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The Papers of Charles Hamlin (mss24661) 359_02_001- Hamlin, Charles S., Scrap Book — Volume 157, FRBoard Members 205.001 - Hamlin Charles S Scrip Book - Volume 157 FRBoard Members Form F. R. 131 110 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Office Correspondence To Files From Mr. Coe Date June 26, 1941 Subject: After correspondence with Mrs. Hamlin (See letters of May 25 and June 4, 1941) the items attached hereto and listed below, because of their possible confidential character, were taken from Volume 157 of Mr. Hamlin's scrap book and placed in the Board's files: VOLUME 157 Page 8 Confidential Statement on Float. Page 35 Amendment to Federal Reserve Act limiting power of Board in prescribing conditions of membership. Page 64 Member Banks borrowing continuously in excess of capital and surplus during January 1926 Page 69 By-Laws of the Federal Reserve Board Page 83 Memo from Mr. Eddy to Mr. Hamlin List of insolvent national banks Page 94 Deficiencies in Reserves of Member Banks for Month of January 1926. Page 101 Amendments to Federal Reserve Act and National Bank Act. Page 102 Memo from Mr. Smead to Mr. Hamlin Comparative Statement of F.R.Bks. of Boston, N. Y. and Phila. with the 3 Largest Nat. Bks. in Each City Respectively. Page 117 Earnings and Expenses of Federal Reserve Bank - February 1926. Page 123 Proposed letter to Mr. Wetmore, Pres., Fed. Adv. Council. Page 131 Memo to Mr. Smead from Mr. Van Fossen in re Bank Failures in 1924 & 1925. Page 137 Eligibility for discount of factors' notes covering advances to producers of eggs, poultry and butter (X-4559). • _ Page 8 Book 157 0 NTI AL cation Total • AVERAGE AMOUNT ON ATft CARRIED BY.5HE FEDT DATEE DUZ,7 in thousands or Classification ol( Float (excess G lected over der .ed 1_ Unco3lected Clearing 1 I availability it as) 'Per cent of ITransit1 House 1 Othei Amount I items I total Ex1 cash deposits I changes 1 items 'Jr') 0(3 C New York 2,381 1.6 64,204 1,598 30,842 3.5 139,311 2F 2 -- St . 4'645 BANKS • Classification of Deferred availability items GovernOther ment Total transit transit items I items 66,148 360 63,4o7 63,767 22,604 167,445 1,776 134,827 136,603 Philadelphia 6,235 53,575 g,355 65,735 97g 56,522 57,5o0 Cleveland 7,600 61,361 2,702 65,884 471 57,813 58,284 5,470 7.8 57,542 2,719 62,118 2,170 54,478 56,648 5,737 6.8 39,905 585 42,718 320 36,661 36,981 332,989 13,955 4.2 79,743 88,412 546 73,911 74,457 st. Louis 86,390 2,585 3,517 182 36,750 36,932 Minneapolis 55,804 13,561 214 11,948 12,162 *as City 92,520 5,603 42,746 271 36,872 37,143 Dallas 61,963 (a)1,539 29,495 188 30,846 31,034 17 1061 (a)b15 41,509 69g 41,426 42,124 723,288 8,174 6,875 9,929 635,461 562,342 541,248 643,635 569,217 551,177 Atlanta Chicago San Francisco TOTAL Jan. 1926 Jan. 1p7-) ' 2.5 2,306,192 2,282,048 ---BCAh-lok OF BANIVOED,D.ry" IEBRUARY 13:L C. 19, ;(:)5) 35. 024 43,562 rxza (a) Excess of deferred a 21,964 20,156 20,422 649,861 615,680 ty over uncollected items. •• February 1, 1926. 0 , 44•1- 6Pt4.44 C;7 , 4,44,4 4-itt C4401412#14044:444 of the above letter, 1-Tut feel I concur in the general conclusions the a.dmission of a state bank is that the power to impose conditions on imply. In my otinion, any condition not ac broad as the letter sees to necscsary imolication, authorized. immzed must be either expressly, or by cannot believe that Congress ever intended by the Federal Reserve Act. I Federal Reserve Board to impose any to grant a oispensing power to the Nhether or not directly or conditions which mirr_t seem to be desirable Federal Reserve Act. irn-oliedly authorized by the the following changes in Section 9: The -oroposed amendment provides for prescribed by the Federal Reserve Board must be pursuant to the Federal Reserve Act. 1. An. conditions merely states the existing law, and I believe this proposed amendment therefore is unnecessary. 2. limit or impair Such conditions and regulations shall not banks. such of power the charter or statutory and. charter -powers shall The prec.,int law provides that such statutory qualifying clause, "subject to the not be interfered rith., but contains the the Board made pursuant provisions of this Act, end t o the regulations of thereto." cv.t this qualifring The proposed amendment, in effect, would strihe examining into the question whether clause, and. would prevent the Board from bank are consistent with the purposes the corporate powers of the applying Page 35 Book 157 • • •-• of the Federal Reserve and many other kindred sieStions. The effect of this amendment has been clearly set forth ta the above letter. 3. No conditions or restrictions shall be imposed other than tho6e under which national banks shaal operate. Aa a fact, I 17.nom of no conditions or restrictions ever imposed 'by the Board on the admission of state banks which out down or impaired their powers as compared 7.ith the powers of national banks. I deem this amendment, therefore, unnecessary. It seems to me important that the power to impose conditions Should nct be taLen away from the Federal Reserve Board, but it Learas to is clear that all sucli conditions must be eithar oxpressly or by necessary ir.:plication authorized under the Federal Reserv::: Act. The quec,tion of the power to impose conditions .4 in the past, hus aricen chiefly in cases involving the condition that a mamber state bank shall not estdblish Resqrve Board. branches without the consent c2 the Federa/ To my mind, this condition is a desirable one, but there has been a great aifference of opinion in the past as to just 'PAlat particular requirements the Federal Reserve Board should or could lawfully prescribe in giving or withholding its consent. It is unnecessary, hoxeirer, in this connection, to consider the question of conditions as to establishing branches, ur the requirements laid down by the Federal Reserve Board under Regulation H, for the reason that the McFadden bill settles the question of branches affirmatively in other sections, and for the purpose of T•- 4:, $ • ft., up-. 11 11 ccnsidering the propcd amerdLACro Sectic 9, it must be assumed that the other sections of the MAisIden bill will be enacted into law. I St. 4 V1MBER BANKS BORROWING CONTINUOUSLY IN EXCESS OF CAPITAL AND SURPLUS DURING JANUARY, 1926, ALSO BORROWINGS OF ALL MEMBER BANKS AT THE END OF THE MONTH GROUP II - Banks in Group I -GROUP I - All banks borrowing continuouslz: in excess of capital whose borrowlngs at the end of month GROUP III - All member banks in district and surrlus during the month were at least twice capital & aurrlus crrowings on Jan.-51 CapiBorrowin s on Jan. 1 Borrowings on Jan. 31 Accemmo-1 Capi'Ratio to tal tal Ratio to Ratio to Numdated mNuI Totall Amount 'capital & and Amount ber and Amount 'capital & during Num- I capital & ber I surrlus 1 surplus •month 1 bar I surplus urplus surplus For use of Feteral Reserve Board only Federal Resarve Pistrict P $3,451,000 789,000 New Yof 1 000 t149,000 207% 496,0oo Cleveland -As 1 Lichmotra 150,0,0 318,000 212 Atlantik 344,y00 Cnicagb 801,000 233 St. L 1 :Anne 43,000 89,000 207 Aka* itki Dallas 5 270,00o 425,000 121 133 l& 17,606,000 19,509,000 16,990,000 25,663,000 27,535,000 26,947,000 San Francisco TOTAL Jan. 1926 Pec. 1925 Jan. 1925 FEPERAL RESERVE BOARD DIVISION OF BAYK CP7LAATIONS C. MARCH 2, 1926. Page 64 Book 157 157 2 100,300 229,000 229 10 709,000 16 2,215,000 19 1,408,000 1,5s6,o0o 4,924,00o 224 3,624,000 222 257 ASIWW $34,0g2,000 11.91. 172 Lag 359 881 385 754 387,433,000 51,230,000 13.2 30E t61 439,100,300 40,145,000 9.1 259 599 .do0,667,c0o 45,3o5,000 22.6 146 493 158,667,o00 31,762,000 20. 541 1,392 528,807,000 71,196,000 13.5 179 623 170,667,000 18,215,000 10.7 76 829 105,833,000 3,612,000 3.4 169 1,023 141,600,000 13,703,000 9.7 7o g50 142,467,000 7,44g,o00 5.2 1714 736 270,667,000 33,532,000 12.4 1,103,267,000 134,515,000 2,83s *9,459 3,937,202,oco 484,765,00o 3,184 *9,494 3,907,899,o0o 635,193,000 2,554 **9,674 3,742,o33,wo 311,885,000 *Inactual operation. **As shown by F. R. bank capital stock records. 12.2 X-4545 PY-LA7S OF THE FEDELAL RESERVE BOA.,:LD. EPF];',CTIVE :.1ARCH 1, 1923. _Irticle 1. The Chairmen. The Secretary of the Treasury, as Chairman of the Board, shall preside at all meetings when present. In the absence of the Chairman, the Governor shall act as presidin officer. In the absence of both the Chairman and the Governor, the Vice-Governor shall preside, and in the absence of all three such officers, the remaining member of the Executive Committee shall preside. Article 11. The Governor. Sec. 1. The Governor of the Federal Reserve Board shall be the active executive officer thereof; subject, however, to the supervision of the Board and to mach rules and regulations as may be incorporated herein or may from time to time, by resolution, be established. Sec. 2. The Governor shall have general charge of theexecutive and routine business of the Board not specifically assigned under the bylaws or by resolution of the Board to any individual member or committee thereof, and shall havc supervision of the Board t s staff. Sec. 3. Th3 Governor shall be an ex-officio member of all Standing Committees of the Board. Th Vice-Governor. Scc. 1. In the absence or disability of the Govcrnor, his powers shall bc exercised and his duties discharged by the Vice-Governor, and in the absence or disability of both of these officers, such powers shall be e 4;[ •• and such duties discharged by the remaining member of tne Executive Committee; in the absence or disability of all members of the Executive Committee the powers and duties of the Governor shall be exercised by the senior memler of the Board present. Sec. 2. It shall bc the duty of the Vice-Governor to coaperate with the Governor in the administration of the executive business of the Board.' Page 69 B_ok 157 -2- X-4545 Article IV. Secrrtary nnd Assistant Secretaries. Sec. 1. The :coard shall awoint a Secretary and one or more assistant secretaries. Sec. 2. The Secretary shall keep an accurate record of the pro. ceedings of the Board and shall conduct such correspondence and perform such other duties as -nay be assigned to him by the Governor or by the Board. In tne absence or disability of the Secretary, the duties of that offi arce may, by direction of the Board, be performed by an assistat n secrety. Sec. 3. The Secretax7 shall have custody of the seal and, acting under the authority of the Board, shall have power to affix same to all instruments requiring it. Such iastrumonts shall be attested by the Secretary. Sec. 4. The assistant secretaries shall each perform such duties as „my be assigned to them from time to time by the Board or by the Secretary. Article V. Assistant to the Go7ernor. Sec. 1. The Board may authorize appointment of an Assistant to the Goveraor. Sec. 2. The Assistant to tle Governor 6hall perform such duties as shall be assiEned to him by the Governor. Article VI. The Executive Committee. Sec. 1. There shall be aa Executive Committee of the Board consisting of three members, which shall include the Governor, Vice-Governor and one of the appointive members of the Eo-xd. The appointive member of the Comirdttee shall be nominated and elected at a regular meeting of the Board. Members of the Btx,rd shall serve as far as practicable in rotation and for approximately equal terms. The presence of three members shall be requisite for the traasaction of business by the Executive Committee, and action shall be taKen only on. unanimoas vote of the Committee. Sec. 2. In the absence of the Governor and Vice-Governor the appointive member of the Executive Committee shall act as Chairman and shall, with two other appointive members of the Bord present in Washington to be chosen by him in the order of their seniority, exercise the