Full text of Committee on the History of the Federal Reserve System : Material : Cleveland Bank (1914), Entry 168, Box 3, Folder 7

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h e r o s e to s ig n . ,
“ Y o u c e r t a i n l y m a y . ’f w a s tl e a n b w e r, a n d M r. F a r n s w o r t h p ro d u c e d
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t h r e e m o r e g o ld p e n s ;vnd t h e s ig n a
tu r e s w e re m ad e .
“My nam e
is T h o m a s J e ffe rs o n
D a v i s ," s a i d th e C i n c i n n a ti v ic e p r e s ­
i d e n t a s h e S ig n e d .
“ I; h o p e I w ill
p r o v e a m a s c o t f o r th e i n s t i t u t i o n . ”
A r e p r e s e n t a t i v e o f e * c h o f t h e live
b a n k s b r o u g h t t h e s e a l o f h is i n s t i t u ­
t io n , t h o u s u a l m e t a l s ta m * _____
I vice, a n d th e in s ig n ia w-ere s ta m p e d ,
I in to th e n a p e r w ith th e S ig n a tu re s.
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“ I n K e n tu c k y w e are; su p p o s e d to
c a r r y I n s tr u m e n ts som eth in !; like th is
in o u r h ip p o c k e ts ,’’ saip M r. T h r e l­
keld a s he b r o u g h t f o r t h ^ p o n d e ro u s
s e a lin g in s tru m e n t.
“ B u t t h a t is n ’t a lw a y s t r u e .’*
S ig n in g en d ed , th e woitk o f th e d e l­
e g a te s w a s done. C ig a rs c a m e in to
w id e r fa v o r, a fla s h lig h t m a n h a d his
w ill, a n d th e m e e tin g b ro k e u p in to I
little g ro u p s.
;
Mr. D a v is o f C in c in n a ti sa id h«
n a tu r a lly felt th e Queerj, C ity shouli
h a v e o b ta in e d th e b a n l l f t ^ B u t tin
se le c tio n h a s been m ad e ,” h e a d d e d
“ a n d it is th e d isp o sitio n of o u r b a n k
a n d so f a r a s I c a n say , of o th e r Cln'c in n a t i b a n k s , to w o rk w jth h e a r t anc
soul fo r th e good o f th e ijegional b a n t
Those shown above are: Left to right—Charles R. Mayers, T. J . Davis, W . A. M cD ow ell, M r. S hields, J . R. K ra u se , C. E F a rn s w o rth , R o b e rt M c E lv illy ,
of o u r d istric t.* ’
Alex Dunbar, W. L. Threlkeld, Harrison Nesbit, T. H. Wilson.
Mr. N e sb it g a v e voice to Identically
th e s a m e opin io n , e x ce p t th a t he be
L
h e r e ; T h o m a s H . W ils o n , A. B. M a r ­ lieved P i t ts b u r g th e logical site fo r *
b a n k o f C le v e la n d .
f o r m a l, a n d w a s t a k e n b y r e p r e s e n t a ­ s h a l l a n d J o s e p h
R.
K ra u se ,
v ic e ba n k .
Mr. M a y e rs of <%)1uml»’j s t s a i d theft
The
b an k ers,
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C le v e la n d ; t iv e s o f b a n k s d e s i g n a t e d b y th e r e ­ p r e s i d e n t s , a n d C. E . F a r n s w o r t h ,
had b een no p re p o n d e ra n c e <>f fe elim
P i t t s b u r g , C in c in n a ti, C o lu m b u s , a n d s e r v e s y s te m o r g a n iz in g c o m m itte e . ! c a s h ie r .
in h is hom e e ith e r f<»r «A* a g a in s t tm
In th e c o u r s e o f th e m o r n in g a n d !
W h e n th e y g a t h e r e d a r o u n d th e d i ­ tw o la r g e r O hio c itie s . ;
L e x in g to n , K y ., g a t h e r e d in th e d i r e c ­
e a r ly a f t e r n o o n , b a n k e r s w h o a r r i v e d r e c to rs * t a b l e o n t h e t h i r d flo u r o f th e
Mr. T h re lk e ld o f L ex in g to n declare,
L e x in g to n
b a n k e rs hat
t o r s ’ ro o m o f t h e F i r s t N a t io n a l b a n k h e r e w e r e T. J . D a v is , v ic e p r e s id e n t, ; b a n k a t - o ’c lo c k .
A tto rn e y J.
C. t h a t w h ile
been a c c u s to m e d to d e al W ith th e eit
h e r e a t th e r e q u e s t o f t h e f e d e r a l g o v ­ a n d R o b e r t M c K v illy , c a s h i e r o f t h e | K o y a n w a s p r e s e n t w ith th e d o c u ­ a c ro s s th e riv e r, th e y Were w ell dis
F i r s t N a t io n a l o f C i n c i n n a ti ; W . A. m e n t . I t g a v e t h e n a m e o f th e p r o ­ posed to w a r d C lev e lan d !
e r n m e n t.
An o u ts ta n d in g fe a tu r e of th e g a th
M r Dow ell. v ic e p r e s i d e n t , a n d W . L . p o s e d c o r p o r a t i o n , t h e e x t e n t o f i ts
T h e y m a d e o u t p a p e r s f o r m a lly
T h r e l k e l d . c a s h i e r o f th e P h o e n ix & I d i s t r i c t a n d o t h e r d e ta i ls , in c lu d in g e rin g w a s t h a t prat-titm lly noth in )
w a s sa id r e g a r d in g p a r tic u la r c hoice
a s k i n g t h e * r v e r n m e n t t o c h a r t e r a T h ir d o f L e x i n g t o n . K y .; C h a r le s R.
| n a m e s o f a ll b a n k s w h ic h h a v e s u b ­ f«*r dire, to rs o f th o n e i h a n k
'I'1!
c o r p o r a t io n t<> 1*•' k n o w n a s th e F e d ­ M a y e rs , p r e s i d e n t , -and M r. S h ie ld s , s c r i b e d f o r s t o c k a n d t h e a m o u n t.
b a n k m e m b e rs of C le v e la n d 's m s titij
tio n m u s t eh o o se six linen f«*r it
e r a l R e s e r v e b a n k o f C le v e la n d . T h is c a s h i e r o f t h e N e w F i r s t o f C o lu m b u s ,
A ll t h e b a n k e r s w e r e a c q u a i n t e d b**ard. th r e e 1 a n k e r s a m i th r e e b u si
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of
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of th e
c o n tr o l l e r o f th e c u r r e n c y in W a s h ­
H a n k o f P i t t s b u r g . N . B. A.
m e e t in g a n d M r. T h r e l k e l d s e c r e t a r y . p a p e r s fo r th e K ie h tn o t|d , V a. b a n s
a n e la b o r a te p ro g ra m
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in g to n , d i r e c t o r s o f t h e b a n k w ill b e Liiii«*li i n 1 n i o n < lul>.
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tern urn:i nt/..ition < ’u im n * e . «;•><
g iv e s t h e o r d e r q u a r t e r s w ill b e r e n t ­ h e re , a n d u n d e r t h e g u id a n c e o f F i r s t t h e n M r.
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ed a n d th e b a n k w ill b e g in b u s in e s s .
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p a p e r ? ” h e sp e e c h e s to n e a r ly -•”»*’ bank* t s .
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r e g io n a l b a n k s w ill be e s t a b l i s h e d ,
A m o n g t h o s e w h o d e ta i le d t h e m ­ a s k e d M r. M c D o w e ll, s e a t e d a t o n e
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“ 1 t r u s t I m a y k e e p th e p e n w h e n I tsm aller c it> .
Federal Reserve Bank of St. Louis

FINANCIERS MEET HERE TO FORM DISTRICT FEDERAL BANK

U. S. RESERVE BANK

Financiers Gather Here, Use
Gold Pens to Sign For­
mal Application.

Representatives of Cities in
District Take Part in
Ceremony.

July 1 1 , 191U
FINANCE
SENATE COMMITTEE REJECTS JONES & WARBURG
A Washington dispatch says:
The administration met defeat Thursday in the first stage of its fight to
have the Senate confirm the nominations of Thomas D. Jones, of Chicago, and
Paul M. Warburg, of New York, as members of the Federal Reserve Board.
The banking and currency committee voted seven to four to report the nomina­
tion of Mr. Jones to the Senate with an unfavorable recommendation and unanimous­
ly agreed to postpone indefinitely further consideration of the nomination of Mr.
Warburg.
The Jones report will be submitted by Acting Chairman Hitchcock early next
week, and the debate over his confirmation will be resumed on the floor of the
Senate behind closed doors in executive sessions.
No further action.will be taken by the corrraittee on the Warburg appointment
unless the New York banker changes his mind and decides to accept the committee's
invitation to appear before it and submit to questions. The next move, according
to members of the committee, must come from Mr. Warburg.
'
The committee's action on these nominations was taken in the face of a de­
termined effort on the part of the President to secure approval of them. In his
conference with the newspaper men Thursday, the President made it clear that he
would keep up the fight.
It was pointed out that in insisting on confirmation of Warburg, the Presi­
dent was running into the question of Senate prerogatives and might find many
votes against him which vrould otherwise be on his side. The Senate has grumbled
for years about the invasion of its prerogatives by Presidents, and in this case
many Senators feel they have found an issue on which they can stand together.
Opposition to Mr. Jones was based on the fact that he is a director of the
International Harvester Co., now being sued by the government as a combination in
restraint of trade and illegal under the Sherman anti-trust act. Senators, Lee,
of Maryland; Hollis, Pomerene and Shafroth, all Democrats, voted to make a favor­
able report on this nomination, while Senators Hitchcock and Reed, Democrats, and
Bristow, Nelson, Crawford, Weeks and McLean, Republicans, voted for an unfavorable
report.
Objection to Mr. Warburg so far is based upon an entirely different reason.
The committee has asked him to appear and submit to questions about his business
connections. He has refused, and the question as now viewed by the Senate is
whether it should confirm any man who will not accept such an invitation.
Thirty-five members of the National Association of Supervisors of State Banks
were received by President Wilson at the White House Thursday, and had a conference
later at the Treasury Department with Secretary McAdoo, Assistant Secretary Hamlin
and Comptroller of the Currency Williams concerning the new federal reserve banks
and their co-operation with the banks of the states.
The bank supervisors were especially anxious to learn whether the new federal
reserve banks will act as clearing houses for banks which are not members of the
federal reserve system.
Couptroiler Williams said the Federal Reserve Board must decide that question,
but expressed the opinion the new banks will clear for member banks only.



Amendments to Reserve S y s­
tem Law Favored by
F. H. Goff.
•

_______ v

-

:;

Clevelander Favors One In­
stitution Instead of 12
RegtoTftlsi
SPECIAL TO THE PLAIN DEALER.
RICHMOND. Va.. Oct. 13—F. H
Goff, president of the tru s t companj
section, and Francis Coates, jr., clearing
house exam iner, both of Cleveland, were
two of the principal speakers a t the
convention of the Am erican Bankers
association here today.
Mr. Goff spoke in favor of tru s t com­
panies entering the federaLjj^airve sys­
tem, though he advocated am endm ents
to the federal reserve act. Mr. Gotf
had high praise for the adm inistration
a t W ashington, and he indicated his be­
lief th a t there should be b u t one cen­
tral bank instead of twelve regional
banks and th a t the future trend thus
m ust be more than a t present toward
centralization. Mr. Goff said in part:
The crisis through which we are passing
has dem onstrated, as nothing before in our
history, the need of a pow erful central bank
where the reserves of the nation can be con­
cen trated and the outflow of gold controlled.
G rateful as we a re for w h at has been a c ­
complished under the able leadership of
President W ilson In bringing about reform
|n our currency an d in perfecting our b an k ­
ing system, we anxiously but hopefully aw ait
enactm ent of fu rth er legislation which will
Insure adequate protection of credits both a t
home and abroad should conditions ever arise
In th is country such as liave obtained In
Europe since th e declaration of w ar. The
real te st of a financial system m ust be its
a b ility to serve adequately in tim es of m ax i­
mum strain .
F irm in th e conviction th a t collisions are
more likely to be averted when there is but
one and not tw elve levers to be operated,
we believe th a t the trend In the future m ust
inevitably be tow ard fu rth er centralization.
While our views w ith respect to th is dlfTer
from those in authority, we wish it known
th a t we are not antagonistic, but sincerely
desirous of being helpful in w orking out th e
financial problems of the nation. The ques­
tion th a t confronts us is how such help can
best be given.
W ill our Influence be m ost effective if we
refuse to accept m embership, hold aloof an d
criticize w hat has be«n done, or can we
best serve by co-operating w ith th e national
banks and th e federal reserve board? W ill
we have th e m ost influence from w ith o u t or
w ith
?
^
I ln
believe
the governm ent m d^s and^ de­
sires the support of the tru st companies,
and perhaps sooner th a n we think they may
again need Us support.
Those who a re not Influenced by p atrio tic
motives perhaps ought to be by ftelflsli ones.
Commending the president as 1 do for the
excelent appointm ents he made to the fed­
eral reserve board and "for the attitu d e of
his adm inistration d uring the recent crisis, I
have come to have an increasing faith th a t
w hat is not rig h t will in tim e be made rig h t.
It may be well to rem em ber th a t more b a t­
tles are won by men on th e firing line th a n
bv men skulking in the s u tle r's tent.




New York Banks Buying More Freely in Open Market
at Six Per Cent—Bond Market Broadens, But
Stocks Are Reported Weak.
B Y F . F. D U N C A N ,
F in an cial E d itor of The Leader.
P o ssib ly th e o u tsta n d in g fea tu re o f the financial outlook y es­
terday w as the increased su p p ly of fu n d s offering in the com m er­
cial paper m arket.
Comm ercial paper has been quoted o f la te as low as 6 per
cent, but it w as a very lim ited circle o f nam es that could command
that figure. Y esterday N ew Y ork b anks were b uyin g rather freely
at 6 per cent, w ith the su pp ly o f p aper dim inishing.
H e re is a n e x a c t c o u n te rp a rt o f th e d e v elo p m en ts in th e L ondon m a r ­
k e t w h e re d isc o u n t o p e ra tio n s in th e ir p u re s t c o m m e rc ial sense h a v e been
re p o rte d a t 3 p e r c en t, o r a s h a d e a b o v e th a t, w hile a ll th e w o rld know s
t h a t It is th e c o lla te ra l lo an situ a tio n In L ondon t h a t h a s cau sed a ll of
th e p re se n t tro u b le s. A n o u ts ta n d in g u n s e ttle d a c c o u n t on th e L ondon
sto c k e x c h a n g e is e s tim a te d — o r r a th e r g u essed a t f o r n o one k n o w s its
re a l e x te n t— a s a m o u n tin g to se v e ra l h u n d re d m illio n d ollars.
I n all p ro b a b ility , h a d o u r ow n fe d e ra l re se rv e sy stem b e en In
o p e ra tio n , th e p a r tin g of th e w ay s b e tw ee n tTir ill n ru m T -T n siw t a n d th e
difficulties In fin an c e p a p e r, w o u ld h a v e b e e n in e v id en ce h e re a s e a rly
as In L ondon. T h e c o m m e rc ia l w o rld w o u ld h a v e 'been re le ased fro m
Its th ra lld o m m u c h sooner. T h is Is ju s t one m o re d e m o n s tra tio n of th e
p o ssib ilities a h e a d fo r th e fe d e ra l re se rv e sy stem .
*

IN V E S T M E N T D E M A N D A G A IN PIC K IN G UP.
T h e d e p ressio n In th e N ew Y o rk fin an c ia l c o m m u n ity w as less a p ­
p a r e n t y e s te rd a y th a n on th e p re v io u s day. In v e s tm e n t d e m a n d p ro ­
cee d ed a lo n g th e co n fid en t lin e s e x h ib ite d la s t w eek. T he d e m a n d for
th e h ig h e s t g ra d e n o te s a n d b o n d s w as good a n d th e su p p ly re p o rte d
d im in ish in g . On th e o th e r h a n d th e u n o rg a n iz e d m a r k e t o f th e s tre e t
d isp la y e d a f u r t h e r d e c lin in g te n d e n c y in th e p ric e s o f stocks.
S te rlin g e x ch a n g e w as firm e r w ith su p p lie s re s tric te d , b u t th e gold
pool w ill be a la rg e r f a c to r to d ay .
H e re to fo re it h a s been o p e ra tin g
la rg e ly on fu n d s a d v a n c e d by N ew Y o rk b a n k s w h ic h a re to be re sto re^
to th e m w h e n In te rio r c o n trib u tio n s a re a v a ila b le . T h e fu ll In itia l p a y ­
m e n t o f th e C lev elan d b a n k s h a s been fo rw a rd e d to one o r o th e r of
th e s u b -tre a s u rie s a n d w ill be a v a ila b le e ith e r d ire c tly o r b y te le g ra p h ic
tr a n s f e r a t once. I t is to be p re su m e d t h a t o th e r c e n te rs a re also f o r ­
w a rd in g th e ir q u o tas. T h e re w e re f u r t h e r sm a ll sh ip m e n ts of gold to
O tta w a , b u t t h e a m o u n t s e n t to t h a t c e n te r sh o rtly w ill be c o n sid era b ly
e n la rg e d .
M a te ria l p ro g re s s Is re p o rte d b y th e b a n k e rs ' c o tto n pool. I t Is
to b e d o u b ted th a t th e 6150,000,000 n e c e ssa ry c a n be ra is e d b u t th e r e is
no d o u b t b u t t h a t a c o n sid e ra b le p a r t o f th e s u rp lu s c ro p c a n b e c a rrie d
sa fely , p ro v id ed th e pool m a n a g e rs in sist u p o n a s a fe m a rg in a n d a
d e p e n d a b le g ra d in g a n d w a re h o u s in g sy stem . T h e S o u th can only gain
th e e a r o f b a n k e rs In t h a t w ay. A ny a tte m p t to c re a te a n a rtificial
p ric e fo r th e s ta p le o r to h o ld c o tto n f o r a h ig h p ric e Is d oom ed to
fa ilu re . T h e b a n k e rs h a v in g t h e m a tte r in h a n d a re fu lly c o g n iz a n t of
t h a t situ a tio n . A t a s a fe m a rg in u n d e r c a sh p ric e s th e r e is no se c u rity
m o re sta b le th a n co tto n .
I f th e ev id en ces of th e c o m m e rc ia l p a p e r j
m a r k e t a re c o rre c t it is b a re ly po ssib le t h a t th e c o tto n pool w ill o p e n a
sa fe m e a n s fo r p ro fita b le in v e s tm e n t w h e n re a lly good c o m m e rc ia l p a p e r
b e co m es scarce. S p o t c o tto n c o n tin u e d to so fte n in th e S o u th e rn m a r - 1
kets, so m e p o in ts in T ex as b e in g dow n to th e six c e n t level.

H i l M PREDICTS
,p

--

•

»- »n* • ■

RICHMOND. VA., October 14.-Discusslon of the nation’s new currency sys­
tem m arked the first .general session
here today of the American Bankers'
Association conventftC
“Only the w ls d o n ii» inanag#m aat by
the directors and officers of the various
reserve banks and of the federal re­
serve board can Insure the success ol
the experim ent,” declared A rthur R e /J
nolds, president of the association, la
hla annual address.
“ It is a ju st criticism of the m eas­
ure," said Mr. Reynolds of the reserve
law, “ to say th a t It does not take the
governm ent out of the banking business
and th a t it confers upon one of our gov­
ernm ent officials an extraordinary pow­
er and discretion unw arranted by the
spirit of our institutions and repugnant
to republican principles.” ‘
D elegates were discussing with inter­
est today probable action tomorrow on
the proposal to appoint a committee to
urge th a t the federal reserve board seefc,
changes in the reserve law which would.
trtake the nation’s new banking systeitr
more a ttrac tiv e to sta te banks and trust
companies.
Governor Hamlin, of the federal board,
told the bankers th a t he hoped to sea
the fiew system in operation in a snort
time, a n d predicted th a t It would prove
of Immense advantage to the country.^
He said, in p a rt:
‘
“The federal reserve banks are quickly
approaching the time of opening and op­
eration. There is to be a conference in
W ashington on October 20. at which*
com m ittees representing the directors
of the various reserve banks will be
present, and it is noped th a t an authorl-^
tative statem ent m ay be m ade of an
e arly date when the banks will open.
“ M any im portant questions are now.
pending before the reserve board. Among*
these a re clearances
f h.ecks and the
definition of eligible commercial paper..
W e w ant light thrown upon them , and
a n y suggestions em anating from your
body will be conscientiously considered." I w ant to emphasize the necessity oT
establishing branches of our national
banks in foreign countries. We have
already approved applications for twp
branches in South Am erica and one on
the Isth m u s of Panam a.
“Our present difficulties do not ap­
pear to arise from the scarcity of*
actu al money, or bank notes- There
se^ms to be an ample supply in th e
United States, and much more can be
Issued. F o r exam ple, the total of Ald rich -V re e la n l notes throughout th e
U nited
States available
for issue
am ounts to over $1,200,000,000, while
th ere h av e actually been shipped to
banks only a little over $34O.»K)0,00Q.
“ The re a l difficulty would seem to
be one of credit. M utual tru st and.
confidence have been disturbed
“ It should be rem em bered th a t the
reserves to be paid in to the federal re ­
serve b an k s will not reach th eir m axi­
mum un til a fte r the expiration of three
years. A t the opening, however, the
reserve b a n k s will begin operations
w ith a paid in capital of about $18,000.X)0 and reserv e deposits of about $250,­
300.000.
“ One can sta te w ith confidence that
the federal reserve system a t the out-,
set will Increase the lending power ofthe n ational and federal reserve bank*
by some hundreds of millions of dol*«
In n -”




RESERV E BANK O FfllC gR S
HOLD CO N FER EN CE H ERE
rt* y
ItetjAvil rei^W ^S S snT and chairm an o l t ® board
}t the new regional bajik.
a hur•led visit to Cleveland yesteM ay.
Mr. Wills t o in conferAice with I
Lyman H. Treadw ay, d eputyV nd vice]
chairm an of the board, on m atters re­
lating to the organization of the new
bank.
The first m eeting of the board has
been definitely called for Saturday
m orning a t the F tderaJ building. The
securing of a location ftar the bank and
the election of a practical banker as
governor and active executive will be
the first form pipw oves
the
board.
IJL ■ i D
i
The selection of a governor by the
board is subject to approval by the fed­
eral reserve board a t W ashington. The
nam es of several bankers are under
consideration for the post. Three dele­
gates from the Cleveland bank board
and as many directors a s desire will
attend the conference in W ashington
October 20. At that m eeting active steps
will be taken for the actual opening of
i the regional banks.

VETERAN PREDICTS
PROSPEROUS ERA
Dean of Finance Students
Foretells Trade Boom
Within 18 Months.
W A’\i r r i : t

Money Waste m War No
Factor in World’s Cash
Supply.
“We are all seeing things. We are
hearing things. But we are misreading
the signs,” said Edward J. Cattell, city
statistician of Philadelphia, in an op­
tim istic business talk to the Cleveland
Association of Credit Men in Hotel
S tatler Wednesday. Mr. C attell is a
veteran financial expert. H e was asso­
ciated with Ja y Cooke in the old days,
and most of his life has been a stu ­
dent of business conditions. He said
in p art:
We can win in America, and I w ant
to go on record right now a t the sta rt
th a t I believe within eighteen months
this nation will enter upon the greatest
e ra of prosperity ever enjoyed by any
people in any age or in any continent.
I have the right to speak with some
little authority. I have been through
every panic since th a t of ’69. I went
through the g reat B aring days in Lon­
don. and I have, as I say. the right
born of experience w ith every crisis to
speak with some little authority. And.
a fte r exam ining the stru c tu re of credit
conditions, not only here, but in E u­
rope. and taking into consideration the
new element brought by the war, I re­
a sse rt my position.
I had a recent talk with John W anam ak er of Philadelphia, ju s t before he
w ent into the Union League club to
m ake the speech which was quoted
over the whole world, prophesj-ing bet­
te r conditions. He said to ,jne, “Mr.
Cattell, do you think I am justified?
I am going to speak optim istically.” I
answ ered, "I said th a t two m onths ago.
You are perfectly justified.”
Now, here’s a lesson I got out of
ball. I am an old ball player. Played
a gam e of ball two years ago, old as I
am. Got a two-base hit. W hen I got
to second base my breath was on first,
b ut m y h e art was on third. I said
within myself, *If the d arn breath can’t
!(eep up w ith my h e art I am going

a f te r m y naan.*
This is the American spirit; the pow­
er. the ability to do down, go to grass,
wipe the blood eut of the face, get up
a n d think of home and wife and little
ones, and m ake a winning fight. You
can’t keep a country down w ith men
like that.
L et us get a grip on w hat we have
done ift this country. Let us under­
stand w hat we are, the type of men
you produce here in Ohio, the type we
produce in Pennsylvania, the type th a t
is a real type of the real American,
th a t don’t know w hat defeat is.
Then, when we come to look a t new
problems there won’t be any fear. Why,
the problems we solved in the late ’60s
and the early ’70s, when we re ­
sumed our work, when this waa a
nation of only 35,000.000 people v h a
wealth of less than tw<
were nothing, compared v.
we
solve now with 100.000 .<> 1
id
one hundred and thirty-five thousand
million of wealth. Don’t let us get
frightened.
I have faith in this country, and I
w ant to tell you why I have faith. I
have seen this republic prow in pop­
ulation from 22,000,000 to 100,000,000. I
have seen its wealth grow from eight
thousand million to a hundred and th ir­
ty-eight thousand million.
Forty-five years ago I was m aking the
trip across the continent on the first
train th at linked the A tlantic and the
Pacific. We traveled five days over
w hat geography called “The G reat
American D eseit.” Today in th a t same
country they are raising four crops a
year. Ju s t before th a t I was in the
south and saw posted in a hundred
southern cities a th rea t of fine if you
left cottonseed go to w aste on the
ground. You know w hat cottonseed is
doing today with regard to our credit
balances.
W e have added 1,500 acres of culti­
vated farm land in this country every
tw enty-four hours for forty-five years.
T hink w hat 1,500 acres produces today.
And think of th a t addition coming
every tw enty-four hours. Since th at
tim e we have assim ilated 21.000,000 for­
eigners. made p art of the body politic.
You wonder why I am beginning to
have a little faith in our people to solve
new problems?
You are a m ighty city. Nobody in
this country more clearly recognizes
your power or has more confidence in
your future th an I have regarding
Cleveland. I w as delighted to hear of
your selection a s a regional bank cen­
ter, and I believe if <KQUadMBsti$°ukl
get a grip on the faith l have in your
future, you would double your rate
of progress and you would sta rtle the
whole world. W ith this m ighty lake,
with your wonderful city, w ith your
power of situation, with your diversi­
fied industries, and, beyond and above
all, with a certain tem per of mind and
h e a rt which I have come to call the
Ohio mood, th a t is responsible for a
Garfield and a McKinley and for great
men in every division of our civic and
national life, you will grow and you
will prosper.
W a r M o n ey L o u r I<ny I d le .

Now, this w ar in Europe. In th e first
place, largely the am ount uestroyed already
has been taken from com m ercial circles for
tw enty years. W hen I was living in Lon­
don In the ’90s they were beginning to a c ­
cum ulate It. Stores had been bought; gold
funds had been accum ulated, so th a t w hat
Is being w asted today has alre a d y been
taken out of th e c hanm ls of tra d e and
charged off. W e won’t have th a t to pay
again.
On the other hand, if it re su lts in the
abolition of m ilitarism , as I believe it will,
throw ing back into channels of in dustry the
m illions which have been going to preparatlORi for seven years, there will bo a new
buying capacity given to the w orld of over
$30,000,000,000 a year, or three tim es as
m uch a s the value of all o u r crops put
together.
W e can afford to put up w ith a couple of
lean years if th a t immense revolution will
re su lt In favor of be tte r tim es everyw here.
W hy, in R ussia I have seen farm s, in my
travels, only a yard wide, not a s wide as
th is table, farm s in a black belt region th a t
have never had a particle of fe rtiliz e r placed
upon them —R ussia w ith 42.000 m iles of
railroad when it should have 2.800.000 to
h ave a s m any a s Ohio or Pennsylvania.
W hen they s ta r t to develop th a t, w hen peace
comes and they s ta r t to develop Spain and
the B alkans, the new m arkets for goods in
addition to th e new life coming through the
P anam a canal an d South A m erica w ill s ta g ­
ger belief, if you w ill only have th e faith
of th e old prophets.
How

th e B a n k s W i l l H e lp .

A na then, to m eet new conditions, w e nave
th is splendid banking system.
W e have been building up a g re a t t*-ade
w ithout the a id of an Adequate banking syar
tom. We have g o t it now and the net re*
suit of th a t will be th a t out of the 130,000,­
000,000 of w ealth, a t least 150.000.000,000 th a t
were not liquidated before w ill be x-endcrtd
liquid, should be a t the service of the de-

It Is impossible to overestimate the stimu­
lating effect of the ability of the banks, in
the first place, to a cc e p t, to Indorse a c c e p t­
ances, th e taking: of book a c c o u n ts o u t of th e
books a n d m aking: th e m in to co m m ercal p a ­
p er, a n d th o tying together o f th e sm all
c o u n try b a n k s Into associations so th a t th ey
will h a v e th e same strengch and confidence
th a t banks in New York and Philadelphia
have through clearing houses, the breaking
down of prejudice between east and west,
that hatred of the money power, that potent
Influence to put class against class, when
you wipe that out, gentlemen, you are going
to see this country stripped for the race
and able to make a record that will make
all of the rest seem like standing still.
The

M an

F ro m

W ic h it a ,.

If you travel, and this great city o f Cleve­
land will travel, you want to get that
boosting spirit. Y e ars ago I had an experi­
ence with a man from Wichita. I w a s in
fro n t of the old F if th Avenue hotel in New
York. Saw a man with a crowd around him
a n d he didn't seem to be ab le to convince
them . Thought I would go and help. t
w en t o v er to w h e re h e w a s and found he
w a s b ra g g in g a b o u t W ic h ita . I sa id to him ,
“ Yos, W ic h ita is a m ig h ty fine p la c e .” Ho

tu rn e d on m e a n d said , “ W h en w ero you
th e re ? ” I sa id “ Tw o w eek s a g o .” H e said
“ Oh, tw o w eek s a g o ? H ell! You o u g h t to see
It n o w .”
J u s t g e t th a t th o u g h t in y our
m in d .
T h is is th e w a y w e w a h t to fool
a b o u t C lev elan d a n d P h ila d e lp h ia .

RESERVE BANK HERE
S BIG BUSINESS

* - v . -p T r; ~~ -v ’:.
!s d r e beit»g p o u re d fh to th e
t r e a s u r e v a u lt o f t h e f e d e r a l r e ­
s e rv e b a n k , W illia m s o n b u ild in g ,
w h ic h o p e n e d M o n d a y .
A t th e c lo s e o f t h e firs t d a y
$3,500,000 w a s o n h a n d .
“ I e x p e c t w e w ill h a v e $15,000,000
b y S a tu r d a y n i g h t , ” s a y s E . C. B a x ­
te r, b a n k s e c re ta r y , T u e s d a y .
'•

-t i b t ' T -

:

.

UtV&iA»8 PUUM *LU£!v
C a ll In C l e a r in g H o u n e

G r a d u a l e a s in g is e x em p lified in
th e s te a d y re d u c tio n in th e a m o u n t
o f o u ts ta n d in g c le a r in g h o u s e c e r tif i­
c a te s a t m o s t re s e rv e c e n te rs .
The
b a n k s a r e fin d in g le s s n e e d fo r th e
h u g e v o l u m e . .$5:!,000,000, i t sto o d on
S e p t. 12 - n d e m e rg e n c y b a n k n o te s
s e r v in g th e n e ed s.
Uoltl f o r I t c K i o n i A f i j P l k k l s .

,

..

An n o u n o e m en IO T w ft ha- firs I "nil s t aTl m e n t on s u b s c r ip tio n s to s to c k o f th e
fe d e ra l r e s e r v e b a n k s w ill b e d u e N o v .
2 re c a lls to t a n k e r s ' m in d s th o n e ed
fo r g o ld o r g o ld c e rtific a te s .
T he
a m o u n t t h u s to IfWTtti nod in f o r C le v e ­
la n d 's re g io n a l b a n k w ill b t a b o u t
Ji1,0 50.0 0 0 -7 1-fi o f (! p e r c e n t, o f th e
j c a p ita l a n d s u r p lu s o f t h e m e m b e r
! b a n k s in t h e d is tr ic t.
T h e re a re
a b o u t 730 su c h b a n k s , w ith $195,000,| 000 c a p ita l a n d s u rp lu s ,
j A s m e m b e r b a n k s h a v e b e e n h o ld i in g gold p r a c tic a lly e a r m a r k e d fo r
(h is p u rp o se , t h e s t r a i n w ill bo m in i| m ixed.
T h e r e s e r v e b a n k s , ju d g in g
; fro m th e e ffo rts m a d e to w a r d e a r ly
j o p e ra tio n , w ill lose n o tim e in t u r n i in g on t h e i r r e d is c o u n t m a c h in e ry .
I - . \% V -

Q

Hamlin Predicts Reserve Banks
Will Open Soon
D iscu ssio n o f th e n a tio n ’s new c u rre n c y system
m a rk e d th e first g e n era l session h e re W e d n e sd a y
o f th e A m erican R a n k e rs ’ A ssociation co n v en tio n .
“O n ly the w isd o m o f m an a g em e n t b y th e , di­
re c to rs a n d officers o f th e v a rio u s re se rv e b anks
a n d o f th e F e d e ra l R e se rv e B o a rd can in s u re the
su ccess o f th e e x p e rim e n t.” d e clare d A rth u r R e y ­
nolds, p re sid e n t o f th e a sso c iatio n , in his a n n u a l
a d d ress.
“ Tt is a ju s t c riticism o f th e m e a s u r e ” sold
’M r. R ey n o ld s of/- ffie re serv e^faw , “to say th a t it
does n o t ta k e the g o v e rn m e n t o u t o f th e b anking
bu sin e ss a n d th a t it c o n fe rs u p o n one o f o u r g o v ­
e rn m e n t officials an e x tra o rd in a ry p o w e r a n d d is­
c re tio n u n w a rra n te d by th e sp irit o f o u r in sti­
tu tio n s a n d r e p u g n a n t to R e p u b lic an p rin c ip le s.”
D e leg a te s w ere d isc u ssin g w ith in te re s t p ro b ­
able a ctio n on th e p ro p o sa l to a p p o in t a co m m ittee
to u rg e th a t th e F e d e ra l R e se rv e H oard seek
ch an g es in th e re se rv e law w hich w ould m ake
the n a tio n ’s new b a n k in g sy ste m m o re a ttra c tiv e
to sta te b a n k s a n d t r u s t com panies.
G o v e rn o r H a m lin , o f th e fe d e ra l b o a rd , to ld
th e b a n k e rs th a t he hoped to see th e n ew sy ste m '
in o p e ra tio n in a s h o rt tim e, a n d p re d ic te d th a t it
w ould p ro v e o f im m en se a d v a n ta g e to th e c o u n try .
H e said in p a r t :
" T h e fe d e ra l re se rv e b a n k s a rc q u ick ly a p ­
p ro a c h in g tlie tim e o f o p e n in g a n d o p e ratio n .
T h e re is to be a c o n fe re n c e in W a s h in g to n on
O c to b e r 20, a t w hich c o m m itte es re p re s e n tin g th e
d ire c to rs o f th e v a rio u s re se rv e b a n k s w ill be
p re se n t, a n d it is hoped th a t a n a u th o rita tiv e
sta te m e n t m ay be m ad e o f an e arly d a te w hen th e
b a n k s w ill open.
“ M any im p o rta n t q u e stio n s a re no w pen d in g
b e fo re th e re se rv e b o a rd . A m o n g th e se a re c le a r­
a n ces o f checks a n d th e definition o f eligible c o m ­
m erc ia l paper. W e w a n t lig h t th ro w n upon th em ,
a n d a n y su g g e stio n s e m a n a tin g fro m y o u r body
w ill be c o n sc ie n tio u sly c o n sid ered .
" I w a n t to e m p h asize th e n ecessity o f e s ta b lis h ­
in g b ra n c h e s o f o u r n a tio n a l b a n k s in fo re ig n
c o u n trie s. W c h a v e a lre a d y ap p ro v ed a p p lic a ­
tio n s fo r tw o b ra n ch e s in S o u th A m e ric a a n d one
on th e is th m u s o f P a n a m a .
“ O u r " re s e n t difficulties do n o t a n n e a r to a rise
fro m th e sc a rc ity o f a ctu al m oney, o r b a n k notes.
T h e re seem s to be an am ple supply in th e U n ited
S ta te s, a n d m uch m o re can be issued. F o r e x ­
am ple, th e to ta l o f A ld ric h -V re e la n d n o tes
th ro u g h o u t th e U n ited S ta te s a v ailab le fo r issue
a m o u n ts to o v e r $1,200,000,000. w h ile th e re h ave
a ctu ally been shipped to b a n k s only a little over
$340,000,000.
“ T h e real difficulty w o u ld seem t o lie one o f
c re d it. M u tu a l tr u s t a n d c onfidence h a v e been
d istu rb e d .
“ Tt sh o u ld be re m e m b e re d th a t th e re serv e s
to be paid into the fe d e ra l re se rv e b a n k s will not
reach th e ir m a x im u m u n til a f te r th e e x n ira tio n
o f th re e y e ars. A t th e o p e n in g , h o w e v er, th e re ­
se rv e b a n k s w ill begin o p e ra tio n s w ith a naid in
c ap ital o f a b o u t $ 1 ^,000,000 a n d re se rv e d ep o sits
o f a b o u t $ 25 0 ,000 ,000 .
"O n e can s ta te w ith confidence th a t th e fe d era l
re se rv e sy stem at th e o u tse t w ill in c re a se th e le n d ­
ing p o w e r o f th e n a tio n a l a n d fe d e ra l re serv e
b an k s by som e h u n d re d s o f m illio n s o f d o lla rs.”
■

^

<

I > r

W A SH IN G TO N , Oct. 21.—W . P. G. H a rd ­
in g o f th e fed eral reserv e board w en t to
ISew Y ork to d ay to mmimt w ith b a n k ers
th e re ab o u t th e $150,000,000 loan fu n d to ta k e
c a re o f th® s u rp lu s co tto n crop. Mr. H a rd in g
ex p ected to m eet F eSttis J . W ad e o f St.
Louis, one of th e b a ck e rs o f th e plan . In
P h ila d e lp h ia an d c o n tin u e th e effort to have
th e New Y ork b a n k e rs accep t pro p o sals for
th e use o f th e fu n d discu ssed by th e fed eral
reserv e b o ard .
.

