may be kept in solvent banks, other than savings Dank*.
In cities of 50,000 or more, reserve of 20 % shall be maintained
in above proportions.
SAVINGS BAI1KS
10'/, of ite deposit liabilities.
I in vault.
may be kept in solvent banks, other than savings.
Banks having commercial and savings departments shall maintain
a lawful money reserve for each d e p a r t m e n t as above provided.
FEDERAL HKSKRVE DISTRICT
HO*
12.
Continued
WASHINGTON
Law® of 1915, Section 3343, Chapter 35.
Every bank and trust company shall have on hand available
funds of 15 % of its total deposits.
key consist of balances with other solvent banks or cash
as approved by stnte bank examiner.
UfiEGON
Laws of 1915, Section 4579.
Chapter 285
Every f>tate bank and all banks acting as reserve agents for
Oregon state banks;
15 % of demand deposits and
10$ of total time and *(?vings deposits.
(Postal savings funds and Ui r« deposits excepted.)
I may be kept with other banks approved by Superintendent
in vaults.
Ho bank with an unimpaired capital and surplus of les^ than
;75,000 can qualify as a reserve bank.
°ennis*ion is given all banks to join the federal reserve
system and shall be subject to the reserve requirements of the Federal
R e s e r v e Act i n substitution of the above state provision*.
@FedFRASER