powers and charge the duties of the Executive Committee. In the absence of all three -3- X-4545 regular members of the 2xecative 3orTaittee the three remaining appointive members of the Board, provided there be three in Washington, shall act as an interim committee and exercise the powers and discharge the duties of the Executive Committee, the senior member acting as Chairman. Sec. 3. In the absence of a quorum of the Federal Reserve Dcyrd and for the transaction only of business of a routine character requiring action during the absence of such quorum, the Executive Committee is aut2.orized to transact business of an executive nature which can be transacted in accordance with well established principles and policies of the 2oard and to perform such additional duties as may be specifically delegated to it from time to time by instruction of the Federal Reserve Board; to review and submit drafts of important correspondence involving the expression of opinions or decisions of the Board, and to prepare and make recommendations governing the conduct of the Board's business. Sec. 4. The Executive Comittee Shall also have charge of all matters ap-)ertaining to the internal organization of the Board, and shall make recommendations from time to time on this matter. It shall also prepare annually a 'midget of . -)roosed expenditures. The Secretary of the Board shall serve as Secretary of the Executive Committee. Article V11. S tandin?: Comni t te es. In addition to the Executive Committee there shall be the following Standing Committees,ap-lointments to whiCh shall be made by the Governor, subject to the approval of the Board. Sec. 1. Law. To the Law Committee shall be referred for study and report all questions of a legal nature. To this Committee shall also be assigned the preparatiol% or revision of the Board's regulations, contemplated amendments to the Federal Reserve Act, applications under the Kern amend.cent to the Clayton Act, and aoplications for the exercise by national banks of trust powers. The General Counsel shall serve as Secretary of the Cornmittee. Sec. 2. Examination. To this Committee shall be referred all questions relating to the examination of Federal Reserve or member banks including admission of state banks and permission to establish and operate branches. The Chief Examiner shall serve as Secretary of this Committee. -4- X-4545 Sec. 3. :eser'io. Lcod Statistics. Thi5 Committee shall hove ch:.'.rge of all investigatioas of an ecoaomic aAc:, statistical character authorized by the Board and shall supervise the 7ork of the pivisiol of Research and Statistics and the preparation and publicatioa of the Federal Reserve Bulletin. This Committee shall also have sunervision of the statistical aad ipublication work of the Federal Reserve Banks. The Director of the Division of Research and Statistics shall serve as Secretary of this Committee, or in his abseace the .lissistant Director shall so serve. Sec. 4. Salaries and Expenditures of Federal Reserve Banks. To this Committee shall be assigned all recommendations from Federal Reserve Banks for changes of salaries and other expenditures. This Committee shall make reports with respect to Charge-offs and franchise tax of Federal Reserve Banks. The Secretary of the Board shall serve as Secretary of this Committee. Sec. 5. District Cummittees. To each Federal Reserve Bank and District shall be assigned a Committee of not less than two members of the Federal Reserve Board. It Shall be the duty of each Committee to keep itself informed by correspondence and visit of‘the affairs of the Bank and the condition of the District, and make investigation and report on all ouestions appertaining to the operation of any Federal Reserve Bank or tae condition of any Federal Reserve District that may be referred to it by the Board. These Committees shall also aid the Committee on Salaries and ExTpenditures with information regarding personnel of the respective Federal Reserve Banks of which they have charge. These Committees Shall also make recommendations to the Board for the appointment of Directors at Federal Reserve Banks and Branches. Article V111. The Fiscal Agent and Deputy Fiscal Agent. Sec. 1. The Board shall appoiat a Fiscal Agent and a Deguty Fiscal Agent. The duty of the Fiscal Agent shall be to collect and deloosit all moaeys receivable by the Board with the Treasurer of the United States, to be placedspecial fund established on the books of the Treasurer for the Federal Reserve Board. The Deputy Fiscal Agent shall perform the duties of the Fiscal Agent during his absence or disability. Sec. 2. The Fiscal Agent aad Deputy Fiscal Agent shall each axecute a Le?arate bond with surety satisfactory to the Board. Payments of exDeases and other disbursements of the Board shall be made by the Fiscal Agent upon proper vouchers out of moneys • -6- X-4545 advanced to him by requisition and warrant aut of tile s-)ccial fund -olaced to his official credit witli the Treasurer of the United StatesS. as 7)rovided by Section 5 of this Article. In thc aosence of the Fiscal ilgent payment of expenses and other dislmrsements shall be made by the Deputy FiJcal AgenvIuppon ?roper vouchers uut of monezrs .1dvancea to the Fiscal gent by requisition and warrant out of the special fund and placed to his official credit with the Treasurer of the United St.ltes as provided by Sections 5 and 6 of this article. Sec. 4. The Fiscal Agent shall prepare a quaiterly account in such form as shall be approved by the Comptroller General of the United States and, aftor aaoroval by the Governor, such quarterly accaunt shall be submitted to the General AccauntinE ; Office. Such accaunt shall cover 7)ayments of expenses and Other disbursements made by both the Fiscal Agent and the Deputy Fiscal Agent. Soc. 5. The Governor shall, when necessary, makc requisition on the Treasurer of the United States for thc advance of such sums to the Fiscal ,a_ent as may be necessary from the Federal Reserve Boord fund. Sec. 6. The Deputy Fiscal Agent in making disbursements of the Board upon -orol)er vouchers out of the moneys advanced to the Fiscal Agent shall sign against funds to tae official credit of the Fiscal A4, ,.ent Tith the Treasurer of the United States in the name of the Fiscal Agent by self as Deputy Fiscal Article 1X. Gold Settlement Fund. and Federal Reserve Agents' Fund. All fands ciposited by or for accaunt of the respective Federal Reserve Agents in the Federal Reserve Agents' fund of the Federal Reserve Board and all funds deposited by or for accaunt of the respective Federal Reserve Banks in the Gold Settlement Fund of the Federal Reserve Board shall be held on deposit with the Treasurer of the United States and shall be subject to withdrawal only by check of the Federal Reserve Board signed by the Secretary or an Assistant Secretary and countersigned by the Governor or acting exeautive officer of the Board. Article X. Ruouisitiun for Delivery. of Federal Reserve Notes Requisitions upon thc Comptroller of - the Currency for the delivery -6- X-4545 of Federal Reserve notes to thu resnoctive Federal Reserve 4ents shall be made by the Secretar:7 or Assistant Secretary in respoase only to requests .nade by the Federal Reserve Agents to the Boe.rd for such notes. The Secretary or Assistant Secret:?xy sheal submit daily for approval to tne Governor or actinE executive officer of tile Board a schedule showing the amount of each denomination of Federal Reserve Zotes requisitioned by him for the account of each Federal Reserve 1.gent. Article Xl. The Seal. The following is an impression of fae seal adopted by the Eoard. SF:1L. j'.1.rti_cle X11. Counsel. Sec. 1. The Board shall appoint a General Counsel whose duty it shall be to Edvise with the Brnerd, or any e2ember thereof, as to such legal questions as may arise in the conduct of its business; to prepare, at tho Board's request aoiniens, regulations, rulings, forms and other legal papers aad to perform generally such legal services as he may be called upon by the Board to perform. Sec. 2. Subject to tiro direction of the Governor, the General Counsel shall have authority to correspond directly with the Counsel of the various Federal Reserve Banks and to request their opinions as to the interpretation of the local laws of the States included in their respective Federal Reserve Districts. Co-oies of all such correspondence shall be furnished to the Board for its information. Sec. 3. Whenever it may be deemed advisable, the Board may appoint one or more Associate or Assistant Counsel, or one or more Assistants to Cuunsel. The duty of such Associate or Assistant Counsel shall be to assist the General Counsel in the performance of his duties and to perform the duty of the General Counsel in his absence. The duty of such Assistant to Counsel or Assistants to Counsel shall be to assist the General Counsel in tho performance of his duties. Soc. 4. The Board may appoint from time to time Consulting Counsel, who may be attorneys at law engaged in outside practice. ,•••• X-4543 -7- Lrticl X111. Meetino,s. Sec. 1. Five ear o: the Board shall constitute a quorum for the transaction of business. Soc. 2. Stated meetini;s of the Board shall be neld on such days of the week and a'6 such hours as the Board by a majority vote may fix from time to time. One meeting day each week shall be set apart for consideration of the following ma tters, advance notice of not less than two days being sent to members of importont questions to be taken up at the meeting: Special orders; Discount and open market matters; Approval of expenditures and salaries; Establishment of Federal Reserve Branches, Agencies, Currency Stations; Permission for establishment of member bank brancnes; amendment of Board's rules and regulations; New -policies or changes of policy; Such other major 'natters as may be reserved for consideration at the weekly meeting. Sec. 3. Special meetings of the 13oard may be called by the CI-lairman or Governor or upon the written request of three members of the Board. Sec. 4. At all meetings of the Board the following shall be the order of business: (1) Re=ading or inspection of the Minutes of the last regular meeting and Minutes of meetings of the Executive Committee. (2) Retort 01 the Governor. (3) Report of the Secretary. (4) Reports of the committees or members on assigned business. (5) Unfinished business. (6) New business. Article X1V. Absences. Sec. 1. Absences of appointive members of the Board shall as far as Practicable be arranged so as not to interfere with the expeditious conduct of the Board's business in Washington. • gpwailokierte, •st, -6- ;- X-4545 article X7. Information and Publicatio2. Sec. 1. ;al persons employed by the Bo.!