C le v e la n d R e s e r v e B a n k M e n M e e t




/ / ^ V

< 0 -s \ s S

T h e C o tco n P o o l

9 /^

D.
C. W ills, o f P itts b u rg h , c h a irm a n o f th e
b o a rd o f d ir e c to r s ; L y m a n T re a d w a y , C leveland,
vice c h a irm a n , a n d H a r r y W o lfe , o f C olum bus,
th e th re e re ce n tly a p p o in ted C lass C d ire c to rs o f
th e F e d e ra l R eserv e B a n k o f C leveland, m et w ith
m em b ers o f th e F e d e ra l R eserv e B o a rd a t \ \ ash in g to n S a tu rd a y . T h e o rg a n iz a tio n o f th e C leveland
bank, the financial situ a tio n in th e C lev elan d fe d ­
era l re se rv e d istric t, the b y -law s to be a d o p te d
a n d th e lo ca tio n o f q u a rte r s w ere q u e stio n s c o n ­
sidered.

e J . / 7 / f j y

y
,

Q <

f / 7

(j-

/ 9 / y

President Reynolds Discusses
Live Issues
In a n n u a l a d d re ss b e fo re A m e ric a n B a n k e rs ’
A ssociation, at R ichm ond, P re s. A r th u r R ey ­
nolds, w ho is p re sid e n t o f D es M o in e s N a tio n a l
B ank, D es M oines, la., said in p a r t :
r h e p rin cip al o b jec t o f o rig in a to rs o f th e r e ­
se rv e hank plan w as to a d d sta b ility bv d e v isin g
a sy stem th a t w ould a lle v ia te p e rio d ic a l s t r i n ­
g en cies a n d p re v e n t panics. A ny o p e ra tio n u n d e r
sy stem w hich seeks by im m e d ia te r e tu r n to c h a n ­
n els o f com m erce, by th e re d is c o u n tin g plan, to
p re v e n t th e c o n tra c tio n in c id e n t to w ith d ra w a l
o f so larg e a sum fro m business, w o u ld , to th a t
e x te n t, d e fe a t ability o f re se rv e b a n k s to rclie e
a n y strin g en c y . If th ese b anks a re to be alw ay s
in c o n d itio n to w a rd off d isa ste r, w e w ill, a t th e
b e g in n in g , be com pelled to su b m it o u rse lv e s to
so m e c o n tra c tio n .
T o h o ld b o th p o sitio n s is
illo g ical, if n o t im possible.
[t m ay be said th a t re d u c tio n in re se rv e r e ­
q u ire m e n t w ill re le ase fu n d s to a le v iate th e stra in ,
a n d so it w ill, if th e b a n k s will u se th em fo r
th a t p u rp o se.
H o w e v e r, a s ta tu to ry re se rv e is n o t n e ce ssa rily
a s a fe reserv e, as the re se rv e re q u ire m e n t o f e v ery
p ro p e rly m an ag ed bank d epends on th e c h a ra c te r
o f its b u sin e ss, r a th e r th a n on leg al e n ac tm e n t.
T h e ru le o f th e b a n k e r m u st lie “s a fe ty first,”
re g a rd le s s o f c o n tra c tio n . H e ow es th is d uty to
b o th d e p o sito rs a n d sto c k h o ld e rs.
W h a t w ill be th e c o u rse o f th o se m a n a g in g
th e re se rv e b a n k s? T h e y m u st cause a c o n tr a c ­
tio n o f c re d it if th ey keep im p o u n d e d th e m ea n s
to a t all tim es relieve d istre ss, a n d if th ey r e ­
d isc o u n t a t once a n d freely, th ey d e p riv e th e m ­
se lv e s o f ab ility to do so. Tt w ill re q u ire ra re
w isd o m to m eet so c o n tra d ic to ry a situ atio n .
I f w e h a d a n y a ssu ra n c e th a t re se rv e b a n k s
w o u ld h o ld larg e d e p o sits a sid e fro m th o se w hich
th e g o v e rn m e n t m ay place w ith th em , th e re m ig h t
be a w o rk a b le m arg in , b u t as both c ap ita liz a tio n
a n d d e p o sits a re fo rce d , I see no in d u c e m e n t fo r
m e m b e r b a n k s to keep a ctiv e a c c o u n ts w ith r e ­
se rv e b a n k s beyond re q u ire d re serv e . T h e ir com ­
m e rc ia l re la tio n s w ith o th e r b a n k s o f th e c o u n ­
tr y w ill alw ay s be m o re p ro d u c tiv e, a n d c o n ­
fo rm to n a tu ra l tre n d o f b u sin e ss: besid es w hich,
th e y n o w receiv e in te re s t on d aily b a la n ce s w ith
c o rre sp o n d e n ts.
E x p a n s io n o f c re d it in cid en t to re d is c o u n tin g
bv re s e rv e b a n k s w ill becom e a p p a re n t im m e ­
d ia te ly on its c o n su m m a tio n , a n d by in ie c tio n of
n o te s a t th e sam e tim e e x p a n d o u r c irc u la tio n .
I h a v e n o t y et h e a rd any a rg u m e n t w hich justifies
c o n clu sio n th a t th ey w ill be a s ra p id ly re tire d
w h en th ey h a v e serv ed th e p u rp o se. U n d e r p re s ­
e n t m eth o d s, if th e c u sto m e r o f a b a n k o b tain s
use o f c re d it, w h e th e r a n in d iv id u a l, a n o th e r b an k
o r c o rp o ra tio n , the e x te n sio n o f c re d it tak e s
so m e fo rm o f a c red it in s tru m e n t w hich does not
re m a in in e x iste n ce m o re th a n a fe w days a n d
w o rk s n o in cre ase in c irc u la tio n .
O n e fe a tu re o f the a ct c re a tin g th e re s e rv e
1b a n k s, to w hich little, if any, re fe re n c e lias been
m ade, is fo u n d in th a t c lau se w hich leaves to
d isc re tio n o f se c re ta ry o f th e tr e a s u ry th e c o n ­
tin u a n c e o r d isc o n tin u a n ce o f th e in d ep e n d en t
tre a s u ry system .
It h a s been su p p o sed th a t w ith o p e n in g o f r e ­
se rv e banks, g o v e rn m e n t fu n d s w o u ld be d e ­
p o sited in th o se b an k s, a n d in d e p e n d e n t tre a s u ry
sy stem be a th in g o f th e past. T h e law , h o w e v er,
d isclo ses th a t its a u th o rs h a d no su c h in te n tio n ,
a n d th a t if g o v e rn m e n t fu n d s a re d e p o site d in
th ese b an k s, o r if th ey a re a p p o in te d fiscal a g en ts
fo r th e g o v e rn m e n t, it w ill be a t d isc re tio n o f
s e c re ta ry o f th e tre a s u ry alone, a n d th a t th e bill
does n o t p ro v id e f o r a b o litio n o f th e p re se n t
system .
I t is a ju s t c riticism to say th e a c t does n o t
tak e th e g o v e r n m e n t out o f th e b a n k in g business,
a n d c o n fe rs on one o f o u r g o v e rn m e n t officials
an e x tra o rd in a ry p o w e r a n d d isc re tio n , u n w a r ­
ra n te d by sp irit o f o u r in stitu tio n s.
T h e re is no re aso n w hy fu n d s o f th e g o v e rn ­
m ent, ta k e n by ta x a tio n , sh o u ld be b a n d ie d in
th eFRASER
r th a n a business m eth o d . T o a v o id a lte rn a te
Digitizedofor
c o n tra c tio n a n d ex p an sio n in c irc u la tio n in cid e n t
http://fraser.stlouisfed.org/

Federal Reserve Bank of St. Louis

. , collectio n a n d d isb u rse m e n t o f v a s t su m s h a n died by th e g o v e rn m e n t, th ey sh o u ld be d e p o site d
1a n d ch eck ed a g a in s t j u s t as fu n d s o f b u sin ess
! in s titu tio n s a re , a n d beyond in d iv id u a l co n tro l.
P o w e r c o n fe rre d o n s e c re ta ry o f th e tre a s u r y to
c o n tro l m o n ey a n d c re d it, if a tte m p te d by m em ­
b e rs o f th is a sso c ia tio n , w o u ld p ro b a b ly call fo r
a special a ct o f C o n g re ss to c u rta il th e ir activ ities.
W e a rc to d a y in th e m a e lstro m o f u n c e r ta in ty :
sta te a n d fe d e ra l leg isla tio n f o r c o n tro l o f husi
ness by b u re a u s a n d c o m m issio n s u n d e r political
d o m in a tio n seem s th e o rd e r o f th e day, a n d a d ­
vocates o f th is policy a re e n d e a v o rin g to c re a te
p ro sp e rity
by
leg a l e n ac tm e n t, d isre g a rd in g
ag en cies h e re to fo r e m o st efficient in p ro m o tin g
it. T h e y do n o t re co g n ize th a t th e ra p id in ­
d u s tria l d e v elo p m en t th ro u g h o u t th e w o rld has
p ro d u c e d c o n d itio n s w hich h a v e re q u ire d ra d ic a l
ch an g es in b u sin e ss m eth o d s. W h e re fo rm e rly
in d iv id u a l e ffo rt a n d d isjo in te d in te re s ts w ere
em ployed, no w c o -o p e ra tio n , b o th o f c ap ital a n d
th e in d iv id u a l, h a v e ta k e n th e ir place.
T h is is th e g r a n d tr a n s fo rm a tio n Which o u r
re fo rm e rs , fa ilin g to recognize, a r e seeking to
c o n tro l by a p o litica l policy w hich, if logically
com pleted, w ill d o m in a te th e eco n o m ic policy o f
th e people— if it d o e s n o t g o f a r t h e r a n d plunge
us in to socialism .
In th e ir e ffo rts to reach a fe w m en w ho h ave
ta k e n u n f a ir a d v a n ta g e u n d e r the new c onditions,
th ey o v e rlo o k th e fa ta l h a n d ic a p th ey a re im ­
p o sin g o n th e e n tire b u sin e ss stru c tu re , u n d e r
w hich c o m p e titio n w ith th e w o rld a t larg e , a lre a d y
difficult, w ill be still f u r th e r im peded.
I f th e se w o u ld -b e re fo r m e rs w e re p u rsu in g
th e ir policy in re sp o n se to g re a t p o p u la r d em and,
th ey m ig h t be ju stifie d . A side fro m u su a l e x ­
p re ssio n s a n d p ro m ises o f r e fo r m e v e ry fo u r
y e a rs in p la tfo rm s o f a ll p a rtie s , th e re is no
org-tnized e ffo rt f o r m u ch o f th e le g isla tio n a l­
re ad y e n ac te d , o r u n d e r c o n sid e ra tio n . C o m m e r­
cial o rg a n iz a tio n s re p re se n tin g b u sin e ss in te re s ts
h a v e n o t d e m a n d e d it, b u t h a v e p ro te s te d , a n d
even lab o r o rg a n iz a tio n s h a v e confined th e ir ac ­
tiv itie s to su b je c ts w h ich o nly c o n c e rn th e ir p re s ­
e n t in te re sts.
P ro te s ts o f b a n k e rs a n d b u sin e ss m en a g a in st
th is in v a sio n o f th e ir lib e rtie s h a s n o t only gone
u n h e a rd , b u t o rg a n iz e d e ffo rt to m o d ify som e
o f the d ra s tic m e a su re s p ro p o se d h a s been o p e n ­
ly re fe r r e d to a s “ c o n sp irac y to influence le g is ­
la tio n .”
I c a n n o t a d m it th a t leg isla tio n on a n y su b je c t
is so sa c re d o r b eyond c riticism th a t th e people
w ho a re th e m a s te rs o f th o se w ho m u st en act
it shall be d e b a rre d th e rig h t to be h e a rd , and
believe th a t b u sin e ss in te re s ts h ave a special claim
on a tte n tio n o f th e la w m a k e rs a t th is tim e. If
rig h t o f a p p eal is by such tac tic s to be denied
any class o f o u r citizen s, m ay they n o t ju s tly fe a r
th e good in te n tio n s a n d d o u b t the w isd o m of
th o se w h o a ssu m e to do so ?
I do n o t believe th e people h a v e a b an d o n e d
th o se p rin c ip le s u n d e rly in g o u r econom ic s tr u c ­
tu r e w hich h a v e e n ab led us to a tta in o u r p re se n t
p o sitio n in th e b u sin e ss o f th e w o rld .
I d o n o t believe o u r la w m a k e rs de sire to c h am ­
pion th e cau se o f th o se w ho d e m a n d a re d is ­
tr ib u tio n o f p ro p e rty by law , if possible, o r by
o th e r m ea n s, if n e cessary , b u t a logical c o n ­
tin u a tio n o f th e ir p re se n t c o u rse w ill u ltim ately
place th em in th a t positio n .

C
/z / t / r

c

Goff Favors One Central Bank
A R ich m o n d d isp a tc h s a y s :
F . H . Goff, p re sid e n t o f th e tr u s t c om pany sec:ion o f th e A m e ric a n B a n k e rs’ A sso c ia tio n , vvas
:he p rin cip al sp e a k e r a t th e t r u s t com pany section
m eeting on T u esd ay .
M r. Goff spoke in fa v o r o f t r u s t com panies e n ­
te rin g th e fe d e ra l re se rv e system , th o u g h he
a d v o ca te d a m e n d m e n ts fo th e fe d e ra l re se rv e act.
M r. G off h a d h ig h pra ise f o r th e a d m in istra tio n
at W a sh in g to n , a n d h e in d ic a te d his b e lie f th a t
th e re sh o u ld be b u t o n e c e n tra l b a n k in ste a d of
tw elv e re g io n a l b a n k s a n d th a t th e fu tu re tre n d
th u s m u st be m o re th a n a t p re se n t to w a rd c en ­
tra liz a tio n . M r. G off sa id in p a r t :
" T h e c risis th ro u g h w h ich w e a re p a ssin g has
d e m o n s tra te d , a:> n o th in g b e fo re in o u r h isto ry ,
th e n e ed o f a p o w e rfu l c e n tra l b a n k w h e re th e r e ­
se rv es o f th e n a tio n can be c o n c e n tra te d a n d th e
outflow o f g o ld c o n tro lled . G ra te fu l as w e a re
f o r w h a t h a s been acco m p lish ed u n d e r th e able
le a d e rs h ip o f P re sid e n t W ilso n in b rin g in g a bout
r e fo r m in o u r c u rre n c y a n d in p e rfe c tin g o u r
b a n k in g system , w e a n x io u s ly b u t h o p e fu lly aw ait
e n a c tm e n t o f f u r th e r leg isla tio n w hich w ill in su re
a d e q u a te p ro te c tio n o f c re d its b o th a t hom e and
a b ro a d sh o u ld c o n d itio n s e v er a ris e in th is c o u n ­
try such as h a v e o b ta in e d in E u ro p e since th e dec­
la ra tio n o f w ar. T h e re a l te st o f a financial sy s­
te m m u st be its a b ility to se rv e a d eq u a te ly in tim es
o f m ax im u m stra in .
•‘F irm in th e c o n v ic tio n th a t c ollisions a re m o re
likely to be a v e rte d w h e n th e re is b u t one a n d n o t
tw elv e lev e rs to be o p e rated , w e believe th a t the
tre n d in th e f u tu r e m u st in ev itab ly be to w a rd f u r ­
th e r c e n tra liz a tio n . W h ile o u r view s w ith resp ect
to th is d iffer fro m th o se in a u th o rity , w e w ish it
know n th a t w e a re n o t a n ta g o n istic , b u t sincerely
d e siro u s o f bein g h e lp fu l in w o rk in g o u t th e
financial p ro b lem s o f th e n a tio n . T h e q u e stio n
th a t c o n fro n ts us is how su c h help can b e st be
given.
“W ill o u r influence be m o st effectiv e if we re fu s e
to accept m em bership, h o ld a lo o f a n d criticize
w hat h a s been done, o r can w e b est serv e by
c o -o p e ra tin g w ith the n a tio n a l b a n k s a n d th e fe d ­
eral re serv e b o a rd ? W ill w e h av e th e m o st in ­
fluence fro m w ith o u t o r w ith in ?
"1 believe th e g o v e rn m e n t n e ed s a n d d e sire s th e
su p p o rt o f th e tr u s t com panies, a n d p e rh ap s
so o n e r th a n w e th in k th e y m ay a g a in n e e d its
support.
" T h o se w h o a re n o t influenced by p a trio tic m o­
tives p e rh a p s o u g h t to be by selfish o n es. C o m ­
m en d in g th e P re s id e n t as I do f o r th e ex ce lle n t
a p p o in tm en ts h e m ad e to th e f e d e r a l R e se rv e
B oard a n d f o r th e a ttitu d e o f h is a d m in is tra tio n
d u rin g th e re c e n t crisis. I h a v e com e to h ave
an in c re a s in g fa ith th a t w h a t is n o t rig h t w ill
in tim e be m a d e rig h t, f t m ay be w ell to r e ­
m em ber th a t m o re b a ttle s a re w on by m en 011
th e firing line th a n by m en sk u lk in g in th e-& u tW »
^

C

C

/ ' /f /y

State Banks Free To Enter Reservt
System
A R ic h m o n d d isp a tc h s a y s :
A c tiv itie s o f th e tw o th o u s a n d A m e ric a n bank
:rs h e re f o r th e ir fo rtie th co n v en tio n w ere cen ­
tere d T u e s d a y in sectio n al m ee tin g s o f th e ir sub­
sidiary o rg a n iz a tio n s. 11. P a r k e r W illis, se c re ta ry
o f th e F e d e ra l R e se rv e H oard, o p e n ed th e w ay
to d isc u ssio n o f th e n a tio n 's new financial system
a t a jo in t m ee tin g o f th e tr u s t c om pany a n d sa v ­
ings b a n k sections. H e spoke as a financial e d ito r
and n o t a s a re se rv e b o a rd official.
T h e re is 110 re q u ire m e n t in th e fe d e ra l re serv e
act th a t w ould p re v e n t s ta te b an k s fro m e n te rin g
th e new system , M r. W illis s a i d ; th e y w ould
m erely h ave to c o n d u ct th em se lv es in a g e n era l
w ay on th e basis o f b a n k in g m an a g em e n t re q u ire d
 o f n a tio n a l in stitu tio n s.

http://fraser.stlouisfed.org/
TWO M AIN OBSTACLES NAMED.
Federal Reserve Bank of St. Louis

ad d ed th a t, in a g e n e ra l way, it h a d been
fo u n d th a t th e tw o p rin cip al o b sta cles to th e e n try
o f sta te in stitu tio n s in to th e fe d e ra l re se rv e sy s­
tem w e r e :
_
" T h e e x iste n ce o f a la rg e fle m e n t o f re a l estate
lo an s in th e p o rtfo lio s o f th e in stitu tio n s .
" I he e x iste n c e o f w h a t a re called 'ex cessiv e
Joans.' by w hich is m ea n t lo an s to single p erso n s
o r in d iv id u a ls, g re a te r th a n th e a m o u n t p e rm itte d
u n d e r th e n a tio n a l b a n k in g law .’’
SHOULD ELIM INATE THESE.

" I t h a s been rig h tly a ssu m e d by th e s ta te in sti­
tu tio n s th a t th ey o u g h t to e lim in a te th o se tw o
g ro u n d s o f c riticism if th ey e x p ec t to e n te r the
sy stem ,” c o n tin u e d M r. W illis.
" T h e e a rly e n try o f s ta te b an k s in to the system
dep en d s in a v e ry la rg e m e a su re 011 th e w ay in
w hich th e c le a ra n c e fe a tu re is h a n d le d , a n d th e
e x te n t to w hich the cle arin g fu n c tio n is tak en
o v e r by th e fe d e ra l re se rv e b anks u n d e r in s tru c ­
tio n s fro m th e F e d e ra l R e se rv e B o ard . P ro v id e d
th a t th is w o rk is u n d e rta k e n c o u ra g e o u sly and
su c c essfu lly , th e re su lt w ill be to e n la rg e v ery
g re a tly th e m em b e rsh ip o f th e fe d era l re se rv e sy s­
te m .”

C o n g ra tu la tio n s fro m all o v e r th e c o u n tr
p o u re d in 011 D a v id C. W ills, c a s h ie r o f the D ia
m o n d N a tio n a l B a n k , fo llo w in g th e a n n o u n ce
m en t fro m \ \ a sh in g to n th a t he h a d been selectei
byf th e F e d e ra l R e se rv e B o a rd as c h a irm a n o
th e b o a rd o f d ire c to rs . F e d e ra l R e stff'ff' A geti
a n a class C d ire c to r o i th e F o u r ih d is tric t Re
g io n al B an k a t C leveland.
T h e re is n o m o re p o p u la r m an in th e -banking
b u sin e ss th a n “ D a v e ” W ills. H is selection has
m et w ith a p p ro v al e v e ry w h e re . M r. W ills w as
a d a r k h o rse . H e h a d n o t so licited th e office. "1
h a te to lose h im . r sa id \ \ illiam P ric e , p re sid en t
o f th e D ia m o n d N a tio n a l B ank, “b u t it is a g reat
h o n o r to a w ell d e se rv e d m an, a n d I fe e l he
sh o u ld a v ail h im s e lf o f th is h o n o r. T h e F e d e ra l
R e se rv e B o a rd . I am su re , h a s m ad e 110 m istak e
in se lec tin g h im .”
M r. W ills w as b o rn A u g u s t 11, 1872. A s a
m esse n g e r he e n te re d th e M ech an ics N a tio n a l
B ank in IS,s'). F ro m m esse n g e r he ra p id lj rose
fro m one p o sitio n to a n o th e r u n til he becam e
te lle r in th a t in stitu tio n . In 1902 he a ccep ted the
position o f a u d ito r in the M ello n N a tio n a l Bank.
In 1904 he becam e c a s h ie r o f th e D ia m o n d N a ­
tio n a l B ank, a n d h a s since held th a t positio n . M r.
W ills is a d ire c to r o f th e D ia m o n d S av in g s B ank,
a n d is p re sid e n t o f th e C itiz e n ’s N a tio n a l B ank
o f B ellevue. H e h a s a lw ay s been a conspicuous
figure in b a n k in g o rg a n iz a tio n s. H e w as an o r ­
g a n iz e r a n d first p re sid e n t o f P itts b u rg h C h ap ter,
A m e ric a n In s titu te o f B a n k in g , w as i o r n n i l \
c h a irm a n o f G roup 8, P e n n sy lv a n ia B. u k n As­
sociatio n , a n d is a m em b e r o f th e e ,
-ive c o u n ­
cil o f th e A m e ric a n B a n k e rs ' Assov iation.
tr.
W ills is m a rrie d , h a s fo u r c h ild ren .
re ides
in B ellevue.
In o rd e r to accept h is n ew positio n , M r. W ills
w ill h a v e to se v e r his co n n ec tio n s w ith all b a n k ­
ing in stitu tio n s, u n d e r th e p ro v isio n s o f th e act.

C leveland R eserve Bank Officials
Confer
I). ( . W ills, o f Pi t t sbur gh, f eder al re.»'
n»l c h a i r m a n o f t he bo ar d of t he new
ink. ; aid a h u r r i e d visit to Cl eveland

agent
ional
cdne?

Mr Wil l s was in c o n f er en ce wi t h I-.n H
I’r - a d wa y . deput y a nd vice c h a i r ma n
t: <
tr<i.
"ii ma t t e r s r el at i ng to the nrjrani / at i on -f *lu
new bank
T h e hr>; me e t i ng of t he b o a r d a- ln-< ii deiin
jtely called t r S a t u r d a y mo r n i n g at t he federal
building.
Fhe s e curi ng o f a location for the
b ank a nd the clecti -n <>f a practical ba n k e r as
g o v e r n o r a n d acti ve execut i . T will be t he first
•<*rmal mo ves marie by the board.
T h e -election of a g o v e r n o r by t he boar d is
>ub j eel t* appr oval by t he Feder al Re ser ve H* -ard
tt W a s h i n u t ' ti T h e n a m i ' <»f several are un d e r
cons i der at i on f«>r t he p«*st
Tbr« e del egat es f r om
the Cl evel and bank boar d a nd as ma ny di r ect ors
as des i r e will at t end t he c o nf er ence in W a s h i n g ­
ton Oc t o b e r .0. \ t t hat meet i ng active -te;>< will
)e t a k e n fnr the actual openi ng of the regional
>anks.

G r a d u a lly H oum r** u p e n .
D u rin g th e w eek th e New Y ork
curb m a rk e t re su m ed trad in g - un d er
m odified c onditions p e rm ittin g tr a n s ­
a c tio n s in sto c k s sellin g a t $10 a
s h a re a n d under, a n d th e B oston
c u rb e x ch a n g e also reopened for
b u sin e ss u n d e r c e rta in restrictio n s.
A u th o riz e d tra d in g a m o n g b ro k e rs of
tb e T o ro n to stock ex ch an g e began
T h u rs d a y a n d it is und ersto o d the
M o n tre al stock e x ch a n g e soon will
follow su it, th o u g h In th e case of
b o th in s titu tio n s u n re s tric te d trad in g
•will be held in a b e y a n c e u n til the
a u th o ritie s of th e L ondon a n d New
Y o rk exchange? deem it p ropitious
to re su m e o p e ratio n s in th e old way.
T h u s, It a p p e a rs th a t a real b e g in ­
ning: h a s been m ade in the w ay of
lif tin g th e em b arg o w hich th e w a r
p la c e s u p o n th e se c u rity m ark e ts.
In q u iry am o n g b a n k e rs discloses a
w id e difference of opinion re g a rd in g
♦jU® w isdom of th e proposed fo rm atio n
©f a $150,000,000 fu n d to p ro te c t th e
pgiarket fo r c o tto n a n d to provide
p la n te rs w ith th e m ea jis of borrow ing
Upon th e ir p ro d u c t u n til it can be d is­
po sed of to c o tto n m a n u fa c tu re rs in
th is c o u n try a n d a b ro a d ,a t a -fair
p ro fit, A lth o u g h th e p lan se e m s to be g a in ­
ing: fa v o r a s re s u lt of its a p p ro v al by
the fe d e ra l re serv e bo a rd , m a n y b a n k ­
e rs, w hlle^ff'fH W llPto lend e v ery pos­
sible aid to w a rd its successful p ro se­
cu tio n , fo r th e re aso n t h a t it prom ises
tQ o b v ia te g o v e rn m e n t a ctio n , a re
eonvnced t h a t th e so lu tio n of th e cot|o n pro b lem should be reach ed by
fptmnH m o re econom ic a n d b u sin e ss­
like. I t is d e clare d b y som e t h a t the
sch em e is n o t econom ically sou n d as
It w ill c re a te a ten d e n cy on th e p a r t
of c o tto n g ro w e rs to hold th e ir su p ­
p lie s of th e sta p le fo r h ig h e r prices,
Will a id th e south in c re a tin g a n a r ­
tific ia l m a rk e t for cotton, a n d will
em b o d y a severe ta x upon th e c o u n ­
t r y 's b a n k in g resources.
F u rth e r­
m ore, th e se b a n k e rs sa y , if th e so u th
Is e n co u rag ed in h o ld in g its cotton
U ntil it c a n o b tain 10 c e n ts a pound
or b e tte r, w hich price, w ith th e p re s­
e n t b ig crop, w ould m e a n su b s ta n tia l
p ro fit fo r th e g ro w ers, th e conseQijence w ill be th e p la n tin g of a big

fuse to lend a helping liand. as their refusal
m ight entail criticism that It were better at
all events to avoid. Perhaps It w as due to
th is feeling th a t the banks In New York
concluded to contribute $50,000,000 toward
the pool, tho fund to be distributed among
the southern Institutions, which a re to pay
interest a t the rate of 8 per cent, and make
loans to the planters on the basis of 6 cents
a pound on cotton.
It is felt, however, th at the plan would be
more successful If the m anagem ent of tho
fund were vested in the federal reserve
board In W ashington and the money loaned
not to Individual banks but to groups of
banks represented by the various currency
associations In the south.
It is probable
th a t these suggestions will be adopted, in
p art, a t least, though it is difficult to sethow the federal reserve board can take on
the trusteeship of th e fund w ithout exceed­
ing its legal functions.
The cotton pool plan Is at least practicable.

Men of Twer" Governments
Consider Problem of Pay­
ing Oversea Debts.
English May Take Bank Indorsed Notes in Lieu
of Gpld.'
___
o
•

WASHINGTON, Oct. 1 0 - S ir George
Paish, adviser to the English chancellor
of the exchequer, Basil B. B lackett of
the English treasury, Secretary McAdoo
and the federal reserve board today be­
gan a series of
» s here which
are expected to have a m ost im portant
effect upon financial conditions in both
G reat B ritain and the United States.
R estoration of norm al conditions in
cotton a c re a g e n e x t y e a r and a re ­
foreign exchange dealings between the
cu rren ce of th e problem now vexing
1
c° urint,r>, 8 18 t t e object of the m eet­
* tne country.
ings and they probably will have direct
influence upon the disposition of the
♦ > * ° r v e r’ **
g e n era lly conceded
tu a t. t h e c o tto n pool p lan is th e only ! eo“ th 8 enormous cotton crop.
Officials of the Am erican governm ent
feasible so lu tio n y e t proposed. Th#
feel th a t cotton is the crux of a situa
chief difficulty lies in fix in g th e price
tlon which i is manjf ram itications and
w hich shall c o n stitu te th e ba sis for
th a t upon the success of plans to care
loans.
O bviously, th e lo an in g of
for surplus otton and upon the willing­
® puey on m id d lin g c o tto n on th e b a sis
ness of m anufacturers to buy cotton
more th an any o th er thing, depends the
o r o cents a pound u n d e r p re se n t c o n ­
value of Sir George’s visit.
ditions, a s th e p la n p ro v id es for, is
It Is probable th a t before Sir George
n o t good b a n k in g , w hen < h a t g ra d e is
re tu rn s to E ngland th e question of re­
tjfcjng qu o ted a t
c e n ts in N ew
opening
the London and New York
O rleans.
, 7 FT . stock exchanges will be considered. It
w
m
predicted
here tonight th a t the
K certain
®°,ton
rBl,ef ‘pthe
*n
couid be modified In
particulars,
London exchange would reopen shortly,
Digitized
Daniu at for
theFRASER
financial centers should not re­
with the tJrltiih governm ent urging that



London brokers shall not call loans im ­
mediately. If the London m arket is not
greatly affected, its resum ption of busi­
ness may be followed by the New York
exchange.
So much depends, however, upon the
solving of the cotton problem th a t there
probably will be no fu rth e r conference
until a committee of the board which is
wrestling with the proposed Sir*),<100,000
cotton loan fund plan has found a solu­
tion satisfactory.
Sir George takes the position th a t
English cotton m anufacturers do not
wish to go into the m arket now and
buy cotton unless they are satisfied
that it has reached the bottom price
The American m anufacturers ap p ar­
ently feel about the same way, and in
consequence little cotton is being sold
With the $150,000,000 loan fund in op­
eration, however, it Is argued th a t m il­
lions of bales of cotton will be taken
out of this m arket and stim ulating e f­
fect will be felt here and in England
This country normally relies on cot­
ton to pay most of its indebtedness
abroad. It W 'a s said tonight th a t E n g ­
lish bankers and m erchants have com­
ing to them from the United S tates
more than $200,000,000. They know
that this country has about $1,000,000,­
000 In gold and are a t a loss to under.stand why, when E ngland does busi­
ness on probably a third less gold, the
In k e d States is not anxious to meet
Its obligations now in th a t m etal
Since the w ar began governm ent offlc als have been loath to see American
gold exported, and the $100,000,000 gold
pool was created only a fte r much dis­
Mission to meet an emergency In ad
imon to the fact th a t officials do not
want to see exports of gold, it is not
*n easy m atter for the trea su ry to get
ihi
i. ? d national banks in
,hold ab.out *375.000,000 in
’ a sa ln st which gold is
J„nt .lh e i reasuryTlle people.
rest is large­
ly scattered
ajnong the
The
w,
i
th
n,uch
$J<o,0(X).0q0, for it m akes th eir lfiralthel?
reh ™ C’ a»? ,th? trea8ury probably would
^
ui? e setting a few hundred
it
J
1.7,di' rlduals who hold
Uie Englishmen.
° Ut ‘°
According to authorities here it is
S“,sl5)e the conference will develop
th a t English bankers are willing to ae- 1
cept short term paper bearing the in
dorsement of American federal reserve
<-7 of Bome w e‘l known bankfng
institutions not directly g o v ern m en tal
This m ight lead to a decided imnrnve
m ent and obviate large gold exports
It was said tonight th a t cotton ex­
changes probably would open shortfv
if argum ents made here availed
y

DIFFER FROM M ’AOOO
Bankers Vote to Delay R e ­
serve Bank Opening.
■
*— /
W ASHINGTON Oct. 2i;—A fte r a
tw o -h o u r discussion h e re today, >dire cto rs and go v ern o rs of th e tw elv e
fed eral reserv e ban k s refused- by tw o
votes to s upport t he pro p o sal of Secreta.r> Me “WiM ife’ open
th e
new
b a n k in g system for bu sin ess Nov, l(i
By a vote of 37 to 35 th ev recom N ov^30 th a t the opening be se t for
T his action has no b in d in g effect
^ e fed eral reserv e board o r
upon Mr. McAdoo, for th e c u rre n c y
a c t gives the se c re ta ry a u th o rity to
open the ban k s w hen he believes th ev
a re ready to do business. It w as e v i­
d e n t to n ig h t th a t m em bers of the
bo,? ld . 'J ere not P a rtic u la rly pleased
w ith th e recom m endation
of
the
b a n k s a n d it is possible th a t a m eetin ¥ , j h * board >n the n e x t few day .
w ill deveiop sufficient s e n tim e n t to
b rin g a vote a sk in g th e s e c re ta ry to
nam e a d a te e a rlie r th an Nov 30
The discussion of the o pening V ate
w as ta k e n up im m ediately a fte r the
b a n k e rs re tu rn e d from th e
W hite
House, w here P re sid e n t W ilson d e ­
c la red h is belief th a t the b est th in g
fo r the c o u n try w as to open the
b a n k s a t the e a rlie st possible d a te
"O th erw ise.” said the presid en t, "w e
should seem to d isc red it in p a rt the
v ery th in g th a t we a re u n d e rta k ­
ing."

j

FANCHER HEAD
CLEVELAND'S 0. S.
President of Union National Is
Expected to Be Formally
Elected Friday or
I"-.turday.
—

o e 7

•>-*- 1 9 1 4

CH O ICE IS APPROVED
BY FED ERAL BOARD
New Institutions Are Slated to
Open for Business on
Novemb?" 1£>.
r: R. F ra n c h e r. - cntly elected
p re sid e n t of th e U nion N a tio n a l
B a n k , is sla te d fo r th e govern o rs h ip
of t h o T 'e T e M l H ^ sn 'v e ' B a n k of
C leveland.
~ M r. F a n c h e r is in d o rse d b> th e
C leveland c le a rin g h o u se b a n k s a n d
by th e f e d e r a l re se rv e b o a rd a t
W ash in g to n .
D irec ,rs o f th e C leveland in s ti­
tu tio n w h o a r e a tte n d in g th e c o n ­
fe re n c e o f re g .o n a l b a n k officials in
W a s h in g to n
y e ste rd a y in fo rm a llj
a p p ro v e d th e C lev elan d m a n to head
th e f o u rth d is t.ic t re g io n a l ban k .
M r. F a n c h e r's a c tu a l election, acc o -d in g to th e W ash in g to n advices,
a k e p lac e a t th e d ire c to rs '
i
e to be h e ld in - C leveland
j.
o r S a tu rd a y of th is w eek.
At
sa m e tim e o th e r officials of
th e b a n k , in c lu d in g a c a s h ie r a n d
possibly som e of th e m in o i officers,
w ill b e a p p o in te d .
C oulton to Succeed F u n c h e r.
Tt is u n d e rsto o d t h a t G eorge A.
C oulton. now vice p re sid e n t, will
su c c ee d M r. F a n c h e r a s p re sid e n t of
th e U nion N a tio n a l.
Since th e
close of th e R ic h m o n d co n v en tio n
la st w eek, Mr. F a n c h e r h a s been
in A tla n tic 'C ity , b u t he h a g b e e n in
close to u c h w ith th e f e d e r a l b o a rd
a t W a s h in g to n .^
It Is sa id t h a t M r. F a n c h e r 's s a l­
ary will be th e $25,000 a y e a r lim it
fixed by th e fe d e ra l b o a rd . H e w ill
be th e a c tiv e ex ecu tiv e h e a d of a n
in s titu tio n w h o se to ta l re so u rc e s
p ro b a b ly w ill exceed $100,000,000,
a n d w h ic h w ill h a n d le c le a ra n c e s
fo r m e m b e r b a n k s w h ic h m ay re a c h
$ 1 0 0 , 0 0 0 ,0 0 0 daily.
T h e c o n d u c t of th e b a n k a n d its
p ra c tic a l w o rk in g s w ill be in th e
h a n d s of M r. F a n c h e r a n d D. C.
W ills, of P itts b u rg . M r. F a n c h e r 's
d u tie s w ill c o rre sp o n i v ith th o se of
a b a n k p re sid e n t. H e h a s b e e n a
b a n k e r fo r n e a rly th irty -fiv e y e a rs.
M r. W ills, a s c h a irm a n o f th e
b o a rd a n d fe d e ra l re se rv e a g e n t,
w ill b e t h e m o u th p ie c e o f th e g o v e m m e n t w h ic h div id es th e c o n tro l of

th e new sy s te m w ith th e m e m b e r

*



O p en N o v e m b e r 16.
Ak
y u r ts to th e fe
a l re se rv e
b o a rd a n d a ll in s tru c tio n s o f t h a t
body to th e C lev e lan d b a n k w ill be
m ad e
th ro u g h
M r. W ills. B o th
officials m u s t a b a n d o n a ll banking:
a ffiliatio n s a n d sell a ll th e b a n k
sto c k th e y m ay ow n.
S e c re ta ry of th e T re a s u ry M cAdoo
y e ste rd a y to ld th e fe d e ra l banking:
officials a t th e W a sh in g to n c o n fe r­
ence h e e x p e c te d th e new b a n k s
w ould be e ad y t i 4 o p^n fo r bu sin ess
by N o v e m b er 16. T h is w ill be d e ­
te rm in e d defin itely be fo re th e p re s ­
e n t m e e tin g closes.
M r. C oulton, p ro sp e c tiv e h e ad of
th e U nion N a tio n a l, b e cam e
onn e cted w ith t h a t in s titu tio n w h en it
a b so rb ed th e C olonial N atio n al. He
h a s been p ro m o te d in re c e n t years,
su ccessiv ely fro m a s s is ta n t cash for
> c a s h ie r a n d vice p re sid en t.

FANSHER IS CHOICE
fanion’ Nationars President to
be Gov?"nor of Regional
Institution.
(Nine Directors of Cleveland
District Attend Capi-

Form al e ^
n of
a®
governor
'ederal Reserve Bonk
of Clevel
pected to tak e place
at the en
week. Mr. Fancher.
now presi
tho Union N ational
bank, has
indorsem ent of t h '
Cleveland Clearing House associati*
and Is approved by th e federal re ser\«
board.
W hile form al announcem ent of the
choice of Mr. F ancher cannot be made
until the reserve bank directors meet
here this week, W ashington dispatches
indicate a * rong preponderance of sen­
tim ent am ong the directors and gov­
ernm ent officials th a t he be the man.
R eports had it th a t his salary would be
$25,000 a year, but no confirm ation of
this was had. The governorship of a
reserve bank corresponds to the presi­
dency of a present day bank.
Mr. F a n c h er has been a banker n e ar­
ly thirty-five years, sta rtin g in minor
position a t Lorain, O., and working up
to the vice presidency of the Union N a­
tional bank of Cleveland, of which he
became president about a month ago.
George A. Coulton. vice president of
the Union National, is deemed the log­
ics’ successor to Mr. F an ch er as presithe convention of directors and
o.
s of the federal reserve banks
helu in W ashington yesterday the di­
rectors of the Cleveland reserve bank
took prom inent part. D. C. W ills of
P ittsb u rg chairm an of directors of the
Cleveland bank, was m ade a mem ber
of the com m ittee on duties of federal
reserve agents and of the com m ittee
on accounting and statistics, while DiI
°* C incinnati w as
made a m em ber of the com m ittee on re­
discount, including definition of com­
m ercial paper and consideration of
n>Ur?a u *i«
convention were
the follow ing directors of the Cleveland
bank: Mr. Howe, S. B. R ankin, R obert
»om£s A - Combes, C. H.
Mr \ f l l l . . , 5 ‘t W
' H - P ' W olfe,
a *i i
—’
T read w ay.
As it is e zp o iU d fn e narise will be
5’dv- before
th ereth ia
uch
detail ISLSE?
w ork to hJbe Tdone
at m
time.

OF GOLD TO BE ASKED

,r-

■}

English

Experts and Reserve
Board to C onsider Payment
o f U. S. D ebt Abroad.

WASHINGTON,
October
il.—How
American bankers can meet th eir obli­
gations In E ngland w ithout actual
shipm ents of gold acroBS the Atlantic
will bo discussed a t a conference hsre
Friday between Sir George Palsh and
riasll B. Blackett, representatives of
the English treasury, and t e federal
reserve board, Secretary McAdoo and
r e p r e s c n : S « j « ^ i a n l i e r s from New York
who are parti7im !n**«rncerned in for­
eign exchange conditions.
This will be the first im portant con­
ference between the representatives of
the English government and the E ng­
lish banks a t which American bankors
will appear. Announcement was made
today of the meeting, but in the absenc? of acceptances from New York
bankers, no list of those expected Was
made public.
It is understood here tonight th a t the
main liope of the American Ticials is
ih at they be able to find son-3 method
or postponing gold payi.ient for sev­
eral m o n - until the tw
e federal
reserv e
a r e in ope
n . and the
lilTiculi
burdens lmpj.sed on the
In d iv id k s of the country hav
been ss
ind cared for.
It ha.
come evident th a t Slr
George Paish and Mr. Blackett do nor
wish to m ake an arbitrary demand for
im m ediate cash payments, and thaL
they realize the difficulties which a l
present confront American bankers and
the reserve board.
In official circles it was the general
view tonight th a t if the bankers in- (
*
viied can produce some plan
by
the English creditors m ay receive
short-term paper, there will be no In­
sistence on present gold paym ents.

Regional Bank Directors De­
cide on Clevelander.
A t a m eeting of directors of the F ed­
eral Reserve B ank of Cleveland held
here yesterday m orning, Ei _gi>£ a n c h e r1
president of the Union N ational bank,
form ally w as made governor of the
regional institution.
Mr. F ancher and the directors spent
p a rt of yea^erday afternoon Inspecting
locations w ith bank vau lts in them , and
while a prom inent downtown location
has been tentatively decided upon, final
action will not be taken until the end
of the week and the board Is still open
for offers.
C hairm an D. C. W illis said yesterdav
th a t the federal reserve banks will not
a tte m p t to tak e over the check cle ar­
ing business of m em ber banks a t pres­
ent, a n d w hen such action would take
place, if it does, he w as not prepared
to say.
The date for opening the regional in­
stitu tio n s will be betw een Nov. 15 :ind
Nov. 30. the day to be decided on sh o rt­
ly in W ashington. T he directors -will
l m eet her« ugaln F rid ay .

B A N K E R S D IV ID E ON O PE N IN G D A Y FO R BA N K S.
T h e c la sh , o f co u rse. Is n o t a se.-ious one. I t Is a n ex p ressio n nt
o p in io n by th is re p re s e n ta tiv e body. T h e s e c re ta ry of th e tr e a s u r y 18
a u th o riz e d b y th e new b a n k in g a c t to fix th e d a te of o pening
W hile
sta te d 0 th»Tatah f T ^
e x p res*lon o f oplnlon fro m th e d ire c to rs It Is
^ I
fe d e ra l re se rv e b o a rd w as n o t p a rtic u la rly p leased a t th e
la c k o f in d o rs e m e n t o f
— —
a
r ,.d
w „, „ .
d u a l b a n k in g a n d g o v e rn m e n t c o n tro l of th e new b a n k in g system
V fv "
° f o p e n ln » w as fa v o re d m ore exten siv ely by th e of.if t
reK lonaI b a n k s of th e la r g e r re serv e cities. It is obvious
t h a t th e s e d o n o t w a n t to ta k e c h a n c e s w ith d is tu rb a n c e to th e situ a tio n
m,
i m 0/.W.^ en CF0P m o v ln g d e m a n d s a re a t th e ir h e ig h t. U pon th o
o t h e r h a n d th e g o v e rn m e n t forces w a n t th e re g io n a l b a n k s to g e t in to
, \ h Kr r e - d Isc o u n t fu n c tio n s be fo re m o n ey becom es so e£sy
t h a t th e re g io n a l b a n k s m a y h av e difficulty in m a k in g p ro fitab le Investin e n ts . Som e o f th e S o u th e rn b a n k s fa v o r a n e a rly o p e n in g b ecau se th e
S o u th is Ju st now g ra s p in g a t stra w s. T
.’
* Thfe «CH mi tt.?e ,lrl CbaTg6 0 t a ,<Ienn,ti°n of c o m m e rc ia l p i p e r
n o t y e t finished Its labors. I t h a s re c o m m e n d e d a b ro a d definition
d e c id e d to c o n tin u e Its w o rk fu rth e r.
gennlU on.
In th e sto ck m a rk e t y e ste rd a y th e official C om m ittee in c h a rg e
I
fo r oil stocks. I t is

has
w
but
de i
still I

n lm u m on th e g e n e ra i u st ^
m o n ey m a r k e t c o n tin u e d e a 3 W w ith ra te s ra n g in g fro m ft t „ 7
p s f - c e n t . th e b u lk of th e bu sin ess 1>S% dono a t th e h l e h . r
k I
t f l t h a c o n sta n tly b ro a d e n in g ra n g e o f c h o r a l a c c e p ta b le fo r th e 6 p e r
c e n t loans. T h e re w ere h e av y c u rre n c y t r i e r s to N ew O rle a n s in con
n e c tio n w ith th e c o tto n m ov em en t,
Seve
m o re of th e N ew Y ork
b a n k s m ad e re tire m e n ts o f c le a rin g h o u se cei^ [Icates,

NO TIME LOST
BY U. S. RESERVE
A d y n a m o of e n e rg y -^ th a t's E.
R. F a n c h e r .
H e ’s th e g o v e rn o r of th e C leve­
land d is tric t federal reserv e bank.
H e w as elected T h u rsd ay .
A n d rig h t th e n h e hopped to the
job, a n d began io o k in g for q u a rte r*
in w h ic h to in s ta ll th e bank,
w h ic h w ill h a v e in th e n e ig h b o r­
hood o f 1000 c le rk s, a n d w ith w hich
m o re th a n 706 b a n k s w ill be affili­
a ted.
{J l , ; 2 ■
T h e q u a r te rs h a v e ifo t been
leased, a lth o u g h it is u n d ersto o d
th a t F a n c h e r and th e d ire c to rs
h av a v irtu a lly agreed on room s.
F a n c h e r is p re sid en t of
th e
U nion n a tio n a l b ank. As he s a t a t
h is d e sk th e re F rid a y h is le tte r
o p e n e r sizzed th ro u g h a big a c ­
c u m u la tio n of mall.
Il» p id -F ire A n s w e rs.
Q u e stio n s were m e t by rap id -fire
replies.
" W h e n did you go in The b a n k in g
b u g in ess? ”
"In ’82.”
“ S ta rte d a s m esse n g er boy?"
“ D o n ’t h a v e m esse n g er boyg in
c o u n try b an k s. Did e v e ry th in g .”
"S w e p t o u t? ”
"Y es.”
T he sla s h in g p a p e r c u tte r w asi
in te rru p te d by a lo n g -d ista n c e call. |
H o w H e D oes B u sin e ss.
F i n c h e r ’* h eels c rac k ed o ver the
floor to th e telep h o n e booth. T he
d o o r sla m m e d behind him , a n d his
quick, s h a r p w ords w oke up the
tire d w ire .
B ang!
T he re c e iv e r w e n t up: th e h e e l s [
cracked a g a in ; th e p a p er c u t t e r '
ripped a n d to re a m o n g th e e n ­
velopes.
"B orn in M ich ig an ; s ta rte d in




| b a n k in g business In L o rain , 0 ■
I been connected w ith U nion n a tio n 1
about q u a rte r of c e n tu ry ; filled
a b o u t a ll the jo b s th e re a re to fill
in a b a n k .”
T h at, in h is ow n w ords, is the
histo ry of F a n c h e r, re serv e bank
governor.
F a n c h e r w ill re tire a s p re sid e n t
or th e I nion n a tio n a l before he a s ­
sum es his new duties, i t is u n d e r - ;
stood th a t G eorgo A. C oulton, now '
vice p re sid en t of th e U nion n a tio n - I
al, will becom e its p re sid e n t

SECURITIES PUZZLE
u f

w

v

v

•*

Al W l

How to Protect Stocks and
Bonds Must be Decided by
Federal Reserve Board.
Day of Individual Bankers as
Country Savers is
Past.
xu
B Y H . S. R O S E N T H A L .

So
e arly in its c a re e r h a s th e federal
re serv e board becom e th e h u b of this
c o u n try ’s finance. £ i r s t th e gold pool
to keep o u r c re d it good a b ro a d w as
p u t up to th e b o ard . T hen th e cotton
loan plan, to keep up th e s p irits of
th e south. N e x t in o rd e r w ill be the
s a fe g u a rd in g of th e stock exchange
fo r re serv e board consid eratio n .
T he s tre e t h a s n o t said openly th a t
It w ould send its c ry to W ashington,
b u t d ire n e ce ssity w ill po in t th e way,
I f th e re e v er w a s a tim e w hen a
g o v e rn m e n ta l body could leg itim a te ly
be called Into W all S treet, It is now
w hen finance, fo reig n tra d e a n d in ­
la n d tr a d e a re so m a n ife s tly bound up
w ith th e sto c k a n d bond problem .
L iq u id a tio n fro m a b o a rd w ould m ean
lim itless gold e x p o rts on th e one hand,
o r su sp en sio n o f gold p a y m e n ts on th e
o th er, a n d n e ith e r ia a co m fo rtab le

th in g to contem plate, e ith e r in Wall
S tre e t or in a n y o th e r c orner of the
co u n try .
W h y B o a r d is N e e d e d .

W e owe E urope now a n estim ated
• $200,000,000. If only 5 per cent, of
th e six billions of secu rities held
o v ersea w ere sold here, we
h ave a n additio n al d e b t of $300,000,­
000. E ven if E u ro p e took cotton in
p a r t p a y a n d we continued to^ export
g ra in in enorm ous q u a n titie s, we
w ould have a p re tty ta s k paying the
debt. Shipping a s m uch cotton a s we
shipped all la s t year, 8,800,000 bales,
a n d a t 8 c en ts a pound, w hich is
above tho iire se n t m a rk e t, we would
disch arg e only $352,000,000 of our
debt. W ith g ra in e x p o rts a t th e ra te
of $1,000,000 a day and o th e r big m e r­
chan d ise exports, we still w ould find
E urope clam oring for gold a s our
debts piecem eal m atu re .
T his is th e outlook in a n extrem e
stag e. The federal reserv e board, now
head a n d c en ter of finance in this
c o u n try , can lessen, even prevent,
th e rig o rs of the se ttle m e n t.
The w elfare of all bu sin ess in th is
c o u n try depends upon it, a n d the
d a y s a re p a st w hen one b a n k e r or
g roup of b an k ers will be called upon
to save the country.
E urope can have our m erchandise;
she can h ave g ilt-edged notes in ­
dorsed by stro n g banks, p e rh a p s even
by federal re serv e b a n k s; to a lim ­
ite d e x te n t she c an h a v e our gold.
B u t first she m u st ag ree n o t to liq u i­
d a te o u r securities in bulk, to be r e a ­
sonable a s to th e m edium she will
a ccep t in paym ent, or to re tu rn gold
to us a s quickly a s the foreign ex­
c h an g e tendency shall in d icate a b a l­
a n ce in our favor.
S e c u r it ie s N a t io n ’ll B a * i n e » * .

No b a n k e r or little gro u p of b a n k ­
e rs can n eg o tiate for th e U nited
S ta te s in th is a s can th e federal re ­
serv e board, re p re se n tin g go v ern ­
m en t, b a n k e rs a n d people.
W hile the securities business is
W all S treet, now m ore th a n ev er it is
th e business, big a n d little, of the
en tire U nited States.
The seven wise m en of W ash in g to n
w ill be devising w ays to pro tect
sto ck s a n d bonds in th e v e ry near
fu tu re. In the larg e r sense, they are
doing it alread y , in th e ir conferenee
w ith Sir George P a ish and A m erican
b a n k ers. W hile the law c re a tin g the
fed eral board is designed not to
f u rth e r th e w elfare of speculators, the
bo ard h a s pow ers broad enough to
countenance a n d su p p o rt the s u s ta in ­
ing of securities va lu e s— W ith o u t
such
a d e q u a te
values,
business
financing w ould be up a g a in st a stone
w all.
The sta m in a of th e p re sen t im ­
pro v em en t in general conditions over
here depends on the board s w ork,
a n d on th e freedom of L ondon from
th e physical a ctiv ities of opposing
belligerents.
E x p o rt* B re a k R ec o rd .

F o reig n tra d e out of th e p ort of
N ew Y ork, th ro u g h w hich is done th e
b u lk of th e business, h a s been show ­
in g a n excess of $1,000,000 a day in
o u r fav o r, a n d on W ed n esd ay a n e x ­
cess of $4,000,000. On t h a t d a y the
e x p o rts w ere $(>,105,000, th e biggest
irt th e h isto ry of th e p o rt. Y e ste r­
d a y 's w h e a t e x p o rts from th is coun­
t r y broke th e record a t 3,000,000
bushels.
C opper e x p o rts a re p icking up. On
th e ba sis of th e first th re e w eeks of
O ctober, th e m o n th 's sh ip m e n ts will
be n e a rly 45,000,000.
A s norm al
m o n th lv e x p o rts a re 60,000,000 to
70,000,000 pounds, th e p re se n t volum e
is sa tis fa c to ry .
A fe a tu re of the d a y ’s fo reig n e x ­
c h an g e situ a tio n w as th e new low
p rice for exchange on G erm any, sight
d r a f ts selling a t 90 1-2. T h is w as due
to larg e offerings of bills a g a in st
sh ip m e n ts of g ra in s, c o tto n a n d other
m e rc h an d ise to
G e rm an y .
L arge
su m s o f m oney a re believed to be
on d e p o sit in Now Y ork fo r business
in te re s ts in B erlin, H a m b u rg , F r a n k ­
fo rt a n d o th e r c ities of th e em pire.
E x c h a n g e on L ondon w as w eak, d e­
m a n d closing a s low a s 4.94.16 and
s ix ty -d a y bills a s tow M 4.01, due
to th e Influence of
'

o

>

' ''

'

U

x ancner To H ead C leveland
R eserve Bank
(• i\. i i \ ,er. recentl y el ect ed pr e s i d e n t o f tin
l i unn .National Bunk, is sl ated f o r t he g o v e r n o r sliip o f t he Fed e r a l Re s e r v e R a n k o f Cl eveland
Mr . F a n c h e r is i ndor s ed by t he Cl eve l a nd Clear*
i n s H o u s e b a n k s a n d by t h e F e d e r a l Re ser ve
B o a r d at Wa s h i n g t o n .
Di r ect or s of t he Cl eve l a nd i nst i t ut i on h a w
i nf or mal l y a p p r o v e d t he Cl eve l a nd m a n t o head
t he f o u r t h dist ri ct r egi onal bank.
Mr
F a n c h e r ’s actual election, a c c o r d i n g to
W a s h i n g t o n a d ' i c e s , will t ake place at t he d i r e c ­
t o r s ’ me e t i ng to lie hel d in Clevel and F r i d a y or
S a t u r d a y o f t hi s week. At t he sa me t i me ot h er
officials o f t he hank, i ncl udi ng a cas hi er a n d p>><' sibly some o f t he m i n o r officers, will be appoint ed,
c o r i.ton to srcct i ' . n f a n c h k r .
Tt is u n d e r s t o o d t h a t Ge o r g e A. Coul t on. now
vice presi dent, will succeed M r F a n c h e r as pr es i ­
dent of t he U n i o n Nat i onal . Si nce t he close of
t he R i ch m o n d convent i on last week. Mr . F a r c h - r
has been in At l ant i c City, but he has been in
close t ouch wi t h t he f eder al b o a r d at W a hi ngton.
Tt is said
t hat
Mr .
Fancher's
sal ary
> ill
be t he $2."),000 a
y ear
limit
fixed
I by the federal boar d. H e will be the ac| tive e xecut i ve head o f an insti t ut i on whose
total r es our ces pr obabl y will excee d .$100 ,000 .Odd,
a n d which will handl e cl ear ances f or m e m b e r
ba nks whi c h ma y r each $100,000,000 daily.
T h e c o n d u c t o f t he b a n k a n d its pract ical w o r k ­
ings will be in t he h a n d s o f M r F a n c h e r and
D. C. Wi ll s, of Pi t t s bur gh. Mr . r a n c h e r s ' duties
will c o r r e s p o n d wi t h t hos e o f a b a n k pr esi dent . 1Fe
ha s been a b a n k e r f or near l y t hi r t y- l i ve year*.

W ill H ave $240,000,000 By Jan. 1st
T h e F e d e r a l r e s e r v e s y s t e m wi l l h a v e >J 4 0 0(10.00(1 d f f u n d s b e f o r e J a n u a r y 1 w i t h v. • \ :
t o c a r r y f o r w a r d the “ D e m o c r a c y of credit."
t o w h i c h I ’r e s i d e n t W i 1>• •n refer-- in hi s c a m ­
p a i g n l e t t e r t " R e p r e s e n t a t i v e I ’u d e r w - o d .
T h i s will b e m a d e u p o f t h e first p a y m e n t o f
m e m b e r b a n k s o n t h e i r s u b s c r i p t ! ' 11 t« t h e
c a p i t a l »«f t he r e s e r v e 0y s t e m . a n d th
:.-rves
w h i c h all m e m b e r b a n k s will be r<
d t« •
t r a n s f e r t«* t he F e d e r a l r e s e r v e ' ai
The
t r a n s f e r <>t" r e s e r v e s is t «» be a r
• :
I itnm e d i a t e l y a f t e r t he S e c r e t a r y
■
i sur y
officially a n n o u n c e s t h e op> ; . ■
re ■er ve

1i.'l TJk‘s

.

.

.

I lie d e p o s i t s m n a t i o n a l ' a u k s s u b j e c t t «•
' - e r v e a r e a b o u t $0,750,000.01 mi
< )f t hi s s u m
1 p e r c e n t , r o u g h l y s pe
;n - . > .eld in c e n t r a l
e-i -rve ci t i es. 30 p e r c< :
rv». ; \ e ci t i es a n d
th
e m a i n i n g h a l f in
snt ry
i nks.
The
•••ntry b a n k s , a f t e r t l u m i *-::i* -n o f t he re>er ve s y s t e m , will be r e q u i r e d t<> c a r r y r e s e r v e s
" t 12 p e r c e n t of t h e i r d e m a n d d e p o s i t s : b a n k s
in r e s e r v e citie>.
p e r c e nt , a n d b a n k * in cent r a l r e s e r v e ci t i es l*s p e r cent ,
he i m m e d ia te
r a n s f e r ••! r e s e r v e s i nvol ve .- tw«
a el ff h - " f t h e
l egal r e s e r v e of c o u n t r y b a n k s . . t ! i r e e - i i i f e e i U h >
»f t h e r e s e r v e ' o f r e s e r v e ci t \ ' >an •, - a n d >evei i . igbi teent i is o f t ho r e > e r v e s .
central reserve
; i t y bank.-.
T h e f u n d s at t he «1i sj»,>sal . :
i I- e d e r a l reser ve b a n k s m a y . in t he di s c r e t !■ i ; if t h e S e C f e ­
t a r v of t h e I r e a s u r y . be i ncr e
ll V
r i n g t o t h o s e b a n k s m o n e y in
i-ner.
of t he t r e a s u r y . T h e r e. - e n
b a n k s will e v e n t u a l l y be
d t.
<u
w i t h t h e F e d e r a l r e s e r v e a.
a ba s i s o f $(>.750.000.00U d<>
t< $^s4.r
000. T h i s wil l be f u r t h e r ir
s e r v e s d e p o s i t e d by s t a t e 1
w 11 ic 1
•i l l e
m e m b e r s of the s ys tem.
I lie b e d e r a l R e s e r v e B o a r d is now eiijj .red
in m a k i n g e x a c t c o m p u t a t i o n s • ■l t h e r e s e r v e
r e q u i r e m e n t s o f e a c h b a n k , a n d it is e x p e c t e d
t h a t t hi s i n f o r m a t i o n will be a v a i l a b l e t or
b a n k e r s t h i s w eek.
I he c o m p u t a t i o n s ar e
b a s e d o n d e p o s i t s e x h i b i t e d in t h e s t a t e m e n t
of t he c o n d i t i o n o f b a n k s o n S e p t e m b e r 12.
T h e p a y m e n t o f t h e first c a p i t a l i n s t a l l m e n t is
t o be m a d e N o v e m b e r 2. a n d t he f o r m a l o p e n ­
i n g o f t h e b a n k s is e x p e c t e d t«» foil >w w i t h i n a
short time thereafter.

CZ '

V.

-

B ankers V ote To D elay R eserve
Bank O pening

E. R. F A N C H E R
President U nion N ational Bank, elected G overnor
Cleveland Reserve B ank
M r. W ills, as chairm an o f the board and ted
era! reserve agent, will be the m outhpiece o f the
governm ent which divides the control of the new
system w ith the m em ber national banks.
All rep o rts to the F ed eral R eserve B oard and
all instructions of th a t body to the Cleveland bank
will be m ade through M r. W ills. B oth officials
m ust abandon all banking affiliations and sell all
the bank stock they m ay own.




A W ashington dispatch says: A f t e r a U y liour discussion here \ \ ednestlay.
'*1
governors o f the tw elve fed era1
refu sed by tw o votes to suppor. th.Secretary M cAdoo to open the n<
:
-ystem for business N ovem ber 1
B> i ->te ■’ -~
to 35 they recom m ended th a t •he • i-c\.ng be >et
fo r N ovem ber 30.
This action has no binding effect ii]•<>11 the
federal reserve hoard or upon M r. M c A d o o . for
the currency act gives the secretary authority t o
open the banks when he believes they are ready
to do business. It was evident tonight that m em ­
bers o f the board w ere not particu larly pleased
with the recom m endation of the banks and it is
possible th a t a m eeting o f the board in the next
few days will develop sufficient sentim ent to bring
a vote asking the secretary to nam e a date e arlie r
th an N ovem ber 30.
T he discussion of the opening date was tak en
up im m ediately a fte r th e bankers re tu rn e d from
the W h ite H ouse, w here P resident W ilso n d e ­
clared his belief th at the best thing fo r the c o u n ­
try w as to open the banks at the e arlie st possible
date.
"O th e rw ise ." said the P re sid e n t, "w e
should seem to d isc red it in p a rt the very th in g
th a t we a re u n d e rta k in g .”

--- -___________

Directors Of Cleveland R eserve
Bank M e et
^
D i r e c t o r s of t he F e d e r a l R e s e r v e B a n k , of
Cl e v e l a n d . nu-t S a t u r d a y a t t he F e d e r a l b u i l d ­
i ng a n d t o o k t lie first n o r m a l s t e p s in t he o r ­
g a n i z a t i o n o f t he b a n k .
(/- /
' / ? /'/
T h e c h o i c e o f a g o v e r n o r w a s d e f e r r e d . It
i ' u n d e r s t o o d t h a t a C l e v e l a n d m a n will be
s e l ect ed.
T h e r i gi d c o n d i t i o n s o f t he new
b ank act r e qui ri ng t he g o v e r n o r to absol utely
■<oviT all h i s p r e s e n t b a n k i n g c o n n e c t i o n s a n d
<cll til hi s h o l d i n g s in b a n k s t o c k s h a s ' m a d e
t he a p p o i n t m e n t o f a g o v e r n o r a difficult t ask, j
T h e b o a r d will m e e t a g a i n l at e t hi s we e k,
r i te b o a r d l o o k e d o v e r s e v e r a l p r o p o s a l s t or
t e m p o r a r y q u a r t e r s i-*r t h e b a n k . X o l oc a t i on
wa s d e c i d e d u p o n . F e d e r a l A g e n t O. C. Wi l l s
said t hi s w e e k t h a t a t e m p o r a r y office w o u l d
be s e c u r e d .
1). C. Wi l l s . W . S. R o w e a n d A. B. P a t r i c k
w e r e a p p o i n t e d a c o m m i t t e e of t h e b o a r d t o a t ­
t e n d t he c o n f e r e n c e o f r e g i o n a l b a n k d i r e c ­
t o r s wi th the F e d e r a l R e s e r v e B o a r d a t W a s h ­
i n g t o n on <)ct« >bcr 20.
I). C. Wi l l s . T h o m a s A. C o m b s a n d R o b e r t
\ \ a r d r o p w e r e e l e c t e d t o s e r ve t h e t h r e e - y e a r
•< r m s a s d i r e c t o r s : L y m a n II. T r e a d w a y , C. II.
R a g l e y a n d W . S. R o w e , f or t h e t w o - y e a r
t e r m s , a n d H a r r y P. W o l f e . A. B. P a t r i c k a n d
S t a c y Pi. R a n k i n f o r t h e o n e - y e a r t e r m .

Fancher E lected G overnor
F. I\ I a n c h e r was f o r m a l 1) elected
- ; e r nor
11f t he Feder al Reserve Bank ot ( ieveiand at a
full meet i ng o f tin- b o a r d in Cl evel and I hiirs—
day.
Di r ect ors of t he bank al so decided on t e m p o r ­
a l q u a r t e r s in t he Wi l l i a ms on building.
I util
the first o f the year thev will ti'-e t he g r o u n d floor
«litices leased by the I ' ni oi i Xat i onal f *r a tempor ar v h o me while the l at t er s ne w bank build
i ng is in co u r s e o f cons t ruct i on.
By t he t i me the Uni on Nat i onal is reads tr
nv-ve in next J a n u a r y space will 1 «• pr ovi ded or
’lie )f t he o t h e r doo r s of t he ' Wi l l i a ms on buildng f or t he f eder al ba n k q uar t er s . Both institujons will use t he c o m mo d i o u s vaul t s in t he basen e n t u n d e r j oi n t cont rol .
H. Ci. Davis, f o r me r l y in t he office o f t he n a ­
tional hank e x a m i n e r in P i t t s bur g h, Isa - been a p ­
pointed s e c r e t a r y t o I). C. Wills, f eder al r eser ve
lgent.
G o v e r n o r F a n c h e r said t h a t ot her appoi n t ment s ,
i ncl udi ng a c a s h i e r a n d g ^ n e j ^ i b a n k i n g staff,
woul d be a c t e d . . u p ^ n by tlie ho a r d fau?f nn*.

M ay O pen B an k s On N ov. 16
A Wa s h i n g t o n di spat ch s a ys :
Al t h o u g h r e pr e s ent at i ves o f t he t w e h e federal
r eser ve b a nks vot ed in f a v o r o f openi ng t he banks
X-jvcinber -ii>, me mb e r s o f t he r es er ve boar d ar e
goi ng ahe a d wi t h plans f or put t i ng t he n ew b a n k ­
ing s ys t e m in ope r a t i o n N o v e m b e r 10 o r N o v e m ­
ber 20, if it be f o u n d t h a t t ’li- can be a c c o m p ­
lished. Secr et ar y M c A d »o f a. r ed N o v e m b e r 10.
and P r e s i d e n t Wi l s o n tliotighi t he ba n ks shoul d
'■egin business «i' t he <arlie<t possi bl e date. As
t he c ur r e nc y act ha s
:ip< .vcred M r M c A d o o to
open the banks w h e m ver a h i ' ■-jiiiii*»n. the\ artr eady to t r a n s a c t busi ness, t he \oi<- if t he banks'
r epr e s ent at i ves does not bii d t he - ietar> or t he
r es e r ve board. Al t h o u g h the b o a r d ha- vot ed t hat
all t he b a nks shal l open at i'.e -am< t i me, t !i is d e ­
c is io n m a \ be c h a n g e d , if a ' < e ms des i r abl e t - r
a n reas< n to h a v e - oi ne -i the b a n k - begin ba-i
m s s b e f o r e ot her s . T h e s ma l l e r r e s e r v e banks,
it is said, ar e m o r e near l y r e a d y t o open on N o ­
ve mb e r 10 t h a n t hose in t h e l a r g e r cities.
An
ear l y d a t e wa s t a v o r e d by s o m e of t h e S o u t h ­
Digitized for
e r nFRASER
"bank er s . as t hey th-■ught the f e d e r a l banks
http://fraser.stlouisfed.org/
mi g h t r e n d e r aid in h a n d l i n g t he c o t t o n crop.

Federal Reserve Bank of St. Louis

Call For First P aym en t On
Capital Stock
A W a s h i n g t o n dispatch sa ys :—
I lie F e d e r a l R e s e r v e B o a r d h a s c a l l e d u p o n
m e m b e r b a n k s —Nv- m a k e t h e i r first p a y m e n t o n
s u b s c r i p t i o n s t o c a p i t a l of r e s e r v e b a n k s XVv e m b e r 2.
F r o m t he n a t i o n a l b a n k s o f t h e
c o u n t r y p r a c t i c a l l v $17,000,000 wi l l lie a b s t r a c t ­
ed u n d e r t h i s call.
T h e reser ve act r eq ui re s b a n k s to s ub s c r i b e
t o t he c a p i t a l o f t h e r e g i o n a l r e s e r v e s y s t e m
6 p e r cent of t he ir capi tal a n d s ur pl us.
Ii
f u r t h e r p r o v i de s t hat o n e - s i x t h of t h i s s u b ­
s c r i p t i o n s ha l l be pai d on call o f t h e R e s e r v e
B o a rd , a n o t h e r sixth t hr ee m o n t h s l a t er a n d a
t h i r d f r a c t i o n ot like
amount
within
si x
m on th s. T h e rem aini ng half of the s u b s c r i p ­
t i on o r a n y p a r t o f it is t o b e p a i d o n call.
T h e first i n s t a l l m e n t t o be p a i d N o v e m b e r
2. wi l l d r a w $937,937 f r o m O h i o n a t i o n a l b a n k s .
$307,254 f r o m I n d i a n a n a t i o n a l b a n k s . $165,848
f r o m W c ' t V i r g i n i a n a t i o n a l b a n k s a n d $256.0()0 f r o m K e n t u c k y n a t i o n a l b a n k s . T h e p a y ­
m e n t s i m i ' l be m a d e in g o l d o r g o l d c e r t i f i I cates.

Ci nci nnat i s s h a r e <»! t he first p avment on s u b ­
scri pt ions to t he f eder al r es er ve ban k o f t hi s d i s ­
trict is about $20.',.:,00. di st r i but ed as f o l l ows :
H r s t . $72,000; Second, $12,000 ; I if t h - T h i r d $4*> ■Vio; f o u r t h . $12..“,0 0 : Atlas. $ l l . o o o ; Citizen*.
•S'!O..VIO; ( , er man. $ l o. ooo; Ma r ket . $!i.000 . T h e s e
Mgures ar e bas ed on t he capital a nd s ur pl us on the
'call S e p t e mb e r 12.

COTTON PLAN LAUNCHED
Federal Boarci Tentatively
Approves Loan Scheme.
BY PL A IN D EA L.Eli’S LEASED W JR E.
W A S H IN G T O N . O rt. 24.—A v ita l s te p
to w a r d s easing- u p th e c o tto n s itu a tio n
w a s ta k e n to d a y b y th e f e d e r a l r e s e r v e
b o a r d w h e n It a n n o u n c e d Us te n t a t i v e
a p p r o v a l o f a $135,000,000
pool
d e v e lo p e d fr o m th e p la n o rig in a lly p ro ­
p o sed by F e s t u s J. W a d e , S t. L o u is
b a n k e r.
S e c r e ta r y o f th e T r e a s u r y M cA doo in
a s t a t e m e n t to n ig h t g iv e s th e e s s e n tia l
f e a tu r e s o f th e p la n a s :
1. N ew Y o rk b a n k e r s w ill s u b s c rib e
$50,000,t*00 on c o n d itio n t h a t a n a d d i­
tio n a l' $50,000,000 be s u b s c r ib e d by c itie s
in n o n c o tto n p r o d u c tin g s ta t e s .
2. T h e $83,000,000 r e m a in in g will be
p ro v id e d by tn e c o tto n s ta t e s .
3. M o n ey w ill b e lo a n e d o n c o tto n to
b o rr o w e rs a t I n te r e s t n o t e x c e e d in g 0
p e r c e n t, fo r o n e y**ar w ith p riv ile g e o f
re n e w a l fo r six m o n th s .
A g u a r a n te e
fu n d to be m a d e u p b y th e b o r r o w e r s
s h a ll p ro v id e a g a i n s t lo s s to le n d e rs.
O p e ra tio n o f th e pool w ill b e u n d e r th e I
s u p e r v is io n o f th e fe d e ra l r e s e r v e b o a r d j
th r o u g h a c o m m itte e w h ic h i t win ap­
po in t.

Jn the cotton pool conference were,
besides Secretary McAdoo, A lbert H.
Wiggin, J. S. Alexander, A. J. Hem p­
hill and W illiam W oodward of New
York, and r estus J. Wade.
It Is provided th a t all services ren­
dered in the adm inistration of the fund
by voluntary comm ittees and bankers
shall be w ithout charge, but th a t the
borrow ers shall pay 3 per cent, on the
am ount loaned, to them into a fund to
be called the guarantee fund to be used
exclusively for paying the necessary E x ­
p en ses of adm inistration which it is es­
tim ated will not exceed one-eighth of
1 por cent, and the rem ainder to be
used to m ake good any losses which
m ay be incurred on loans th a t m ay be
m ade on cotton a t the stipulated rate
of 6 cent* a pound.

FAIUCHER ELECTED
F
SELECTS OFFICES
th r

Reserve Body Will Occupy Tem­
porary Quarters in William­
son Building Until
First of Year.
K. R. F a n c h e r w as fo rm ally elected
g o v e rn o r of th e F e d e ra l R eserve
B a n k of C leveland a t a fu ll m eeting
o f th e b oard here y e s te rd a y a f te r ­
noon.
D ire c to rs of th e b a n k also decided
bn te m p o ra ry q u a r te rs in th e W illia m io n building. U n til th e flrst of
th e y e a r th e y wfll u se th e gro u n d
floor offices leased b y th e U nion N a ­
tio n a l fo r a te m p o ra ry hom e w hile
th e 3sitte r's n ew b a n k build in g is in
c o u rse of c o n stru ctio n .
B y th e tim e th e U nion N a tio n a l is
re a d y to m ove In n e x t J a n u a r y sp ace
■wfll be p rovided on one of th e o th er
floors of th e W illia m so n b u ild in g fo r
th e fe d e ra l b a n k q u a rte rs . B oth in s ti­
tu tio n s w ill use th e com m odious
v a u lts in th o b a se m e n t u n d e r jo in t
c o n tro l.
H.
G. D a v is, fo rm erly In th e office
of th e n a tio n a l b a n k e x a m in e r in
P itts b u rg , h a s been a p p o in te d se c ­
r e ta r y to D. C. W ells, fe d era l re serv e
a g en t.
G ov ern o r F a n c h e r sa id la s t n ig h t
t h a t o th e r a p p o in tm e n ts, in clu d in g a
c a s h ie r a n d g e n e ra l b a n k in g staff,
w ould be a c te d upon b y th e board
l a t e r on.

u r n IS GONE

to r w hich th e y h a v e been s triv in g te n
w eeks is a tta in e d .
A gain on a d e q u a te gold footing,
th e y c an loosen th e re in s on th e ir c u s­
to m e rs business.
To be sure, th e
a d eq u a cy of a re serv e does n o t lie in
figures, b u t th e tim e-h o n o red 25 per
cent, h a s its own psychologic influ­
ence, a n d in the a b sen ce of su rp rise s,
m oney wiU c o n tin u e to e ase th is
week.
T he show ing now su b m itte d is th e j
w eek's av erag e, the only re p o rt a t
p re sen t issued. T he b a n k s a g a in w ere
able to reduce lo an s— by $11,000,000.
T hese sta n d a t $2,100,000,000, w hich
show s a re d u ctio n of $70,000,000 in
the la s t five w e ,k s. C ash h a s been
slowing in from th e Interior, $7,500,­
000 in th e la te st week, but a r a th e r
ste a d y o u tp o u r of gold to C a n a d a has
hot p re v en ted th e w ash in g o u t of th e
reserv e deficit.
Snine an iu

1907.

It is in te re s tin g to note th a t th e
deficiency in 1907 la s te d a lm o st p re ­
cisely a s long a s th e la te unlam ented,
eleven w eeks.
C leveland n a tio n a l b a n k s re p o rt for
the w eek a decrease in loans of
$1,461,000, w hich is a fa v o ra b le d e ­
velopm ent because it m a rk s m ain ly
reduction on th e p a r t of local b o r­
row ers. W hen th is is considered In
co n junction w ith th e in cre ase in cash
and due froiv re serv e a g e n ts of $311,­
000. it is e vident th a t th e b a n k s a re
g ra d u ally b e tte rin g th e ir facilities.
T he loan decrease a cc o u n ts for
m uch o f th e deposit decrease of
•SI.1182,000, b u t in th is th e d ra w in g
down of b a la n ce s by In terio r b an k s
plays its p a rt. F a rm e rs a re still d is­
posed to hold g ra in for h ig h e r prices,
and th e ir b a n k s m eanw hile m u st
c a rry th em fo r ro u tin e needs. T he
fa rm e rs also a re show ing a pred ilec­
tion for b u y in g c a ttle to feed over
the w in te r for good p rice s n e x t year.
F liN N e* o f th e \Y itr T a x ,

The
fin an c ia l
c o m m u n ity
now
know s w h e re it s ta n d s on th e w a r ta x .
B rokers p a y a fla t $30 a n n u a lly .
H anks p a y $1 fo r each $1,000 of c a p ­
ital em ployed, in c lu d in g su rp lu s a n d
undiv id ed profits, th e a m o u n t figured
a s of th e p re ce d in g y e a r. T h e Society
(or S a v in g s will be e x em p t b ecau se of
its m u tu a l n a tu r e . T hese ta x e s begin
to 'U n a s of N ov. 1, n e x t S u n d ay .
.Stock a n d bond Issu es m ad e a f te r
!>"<•. 1 w ill be ta x e d 5 c e n ts on eac h
f 100 of fa c e v alu e, w hen Issued. S ales
»f ;tock a re ta x e d $2 on e v e ry tra d e
of a h u n d re d s h a re s of $100 fa ce v alu e
each.
■
P ro m isso ry n o te s com e in fo r 2
.its w h e n n o t o v e r $100 in a m o u n t,
iii-.d f
each a d d itio n a l h u n d re d o r
f r a c tk . th e ro f 2 c en ts: T h ese a re a
few of th e n ew re g u la tio n s w hich d i­
re c tly a ffe c t th e fin an cial d is tr ic t.
Tho sto c k t r a n s f e r ta x m e a n s littlrt
th ese d a y s, a n d th e 2 c e n ts a s h a ro
w o n 't m e a n m u c h even in b u sy tim e s,
e x ce p t t h a t It e v id e n tly w ill be adde<l
to th e lik e s ta te t a x a lre a d y Im posed
on d e a lin g s th ro u g h th e N ew Y o rk
c re h a n g e .
, K » r d l y B e f o r e J a n . 1,

iE V f^a- to M

im l ii

New York Banks Boost Their
Reserves and Are Back
on Broad Highway.
OoT

16«*+

Government Ta x on Stock
Dealing Won’t Bring Much
Revenue Now.
BY H . 8. ROSENTHAL*
Gor.e is th e deficit, a n d th e re a re
no m ourners.
T he six ty -se v e n N ew Y ork c le a r ­
in g house b a n k s, m a k in g u p th e n a ­
tio n s c h ie f b a n k g ro u p , p ile d u p a n
excess re se rv e of $8,500,000 in the
la te st w eek.
T h e ir com bined re se rv e
s ta n d s Otis m uch a b o v e th e n o rm a l
25 p e r <re*t- of d e p o sits, a n d th e * o a l




B ut th e e x ch a n g e is n o t expected t o
t p e n b e fo re J a n . 1 a n y w a y .
S ir
G eorge P a isc h , th e fe d era l re serv e
b o a rd a n d th e A m e r ic a n h a n k e rs in
' in fe re n c e a re sa n g u in e o ^ P T h e lr e f­
fo rts to s tr a ig h te n o u t all th e o th e r
ta n g le s. In c lu d in g th e fo reig n e x ­
ch an g e , b u t th e y w o n ’t p re d ic t e a rly ;
re o p en in g of th e e a s te rn bourse. I t Is
h ig h ly probable, how ever, th a t W all
s t r e e t w ill n o t s it id ly b y a n d le t N ew
S tre e t ta k e a w a y its m ea n s of liv e li­
hood, b u t t h a t th e p erm issible t r a d ­
in g w ill be g ra d u a lly broadened.

non ORDERS
RESERVE BANKS
TO OPEN NOII. Ii
Secretary
Asserts
Emergency
Needs in South Caused De­
cision to Overrule Di­
rectors on Date.
W ASHIN-GTC&C (Oatotjer j ^ - T h e
tw elve federal reserve b a n k s of tho
new b an k in g system will be opened
fo r business on N ovem ber 16. This
w as a nnounced to d a p r nBMwlly.
S e c r e te rj'M c A d o o . au th o rize d by
th e c u rre n c y a ct to nam e the open­
ing d ate, m ad e the announcem ent.
H is choice of the 16th w as m ade
desp ite th e fa c t th a t th e directo rs
and g o v e rn o rs of the b a n k s in a re ­
c en t
conference
expressed
th e ir
preference for N ovem ber 30.
R e le a se s $400,000,000.
In m ak in g th e ann o u n cem en t, Mr.
McAdoo declared he h a d reached his
i decision a f te r d iscussion w ith th e
fed eral re se rv e board a n d because of
em erg en cy conditions in th e South,
i in th e belief t h a t th e opening of the
j b a n k s w ill be helpful th ere a n d will
j benefit b u sin e ss in all sections of th e
j co u n try .
j In a sta te m e n t- Issued to n ig h t, the
■Secretary m ad e it c le a r th a t un d er
th e new sy ste m th e fed eral govern­
m e n t will be ab le b y deposits from
th e g e n e ra l fu n d of th e tre a s u ry fci
re serv e b a n k s to aid producers of
staples.
T he new re serv e
req u irem en ts
o p e rativ e a f te r
th e
banks
a re
opened, h e pointed out, will release
m o re th a n $400,000,000 of th e m oney
now hold b y n a tio n a l b an k s a s r e ­
serves, a n d w ill add g re a tly to flie
loaning pow er of th e bank.
C onfidence In D irecto rs.
M r. M cAdoo, in his s ta te m e n t, said
f u r th e r :
" I a m fu lly a w a re of th e phy sical
d iffic u lties t h a t m u st be overcom e
to se t th e re se rv e b a n k s in m otion
on th e lG th of N ovem ber, b u t
t h e d ire c to rs of th e s e b a n k s re p re ­
s e n t th e h ig h e s t d e g re e of A m e ric an
b a n k in g a b ility , a n d I a m s u re t h a t
n o t only c a n th e y m e e t th e s itu a ­
tio n b u t t h a t th e y w ill c h e e rfu lly
ta k e u p th e ta s k in th e sa m e fine
s p irit o f p u b lic se rv ice w h ic h a n i­
m a te d th e ir discu ssio n s a t th e W a s h ­
in g to n c o n fere n ce .
" U n d e r t h e p re se n t sy s te m th e
••■ (Ig ta ry o f th e T re a s u ry c a n n o t
w l t H T ^ ^ e n c e s c a tte r t h e ‘ge n era l
fu n d ' o ^ ^ % « tre a s u ry a m o n g th e
g re a t n u m b e p ^ f w id ely se p a ra te d
n a tio n a l
banks
th r o u g h o u t
th e
c o u n try .
"A s soon a s th e re serv e b anks
a re In o p e ratio n I sh all tr a n s ­
fe r to th em a s larg e a n a m o u n t of
g o v e rn m e n t fu n d s as possible; th is
will. In tu rn , enable them to extend
e n la rg ed c re d its to n a tio n a l b anks
and s ta te b a n k s w hich m ay become
m em bers of th e federal re serv e sy s­
tem . w hich th ey , In tu rn , m ay e x ­
te n d to th e ir custom ers.