-.rd shall keep inviolate its business, affairs, and concerns, and shall not disclose or divulge the same to any unautnorized pe-2son whomsoever, and any employee who Shall give information contrary to this by-law shall be liable to immediate dismissal. Except upon vote of the Board, no onakother than a Member of the Board or the Secretar, Assistant Secretaries Assistant to vernor, and General Counsel, shall be permitted to inspectt any of t .'s minutes. Sec. 2. No state.nents shall be made to the press sive of the Board's -policy or descriptive of its action exce-yt as4. .A.) trized and approved by the Board. Such statements shall be issued only in wr.tten form and when authorized and approved they shall be iSsued through the office of the Governor or such other officer or member of the Board as may be specifically designated. While each member of the Board must determine for himself the propriety or necessity of expressing publicly his individual opinion on any gaestion, members Shall not quote publicly the opinion of other members on matters which have not formally been passed upon by the Board. Sec. 3. There shall be published monthly, a bulletin to be known as "The Federal Reserve Bulletin", which shall be the official periodical organ or publication of the Federal Reserve Board. Sec. 4. No resolutions of a personal character, except upon the death of a member of the Federal Reserve Board while serving as such, shall appear in any publication of the Federal Reserve Board. Article XV1. Amendments. These by-laws may be amended at any regular meeting of the Board by a majority vote of th'.), entire Board, provided that a Opy of.:such amendments shall have been delivered to each member at least seven di& prior to such meeting. Form No. 131. Office Correspor .ence . F...arni.in To FEDERAL RESERVE BOARD L„,e_Mateh 3$ 1926. Subject: From_ Thervit ttaehed "heri)to$ fttr yr1. infor.nationt a list of insolvent nationzi laara(s, 34 in riteransre which had been (nroroisine, trust •porters muter permits gewited by the Name of Bank Dist, 1 National Bank of Matbnen, Location Dato Inaolvont Methaen, Maas. July 29, 1925. Osanannealth Notional Bank, Reedville, Virginia Yeby.16, 1921. 6 00010411 National Bask, Athena, Georgia April 17, 1925. I 7 7 Posoitsburg National Bank, merchants National Bank, Ferry National Bask, mmstilrarg. /ova Grinnell, Iowa Perry, Iowa March 11# 1921. 3ov. 3, 1924. Fay. 5, 1925. 9 9 9 9 Alexandria, Nina« Crookston, tAinn Wells, Mica. Jan. 8, 1925. Noah 24, 1924, Oct. 22, 1923. 9 9 9 9 9 First National Bask, **reheat* National Baca, First National leak First National Bank: at Fergus Count, in Ommeereial National Ba6k, First National So*, First National 31.04 3ioitu Walls Notional Book, First National Bank, Lewiston, Mont, Miles City. Mont. Brookings, Sea:eau I.Preston, Scam*. Sioux Wslla, 14.Dak. Nebetor# 3o0Dak. April 12, 1924. My. 15, 1924. Toby. 9, 1924. Marsh 28, 1924, Jima. IA, 1924. Jan. 2, 1924. 10 10 10 10 10 10 10 10 10 Broadway* National Dank, Gleba National Bank, Loveland National USN Logan County Nation& link, Mrs, National 'Bank, first National Bask, First natiAnel Bank, Citisena National Bask, Powell National Bonk, DOM% 00100 Jan. 16, 1926. Dommer, Colo. Loveland, Colo, Steals& Colo. Lat "Ape, N.Mex. Lawacis Okla.. Basir Wronisig Cheyanna, wyemin Powell, Wyoming Oct. 1, 1925. Oct. 22, 1925. Jan. 26, 1925. May 4, 1925. Nov.18, 1922. June 14, 1924. July 21, 1924. March 27, 1924. 11 11 11 11 11 11 11 Citivens National Busk, State National Salk, First National ask, Mat National Bank, Citiseas Natiosal Beek, ,Silvar City National Bask, City Notional Bank, Albuquerque,N.Mex. Albuquerque, N.Mex. Carlsbad, N.Mex. 3oave11, N.Mex. Rompoll, N.Mex. Silver City.X.Men4 Ni Paso, Taxes Mar IL 1924. 13, 1924. May 14, 1924. Nov.14, 1923. Nov.14, 1923. May 14, 1924. May 8, 1924. Clarkatoa, Wash. Passe, Wash. Otevills, Wash. Feby.12, 1924. Nov. 21, 1925. Feby. 8, 1926. 12 12 12 .1111, I First National Bank, First National Bank, First National Bank, ....•••••• Page 83 Book 157 Mar CONFIDENTIAL For use of Federal Reserve Board only Federal Reserve District 1111. DEFICIENCIES IN RESERVES OF MEMBER BANKS FOR MONTH OF JA72ARY , 1926.* NUMBER OF 7B-ANT?s PENALIZED I In In other I F.R. I bank reserve I and 'branch cities 'cities I I Country I Total banks 1 I I I ** 3oston New York Pniladelphia Cleveland Ricmond Atlanta 11 Chicago 4 St. Louis 25 Minnearolis ** 861 1 599 493 1,392 623 829 1,023 85o 736 9,459 9,494 ##9,674 1 ** 2 ilk San Francisco Jan. '26 Dec. '25 Jan. '25 9g 24 963 120 90 31 27 1,215 S9S FEDTRAL RES;:RVE BOARD DIVISION OF BANK OPERATIONS MARCH 8, 1926. C. Page Bo ** 1 • 6 754 2 AVERAGE DAILY DEFICIE7CIES ON WHICH PENALTIES wFRE ASSE_SSTP anks-T-I Banks lin F.R. in Coun1 bank other try Total and rebanks 'branch serve 'cities cities ' (In thousands of dollars) ** 418 Kansas City Total NUMBER OF BANKS ASSESSEP PENALTIES IN EXCESS OF 1 MAXIMUM RATE CHARGED# Member MINIMUM RATE# I banks 1 In 1Banks 1 F. R. In Coun'in F.R1 Coun11,1 bank other try I Total' bank I try trict and re- 1 banks I 1 and ' banks brancn serve 1I 'branch' I cities cities 1i Icitieslcities I 881 3 7 6 .1eAs. 44t st. 4s71 76 ** ** ** 1 1 3 1 29 30 13 14 16 16 192 212 226 194 216 227 6 6 6 6 6 6 7i 6 6 71 gi 6 6 6 6 6 1,089 140 453 ** 6 7 6 7 7i 62 ** 1,377 10 744 10 431 86S 923 532 471 170 272 347 549 5,876 6,309 3,882 *Fizures for country banks .sre for the calendar month, and for central reserve and reserve city banks for four and five-wk periods **Federal reserve baCr and T -&.,1 cities are the only reserve cities in the district. #Progressive penalty are not applied by the F. R. Banks of New York, St. Louis and Minneapolis, the Atlanta bank has a maxrnum penalty rata of 8 per cent, and th3 eight remaining banks a maximum of 10 per cent. #RRepresents the number of banks as shcwn by the F. R. bank capital stcck records; the figures fcr January 1926 and Decembar 1925 represent the number in actual operation. 44, u ,.061 FEDERAL RESERVE BANK OF SAN FRANCISCO JOHN PERRIN CHAIRMAN OF THE BOARD AND FEDERAL RESERVE AGENT 11,10114mryZ, 111111 Noir trot Mr. Wass leaelles was ftrmorli valued nee Presides* at the to* at Indio...ells of whisk 1 wee Us *repel:or amd Prealdemt* Be la earring as Aroma Cbsimmos at a Seb-somelttost Uree sr Mo. Peal m* Amelia&Mr. ,4av1s 414 11144I0i, Gemmitteo of tear 0111sra egpeintei b4 tamp, Ohs Apiaries: SeekseeAnt.141a I siemsider isttadtmatts timmittes st desirable la wafts Obese Oat It eemsledsd 4Jribe Moot lissertemt essesttal lee first the astomeism otithill#tore at the MIMI miss to deter pepossis it I Deserve islis..sit Upsetter* at 'Ober 3*1.$t*\ 4$i Attie mar krsparlats tar its de es reqesetel that 1 milks seigestiome \-iessed to no 4seille4s, AMMPOI41141 vs of seeedmemas tan with tee Emiegliereiell asmuremele is \resasst* I fiisI tit! Suraisetiass tar einsidievailm Folerel Omer,* AS a. linspations go, swiligiesselas la apoilas Ike Natiatal Irk Amt. Sillereet Se tbdt sepias at thee, list these eageeetSsieem met be without lessrve Used, 1 beessith *Palos. Tars viry Indy, Olmieris Ilederal 16 C. Perri* NA Illmslamaras Page 101 Book 1_57 ammelbs ads* *IOW 10 Mat 11.1111 avail 411111114 SIR Frandsile Nig 1.11. 15/S. Suausgsaliallt&-aimanlassi teMa;ft'• J6101 ilWriVs istamilsa. owlsiderstita AMA& 1. AmMilignift Mire this tie Osumi bom1lm4 Datiemil Oa MOO, hem failed since 1920, imaiwitag *soma hundred fifty-three dmrlagrliaii alprosinstely thirds of thoshiartng capita of 446,000 smi DNS, and approximately amity per seats hsvkag capital of $100,000 end lace. Mere has bets o similar sAaaessitla of such failures throughout the finansial history of this country'. There ha$ bees no authoritative investigation as to the onus of suoh failarea and their possible prevention, nor as to the reason gpivr other eountries are largely exempt from sash fallares• Onosely settlsd a-Astro/1s, for Lasts**, Ms est had a failure within thirty. miss Analogous to this were the alr•r•IVOUrring finasalid pasties, with no authoritative injuiry as to their ellaa• or possible prevention, tor as to the reason why *titer countries wore exempt. This imvestlintion etor the penis of 110? vas ttle first authoritative ons, sod that repeated in the Pederast aeserve System, which is a comprehensive pnelaltieli of pies. 2* AALlimucaujAkimmata' illsesaite of the wain:sift stress of failures, sat with the parposat ci uskiag balks safe, the practise belga of legally replying slash misery**, the Met isseirtait early step in this elaseot Loa loin the provision of Lot. LAIsh re Aratesti new appear in the lams of all Shp Notional is tha States. *thing is more clear, bcresvaisi OMR that leis1 reserve regrillroomts inn proved futile for mean bee* safe, sena States hiring hisbost morn relatirements hewimg suffered moat fres Imo* fanfares* 11. Sipsiffision of banks by legally constitAtot authority is 11111donital1y dosirabls, It is s periodic test of Dre observames, jaat as as audit of soak is a test of cont. While supervision nay *arm to asp 'prat lens within the teehnieel limitation of low, it oestuillatas little to gag ammogaseftt. 4 . SAILMOsammai Pet hares eas be overtoi 5517 tir leg alillealaimt, sad good ammogiumat is svailabl• *air as the average for beaks suffieiently oapitalised to assize an Isom •iliste ter the omploymomt sad retention of *killed Mg imporloaseil s. -1- 11 5* In spite of the high, micrtall*, of bathe at smell capitalisation, it weal& not at the present time be a posetiesil proposal either that otetes or the Psderal enthorities dissontinne aharteriss bathe of smell capitalisation. 6. JONNIEJNOIL Illreeek beakers would snegsat the sabstitatien of Branches of largo babe tor smell it tran1c3, bat s proposal for either Intion-wide or 3tate-mide Urea* banking wettld not at the present time be praatklal beams of the &IMO mmtebneus op,Jesition of bemhersy laths* the more replid ereith et breath beaks seems to indicts** approval by tank oastaners. Luah oppositions to s aelaiderable extant, asubtleas sieve oat of tradition rather then refaseaed contriettea* It is an interesting fast, pointed 04i tir Mr. Platt of the Apiters1 :Seery, 3oard, that legislation restricting the eetebliehment of breathes one instigetiod by city banks against the amareashmeat at *emir, bents, at a time when there was free issue of notei4 by UMW establishing th'ir office* in secluded Oases and apsaise brushes or agensies in cities, to bqy their notes at a tieeomate ;Sentiment has since tlarmedy so that country banks mese branches to avert as. eroaehmeat by city baba. 1!Ilidalli..Z11111811 The lefediem Bill received much attention in the lest Congress. it mme avowedly intended to restrict the extension of Branch banking is its maj*It SOUS* of transferring /*sepias of ane comzutity to meet the dieficieler et another, but at the same time mate a ioncession to neighborhood 00ave111011.0 in eathorisLog the establishment of additional °Mess tn the city of heat Office in those States permitting bran* banking. This plan of serving meiehherhoei convenience wad be swliedi to the eallatry as well as to the e ity, Om.trithorisingt a inaeoperatioa of Istionel banks capitalised at not less +hes. sap', ,A50,003, privileged to SO-lair* by potrohase or consolidation other beekemithia s restricted area. The Ineedisa Dill proposed to limit to the eity of bead *Mos the establishment of additional offices. DA like mammary the suggested balk mi;Iht be limited in its eatsblishment of additional offices to e oodles of, sery twenty-five miles. ?be *met radius skieh would be advisable scald only be ascertained by careful stn4, sni there mi4ht well be previsions/testiest* the ,:omptrollsr of the Cerrency discretion to permit a stated radios te be eztangai in sparsely settled soot tens. 1WmgF who mere strongly opposed to branch barking were in fever 3f the eneotment of the MaPadiem Billy lathes* it contained the provision of widitionsl offices to serve nsighbelheed senrrosiame• It is therefore possible that the sathorisation of banks, sea as saggested4 miAht meet with approval. If provia ten for *ma basks were inserporsted in the lass **pita moat flow into their oripsnisatiesk ear if their operettas would prove mlre grantable then that of the emill beam. Differing frest the brenoh "do nave' provided for cities, it will be observed that yr/ eameetien is that additional offices 'mould be escAred only thro4gh absorption at entatiair amell beam. if the *lamented type Or Wade were found profitable. a pot mast wield be provided for selling the small MONO, 010 that the davolopmeat If the sageittei larger bane 'foul& 110 eintatiact Weir an& It litiltrwt iv4p,sind es isi teta Mr a period. of of our meat smelt inipertamt sheese la 414187 " .)1g t°‘f-Istity tensede sort straotare• Se 411iiittLIMAIUMML Relative innanIty frost failures appears in bathe ottpltalisel at 01.04000 or lore, nee for these at esoller sepltslization. ?o ~tout the waded ob$orptien of the smalls& haft into the larger units, it would ob— viously be necessary that sash bats should hire stathoricatittat with— out limatailon to t!lose tattoo permitting brasah b4Aking. XASItt otQ7qflar orefilly The Comptroller of the .urrenoy'a *Moe ahead to the /*Orel Moser,* Sisardo to. RAAgrotiotri_tems of the departmeat of c)sqtroller There should be a prevision not now is the Nat tonal Unit kft ta the Cemptroller full discretion im grant*/ *barters for new 'halo or loreaobbee occorlize to public comramiamee owl adractage. 