M O N E Y RATES EASE
AS E A S T E R N BANKS
B U IL D I
RESERVE'S
\
by

w . e. c o r s i n s .

th em a s co llateral. I t h a s also been
h a ste n e d by th e Influx of m oney In­
to N ew Yofk.
T he b anks w hich advanced th e
first $10,000,000 of gold to enable the
fo reig n exchar. r« com m ittee to be­
g in sa les a re
w receiving the
"unde subscribe
j y in stitu tio n s in
o th er centers. T hen, too, th e con­
tra c tio n in business the c o u n try over
has lessened dem ands for com m er­
cial purposes a n d has o perated to
in cre ase cash holdings. Money prom ­
ises to be p len tifu l enough
m ake
it possible to resum e security d e al­
ings w henever o th e r factors, th o u g h t
to m ak e it inadvisable to open the
ex change now, have been
s u r­
m ounted.

E ditor, The A m erican Banker.
N E W Y O RK, O ctober 25.—From
w h a te v e r a n g le th e financial s itu a ­
tio n in A m erica m ay b e view ed, it is
p o sitiv e ly c e rta in th a t a d istin c t im ­
p ro v e m e n t m ay be noted. Tho loan
s itu a tio n of th e New Y ork clearing
ho u se b a n k s h a s grow n to such an
e a sy position th a t th e huge deficit
u n d e r w hich th ey h a v e been lab o r­
in g h a s been a lm o st com pletely wiped
out.
On A u g u st 1, on w hich d a te the last
d e ta ile d cle arin g house sta te m en t
w a s Issued, th e asso ciated ban k s of
N ew Y ork h a d a su rp lu s o ser th eir
re q u ire d legal reserv e of over $8,000,­
O pening th e E xchangtv
000. One w eek late r, on A ugust 8,
th e ir sta te m e n t show ed th a t th ey had
T he m ost im p o rta n t question now
n e a rly $44,000,000 less th a n th e ir legal before th e financial com m unity, and
re serv e in th e ir v au lts.
In o th er j one th a t becom es m ore a cu te a s each
w ords, t h a t th e ir lo an s a n d w ith- | day brings no definite solution, is
d ra w a ls drew out m ore th a n $50,000,- th a t w hich concerns the opening of
000 from th e ir a v ailab le "quick a*- j th e N ew York Stock E xchange,
se ts.”
I On th e one hand we h ave exchange
O ne m o n th la te r, on S eptem ber 5, I m em bers and all th e In tric ate : ath is deficit h a d been reduced only to c hinery of stock tra d in g in a posit: m
a b o u t $38,000,000, b u t since th a t tim e 0f u tte r helplessness, while expenses
th e sp len d id efforts of our A m erican a re a c c u m u la tin g a t a n a la rm in g
b a n k e rs h a v e w rought such evolu- r a te. On the o th er hand, the banks,
tio n a ry im p ro v em en ts in financial n o t only of New f o r k , but in the
co n d itio n s th a t each w eek has con- sm a lle st tow ns an4» cities, hold as
trlb u te d to th e w iping o u t of this c o lla te ral m illions of d ollars’ w orth
a w k w a rd deficit. On O ctober 3 the j t sto ck a t th e Ju ly valuation, a n d in
s h o rta g e w as $17,000,000 a n d on Octo­ m an y cases th ey would be subjected
b e r 17 less th a n $1,000,000.
to serious losses should these stocks
be th r u s t on th e m a rk e t un d er a n of­
M oney R a te s E asy.
ficial v a lu a tio n m uch below th a t on
M oreover, th e re h a s been an a p ­
p re ciab le e asin g off in m oney rates, w hich th ey loaned th e ir funds.
A b a n k e r from a sm all c ity In
w hich Is th e only logical sequence
of a n In c re a se In th e supply of N o rth e rn C onnecticut said to the
fu n d s. N o s u re r ovidence of the w rite r, " I f th e New York E xchange
stre n g th e n e d position of th e banking opens tom orrow , o u r b a n k will be
in s titu tio n s could be furnished th an w iped o u t.” I t is obvious, therefore,
th e f a c t t h a t th ey a re also re tir in g th a t am ple p rotection should be f u r ­
th e ir em ergency c u rren cy notes and nished the loan in g Institutions, w hich
a re to a la rg e r e x te n t th a n a n y o th e r
c le a rin g house certificates.
B o th of th ese served th e ir puijjoj^ class th e victim s of u n fo rtu n a te c ir­
a d m ira b ly a n d will d o u b tle ss , con­ cum stances.
T he governors of the exchange still
tin u e to be used fo r som e tiitio '-to
com e, b u t th e e x tra o rd in a ry 'e p n d i- refu se to p erm it tra n sa c tio n s in listed
tio n s w hich called th em Into ' 6eing stocks, unless g u a ran tee d dividendh a v e larg e ly disap p eared . A frore- j p roducing, on a low er basis th a n th a t
ru n n e r of th e fa c t t h a t th e clearing of J u ly 30. T his policy h a s caused
house b a n k s h a d su rely wiped out a g re a t deal of d issa tisfac tio n , espe­
th e ir deficit w as seen In the fa c t cially w hen It is rem em bered th a t the
th a t m o re th a n one of th e la rg e r pro h ib itio n is c au sin g serious a n d ir­
com m ercial b a n k s loaning m oney re trie v a b le losses to people w hose
on call reduced th e ir r a te from 8 to exigencies req u ire them to sell th e ir
7 p e r c en t, a n d did n o t th en find se c u rities to c a re for o th er pressin g
b o rro w e rs fo r a ll th e m oney th ey obligations.
w ere offering.
As th e m a tte r now stan d s. It Is not
W h ile som e of th e b an k s h ave possible to do a n y business th ro u g h
m a in ta in e d a 6 per cen t ra te , th is a re g u la r stock exchange house, w ith
h a s been av ailab le for only th e ir th e exception of bonds a n d of th e
re g u la r cu sto m ers a n d for lim ited
a m o u n ts, so t h a t th e prev ailin g ra te d iv id e n d -g u ara n tee d stocks. The real
on th e m ajo rity of loans has been m a rk e t fo r stocks is of course below
held p re tty ste ad ily a t 8 per cen t th e level of th e J u ly prices, a n d hence
up to th is tim e. A t th e p re sen t tim e those w ho a re com pelled to realize
m ore m oney Is a v a ila b le a t the low er w h a t th ey can on th e ir holdings m ust
ra te , a n d N ew Y ork b a n k e rs a re of do so th ro u g h o u tsid e agencies, w hich
th e opinion t* a t be fo re long th is will a re n o t v ery p a rtic u la r e ith e r a s to
th e ir code of e th ic s or a s to th e ob­
be th e ru lin g q u o tatio n .
T h is change fo r th e b e tte r has s e rv a n c e of ru le s a n d re g u la tio n s.
b«en accom plished th ro u g h a good T h u s p rice s a re bein g forced dow n­
d e c re e o f c o-operation by th e bor­ w a rd to a m u ch la rg e r e x te n t t h a n
ro w e rs, who h a v e exerted them selves th e y w ould u n d e r leg itim a te tra d in g
to, re d u c e th e ir c om m itm ents a s op­ conditions, a n d th is has a ten d e n cy
p o rtu n itie s offered to dispose of to c r e a te u n e a s in e ss n o t o nly am o n g
* e foro fFRASER
som
th e se c u ritie s pledged u n d e r ho ld ers o f h igh g ra d e stocks, b u t in
Iso
Digitized


th e financial instit ions th e unds i
hpreon.
of w h ich a re loam‘
o u t th a t
I t h a s 1 n well
w ha
m ge
ao st of all
a re : F irs t,
s' egtt, ..Is m en t of a
responsible m a rk e t; an'l second, a
m ore a b id in g c o n fid e n t in th e re al
in trin sic value of stock x change se­
curities. T he sto ck exchange gov­
e rn o rs can and should a t once pro­
vide th e form er. T he la tte r m u st de­
pend in larg e m ea su re upon our law
m ak ers, from th e P re tlu a n t dow n to
m unicipal officials.
T he P re sid e n t h a s le t i t be know n
th a t th e a d m in istra tio n ’s p rogram
“ a g a in s t big business” h a s been com ­
pleted. H ence th ere is reason to hope
th a t n a tio n a l a n tag o n ism t h a t has
been re stra in in g n a tio n a l a c tiv ities
has in su b s ta n tia l m easu re a t least
culm inated a n d th a t o th e r form s of
g overnm ent w hich h ave been follow ­
ing W ash in g to n ideas will follow
' suit.
A s to th e obligations of th e stock
ex ch an g e governors to a c t p rom ptly
it m ay be said t h a t the b a n k in g s it­
u atio n h a s concededly im proved to a
sufficient e x te n t to ju s tify action.
Nobody believes th a t th ere should be
an im m ediate, u n re stric te d opening
i-of tho stock exchange. B u t th e re is
a wide chasm betw een u n re stric te d
tra d in g and no tra d in g a t all.
T h e em inent econom ist and pub­
licist, Sir George P a ish , of London,
h a s given us reason to belle\fe th a t
th e L ondon exchange will ere long be
o p e ratin g , on a lim ited ba sis a t least,
a n d th is will g re a tly m inim ize the
d a n g e r of a deluge of stocks held by
fo reig n holders.
To th is m ay be adder* th e fa c t th a t
th e crisis w hich existed w hen E u ro ­
pean offerings w ere being liquidated
h ere h a s been larg e ly done a w ay w ith
b y co -o p eratio n betw een th e B ritish
g o v e rn m e n t a n d th e banks, and peo­
ple w ho w ere a nxious to c o n v ert all
1of th e ir A m erican Investm ents intd
cash h a v e now h a d tim e to recovef
from th e ir panic, and th ey a re little
disposed to th ro w over A m erican in ­
v e stm e n ts tjia t prom ise to suffer less
by th e w a r th a n a n y o th e r secu rity
th ey hold.
M oreover, th e isolated position of
G erm any w ill m ak e it difficult, if not
im possible, for B erlin to con tin u e the
sellin g w hich w as such a fa c to r in
d e p ressin g prices in the la s t few days
of Ju ly . U n til th e stock e x ch a n g a
is reopened a n d th e b an k s a re ag ain
re a d y to ex ten d th e cu sto m a ry a c ­
com m odations to Investm ent houses,
financing of c o rp o ra te a n d m unicipal
needs m u st be done on a s h o rt-te m *
basis, w hich m ean s the p a y m e n t o£
high r a te s for money.

9

OPENING T E E BESEEVE BANKS.

' y

T h e only serio u s o b jec tio n th a t we see 1
to th e d e te rm in a tio n of S e c re ta ry Mc­
A doo to a n n o u n ce th e sim u lta n e o u s
" e s ta b lis h m e n t” of th e tw elv e F e d e ral
re se rv e b a n k s on th e six te e n th of N ovem ­
ber is th e p ro te s t of a m a jo rity of tho
d ire c to rs at th e W a s h in g to n conference
t h a t th ey could n o t be ready to p u t,
them in o p e ratio n before th e th irtie th . I
A fte r th e ir vote of 37 to 35 in fav o r of
th e delay as a te s t of se n tim e n t, '.h
decided u n a n im o u sly to recom m end
o p e n in g on N ovem ber 30, deem ing K
d e sirab le to have th e b a n k s begin o p e r­
a tio n sim u lta n eo u sly , a n d th e m a jo rity
d e fe rrin g to th e w ishes of th o se who
said th ey could n o t be read y sooner.
In som e cases th e o rg a n iz a tio n h a s not
been e n tirely com pleted a n d a rra n g e ­
m e n ts have to be m ade for o b tain in g
th e necessary p re m ise s a n d equipping
them fo r the w ork. T h ere m ay be a n
official a n n o u n ce m e n t th a t a ll th e i n s ti­
tu tio n s a re ‘■established,’’ b u t th a t will
n o t put them in o p e ratio n . T h ere is no
w ay of forcing action until th ey a re
ready, and of th a t th e b a n k e rs a re th e
best judges. S ecretary McAdoo says he
is aw are of th e "ph y sical d ifficulties.”
b u t he c o m p lim en ts th e d ire c to rs w ith
(he a ssu ra n c e th a t they re p re se n t “ the
h ig h e s t degree of A m erican b an k in g a b il­
ity ,” and he is confident th a t th ey can
' m eet th e situ a tio n " and w ill “ch eer­
fully tak e up th e task in th e sam e fine
s p irit of public service w hich a nim ated
th e ir discu ssio n s a t th e W ash in g to n con­
fe re n c e.”
P e rh a p s th is " fla tte rin g u n c tio n " will
stim u la te th e ir souls to a pow er to com r a n d prem ises fitted for th e ir purpose
uro p er term s, eq u ip them w ith all .tie.'*vv app lian ces
woiiiung
ee In to effective a ctio n inside of thre*
eeks. in sp ite o f any “ p h y sic a l” or
j th e r difficulties to be overcom e; but. if
any of them should fail, th e ir in s titu ­
tio n s sim ply will n o t w ork u n til they are
lea d y . and th e g en eral o p e ra tio n m ay be
so m e w h a t h a ltin g .
T h ere is n o t so
m uch occasion for h a ste as for a n effec­
t i v e a n d sa tis fa c to ry s ta rt. T h e p repa­
ra tio n m ade a t W ash in g to n in th e m any
n o n t h s since th e F e d e ral R eserve act
w as passed last D ecem ber has been
l a t h e r leisu rely th a n o th erw ise; but
t h a t is the one place a t w hich p ro m p t­
ness, econom y and efficiency a re n o t to
be expected. I t is to be hoped th a t all
th e reserv e b a n k s w ill be “ good and
re a d y ” to s t a r t to g e th e r on th e 16th, a n d i
to pull to g e th e r a fte rw a rd s, b u t th e Sec­
r e ta r y ’s re aso n s for b rin g in g official
p re ssu re to h e a r a re n o t a lto g e th e r c o n -|
vincing.




H is .chief re aso n is “ th e em erg en t con­
d itio n s in th e South a n d th e confident
belief th a t th e p ro m p t o pening of th e
re serv e b a n k s w ill be v ery helpful to the
c o tto n situ a tio n and to g e n era l b u sin ess
,ii all se c tio n s of th e c o u n try .” A plan
;s bein g perfected by th e b a n k e rs of the
c o u n try to ra ise a loan fund from w hich
a d v an ces m ay be m ade fo r c a rry in g s u r ­
plus c o tto n on se c u rity of w arehouse
lec cip ts. T h is bids fa ir to w o rk out
successfully, and we do n o t see t h a t a
h u rrie d o rg a n iz atio n of th e re serv e b anks
w ill help it m ate ria lly . W h a t seem s to
be chiefly counted upon by th e S ecretary
to r t h a t a n d for h elp in g th e “ general
bu sin ess in all sectio n s o f the c o u n try ,”
is th e re le ase of a larg e a m o u n t of
m oney now held in b an k reserves,' to be
freely used in m ak in g loans. As we
h rv e a lre a d y had occasion to re m a rk ,
th a t is a m a tte r w hich should be tre a te d
w ith c a u tio n and th e best b a n k in g ju d g ­
m ent. T h e S ecretary of th e T re a su ry
p rofesses to be a c tin g w ith th e co rd ial
c o -o p eratio n of o th e r m em bers of the
F e d e ral R eserv e B oard, and sa y s t h a t !
th e op en in g of th e re serv e b a n k s w ill
“ release m ore th a n $400,000,000 of r e ­
serve m oney and larg ely in cre ase the
c red it fa c ilitie s of th e b an k s of th e
c o u n try .”
i t is to be presum ed th a t th is s t a te ­
m e n t is based upon a c alcu la tio n of the
p re sen t a m o u n t of th e req u ired re serv e s
of n a tio n a l b an k s and th e difference be­
tw een th a t and w h a t w ill be required
u n d e r th e new law w hen th e re serv e
b ^n k s a re “e sta b lish e d ." W ith o u t a
p re se n ta tio n of the figures th e accuracy
of th e s ta te m e n t c an n o t be verified. It
Is to be rem em b ered t h a t th e re serv e
b a n k s th em se lv es m u st hold re serv e s
equal to 35 per c en t of th e ir d ep o sits
and 40 p e r cen t of th e ir o u tsta n d in g
n o tes issu e d on se c u rity of com m ercial
p a p er red isco u n ted fo r m em b er banks.
M uch of th e p re se n t reserves, e x cep t In
cen tra l re se rv e cities, as th e y ap p ea r
itig figures c o n sists of c red its a n d n o t of
cash. W h e th e r allow ance is m ad e for
th is does n o t a p p ea r, b u t it h a s n o t
been th e usual e stim a te t h a t a n y ­
th in g lik e $400,000,000 is to be “ re ­
leased .” W h a te v e r m ay be se t free from
legal r e s tr a in t c a n n o t be safely le t loose
to “ In c re a se th e c re d it fa c ilitie s of th e
bu n k s.” T h ere is need of c o n se rv a tism )
In th is m a tte r. B ecause th e re is a m in i-/
m um lim it to re se rv e s is n o t a re aso n

fo r d isp e n sin g w ith a ll s u rp lu s above
th a t. T h ere a re d em an d s of foreign ex­
c h an g e still h a n g in g in th e a ir, w hich
m ay be a s u rg e n t a s re lie v in g th e cotton
situ a tio n . W hile re serv e m oney Should
pot be n eed lessly hoarded, it should be
c are fu lly conserved and used w ith due
re g ard for th e sa fety of a ll in te re s ts
d ependent upon a well secured credit.
T h e re is especial need now of a broad
and solid basis of re al m oney, firm ly
held a n d ju d ic io u sly em ployed.
A n o th e r th in g th a t S e c re ta ry McAdoo
confidently c o u n ts upon as a m ea n s of
g e n era l re lief is th e d istrib u tio n of Gov­
e rn m e n t fu n d s am ong th e re serv e b a n k 3
a n d th e use of th ese in s titu tio n s as fiscal
a g e n ts of the G overnm ent. T he o p en in g
cf th e re serv e b an k s, he says, w ill “ m ak e
‘.he a ssista n c e of th e T re a su ry dpubly
p ow erfu l,” because th e S e c re ta ry w ill be
au th o rize d “ in his d isc retio n to deposit
a larg e a m o u n t of m oney held in th e
g e n era l fu n d ” in th o se in s titu tio n s , and
also “ to deposit re c e ip ts of th e Gov­
e rn m e n t in th e re se rv e b a n k s a n d to
m ak e d isb u rse m e n ts by checks d raw n
a g a in s t such d e p o sits." I t is im plied
th a t th is d isc retio n m ay be lib e rallv
UFed in th e d istrib u tio n of G o v ern m en t
f'.’nd s fo r th e re lief of th e c o tto n s itu ­
a tio n o r a n y o th e r s itu a tio n th a t m ay
seem to d em an d it. W e re g a rd th is as
o n e of th e d a n g ers of th is new sy stem ,
w ith its d iv isio n of th e c o u n try in to
tw elv e se p a ra te d istric ts, each w ith a
financial c e n te r of its .o w n . a n d w ith a
u n ify in g pow er in an official bo ard a{
^W ashington a n d in th e T re a su ry D e p a rt­
m e n t of th e G o v ern m en t, w hich m ay be
used w ith la rg e d isc retio n and w ith no
d irec t financial re sp o n sib ility on th e p a r t
of th o se w ho exercise it. W e sh a ll be
c-ependent upon a high d egree of w isdom
and a b so lu te in te g rity in the F e d e ral
R eserve B o ard to avoid p erilo u s com ­
p lic a tio n s.
In th e m id st of sucn a n
i em ergency a s now ex ists, th e re w ill be
1special need of financial in s ig h t a n d fore­
sig h t, and t h £ c are fu l exer'.ise o f disc -e tio n in p u ttin g th e new sy stem in ti*
, o p e ratio n .
/W

jo -ir . o f Com. N . Y .
O ctober 27, 1914

Volume of Foreign Trade F a ­
voring Th is Country Large
Enough to Hold Down Ster­
ling Rates
TThile there were not so nian>
tangible developments o( a favorable
ch aracter T hursday. Indications th a t
progress is being made tow ard the
restoration of rjormal condition* .were
num erous.
V* l ** ,
E xports were large again, and the
southern cotton problem seemed slight­
ly less ominous. The opinion is th a t
as tim e goep on Germ any, and perhaps
even A ustria, may be buying from onehalf to tw o-inirds of th eir regular re ­
quirem ents, while the B ritish demand
for cotton in the next two m onths is
likely to expand, as it has developed
th a t the E gyptian crop was small.
B est evidence th a t the current trade
balance strongly favors this country lies
In the continued w'eaknesa in exchange
relative to recent quotations. Although
dem and bills have dropped about 9 cents
in the pound, they have recovered only ,
1 cent, and there is still too large a
«upplv of bills to produce any re c o v e rj.
The sterling exchange m arket T hurs­
day m orning was described &s s te a d s ,
hut ra te s were a gho.de under 'A ed“ _
S ix ty -d a y bills w .re
rfiv n closing.
quoted at 4.8630; cables. 4.908; demand,
4-T he figures given out by the con- j
t-o ller of the currency Indicate th a t .ne
extent of funds to be released under the ,
new federal reserve >y«tem strengthens .

the am ount of
is
7.500 banks In the t nited
II,4SO.OrtO.OW. Under the new * 5 ™ ! ^ ”
s e r/e requirem ents will be
. w.
Consequently, the
”
leased is approxim ately |4«o.00MCn. t.ash
held on S e p t e m b e r 12 a m o u n t e d t o $ » - .
000,000. The a m o u n t t o b e r e t e a s e t
\ e m b e r 17 s h o u l d b e a b o u t IlSj.OW.nuu.
It is quite evident th a t the benefit
of the additional loaning value and the
huge am ount of g»m
the :
enorm
ousand
to the
dom‘“
2f,.<'t in
, sett.m
sett'ingg
country
to its
a b ility
its foreign debt on a proper basts.
A srood volume of business is being
tran sac te d in bonds.
In
stances, however
fai*n h a ^ fafled to satisfactorily explain
how it can officially recognize sales of
bonds a t declines ranging f r o m 3 to ■
p o in t, when It will not perm it a ™
tlons in slocks a t ' ' t ” ^ levels
concession from the July 30 le\e .

CO M PTRO LLER SHOWS
BANKS IN GOOD SH APE
* W A S H I N r T O NV’
27.—
C om ptroller of th e C u rrency W ill­
iam s to n ig h t m ade public sta te m e n ts
show ing th e re serv e s held by n a ­
tional b a n k s on th e d a te of his la s t
call.
'
T he r e s e w s s held Septermber 11!
w ere $5S>a,000,000 in excess of the
a m o u n t required u n d e r th e new law .
(if this, $-3,000,1)00 w as In B oston d is­
tric t, $83,0110.000 in New York, $70,000,­
000 in P hiladelphia, $59,000,000 in
C leveland, 121.000,000 In R ichm ond.
Sl4.'X)0.00b in A tla n ta , I8S.000.000 in
Chicago. $18,000,000 in St. Louis, $43,­
000,000 in M inneapolis, $37,000,000 in
K a n sa s C ity, $24,000,000 in D allas,
and $50,000,000 i;i S an F rancisco.
On Septem ber 12 th e re serv e of all
n a tio n a l banka w as ab o u t $115,000,000
above legal req u irem en ts. P re se n t
re serv e re q u ire m e n ts a re $1,460,711.­
345. T he new re q u ire m e n t will be
$993,792,269.
C onsequently $464,919.­
076 in reserves will be released under
the new law. Of th is a m o u n t New'
Y ork c ity will c o n trib u te a b o u t $88.­
000.000 . Chicago ab o u t $24,000,000, St.
L ouis a b o u t $8,000,000. o th e r reserv e
cities a b o u t $203,000,000 a n d c o u n try
b a n k s a b o u t $141,000,000.

W h y M o n e y S o fte n s.

I t is m oney n o t now needed in g e n ­
e ra l b u sin ess n o r in speculation th a t
is a v a ila b le for th o se who do c are to
borrow . T his, w ith th e com ing o p e n ­
ing of th e fed eral, reserv e b a n k s a
w eek fro m n e x t M onday a n d th e c o n ­
c o m itan t re le ase of sevec^l h u n d re d
m illions of gold due to legalized low ­
e rin g of b a n k reserves, m akes th e
m oney m a rk e t e a s ie r th a n a t a n y
tim e since th e w a r began. A s re su lt
th e d e m a n d for nu m ero u s sh o rt te rm
n o te issu es c o n tin u e s brisk. F o r e x ­
am ple, tire re ce n tly extended 0 per
cent, n o tes of th e C onsolidated G as
Co., w hich w ere offered a t a price
y ield in g a little m ore th a n 6, w ere up
to a 5 1-2 per cent, basis y e ste rd a y .
I t is reaso n ab le to assu m e t h a t for
a period a f te r th e s t a r t of th e re g io n ­
a l b a n k s, general c au tio n w ill be e x ­
ercised in m ak in g loans. M uch gold
will be in tra n s it a n d first in sta llm e n t
of re serv e s w hen called fo r m u st be
paid in gold o r law ful m oney. B anks,
how ever, h ave long been p re p a rin g
for th e calls—t h a t a lre a d y m ade for
stock su b scrip tio n s, a n d th a t w hich
will be m ade, fo r reserves.

S u llivan H eads Comm ittee.

OWNING OF U. S. BANK
TO RELEASE MILLIONS

E. R. F ancher resigned yesterday as
president of the N ational Currency As­
sociation, ot Cleveland, and
Sullivan was elected p re sid en t Geo. A.
iSflllBtr. of the Union National, suc­
ceeded Mr. Fancher on the executive
committee. Mr. F ancher1* resignation
la In line w ith his prospective severing
of all national banking activities in or­
der to assum e the jrov^mftrshtD. At, l>ie
PV lerat Reserve

F if ty -n in e m illio n
d o lla rs of
gold re se rv e , now h e ld in th e
C lev e lan d re s e rv e d is tr ic t, w ill be
re le a s e d w h en th e re s e rv e b a n b
o p e n s h e re a c c o rd in g to fig u res
issu e d by C o n tro lle r of C u rre n c y
W illia m s a t W a s h in g to n h'ridav
T o ta l re s e rv e no w h e ld in tlie
a m o u n ts to
$ 1 <>4,000,000,
or
$ 1 0 ,0 0 0 ,0 0 0




^ T T $ 'W e

JO J5 E P M
W ARD

S e it

"(jV *6

!)re s e n t. r e q u lre -

A
„s o ^ r e t e r v j a g g r e g a tsS tta
f tte
p sl wHi
u ?° k0 ’0 0 0 in th e I n ite d
be re le a s e d w h e n th e
new b a n k in g sy s te m s t a r t -

E dw in C. B axter
KdwM uC1 lSaxi£r, a ssista n t secre­
ta ry 1 or Ilia C ham ber o t Com merce,!
y e ste rd a y w as appointed se c re ta ry jf
th e F ed eral R eserve B an k of Cleve­
lan d by the dir-ieigrs a t th e ir m ee t­
ing in the W illiamsfcn building q u a r ­
te rs .
Joseph A. W ard, a ssista n t
c ash ie r " ot tlie c T e v e u u id N atio n al
ban k , also w a s nam ed to a n im ­
p o r ta n t place in th e federal reserve
ban k , but th e ^ ia tu r e of his d u tie s Is
n o t y e t announced.
M r. B a x te r w as se c re ta ry of the
com m ittee w hich w orked to brin g
th e b an k to C leveland, a n d w a s one
of th e m en a c tiv e in th a t endeavor.
H e h a s been a sso ciated w ith the
C ham ber of Com m erce tw elve years.
M r. W a rd is one or th e b est know n
younger b a n k e rs of C leveland, and
Is a n e x p e rt on tra n s it business, the
in te rc h a n g e und collection of checks
d ra w n b y b a n k s of one locality on
th o se of a n o th e r.
E lb e rt A. C arter, a young m an of
D eiiance, O., also will Join th e C leve­
land in s titu tio n 's staff, in c a p a c ity 1
not y e t announced.
T he re se rv e b an k is now c om fort­
ably ho u sed in th e dow ntow n b u ild ­
ing, a n d th e d irec to rs h a v e been com ­
ing’ fro m th e ir hom es once a week
for m ee tin g s.
T hey "will convene
a g a in F rid a y . T h e d ire c to rs of th e
S t. U su is re se rv e b a n k a r e consider­
ing c o n stru c tio n of a n ew I. uildlng
ln r th e ir in stitu tio n

G olden Stream Flows Into City

to Fill Coffers of Reserve Bank
Federal Institution Flooded With Payments of Member Banks Which Are Rushing to Cleveland

by Mail and Express— Work of Receiving Goes On to Accompaniment of Car­
penters’ Busy Saws and Hammers,
A deluge of gold i- headed Cleve­ i federal in stitu tio n w ill com m ence
(purchasing red isco u n ted p a p e r from
lan d w ard.
I t s ta r te d y e ste rd a y and will c o n ­ (♦ho m em b er banks.
for;»r-t p a \in g teller
tin u e for th ree m onths. I t is com ing L. B. W u iiu
in gold coin, gold certific ates and of th e U nion N a tio n a l B ank, of th is
su b tre a stiry re ce ip ts payable in gold C ity, w as presiding y e sterd a y a t the
a t a n y o f U ncle S am ’s su b tre asu rie s. receiving teller’s w indow of th e fe d ­
T he M ecca of the m ovem ent is the e ra l bank. H is receiving fu n ctio n s
g re a t co n crete and ste e l v a u lts in th e w ere a b it e m b a rra sse d by a n accom ­
basem ent of th e W illiam son build­ p a n im e n t of c a rp e n te r’s sa w s and
ing, w hose capacious m aw is now h a m m e rs, because S e c re ta ry M’Adoo
open fo r p a y m e n ts by th e m em ber in sists on an e a rly opening irresp ec ­
b a n k s of the new federal b anking tiv e of c o n tra c to rs’ tim e lim its.
sy stem to th e sto ck of C leveland's
B.
O. Hill, fo rm erly w ith th e Sec­
Dew fe d era l bank.
ond N atio n al of P itts b u rg , wra s also
Tho i n o n o y w as han d ed in y e s te r­ on d u ty . W a lte rs a n d H ill a re the
d a y by m essenger. I t cam e by mail, first p ra ctic a l b a n k m en re q u isi­
by e x p ress and by tr a n s fe r from the tioned fo r th e w ork in g staff.
F u b tre asu ry a t C incin n ati.
T he board of d irec to rs will m eet
D.
C. W ills, fe d era l re serv e agent,to d ay and a p p o in t a m em ber for the
w as a ssiste d in th e opening proceed­ a d v iso ry council w hich w ill confer
in g s by C a sh ier R. B. B a rre tt, of th e re g u la rly w ith the fe d era l reserve
C in cin n a ti su b tre a s u ry .
M r. B a r­ board a t W ash in g to n . I t is probable,
r e t t ’s principal m ission is to weigh too, t h a t one o r m ore of th e ju n io r
in th e gold receip ts. Gold coin is <officers of the b an k will be nam ed
su b je c t to a sh o rt w eight deduction a t to d a y ’s m a t i n g .
t o erosion.
C e rtific a te s F o rw a rd e d .
M uch of th e m oney com ing iu is in i
th e form of yellow b ack s or gold cer- j
tfficatos. w hich a r e accepted a s gold. ,
C in cin n ati a n d th e so u th e rn Ohio and
K e n tu c k y b an k s a re sending th eir
p a y m e n ts to th e s u b tre a s u ry a t C in­
c in n a ti. T he la t t e r issu es to th e fed­
e ra l re serv e b a n k h e re a s u b tre a s u ry
le c e ip t w hich is a s good a s gold in
th e v a u lt.
"T h e s u b tre a s u rv c ertific ates.” said
M r. W illis, “a re p a y a b le a t a n y s u b ­
tre a s u ry in th e T Jnited S ta te s and
c o n se q u en tly w ill be in te rch a n g e ab le
b etw een th e fed eral b a n k s a n d th e
s u b tre a s u rie s a s gold."
T his g iv e s the fe d era l b a n k s th e
te m p o ra ry use of th e su b tre a s u ry
sy ste m to su p p le m e n t its ow n v a u lt
c a p a c ity d u rin g th e period of th e o r­
g a n izatio n .
“T he b a n k s a re u n lo ad in g on us all
o f th e w orn a n d d og-eared c ertifi­
c a te s th ey can lay th e ir h a n d s o n ,"
com plained C a sh ier B a rre tt.
T h is is the first ch an c e b a n k s in
th is locality h a v e had of dum niner
. ’iiuch-used gold certificates on t h e ;
.g o v ern m en t for cancellation a n d r e ­
issue, a n d th ey a re ta k in g a d v a n ­
ta g e of th e o p p o rtu n ity .
W ill O pen N o v e m b e r 16.
B an k s in th e F o u rth federal d is ­
tric t w ill p a y in 1 p e r c e n t of th eir
c a p ita l a n d su rp lu s in p a y m e n t for
sto ck in th e fe d era l in stitu tio n . T hey
h a v e u n til N ovem ber 2 to com plete
th e p a y m e n t. T h is m a k e s a to ta l of
$2,000,000 to be p a id in on th e p re se n t
call. L a te r calls w ill b rin g th e to ta l
up to $6,000,000, w ith a p o ssib ility fo r
»n u ltim a te call fo r $12 ,000 ,000 .
T h e fe d era l b a n k s a re to open fo r
a c tu a l b u sin e ss on N o v em b er 16. On
th a t d a te m em b e rs b a n k s w ill be
called on to p a y In p a r t o f th e ir re ­
Digitized
FRASER
s e rv for
e fu
n d s. A t th e s a m e tim e th e



n

r

~

(J
Comptroller Show s B anks In
Good Shape
Comp t r ol l er of t he C u r r e n c y W illiams T u e s d a y
ma d e public st a t e me nt s s h o wi n g t he r e s er v es hel d
by nat i onal banks on t he dat e o f his last^.call.
T h e reserves hel d S e p t e mb e r 12 we r e $580,000,­
000 in excess o f t he a m o u n t r e q u i r e d u n d e r t he
new law. O f this, $53,000,000 wa s in Bo s t on d i s ­
trict. $83,000,000 in N e w Yo r k . $70,000,000 in
Phi l adel phi a. $59,000,000 in Cl evel and. $21,000,000
in Ri chmond. $14,000,000 in At l a n t a , $8 8 ,000,000
in Chi cago. $18,000,000 in St. Loui s , $43,000,000 in
Minneapol i s. $57,000,000 in K a n s a s City. $24.­
000.000 in Dallas, and $50 .OOO,GOO in S a n F r a n ­
cisco.
O n S e p t e mbe r 12 t he r e s e r v e o f all nat i onal
b a n k s wa s about $115,000,000 ab o v e legal r e q u i r e ­
ment s. P r e s ent r eser ve r e q u i r e m e n t s ar e $1,460,­
711.345. T h e n e w r e qui r e me nt will be $995,792.­
269. Cons equent l y $464,919,076 in r e s er ves will
be rel eased u n d e r t he n e w law. O f t hi s a m o u n t
N e w Y o r k City will cont r i but e a b o u t $88,000,000,
Chi ca go about $24,000,000. St. L o u i s a b o u t $8.­
000,000. ot her r eser ve cities a b o u t $203,000,000
a nd c o un t r y b a n k s a bout $241,000,000.

COTTON E X C H A N G E PEO PLE IN B A D TANGLE.
T h e only d e v elo p m en t of m o m e n t in th e c o tto n s itu a tio n w as a n ­
o th e r sp lit b e tw ee n th e N ew Y ork a n d L iverpool in te re s ts on th e s e ttle ­
m e n t of th e old s tra d d le in te rest. L ik e th e pro b lem of th e sto c k e x ­
c h an g e th a t situ a tio n a p p e a rs to be in c u ra b le a n d one th a t p ro m is e s to
be se ttle d o nly in th e insolvency c o u rts. In th e m e a n tim e E n g lish s p in ­
n e rs h a v e finally g o tte n th e ir a g e n ts in to S o u th e rn te r r ito r y a n d a re
b u y in g c o tto n d ire c t fro m th e p ro d u c e r w ith o u t th e a ssista n c e f r o m th e
b ro k e n -d o w n m a c h in e ry o f th e e x c h a n g es in N ew Y ork a n d L iverpool.
.Spot c o tto n c o n tin u e s to firm up, a id e d by p u rc h a se s by E n g lish s p in n e rs
a n d by a lessening of th e p re ssu re o f d istre sse d c o tto n on th e m a rk e t.
T h e B a n k of E n g la n d w eekly s ta te m e n t sh o w ed b e tte r p ro g re s s th a n
in a n y w eek since th e e a rly A u g u st b reak d o w n . R e se rv es in c re a s e d 2.27
p e r c e n t to 29.73 p e r c en t. T h e g old gain w as $9,000,000 a n d d isc o u n ts
d e c re a se d $20,000,000.
j
‘
VK v
T h e c o m p tro lle r's e stim a te on th « T a T f ^ n i io n su rp lu s to be a v a ila b le
w hen th e fe d e ra l i e s e r \ o s js te m goes in to o p e ra tio n w as th e su b je c t of
a lot o f c o n je c tu re by b a n k e rs. T h e re a re som e obvious d e d u c tio n s in
th e w ay o f th e debt ow ing to L ondon, th e e m e rg en c y c u rre n c y o u ts ta n d ­
ing w h ic h b a n k e rs a r e in clin ed to tr e a t a s d e b t because o f th e r e h y ­
p o th e c a te d p a p e r a n d th e 3 per c e n t in te re s t c h a rg e Involved. T h ere
a re, too, som e c le a rin g h o u se loan c ertific a te s o u tsta n d in g a n d a v ery im ­
posing lin e o f o u trig h t borrow ed m o n ey a p p e a r in g in b a n k s ta te m e n ts
a s bills p ay ab le. T h en a g ain , a g r e a t deal o f th is jr&>er\q is m o stly held
su b je ct to q u ic k w ith d ra w a l fo r sp ecial p u rp o se s. u G l 3
1 •’
I t w ould b e obviously a m is s ta te m e n t of fa c ts to p u t o u t th e b a ld
a sse rtio n th a t a h a lf billion o f re se rv e s w ill be m a d e a v a ila b le offhand
I t is o f in te re s t, how ever, to c o n te m p la te th e im m e n se offset, p re se n te d
in th e c o m p tro lle r's figures, to th e p re se n t situ a tio n . P ro v id e d th e r e ­
d isc o u n tin g fu n c tio n s of th e fe d e ra L .b a n k s a re p ro m p tly s e t in m o tio n
th e la u n c h in g o f th e system sh o u ld lift a se rio u s load a n d its benefits
should be even la rg e r w h en th e fe d e ra l b an k s a r e o rg a n iz ed to ta k e c a re
o f d o m estic e x ch a n g e m ovem ents.

i\AMEU RESERVE
BANK SECRETARY

*■<4 ?/
M cA doo O rders R eserve B anks
O pened N ov. 16
A W ash in g to n dispatch sa y s:
T h e tw elve federal reserve banks of the new
banking system will be opened fo r business oti
N ovem ber Ifi. T h is w as announced officially.
S e c retary M cAdoo, a uthorized by the currency
act to nam e the opening date, m ade the announce­
ment^ H is choice o f the sixteenth was m ade
despite the fact th a t the d irectors and governors
o f th e banks in a recent conference expressed
th eir preference fo r N ovem ber 30.
RELEASES $400,01)0,000.

In m aking the announcem ent, Mr. M cAdoo de­
clared he had reached his decision a fte r discussion
with the F ed eral R eserve H oard a n d because of
em ergency conditions in the South, in the belief
th at the opening of the banks will be helpful there
and will benefit business in all sections o f the
country.
In a statem ent issued, the secretary m ade it
clear th a t u n d e r the new system the federal gov­
ernm ent will be able by deposits from the general
fund o f the trea su ry in reserve banks to aid pro­
ducers o f staples.
T h e new reserve requirem ents operative a fte r
the banks are opened, be pointed out, will release
m ore th an $400,000,000 o f the m onev now held by
national banks as reserves, and will add greatly
to the loaning pow er o f the bank.
CONFIDEXCE IN I>IRECTORS.

P W IX * . IUXTF.ll a s s is ta n t se c ­
a n d In d u stria l co m m is­
sioner of th e C h a m b e r of C om m erce,
y e s te rd a y w as elected s e c re ta ry of
the fe d era l re se rv e b a n k a t th e w eek ­
ly m ee tin g of d ire c to rs ip th e W il­
liam son building.
Mr. B a x te r h a s been w jth th e c h a m her lo r tw elv e y e a rs. A s s e c re ta ry
of th o jo in t co m m ittee, th e w o rk of
w hich w as responsible for b rin g in g
the fe d e ra l in s titu tio n to C leveland,
he w a s one of th e m o st a c tiv e figures
In th a t c am p a0 < ? ~
J. A. W a rd , a s s is ta n t c a s h ie r of the
C leveland N a tio n a l B a n k , also re ­
ceived a n a p p o in tm e n t w ith th e new
bank. l ie will p ro b a b ly be a sso c ia te d
w ith th e a c c o u n tin g d e p a rtm e n t, b u t
his title a n d d u tie s h a v e n o t been
d e fin itely decided.
N o choice w as m ad e by th e b o a rd
y e s te rd a y of -a m em b e r of th e a d ­
visory council. A n o th e r im p o rta n t
post to be filled is t b a t of d e p u ty
governor.

E r e ta r y




M r. M cAdoo, in his statem ent, said fu rth e r :
"I am fully aw are o f the physical difficulties
th a t m ust be overcom e to set the reserve banks in
m otion on the 1fitb of N ovem ber but th e di­
recto rs o f these banks represent the highest degree
o f A m erican banking ability, ami I am sure th a t
not only can they m eet the situation but th a t they
will cheerfully take "up the task in the sam e fine
spirit o f public service which anim ated th eir disct’.ssions a t the W ashington conference.
“U n d e r the present system the Secretary o f the
T re a su ry cannot w ith prudence scatter the ‘gen­
era! fu n d ’ o f the trea su ry am ong the g re at n um ­
ber of widely separated national banks th ro u g h ­
out the country.
“ As soon as the reserve, banks a re in operation
T shall tra n s fe r to them as large an am ount o\
g overnm ent funds as p o s y U e : th is will in
enable them to ex ten d .enlarged credits to n a ­
tional banks and state banks which may become
m em bers o f the fed eral re serv e system , which
they, in turn, m ay extend to th e ir custom ers.
" liy this m eans and th ro u g h the agency o f the
federal reserve banks I h"pe to give additional
assistance to th a t already given by the T reasury
D epartm ent to the cotton producers, th«* c-'tton
industry a n d the business m en o f th e Smith.

' -<v
IS 1 J /
T h e Cleveland F ed eral R eserve Bank has
opened an office in the W illiam son building w here
the bank will be form ally opened fo r business on
N ovem ber 16. F ederal R eserv e A gent W ills and
G overnor E. Rl~ FftncRer' are now devoting all
o l their tim e to "the new bank, and it will take
som e decidedly fast w ork to se t everything in
readiness fo r the opening on N ovem ber 16. Tt
is not expected, how ever, th a t the new bank will
be ready to p erfo rm all of its functions on th at
date but it will be ready to discount bills. As
rapidly as possible steps will be taken to put the
institu tio n in shape w here it can perform all of
the functions expected of it.
T he new institution is receiving paym ent for
the first call on the capital stock, n r w ;iiederal reserve agent, was assisted in the opening
iroceedings by C ashier R. Ii. B arrett. of the Cin■innati sub-treasury. M r. B arrett's principal m is­
sion is to w eigh in the gold receipts. Gold coin
s subject to short w eight deduction to erosion.
CERTIFICATES FORWARDED.

Much of the m oney com ing in is in the form
Dt yellow -backs or gold certificates, which are
accepted as gold. C incinnati and southern Ohio
and K entucky banks are sending th eir paym ents
to the sub-treasury a t Cincinnati.
T he latter
issues to the federal reserve bank here a sub­
treasu ry receipt which is as good as gold in the
vault.
"T h e su h -treasu ry certificates,” said Mr. W ills, i
"are payable at any sub-treasury in the U nited
S tates and consequently will be interchangeable
between the federal banks and the sub-treasuries
as gold.”
T his gives the federal banks the tem porary use
■>f the sub-treasury system to supplem ent its own
vault capacity during the period o f the organiza­
tion.
“T he hanks arc unloading on us all of the worn
w d dog-eared certificates they can lay th eir hands
m .” com plained C ashier B arrett.
T his is the first chance hanks in this locality
have had o f dum ping m uch-used gold certificates
in the governm ent fo r cancellation and reissue,
and they a re taking advan tag e of the opportunity.
B anks in the fourth federal district will pay in
1 per cent o f their capital and surplus in pay­
m ent fo r stock in the federal institution. They
have until N ovem ber 2 to com plete the payment.
T his m akes a total o f $2 ,000,000 to be paid in
on the presen t call. L a te r calls will b rin g the
total up to $ 6 ,000,000. w ith a possibility fo r an
ultim ate call fo r $ 1 2 ,000,000.
The federal banks a re to open fo r actual busi­
ness on N ovem ber 16. O n th a t date m em ber banks
will be called on to pav in p a rt of their reservo
funds. A t the sam e tim e th e federal institution
will com m ence pu rch asin g rediscounted paper
from the m em ber hanks.
I
L. B. W alters, fo rm er paying teller o f the
U nion N ational B ank o f this city, was presiding
F rid a v a t the receiving te lle r’s window o f the
federal hank. H is receiving functions w ere a bit
em barrassed by an accom panim ent o f carpenters
saw s and ham m ers because S ecretary M cA doo in­
sists on an earlv opening irrespective of the con­
tra c to rs ' tim e limits.
B.
O. H ill, form erly w ith the Second N ational
I Bank o f P ittsb u rg h , was also on duty. W alters
and H ill are the first practical bank men requisi­
tioned fo r the w orking staff.
It is believed no attem pt will be m ade by fe d ­
eral reserve banks to clear checks at the start
and open m arket operations will likew ise be de­
ferred. U ntil the rle a rin " system is established,
it is probable the N ew Y ork re serv e bank will
become a m em ber o f the clearing house.
H ad the federal reserv e system been in opera­
tion w hen w a r broke out. it is th o u g h t th at n a ­
tional hanks w ould have applied fo r em ergencv
currency, as dem and fo r m oney w ould have been
met bv federal reserve notes. N ow th a t em erg­
ency notes have been taken out in large volume,
it is not expected th a t opening of reserve banks
will stim ulate retirem en* o f the notes o r their
indirect conversion into federal reserve notes




A lthough on o r about N ovem ber 1 the 3Yi per
cent tax becom es effective fo r m ost banks, it is
calculated th at it will not pay the banks to re­
tire em ergency notes by getting rediscounts at
reserve bank and using the funds for redem ption
of the notes. A s rediscount rate will probably be
6 per cent it w ould be unprofitable to retire the
notes, cost of which is only 3]/i per cent and can
never exceed 6 per cent.
In som e banking circles opinion is expressed
that the F ederal Reserve Board will require New
Y ork reserve banks to rediscount discounted paper
of o th er reserve banks, th a t g re ater relief m ay be
given banks in the South. T he law requires
affirmative vote of at least five m em bers of the
reserve board to compel one reserve bank to re ­
discount paper fo r another.
Secretary M cA doo’s announcem ent th a t reserve
system will becom e operative N ovem ber 16 is
taken to m ean th a t new reserve requirem ents will
become effective on the sam e date. These provide
that instead o f 25 per cent reserve, central reserve
banks m ust c arry a reserve equal to 18 per cent
of aggregate dem and deposits and 5 per cent of
tim e deposits, as follow s: 6-1S in the valuts, 7-1^
in reserve bank, and the balance either in vault or
in reserve bank. T he reserve bank may receive
as reserve eligible com m ercial paper to am ount
nol exceeding 50 per cent o f erich installm ent.

Reserve Act Has Already Helped
B efo re U n io n C o u n ty B a n k e rs ’ A sso c ia tio n ,
t E liz a b e th , N. J.. C h a rle s A. C o n a n t d e clare d
hat F e d e ra l re se rv e act had a lre a d y re n d e re d
m p o rta n t se rv ice s in th e c ris is cau sed b y w a r
n E u ro p e . I t p ro v id e s one of th e e sse n tia l
o n d itio n s o f a so u n d b a n k in g sy s te m — a m o ral
earlership p o s s e s s in g legal a u th o rity . H e r e to ­
fore in im p o rta n t c ris e s th e re h a s been no re c ­
ognized a u th o r ity to tak e the lead in o rg a n iz ­
ing defensive m e a s u re s fo r p ro te c tio n o f the
gold stock, p ro v isio n fo r a d e q u a te c u rre n c y and
m ain ten a n ce o f p u b lic confidence. T h is w as
p ro v id ed by o rg a n iz a tio n of th e F e d e ra l re se rv e
b o ard , even th o u g h re se rv e b a n k s are n o t y et
in o p e ratio n .
By reaso n of e x is te n c e of th e b o a rd it h a d
b een po ssib le to o rg a n iz e th e g o ld p o o l to p r o ­
tec t A m e ric an c re d it a b ro a d , a n d to c o n sid e r
p ro p o se d c o tto n p o o l to g u a rd p ro d u c e rs o f th e
S o u th . It w as n o t unlik ely th a t, a t th e p ro p e l
tim e, th e su b je c t o f p ro te c tin g the A m erican
se c u rity m a rk e t a g a in s t v io le n t fluctuations
w ould p ro b a b ly be tak e n up b y th e sam e b o d y
a lth o u g h it m ig h t re q u ire a c h a n g e of law tt
m ake th e ir aid effective.
In all th ese m a tte rs , th e a c tio n tak en w ith as
sista n c e of th e S e c re ta ry o f th e T re a s u r y af
fo rd e d a g r a tify in g c o n tra s t w ith the h e sita
tio n s in p re v io u s c ris e s in w h ic h le a d e rs h ip h a t
u su a lly been a ssu m e d finally by a single stro n g
m an w ith o u t a n y leg al a u th o r ity o r a n y direct
c o n n e c tio n w ith th e n a tio n a l b a n k in g sy ste m
o r the g o v e rn m e n t.
W h ile the new law did n o t g o as fa r as m any
c o m p e te n t e x p e rts th o u g h t d e sira b le in c o n c e n ­
tr a tin g g old re s o u rc e s of th e c o u n try in to a
single m ass a v ailab le fo r m e e tin g p e rio d s ol
p re ssu re effectiv ely , like th e g re a t g old re ­
so u rc e s of th e B a n k o f F ra n c e a n d th e S ta te
B ank o f R u ssia , th e re w e re a lre a d y in d ic a tio n th a t n e c e ssity o f c o n c e n tra tio n of re se rv e w as
re co g n ize d a n d w o u ld be u ltim a te ly given p ra c
tical effect. I t w a s to be r e g re tte d th a t th t
N ew Y o rk F e d e ra l re se rv e b a n k , o n w hich
w ould be c o n c e n tra te d m o st o f th e p re s s u re ol
fo reig n e x c h a n g e o p e ra tio n s , w as n o t g iv en a
b ro a d e r scope a n d la rg e r re s o u rc e s ; but th t
w e ld in g to g e th e r by th e F e d e ra l r e s e r v e b o a rd
of the e n tire m e c h a n ism e sta b lislre d b y th e new
law w ould te n d in so m e d e g re e to o b v ia te this
difficulty.

What Effect Will the Federal Reserve
Act Have on Clearing House
Examinations ?
By F R A N C IS C O A T E S, J r .
E xam iner, C leveland Clearing H ouse Association
(D elivered before the C learing H ouse Section ; A t a late h our this seem ing uanger vva> scemeu
of the A m erican B ankers’ A ssociation at R ich­ | by one of the bankers, and through the c incerted
mond. )
I action of the bankers th ro u g h o u t the country.
In discussing the question o f clearing house an am endm ent was a rra n g e d w herein the questi >n
exam inations, we have been accustom ed to m ake of perm ission was divided, and was left to the
com parison with exam inations m ade by the fed- I discretion o f the m anagem ent, i. e.. the directors
eral and state departm ent exam iners, and I s h a l l ! of each individual bank, or to the Com ptroller
have to use the sam e com parison in discussing 1o f the Currency. H ow groundless w ere our fe a r',
the question before us. Not, how ever, in the wav however, is show n by the fact th a t when the
m atter was brought to the a ttention of the fram ­
of any reflection 011 those exam inations, as th
w ork and the functions o f the officers are m a­ ers of the bill, the am endm ent was inserted w ith­
terially different from these o f the clearing house out hesitation, and w ith the explanation that its
exam iner.
om ission was an o v e rsig h t; th at at the incep­
I am entering upon fam iliar history when I say tion of the act o f fram in g the hill, it was decided
that the system of clearing house exam inations th at it should contain 110 provisions th at w ould
had its inception in C hicago early in l'.WG, follow ­ tend to restrict or change the system o f clearing
ing the failure o f three large closely affiliated house exam inations as they are now being con- 1
banks in th a t city. T h e deposits o f these banks ducted.
Follow ing the passage o f the bill, this provision |
were protected by m eans of an assessm ent levied
on the o th er clearing house banks, w hich eventu­ was taken under consideration by th e executive j
ally resulted in a heavy loss to the assisting banks. com m ittee o f the C learing H ouse Section of the
T he reason for the establishm ent o f the system Am erican R ankers' A ssociation. F o rm s o f reso- ,
is too well know n to you to req u ire discussion- - lution authorizing the clearing house exam iner to
suffice to say th a t it w as a m eans o f safeguard continue his onerations as h e reto fo re w ere suband protection th a t w as not possible under the m itted to the hoards of d irectors in all banks in
then e xisting system s o f federal a n d state bank clearing house citics em ploying an exam iner, and
supervision, and th at is not possible under these 1 know o f no instance w here th ere has been am
system s as they exist today. T h e success th at hesitancy in g ra n tin g the desired authority. F u r­
crow ned the efforts o f the Chicago exam iner, Mr. ther, in m y own case, the C om ptroller of the
Jam es B. M cD ougal, who is the dean of o u r pro­ C urrency has arranged to have his exam iner dis­
fession, was closely w atched by bankers every­ cuss with me conditions in the national banks in 1
w here, and the degree of his success in this new the city of Cleveland, and has filed w ith me his
"express perm ission in w ritin g " to this end, and ,
field is m easured by the fact that tw enty-one rep
resentative cities have now follow ed Chicago’s I presum e this is the case in o th er cities
W ith these evidences of consideration and co­
lead and have established clearing house d ep art­
operation 011 the p art o f nur law m akers and
m ents o f exam ination o f th eir own.
O th er cities have the question u n d e r s e r i o t i - the federal a uthorities in m ind, 1 feel th at we may
consideration, and the num ber of converts is safely pass the question as to w hat effect the
grow ing steadily. M any conditions have devel­ /ii;,' will have 011 clearing house exam inations,
oped to cause delay in its adoption—lack of and pass o nto the question o f w hat effect the o p e r­
ation of the federal reserve banks them selves will
unity and co-operation am ong the bankers them
selves in som e instances, and in o th er cases it has have on these exam inations.
Section 21 of th e act provides fo r the ex am ­
been the question o f expense.
As re g ard s the fo rm er, differences have been ination o f every m em ber hank at least twice a
and arc being reconciled, and petty jealousies and y e ar: these exam inations to be m ade by national
selfishness elim inated, as the success o f the sys­ bank exam iners, provided, how ever, th at ex am ­
tem and its freedom from "leaks'' is being inations by state a uthorities m ay be accepted in
thi' case o f state institutions
\ lt rep o rts of e x ­
d em o n strated in o th er cities.
In the sm aller cities particularly expense has am inations to be filed t«7/i the C om ptroller o f
been the d e te rrin g fa c to r; in m any cases there the C urrency
It also provides th a t in addition to these exam ­
being too few banks in even a larg e com m unity
to m aintain this departm ent. T h is has been met inations, each federal reserve bank m ay provide
in some instances by utilizing firms o f c hartered for special exam inations of its m em ber banks.
accountants, who supervise the w ork in tw o or T hese exam inations to be so conducted as to in­
m ore cities, and so reduce the individual expense, form the federal reserve bank of the condition of
and the idea of a “g ro u p ” exam iner is now being its m em ber banks, and of the lines of credit
considered in some qu a rte rs, so th a t the benefits which are being extended by them.
o f the system may he enjoyed bv banks in sm aller
From this it is to be gathered th a t the in fo r­
cities, located w ithin a given radius, whose in te r­ m ation as to those tw o im p o rtan t points cited in
the act. the condition o f the m em ber banks, and
ests a re sim ilar.
T h is line of developm ent can m ean but on', the lines o f credit extended by them , which latter
thing—th a t the system o f clearing house exam ina­ will necessarily cover the w orth and value of the
tions has proved the best know n expedient for borrow ers and the securities held as investm ents
safety, fo r unity, and fo r p ro tec tio n : and the o r as collateral, shall be fu rn ish ed to the reserve
question o f i‘.s continuance will probably be de­ banks by the special exam iners appointed 1> the
term ined onlv hv the finding of a su b stitu te th at boards o f these banks, who may, the act, h o w ­
ever. provides, m ake th eir exam inations in c o n ­
is better, and costs less.
W ith this prelim inary as to the origin and the nection with the reg u lar exam inations m ade by
developm ent of the system to the present tim e. the national and state exam iners
Thus, we are b rought to a realization o f how
T will com e to the c ru x of the qu estio n —‘ W h at
effect will the federal reserve act have on cle ar­ m uch m ay depend on the efficiency o f the national
and state exam iners.
ing house ex am in atio n s?”
Federal and state d e p artm en t exam inations are
R efore the final fra m in g and passage o f the
act. it w as thought th a t certain provisions aim ed designed prim arily to advise those departm ents
a direct blow at these exam inations. Section 22 as to the condition, as to solvency, o f the banks
exam ined, and these exam inations will con*i vie
provided th a t—
“S o exam iner, public o r private, shall disclose fo r this purpose as in the past. N ational ban!:
the nam es o f borrow ers o r the collateral for loans exam iners, like state exam iners, will, how ever,
be placed on a salary instead o f a fee basis, and
o f a m em ber bank to o th er th an the proper offi
cers o f such bank, w ithout first h aving o b ta in e d \ it is th o u g h t th at this will m aterially im prove the
the express perm ission in w ritin g o f the C o m p -| efficiency o f these exam inatiions. T h is is a mooted
tro lle r o f the C urrency."
1 Question. It will probably m ean increased Y>m-




| p c a s a n o n a n d e asie r c o nditions fo r th e so-called
"c o u n try e x am in ers,” h u t a m uch d e p rec ia ted c o m ­
p e n s a tio n a n d h a r d e r co n d itio n s fo r c e rta in o f
the city e x am in ers. I t w ill p ro b a b ly re s u lt in a
h ig h er sta n d a rd o f w ork in th e c o u n try d istric ts,
and in th e city d istric ts it w ill, by e lim in a tin g
.several o f th e la rg e “plu m s” now fo s te re d u n d e r
th e fee system , p ro bably elim in ate p o litics to -i
larg e e x te n t, a n d in su re the e m p lo y m en t o f high
g ra d e a c c o u n ta n ts a n d c red it m en a t all tim es.
T h is re su lt is lo o k ed fo r by th e o rg a n iz a tio n c o m ­
m ittee o f th e fe d e ra l re se rv e bank. M u ch will
depend on the qu estio n o f c o m p en satio n in d e ­
term in in g the calib er o f th e m en secu red , a n d o f
the d e p a rtm e n t’s a b ility to re ta in h ig h g ra d e m en
in the service, a n d w e a ll hope to see im p ro v e d
conditions. A s a m a tte r o f a rg u m e n t, w e w ill
assum e th a t th is hope w ill m aterialize, as m uch
depends upon th e class o f w o rk p e rfo rm e d , in
d e te rm in in g th e fu n c tio n s and the scope o f the
d e p artm e n t o f e x a m in a tio n o f the re se rv e hanks.
A nd so, again, w e a re b ro u g h t to a re aliz a tio n
o f how m uch m ay dep en d on the efficiency o f
n a tio n a l a n d sta te e x am in ers.
In this co nnection, I can probably b e st q uote
M r. R alph V an V ech ten , o f C hicago, sp e a k in g
b e fo re th e C e d ar R ap id s, la ., C lea rin g H o u s e A s­
sociation last M a rch . In c o m p a rin g th e w o rk
o f the cle arin g h o u se e x a m in e r w ith th a t o f th e
sta te a n d n a tio n a l b a n k e x am in ers, h e sta te d as
re g a rd in g the l a t t e r :
"T h e s e la tte r officials m ake a u d its w hich u s u ­
ally will u ncover a n y d iscrep an cies in th e b o o k ­
keeping, any sh o rta g e s in cash o r any excessive
lines o f c red it, a n d in g e n era l a re as th o ro u g h
an d com plete as could be e x p ected fro m m en n o t
closely in to u ch w ith local co n d itio n s a n d the
affairs o f th e in d iv id u al b o rro w e rs. T h e c le a r­
ing h ouse e x a m in e r n o t only m akes an a u d it but
w eighs th e v alu e o f every piece o f p a p e r and
collateral, his e x a m in a tio n being in th e n a tu re of
an a p p raisa l, as well as an a u d it. L et m e say
right h e re th a t the c le arin g h o u se sy stem is not
in a n y sense a reflection on th e w o rk o f th e n a ­
tional a n d sta te b an k e x am in ers, b u t th ese officials
cover such a w ide te rr ito ry th ey c an n o t u n d e r­
take to fa m ilia riz e th em selv es closely w ith the
credits o f a n y fine p a rtic u la r locality. O n tin
o th er hand, th e d u tie s o f a c le a rin g h o u se e x ­
am iner, as a rule, a re confined to one city and
he has a g re a te r o p p o rtu n ity to becom e a d o s t
stu d en t o f the c re d its o f th a t p a rtic u la r d istric t
He k n o w s w ho th e la rg e b o rro w e rs a re a n d t(
w hat e x te n t thev a re being c a rrie d by any p a r­
tic u lar b an k o r b an k s o f his city.
H e know if th e re a re a n y sp ecu lativ e a cc o u n ts and w h e n
and ho w t h e
a re being c a rrie d . H e know?
w h eth er p y ra m id in g is g o in g on in a n y o f th t
tfanks o f his city. Tie know s th e e x te n t to w hich
cjfficers a n d d ire c to rs a re b o rro w in g fro m th eii
own ban k s a n d fro m n e ig h b o rin g b an k s.
lit
know s if any p a rtic u la r in te re st o r co m b in a tio n
o f in te re s ts is se e k in g to do m in ate a local b a n k ­
ing situ atio n . K n o w in g th ese th in g s a n d h av in g
a u th o rity to m ak e reco m m e n d a tio n s, it is p o ss ib k
for him , a ctin g w ith local b an k b o a rd s anti the
c le arin g h ouse co m m ittee, to elim inate evils th a t
if left to g ro w , m ig h t la te r assum e a la rm in g p r o ­
p ortions. W h ile som e o f th ese th in g s do com t
to the kno w led g e o f th e public e x am in er, he is not
as a rule, in close e n ough touch w ith th e local
situ atio n to scent them o u t.................”
F ro m th is we see th a t th e b a n k e rs th em se lv es
have set th is very high sta n d a rd o f w o rk fo r th e
c le arin g h o u se e x a m in e r—th is as a re su lt o f
necessity in pro p erly sa fe g u a rd in g the in te re sts o f
th e v a rio u s c le arin g h ouse co m m u n ities. S hall the
fed eral re se rv e e x a m in e rs o p e ra te u n d e r a lo w e r
set o f s ta n d a rd s a n d com pete w ith o r su p p la n t
the o p e ra tio n s o f th e c le arin g h o u se e x a m in e r?
And. if not. how a n d w hen can th ese s ta n d a rd s
be re ac h ed ?
.
A nd if reach ed f o r su p e rse d e d ) shall we stil>
have an inco m p lete a n d in co m p eten t re c o rd ?
A nd, if so. w h a t w ill it a v ail?
It is e stim a te d th a t but fo r ty per cen t o f thfi
b anks eligible to m e m b e rsh ip in th e fe d e ra l r f se rv e b a n k s have a v a ile d th e m se lv e s o f %<!ch
m em bership, a n d th e final p e rce n ta g e th a t will
do so is a m a tte r o f c o n je c tu re . T h is w fth the
re su lt th a t in each co m m u n ity , a la rg e p e rce n ta g e
o f FRASER
th e b anks will be u n k n o w n to th e fed eral r e ­
Digitized for
serve bank, and c o n se q u en tly .to th e m em ber
http://fraser.stlouisfed.org/

Federal Reserve Bank of St. Louis

b a n k s. T h e ir lo a n s a n d in v e stm e n ts a n d c re d it
re c o rd s a re w ith h eld fro m th e re c o rd s o f the
re se rv e b a n k s, a n d w ith o u t th ese re c o rd s it >
possible to d e te rm in e th e d e g re e o f so lv c n c ' ot
th e b a n k s as a c o m m u n ity , o r in fa c t as int. f i ­
n a ls ? W ill not th e h e a rin g o f th e u n k n o w n lo an a n d in v estm e n ts, on th o se lin e s c o n ta in e d in tn e
tiles o f th e re se rv e ban k , be th e d e cid in g fa c to r in
m an y cases in d e te rm in in g th e ir w o rth a n d solvU1f h i s in fo rm a tio n is h a d in d e ta il bv th e c le a r­
ing h o u se e x a m in e r th ro u g h his access to all
o f th e b a n k s in th e co m m u n ity .
T o illu stra te , ta k in g m y ow n field, l lev elan a.
R ecent sta te m e n ts o f c o n d itio n fu rn ish e d by th e
C o m p tro lle r o f the C u rre n c y a n d S ta te l.a n k in u
D e p artm en t show to ta l a sse ts 111 C lev elan d b a n k s
1
$345,000,000
a g g re g a tin g ...................................................
T h o se c o n ta in e d in m em b e r b a n k s ag
1(14,000.(101)
g re g a te
T h o se c o n ta in e d in n o n -m e m b e r ban k s
^.>41,000,000
,
a g g r e g a t e .............................................. ■y
o r a p p ro x im a te ly 70 p e r c e n t o f th e to tal.
In th e e n tire S ta te o f O hio, th e a sse ts c o n ­
ta in e d in th e n o n -m e m b e r b a n k s w ere, on the
sam e d ate, a p p ro x im a te ly 50 p e r cent o f th e
w hole.
.
T o cite o n e lo an re c o rd tak e n fro m my lu es;
th e b o rro w e r o w ed a n a g g re g a te o f $ 500 ,000 , a n d
o f th is a m o u n t only $130,000 w a s lo a n e d by m em ­
b e r banks.
In th e p a st, th e fe d e ra l a n d sta te d e p a rtm e n ts
o f e x a m in a tio n h ave a cted larg e ly in a sup erv iso ry
capacity. T h ro u g h th e lo a n in g o f m oney and
th e issu an ce o f c u rre n c y , a n d th e a tte n d a n t d is­
c o u n tin g o f c o m m ercial paper, and o th e r fu n c ­
tio n s. tlie fe d e ra l re se rv e b an k will no w h a \ e .i
p ro p rie ta ry in te re s t in its m e m b e r b an k s, a n d the
d e g re e o f th is in te re s t w ill p ro b a b ly larg e ly d e ­
te rm in e th e d e g re e o f efficiency a n d th e scope ..t
e x a m in a tio n s c o n d u cted by it.
In th e re c o m m e n d a tio n s o f th e o rg a n iz a tio n
c o m m itte e m uch im p o rta n c e is g iv en to th e e s­
ta b lish m e n t o f co m p e ten t c re d it b u re a u s fo r the
collection a n d re c o rd in g o f d a ta c o n c e rn in g not
on 1v th e b an k s, b u t also th e sta n d in of ldividu als firm s a n d c o rp o ra tio n s b o rro w in g ,ro m th t
b a n k s o r sellin g p a p e r in th e open m a rk e t, the
v a lu a tio n o f in ac tiv e o r u n liste d se c u ritie s heltl
e ith e r as in v estm e n ts o r as c o lla te ra l : th e reco rd s
to be s o a rra n g e d as to show th e a g g re g a te lia b il­
ity o f each b o rro w e r, o r th e a g g re g a te in v estm e n t
in any se c u rity a n d th e w o rth a n d valu e ol sam e.
Il
is re co m m e n d e d th a t a plan foi th e e x ch a n g e
o f in fo rm a tio n be a rra n g e d th ro u g h th e v a rious
c red it b u re a u s e stab lish e d in th e fe d e ra l re serv e
d istric ts, a c tin g w ith th e b u re a u s e sta b lish e d by
th e s ta te b a n k in g a u th o ritie s, w h e re a p ro p e r sy s­
tem
fo r s a fe g u a rd in g in fo rm a tio n h a s been
a d o p ted .
It is re c o m m e n d e d f u rth e r th a t c re d it b u re a u
d a ta shall be a v ailab le to th e fe d e ra l re se rv e
a g en t, e x ec u tiv e officers o f th e fe d e ra l re serv e
ban k s a n d n a tio n a l a n d fe d e ra l re s e rv e b a n k e x ­
a m in e rs.
.
In d isc u ssin g th e fe d e ra l re se rv e a c t a n d its
o p e ra tio n s b e fo re th e O h io b a n k e rs a t ( ed.ir
P o in t in J u n e o f th is y e ar, fu d g e M . C. E llio t,
s e c re ta ry o f th e re se rv e batik o rg a n iz a tio n com ­
m ittee, tra c e d a lo an u n d e r th e n ew sy ste m fro m
th e p o in t a t w hich th e m em b e r b a n k m ak e s it. to
a p o in t a t w hich it is used as a b a sis o f c red it
fo r n o te s to lie issued by th e g o v e rn m e n t.
’
q u o te fro m his a d d re s s as fo llo w s:
“ T h e c u sto m e r ap p lies to his local bank fo r
th e d isc o u n t o f c o m m ercial reiper.
T h e local
b an k * * * is re liev e d o f th e n e ce ssity o f c u rta il­
ing its in v e s tm e n ts by re a so n o f th e fa c t th a t
w ith th e n ro p c r cla ss a n d c h a r a c te r o f p a p er it
will be able to re c o n v e rt th is p a p er in to cash
w hen occasion d e m a n d s it. T h is abilitv to c o n ­
v e rt such p a p e r in to cash, h o w e v er, is d ep en d en t
upon th e class a n d c h a ra c te r o f p a p e r accepted
«o th a t as a m em b e r o f th is new system , r e a l­
izing th a t h e m av d e sire to c o n v ert th is p a p e r
into cash and th a t h e m ay d e sire the g o v e rn m e n t

lu r u is i7 7 l7 r " 7 a s T T " T lic r c i> ;m :1<I ' I>■<i in c c iu iy e

fo r the b a n k e r I d use c a re am i c o n se rv a tis m in
m ak in g his loans. O ccasion docs a ris e w hen th e
h a n k e r n e ed s a d d itio n a l cash, a n d he a p p lie d to
the fe d e ra l re se rv e h a n k o f h is d is tr ic t to r e ­
d isc o u n t th is p a p er. T h e fe d e ra l re se rv e hank,
k n o w in g th a t each m em b e r b a n k is o n e o f its
c u sto m e rs, has an in te re s t in th e a ffa irs o f each
a n d in th e class a n d c h a ra c te r o f p a p e r w hich is
heing h a n d le d a n d o ffe re d fo r re d isc o u n t. K n o w ­
ing th a t it in tu rn w ill he liable to th e e x te n t o f
all its a sse ts fo r any c re d it a sk e d fro m th e g o v ­
e rn m e n t in the fo rm o f fe d e ra l re se rv e notes,
sh o u ld occasion a rise, th e re is every in d u ce m en t
fo r such b an k to e x e rc ise d u e diligence, c a re a n d
c o n se rv a tis m in a cc ep tin g n o tes fo r re d isc o u n t
w hich m ay o r m ay not be su b seq u e n tly used as a
ba sis fo r th e issu a n c e o f fe d e ra l re se rv e notes,
a n d th e e x erc ise o f th is d ilig en ce a n d c a re is a
m a tte r in w hich each m e m b e r b a n k h a s a vital
in te re st, a s well as a voice th ro u g h its re p re ­
se n tativ e on th e b o a rd .
A ccordingly, w hen su c h n o tes a rc o ffere d to th e
fed eral re se rv e a g e n t, as th e local re p re se n ta tiv e
of th e F e d e ral R eserv e B o a rd , th ey h av e a lre a d y
been a p p ro v e d ; first, by th e local h o a rd o f d i ­
re c to rs o f th e m em b e r b a n k ; seco n d , by th e b o a rd
o f d ire c to rs o f th e fe d e ra l re se rv e bank, o f w hich
he is c h airm a n , a n d if rece iv e d th ro u g h a bran ch
o f th e fe d e ra l re se rv e b ank, th ey h a v e also been
ap p ro v ed by th a t b o a rd .
C onsen u en tlv . w hen
app licatio n is m a d e to th e F e d e ra l R eserv e H oard
fo r an issu e o f fe d e ra l re se rv e n o tps th e re w ould
seem to he little p ro b a b ility o f any re a l risk to
th e g o v e rn m e n t's c re d it by th e issu an ce o f such
n o tes. * * * * '*
F ro m th is, it w ould a p p e a r th a t fo r th e p re sen t
at least, th e te st o f th e w o rth a n d liq u id ity o f
th e p a p er d isc o u n te d is to be d e te rm in e d , n o t by
th e findings o f a n e x a m in e r o r cred it m an . o r by
in fo rm a tio n c o n ta in e d in the c re d it b u re a u o f the
re serv e bank, h u t by th e ju d g m e n t o f th e o rig in a l
b a n k e r su p p o rte d hv th e ju d g m e n t o f his b o a rd of
d ire c to rs ; a n d in tu r n by the d ire c to rs o f th e fe d ­
eral re se rv e bank.
A dm ittin g , a s a m a tte r o f a rg u m e n t, th a t this
m ight be a s a fe p ro c ed u re , it d o e s n o t a u g u r
stro n g ly fo r th e d evelopm ent, in th e n e a r fu tu re ,
o f a com petent d e p a rtm e n t of e x a m in a tio n an
cred its, w hich a t b est will tak e y e a rs in fo rm in g
X ow let us se e ho w the c le a rin g h o u se e x ­
a m in e r will a rriv e it his findings in such a case.
and w h ich fin d in g s w o u ld he open to th e re ­
se rv e bank in ease co-operation w ith clearin'/
house d e p a rtm e n ts, the sam e as w ith st'ite b a n k ­
ing! depart m o ils , is in cited or arrani/cd. as i ‘.
reco m m e n d e d in th e findings o f th e su b -o rg a n iz a ­
tion co m m ittee. A s a m a tte r o f necessity , I shall
cite m y ow n re c o rd s a n d o rg a n iz a tio n in ( levelan d . a n d th is w ill. I tru st, elicit la te r a full d is­
cussio n o f m e th o d s w hereby I shall be a m ate ria l
g a in e r.
f i r s t : All lo a n s a n d all se c u ritie s a re analyzed
by th e e x a m in e r on the basis o f th e b a n k 's c re d it
files, its lo an re co rd , the a cc o u n ts w hich a r e c a r ­
ried. a n d a f1111 a n d fre e d iscu ssio n w ith th e
sta ff and c o m m itte e o r th e d ire c to rs o f th e bank
T h is a n a ly sis is re ta in e d by th e e x a m in e r, a n d in ­
c o rp o ra te d in his reco rd s, a n d is also reflected in
th e re p o rt o f h is e x am in atio n .
S e c o n d : A t th e inception o f m y w o rk som e
th re e y e a rs ago, it w as d eem ed a d v isab le to o r ­
ganize a b u re a u o f c red its, a n d I m ay say th a t this
is probably th e m o st im p o rta n t c o n sid e ra tio n in
d e te rm in in g v a lu e s, a n d in e sta b lish in g any d e ­
p a rtm e n t o f e x a m in a tio n .
L oo k in g to th e e stab lish m en t o f th is b u re au . 1
first h a d filed w ith m e by each b a n k a list o f u n ­
secured lo a n s in a m o u n ts o f $5,000 a n d o v e r
U sin g th is as a ba sis fo r th e la r g e r b o rro w e rs, I
took into m y files, d u rin g th e c o u rse o f m y first
ro u n d o f e x a m in a tio n s , the n a m e o f e v erv b o r­
ro w er. in a m o u n ts o f $1,000 o r o v er. T h e se nam es
f applied to m y files, c o n tro llin g th em by an
e la b o rate fo rm o f in d ex , by m eans o f w h ich quick
re fe re n c e could be m ade to d e te rm in e w h e th e r an
in d iv id u al w as “d u p lic a tin g ” h is b o rro w in g s —
th a t is, b o rro w in g in m o re th an o n e ban k , a n d if
so. in w hat b a n k s. As ra n id ly as "d u p lic a tio n s"
in b o rro w e rs o c c u rre d , th ese b o rro w e rs w ere
tr a n s fe rre d fro m th e o rig in a l file, to a file o f
 w hat I te rm 'd u p lic a te d b o rro w e rs,” a n d 1 m ig h t
s.-iv incidental!,v th a t th is file now c o n ta in s som e
http://fraser.stlouisfed.org/
th irtv -liv p t’” " d r e d nam es.