11 . 041000tOn Jawing' doolits shot4141 he segregate& and inveatments mote with 4ueh funds held solely for tno benefit r)f serinps depositors. la. AMMOMMIUMWLANNWIL Me plan of the California 3e* Act, in *tract tines 1900, appears 5* have watts& isinitahly, with oopAtierably less fstality that at National Simms la that States IS* Mgr measare abotilding Ube Motional Bank Aoto when referred to a owa. nIttee of Jong's**, should be sahaitted hy that committee to the Pettsral e. *erre Mocrl, *Ai theBeerd's epprems1 or disepproval me44, a part of the semmitteeta report. Jan Iffeaelse. Sri 136 1928 conftdeutisl Xamorandum for LE*. vane .00llen PCP. V.. John P,trr# zggestions for lonsideration itrsoudirt NI/ irrpo4 Bwrtz Att 1, Aeserve Bog5tratiantS The reserves required for National basket prior to the Federal ?Amery* Let, were perhaps net deficient in amount seams's as is availability* if, however, the persentages specified in the National Dank kat were neseesary to liquidate 1erositers9 current demands, them it is obvious that the pereentagee of reserve deposits required by the federal Reserve AO are entirety inadequate for th, : sow purpesio• Till money, for Inatome** in some reserve hank cities averages mppremliately on. and 4410 half to on. per cent* ra reserve cities this immillialem a reserve regairement of team* en* half per sent artinst the former requirement of twenty-five per cent. it is submitted that the soonomie effect ef the present reserve requirements, though perhaps not so intended, is aerely to give federal Reserve Daum rediseounting strength, and net primarily to provide member beaks with fumds sioquate to liquillate 4erositors, o'Irrent demands* 2. Wet",.2t peetber tank, If this enegestion is soundly based then it follow, that reserve deresits are wet required gram amber banks to wake this safe* Ls providing such reserve deposits the element of safety of the depositing member halite &mold he di'sregarded and emly smak reserve deposits required as woad give $10ders1 reserve hooks *deviate rediseemmting strength. IL poetry, nevi/sits n.elmted to pyrowirsji jecoase of tradition that legal regairemints of realm maks tasks oaf* reserves have been related to deosits* If. bilever• the alliondUllourimee of reserve deposits is morelx to give the federal reserve Woks redimeemeting strength, then re/pavement' of reserves should he related Is berrewings from federal reserve hmahe. This seuld be in line with the oustemary oemmereial bank preetio. of requirimi soMpensating balances, sad nicht be based apes gearterly* scsd-annual or axonal svowsges, that is, the reserve deposit required from the maw bow( wield be determined hy the amount of its berrewinrs during the pressen( Porto& 4. 114001 on Ocla JSdera1 pitorye equirommit, It would he a eoro1ler.1 of the previous sucsesti.n that nct,terreving tanks should he exempt. In part or entirely, frumrsquirwments to oarry reserve deposits with federal reserve hanks, or, a lash baftat a ionalsPeriontsf* at Its &formats invested in free tailimrs asooptamses Sr gevoriment eSseritiee might likewise be partially er Smartly exempted from reserve ragmirememts. L. flonomic MOOS Whether reassillay sr not, probably me provision of the Federal Reserve Act is is mach resisted ** that of eerrying nenAmeene rseerve dwposits with federal reserve banks. The preeeding suggestion imuld sake for enlarged. popularity of PederAl reserve basks and oosimpasatly emlorpoiimmihorship, mmd, nt the ammo time would eive imoOntives for sommder banking. Am Wort to gain eximption front resurve deposits would stinnlate the wider use of acceptance credits in bozdt portfolios, and. at the sews time relating reserve deposits to borrowings would impose a wash needed restraint upon week and badly managed bunks. It it observe& that banks In whidt the oonfidence of the community has been impaired suffer shrinkage of derj!oe its and not infrequently borrow amounts Omeedine their totga deposits. City banks under sash a plan woul4 doubtless rarely rediscount, utilising their released reserve t. sitsfor investment in bankers' acceptances WWII; would be sold or allowed to run off in order to replenish funds. This mesa be a sounder situation than rediscounting *dimmer to customers. The development of such alp:UW*1ga* load to diminished use of the rediscount privilege. Mile this sight be to the advantaFe of the general bank, ing situation, it woulii rfsult in ilmlnished rederal reserve earnings. "Pis difficulty might be mot In ons of Ur* yam either by reduction In the outgo, 1. s., by *posing service cbArges for sertsin free services such as check collections; or by an imams* of limos" by larger open merkst operations. 6. itirossior• t•dis,0424t, Seforfe the Federal nessrve et use Osastamt a lotion-•1 bank vas permitted to become indebted In en amen* act greater than one hundred per cent of its member beak's rediscounting espital, if this be Wm as $ narmal masts= of then redlsoonnting, if permitted beyond that, should not have the inoentivo of largo profit as at the present time withroderal reserve bank rediscount mt.* at three and digt-haif and OW per cent, end loading rates in some sections is lank' disposed to redieconmt excessivehigh as oligkil or Wiper cent or more ative course If the Federal reserve conserv more a 41, will undeabtedly pursue hundred per cent of capital of the ono above tank Moil& rediscount amounts the same rte. ms borne by the nearly at or borrowing bask at the same rate, paper otters& for rediscount. 7 pUtS .11 ,11—t1 034 C.......2.1 There ebeald be a provision ter the larger use of gold, in the fens et ve sold certificates, instead of Federal reserve notes. 'Awn there is an aseessi us apply of tcold, as bas teen the ense during the last few years, there seems d as be Wight employe eates sertifi geld viien w sorro credit prepriety to using bel wad use paper neney. ftel features f)f sash (a) smaller reserve ratios In Federal reserve published statements, inviting less conspicuous attention with consequent less incite. slant for foreign or domestio powers to se* amps to utilise potential credit. (10 Meertifloates in circulation available for replenishinf Federal reserve InOr reserves. 21th gild certificates constating * large part of our paper meney there would be the possibility of a larger swing In setual conditions without arsesing apprehension than if, for Instance, an outflow of gold were all fro* unreplent shod Federal reserve blink reserves. O. Live Aesets equipMoral reserve Wean sheabi apreetats sarialy Voir betiding* ant live in carry not plyoultt and value ntton liold meat to a point of not Wirt that failed year, one any tram aseunts 4u0 assets for sere than a limited UM, SW of assets banks. Federal reserve tamiragoommitat ahonld be t model to its ratinr at lleutdation value. 9. Zia tributi on of yederellteeern Mak Prnimax per cent AS early draft of the Federal Reserve tit provided fqr five y dividends to amber banks. Ible use later increased to six per cent, chiefl t preven te vas won representation* able by Nre James B. Fergsn. $ea limitation of the timers operations for the primary peeves* of profit it beire thought by per cent pc six ably, gs the earniu have to OUI the sill that it woald b VMMOSM to the government. In n period of strain, Visa Waage are small no ilfficulty arises, bet proves that the atence gs, experi With seampommat largo Federal reserve earnin details of upon both say tentian if Ifeigrese la oeutorei in an solesirelle ation of applle ether woleral reserve balk speratienasilspos :providing sees 'mists than the methods previdei In the present Um desirable instead of the presort distribation of earmliews it would appear s ements that all, or at least the major part,of net earnings Owe surplu requir paithat fact the of view in and, banks should go as lividends to Shareholding does not have the meat of earniers, as a franchise tax, to the government is lire of*e , that, e shares reserv justifieatisa of investment in Federal d upon the ir,pose be ment present Mashie* tax a tax on behalf of tbe gover better lasR have would uncovered Issues of Federal reserve notes. Ouch a tax effect in is ment tiftsattes mut papaws If earnints, inasmuch as the govern * contingently liable for the rodomption of Federal rimer, not**. e, that whisk The beposiCon of such a tax WW1 sem • doable purpos l imams beaks of ?Mora part the is ence prefer has just bee* stated, and also a order to re. In totes e reserv d to (gradate gold aertiftaates instea of 7404oral yment. the se tax:pa minimi thus and ation duce to a minlimak the uncovered sireul further and 1,11.4natt It 'would be desirable, if possible, to go a step l I:eserve notes. of redorl tion the liability of the government for the redemp 10. 0mmaimprigg9M9W2 shiald be raVW prevision of sompulserysesIbership it Watismal WOO or asap-rove reve iieirg risei pealsi4 The Moral **WM board shoal' he estilte saiberomp f Ostia/sal ben* tbe Seme as of State banks mai have the rigid terielbate assbership for wise. Cs mad iti oat of731071hOrthl, of watiosel leaks eat SUMP kaki ekeild be idestisele lhatevwt the ateastage of oomolscriNalbership 011 Mstional berninsing have been at the *sleet the neoessity no longer exists. U. ReqPwal 0/1044.9 Yederkl reserve Wank sh%rtere should, of course, he extended. 1E. lagE Rotxualt areetersiqps of Federal reserve b34X11 lack the vital olement of pecuniary intermit. AS an offset, the terTs of directors of Federal reserve bemire and their trenehes should be limited so that there will he from tins to tine freshof views nrid keenness of interest naturally incidental to new InvAmbency. ?entative swestions in this sonneetion are that: (a) No non-salaried director of a Moral reserve totric or of a branch of a Federal reserve bank, should serve aontinuously for a lower period than *is peers. (14 Ihe service* of as7 director should automatically terminate it (1) MO reaOles the se of seventy years; (2) Me is absent from rtirestors' neettngs for a period of obi siestbs4 (I) se attends less than fifty pir eat of the meetings in treIVIIPamenth period (not 41111.11dar period). 13. Berresesiptle% pectoral -zesorve 4et, flootion 4, provides In part ILO follvest "class (direstors) shall oonsist of three ambers who shall be chosen by end be reprseentattve of the stock bolting tesbrs.14 The term wrspreeestatIve of', should properly appear in the description of class directors and in the description of class 0 direotors, the leAter being representative of the Federal Reserve seard. Thus tr,is would sees to rawest "blocs' in form it swell not be so in the usual sense, 'manuals as no one inter.. setwould seek to take advantage of another interest; nevertheless it appears desirable that sash aireator should be alert to pee that the interest etioh he represents hat tall consideration. Directorships in yedseal reserve tanks titter fundamentally tree those In a private corporation issipuch As the latter are prissray immersed with profits Rnd all unite upon that common around. 1.41. Ilistlatio* SEMae A Usufli y Qiasip lireotors thefl is & great lack of interest is nominations -t of both Class A and Class is directors and in their election. The Beetssi Diatrist is a eeipaet One end there has been adopted there a plan of soesseeting of representatives ef all sember basks. A OpMMittee OK direotors' noninAtiots works out very easily in that ease. In the New York tank a eoemittet of the SOW York State Sembers Asseeiatien undertakes the recsommeadiation of those suitable ter seedastiest sod eleetiea. inoluded is this semmittee is a representative of the wee Jere., leabere Aseeelaties anti of the :.,onneetieut mankers ksreeistion. ts brings sp the Whole matter of method of seleeting director*. Constierativn may develop sees method better than the present one. Class 0 directors beeeuse appointed and net elected, have carefhl consideration and are usually of a very high quality. The prOldsion **vertu, the selection of alass directors is sorely that *- *- at the time of their elastics shnll be astively eigmeedin their District in amerce, agrioulture or some ether industrial puritan.* Ibis prevision does not plane ipen Class I direeters the responsibility of repres00ing the aetivities in whigh they are opposed at the time of election. 7-ey ere aceountable only to the kaki whit* nominate then and vote for them. Their in. sentive is to look to the voting basks and, as directors, to joie as a matter of worse with these of Class A. To the extent that this is true, it gives a twothirds bankdissisasse in eaeh Beard of Direetors. /ran a standpoint of sentient, this would perhaps be sameehat attested it the law plea* the responsibility sosst class 3 direetore f representing those enraged in the activitiow ertielfied. soald doubtless also be a most wholesome influents, if the federal leserve Beard shoald be empowered to appoint one of the three elass 3 direetors. This lead still leave sontrol with the votingsesW banks - threigh *listing five out of nine directors, but would provide fear eat of aine dirseters chosen Ws, appointIMO instead of eleotion.. oinging the appointed and sleeted elmeests of the it probably prove advantageous. MA into mos-41%41i naserisal positive /IL .Vigra Ileserve Mrent, Liability 2.f fawn should be a provision ineorporqted in the Federal leeerve kelt fixing the peesalery liability of the Federal Reserve Agent on the same basis es that of ea operating officer, As is not individually liable for losses by the bank and is responsible only for due tiligense. 16. AMMAR may seesewe isesellair the Federal Zseerve Act, elm referred to a eosetittes of ~ass, Mesta be Wed tted by thikt essaittas to lb* Federal Reser,* 3oKr41.• and the *card's approval sr disapproval sada a port of the easarittew it report. It. leserve Reasirenept, The provisions prescribing reservc4 to be held by federal Reserve Maks against deposits and against Federal Resi.rve notes should be Wepealed, sad the 11144 , %mount of reserves lett to the dieerstion of the federal Beeerre 11 lelti adalaila ?sdsrs1 Duerre hat shield be eastiet to ellainate requiresest that the awes elteald be Wee publielt, et the lake milkingskesinatIONS for It A sled abs. directs's* .b.. -Fornr No. 131. Office CorrespoRtence To Yr. Hamlin From Mr. Smead FEDERAL RESERVE BOAftD • Date_ _ March 9, 1926*_ Subject_ /.; -) '2--041/6 In accordance with your request I am giving below figures comparing the three largest National banks of Boston, New York and Philadelphia with the Federal reserve banks in those cities. The figures for ration al Banks were taken from the December 31, 1925, condition reports submitted to the Comptroller's office and do not include the resources of branches located inforeign countries. Figures published by the banks, which presumably include figure s for foreign branches, give the resources of the First 7ational Bank of Boston as .:;402,000,000, the 7ational City Bank of Yaw York as $1,215,000,000, and the Chase 7ational Bank as „;638,000,000. Consolidations or mergers of banks in New York City 'will when completed increase the loans and investments and resources of the rational City and the Chase 7ational banks very materially. r_V,TARATIVF, STATEL:ENT OF THE FEDERAL RESERVE BANK OF BOSTON , NEff YORK An PHILADELPHIA WITH THE THREE LARGEST NATIONAL BANES IN EACH CITY RESPECTIVELY. December 31, 1925. BOSTON: Federal Reserve Bank First National Bank 'cational Shawmut Bank Altlantic :Tational Bank Total NTT YORK: Federal Reserve Bank National City Bank 7ational Bank of Commerce Chase National Bank Total PHILADELPHLA: Federal Reserve Bank Philadelphia National Bank Fourth Street 7ational Bank Oorn Exchange National Bank Total Page 102 Book 157 W Loans and Investments Total Resources c3151,140,000 S412,516,000 252,081,000 158,763,000 84,929,000 495,773,000 346,521,000 237,648,000 111,962,000 696,131,000 334-,269,000 1,499,229,000 605,471,000 396,389,000 384,997,000 1,386,857,000 971,201,000 682,771,000 630,326,000 2,284,298,000 98,018,000 388,500,000 103,880,000 50,260,000 53,498,000 207,638,000 165,487,000 78,105,000 76,105,000 319,697,000 • EARNINGS AND EXPENSES OF FEPERAL RESERVE BANKS FEBRUARY 1926. Total earnings of the Federal reserve banks during February were $3,539,C00, or about $450,200 less than during eIm preceding, as the resrlt of a decline of $134,000 in earnings from discounted bills and of $313,000 in earnings from purchased bills and U. S. securities. As comcared with February of last year, however, total earnings increased more than $750,000, practically all in earnings from bills counteI- •ver operating expenses) of the Minneapolis bank were at the annual rate of only 1.5 per cent of paid-in capital as compared with 14.5 per cent for all banks combined. For the two-month period ending February 28, current net earnin;,s of the Minneapolis bank fell $7,194 short of meeting dividend requirements, Current net earnings of all of the other reserve banks for the first two months of this year were substantially in excess of dividend requirements, the excess being $303,000 for the New York bank, $271,000 for Atlanta, $269,000 for Boston, and $226,000 for Chicago. St. 4873a -1543. Mr. Hamlin CONFIANTI AL Not fcr publication Federal Reserve Bank From counted bills St. 4875 EARNINGS AND EXPENSES OF FEDERAL RESERVE BAI1KS Month of Earninqs From purchased bill s From and U. S. other securities suurces February 'Total Current expenses +4. 1926 Annual rate Current of current netCurrent earnings on net earnearnings average ings to paid -in capital Feb. 27 Per cent Dividends accrued to Feb. 27 Year 19 2 6 Balance available fcr depreciation allowances, surplus, franchise tax etc. - T-I On Jan. 30 On Feb.72 n17,981 4186,977 $6,746 $311,704 $166,795 $144,909 21.9 $353,672 $84,679 $268,993 $167,o6o New York' 549,535 321,275 20,003 890,813 517,740 373,073 14.6 633,386 330,430 302,956 96,359 Philadelphia 172,55o 107,486 13,g41 293,377 169,760 124,117 13.g 243,420 116,848 126,572 61,186 Cleveland 130,329 138,959 13,307 263,095 8o7,617 75,47E 7.4 221,919 132,198 89,721 g0,VJ9 Rich,rend 117,484 40,312 6,888 165,184 113,474 51,710 11.2 105,979 60,159 45,820 24,25g Atlanta 81,677 130,944 10,786 223,407 101,565 121,84e 33.0 318,716 47,669 271,047 174,116 .Chicago 205,431 218,076 26,667 450,174 309,257 140,917 11.6 384,670 158,3C)9 226,361 164,747 63,753 114,006 3,678 131,637 113,950 67,637 17.2 174,733 51,203 123,470 81,413 neapolis 19,542 71,315 2,610 93,40 69;915 3,552 1.5 23,993 31,187 *7,194 5,040 Kansas City 52,358 138,449 24,159 214,966 146,190 68,776 21.1 157,148 42,401 114,747 67,168 Dallas 17,923 131,15E 5,93ci 155,020 93,76o 61,254 1E.7 165,327 42,697 122,630 82,731 San Francisco 77,465 TOTAL Feb. 19g6 1,606,526 Jan. 1926 1,740,690 Feb. 1925 868,419 190,2E5 7,761 275,511 169,931 85,580 13.5 236,350 82,347 154,003 109,768 3,019,313 1,180,167 1,839,126 1,114,415 1,277,063 1,122,439 154,624 Ilitton .St. Louis e 1,789,742 142,5E5 2,103,026 142,036 1,751,330 136,4E8 FEDERAL RESERVE BOARD DIVISION OF BANK OPERATIONS C. ' MARCH 10, 1926. Page 117 " t Book 157 3,538,655 2,219,960 1,316,695 3,965,952 2,235,534 1,700,418 2,776,237 2,359,713 416,524 *Deficit. swirms=101.IIMMEIMPIMMIS 6.444,40/1404 ,44,00.44 iet4v44 j.-‘444 //, 47 44,4,44 Wirch 5, 1928. )..44-$44. //, •s,FA-t--(t-e ght l." 44.10, komo4.4, 4444 Mr. Ir, 0. Wetmore President, ftderal Advisory Council, Care First National Bank, Chicago, Illinois. my dear 14r. Iliitmores At the last conference of the Yederkl Advisory Council and the federal neserve Board there was some discussion of the step taken by the Board toward asseibling and publishing in the wetskilr stOessmt of oondition of the 61 rerrorting banks of Now "fork City figures covering so-called street loans of those banks, to wit, loans to broker* and money dealers. This is now being done. this action had not been set down on the formal :vow= of the Council conference and no formai action by the Co_.ncil was taken, imeihers of the Board have the impression that the Council generally regarded with favor the action taken by the Board. 2, 3 Since the above action ma taken the Board has taken further steps to possess itself of information with respect to the security and street loans of each ef the reporting New York City banks weekly and of their borrowings from the federal reserve bank whenever these are above 4,000,000. The Board intends to follow a similar procedure in the near future with respect to reDorting bar banks at the most imnortant federal reserve centers, to wit, Boston, Philadelphia, Cleveland, Chicago, St. Louis and an treacles°. On the subject of security loans, the Federal Reserve ,12art will say in its forthcoming Anaual Report: Under ciroumstanoes such as prevailed in the autumn of 1925, When the growth in amber bank credit was largely in lease on securities, and when seasonal currency demands amounted for only a part of the increase in reserve bank credit, it was evident that the member bank* as a whole were increasing their borrowines at the reserve banks in order to b-Ald up their reserve Page 123 Book 157 balances. The increase in reserve regal' A to Iliko occasioned this borrowing could in turn ft arising liabilities marmarett zrowti in deposit Is allmarao. 'Om,of security loan*. Considerations ter Men an the factor* considered in 110441ber, 1925, Awn the discount rates were advanced at Angie the reserve bank*." 4- Ned au Before the Federal leeerve :System was este legket investment of &portion of Its resources in the tall by a bankwas recorded as affording it a soonniary ri tvents, ,-articularly in the Last half of the year Isms indicate, however, that some, if not a cousidersibie mai it banks are not disposod to withdrew investments few the 4160. IlArt market in order to meet local commercial Ammends then the Weed between the discount rate of the Moral Merv* hank and Ilhe Gall loon rats makes it profitable to maintain intact its *Sweetmeat in the call loan market end to borrow from the Uwe* beak to mast eommercial demands of its customers, rt even appears, as briefly let forth in the above extract, that there are banks Vat home boo using 7ederal reserve credit facilities to emilemg their investmeets in the cell loan market when that is a pr2filleble proceeding by reason of the spread between the v?ederal reserve die. count rate mad the ni.evailiag call loan rates. The nowt is desirous of Rscertaining the views of the Coaacil wtth roterd to (I) The proper relation of federal reserve banks t!:Npall loss merket; (2) The relation of ?edema reserve hank rates to call loan rafts; (3) The proper function muter our banking system as modified by the ostabliahmant of the Pedaral reserve banks of bantteg investment in call loxes. canterst the federal Re 4-•'---; l' /// Reserve 74stem to late, the use of the fac Met of the *er banks to the call e4,--(.... swport be extension of lo s by its t to the development of titAsti-k / auket1 (The Board is giving gather eliminate the misuse a procedure which will check or of Federal reserve credit :wilt S•) 04, review of banking history sun misuse was aede by soma loilibilL, ..