Federal Reserve Bank of St. Louis

^ ^ ^ ^ ^ ^ c o m p i e t i o i ^ o ^ h i ^ r e c o n w u t e r mv
first ro u n d o f e x a m in a tio n s , 1 a ssu m ab lv had in
m y files th e n a m e o f ev ery b o rro w e r a p p e a rin g in
o u r banks, and in case he a p p e a re d in m o re th a n
o n e b ank, a Com plete re c o rd o f his b o rro w in g s
a t th e tim e o f m y e x a m in a tio n , sh o w in g in ju s t
w h a t b a n k s a n d in ju s t w h a t a m o u n ts, a n d also
th e n a tu re o f th e lo a n s— w h e th e r d ire c t o r in ­
d ire c t, w h e th e r se c u re d o r u n se c u re d , a n d if se­
c u re d , how . I t - r e q u ir e d so m e th irty m o n th s to
co m p lete th is re c o rd . A t ib is p o in t I elim in a te
fro m c o n sid e ra tio n th e o rig in a l sin g le n a m e file,
as th is is no w u se d only to in d e x new n a m e s a n d
to a ssist m e in p ick in g up new d u p lic a tio n s as
th e y o ccu r. In o rd e r, h o w e v e r, to keep th e re c ­
o rd c u rre n t. I a t o nce a rra n g e d w ith e a c h b an k
to file w ith m e w eekly a list o f th e na m e s o f all
new b o rro w e rs o c c u rrin g d u rin g th a t w eek, and
th ese a re applied re g u la rly to inv in d ex , thereby
k eep in g m y re c o rd co m p le te a n d up to date.
It is th e m an w ho is b o rro w in g fro m tw o o r
m o re b a n k s in w hom , n a tu ra lly . I am chiefly in ­
te re s te d ; c o n se q u en tly 1 use th e “ d u p lic a te d b o r ­
ro w e rs " tile a s a ba sis o f o p e ra tio n s.
T o th is end. I h a v e co m p iled loose le a f re c o rd
books f o r the use o f each bank. T h is book c o n ­
ta in s a p a g e fo r each " d u p lic a te d b o rro w e r” w ho
is b o rro w in g f ro m th a t p a rtic u la r bank.
T h e re a re th ir ty - tw o b a n k s c o m in g u n d e r my
e x a m in a tio n , a n d c o n se q u en tly I h a v e tiled th irtv
tw o books. At ir re g u la r in te rv a ls th ese b o o k s are
d e liv e re d by m e to th e v a rio u s b an k s w ith the
re q u e st th a t they a d v ice m e th e s ta tu s o f each
b o rr o w e r ’s lo an s a n d d isc o u n ts as o f a specific
date. W h e n th is is co m p leted , th e b o o k s a re r e ­
tu rn e d to m e a n d th e d a ta fro m each b an k is
p o sted to a c o n tro llin g re c o rd c o n ta in in g th e nam e
o f everv d u p lic a te d b o r ro w e r in all o f the banks,
a n d w hen th is p o stin g is com p leted . I h a v e a
sta te m e n t o f th e to ta l, a n d th e n a tu re o f the
borrow ings o f each in d iv id u a l on th e sam e specific
date.
In th e c o u rse o f m y e x a m in a tio n s a t th e p re s­
ent tim e, m y a n a ly sis o f th e lo a n s a n d d isc o u n ts
is r e fe rre d to th e " d u p lic a te d b o rro w e rs " file,
a n d w hen a d u p lic a te d b o rro w e r a p p e a rs, I f o r ­
w a rd a n in q u iry as o f th e d a te o f m v e x a m in a ­
tion. to each o f th e o th e r b an k s in w hich he is
b o rro w in g , a s to the s ta tu s o f h is lo a n s on th a t
d ate, on th e basis o f w hich I a g a in com pile the
a cc o u n t o n m y c o n tro l (e x h ib it B ), a n d in this
w ay b rin g fro m tim e to tim e th e s ta tu s o f each
d u p lic a te d b o rro w e r's lo an s d o w n to th e d a te o f
m y e x am in atio n .
U sed in co n n ectio n w ith m y e x a m in a tio n s a n d
re p o rts , I find this re c o rd o f in estim a b le value,
o p e n in g to m e as so u rc e s o f in fo rm a tio n , the
v a rio u s I a n k s in w hich a m an is d o in g business,
k e ep in g m e in touch, by p e rio d ica l re p o rts and
a c o n tin u in g re co rd , w ith th e flu c tu a tio n s in his
b o rro w in g s a t v a rio u s se a so n s o f th e y e ar, and
in d ic a tin g his tend en cy to e x p a n d o r to c o n tra c t
his field o f o p e ratio n s.
T h is is. I believe, a vital fa c to r to th e e x ­
a m in e r in d e te rm in in g th e c o n d itio n o f th e hank
itself, a n d its value a s a s o u rc e o f in fo rm a tio n
to th e banks, h e re to fo re u n k n o w n , c a n n o t be
o v e restim ated .
U n listed se c u rities is a n o th e r item th a t h a s re ­
q u ired c a re fu l c o n sid e ra tio n , a n d on w hich I
h ave fo u n d it n e ce ssa ry to e stab lish a c re d it
b ureau.
As in th e case o f lo an s, I h ave re ta in e d a re c ­
o rd ( c a rd sy ste m ) o f e v ery se c u rity , lis te d o r
u n liste d , fo u n d in th e c o u rse o f m y e x a m in a ­
tions. T h is re c o rd sh o w s th e n a m e a n d class o f
th e secu rity , the h an k s w h e re fo u n d , w h e th e r held
as an in v estm e n t o r as c o lla te ral, a n d if as col­
lateral. th e n am e o f th e b o rro w e rs p led g in g sam e
in each case. In a d d itio n , on u n liste d se c u rities,
a se p a ra te c re d it file is m ain tain ed , a s it is fo u n d
d e sirab le, a n d all d a ta in th e w av o f in f o r m a ­
tion a n d v a lu a tio n is com piled acco rd in g ly . On
each e x a m in a tio n . I file w ith th e c h ie f ex ecu tiv e
officer o f th e b a n k a list o f in a c tiv e a n d u n liste d
se c u rities, w ith a re q u e st fo r a v a lu a tio n on each,
to g e th e r w ith th e d iv id e n d ra te , w h en possible,
and such a d d itio n a l in fo rm a tio n a s is o b ta in a b le :
th is to be re tu rn e d to m e o v e r th e sig n a tu re s of
th e m em b ers o f th e finance o r e x e c u tiv e com m it
tee o r o f th e b o a rd o f d ire c to rs . I also reqttes
sta te m e n ts o f c o n d itio n a n d s ta te m e n ts o f earn

ind these are analyzed as a m eans <
ndependent judgm ent. You w onder if all o f tliis
s fo rth c o m in g ! You w ould be surprised and
'ra tified to see the results.
In the case o f local bonds, I, o f course, have
access to the records o f the trustee, and am
usually able to form definite opinions from an
analysis o f these.
\ o u will appreciate the value of such records,
Independent opinions from m any reliable sources
reflecting a know ledge of personnel and personal­
ity not otherw ise obtainable, and which is open
to a clearing house exam iner solely th ro u g h the
intim ate relation th a t ex ists between him and all
<»f the banks.
T h ere is one o th er point in the operation o f the
learing house exam iner which I do not wish to
overlook, and this is his re p o rt o f exam ination.
It has been repeatedly dem onstrated that
troubles in banks—losses, failures, defalcations,
etc., are attributable largely to the fact that the
directors a re not conversant with the bank's
affairs.
In his w ork, the clearing house exam iner assum
ably represents the clearing house, and it is true
that he reports to a com m ittee of the clearing
h o u se; this report, how ever, being generally con­
fined to a single statem ent o f fact as to w hether
he finds the bank in good and satisfacto ry con­
dition o r otherw ise, and only in case the report
i> "otherw ise” is any detail o f the bank’s affairs
im parted to the clearing house.
In my opinion, the chief strength o f clearing
house exam inations lies in the fact that the e x ­
am iner. unlike eith er the federal or state e x ­
am iners. reports his findings direct to the in­
dividual directors. I may say th a t it is one m at­
ter to fram a re p o rt for the use o f a distant
federal o r sta te officer who has absolutely no
know ledge o f the bank's affairs, and who acco rd ­
ingly does not know w hether y our report reflects
a com plete, o r a tru e and correct exhibit o f con­
ditions. or otherw ise, and it is quite another
m atter to fram e a report fo r exhibit to the offi­
cers and directors of the institution itself, who
unquestionably know m ore regarding its condition
and its intim ate affairs than an exam iner can
ever hope to know , and I may say that it is the
necessity o f this detailed report to the directors
them selves th at is the g r e a te r insurance of c are ­
ful and o f efficient w ork on the part of the e x ­
am iner.
T his rep o rt to the individual directors is also,
I believe, the stro n g e st fe atu re o f safeguarding
the bank's affairs th a t has been conceived. T he
exam inations and the a ttending reports are. neces­
sarily, o f a very technical and critical nature,
covering com pletely the details of organization,
an exhibit of all loans and lines of credit o f in­
vestm ents and collaterals, with a definite valuition o f same, an analysis and exhibition o f the
jank’s sw orn statem ent o f condition and s ta te ­
ments o f earnings and divideds. as filed with the
federal or state a u th o rities, a review of account ng m ethods, with recom m endations as to possible
im provem ents or additional m eans of safeguard,
tncl a general review o f ad m inistrative features,
a* reflected by the action and the records o f the
various officers, auditors, com m ittees and boards ,
I believe th at this ex h au stiv e and critical rjr
p<»rt covering every detail, filed direct with tjie
individual directors, and usually subm itted t*> ^
discussion with them or w ith a com m ittee of
the board, is the best insurance o f solvency. o<
good m anagem ent and o f correct m ethods: and
this is a ttrib u ta b le to the fact th a t the clearing
house e xam iner is a free agent, w orking on hi.own initiative, dependent upon his ow n ab ilit> and
his ow n efforts for the success o f his w ork and
o f his departm ent, untram m eled by the necessit>
of satisfying any superior and in a position t"
give suitable tim e to each case, to insure correct
findings and a com petent indisputable rep o rt of
same.
T o sum m arize, w hat effect will the federal re ­
serve act have on these e xam inations? T have
endeavored to outline the w ork o f official ex
anim ations as we have know n them in the past,
the proposed w orkings o f the federal reserve bank
dep artm ent o f exam in atio n and credits, and the
w ork o f the clearing house exam iner as it ex ists

todav.
T h e conclusions based on these considerhttp://fraser.stlouisfed.org/
ifion* n rt% nrobnblv obviotlS_
.
—— —

Federal Reserve Bank of St. Louis

I lie federal reserve act and the w ork o f the |
organization com m ittee are aim ed at high standarils. S tandards the necessity of which have been
forcibly im pressing them selves upon bankers,
legislators and laym en for years, and which re ­
sulted in HMJti in the establishm ent o f the pres­
ent system o f clcarintj house exam inations.
T h e operation o f the federal reserve banks un- ;
der these stan d ard s will be a long stride fo rw ard
in the accom plishm ent o f the ideal. It will m ean '
com prehensive surveillance.
om petent analysis
of conditions and values in hand, and an or- ’
ganization ably conducted, as effecting the in te r­
ests represented, namely, the governm ent, and the
m em ber banks. It will not. I believe, a t least in
the n e ar future, approach the standards attained
by the clearing house departm ents. T his ap­
proach m ust come, if ever, through a slow
process of m erging the many units in that large
organization, and through the rem erging o f these
with the m any units represented by the various
state departm ents o f exam ination, and even then
th ere will be a long avenue of approach still to
be covered.
I re fe r to the relationship th at exists between
the clearing house exam iner and the banks he rep­
resents. T h e faith the banks m ust have in him,
first to engage, and th en to continue his service.
T he intim ate knowledge thus accruing to him.
th a t is impossible o th er than by a continued se rv ­
ice in this one field, and a daily personal contact
th at will beget continued confidence.
H e is th e agent o f the banks them selves. T he
agent o f each individual officer and director. E x ­
hibiting to them the points of strength and of
w eakness in th eir ow n organizations, suggesting
corrections here and applying rem edies there,
sharing in their disappointm ents and in their suc­
cesses. It is a relationship akin to that o f a
fam ily physician, and one that they m ust, and
can, rely on in case o f trouble. And with-<*ll
he is the representative of their own org an iza­
tion. the clearing house! An organization de­
signed fo r m utual help and m utual protection.
Not a public official to be satisfied or appeased,
not a departm ent or a parent bank, but as I have
likened the exam iner to a family physician, so do
I liken the clearing house to the apothecary, who
will, when trouble comes, on a prescription given
through ,t thorough know ledge of conditions,
provide a panacea th at has so many times proven
a relief fo r individual cases, and a "cure-aH ”
when the panic plague was rife and all were in­
fected. and all o f the pow ers and resources o f [
the governm ent itself could not curb its sweep
of ruin.
O ne further consideration. W e must bear in
m ind th a t the clearing house departm ent o f e x ­
am ination is a local organ. T he departm ent, a s ,
designed in the various federal reserve banks, is
a g re a t sectional institution, covering many com ­
m unities and many sta te s—all possibly to be
m erged in one g re at national organization if the
plans of the federal reserve bank organization
„
oro rp il!7Of]
J
T h is organization will not m aterialize over
night, it will probably take som e years to de­
velop, and *hat through a slow er process of evo­
lution t l . I lia* characterized the developm ent of
the various clearing house organizations.

The Federal Reserve Act
B y CO L. J .

SU LLIV A N ,

P re sid e n t C entral N ational B ank and S uperior Savings & T ru st Co.
(D elivered T hursday, O ctober 20. be fo re the turc. m an u fa ctu rin g and in general developm ent
during the last h alf century ha? n o t been re ­
m eeting of G roup Six, at U pper S a n d u sk y .)
It is needless to assure you th at I have very inforced, how ever, by the im provem ent in the law
much appreciated the courtesy nf y o u r invitation governing national banks. T h a t the system was
to be guest here today, and having the o p portun­ inadequate to m eet the re-current periods o f tinan
ity afforded me to meet the active and progressive cial stringency is adm itted by all w ho have con­
bankers and business m en o f the counties com ­ sidered the question, and who have knowledge
prising Group Six, of the O hio B an k ers’ A sso­ o f what a financial system ought to be. T he finan­
cial'p an ic o f 1007. and the general disturbance in
ciation.
I am a th orough believer in the w ork which financial, com m ercial and industrial condition."
tiie Ohio B ankers’ A ssociation is accom plishing th roughout the country, a re yet fresh in onr
minds. M any bankers w ere com pelled to suspend,
and also the w ork being done bv the g ro u p m eet­
and business men w ith securities of good c h ar­
ings, in bringing the bankers o f certain commimi
ties together, and exchanging views on the dom ­ acter and am ple in am ount w ere em barrassed and
inant questions o f the day. A s “in terco u rse is the suffered severe loss th ro u g h th e ir inability to
obtain loans from th eir banks.
soul of progress,” I believe th a t bankers, as well
T he Cleveland C learing H ouse Association
as business men, m ust necessarily be b e tte r b a n k ­
issued over $4,000,000 o f so-called clearing house
ers and better men by a closer association and
better know ledge of th eir fellows. T h e asp eri­ I certificates, and the clearing houses of the c u n trv issued nearlv th ree hu n d red m illions o f such
ties of business will certainly be m oderated, and
subterfuges, for the extension o f credit to w orthy
the larger spirit o f “L ive and let live” m ust pre­
people.
vail.
It is tru e that th ere never was any «!• n b t about
As a basic principle, the best interests o f the
com m unity should at all tim e- dom inate the ac­ the character of the national bank notes, and nr
tions of good citizens everyw here, w hatever line u ■>rrv was created ii1. the m ind o f anv m an ar
o f labor in which thev may be engaged. T he edu­ “to the character of the money in w hich he wa?
cational w ork which is being done by bankers* paid. T he so-called federal reserve act which
associations and group m eetings m ust necessarily became a law on the 2:»rd o f Decem ber, injects an
prove of g reat value, not only to the business of entirely new condition into our banking and Cur­
j tanking, but to every departm ent of o u r in d u s­ rency system . The change from the national
trial and com m ercial life.
banking act to the federal reserve act was so
T he rapid developm ent of o u r country, together j sw eeping th a t it seems like en terin g into a new
with recent econom ical and financial legislation, 1century o f financial legislation
and the adjustm ent o f business thereto, have
N otw ithstanding its acknow ledged m erit by
opened up m any fields of activity, as well as many
new and vexatious problem s fo r solution. T o practical bankers as well as political econom ists,
solve these questions correctly will require strong, while the bill was pending in C ongress, it was
educated, patriotic men. T h e banker, in a sen-c; opposed m ost strenuously by the banking fra te r­
is the servant o f all o th er vocations—hence he nity of the country, m any of them predicting dire
m ust of necessity be the m ainstay of every well- disaster for the country in case it should become
governed com m unity. Tt is a pre-requisite o f a a law. S tran g e to say, how ever, those who were
successful banker th a t he shall possess m ature m ost vehem ent in denouncing the bill while it
judgm ent, keen discernm ent, and a com prehensive was
, " pending
'
j* in
11 Congress, are now am ong its
know ledge o f men and a ffa irs; th a t he shall he fo Lem ost ^ v o c aates.
T he federal reserve act provides th at a com ­
fam iliar with the elem ents which co nstitute credit :
m ittee consisting o f the S ecretary o f the T re a s ­
that he shall possess the faculty o f right analysis
ury. the S ecretary of A griculture and the Comp
o f propositions th a t require his consideration,
tro lle r o f the C urrency, shall co nstitute an o rg a n ­
and th a t he shall be a p atient and persistent stu ­
ization com m ittee fo r the purpose o t dividing the
dent of public sentim ent.
T h e president of one o f the leading colleges of U nited S tates into not less than eight n o r m ore
than tw elve districts, each d istrict to contain not
o u r countrv said in an address recen tly : “W hile
m ore than one federal reserve bank. As you
the banker h a s not been so conspicuous a figure
are aw are, the com m ittee decided upon twelve
before the w orld, as the soldier and the statesm an
districts, the federal reserve bank of one of such
be has m ade the achievem ents o f the soldier and
districts being located in Cleveland.
the statesm an possible bv bis nhilitv to
T h e law provides th a t every n ational bank of
inews of w ar to the soldier, a n d the m eans o f the
..... country
............. shall unite w ith the
,.««*. system inside of
accomplishing g reat stro k es o f sta te cra ft, bv the sixty days from the passage of the act. and shall
.tatesm an
subscribe to the capital stock in its district federal
W ith the know ledge of the tru th fu ln e ss o f this reserve bank to the extent o f fi per cen t o f its
sentim ent, gleaned from m any years of experi- ow n capital and surplus. O ne-sixth Cl-6) of the
ence, I am impelled to im press upon the young am ount subscribed is payable on c a ll: t-6 in thret
m en o f the country the necessity i «*r g re ater m onths and t-6 in six m onths; the rem ainder
p reparation in assum ing the responsibilities
being subject to call at the pleasure o f the F ed­
cident
bankers’ vocation.
___ to
__ the
_
eral R eserve Board. N o fed eral reserve bank.
In speaking to you todav. how ever, on the how ever, can be organized with less capital than
1 " not' u n d’ertak' e to
* g $4,000,000.
federal reserve act. T
I shall
into all the deep quagm ires o f bank notes and
T h e stockholders shall receive a dividend a t _
currencv, which, as was said In a distinguished the rate o f f> per cent ;>er annum , which dividend
gentlem an recently, “no m an could full} undershall he cum ulative
stand in this w orld or in the next.
Each call on m em ber banks fo r the pavment o f
T h a t conditions dem anded a revision o f our bank1 per cent on the capital subscribed, will require
ing and currencv system the people of this conn- from this federal reserve d istrict two millions
try are singularly in agreem ent.
I he national of dollars. T h e State ot O hio will contribute
bank act was passed in l*i»:> when our countrv $940,000, and the thirty national banks o f G roup
was engaged in the throes of the Civil W ar. and
Six will contribute ' i.ono.
in dire financial distress. Indeed, the governing
T he b ed eral Reserve Bank o f Cle eland, with
thought of the advocates of the law at th at tim e 7 67 national banks and a capital s t o c k o f nearly
was to provide a m arket for the bonds o f the g o v - $200,000,000. will have a subscribed capital of
ernm ent, and a l s o t o provide a currency national
nearly $ 12 ,000,000
in ch ara cte r to aid in carrying on th e w ar and the
T his district em braces
c o m m e r c e o f the country, l h a t the law was suited
I he entire S tate o f O hio with 37!) hanks and
to the tim es when it was passed, and th at its oper-- nearly $ 100 ,000,000 capital and surplus,
ation resulted in the m aterial advancem ent of
W estern Pennsylvania <including P itts b u rg h !,
our com m erce and industry will not be disputed, with ?*or> banks, having $00,000,000 capital and
T he w onderful grow th o f the c o u n try in agriculsurplus

F ifty -six counties of K entucky w ith 74 banks.
http://fraser.stlouisfed.org/

Federal Reserve Bank of St. Louis

having $m.,">no.000 capital and surplus.
F o u r co u n ties o f W e s t V irg in ia w ith 0 h an k s,
h a v in g $2.000,(ion cap ital a n d su rp lu s, m a k in g a
total capital and su rp lu s in th is d istric t o f $ 200 ,­
000,000.
T h e w ealth a n d g e n era l re so u rce s o f th is d is­
tric t gives us fo u rth place in the fed eral re se rv e
system , hein g su rp a sse d only by N e w Y o rk . C h i­
cago and P h ilad e lp h ia .
E v erv fe d e ra l re se rv e b a n k shall he co nducted
u n d e r th e su p erv isio n and c o n tro l o f a h o a rd of
nine d irec to rs, w hich h o a rd shall p e rfo rm all o f
th e d u tie s p e rta in in g to th e office o f b a n k d ire c ­
to rs. T h e svstem o f se lec tin g th e d ire c to rs is
specifically set fo rth in th e law , a n d is so m e w h a t
com plex as vou all k n o w w h o a re con n ected w ith
the n a tio n a l b a n k in g svstem .
T h e m em ber b an k s a re n riv ile ee d to select six
o f such d irec to rs, and th e F e d e ra l R e se rv e B o a rd
has the a p p o in tin g o f t h r e e : tw o o f th e la tte r
class, shall h ave teste d b a n k e x p erien ce, a n d shall
sever th e ir c o n n ectio n s w ith b a n k s in ev erv m a n ­
ner and fo rm . T h e b o a rd o f d ire c to rs shall anpoint all o f the officers o f th e re se rv e -b a n k s su b ­
je c t to the a p p ro v al of th e F e d e ra l R e se rv e B oard
at \ \ a shington.
T h e ex ecu tiv e officers o f th e b an k sh a ll he
know n as “G o v e rn o r,” a n d w ill, su b je c t to th e
h oard o f d irec to rs, h av e e n tire c h a rg e o f th e
bank.
T h e m em ber b an k s sh all keep re se rv e s w ith th e
re serv e bank in th e ir resp ectiv e d istric ts, th e
per cent o f re serv e s being re d u ce d fo r so-called
c o u n try b an k s fro m 15 to 12 p e r cen t o f th e ir
deposits. T h e re se rv e city b a n k 's re se rv e is r e ­
duced from 25 p e r cent to 15 p e r cent, a n d ban k s
in c en tral re serv e cities fro m 25 p e r c en t to IS
per cent.
T h e com bined n e t deposits o f all n a tio n a l b an k s
exceeds $7,000,000,000. T h e re se rv e re q u ire d to
lie k e p t in th e fe d e ra l re se rv e b a n k s w o u ld th e r e ­
fo re lie a b o u t $420,000,000, w hich a m o u n t m ay be
paid in in sta llm e n ts—2 p e r cen t f o r th e first y e ar
a fte r th e sy stem becom es o p erativ e, a n d 1 p e r cent
each succeeding six m o n th s up to 5 p e r cent. O nehalf o f such paym ents, h o w ev er, m ay be m ad e in
com m ercial p a p er acceptablc fo r re d isco u n ts.
T h e capital a n d su rp lu s o f all th e n a tio n a l banks
’ in the U n ite d S ta te s a m o u n ts to $ 1 ,800,000 ,000 .
•Six per cent o f this sum w o u ld p ro v id e $108,000,­
000 cap ital fo r th e fe d era l re se rv e b an k s. H a lf
o f this w ould be $54,000,000, w hich, as h e re to fo re
stated, w o u ld h av e to be paid in g o ld inside of
six m o n th s a f te r th e sy stem w ould lie p laced in
o p e ratio n .
.
T h e su b sta n tia l re d u c tio n in re serv e re q u ire ­
m en ts w ill m ake it com parative il*- easy f o r th e
ban k s to pay th e ir su b sc rip tio n s to th e capital
stock o f the re serv e banks. T h e 3 p e r cen t r e ­
duction on c o u n try b an k d e p o sits w ill re le ase
ab o u t $78,000,000; 10 per cen t re d u c tio n o n d e p o s­
its o f b anks in re se rv e cities, will re le ase n e arly
$200,000,000, a n d a 7 p e r c en t re d u c tio n on d e ­
posits o f c e n tra l re serv e cities, will a m o u n t to
a bout $ 10 0 ,000 ,000, m ak in g a to ta l o f $ 1178,000 ,000 ,
w hich w ill be re le ased fro m re se rv e re q u ire m e n ts,
a n d m ade available f o r lo a n in g p u rp o se s. A t th e
e n d o f th re e years, h o w e v er, th e b anks in re se rv e
cities a n d cen tral re se rv e cities, will lose som e
o f th is a d v an tag e , as th ey w ill, to som e e x te n t,
cease to be d epositories f o r re se rv e s o f o th e r
banks.
_
T h e com bined d ep o sits o f all n a tio n a l b a n k s in
D istric t N o. 4 a g g re g a te $850,000,000; $373,000,­
000 th e re o f being in re se rv e cities, a n d $477,000,­
000 being in so -called c o u n try b a n k s. T h e re d u ce d
re serv e re q u ire m e n ts will re le ase fo r re in v e stm e n t
o r re lo a n in g in th is d istric t n e a rly $ 5 2 ,000,000 .
T h e d e p o sits in n a tio n a l b a n k s o f G ro u p S ix
a m o u n t to $15,500,000. T h r e e p e r c en t re d u c tio n
in re se rv e re q u ire m e n ts, w ill re le a se $450,000 fo r
re lo a n in g p u rp o se s.
.
A fe a tu re o f th is a ct w hich m ay be o f especial
in te re s t to the m em b e rs o f th is g ro u p , is th a t sec­
tio n w hich a u th o riz e s all n a tio n a l ban k s e x ­
c ep tin g th o se in c e n tra l re se rv e cities, to m ak e
lo an s on real e sta te to an a m o u n t n o t to exceed
25 p e r cent o f th e ir cap ital a n d su rp lu s.
U n d e r th is p ro v isio n th e th irtv n a tio n a l b an k s
in G ro u p N o. S ix , w ith th e ir to ta l capital a n d
su rp lu s o f $3,300,000, will be e n ab led to m ak e

lo an s on fa rm lan d o r o th e r real e sta te in excess
http://fraser.stlouisfed.org/
o f $800,000.

Federal Reserve Bank of St. Louis

T h e to ta l a m o u n t a v a ila b le f o r su c h lo a n s in
th e C lev elan d d is tric t w ill be a p p ro x im a te ly $50,­
000,000, a n d f o r th e S ta te o f O h io a lo n e w ill
a m o u n t to $25,000,000.
O v e r th e e n tire sy stem , w ith a lm o st a b so lu te
c o n tro l, a n d a lm o st w ith o u t re stric tio n , s ta n d s
th e F e d e ra l R e se rv e B o a rd o f seven m en. T h is
b o a rd c o n sists o f th e S e c re ta ry o f th e T re a s u ry ,
th e C o m p tro lle r o f th e C u rre n c y , a n d five m em ­
b e rs a p p o in te d b y th e P re s id e n t o f th e U n ite d
S ta te s. T h is b o a rd w ill h a v e offices in th e city
o f W a s h in g to n , a n d w ill re ce iv e a s a la ry o f $12,­
000 p e r a n n u m . N o m e m b e r o f th is b o a rd shall in
any m a n n e r be id entified w ith b a n k s o f a n y kind.
T h e m em b e rs o f th e h o a rd a p p o in te d by the
P re s id e n t a re m en o f h ig h sta n d in g a n d u n ­
d o u b ted in te g rity .
In d e e d , it w ould be difficult
in th e e n tire c o u n try to find five g en tle m e n so
specially q ualified by n a tu re a n d tra in in g fo r the
d isc h a rg e o f th e a rd u o u s a n d m u ltif a r io u s d u tie s
w h ic h w ill devolve u p o n them .
T h e law also p ro v id e s f o r a fe d e ra l a d v iso ry
council to c o n sist o f o n e m em b e r fro m each o f
th e re se rv e o r so -called resrional d istric ts
uicu n icia in ye cn o seu i>y tne banks, m i s a d v is ­
o ry c o u n cil sh a ll m eet fo u r tim e s a y e a r in th e
city o f W a s h in g to n (1 ) to c o n fe r d ire c tly w ith
th e f e d e r a l R e se rv e B o a rd on g e n e ra l b u sin e ss
c o n d itio n s ; (2 ) to m ak e o ra l o r w ritte n r e p re ­
se n ta tio n s c o n ce rn in g m a tte rs w ith in th e j u r is ­
d ictio n o f said b o a rd ; (3 ) to call fo r in fo rm a tio n
a n d to m a k e re c o m m e n d a tio n s in re g a rd to d is­
c o u n t r a t e s ; re d is c o u n t b u sin e ss, n o te issues, re ­
se rv e c o n d itio n s in th e v a rio u s d istric ts, th e
p u rc h a se a n d sale o f gold o r se c u ritie s by re se rv e
banks, o p e n -m a rk e t o p e ra tio n s by sa id b an k s, a n d
th e g e n e ra l a ffa irs o f th e re se rv e b a n k in g sy s­
tem .
T h e n ew b a n k in g law is in te n d e d to b rin g ab o u t
th e m o b iliza tio n o f fu n d s w h e re th e y w ill do th e
g re a te s t g o o d : to in a u g u ra te a scientific system
o f re d is c o u n tin g c o m m e rc ial paper, w hich th is
c o u n try in tim e s p a st h a s sadly n e e d e d ; a n d to
p ro v id e f o r th e issu an ce o f e la stic c u rre n c y based
on re d is c o u n te d p ap er, a n d an a d e q u a te g old r e ­
serve. T h is, to g e th e r w ith th e n o te issu in g fe a ­
tu re o f th e law , w ill en ab le th e m e m b e r b an k s to
o b tain m oney a t all tim e s f o r all lau d a b le e n te r ­
prises. W h ile th e law w ill n o t be a g u a ra n te e
a g a in st tr a d e d ep ressio n , 1 th in k I am e n tirely
w a rra n te d in sa y in g th a t m oney p anics a n d all th e
a n x ie ty a n d lo ss in cid e n t th e re to , will n o t a n d
c a n n o t obtain .
It is to be hoped th a t the tr a n s itio n f ro m th e old
to th e n ew w ill be effected w ith o u t e m b a rra s sm e n t
to a n y one. O f n ecessity th e a b o litio n o f a fin an ­
cial system w hich h a s c o n tin u e d fo r fifty years,
a n d th e su b s titu tio n in its ste ad o f a n o th e r system
ra d ic ally d iffere n t, is c alcu la te d to cau se m o re o r
less d istu rb a n c e , a lth o u g h it now seem s a s if the
p a ssin g fro m th e o n e sta te to th e o th e r w ill be
acco m p lish ed w ith ease, a n d w ith o u t d is tu rb ­
ance o r e m b a rra s s m e n t o f th e b u sin e ss o f th e
c o u n try . W h e n th is p ro c ess h a s been co m pleted,
th e b u sin e ss w o rld w ill b re a th e m o re free ly , and
b u sin essm en w ill lie e n co u ra g ed to fo rg e ah ea d ,
firm in th e b e lie f th a t w ith th is b asic m a tte r o f
c u rre n c y re fo rm settled , th e re o u g h t to be sm ooth
sa ilin g fo r all tim e to com e.

S ir G e o r g e Cs M

m

,<er c e n t, o f t h e f a c e o f h is lo a n to
i Into a f u n d to g u a r a n t e e le n d e rs
ro m lo ss a n d to p a y e x p e n se s o f a d ­
m in is te r in g t h e fu n d . H e w ill re ce iv e
b a c k h is p ro r a t a s h a r e o f w h a t is le ft
fro m th e e n tir e 3 p e r c e n t, g u a r a n te e
fu n d , w h ic h Is a m u tu a l a f fa ir a p p ly ­
in g to th e p r o je c t a s a w h o le.

■ P la n .

L o n d o n e x c h a n g e c o n tin u e s In th e
4.90 n e ig h b o rh o o d . S ir G e o rg e P a ls h ,
t h e fe d e ra l r e s e r v e o o a rd a n d A m e ri­
c a n b a n k e r s t i m - M H bo n e a r a g r e e ­
m e n t on th e m e th o d o f d is c h a r g in g
th e A m e ric a n d e b t to E n g la n d a n d a l ­
lie d n a tio n s t h a t S ir G e o rg e h a s
c a b le d th e p ro p o se d p la n hom e. I t Is
u n d e rs to o d to in c lu d e w a iv e r o f c a s h
b y E n g la n d fo r th e p r e s e n t, a c c e p t­
a n c e s in d o rse d b y A m e ric a n b a n k s
b e in g ta k e n in s te a d , th e a c c e p ta n c e s
to r u n fo r p e rio d s a t th e e n d o f w h ic h
th e e x p o rts o f m e rc h a n d is e to th e
c o u n tr ie s c o n c e rn e d s h o u ld . h a v e e x ­
cee d ed o u r d eb t.
E n tr y o f T u r k e y In to t h e w a r h a s
h a d little e ffe c t o n s e n tim e n t h ere,
e x c e p t in w h e a t. T h e c e re a l Ju m p ed ,
on th e lik e lih o o d o f s e rio u s h a m p e r ­
in g o f R u s s ia n e x p o r ts b y w a te r a n d
h a s held Its g a lU J i i ; <•
4A 14
T h e B a n k of Bfcglfenct c o n ttn W B to
in c re a s e its g o ld s to c k . T h e L o n d o n
a n d N e w Y o rk s to c k e x c h a n g e s a r e
n o t o p tim is tic fo r e a r ly o p e n in g ; F r i ­
d a y m a r k e d th e n in e tie th d a y sin c e
th e c lo s in g o f th e e a s te r n b o u rse.
N e w s e c u ritie s , m o s tly s h o r t te r m
goods, a r e b e g in n in g to c o m e to m a r ­
k e t. J u d g e G a r y , a t th e c o n v e n tio n o f
ste e l m en in B irm in g h a m , m a d e a
ro u s in g s p e e c h f o r b u s in e s s p ro s p e c ts
in th e lo n g e r v ie w , a n d p re d ic te d b e t- i
t e r b u s in e s s in th e n e x t th r e e m o n th s I
t h a n in t h e l a s t th re e .

Banks

D rew

6 P e r C en t.

A ll b a n k s c o n tr i b u t in g to th e fu n d
w ill re c e iv e p a r ti c i p a ti n g c e rtific a te s
b e a r in g 6 p e r c e n t, i n te r e s t. B a n k s in
n o n c o tto n p r o d u c in g s t a t e s a r e to s u p ­
p ly $100,000,000 a n d a r e te rm e d C lass
A s u b s c rib e rs , t h e 'e n t i r e p r o je c t b e in g
c o n d itio n a l u p o n $100,000,000 b e in g
su b s c rib e d b y in s t it u t io n s so lo cated .
B A N K S CLO tffc

3 a n k s in c o tto n p r o d u c in g s t a te s a re
cerm ed C la s s B s u b s c rib e rs . I n th e
u ltim a te p a y in g off o f th e o b lig a tio n s
th e n o r th e r n b a n k s w ill be fa v o re d ,
in th e r a ti o o f $2 to $1, in h a v in g th e
o b lig a tio n s to th e m d is c h a rg e d , u n til
C la ss A a n d C la s s B h a v e th e s a m e
a m o u n t o f p a r tic ip a tio n c e rtific a te s
o u ts ta n d in g .
1 T h is in ro u g h is t h e c o tto n lo a n
V la n , th e th ir d “ p ool” a r r a n g e m e n t to
w h ic h N e w Y o rk b a n k s a n d th e se c ­
o n d to w h ic h C le v e la n d b a n k s w ill
h a v e c o n tr ib u te d sin c e th e w a r b e g a n .
S p o t J u m p * In \ e w

fr ic e of Staple Jum ps
Planters See Lining of
Their Cloud.
B V H . S. R O S E N T H A L .

C le v e la n d b a n k s y e s te r d a y a g re e d
to s u b s c rib e $2,000,000 to th e c o tto n
lo an fu n d .
T h e lo cal in s titu tio n s th u s w ill c o n ­
tr ib u te t h e i r s h a r e to th e $135,000,000
w hich th e fe d e ra l re s e rv e b o a rd in
W a s h in g to n is m a k in g u p to reliev e
1 he s o u th fro m t h e p re s s u r e o f i ts c o t­
to n c ro p s u rp lu s .
T h e c o n tr ib u tio n w ill go to a c o m ­
m itte e to b e a p p o in te d b y th e fe d e ra l
re s e rv e b o a rd , a n d th is c o m m itte g , will
a p p o in t c o m m itte e s in th e c o tto n
s ta te s t h r o u g h w h ic h i t w ill a c t.
O w n e rs o f c o tto n m a y b o rro w fro m
th e fu n d th r o u g h s o u th e r n b a n k s , th e
b o rro w e r p r e s e n tin g c e rtif ic a te s r e p ­
r e s e n tin g w a re h o u s e d in s u re d c o tto n .
T h e c o tto n fig u re s a s s e c u r ity a t 6
c e n ts a p o u n d f o r m id d lin g , a n d th e
b o rro w e r m u s t g iv e h is n o te b e a r in g
-! p e r c e n t. I n te r e s t a n d r u n n in g n o t
lo n g er th a n a y e a r ; d e s ig n a te d m e m ­
bers o f th e fe d e r a l r e s e r v e b o a rd m a y
ex ten d th e n o te s to c ...s ix _ in o n th s in
th e ir d isc re tio n .
H o w S o u th e rn B a n k s S u b s c r ib e .

P ro s p e c tiv e b o r r o w e r s m u s t a c t i
th ro u g h b a n k s a n d e a c h b a n k th u s
a p p ly in g fo r a lo a n f o r i t s c u s to m e r
m u s t its e lf s u b s c r ib e to t h e $135,000,­
000 fu n d to th e e x te n t o f 2 5 p e r c e n t,
o f th e a m o u n t o f t h e lo a n h e is a p p ly ­
in g fo r. T h e b o rro w e r m u s t p u t u p



i

O ’C L O C K .

All Cleveland b a n k s w ill close to ­
d a y a t 1 o'clock, .a s election d a y in
Ohio h a s been m ad e a p a rt legal
holiday.

j

Agree to Contribute to < M
Relief Fund at W ash ­
ington Request.

UNION NATIONAL
SIDENT

O r le a n s .

N ew Y o rk b a n k s w ill f u r n is h $50.­
000,000 to th e p r e s e n t fu n d , C h ic a g o 's
s h a r e w ill be $20,000,000, P h ila d e l­
p h ia 's $10,000,000, B a ltim o r e ’s $2,­
500,000. T h e s w if tn e s s o f th e p la n 's
p ro g re s s, to g e th e r w ith d a y ’s big
sh ip m e n ts o f c o tto n to c ro s s th e sea,
s e n t m id d lin g s p o t u p 3 -8 c e n t a
p o u n d in N e w O rle a n s y e s te r d a y to
a n e w h ig h fo r th e tim e o f 7 1 -1 6
c e n ts . L iv e rp o o l so ld G,500 b a le s of
A m e ric a n c o tto n , m a k in g th e la r g e s t
tr a n s a c tio n s fo r a d a y in o v e r th r e e
m o n th s . T h e c o tto n e x c h a n g e s th e r e
a n d in N e w Y o rk w ill o p en N ov. 10,
a n d th e w h ite e le p h a n t is b e in g lifte d
fro m th o s o u t h ’s h a n d s .
T h o c h ie f
c lo u d in th e e n tir e in te r n a tio n a l s i t u ­
a tio n is b e in g d is s ip a te d .
M o ra to riu m

E n d s T o m o rro w .

E n g la n d 's m o r a to r iu m e n d s to m o r­
ro w , w h e n th e d e b ts o w in g u s w ill be
p a y a b le . T h is, w ith th e c o tto n m o v e ­
m e n t, sh o u ld p ro d u c e a d e c lin e in
s te r lin g e x c h a n g e . C a b le s a n d s ig h t
d r a f t s o n L o n d o n c lo sed in th e n e ig h ­
b o rh o o d o f 4 .9 1 1 -4 a n d 4 .9 0 1 -2 r e ­
sp e c tiv e ly , b u t l it t le c h a n g e d fr o m
S a tu rd a y .
N e w Y o rk b a n k e r s a r e o ffe rin g
lo n g tim e lo a n s a t 6 p e r c e n t., w i t j
b o rro w e rs h o ld in g off fo r lo w e r ra te s .
T h e c o n tr o lle r o f t h e c u r re n c y b e­
lie v e s t h e c a ll lo a n m a r k e t sh o u ld b e
e a s ie r t h a n it is, a n d y e s te r d a y w ire d
a ll n a tio n a l b a n k s in t h a t c ity to
a n s w e r w h e th e r th e y h a v e la te ly
b e en c h a r g in g m o re t h a n 0 p e r c en t,
on c a ll lo a n s se c u re d b y s to c k s a n d
b o n d s a n d th o s e t h a t h a v e been
d o in g so a r e to a n s w e r w h y .
T h e d a y ’s n o w s to ld o f m o re re d u c ­
tio n s in p ric e s o f ste e l. T h e S t. P a u l
r a ilr o a d is s u e d i ts S e p te m b e r re p o rt,
w h ic h w a s r e fr e s h in g
in t h a t i t
sh o w e d a h a n d s o m e n e t In c re a se .
C a b le s re p o rte d G e rm a n y a b o u t to
m a k e a $50,000,000 w a r lo a n to T u r ­
k e y , a n d H o lla n d a b o u t to float a
$15,000,000 is s u e a t 5 p e r c e n t fo r
h e r o w n n e e d s— tw o m o re little e v i­
d e n c e s o f th e fo re ig n c a p ita l d e m a n d
w h ic h h a s s p re a d to th is c o u n tr y a n d ,
w ill b e h e r e m o re v ig o ro u s ly a s thfe
w eeks go by.
T h e L o n d o n s to c k e x c h a n g e w o rk s
to w a r d re o p e n in g , w ith th e B a n k of
E n g la n d b e h in d it.
G r e a t B r ita in
h a s r e m o v e d r o s in a n d .tu r p e n tin e
fro m th e c o n tr a b a n d lis t, a n d m u c h
o f th e s e n a v a l s to r e s is ^ jg j^ u n g in
th e s o u th fo r s h ip m e n t a n ro a rt. T h e
p r e s e n t w a r In s u r a n c e
r a te s
m ay
lesse n th e b e n e fits to flow fro m th e
B ritis h

t £ eo £& e A C o u lt o n
D ire c to rs of th e ' ’ tH i'iln ^ la ^ i al
b a n k y e s te r d a y elected G eo rg s A .
C o u lto n p re s id e n t of th e in s titu tio n .
M r. u o u lto n m o v es u p fro m th e vice
p re sid e n c y a n d in h is n ew p lac e s u c ­
ceed s E . R. F a n c h e r, now g o v e rn o r of
F e d e r a l R e se rv e b a n k of C leveland.
W . E . W a n ii-a a flh ie r of th e U nion,
w a s m a d e v ice p re s id e n t a t y e s te r ­
d a y s m e e tin g o f d ire c to rs .
W . C.
S a u n d e rs, a s i s t a n t c a s h ie r, w a s m a d e
c a s h ie r. E . E . C resw ell c o n tin u e s a s ­
s i s t a n t c a s h ie r, b u t b ecom es firs t a s ­
s is ta n t. T h re e o th e r m em b e rs o f th e
s ta f f w e re m a d e a s s i s t a n t c a s h ie r s —
F . W . C ook, A. E . C h ris tia n a n d C F
M eade.
T h e d ir e c to rs m a d e W a rre n S. H a y .
den , o n e o f th e ir n u m b e r, th e c h a ir ­
m a n o f d ire c to rs .