-44,--tg during the last year Shows t port n of the year. The Board, banks, especially in the Is and assts Ice of the Council in detherefore, desires the vi veloping a procedure to 061 with this s taation. ',3necifically, the 'Ioard desires the vim,* and reoommen tions of the Council upon the following questions; 1. That at the Council recommend that the ledaral Reserve Board de sients (a) arway of ampliryiag the iddrietion it now obtains from its weekly reporting member balks with respect to their condition and operations; (b) ly way of regulations addressed to Federal reserve beaks with resnoot to their relations and dealings with their member beaks* or (c) In any other ways deemed arprepriate and ef.tective by the Council? 2. That, in the judgment of the Council, *an the management of the Federal moms beaks properly do by way of restraining such of their assiber banks as show a disTmeition to make Amproptir use of the credit facilia/.441m;444. ties of the Federal reserve bankl It is presumed that the meLlblre of Ise Advisory Council versant wt the practicto and. meilkmds of their are already reeerve auks or can ithatitt difficulty fully resnective *. on these inform thensel /0 Reali*Ing the importance of the difficulties of the nueetians that are beiag sOnitted to the Council, the loard is transmitting them at this early date IA advance of the next conference of the Advisory ',01.1ncil with the Pederal :ioserve Board (ray 218,1) in order that the Council may have simple last* study the situation which has given rise to these problems and to recommend su6setions of practicable ways and means of dealing with them in a manner at once effective and temperate. eta the Board th_ -Who Council ma Mut to dolit oo "41 Use of LA Members:alp eget& the study of Clis matter need cl rice', Ostia c4..41i* other tt and that such a the coal Reserve ao rd,, T4 invit assistance from the it! matters t w cil "these dealing in oneration of the imP* any Council t of sposal place gl to the Beard which may be ed. assistance that it direction of the federal Reserve Board. cAocretary. • February 15, 1926. TO: Mr. Smead FROM: Mr. Van Fossen SUBJECT: Bank Failures in 1924 and 1925. That the crest in the wave of bank failures, which was one of the outgrowths of the post-war period of falling prices, was passed in le25 might perhaps be inferred from the fact that the number of bank failures fell off from the 1924 total of 777 to 612 in 1925. An analysis of the figures indicates, however, that while the number of failures during the first 9 months of 1925 was about one-third less than during the corresponding period of 1924, the number during the last quarter of the year was about one-third more than in the last quarter of 1924. 4 in 1924, more than three-fourths - 466 - of the failures last year were of nonmember banks, most of which were comparatively small institutions as is indicated by the fact that their average capitalization was around $30,000. A total of 146 member banks, of which 118 were National banks and 28 State bank members, suspended during 1925, the average capital of these member banks being slightly under $70,000. Of the tntal of 1,389 bank failures during the past two year;,1,023 or about 75 par cent occurred in the area west of tho Mississippi excluding the seven states of the Pacific Section, In the above area the states in which the greatest number of failures occurred as compared with total number of banks were New MeIice, Wyoming, South Dakota, Montana, North Dakota and Iowa. Louisiana stands out as the only state in this section in which there wore comparatively II few failures. Another area of numerous bank failures is constituted by Georgia and the two Carolinas, with 158 in the two years or about 11 per cent of the total for the entire country. Five of the states in these ti:o areas, viz., North Carolina, South Carolina, Texas, Kansas and Colorado, reported a somewhat larger number of failures in 1925 than in 1924, and Georgia, Louisiana, Iowa and Missouri each reported one or.two more failures. The remaining 9 states in these two areas show considerable improvement, especially marked in the case of the Dakotas, Montana, Wyoming, New Mexico and Oklahoma. It is noteworthy that the states in whicO improvement is shown are almost without exception leading wheat-grawing states. Mth respect to causes of bank failures it is, of course, unquestionable that the fundamental cause is the widespread financial distress in the agricultural industry which had its origin in the post-war fall in prices. That the smaller banks experienced greater difficulty than those with larger capitalization in coping with unfavorable conditions is indicated by the fact that in the 18 states located in the areas in which the greater part of the bank failures occurred, the ( average catital of the banks which failed was below the average for all b(e.nks in each class (i. e., nonmembers, National banks, and state bank members). In the case of National banks and State member banks the average capital of tho failed banks was very much below the average for the class. It is also a fact rf considerable significance that 40 per cont of all bank failures in 1924 and 1925 were of banks located in places of less than 500 population, and over 61 per cent in places of I1t- than 1,000 population, whi],e -t] Page 131 Book 157 •• • _ Depreciation of securities. Failure of banking correspondents. Failure of other large debtors. 1,ttached hereto are a number of tables showing data in regard to bank ' as herein used represents failures in 1924 and 1925. The term ”failed bank, banks closed on account of financial difficulties, some of which may subsequently prove to be solvent and others may, of course, be restored to solvency and resume I.erations. (St.4862) TABLE NO. 1 - BANK FAILURES DURING 1925 AND 1924 - NUMBER, CAPITAL AN-10 DEPOSITS BY CLASSES OF BANKS Federal • Reserve District Number 1925 1 1924 Boston New York Philadelphia Cleveland Rijilknd a At Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Total Ratio to total for all failed banks Federal Reserve •I District ALL BANKS Capital 1925 I 19,24 $1?5,000 2 6 I $150,000 85,000 125,000 129,000 1,654,000 1,974,0W 4,622,000 Deposits 1925 1 1924 I $1,298,000 2,665,000 9,624,000 13,182,000 6,079,000 34,126,000 $1,605,000 1,746,000 901,000 1,137,000 5,822,000 5,002,000 36,950,000 NONMEMBFR BANKS NuMber Capital 1925 1924 1 1925 1 1924 2 3 11 57 29 s5 52 100 100% Number 1925 I 1924 Boston Aelherk Pnl elphia Cleveland Richmond Atlanta Chicago St. Louis Minneapolis Kansas City Dallas San Francisco Total Ratio - to total for all failed banks 100% NATIONAL BANKS Capital 1 1925 1 1924 1 1 3 lo 3 $225,000 550,oco 10 16 4 930,000 - 6 1 1,o15,000 - 44 16 10 9 118 49 30 16 10 122 2,015,000 1,600,000 1,15.1000 19% 100% 48o,000 7,970,000 $150,000 25,000 53,000 203,000 365,000 385,000 200,000 2,355,000 1,655,000 1,810,000 425,000 7,6 0,000 l00% I 61 35 12 466 92 50 237 101 34 18 618 loc% Deposits 1525 1 1924 1 Deposits 1925 I 1924 $1,298,000 $60,000 1,9o3,000 11,942,oco 13,674,000 9,084,000 44,985,000 85,539,000 119 4,142,000 28,698,000 34,763,000 3,108,000 11,830,000 19,612,000 1,397,000 8,471,000 6,69. ,000 28,373,000 1-7900,000 213,44 ,000 $125,000 I $981,000 2,665,000 654,000 6,003,000 1,137,000 9,547,000 4,280,000 2,179,000 3,134,000 21,724,000 28,718,000 11,916,000 12,305,000 26,443,000 59,588,000 12,288,0C° 18,207,000 ••SS5,905,000 5,384,000 4,066,000 105,636,000 138,975,00U 61% STATE MEMBER BANKS 1 Number Capital 1924 1925 1 1924 1 1925 I Deposits _ 1924 1925 $1,605,000 765,W0 247,000 $3,621,COG 3,528,000 2,782,000 7,658,000 17,806,000 16,410,000 4,011,000 2,721,000 58,537,000 1,243x° 1,035,000 5 4,868,000 616,000 8 1 19,764,000 15,984,No 12,325,00o 2,437,00o 5 5 3 3 60,889,000 28 37 9 ;.0 $25,000 275,No 1,039,000 2 25,000 9 150,o00 2 315,000 125,000 1,950,000 $100,000 625,000 540,000 200,000 795,000 125,000 235,000 25,000 2,645,000 $107,000 1,118,000 4,744,000 26,000 736,000 1,630,000 366,000 8,727,000 16% 34% 29% 27% 33% NOTE: Figures include 3 private banks in 1925 and 5 in 1924 for which no capital is available and 8 private banks in 1925 and fcr waieh no deposits are available. Figures of capital F,..ad deposits taken from latest available records. • • • 651 7 in 1924 TABLE 2 - BANK FAILURES DURING 1325 CTASSIFIED ACCORDING TO POPULATION OF PLACE IN VHICH LOCATED Less Total than .500 500 to Villatestowns or cities of 1,OCO 1,500 2,500 5,000 10,000 25,000 to to to and to to 1 4Q 2,494,999 9,999 24,9.93 over NE ENGLAT.D STATES: New Hampshire Rhode Island Total EASTERN STATES.: Pennsylvania Maryland Total SOUTHERN' STATES: Virginia West Virginia North Carolina South Carolina Georgia Florida Kentucky Tennes,iee Alabama Mississippi Arkansas Louisiana Texas 1 2 1 1 2 2 1 3 4 2 - 18 43 31 7 8 5 3 39 14 2 10 Total 171 MIDDLE WESTERN STATES: Ohio Indiana 10 Illinois Michigan 5 Wisconsin 10 Minnesota 50 E54 Iowa Missouri Total 213 WESTERN STATES: 32 North Dakota 64 South Dc., .kots Nebraska 12 Kansas 19 Montana 16 Wyoming 3 Colorado 15 New Mexico 10 21 Oklahoma 192 Total PACIFIC STATES: 6 Washington Oregon 3 California 3 Idaho Utah Arizona 3 24 Total Grand total 612 Per cent of total Cumulative per cent 1 1 2 6 - - - 1 1 2 - _ - - - 1 1 5 14 7 4 7 3 1 7 3 4 2 6 5 14. 5 2 2 1 2 - 4 - - - 1 - - - 2 2 1 - - - - - 2 - 1 - 1 1 2 1 2 3- 1 2 5 23 3 9 1 1 11 1 1 1 - 1 1 1 1 1 - 2 - - - 5 5 1 4 1 1 4 2 10 5 6 ... - 1 7 ... 3 3 1 12 9 39 ,5 21 3 4 1 2 14 21 27 24 3 - 1 2 3 12 19 1 6 3 5 7 3 10 23 18 1 13 1 1 3 1 1 5 2 23 2 12 3 1 1 5 3 1 1 1 1 1 3 3 4 14 6 3 2Z---130 67 56 b0 32 9.2 78.3 9.8 88.1 2 19 36 21 30 5 lo 6 1 4 2 9 11 3 7 4 1 1 2 4 4 8'3 42 1 1 2 - 1 1 - 2 3 - 1 13 1 1 3 4 9 2 - 1 2 1 1 2 2 10 1 4 36.9 36.9 21.2 58.1 11.0 69.1 15 23 5.2 2.9 93.3 9b.2 3.3 100 St.4862-7a-- TABLE 2 - BANK FAILURES DURING 1.124 CLASSIFIED ACCORDING TO POPULATION OF PLACE IN WnICH LOCATED Villag_e_p_, towns or cities of Less 500 1 1,000 1,56672,500 5,0o0 10,000 25,000 Total than to to to [ to to and to 500 999 1,99 2,49914,999 9,99 24,999 ovEzr NEW ENGLAND STATES: Connecticut Total EASTERN STATES: New York 6 Pennsylvania 2 Total SOUTHERN STATES: Virginia 4 West Virginia 2 North Carolina 13 South Carolina 24 Georgia 29 Florida 3 Kentucky 6 Tennessee 6 Alabama 10 Mississippi 1 Arkansas 11 Louisiana 2 Texas 30 Total 141 MIDDLE WESTERN STATES: Ohio Indiana Illinois Michigan 7 Wisconsin 10 55 Minnesota Iowa g3 4 Missouri Total 220 WESTERN STATES: 76 North Dakota South Dakota 111 17 Nebraska 16 Kansas 46 Montana Wyoming 32 Colorado 9 22 New Mexico 4 Oklahoma Total 37g PACIFIC STATES: Tashington 12 Oregon 3 California 2 Idaho 7 2 Utah Arizona 3 29 Total Grand total 777 Per cent of total Cuurulative per cent 1 1 II 4 1 5 10 5 3 4 52 10 40 1 5 3 3 - - 2 12 4 I. - 3 - 3 3 7 2 4 4 23 32 21 91 2 3 14 ig 6 48 1 2 2 4 4 9 17 18 7 9 2 19 56 54 11 27 3 10 - 6 1 3 1 1,8 14 12 1 2 21 1E54 64 - 2 ii 6 6 1 1 3 6 3.0 36 4 19 15 14 2 1 6 5 1 2 5 1335 15g 43.1 20.3 43.1 63.4 5 2 2 5 71 75 9.2 9.7 72.6 82.3 55 7.1 89.4 29 3.7 93.1 32 22 2.8 4.1 95.9 100 St.4862-b TABLE. Capital stock 3- BANK FAILURES DURING 1925 - CLASSIFIED ACCORDING tt. 4802c C APITAL STOCK San I Total banks I Minn- TC it 'Boston New IPhila- (Cleve-'Rich- I Atla-1 Chicazo I St• ansas 'Dallas I Lc nta i y I 'York Idelphia I land 'mond ILouis Ieapol is IFranci sco N-urnber IPt.-,r cent I Tot 11 capital A:nount cent NATIONAL BANKS 34.8 4.2 39.0 12.7 10 10 lb - 44 1b 10 116 9 1u0. $1,Oa5 165,300 2,635,000 1,675,000 12.9 2.3 33.1 21.0 2,450,00:., 7,970,00C, 30.7 100. 5 _TATE NEMBER LISTS1, 3.6 $199,999 -:;.'%30,000 to $500,000 i100,000 to - - ONI. ••• '''' ._ - 1 Total 2 2 - 5 2 - - - .. - g 5 35,000 1.8 25.6 33.3 1 - 5 2.7., 500,000 5 -• 3 2 7.1 650,000 20 3 3 1 3 28 100. .8 1,950,000 100. NONMEMBER BANKS Less -ths.n t25,000 - - - Itr-r‘ 000 to $99,999 2 - 1 F200,000 to - - 1 5 - 26 11 ii 6 29 17 37 4 72 15 30 12 8 233 83 50.0 3,097,000 21.3 17.8 E.6 2,075,000 1,339,000 14.3 79 17.0 4.9 4,405,000 2,475,000 1,130,000 .6 100 14,521,000 234 38.2 22.1 3,112,000 3,375,000 40 2 '.530,000 Total 2 - 3 _ _ - 1 ii - 57 29 1 85 52 61 35 12 3 466 72 30 21 49 10 lb 4 lb 3 3 8 135 119 9.2 30.3 17.1 7.g 100 ALL BANKS Less than $25,300 5 37 5 26 9 ii 13 29 27 10 2 13 1 4b 7.5 1,559,000 5 35 14 133 21.7 8 7,515,000 94,650,000 it50,000to16 14 24 2 4 12.7 13.8 b.4 30.8 $100,000 to $199,999 19.0 00,000 to $5C,0,0 04,230,000 17.3 0 Not avail a.ble 1 2 .5 3 S. 2 3 14 68 44 53 168 77 50 • Total 612 100 24,441,000 1;100 .1.. ..• '.. ! TABLE 3 - BA:.?: FAILURES DURING 1924 - CLASSIFIED ACCOR DING TO CAPITAL SOCK St. 4862d Capital stock IBostonINewI Phila-ICleve-IRich-IAtla-'Chic ago' St.I Minn- 1Kansas IDallasi San I Total banks I Tot..11 capital IYorkIdalphial land mond' nta I ILouisleapolisl City IFranciscolNumberiPer centl Amount IPer cent NATIO NAL BANKS $25,000 1 28 10 2 2 $25,001 to $49,999 44 36.1 $1,100,000 14.4 2 1 3 $50,000 to $99,999 1 7.4 310,0 9 00 4.0 2 12 14 3 13 $100,000 to $199,999 42 34.4 2,300,000 7 30.0 1 1 2 4 4 $200,000 to $500,030 19 15.6 2,000,000 26.1 1 1 _ 2 1 3 8 6.5 1,950 ,000 25.5 Total 1 1 1 3 4 1 49 30 16 10 122 100 7,660,000 100 STATE MEMBFR BANKS 4'25,c00 _ _. ... _ _ C 3 1 $25,001 to $49,999 1 9 24.4 225,000 8.5 1 2 $50,000 to .99,99 4 10.8 150,0 00 ;-, 5.7 2 1 2 ., 1130,3C0 to :1.99,999 _ _ 10 27.0 _ _ 510,000 19.3 1 2 2 1 3 i.230,000 to0,000 12 5.4 1,360,000 51.4 1 1 2 32.4 400,0 00 15.1 Total 1 9 10 2 2 3 9 1 37 100 2,6145,000 100 NONME MBER BANKS Less than $25,000 4 2 17 17 26 25 151 65 $25,000 8 320 51.8 5 4,241,000 1 23.5 4 10 29 10 143 15 12 '25,001 to $49,999 138 3 22.3 3,450 ,000 19.1 b 4 4 3 11 z..50,000 to $99,999 6 1 7 42 6.8 1,387,000 1 7.7 16 7 10 3 18 -1100,..-m to 1,199,999 9 7 7 12.6 4,303 ,300 73 23.8 3 2 9 g 1 4-,200,000 to 1'530,000 2 5 30 4.9 3,287,000 18.2 1 1 3 _ ct available .8 1,430 ,000 5 _ 7.7 -5 5 .8 Total 5 1 92 39 35 50 237 101 34 18 618 100 18,068,000 100 ALL BAN7S Less than t25,000 4 2 17 17 26 25 151 65 125,000 5 320 41.1 4,241,000 2 14.9 4 6 13 32 10 26 15 77 $25,001 to $49,999 6 191 _ 24.6 _ 4,775 ,000 16.8 6 6 4 5 16 :t.50,000 to .4.99,999 2 9 55 7 7.1 1,847 ,900 2 6.5 24 9 11 5 32 22 11 $100,000 to $199,999 114 130 _ 16.7 _ 7,113 1 ,000 25.2 13 5 5 1 15 10 200,000 to $500,000 2 61 9 6,647,00 7.8 23.4 , 2 c. 3 4 1 Not available 3 15 1.9 3,750,000 13.2 • 5 .8 5 Total 1 6 43 48 108 53 e95 133 29 53 28,373,000 100 I 777 100 0 .10 .... ..• '.. O • ..1, ... ... .". .". ... 1 gEW ENGLAND STATES: New Hampshire 1 1 Rhode Island 1 1 2 2 Total EASTERN STATES: Pennsylvania 8 Maryland 2 1 Total 10 9 SOUTHERN STATES: Virginia 2 3 L. 4 West Virginia Carolina 18 North 15 South Carolina 43 140 Georgia 31 28 Florida 1 1 Kentucky 7 5 Tennessee 3 7 Alabama 5 5 Mississippi 1 1 Arkansas 2 Louisiana. 3 Texas 39 37 Total 171 155 MIDDLE WESTERN STATES: Ohio 1 1 Indiana 10 9 Illinois g 5 Michigan 5 2 Wisconsin 10 6 Minnesota 50 29 Iowa 84 6o 45 2 Missouri 213 114 Total WESTERN STATES: North Dakota 32 South Pakota 64 12 Nebraska 19 Kansas Montana 16 Wyoming 3 Colorado 15 New Mexico 10 Oklahoma 21 Total 192 PACIFIC STATES: Washington 6 Oregon 3 California 3 Idaho 8 Utah 1 Arizona 3 24 Total 612 1 1 1 1 1 2 1 - 2 - 1 1 1 2 3 2 - 1 5 1 1 1 2 3 2 - 2 2 1 2 2 4 3 6 37 5 10 1 26 1 1 1 2 4 1 6 3 5 1 5 - - 1 3 2 13 1 27 _ _ 10 49 115 2 3 19 4 8 - 1 1 1 1 1 1 - 2 1 - _ 1 1 2 2 2 1 _ ". .. I.• - 26 2 19 - 1 1 5 4 1 1 - 1 2 2 1 1 2 1 1 2 8 7 18 49 5 2 1 6 6 - 1 - 2 1 - - 2 17 86 5 2 9 12 8 33 3 - - 8 5 4 1 - 7 3 5 1 5 1 5 4 4 31 6 2 2 - 6 2 10 6 6 1 5 1 _ 1 5 3 1 1 6 14 9 31 26 34 3 7 7 7 11 1 3 1 1 23 22 5 2 1 7 4 2 17 1 1 1 _ 3 6 g 2 - 9 84 g 1 1 3 - 1 1 - 17 72 11 1 12 8 12 4 3 1 2 3 3 2 2 1 1 1 3 5 1 2 2 1 2 7 1 7 1 2 18 2 1 5 5 385 I 97 297 21 lo 46 36 12 4 - - -- - _ 1 _ 1 1 1 1 9 7 - 2 - 3 - 18 20 2 _ - - 1 4 9 1 3 1 - 3 5 1 2 4 16 85 23 - 14. 5 1 58 3 5 4 - 1 - 1 1 1 1 20 23 21 1 5 _ Other causes 1 r.b-I Cl) Heavy withdrawals cd cn r4 0 Defalcations °al r„.. P. Poor management CE (001.-Ita rqmom P•'. 0E- rcg Grand total 4-, crl p, I. 0 ;-. Loss through loans to enterprises in which offs. & drs. intere sted Depreciation of securities •r-4 Cli 00 0 ›. •,-4 tH el CH Loss through loans to offs. & drs. CD ri (1) 0 rC, rT .4 a) Or •r-I rD A al .--1 Failure of other large debtor BANK FAILURES DURING 1925 - CAUSES OF oLURE BY STATES Failure of banking correspondent 4- Daubtful or worthless paper TABLE NO. 3 1 1 4 2 - 5 3 - 4 7 6 24 38 1 1 1 1 1 1 6 2 - 3 12 31 165 4 1 _ g . _ 3 6s so 81 NOTE: Several factors working together are generally responsible for a failure of 7, given ban/ and consequently the above figures merely represent the frequency with which each of the given causes was reported by Federal reserve banks as contributing to failure. St.14862-e. • iro 43 (1) cri 0 Cf; I-. 1) $•-, ' ,4 r) z $.16.7 5,. •,-I ,--1 rc,, T, rC, cn ,,,,i en 4-1 o ,0 ,4 tO 0 0 ..-1 •,-, 1 i 01 ,r) . r) p_, Co') 0 4-1 ,0 tab ,* 0 w •,--f , .4--1 0 '•• i Cd; (2 cf :) 14 rf A L ._•34, ;-4 ,1) t'', (i) a) n ,f, ra?, 2 ° c' -1 r5) al p 171.7 ENGLAND STATES: 1 1 Connecticut -ASTERN STATES: ; 6 5 New York Pennsylvania _2 2 7 Total 5OUTHERN STATFS: 4 4 Virginia West Virginia 2 2 North Carolinal3 13 South Carolina 24 23 29 29 Georgia Florida 3 3 6 2 Kentucky 6 5 Tennessee Alabama 10 10 1 1 Mississippi 11 11 Arkansas 2 2 Louisiana 30 2g Texas 141133 Total MIDDLE WEST1LRN STATES 4 4 Ohio 4 4 Indiana 14 12 Illinois Michigan 7 10 Wisconsin Minnesota 55 55 g 3 72 Iowa 1 Missouri 220 Total WEST= STATES: vorth Dakota 76 75 South Dakota 111 110 Nebraska 17 14 I I•1 i Grand total 29 27 II - - 1 1, 4 5 19 6 28 - - 1 4 - 26 7 2 - - - - - - - - 2 - 10 2 - 9 26 12 27 7 14 5 6 6 16 40 2.05 3 3 20 15 2 g3 48 4 - 6 15 1 29 I. 6 - 34 10 12 1 1 3 1 3 3 11 - _ 10 64 2 104 31 35 30 22 13 28 91 1S 101 135 - 3 16 Kansas 4t; 45 1 Montana 32 31 18 Wyoming 9 9 5 Colorado 22 22 14 New Mexico 8, 1 49 Oklahoma 373 317 51 Total PACIFIC STATES: 5 13 12 Washington Total 1 Other causes CO •rA ,0 n -H - CAUSES OF 4I/LURES BY STATES Heavy withdrawals lab ,4 03 a) 1924 DefRlcations - BANK OLURES DURING 4 rocr nanageaent . TABLE NO. D, Jpreciation of scuritis • • 15 34 7 11 1 4 1 g _ 275 55 2 2 3 44 1 1 19 1 1 2 - 7 - 1 3 2 7 8 4 16 3 6 3 10 82 58 24 6 19 9 20 - 777 641 1110523 63 2 1 36 2A, g5 142 1g1 NOTE: Several factors working together are generally responsible for a failure of a given bank and consequently the above figures merely represent the frequency with which each of the given causes was reported by Federal reserve banks St.4g62-f. as contributing to failure. TABLE 5- BANK FAILURES IN EACH STATE State 'Total[Jan. iFeb. !Mar. lApr. May NEW ENGLAND STATES: New Hampshire 1 Rhode Island 1. Total EASTERN STATES1 Pennsylvania Maryland Total g 2 10 SOUTHERN STATES: Virginia 3 West Virginia North Carolina 15 South Carolina 43 31 Georgia 1 Florida Kentucky 7 Tennessee 8 Alabama 5 Mississippi 1 8 Arkansas Louisiana 3 Texas 39 Total 171 WESTERN STATES: 32 North Dakota 64 South Dakota 12 Nebraska 19 Kansas 16 Mont3n Wyoming 3 15 Colorado 10 New Mexico 21 Oklahoma 192 Total 6 3 3 8 1 3 24 June July Aug. / Sep t. Oct. Nov. Dec. 1 ^ - 2 1 3 2 1 1 2 1 7 12 1 2 2 1 - 3 3 1 1 1 1 1 6 n 37 23 MIDDLE VVESTERN STATES: 1 Ohio 1 10 Indiana 8 Illinois 3 Michigan 5 10 J. Wisconsin 3 Minnesota 50 514 22 Iowa 7 45 Missouri 37 213 Total PACIFIC STATES: washington Oregon California Idaho Utah Arizona Total DURING 1925, BY MONTHS 1 2 - 2 2 2 _ 4 6 3 3 5 2 - - 1 - 1 3 - 1 - 1 2 - - 1 - 1 -9 2 1 - - - 1 - 1 - 1 - 1 1 1 1 1 2 1 - 1 3 lo 5 20 19 1 10 1 2 1 1 7 2 1 2 2 - 1 2 g 1 2 1 1 13 1 13 2 15 1 - 1 1 1 1 - 1 1 1 2 1 1 4 3 3 5 5 5 6 6 7 14 17 29 16 2 27 3 lo 5 17 lo 1 1. 2 1 .... 2 20 2 2 1 1 4 1 _. 1 29 .... 3 26 2 1 - - 1 1 •••• •••• 3 3 2 74 70 1 - 2 - 5 4 8 2 4 1 1 6 1 4 2 3 7 4 3 4 1 12 2 r o 2 10 1 1 1 5 - 2 1 15 15 13 13 16 6 4 4 3 1 1 1 6 2 1 1 4 2 1 2 2 2 3. 1 - 1 3 2 1 - 1 1 2 1 3 1 1 1 g 9 1 6 4 16 - - 2 1 )4 2 2 2 4 1 1 12 1 1 2 - 2 1 ..mr ••••• 14 - 4 10 1g 1 - 4 1 1 - 1 1 - 1 - - - - .... .W0 ••••• ...w ...• .. ... ... .3 14 3 2 2 - •••• ...lb 2 _ 3 6o 43 14s 54 34 30 53 Grand total 612 103 1 10 - 2 3 4 2 2 1 - 24 ^ 3 1 1 1 2 1 - - 1 2 1 1 29 14 4 2 6 .1 NOTE: No bank failures were reported for the following states: Maine, Vermont, Massachusetts, Connecticut, New York, New Jersey, Delaware, Nevada, and District of Columbia. St.14862-g • • TABLE State 5 - '3ANX FAILURFS IN EACE STATE, DURING 1924, BY 'MONTHS Total Jan: Tab. ,!!).,/.. .Apr. I,:a, June July Aug. Sept. Oct. N v. Dec. NEW ENGLAND STATES: connecticut 1 Total EASTERN STATES: New York Pennsylvania Total 1 1 6 1 2 1 SOUTHERN STATES: Virginia 4 West Virginia 2 North Garolina 13 South Carolina 24 Georgia 29 Florida 3 Kentucky 6 Tennessee Alabama 10 Mississtgpi 1 Arkansas 11 Louisiana 2 Texas 30 Total 141 2 2 - 1 1 - - 2 1 1 2 - NOTE: 1 1 2 1 1 3 - - 3 3 - 1 2 - 1 - - - - - - 23 17 4 6 5 g lo g 1 - 2 io lo 4 27 5 5 lo 7 1 2 20 20 2 8 20 4 4 1 16 13 4 4 1 1 13 - 1 0 .) 7 g9 59 20 7 1 11- 1 7 2 2 12 5 3 3 3 27 2 14 15 10 21 lg 1 1 g 2 13 1 1 2 g 2 14 6 13 5 1 27 5 g 7 lo 1 4 g 2 2 1 g 2 14 24 8 4 2 1 1 3 6 2 1 3 3 g 2 1 1 1 - - 8 48 2 26 1 19 10 13 9 3 4 1 1 3 g 35 1 7 45 11 14 12 3 2 7 2 3 29 777 2 3 1145 92 7o 74 gi 5o 47 35 35 39 47 No bank failures were reported for the following states: 1,aine, New Hampshire, Vermor4, Massachusetts, Rhode Island, New Jersey, Delaware, Maryland, Nevada, and District of Columbia, - 12 2 9 3 6 4 5 2 3o 11 Grand total 2 5 3 PACIFIC STATES: Washtngton Oregon California Idaho Utah Arizona Total 1 5 2 WESTERN STATES: North Lakota 76 ulI South 111 17 Nebraska Kansas 16 Montana 46 Wyaming 32 Colorado 9 New Mexico 22 Oklahoma 49 Total 37g 1 St. 4862-h. 62 • TABLE NO. 6 - BANK FAILURES DURI/K1 19c5 AND 1924 - NUMBER, CAPITAL AND DEPOSITS BY STATES AND CLASSES OF BANKS States, and classes of banks Numbdr of banhs 1925 I 1924 1525 Capital 1924 1 Deposits 1924 1925 agw IT-GLAND STATES: MAINE: NONE NONE NEW HAMPSHIRE: Nonmembor banks $50,000 Total NMI 50,000 VERMONT: NONE MASSACHUSETTS: NONE $1,2030 000 - 1,203,003 - RHODE ISLAND: Nonmember banks 75,000 95,000 - Total 75,000 95,000 CONNECTICUT: National banks Total PENNSYLVANIA: NItional banks Nonmember banks Total DELAWARE: MARYLAND: Nonmember banks Total DISTRICT OF COLUMBIA: SOUTHERN STATES: VIRGINIA: National banks Nonmember banks $1,605,000 150,000 1,605,000 25,000 60,000 765,000 981,000 85,000 a,7146,000 6go,000 50,000 75,000 3,6214)00 247,000 7,672,000 654,o00 5.05,000 125,000 11,293,M 901,000 5 6 Total \EW JERSEY: 150,000 II EASTERN STATES: NET YORK: National banks Nonmember banks NONE NONE 3 5 8 2 NONE NOM *2 100,300 552,a.)0 *2 100,000 552,000 NONE - NONE loo,000 5o,000 g9,000 5o,000 189,000 951,000 33s,opo 244,000 33g,coo 1„195X0 3 3 3 4 50,000 150,000 65,:oo TOtal 3 4 2 2 230,000 65,000 NORTH CAROLINA: National banks Nonmemiber banks 4 14 13 155,000 37e,300 18 13 527,000 473,000 ),061,000 1,305,030 5 2 345,030 25,000 1,41C),000 100,000 100,000 727,C)00 2,251,000 292,00C) 107,000 299 poo 0, 31,ao o 2,472,03C., 24 1,788,000 927,000 8,489,OCO 3,0b3p00 Tcta.1 TEST VIRGINIA: National banks Nonmember banks Total CAR3LINA: National banks State bank memb(4rs. Nonmember banks Total 375P00 600,000 259A0 975 poo 259,oro 902,000 2,159,000 1,305,303 st. 4862-i 111 TABLE NO. 6 - 110( FAILUS ru,ING 1925 AND 192 AN -POSITS BY STATES AND CLASSES O States, and !Number of banks' classes of.banksj , 1925 1 1924 1925 SOUTHERN STATES: (Cont'd) • GEORGIA: National banks ,”25,000 . 