C a llin g - N e w

M oney.

A g r e a t d e a l is s a id th e s e d a y s
a b o u t th e c o m in g s c a r c ity o f c a p ita l
t o be in v e s te d in A m e ric a n b u sin e ss.
E u ro p e a n g o v e r n m e n ts a r e e a tin g up
t h e s a v in g s o f t h e i r p eople; E u ro p e a n
in v e s to rs w ill n o lo n g e r p o u r fu n d s
in to A m e ric a n e n te rp ris e s , a n d A m e ri­
c a n b u sin e ss w ill find i t d ifficult to
fin a n c e o n a d e q u a te sc a le . T h is view
o f th in g s m a> o r m a y n o t b e c o rre c t.
A s su m e fo r th e s a k e of a r g u m e n t t h a t
i t is. T h e n it is tim e t h a t A m e ric a n
b o n d h o u se s b r in g in to th e in v e s tm e n t
field m o n ey t h a t h a s n e v e r e n te re d it
d ir e c tly b e fo re — th e m o n ey of th e
" little p e o p le ” — w h o se fu n d s c a ll for
b a b y b o n d s.
T ru e , p a r t of th is .c a s h goes in to in ­
v e s tm e n t c h a n n e ls th r o u g h th e s a v ­
in g s b a n k s , b u t n o t a ll o f it. T h e s a v ­
in g s b a n k w ill n o t ta k e k in d ly to a
b a b y b o n d m o v e m e n t Is o n e o b jec tio n .
T h is is o p e n to q u e stio n . T h e b a n k s
a r e w illin g to e n c o u ra g e e v e ry m e a n s
o f a c c u m u la tio n . M o re o v er, th e y c an
sell b o n d s th e m se lv e s , a s m a n y a re
d o in g h e r e a n d in o th e r c ities. A n d
r s b a n k s a re h e a v y in v e s to rs in
A m e r ic a n e n te r p ris e r, th e y w ould
b e n e fit fro m th e a b ility of th o se e n ­
te r p r is e s to fliVUCfi
i3i||fl0 AP'ble
r a t h e r th a n e x c M fw rit c o st. j |M l m
Is s u e o f s ta ttF V m l n a tio n a l T A nks
c a lls y e s te rd a y f o r c o n d itio n a s of
O ct. 31, m a r k s t h e d e s ire o f th e offi­
c ia ls t o k n o w t h e p re c ise s t a t e o f f
f a ir s j u s t b e fo re th e f e d e r a l

BANK OFFICER
MOVES HIGHER

F o r th e n in e m o n th s g ro ss w a s
$268,900,000, a d e cre ase of $23,900,(XX). W hile in th is p eriod th ere w as
a re d u ctio n in expense of .$21,S0G.000,
of w hich $10,000,000 w a s in m a in ­
ten an ce, th e $52,700,000 n e t show s
a de cre ase o f >$2,200,000 fro m t h a t of
the period la st year. T he upkeep
charges in 1913 w ere ab n o rm ally
high, w hich m akes th is y e a r’s re d u c ­
tion the easier.
Tho m an ag em en t
h a s seen no reason to c u t dividends
anyw ay, a n d the in v estm e n t w orld is
saved a blow.
T he B ritish m o rato riu m ends to d ay
and until is seen how n e arly the d e ­
layed d e b ts a re discharged th ere will
be suspense in th e E nglish and the
A m erican financial d istricts.

TO RETIRE CLEARING
HOUSE CERTIFICATES
R .P 'S e a b s
Roacoe P. Sears, auditor of the CleveIafW WB.licTiai Sank, has been promoted
to the position of assistan t cashier. Mr.
Sears takes the place of Joseph A.
W ard, who will tak e an im portant post
with .the Federal Reserve B ank of
Cleveland.
•
Mr. Sears has been associated with
tho Cleveland N ational nine years.
P rior to his connection with this Insti­
tution, he was cashier of an Adena
(Jefferson county) National Bank, and
previous to his taking th a t place,
served in the office of his father, then
treasu rer of H arrison county.
Mr. Sears is active In the affairs of
Cleveland Chapter, American Institute
of Banking, and is widely known among
the bankers of the city and the state.

u s G o ld f > * r f e r v e r .

T he En^ifSff are now c la m o rin g for
•A m erio*fTeggs. A C hicago d isp a tc h \
stat«K t h a t a B ritish b u y e r h a s a r - 1
ra n g e d to b u y all a v a ila b le cold sta r- |
Sige eggs in th a t city, h a v in g m ade an
in itia l p u rch ase o f 50,000 dozens.
T h e A m e ric an lien jo in s th e fedeni!
re se rv e board and S ir G eorge B aish
a s a solver of foreign e x ch a n g e p ro b ­
lem s a n d a s a co n serv er of o u r gold.
P r o b le m

l » H o w to I '« e C a s h .

V O fficers of th e fe d era l re serv e
bank* a re w restling: w ith a p r o b l e m w h a t to do w ith th e gold flow ing into
th e ir v a u lts now, w ith th e b a n k s not
to open fo r b u sin e ss u n til N ov. lt>.
T h e Clffi e la n d b a n k , fo r Instance,
■holds ;|V lit $2,<X>0.000. w h ich m u st
re m a li. luie fo r a b o u t tw o w eeks, as
th e iiank officers see th e law . A t <i
p e r cent, a y e ar, in te re s t fo r tw o '
w e ek s on th is su m w ould be $4,6].".
W h a te v e r the loss c an be figured a t,
th e b a n k ’s officers p ro b a b ly w ill m ake
n o a tte m p t to s t a r t th e new b a n k in g
sy ste m piecemoal.
C o n tro lle r of th e C u rre n cy W il­
lia m s haa urged th e c le a rin g house
a sso c ia tio n s of th e la rg e c ities to re ­
t i r e a ll c le arin g h ouse c e rtific a te s be­
fo re th e federal re se rv e b a n k s open
fo r bu sin ess N ov. 16.
R e c e n t re p o rts to th e c o n tro lle r in ­
d ic a te d t h a t a b o u t $50,000,000 of
th e s e c ertific ates a r e o u tsta n d in g .
N o n e w ere issued h e re .
T he P e n n sy lv a n ia r a ilr o a d s y ^ e m
re p o rts fo r S e p tem b e r r r o s s of
588,000, a d e cre ase o f $2,700/)00. H ut
as w e re c u t sc d ra stic a lly ,
„ y in m a in te n a n c e , t h a t n e t inDigitized*ed
for 1204,000
FRASER o v e r th e m o n th la st



Comptroller Williams Asks for
United Action in Eliminat­
ing Emergency Paper,
r 1v —

The next step In the path of financial
rehabilitation is the elim ination of the
clearing house certificate. Comptroller
of the Currency W illiams yesterday
sought to bring pressure to bear on all
of the clearing house associations of the
country to retire their certificates be­
fore the federal reserve banks open on
November 16.
The am ount of ciearTfffr house certi­
ficates now outstanding is about $50,­
00,000. T heir retirem ent m ight not only
have a wholesome sentim ental influence
on the business community a t large,
but also give a clearer line on the
banking position, which Is now rather
beclouded because of fhe presence of
certificates and emergency currency.
The retirem ent of the clearing house
certificates would no doubt give a clear­
er Insight into w hat the “average" su r­
plus of the New York banks of $15,000.­
000 actually stands for.
But for the
presence of these unnatural symptoms
of a befuddled finance the banks’ excess
of cash over legal requirem ents would
Indeed he encouraging—It is encouraging
in a modest degree—for it Is the largest
for this season In ten years, except 1908,
when the amount was slightly more
than $30,000,000 The general average for
November 1 has been betw een $7,000,000
and $10,000,000.
The letter of Charles F rancis Adams
to President Wilson on the subject of
railroad ra te s has attracted attention all
over the country. It is the strongest
argum ent, taking Into account the in­
fluence of the writer, th a t has so far
been presented. It comes, too, a t an
opportune time, for there are strong in­
dications th a t the In terstate Commerce
Commissioners are not Impressed with
the necessities of the railroads and have
already reached tite conclusion th at
their case for higher rates was not es­
tablished.
The falling off in im portj from Europe
is reflected In the governm ent's Income
figures for October. Customs receipts
were 514.000,000 less than during the cor­
responding month of 1913. In Septem ­
ber the decrease was $9,500,000. The fig­
ures are capable of favorable as well
as unfavorable construction. The de­
crease was due, of course, to E urope’s
Inability to ship to this country in nor­
mal volume and to the falling demand
here in consequence of the trade and
Industrial retrogression.
On the other hand, the decrease In
customs receipts points to an early re­
turn to norm al in the foreign exchange
m arket, fo r the heavy volume of ex­
ports from this country is furnishing
the nucleus for a trad* balance th a t
eventually will take care of a goodly

portion it uoi an oi our ueui aoroaa.
Y esterday, election day. all of the im
p ortan t official and unofficial m arkets
of the country w ere closed.

IbDERAL BANK HEADS
INVITEDTO LUNCHEON
First National O fficials to
Hosts on Opening of U.
S. Institution.

Be

GovenfehMB. i t . F a n c h e r a n d d i­
re c to rs of th e F e d e ra l R e se rv e lia n k
of C lev e lan d w ill be th e g u e sts of
h o n o r a t a lu n c h e o n giv en by th e
F i r s t N a tio n a l B a n k a t tlie H otel
fetatler.
In v ita tio n s a r e b e in g se n t
to th e officers o f th e TtiT n a tio n a l
b a n k s in th e d istric t.
J o h n S h e rw in , p re sid e n t o f the
F ir s t N a tio n a l, w ill preside.
T h is e n te rta in m e n t w ill m a r k th e
o p e n in g (lay of th e F e d e ra l R eserv e
B a n k . P r io r to a n d a f te r th e lu n c h ­
eo n , th e a rm y of b a n k e rs w ill visit
th e new re se rv e b a n k in th e W il­
lia m so n b u ild in g .
T h e d ire c to rs jo in in g P re sid e n t
S h e rw in in issu in g th e F ir s t N a tio n a l
B a n k ’s in v ita tio n a re :
C h a rle s E.
A dam s, W. D. IS. A lex an d er, F ra n k
A. A lte r, G eorge B a rto l, G eorge N.
C h a n d le r, H e n ry A. C hisholm , L. A.
C obb, G eorge P . Com ey, H e n ry W.
C orning. M. B. D aly, E. F . D yer, H.
C. E llison, C. E . F a rn s w o rth , H . M.
H a n n a , J r .. R . A. H a rm a n , \V. A.
H a rsh a w , F . H . H a se ro t, S. F . H asero t, H. R. H a tc h , K a u fm a n H ays,
F r a n k F . H ickox, F re d Jo sep h ,
H a rry L. K a u fm a n , G eorge W . K in ­
ney. J o h n A. K ling, J o s e p h II.
K ra u s, M. A. M a rk s, J o h n M itchell,
H a rry New, S. L. P ie rce , J o h n L.
S everance. S. L. S ev eran ce, II. A.
S h erw in . J. C. W allace, D. R. W a rin i ngton, W in d so r T. W h ite, T h o m a s
S. W ilson and F re d J . W o o d w o rth .

t io r n l

C le v e la n d .

T he b a n k ers o f L ex in g to n , K y.. a re
loyal to C leveland. St. L ouis h a s been
plead in g w ith th e m to Join th e m ovo.
n ien t for secession from th e C leveland
federal reserve b a tik ra n k s, but L e x ­
ington is satisfied a n d h a s tu rn e d
th em down.

FEDERAL BANK HERE PREPARING TO OPEN
.
•■jfJ M i s t

im.

«_

7t /

I#

.

■

v

HANDLE $2,000,000
IN YELLOW GOLO
N oy-,— ■

Federal Reserve Bank Teller
Counts and Weighs
Heaps of Coin.
Wide Range Permitted in
Merchant Paper to be
Discounted.
*

C leveland, as
rid o r, p re se n ts a view rad ically
d iffere n t from a n y o th e r bank. The
fa c t t h a t m ore th a n TOO b an k s and
th e g o v e rn m e n t have pot to g e th e r
to form it h a s n ’t prevailed on the
re serv e b an k officers to do a n y u n ­
usual deco ratin g . T he p ic tu re s show
one side of th e in s titu tio n —also
T eller E l b e r t ^ ^ C j ^ e r , th e m an who
h a s welgfHi'cT' "an'T ToiYnted .*2.01 K1,000
in gold cftin, one piece a t a tim e in the
la s t w eek. T he coins w ere $20, $10,
$5 a n d $-.50 pieces a n d Mr. C a rte r
h a d to pick o u t those w orn b y use.
T h e b a n k q u a rte rs , in th e W il­
liam son building, first floor, is a busy
place. G ra d u ally the sta ff is being
e n la rg ed , b u t m an y a p p lic atio n s to?
p lac es h a v e not been a cted upon id
y et. T he a d d in g m achines, card in- j
dcxes, loose l«mf.
aud
i
p a r a p h einnlifi wiTl a rriv e soon*




"fe L L E ft C A R T £ R ^ W E I6 H IN 6

6 0 L D PIECES

’ ------------------ ; y

{t

;

t

Directors of the Federal Reserve
Bank of Cleveland will meet here today
to take furth er steps toward opening
the institution a week from next Mon­
day.
The gold paid by member banks on
their stock subscriptions is new pretty
well in, and Teller E lb e rtC ar^ > r has
been spending a solid week counting
and weighing gold coin. In th a t time
he has handled, piece by piece, nearly
$2 ,000,000 in double eagles, eagles, half
eagles and a few q u arter eagles or $2.50
pieces.
Banka sending in lightweight coin,
th a t is, coin th a t has suffered from
w ear beyond the governm ent’s stand­
ard for its own acceptance a t full
value, can have the coin returne to
them for exchanging a t the federal re­
serve bank’s expense if they do not de­
sire to m ake good on the basis of 4
cents a grain. The lightweight coin
Can be used over bank counters a t full
value.
The federal reserve bank will pay
expressage to return the coin to mem­
bers in recognition of the fact th a t
these member banks will have paid
charges on tho two shipm ents to the
bank. The federal reservo bank also
will assum e express charges for re­
serves shipped in when (he reserve
shifting begins.
Definition of commercial paper and
the discount rate to be charged by re­
serve banks on si.ch paper were under
discussion yestercbr- by*the federal re­
serve board in W ashington. No de­
cision was reacied, bu t any conclusion
reached detl nhg such paper will be
most broad end general In its term s.
It is protable th a t is the banks be­
gin discounting the boar 1 will deal
with various cases t'n*t fttoty come up.
The disc^ur.t ra te probably* v ill differ
in different sections’ cjf the country.

•eared to c o n trib u te
icial sa n c tio n , on th e g ro u n d t h a t
hey m ig h t experience th e sam e b o tn ir a s did th e steel c o rp o ra tio n in th e
Tennessee Coal & Iro n d eal, b u t
.heir sc ru p les a re a b o u t overcom e,
ttnte H a n k s R n p .

Institutions in
Borrowing
Center Strengthen Posi­
tion in Five Weeks.
Mp

n

a i jj

R F jy p a

Cleveland Nationals
Fall Merchandise Collec­
tions— Review.
B YV H . S. R O S fiJ P fmAI j.

The six ty -se v en c le a rin g ho u se
b a n k s in th e m etropolis h a v e red u ced
loans a b o u t $85,000,000 since th e b e ­
ginning o f O ctober. To th is e x te n t
c ustom ers in th e c h ie f lo a n m a r k e t
have lessened th e ir o b lig a tio n s to th e
banks—a n d tho b a n k s h a v e been
building up reserves, so t h a t th is item
Is now a b o u t $16,000,000 in pxcess of
the law 's 2 5 -p e r-c e n t.-o f-d ep o sits r e ­
quirem ent.
The b a n k s in creased th e ir re se rv e
$1,000,000 in th e w eek, n o tw ith s ta n d ­
ing th a t th e n a tio n a ls paid th e ir sto c k
su b scrip tio n in sta llm e n t in to th e fed­
eral re serv e sy stem in gold a n d t h a t
New Y ork helped finance th e sto ck
pay m en ts of b a n k s in o th e r p a r ts of
the co u n try . I n a ll th e c o u n try a b o u t
SI 8,000,000 w as paid in to th e re serv e
system .
#28,000,000 E m e r g e n c y N o t e s In .

N ew Y ork c ity in s titu tio n s re tire d
$12,000,000 em ergency c u rre n c y in th e
week, m ak in g m ore th a n $23;t> 0.000'
so fa r called a t t h a t c en te r.
D eposits of th e N e w Y ork cU ing
house b a n k s a r e now $1,023,000,000,
show ing in cre ase o£ $184,000,OOCk over
th o se of a y e a r ago, w hile lo a n s re
$2,144,000,000, sh o w in g in c re a ® - of
$235,000,000 o ver a y e a r ago. A t ’.eposits a re m ad e u p in s u b s ta n tia l1^ ”t
of loans i t w ill be seen t h a t m;
al
fu rth e r lo an re d u c tio n iet io ’’
W eek’s d a y a v e ra g e fig u res ,r
A,
above th ro u g h o u t.
'
•i t
B Ir W i n d

X-t W e e k s B a c k .

T he w eek ju s t p a sse d w a s t
tee n th since th e e x c h a n g e s
.1.
T h a t is th e w ay tim e is fig u re s
he
financial d is tric ts th e se d a y s
rein
th e d a y o f th e b ig w in d . In th e
course of th e la te s t w eek th e N ew
Y ork sto ck ex ch an g e le t it be know n
t h a t som e m ore re s tric tio n s w ould
be rem oved from tr a d in g In h igh
class secu rities. T h e B ritis h m o ra ­
to riu m ended a n d th e re w a s n o r e ­
sponsive q u iv er h e re .
T h e L iv e r­
pool cotton ex ch an g o reopened fo r
business in a lim ited w a y . T he N ew
York cotton e x c h a n g e p u t its e lf in
shape to open in a few d ay s, a n d h e re
a t hom e th e C leveland sto c k e x ­
change considers re o p en in g a w eek
from tom orrow .
T he election, n o tw ith s ta n d in g th a t
it did n o t p u t th e p a r ty in pow er
o u t of control, w a s seized u p o n in
W all S tre e t a s “a good om en ” fo r
business, a n d from se v e ra l p re v io u s­
ly u ltra m a rin e q u a r te r s th e re cam e
copious h in ts c f a b rig h te n in g o u t­
look.
P re s e n t c o n d itio n s a re of
course n o t due to th e election, th e
im proved te n o r h a v in g s e t In w eeks
before, w ith th« e a s in g of m oney in
loaning c en ters, th e in flu x o f fo rign c a lls fo r goods a n d th e ellm in a ion of ro u g h spots in th e c o tto n sitlation.
X ew E n g la n d b a n k e rs sh o rtly w ill
>e convinced th a t th e y c a n c o n trib u te
o th e $ 1 3 5 ,0 0 0 ,0 0 0 c o tto n lo an fu n d
v ith o u t v io la tin g th e law . a n d th e

http://fraser.stlouisfed.org/ und soon will be com plete. T h ey

Federal Reserve Bank of St. Louis

S ta te b a n k s a re se e in g benefits In
he fe d era l re se rv e system , a n d ab o u t
i h u n d re d r e ^ a U y h a v e applied for
n e m b e rsh ip . A c o n ^ fc itte e of th e fed­
eral re se rv e b o a rd is stu d y in g a p ro ­
posal to b ro a d en th e law in th e d i­
rection of re a l e s ta te loans.
The B a n k of E n g la n d a n d th e Im ­
perial B a n k of G e rm a n y re p o rt th a t
th ey hold $348,000,000 a n d $487,000,­
000 gold resp ectiv ely , to g e th e r n e a r­
ly 1 -1 0 of alt th e gold in th e w orld
above ground.
. . . .
Kreedom of L ondon fro m physical
invnsion c o n tin u e s re q u is ite to the
m ain ten a n ce o f b e tte rin g financial
conditions in th is c o u n try . No o th er
indicatio n of th is Is needed th a n th e
fa c t t h a t m ore th a n h a lf Ox a.11 o u r
E u ro p ea n tr a d e is now conducted
w ith E n g lan d , th e fin an c in g th ro u g h
London.
lose o f I n s u r a n c e .

O ur volum e of e x p o rt tr a d e d e ­
pends, too, on m a rin e in su ra n c e
-ates.
To S c a n d in a v ian ports_ th e
risk r a te is ra n g in g from 3 to 5 per
se n t.
F o r sh ip m en t to th e S outh
Pacific zone ra te s a re n o t q uoted, b u t
th e p re m iu m s p ro bably w ould exceed
10 p e r c en t. D a n g er in th e N o rth
se a a n d th e E nglish ch an n el keeps
r a te s in th e N orth A tla n tic zone h ig h ,
b u t su b s ta n tia lly low er th a n to S c a n ­
d in a v ia n p o rts. W hile th e fo reig n
p u rc h a s e r w ho needs m erc h an d ise
w ill see to it t h a t in su ra n ce c o st does
r o t p re v e n t h is g e ttin g it, h is b u y in g
pow er, o f course, flu c tu a te s w ith th e
H ow f a r th e m erc h an d ise ship p in g
, isk c o n trib u ted to y e s te rd a y 'a r i 8e in
L ondon exchange to 4.91 1-2 fo r c a ­
bles, it w ould be in te re s tin g to know .
over* i'mportts0 b of ^ ^ W O O O ^ t h l s
s lo u g h f a n d j N o v e S b e ? nwillf r pull u s
fu r th e r o u t unless tr a n s p o rta tio n b e ­
com es ap p rec ia b ly m ore h a z a rd o u s
C otton is e m ig ra tin g in fa ir, b u t n o t
n o rm al q u a n tity .
F a l l C o lle c tio n * Com ing: In .
Tfie
seven C leveland
n a tio n a l •
u anks w hich do the g re a t bulk of
th e co m m ercial bu sin ess here, have
accom plished a loan
red u ctio n or
SI,200,000 for th e week, an Increase
in d ep o sits n o tw ith s ta n d in g th is of
s :!44 0 0 0 . a n d a c o n co m itan t gain of
SI 207,000 in cash . T h ere a re now
com ing in to th e local in s titu tio n s the
first fa ll collections of v a rio u s in ­
d u strie s, in clu d in g k n it goods a n d
g a rm e n ts, b u t th e e asin g w ill n o t be
im pressive u n til th e end of a u tu m n .
Uv t h a t tim e th e fin an c in g of w in te r
a n d C h ristm a s b u sin e ss on th e p a r t
of C leveland re ta ile rs a n d w holesalers
will be n e a re r com pletion a n d collec­
tions b y C leveland m a n u fa c tu re rs will
be m o re the o rd e r of th e day.

B A N KERS W IL L BANQUET
NEW R E S E R V E O FF IC E R S
M em bers o f the'^ c fc v ii^ n rl^ iS d e ra l
re se rv e b a n k b o a rd a n d G overnor E.
R. F a n c h e r wHl be ten d e red a b a n ­
q u e t tom o rro w n ig h t a t th e U nion
C lub by local b a n k s.
Colonel J. J. S u lliv a n , p re sid e n t of
th e C e n tra l N a tio n a l B ank, is c h a ir ­
m an of th e c o m m itte e h a v in g th e a r ­
ra n g e m e n ts in h a n d .
T h e fe d e ra l b a n k d ire c to rs will
m ee t to m o rro w to com plete d e ta ils
in cid e n t to th e in a u g u ra tio n o f th e
fe d p ra l re se rv e sy s te m , w hich ta k e s
place n e x t M onday, N o v em b er 16. It
j is believ ed a d e p u ty g o v e rn o r w ill be
na m e d , a p o sitio n t h a t r a n k s second
to governor. Som e m in o r offices a re
e x p e c te d also to be filled.

Improvement Has Gone So
Far as to Remove Fears
of Stringency.
Sentiment Mixecl in ® ^ e e l,
Textile T ra d e s— Farm ­
ers Cheerful.
BY

H EN R Y CLEW S.

N E W YORK, Nov. 8.—T he m one­
ta r y situ a tio n show s ste ad y im prove­
m e n t a n d a progressive re ad ju stm en t
to w a r conditions.
T h e su rp lu s reserve o f th e clearing
h ouse b an k s show s ste a d y increase,
h a v in g risen la s t w eek to nearly
$10,000,000, com pared w ith a deficit
fo r the week of Aug. 8 of $43.000,000
th e low w a te r m ark. T h is is a gain of
$01,000,000. C learing house certificate*
a r e being g ra d u ally re tired , a n d con­
sid erab le su m s of th e V reeland enjorgency n o tes h av e been w ith d raw n in
a n tic ip a tio n o f the early opening of
th e federal re serv e banks, which in
d u e tim e will largyU ;,increase th e s u p ­
ply of lo an ab le funds.
T h ere is no longer a n y a p p re h e n ­
sions re g a rd in g th e m o n etary fu tu re.
C red it is g ra d u a lly ten d in g tow ard
n o rm al conditions, a n d ere long b u si­
n e ss will h a v e com pletely a d ju ste d i t ­
se lf to w a r conditions s n d will go on
m uch a s u su a l.
I t is e stim a te d th a t in O ctober the
excess of e x p o rts from th e U nited
S ta te s will re ac h a3 high a s $(>0,000,000, co m p ared w ith only $10,000,000 in
th e m o n th of Septem ber, a n d an ex­
cess of $20,000,000 in im ports in A u­
g u st. T h is is a re m ark ab le recovery
of o u r fo reig n tra d e to w h a t is n o r­
m al.
T he te n d e n cy to w ard revival In
d o m estic b u sin e ss is m ore pronounced
th a n a t a n y tim e since the w ar be­
g a n . T h is of course is m ainly due
to im p ro v e m en t in the credit s itu a ­
tion.
P e rh a p s th e m ost significant devel­
o p m e n t is th e m ore hopeful tone in ,
th e steel trad e . I t is tru e th a t pro- •
d u c tio n continues a t low w a te r m ark , i
a t considerably less tn a n 50 per c e n t .!
of c ap acity , and th a t p rice s a re very
low. N evertheless, c o nditions h ave i
im p a rte d a decidedly m ore optim istic
tu n e to steel m a n u fa c tu re rs, m ost of I
w hom a p p e a r to be convinced th a t •
depression
of th e in d u s try
has
reached its lim it.
In the te x tile tra d e s th ere h a s
been for n e a rly a w eek a feeling of
g re a te r confidence. T he im pression
h a s grow n t h a t v a lu e s have a b o u t .
touched botto m a n d th a t consum ption
is really a t a m inim um . T he woolen \
in d u stry is m ucl. exercised by in te r­
ference w ith its re g u la r supplies of
wool u n d e r w a r conditions, tho u g h on
th e o th e r h an d som e m a n u fa c tu re rs
have succeeded in c a p tu rin g large
a n d p ro fitab le w a r c o n tra c ts. '
In th e a g ric u ltu ra l sections, p a r­
tic u la rly in th e w h e at belt, th ere Is
no a b a te m e n t of th e hopeful feeling
en g en d ered by large crops. T he south
is n a tu r a lly disap p o in ted a t the low
p rice s of cotton, for w hich th e big
yield w ill only p a rtly com pensate.
R e su m p tio n of th e e x p o rt trad e , how ­
e v er, p lu s th e effo rts to finance th e
cro p th io u g h c o -o p eratio n h a s im ­
p a rte d im p o rta n t relief. A t no d is­
t a n t d a te th e c o tto n e x ch a n g t will r e ­
open, a n o th e r im p o rta n t step to w ard
re su m p tio n of n o rm al activ ities.

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Circular, in Out: i in.t F t i:
of

Institutions, C>i c•
W a r’s E " f :- " t on f.l

vs

ey S i t .
BIG R E TU R N S EX PI
FROM EUROPE,'.:' ; 0 a

At Same Timo F ;r< kn 0 •
American Sec'ir!tic-s " y
Ficcd iVK
W A SH IN G TO N .
11— Th
Scope o f t h e o p e r a t i o n
. i lv tw d v
fed eral re serv e b a n k s to be
fo r business n e x t M o n d a y ,
s titfined f o r t h e f i r s t r - \ m o n th s existence, in a c i r c u l a r i«yui .] t .. 1:i .
by th e federal r e s e r v e b o a rd .
F o r the p re sen t tho banks will no
exercise a ll th e function g iv e n th e n ,
by C ongress. T he bo
. < aicornr,.'
w ith th e d ire c to rs an 1 ^
r r . rth e tw elve in re ce n t confer-no*.- here
indorsed th is plan of nnf'ratiorns:
A cceptance of deposits of re serv e '
from m em b er banks.
D iscount of bills of e x c h a n g e a n ’
com m ercial paper.
A cceptance of d e p o sits of r hecks
d ra w n by m em bers b an k s on any re ­
serv e b an k o r m em b e r b an k ia a re ­
serve or c e n tra l r e s e rv e c i t y w ithin
th e ir fed eral Reserve d istric ts.
O th e r pow ers m a y be c a lle d in to
p lay a s th e e sta b lish m e n t of s a f e a n d
efficient o rg a n iz atio n p erm its.
In its c irc u la r th e b oard gave the
long- expected definition of com m er­
cial p a p er w hich is to be the life
blood of the new sy ste m , th e basis
fo r th e new federal res : ve c u rre n c y
a n d th e m eans by' w hich th e n a tio n s
c irc u la tin g m edium is e x p ected to
m eet th e expansions and c o n tra c tio n s
of tr a d e a n d iradi
7 Q
Rat/* to B e A nnotlnrrm .'^
T he r a te of redis*
,, v, as. not a n ­
nounced. T h i s .step j.n ; • jy w ill n o t
be ta k e n until Mond;i:
■ , X[( will
n o t be uniform in all ; • uiks.
T h e definition of cor
p a ; te r
is broad, and relies to a la r r d e g r e e
upon th e la n g u a g e o f t h e
irre n c y
act.
T h e board d e c l in e d a t t h e p r e s e n t
tim e t o d i s c u s s t h e q u e s t i o n o f d o u a i -.
and sin g le n a m e c o m m e r c i a l pap*
It did m a k e It exceedingly clear, ho
over, t h a t it h a d a p re fe re n ce fo r t ■
tw o-na*ne so rt, and le ft no room for
th e a u th o ritie s of th e b a n k s to d o u b t
t h a t it expected c are fu l in q u iry in to
o n e-n am e p a p e r p re sen te d to th em for
rediscount.
T he c irc u la r discussed t h o condi­
tions t h a t h a v e a ris e n h e r e and
th ro u g h o u t th e w orld th ro u g h th e w a r
a n d g a v e som e in sig h t in to th e
Digitized
forc FRASER
econom ic
h an g es w hich m ig h t L* oT.
http://fraser.stlouisfed.org/
p e cted a? a re su lt.

Federal Reserve Bank of St. Louis

" I t s n o u ld b e h '= rn e in m in d t h a t , ”
i t s a id , “ a l t h o u g h oi
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c ip le s . I n b r i e f *.r.cy a r c :
T h a t n o b ill s h a ll be a d m i t t e d to
re d is c o u n t b y l re s e rv e b a n k th e p ro ­
c e e d s o f w h ic h h a v e o r a r e to i-e a p ­
p lie d to a p e r m a n e n t i n v e s t m e n t .
M a t u r i t i e s o f d is » :o u n t< d b ills th e
b o a r d h o ld s s h o u ld b e w e ll d i s t r i b ­
u te d s o t h a t a r e s e r v e b a n k s h o u ld
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w h ic h
th o
b o a r d o > :,’a i n e d , m e a n s
t h a t t h e y s h o u ld n p o s e n t s o m e d i s ­
ti n c t s t e p in th e [ r I j c t i o n o r d i s ­
trib u tiv e p ro c e s s an d
be
of such
c h a r a c t e r t h a t U is r. a s o n a b l y s u r e
t h a t t h e y c a n b e < < ;:e e te d a t m a ­
tu r i ty .
In a d d i t i o n t o th
p r i n c i p l e s th e
h o a rd re q u ir e s th a t
. h p a p e r be
i n d o r s e d by th e m e n ’ , r b a n k o f f e r ­
ing it f o r r e d i s c o u n t ; t h a t t h e in lo rse r bank w aive d e m a n d n o tic e a n d
jr o te s t; th a t such p a p e r b e is s u e d o r
lra w n fo r a g r i c u l t u r a l , i n d u s t r i a l o r
;ornnu*rctal p u rp o se s o r t h e proceeds
>f w hich h a v e been so u s e d ; th a t if
n the fo r m o f a c c e p t a n c e s t h e y m u st
b a s e d on t r a n s a c t i o n s Involving 1

he im p o rta tio n or e x p o rtatio n of
roods, and h av e a m a tu rity of not
o n g e r th a n th re e m onths.

Association President Deliv­
ers Address at Annual
Meeting.

ElfSaMA;

Points Out
Reserve Act on
Loans.

At i..1',' an-UJal 111t ••t i l ij_; «>f T h e '
C le v e la n d A s s .u ;ia tio n o f C r e d it ^Len
in tiie ( '.h a in b e r o f C o m m e r c e la s t
n ig h t, <’h a r P ,: !•:, M .adc o f N e w Y o rk ,
n a t i o n a l p i'o ^ d e n T o f t h e ’o r g a n i z a ­
tio n , d e liv e r e d a n a d d r e s s t o u c h i n g o n i
1‘ g is la tii.m
o f v ita l
im p o r t a n c e t o ;
c re d it m en.
M i'. M e e k a n a i y z e d t h e n e w f e d e r a l J
r< s e r v e a ct. a n d t h e o p e r a t i o n o f th o
b a n k s tin d . r it, g o in g i n t o d e t a i l in
so m e in s ta n c e s - a n d
c o r r e c tin g e rri'u e o u .s
im p re s sio n s r e g a r d in g
its
o p e r a tio n . H e c a lle d a t t e n t i o n to th e
i n s t a l l a t i o n o f n c r e d i t d e p a r t m e n t in
a ll th e f e d e r a l r e s e r v e b a n k s , w i t h a
c e n tra l c re d it tte ft^ rtm e n t a t W a s h ­
in g to n .
“ A p a r t i c u l a r p h a s e o f t h e law o f
g r e a t i m p o r t a n c e . ” .said M r. M e e k , “ is
th e re d u c tio n o f th e re s e r v e r e q u ir e ­
m e n ts .
F i g u r e s h a v e b e e n c o m p ile d :
s h o w in g th a t th e r e s e r v e u n d e r th e 1
p r e s e V la w is SMtio.TK)0,0<)0, w h ile j
under
• fe d e ra l re s e rv e a o t th e to ­
t a l i . ir e m e n t w ill b e $ 9 9 5 ,0 0 0 ,0 0 0 ,
th u s
re le a s in g a b o u t
$ 4 0 5 ,0 0 0 ,0 0 0 ,
whi< a is a b ig th in g .
“A.-.any business m en a p p e a r to feel
th a t w ith the red u ctio n in th e re ­
serve req u irem en ts and the fa cilitie s
for red isco u n tin g w hich th e fed eral
reserve a ct provides, it will be a m uch
easie r th in g to borrow' m oney. T h is
is c e arly » m istak en idea, fo r c o n ­
se rv ativ e b a n k ers will sc ru tin iz e th e ir
1 >arvi unore closely th a n e v er to in su re
th em ielv es a g a in st th e re je ctio n of
paper w hen offered for d isc o u n t."
In sp e a k in g of the C layton a n ti ­
tru s t '4ct, Mr. Meek called a tte n tio n
to section 8 of the a ct w hich fu rn ish e s
the key to unlock the in te rlo ck in g
board of directors. I^e p ointed out
that m a n y changes h ave * a lre a d y
taken place in a n tic ip a tio n of the
passage of th is act, w hich becom es
>perative in tw o years.
P a ssin g to the su b je ct of th e new'
federal tra d e com m ission act, Mr.
Meek said.
"N o fed eral legislation h a s ever
iffected o u r business people, so r a d i­
cally a s th e t r a d e com m ission a ct
m u tt do** I t will no dou b t prove
ty u ally a s Im p o rtan t to b u sin e ss In ­
tere sts a s the reserve a c t is to b a n k ­
e r s .”

Of special in te re st to th e credit
■nen, Mr. M eek em phasized th e fol­
lowing suggestions:
rrh« Dlaclng of sufficient fire In su rlan c e on p ro p e rty a n a stoCKS Ox
as a b asis of credit; im p o rta n c e of
an a n n u a l inventory, also <^f a n a n ­
nual a u d it, p re p a ra tio n a n a proper
signing of financial s ta te m e n ts and
carefu l defining of quick a sse ts.
W a rre n E. Clark, re tirin g p resi­
dent, presided. F o llo w in g th e b a n ­
quet th e re p o rts of T re a s u re r A rth u r
H. H ouse, S e c retary I. K. S c h n a itte and of sev eral c o m m itte es w ere
re ad a n d accepted.

iUUJNiUY fIR M E R A T 51/4 P E R CENT.

FEDERAL BANK FAILS
' TO SELECT OFFICERS

A r a th e r firm e r c all m o n ey m a r k e t o b ta in e d . V e ry la rg e lo a n s w ere,
h o w ev er, m a d e a t 5% p e r cent. W ith re sp e c t to tim e fu n d s, th e ten d e n cy
■was e asie r. T h is w as p r e d ic te d In p a r t on th e c o m in g re le a s e of a v ailab le
re se rv e s by n a tio n a l b a n k s. T h e m o v e m e n t a m o n g th e N ew Y o rk tr u s t
c o m p a n ie s to re d u c e t h e i r re s e rv e s fro m 2E> to 18 p e r c e n t in c o n fo rm ity
w ith th e new fe d e ra l re se rv e a c t w as also a fa c to r In th e m o n e ta ry
re la x a tio n . T h is irten j,f gfiperH 'ly follow ed o u t by th e t r u s t c o m p a n ies
of th e c o u n try , w o u ld a d d tre m e n d o u s ly to t h e a v a ila b le c re d it to be
c re a te d w h en th e new c u rre n c y sy ste m is lau n c h ed .
A b so rp tio n o f lis te d sto c k s a n d s h o r t m a tu r ity n o te s a n d b o n d s w as
on a s a tis fa c to ry scale. Iss u e s m a tu r in g e a rly n e x t y e a r a r e a s a ru le se ll­
in g on a b asis to n e t th e p u r c h a s e r le ss t h a n 5% p e r c e n t. I n th e case
of less c h o ic e m a te ria l th e y ield is, of c c 'irs e , so m e w h a t g re a te r. C on­
v e rtib le b o n d s re c e n tly h a v e r e p re s e n te d a b o u t 60 p e r c e n t of th e to ta l
b u sin e ss b e fo re th e tw o c o m m itte e s. St. P a u l 4>^s, S o u th e rn P acific 5s,
B ro o k ly n R a p id T r a n s it 4s, A tc h iso n 6 s a n d P e n n sy lv a n ia
have had
th e b e st reco v e ry . W ith th e s ix ty -d a y c la u se rem oved, N ew Y o rk sav in g s
b a n k s a r e e x p ec te d to b u y m o re fre e ly . L ife in su ra n c e ^ c o m g a n ie s a re still
h o ld in g off. ex cep t fo r s h o r t te rm issu e s^ '
. . ,y.
A n o th e r ste p fo rw a rd w a s m a d e in c o tto n . AH d e v e lo p m e n ts p o in te d
to a n e a rly re su m p tio n of tr a d in g in f u tu r e s a n d in flu e n tia l m e m b e rs of
t h e e x c h a n g e w e n t so f a r a s to sa y t h a t a d e fin ite d a te fo r re o p e n in g
w o u ld be a n n o u n c e d sh o rtly . T h is, It is e x p ec te d , w ill b e N o v e m b e r 16.
E x c e p t in so m e m in o r d e ta ils, p la n s fo r th e o rg a n iz a tio n o f a c o tto n
c le a rin g h o u se w ere a p p ro v e d . T h a t th e tr a d e is in a b e tte r f ra m e o f m ind
Is a tte s te d to by th e re p o rte d a d v a n c e of S500 i n ^ h e bid f o r N ew Y ork
c o tto n e x c h a n g e m e m b e rs h ip s .
! v j V i 2 ‘‘9 j/?
T h e re a p p e a rs to bo n o absence- of d e te rm in a tio n o h ' tfhe p a r t of th e
a d m in is tra tio n to s ta m p o u t tr a d in g in fu tu re s . H e a rin g s w ill begin to ­
day a t W a s h in g to n fo r th e c o n s id e ra tio n of th e a n ti- f u tu re s law p a sse d by
C o n g re ss d u rin g th e la s t sessio n , a n d to go In to effect F e b r u a ry 18, next.
T h e fe d e ra l g o v e rn m e n t b e lie v es th e a p p lic a tio n of a ta x of tw o c e n ts on
a ll fu tu r e s sold w ill e lim in a te sp e c u la tio n a n d a lle g ed m a n ip u la tio n .