7 State bank members 4 250,000 7 Nonmember banks 20 660,000 21. Total 31 FLORIDA: National banks Nonmember banks 1 Total 1 3 3 KENTUM: Nonmember banks Total 7 7 6 6 TENNESSEE: NAtional banks Nonmember banks 1 7 29 Deposits 195 1 1924 $200,000 549;300 68a,000 $i,691,000 1,059,000 1,232,300 $556,000 652,030 1,306,000 1,428,000 4,032,000 2,514,000 100,000 346,000 45,000 310,000 100,000 45,000 346,000 310,030 120,000 120,000 105,000 733,000 1,017,000 105,000 733,000 1,017,000 1 5 6 80,000 2E-5,000 30,000 208,000 557,000 3,026,000 123,000 1,352,003 3 5,000 238,000 3,583,000 1,980,000 2 1 25,000 25,000 74,00w 135,000 60,000 116,000 183,000 59,030 119,000 351• ,000 86,000 365,000 124,030 311,300 366,000 802,000 Total ALABAMA: National banks 1 State bank members 1 Nonmember banks 3 1,635,000 ital 1 1924 NUMBER, CAPITAL BANKS (Contld) 1 Total 5 7 10 MISSISSIPPI: Nonmember banks 1 1 25,000 25,000 104,000 176,030 Total 1 1 25,003 25,300 104,000 176,030 3 1 10 535,000 150,000 220,000 3,015,000 509,000 1,113,000 3 11 535,000 370,000 3,015,000 1,622,000 - 3 1 1 110,000 25,000 15,000 476,000 95,000 43,000 3 2 110,000 40,003 476,000 138,000 6 750,000 5g9,000 833,000 885,000 135,000 733,000 2,166,:o0 1,551,000 6,333,000 2 x22 x39 x30 1,883,000 1,753,000 1 4 25,000 34,000 180,000 687,000 1 4 25,000 314,000 180,000 687,000 INDIANA: State bank mamoers 2 Nonmember banks 8 4 60,000 263,000 125,000 147,000 1,533,000 844,000 ARXANSAS: State bank members Nonmember banks Total LOUISIANA: State bank members Nonmember banks Total TEXAS: National banks 6 State bank members 4 Nonmember banks x29 Total -.AIDDLE WESTERN: OHIO: Nonmember banks Total r 5,160,000 470,000 4,151,000 8,377,000 10,954,000 Total 10 4 323,000 125,000 1,680,000 824,000 ILLINOIS: National banks Nonmembar banks 1 7 13 25,000 345,300 200,000 649,000 1Z7,03 2,443,000 616,000 3,762,000 Total 8 MICHIGAN: State bank members Nonmember banks x*5 14 370,000 849,000 2,5I5,000 4,378,000 1 &6 64,000 50,000 27,000 398,000 421,000 204,000 x*5 8,7 64,000 77,000 393,000 Total St. 625,00 4862-j T1 1SLE NO. 6 - .BA410FAIEURS DURMG 1925 AND 1324 "UMBER, CAPITAL AND DEPOSITS BY STATES AND CLASSES OF BANKS (Cont'd) States, and Number of bans classes of banks 1325 1924 MIDDLE WESTERN:(Cont'd) WISCONSIN: National banks 1 3 Nonmemb s r banks 9 7 Total 10 10 MINNESOTA: National banks 15 State bank members Nonmember banks 35 Total 50 Calpital 1925 1924 DepoO.ts 1925 1 1924 $50,000 155,000 205,000 $100,000 85,000 185,000 $377,000 2,051,000 2,428 ,000 $1,179,000 713,000 1,892,000 830,000 310,000 80,000 1 62 000 1,952,000 9,129,000 4,483,000 678,000 21,000 17,850,000 18,654,000 23,815,000 2 45 55 724,000 1,554,000 IOWA: National banks 15 State bank members 6 Nonmariber banks 4*6 Total *8)4 5 9 x*6 x*T3 990,000 4,144,000 MISSOURI: National banks 1 State bank membe r s 1 Nonmember banks 43 Total 145 1 142 43 25,000 25,000 1 ,131 ,000 1,181,000 67 76 WESTERN STATES: NORTH DAKOTA: National banks Nonmember banks Total 7 25 32 SOUTH DAKOTA: National banks 12 State bank members 1 Nonmember banks 1 Total 64 NEBRASKA: National banks Nonmember banks Total 1 11 12 KANSAS: National banks Nonmember *banks Total 19 19 MONTANA: National banks 9 State bank members 14 Nonmember banks 3 16 Total WYOMING: National banks State ban K members Nonmember banks Total COLORADO: National banks Nonmember banks Total 3 7 15 15 3 lii 6 11 17 3 17 15 4 14 2 21 32 3 6 9 975,000 2 1 000 360 ,oco 490,000 2 11 000 3,761,000 7,531,000 14,1495,000 2,9143,000 4,000 23,821,000 14,597,000 28,122,000 31,259 ,000 1,462,000 217,000 26,000 6,917,000 7,160,000 11,632,000 11,876,000 175,000 395,000 570,000 330,000 1,190,000 1,520,000 1,471,000 3,059,000 4,530,000 2,348 ,000 9,299 ,000 11,6147,000 545,000 50,000 1 00 000 1,835,000 7140,000 L.122,000 3,262,000 5,067,000 255,000 13,586,000 18,906,000 7,788 ,000 2,566,000 26,269,000 400,000 300 ,000 200,000 500,000 501,000 2,601,000 3,102,000 1,956,000 1,193,000 3,149,000 303,006 303,000 230,000 470,000 700,000 3,234,000 75,000 325,000 50,000 412,000 400,000 900,000 315,000 415,000 100,000 70,000 585,000 2,210,000 45,000 145,000 540,000 125,000 535,000 1,200,000 925,000 355,000 1,260,000 995,000 185,000 98,000 283,000 244,000 36,623,000 1,226,000 3,234,000 3,654,00c 4,880,000 1,762,000 481,000 18,000 2,7 1,000 14,339,000 2,943,000 4,903J:200 12,185,000 182,000 162,000 8,717,000 572,000 3,3714,000 12,663,000 1,961,000 1,1140,000 509,000 13,406,000 1,6149,000 11,445 ,000 St. 4862-k 11111111. O TABLE NO. 6- BANK FAILURES DURING 1925 AND 1924 - NUMBER, CAPITAL AND DEPOSITS BY STATES AND CLASSES OF BANKS .bdr of bank.s States, • c1as3e3 of b 925 1 1324 WESTERN STATE§4Cont'd) NEW YEXI00: National ban.:s 2 11 State bank mamba 1° Nonmember banks 3 10 Total 10 22 OFLABObIA: National banks State bank members Nonmember banks Total CALIFORNIA: National bani-:.s Nonmember banks Total 1 11 21 41 49 730,000 15,000 350,000 1,095,000 5 150,000 1 $925,000 100,000 320,000 1,345,000 $1,012,000 1400,000 5,080,000 79,000 2,650,000 7,809,000 732,000 1,132,000 240,000 25,000 225,000 490;000 1,554,000 2,566,000 960,000 828,000 1,788,000 3 25,000 50,000 10,0_00 35,000 37 ,000 37,000 57D00 434,000 1 3 2 2 50,000 25,000 75,000 242,000 242,000 421,000 193,000 614,000 14 14 3 2 2 255,000 75,000 125,003 455,000 3 7 2 ARIZONA: Nonmember ban's Total 3 3 3 3 Le ositl 1924 110,000 260,000 0 1 *Includes 1 XIncludes 1 &Includes 4 #Includes 3 NOTE: Figures of 1925 12 UTAH: National banks Nonmember banks Total 00 NONE UNITED STATES: National banks State bank members Nonmsmber bans Grand total 425,000 675,000 2 IDAHO: National banes State bank members Nonmember banks Total NEVADA: $250,000 9 PACIFIC STATES: WASINGTON: National banks' State bank members Nonmember bffin.-s Total OREGON: National iloanks State battik members Nonmember banks Total Capital l9iJ 1324 122 pg 466 37 618 777 private private private private capital 230 230,000 3,123,000 7,442,000 10,570,000 1,057,000 190,000 927,000 2,174,000 185,000 192,000 466,000 466,000 _ 5b1,000 561,000 1,155,000 174,000 1,125,000 1,140,000 2,469,000 599,000 1,724,000 25,000 50,000 75,000 164,000 255,000 133,000 164,oco 33c,000 225,000 225,000 3,002,000 3,002,000 1,330,000 1,380,000 200,000 123,000 328,000 NONE 113 612 J $5,809,000 312,000 1,721,000 8,442,000 7,970,000 7,660,000 58,537,000 60,389,000 8,727,000 13,580,000 1,950,000 2,645,000 14,521,000 18,068,000 105,636,000 130',975,000 24,441,000 28,373,000[172,900,000 213,44L,000 ban,: whose capital and depo3its are not available. bank whose deposits are not available. barp.-s whose capital and deposits are not available. banks whose deposits are not availaole. and deposits taken from latest available records. St. 4862-1. 441 • 0 Q, 65 FEDERAL RESERVE BOARD X-4559 WASH I N GTO N ADDRESS OFFICIAL CORRESPONDENCE TO March 12, 1926. THE FEDERAL RESERVE BOARD SUEJECT: Eligibility for discount of factors notes covering advances to producers of e,:;,7s, poultry and butter. Dear Sir: The Board has recently been requested to rule upon certain questions arising under that provision of the second paragraph of Section 13 of the Federal - eserve Act which makes eligible for discount at a Federal reserve bank the notes, drafts and bills of exchange "of factors issued as such making advances exclusively to producers of staple agricultural products in their raw state". It a-or—ears that a certain cold storaEe and t•1PIL company which is engaged in business as a factor makes advances to farmers who consign to the company, chickens, eggs and butter to be stored in the coenanyts warehouse. The advances are made -pending the sale of these “oLlucts by the company for the account II the farmers. The oueston 1 - :resented is whether or not the notes of this wal.ehous3 company issued in its capacity as factor for the purpose of elaking advances exclusively to producers of eggs, poultry and butter should be considered eligible for count at a Federal reserve bank. . Inasmuch as the warehouse company in this case is a factor, the only question to be decided is whether the notes of the company covering the advances to its customers are notes covering advances to "producers of staple agricultural products in their raw state". In considering this question it is imoortant to note that the test of eligibility of paper of this kind is to be found in the character of tne person to whom the advances are made rather than in the kind of products securing these advances. If the advances are made to any person of the class described by the term "producers of staple agricultural -)roducts in their raw state the notes given by the factor may be eligible for discount, regardless of whether the productsby whicV particular advances are secured are or are not agricultural Products in their raw state or whether the advances are secured at all. Broadly sneaking, the term "prcducers of staple agriculturaa products in their raw state" is synonymous with farmers, dairymen and livestock growers and therefore, tlle notes of factors issued as such covering advances oxclusively to this class of producers will be eligible for rediecount at a ?ederal reserve bank; and this is true even though these farmers, dairymen or livestock growers may also be engagod in producing products which cannot properly be considered agricultural products in their raw state and regardless of the kinds of producte securing the advances 'Lade by the factors. Page 137 Book 157 & X-4559 0 -2Anplying these --)rinci-)les to the facts of the present i.e.cuiry, the Board holds that the notes of thie cold storegc and warehouse compaay issued in its capacity as factor advances exclusively to producers of eggs and -2oultry or other staple agricultural products in their rerr state, will e cliible for discount at a Federal reserve ban, provided that these notes co.rply in all other respects with the relevant Drovisione of the law and the Board's regulations. In the goi_eion of the Board butter is not a staple aL: -ricultural rreduct Ln its. raw state; but this does not affect the eligibility of nctes of factors covering advances to farmers, dairymen or live stock growers who -eroduce butter, because any _member of this class is of course engaged in the production of some agricultural products in their raw state even thoh he also produces butter. The Board holds, however, that the notes ot a factor covering advances to those engaged in the com.aercial -nroduction of butter with cream purchased from others, are ineliEjble for rediscount, unless the persons so engaged are also producers of some staple agricultural products in their raw state. The paper of a factor issued as such for the purpoce of making advances exclusively to creamer5es or dairies, therefore, would ordinarily be meligible for rediscount under this provision of the law. In this connection it also seems arpro-Driate to mention a ruling made by the Board prior to the date of the amendment to the law regarding factors raper which holds that while the notes of a cold storage co.T:pany itself are ineligible for rediscount because the 17)roceeds are used to make loans to third parties, the notes of the customers of the cold storage coelpany representing loans made to them by the colany, when endorsed and discounted by the coer.)any, would be cliLible for rediscount by a member bank at a Federal reserve bank, -)rovided that the customers have used or are to use the --)roceeds for a ricultural or commercial p.ar-Doses and provided also that the notes comply in other respects with the provisions of the law and the regulations of the Federal Reserve Board. (See 1921 Bulletin, page 308.) Under this ruling, of course, the notes of the customers of a factor may be eligible for rediscount without regard to the erovisions of the second paragra2h of Section 13 of the Federal Reserve Act providing for tae rediscount of factors' paper. Very truly yours, Edmund Platt, Vice Governor. TO GOVERNORS OF ALL P.R. WKS. •
@FedFRASER