C R E D IT M E N T O L D O F
RESERVE BANK VALUE

o

. T he fe d era l re serv e b a n k h a s a n
u p liftin g effect on b u sin e ss a n d is in
itself a credtT A ssociation, d eclare d
C h a rle s E. Meek, of N ew Y ork, p re si­
d e n t o f tho N a tio n a l A sso ciatio n of
C re d it Men., before m ore th a n 100
m em b e rs of th e C leveland A ssociation
of C re d it Men in th e C h a m b e r of
C om m erce la st n ig h t.
T he ,o th e r s p e a k e r o f th e m e e t­
ing w a s J. H. Tregoe, o f Cleveland,
n a tio n a l se c re ta ry a n d tre a s u re r . He
ad v ised e a c h m em b e r to be m aste r,
not se rv a n t, of e v en ts. “ It Is tho
s tu d e n t,” sa id T regoe, "w ho trim s his
sa ils a c c o rd in g to th e w ind w hen
b u sin e ss fe a tu re s of th e w '”!d ara
R a n g i n g .”
A n a m e n d m e n t w a s ad o p ter,
th t
a sso c ia tio n re d u cin g th e amouV p ro ­
vided each y e a r for p ro se cu tio n p u r­
poses. T he board o f tru s te e s e le c t­
ed fo r th e e n su in g y e a r w ere H a r r j
E nglish, G eorge C. K rid le r, F . H.
H andel, E. M. S pelm an, R. A. W eppner. C. E. Shives, C. C. C o v en try
W illiam T onks, C lifford E. P ierce
C arl Li. H u m p h re y s, F re d T. Jo n es, E.
W. S hepard, D a \id S un sh in e, E. J.
W olfe a n d Jo h n K in g m an .

' o u t to L oyal
.
***4 V
The federal reserve
. rday deIned th e scope of operat! i of
regional
janks a s It shall ex ist at the
Kinnln* of
jp eration. The region *1 m k a can discount
oilla o f exchange and ''TTTteerclal paper.
The board express?* a preference for twonam e paper— that, for instance, m ade when
a bu y er of m erchandise executes h is note
to th e seller, the la tte r also accep tin g re ­
sponsibility when he tak es the note to bank
fo r discount. The board does not b a r sin ­
gle-nam e n o tes from rediscount. T he long
stan d in g custom of American business is In
fav o r of th e single-nam e paper, but In Eu­
rope th e custom Is tw o-nam e. It Is th e In­
ten tio n of th e board to popularize the E u ro ­
pean way here.
Here’s a toast the national bank system
now passing: “For fifty years. It served the
United States—the country grew beyond It—
we build not without the national bank sys­
tem, but upon it.."
'
•




Absence o f D irector Prevents Ac­
tion Being Taken on Vacan­
cies Yet Existing,

1914

j G n n n l l n g R eserv e B a n k s .

/

**o w c&utioudy
fe d era l re serv e
bo ard will protect th e regiona l b a n ks*
reso u rce s is indicated by th re e o u t­
s ta n d in g fa&tupes am ong o th e rs in the
c irc u la r t ’je board h a s isucd. I t p re ­
fe rs tw o -n am e pap er fo r re d isco u n t to
one. I t In te n d s .to e stab lish a coun­
t r y w ide c red it b u re a u w hich will
k eep s ta tis tic a l t a b on bo rro w ers. It
w ill dem and t h a t all p a p e r tu rn e d in
by m em ber bkfiRs fo r re d isco u n t be
accom panied b y a s ta te m e n t m ad e by
th e o rig in a l borrow er, u n d e r o ath , a s
to th e in s a n d o u ts of his business.
T hese s a fe ty d evices will n o t be set
w o rk in g im m e d ia tely . In th e m e a n ­
tim e th e ju d g m e n t of m em b e r banks,
a ccom panied b y th e ir indorsem ents,
will be m ore o r less re lied on.
I n th e C leveland d is tric t deposits
a re e stim a te d a t $800,000,000, of
w hich a b o u t $15,000,000 should be paid
in a s re se rv e e a rly n e x t w eek. T his
w ith th e $2,000,000 in sta llm e n t a l­
re a d y p a id on c a p ita l sto ck will give
th e C leveland b a n k a b o u t $17,000,000
to s t a r t w ith . H a lf of th e re se rv e in ­
sta llm e n t can be p a id in eligible m e r­
c h a n t paper, b u t th e fe d era l reserve
b o a rd h a s expressed a p re fe re n ce for
gold, a n d gold c e rtific a te s. W h atev e r
m e rc h a n t p a p er is so tu rn e d in will
provide fhe re g io n a l b a n k 's initial
p rofit in th e d isco u n tin g .
T h e r a te of d isc o u n t h a s n o t been
fixed. I t will v a ry in d iffere n t sec­
tio n s o f th e c o u n try . I t is believed
t h a t in no sectio n w’ill it be h igher
th a n 6 p e r cent, a t th e s ta r t, a n d th a t
in som e sectio n s it w ill be • m uch
low er. In g iv in g th e federal board
pow er to a p p ro v e d ifferin g ra te s, th e
law m ak e s it p o M M ^ to ^ tu ^ o k |^ s p n al sectional con^|J^. J T

Federal Bank H eadquarters.
O fficia ls o f the G u a r d ia n Savings 'and
T r u s t C o m p a n y said y e s te r d a y th a t a s
y e t th e r e is nothing tangible to the r e ­
p o rt t h a t the Cleveland Federal R e s e r v
B a n k would occupy the G uardian’s pres­

ent q u arters a fte r i t moves TO'the New
England building.
B ankers say they
b e lie v e the G uardian building would
m ake an excellent location for the fed­
eral institution, b u t for some time to
come E. R . F a n c h e r’s bank probably
will use W ill lam s in building offices anil
1
'S 111*3 *n the basem ent with
the Union N ational. The selection of
a perm anent site for the federal bank

LTf s S L n iln| | ^ mf ‘* M 4 "

“

The directors of the Cleveland Federal
Reserve Bank m et yesterday, but failed
to announce the successful candidates
for the various offices th a t have yet to
he filled. This, they explained, was due
to the Inability of Director C. H. Bagley, Corry, Pa., who is ill, to attend the
meeting.
Most of the day was spent In a com­
prehensive discussion of the problems
ih a t will be encountered when the bank
opens for business Monday. The direc­
tors will remain in Cleveland to attend
the launching of the new banking sys­
tem.
Federal bank officers were unable to
say definitely yesterday w hat the Initial
rate of discount for this territory would
be. The ra te will be determined by the
W ashington officials, who are expected
to announce it today. I t is believed it
w ill b e 6 per cent.
R e s e rv e deposits of the member banks
w ill commence coming in next week.
B a n k s of reserve cities are required by
th e law to deposit with the federal bank
?, p e r cent of their total deposits, and
th e other institutions m ust deposit 2 per
e e n t. T here is. however, no limit as to
th e s iz e of a b a n k ’s deposits.
F i r s t deposits, based on figures conla in c d in the b a n k s ’ report as of Sep­
te m b e r 12, will am ount to about $14,500,­
000. T h e b a n k w ill have also an addi­
tio n a l sum of $2,000,000 to work with,
th is b e in g the initial subscription to its
capital stock.

LOCAL DISCOUNT RATE
TO BE SIX PER
N OV 1 ■ 1944
New York Rate on

Less Than

T h irty Days’ M atu rity 5 V 2 P e rl
Per Cent; All Else 6 Per Cent.
I ’he official r a te of red isco u n t of
th e Cleveland F e d e ra l R eserv e B ank
will be 6 p e r cent. T h is w as decided
yesterd ay by th e officials a t W a s h ­
ington. T h e r a te c o v ets all m a tu ri­
ties.
New Y o rk a n d P h ilad e lp h ia will
quote a Bii p e r c e n t r a te on bills and
notea of n o t m ore th a n th ir ty d a y s’
m a tu rity a n d 6 per c e n t on all paper*
h a v in g lo n g e r m a tu rity .
In a d d itio n to C leveland, th e 6 per
c en t r a te w ill o b tain in B oston, R ich­
m ond, C hicago ar.d St. L ouis.
Six p e r cefit will be th e ra te a t A t­
la n ta , M inneapolis, K a n s a s City, D a l­
las a n d San F ra n c isc o on bills r u n ­
n in g n o t longer th a n th ir ty days and
S’ji p e r c e n t on b ills of longer m a ­
tu rity .
In th e m a jo rity of in stan c es th e
ra te s w ere m ad e a t th e suggestion of
th e d ire c to rs of th e various reg io n al
in stitu tio n s . T hey a re to som e e x ­
te n t e x p e rim e n ta l and a n u m b e r of
c h an g e s no d o u b t will b e ' m ade bj
J a n u a r y 1.
g g

*

> I

?<
-<

*. ,

(_

'X * * . / " " / , / 9 /

Defines Scope Ut Federal Keserve
Banks —.
A W ashington dispatch says:
T he scope o f the operations o f the tw elve fed­
eral reserve banks to be opened for business next
Monday, was defined fo r the first few m onths of
their existence, in a circu lar issued W ednesday
by the le d e ra l R eserve Board.
F or the present the hanks will not exercise all
the functions given them by Congress. T he board,
concurring with the d irecto rs and governors of
the twelve in recent conference here indorsed this
plan of operations:
Acceptance of deposits o f reserves from mem­
ber banks.
D iscount o f bills of exchange and com m er| cial paper.
A cceptance o f deposits o f checks draw n by
m em ber banks on any reserve hank or m em ber
bank in a reserve or central reserve city w ithin
their federal reserve districts.
O ther pow ers may be called into play as the
establishm ent o f safe and efficient organization
permits.
In its circular the hoard gave the long expected
definit'
o f C g g y ^ f i a l paper which is in be the
life HwO,L:ot tlie ‘ new system , the basis for
the new federal reserve curency and the m eans bv
which the nation's circulating m edium is expected
to m eet the expansions and contractions o f trade
and industry.
RATE TO BE AXXOt’NCED.
T he rate o f rediscount was not announced. Thi<
'te p probablv will not be taken until M onday
The rate will not be u n ifo rm in all the hanks
The definition o f com m ercial paper is broad
rid relies to a large degree upon the language ol
the etirrenev act.
The board declined at the present tim e to dis
ct’ss the Question of double and sincle nam e com
'ierci.il parn-r. It did m ake it exceedinelv clear
however, that it had a preference for the two
nam e sort, and left no room fo r the authoritie*
‘if the hanks to doubt that it exnected c are fu l in
'T'-irv into one-nam e paper presented to them foi
rpHiecount.
T he circular d;«c"sseH t ’’p c^ndH ons th a t hnv<
herp and tl’rotiehnut t^e world tbrono-i
■hf. w ar a n rt «raVp some i n s i s t into the econom y
.-I,
(, V r,p c t p , | ^ n
'tin Tl.vpj;
“ Tf c^ouM Kp tinrnp in m in't tbqt ” it
‘St
•lirvivrh n 'ir evnorfs aj-p cboivlnn- a nrra*if'‘*rt'T
"■p'lw flinT-o ic
a tnr^p e'1sb t'Mancp d*tp tT. .tt-o*. f.-,n
nrriM r"nv tip ftp
-Inrl *hat a lar^e n'»an»itv rtf ArnPrir*'*V*p M pKfrtarl m.lv bp rp t'’t*n«rf tn t-tr
; TTmfp*t ^*ptPs: w hile on tl'P otbpr hanH rrtnrt
t! an $300,000,000 o f em ergency currency m ust bf
gradually retired.
"N o one can estim ate the d uration o f the w ar
or predict w hat will be the financial or com m er­
cial conditions when peace shall be restored.
"O ur own industrial devedopm ent has beer
- reatly facilitated by foreign capital and we have
'ieen accustom ed to borrow large sums annual!'
■n E urope and to sell A m erican securities there
which attracted foreigners because of th eir higher
rate o f retu rn com pared w ith E uropean invest­
ments.
"It is probable th a t at the end of the w a r in­
terest rates in E urope will be higher th an thev
have been in the past and greater investm ent re ­
turns will be yielded. T he trem endous d e stru c ­
tion of property and w aste of capital will not
only check the flow o f E uropean savings to the
L nitcd States but m ay dispose foreign investors
to re tu rn the securities they now hold. L ow er
monev rates in this c o untry would he likely to
■cce:ituate this tendency, while, on the o ther hand
higher interest rates and lan rer investm ent re ­
turns on our side would check it.
SAFEGUARDS OF BOARD.

"W hile the most acute stag£

of. the




recent finan­

cial em ergency appears to have passed, m e <_ui.ditions in other countries m ake it necessary that
the U nited S tates should, to the utm ost degree of
efficiency, organize and make available its own
resources in ord er th at it may provide for its own
needs and replace the facilities suddenly destroyed
by the closing o f so m any of the accustom ed
channels o f credit and trade.”
In defining com m ercial paper the board a n ­
nounced certain basic principles. In b rief they
a re :
T hat no hill shall be adm itted to rediscount by
a reserve bank the proceeds of which have o r are
to be applied to a perm anent investm ent.
M aturities of discounted bills the board holds
should be well distributed so th a t a reserve bank
should be in a position to liquidate one-third of
all its investm ents w ithin th irty days.
Bills presented fo r rediscount should be “essen­
tially self-liquidating,” which the board explained,
means th at they should represent some distinct
step in the production or distributive process and
be of such character that it is reasonably sure
that they can be collected at m aturity.
In addition to these principles the board re ­
quires th a t such paper be indorsed by the mem­
ber bank offering it fo r re d isco u n t; th at the in­
dorser bank waive dem and notice and p ro test;
that such paper be issued or draw n for agricul­
tural, industrial or comm ercial purposes o r the
proceeds o f which have been sr. u s e d ; th at if in
the form of acceptances they m ust be based on
transactions involving th e im portation or e x p o rta ­
tion of goods, and have a m atu rity o f not longer
than three m onths.
-

A n

Celebrate Reserve Bank Opening
/ T he opening dav of the irrw’ Federal Reserve
Pank of Cleveland M onday will be m arked by an
unusual entertainm ent at which the F irst N ational
S’ank of this citv will be the host T he president
and directors of the F irst N ational are sending
Bnvitations to the officers of the 7<V7 national
lianks of the fourth reserve district inviting them
to m eet the governor and direct1 r o f the federal
Reserve bank at luncheon at
H otel Statler.
\ l t is predicted th a t this w ;ll be the largest
e ath erin g o f national bank representatives ever
held in Cleveland. P resid en t Tohn Sherwin. o f
the F irst N ational, will preside.
Gov. E. R. F ancher and the reserve hank di­
rectors have accepted their invitations, and as
guests o f h o nor will greet the bankers of the
various tow ns and cities of the district.
Besides P resid en t Sherwin. the follow ing direc­
tors o f the F irst N ational Bank will be hosts at
the lu n c h e o n : C harles E. Adams. W . D. B.
Alexander. F ra n k A. A rter. George Bartol. Geo.
N. C handler, H e n ry A. Chisholm. L. A. Cobb.
r,eo. P. Cowev, H e n rv W . C ornine. M. B. Dalv.
P. F. D ver. H. C. E lison. C. E Farnsw orth. H.
M. H anna, Jr.. R A. H arm an. W . A. H arsbaw .
F H. H aserot. S. F. H aserot. H. R. H atch. K a u f­
man Havs. F ra n k F. H ickox. F red Josenh, H a rry
T.. K aufm an. G eorge W . K innev, Tohn A. Klim;.
W p h R. K rau s. M. A. M arks. Tohn M itchell,
H a rrv N ew , S. L. Pierce. John L Severance. S.
T„ Severance. H. A. Sherw in. T. C. W allace. D.
R W arm ineton. W in d so r T. W hite. T hom as H .
W ilson and F re d J. W oodw orth.
On F rid a y evenine at 7 o’clock in the U nion
Club the reserve bank staff and directors will
be guests of the bankers of Cleveland generally
at a dn n n er to he given in the regional bank
people’s honor.

investment Bankers and The Federal
Reserve Law
By R U D O L P H D IA M O N D ,
of A. B. L each & Co., N«w York

o

(B e fo re the Investm ent B an k ers’ A ssociation of in foreign countries fo r our m anufacturers. I t
A m erica C onvention, Philadelphia, N ovem ber 12 will ultim ately establish an elastic currency sys­
tem and create a check clearance system on a
and 13, B e lle v u e-S tra tfo rd H o te l,)
N ow the new federal reserve system will soon p ar basis thro u g h o u t the entire country. It will
com m ence to w ork, it seem s to the point to offer w ork fo r econom y o f o u r gold supply, and will
a few suggestions and th o u g h ts in re g ard to its c o n centrate and m obilize o u r present widely scat­
piohable effect upon the business in w hich you tered gold reserves. It will, furtherm ore, bring
investm ent bankers are engaged. In considering i unifo rm ity in reserve regulations and in general
the condition which the investm ent banking busi­ supervision of a larger num ber of banking insti­
ness will face, w hen the new federal reserve tutions, if state and tru st com panies can be in­
m achinery will w ork sm oothly, we m ust ap p re­ duced to en te r the system , in la rg e r num bers than
ciate th a t at the present tim e this husiness is thus far. It is contended in view o f all this, that
handled by m any o rganizations o f different class better accom m odations will be given by the banks
and character, such as n ational banks. stale banks jn aiding legitim ate business, th a t we will get a
and tru st com panies, in co rp o rated investm ent m ore equitable d istribution o f o u r credit re ­
c o m p a n i e s a n d private bankers.
All o f them reach sources, coupled w ith a norm alization of interest
for the sam e field o f activity, but their opcrat on> rates. T his, in tu rn , will facilitate a free flow of
un d er the federal reserve law will co n tin u e ^to . capital ancj credit th ro u g h o u t the country, while
differ exactly as th e ir o rganizations differ the accum ulation of large foreign exchange p o rt­
at this time. T h ere are, how ever, a num ­ folios will give o u r e x te rio r gold m ovem ent a
ber of questions w hich each a n d all o f us, no system of brakes to be used effectively when de­
m atter how different our w orking organization.: m ands on our gold supply a re being made. The
are. m ust face sooner or later.
new discount and acceptance privileges to ne given
L et us, fo r instance, consider the effect of the to our national banks and the federal reserve
new conditions to be created u n d e r the law, on the hanks will give added prestige to A m erican com ­
m etropolitan banks, o r ra th e r the banks in the m ercial paner and will go fa r tow ard giving the
reserve cities, in so fa r as th e ir disposition to Xmerican bill o f exchange a prom inent place in
invest in bonds is concerned. All indications point international trad e.
■
to the fact th a t th ere will be less reason fo r these
All this, of course, will not be established at
banks to hold bonds fo r perm anent investm ent.
once. M any usages in financing the needs o f our
1 — Because th e A ldrich-V reeland act expires country will have to lie changed, while also the
and bonds cannot be used to take out em ergency law m ight have to be altered in essential p articu­
circulation.
. . .
lars before each and every one
the ideals of the
2 .—Because a b ro a d e r opportunity will he given advocates of the system will have m aterialized.
to these hanks fo r the use of th eir funds in ac­
It will be seen, th ere fo re, th a t as we have
ceptances and o th er paper w ith which the com stated a t the outset, a b ro a d er opportunity will
m ercial w orld will be financed.
be given to our banks for the use o f their funds in
A second question w hich will affect a very com m ercial paper. It m ust be conceded in this
la r g e dro u p o f the investm ent bankers is. w hether I connection th at o u r national banks in the past,
the banks in the reserve cities first, and in fact I as we all know, have invested a m uch larger
the banks in m ost of the principal cities of the j am ount in bonds th an the b anking institutions of
country, will have the funds available and be any o th er country in the w orld. On Ju n e 30.
disposed to m ake loans upon investm ent bonds 1914, about seven hundred and thirty-five m illions
eith er for the account o f th eir custom ers o r in­ o f L n ite d States governm ent bonds (o r morQ
vestm ent bankers w ho a re acting as distributing than TO per cent o f the interest b earing debt ot
agents. W e appreciate ve*y folly th at possibly the country ) w ere held by the national banks and
these loans will not be looked upon, as they have deposited w ith the T re a su ry to secure national
in the past, as a secondary reserve, that better bank note circulation while a n o th e r forty-eight
and b ro a d er facilities will be furnished by the m illions w ere owned and deposited to secure
reserve banks fo r funds which are held as re ­ governm ent deposits. In addition hereto, the n a ­
serve. but, we believe th a t at th e sam e tim e the tional hanks owned a t th a t tim e, m ore th an a bil­
use o f the federal reserve facilities for com m er­ lion o f o ther securities, the total investm ents of
cial paper will release a very large am ount of o u r national banks footing up $1,191,000,000, or
m oney which will be available fo r the carrying about 17 per cent of th eir aggregate liabilities
o f the bonds, perhaps not at the ra te o f l Tj per T his com pares with only 13 per cent for the p rin ­
cent which has o ften been the case in the past, cipal B ritish jo in t stock banks and only S per
but at a stabilized, equalized rate, and it will cent fo r the B ritish discount companies. W e
w ork to the g re a te r benefit o f the lender and the have nothing to figure out the proportion o f stocks
borrow er. O ne o f the g re at difficulties th a t has and bonds in this investm ent, but it m ay be
m enaced the investm ent b anking w orld in years doubted th at in any country in the world, the
past has been th at in tim es o f g re at ease o f monev. proportion o f investm ent in bonds is so large as
large a m o u rts of bonds w ere purchased and held with us. w here it consists o f about 90 per cent
by the banks in the reserve cities to be resold at of the ag g reg ate investm ents. T his condition has
the m arket w hen the dem and came upon them heen created through the use o f governm ent bonds
fo r these funds. C onsequently, the m ark ets were for circulation and deposit purposes and the lim it­
continually disturbed bv these tem p o rary p u r­ ations placed upon the banking operations by the
chases and sales w hich did n o t follow the general usages o f financing the com m ercial needs of our
tren d of the investm ent dem and. W e mav. there­ country th u s fa r prevailing. Consequently, a
fore. perhaps consider th a t th e large banks in large proportion o f the resources of o u r banking
th e reserve cities will not he as large custom ers institutions is also invested in dem and loans on
fo r bonds as they have been in the nast. On the stock exchange collateral. In this connection, it
o th er band, w e m ay also co n sid er th a t as fa r as is in terestin g to note th a t on Tune 4 . 1913. the
the carrying of these bonds in loans, o r the offer­ dem and loans o f o u r national hanks secured bv
ing o f facilities to the h an k in g houses to handle stocks, bonds and o th er persopal securities a g ­
th eir business is concerned, th ese will not be sub­ greg ated over $9*0.000.00. w hile the tim e loans,
stantially restricted.
secured bv stocks, bonds, m ortgages, e tc .
T h e foreeoinsr c onsiderations are based upon am ounted to $1.2fi4.2.=>0.000. m akine in total 3 7 .fi
w-hat is expected the fed eral reserve system will ner cent of nil the loans o f o u r n ational hankine
accomplish, bv those w ho have advocated it. T h 's institutions based largely on stocks and b o n d s
system, according to its ro d fa th e rs will estab­ Tf this percentage is considered in the light of
lish a norm al discount m ark e t in the U nited States direct ow nership of stocks and honds. one cannot
and thereby com pletely change the ch aracter of help feeling that alto g eth er too larg e a p art of
our com m ercial naper. Tt will eive expansion to the resources of our national banks finds invest­
A m erican bankim? in th is c o u n trv as well as m ent in fields being in close direct o r indirect con­
.abroad, and it will afford better banking facilities tact w ith the course of 0Ur stock exchanges




I lie f e d e r a l r e s e r v e s y s t e m u n d o u b t e d l y t e n d s
to c h a n g e c o n d i t i o n s in this respect, a n d m a k e o f
o u r b a n k s ins ti tu ti ons m o r e d e s ig ne d to finance
with their resources the com mercial needs o f the
country than to use them for investment purposes.
I l ie p o i n t is f r a n k l y c o n c e d e d !>y M r . H . I I .
P a r k e r \ \ illis, t h e a b l e s e c r e t a r y o f t h e F e d e r a l
Reserve Hoard :
‘ 1 h e f e d e r a l r e s e r v e s y s t e m is e s s e n t i a l l y i n ­
te nded as a co m m e rc i a l hanking s ystem .” said Mr.
Willis recently, an d . he c o n t i n u e d :
" I t is t h e r e ­
f o r e n o t d e s i r a b l e t h a t an > b a n k s h o u l d e n t e r t h e
< \ s t e m u n l e s s it is d o i n g o r i n t e n d s t o d o a c o m ­
mercial business.
All the se in sti tut io ns wh ich
a r e e n g a g e d i n o p e r a t i o n s t h a t r e n d e r it u n n e c e s ­
s a r y «>r u n d e s i r a b l e f o r t h e m t o c o m p l y w i t h t h e
c o m m e r c i a l r e i / u i r c i n e n f s a r e . i p s o jact»>, o u t s i d e
t h e r a n g e o f b a n k s t h a t wi l l b e m u c h b e n e f i t e d b y
membership.”

If this is the int ent o f t he s\ »t em. it is evi dent
t fiat a notfier p r obl em comes bef or e the i nves t ment
. banker ^.
T o wh a t e xt e nt will t he buyi ng of
bonds l»\ t he so called count rv h a nke r be af fect ed?
\\ ill t he banks in the s ma l l er cities find, un d e r the
t ederal r es er ve law. a b r o a d e r " p u - •rtunity for
t hei r f unds at s a t i s f a c t or y r a ws than t hey have
bad in the pa s t ? It is a p r et t \ well established fact
that the a mo u n t o f local l oans these banks can o b ­
tain will not subst ant i al !) chanee. i.or can we see
; a n\ r eason why t hei r deposi ts vdl material lv
■change, so t hat t he a m o u n t of m.
. which will
be avai l abl e f or h n c<l ment ■<r.t
d their p a r ­
t i cul ar locality will not 1 e - . iT>-ta n tia M\- ('handed
j W ill accept ances ..r such new f or m of securities
' as will be m a d e avai l abl e 1" t he n serve syst em
,:nd t hei r place in th< por t f ol i o o f these b a n k ' 3
W e feci t hat they will not in an\ br oad wav
1 - B e c a u s e t h e f a c i l i t i e s f.
. b t aimny these
s e c u r i t i e s w i ' l p r o b a b l y n o t be o f tin best
ac­
c e p t a n c e s wi l l b e t a k e n b y t h e b a n k s in t h e l a r g e r
cities.

2. I’ecaitse t he rate of int erest " d l probabl y
be l o we r t h a n the^e i>anks have ' ei
w illinu to
accept.
W e are. t h e r e 'o j a
i n c l i n e d t o h i ! ve t h a t t h e
b a n k e r s i n t h e s m a l l e r c i t i e s wi l l P . i d t h e c o n d i ­
t i on s a p p r o x i m a t e l y t h e - a m e as t h t v li ave bee n
a n d t h a t s u c h ha : ks wi l l b e d i s p o s e d t > i n v e s t s a y
”0 p e r c e n t o f t h e n ’ s u r p l u s m o n e y s n b o n d s a n d
"»0 p e r c e n t i n c o m m e r c i a l p . :p e r

P e r h a p s this t al k i- d i n c t e ! to,
.,b at the
ques t i on of the i n ves t ment of U-.nds s . t hat we
ar e f o r g e t t i n g the ques t ion of commer ci al paper,
a nd t he i n ve s t me nt of stocks, in whi ch a haree
n u m b e r of you g ent l emen are i nt er est ed
In
this connect i on, t he pr obl em t c^ mmer ci . d r a u e r
will not be mat er i al l y cha ng e d a- far as the • iut r v ba nke r s a r e co n c e r n e d
T h e i r e t s ; mem jn
stocks will u n d o u b t e d ! ' folh.w u> .■ •ur»« as i' has
in t he past. in a cer t ai n Mercert.i'j-' t .he amo u n t
of i nve s t me nt s m a d e in boj.ds. If a m imp .riant
c hanges wiT! come about . r'a-c wt!: c- rt red. n-'t
come .'•••rni^ht. hut g r a d u a l l y a- c _«n*lit i•»ns cla.nee
u n d e r ?’’e s> stem
_
_
. . .
\ n o t h e r .'M test'o n
. ' - . mi n i : u p t o r C"usi d« r a t i o n
is in h o w f a r o n e w d l ’w e e d ” i 1ar. " a ' h e s t a t e
b a n k s a n d t r u s t c o m p a n i e s . w h . s.-- , m
to
e n t e r t h e «\ s t e m h a s b< e n cor-spam- a s ■>. it - ab
s e n c e . c h a n c e rh. e; r a t t i t u d e .
T' - •
s the
m o r e \ v r t h m e n t i o n i n g - i n a s m u c h : - •' <
1
]
1- a n k i n u M r e n ~ * h
*f • *ur star-■ "ks
, i m t " •»

c m p a r :es is a b , t
banks

••

w hite fherr

• ;11j t

e r a ’ : •» t hat .
wr

rship

•

-he nan n a 1

r ~ -a r : ■•■ -

•

'

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'

,-.f securi t i es o t h e r t han ^ v e r n m e m ’■
by

national

banks

vet

1 ’
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O n e ma v he sur e th

^

t.

• r a ; r e s e r v e = v s t e - ” ■'
t u r n e d t- ■ l v •
t^e
ries enter
s\ s - , - m

b

c ^
r *■ at baui ^ :h

yement- ■- ■n • . t i *" ’ m b - * * • r e s - * in
ctarsr<*« in th-- ’ •••• . w h v u •\:1] • -aa1 V rb. ~
s t i t ut i r - ns t. C- n t b v i e en •' • ■ • a '• r ' ’'T. T
■
f m - v e r e . - n t w h i c h the-. •>' •• '

e nt er ed t he s ys t e m vv-u-r
T ’-t~ Vi r . c * iis • th.

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' '

The ques t ion ar i ses f ur t her wh e t h e r t he b a n k s
will be di spos ed to sell in the ma r k e t s a l ar ge
a mo u n t of t hei r i ndustrial or r ai l r oad bonds,
which they now own. W e can readi l y see t h a t
, .pinions will differ very widely here, but o u r
feeling is t hat if ther e wall be a g r a d u a l sale of
securities it w ill he a slow process. I nless we
are u n f a i r h r eadi ng this ijiicstion it wo u l d se em
to us t hat this federal reserve law m e a n s r e­
d u n d a n t circul at i on. There will be an i ncr ease in
the a m o u n t of currency waiich can be issued, c o m ­
merci al pa pe r bei ng made available f or t he i s s u­
ance o f cur rency, f or which the credi t o f t he
Uni t ed St at es is pledged, while t he pr ovi si ons f or
r e f u n d i n g t he gover nmeui ~ per cent bonds leave
open t he possibility that ./
per cent bon ds c a n ­
not be m a r k e t e d at par, the federal r es er ve b a n k s
will t ake out new circulation on t he 2 per cent
bonds which they purchase f r o m t he n a t i o n a l
hanks at a rate of not more t han $25,000,000 per
a n n u m . T h e r e will, f ur t her mor e , be a r ed u c t i o n
in t he a mount of reserves the b a n ks ar e cal l ed
upon to keep which will materi al l y i ncr ease t h e i r
l e nd i ng power, while a large part o f t he g e n e r a l
fund o f t he Tr e a s u r y and pr obabl y t he m o n e y s
now hel d in the sub- t r easur i es will be pl aced on
deposit with the federal r eser ve hanks.
W e cannot believe, especially wi t h bus i ne s s in
its pr es ent depressed conditions, wit h t he a d d i ­
t ions to the cur rency and t he r educt i on in t he
rt s e n es w hich this ja w brings about , t hat we will
1 ml tlu hanks disposed, to push back i nt o t he
ma r ke t , very large amount s of bonds, cer t ai nl y
not until prices mo r e clearly a ppr oach tlie figures
at whi ch they were t aken into thei r accounts, so
that per haps in t he long run t her e m a y be a
c ha nge in tlie cha r a c t e r of the i nves t ment o f t he
ha nk s in t he l ar ger cities. 1’ut this c h a n g e will
e<une slowly, it is not a problem we will h a v e
to t ace i . *(!a\‘. and if it cotres. we d o n ’t k n o w yet
w h e t he r t o the i nves t ment banker as a d i s t r i b u t o r
f securi ti es should not fall his sha r e in this
di st r i but i on of securit i es which ul t i mat ely mus t
'ind t hei r way to the stpcnt; box of t he i nves t or .
T h e f r a me r - o f t he reserve law have st r i ven
ear nes t l y a nd iric'l wi t h great car e to tie in i m ­
movabl e b.inds this wi ckee Wall Street, whi ch is
supposed 10 r epr esent t he ' e r v la t wa rd of w i c k ­
edncs s and speculat ion, 'vhich ' den o u n c e d by
ever , body and i ndul ged in by veryhodv.
The
•p' t i s. ir s -,f t he f eder a' r eserv
act. t i me and
•_:ain. ha \ e called at tout i- n t« t he fact t hat (
t h r o ’vjli the lack- of an elastic a t r r e n c v s ys t e m ,
a nd c.ther means of maki nu th w ealth <d* thi s j
na, 'ii nioia.
Lie a part of tlie req ui d, t o o
anhs was used as a
• nation;
tcuha’ion. W e donb;
w ah Strei-:
v e '-v h
the
•ouhl
s.r ■p. h* >we\ er.
specul ati ' u.
w helhi
nachi ner y. ( >en if i* wa« i nt e nde d
life wottb! fail and we woul d be
. T f h h - s s if
e c ■11ild not <*xpress ot»r hones in
•m e l a u y i b h wav. T h i s i ; now. wi t h e x c h a n g e s
f a ’l k i n d s an 1 c h a r
er closed, r eali sed w en
>. t h o s e w 1
:id ’o
rrjo f ul mi nat ed rca linsf
; • s. -a
; thev 'a eri open,
S. a n \ >'■ V- \ r- hitlu frame:-- . *f t h :t he-- i r d , . i- • , l i mi t sper n'
n. t h a t t h e
• b
1 w a s fr; u; ed to p r r v :u ?h<> u s e o f
';**'• ’ ' l i e i v - r a r b a nks a\aa: a.l-lr •*.-.r t he
M-ber : -.i*:\ s ; - hr- e - t me i i t o r h • b
upon
c ks a n d b. m s . o r *. aper r«*nrese”. t i n- t hes. - ce" ; '<s
l b ’s m e a n s
»h< iiu, es*m, -m b a n k e r s
■ t \ - bi de d ; r. m ’!:•' a d v a ’- t a-e> wl r ’c ’’ t h e , o y ! • 1' a n k ’ ':' •<’-•! ' h e
. .a r um- m a.ct a i v e t o
•r
-■i' i/ e n
Win m - h-sfy ’ •
ni1,| o u r
' r :*ha t ■r - pe • |e k m - v t h a t t h e
' •r'
' ' >nki n' ’s m <"
s a ia •• s s i t v f»>r
; ' t - ment
•’ e '.'.bob'
. f f ‘a d d i •
1 a r . ‘es. w i n '• u r ’s- •• -rje f m
the refusal
th

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Federal Reserve Bank of St. Louis

•rinnent bonds were purchased, will change. In ,
,iew of the rate at which these bonds are outlanding, and the price at which these bonds |
a ere bought and in view of the fact that the law
lefinitely prescribes the method of am ortizing a
arge part of these holdings, we do not think
that a large am ount of governm ent bonds will
come upon the m arket.

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bankers' s c m c t^ iw ie v e lo p in g tne resources ol
this country. W hen this is realized the investm ent
banker will cease to be persona non g rata. W e
a re sure then, that the door which is now slamm ed
in his face, will be opened, and th a t a hearty wel­
come will be extended to the investm ent banker.
F o r at the risk of repeating, we m ust again say
th a t his services are as essential to th e develop­
m ent and prosperity of the country, as those of
the fa rm e r and the m an u factu rer, to w hose legiti­
m ate needs the new system will so effectively
cater.
D iscussion o f the action of the new reserve
law is tem pered and m ade perhaps som ething for
to m o rro w ’s consideration because of the trem en ­
dous upheaval caused by the w a r; the daily prints
are constantly e n larging upon the idea th a t we
a re to *>avo 'M um ped," as the phrase goes, upon
o ur m arkets an unlim ited num ber o f m illions of
A m erican securities as soon as o u r exchanges
open, o r before, as soon as we get in position to
pay fo r them . A lthough this rem ains a m atter
of speculation, it m ight be well to Bay th a t it
does not m aterially affcct the view point o f-u -„
investm ent banker. T a k in g counsel of o u r fears,
we can w ork up a very serious boogeym an as
to the re su lt of this disaster. But a fte r all, no one ^
can say w hat will happen. P ersonally we do not
believe th a t there is going to be any such influx
o f A m erican securities from fo reig n countries,
and if there is any, these sales will com e slowly.
P erh ap s we are saying som ething th a t had better
be left unsaid, and still a re we facing such a very
bad situation for the country, as a whole, if we
purchase from the w orld, securities o f this coun­
try, substantially representing its in d u stries and
progress, at bargain prices, if o u r fo reig n friends
a t any ra te persist to rid them selves o f them .’'
W e w ould be false to o u r best tho u g h ts if we
endeavored to take advantage of the needs o f the
necessities of our custom ers on the o th er side
of the w ater, but still, if these securities are to
come we believe th a t it w ill build up a g re a te r
and a stro n g e r credit position of this^ country in
the international money m arket. T h is is in the
long day it is fo r the benelit of this country.
For, it w ould seem th at a rational developm ent
o f this country dem ands th a t the boogey or the
real danger, w hatever it m ay be, th a t m illions of
o u r securities held abroad, can, at any tim e, be
hum ped on o u r m arkets, be rem oved. W e know
this cannot be done in a day, and th a t m atters of
prim e econom ic im port are w rapped up w ith it.
T h ere are tw o ways of m eeting this condition, to
buy back a large p a rt o f our securities abroad or
t o ’ begin and invest ourselves in foreign e n te r­
prises, thereby decreasing o u r n et debt to foreign
countries in th at m anner. W h a te v e r will be done,
it seems reasonably su re th a t aside fro m the fact
that we m ight possibly finance, to an extent, our
A m erican neighbors, a n d thereby back up the
M onroe D octrine w ith som ething of real sub­
stance, we will also buy back a considerable
am ount of A m erican securities now held abroad.
T h is will be facilitated through the com m ercial
credit balances w hich we a re continually piling
up abroad, and w hich will go unabated, receiving
an additional im petus from the expansion in com ­
m ercial and in d u strial operations, especially of our
dealings abroad, w hich the federal reserve lawwili stim ulate. T h e n a tu ra l prerequisites fo r this
expansion are available in o u r country. T he o u t­
side w orld needs the products o f o u r soil, m ineral
well as agricultural, w hich we produce in such
p rodigious quantities. Tt needs o u r m an u fa ctu re s
of vario u s kinds and ch aracter ju s t as im peratively
as we all need salt and sunshine, and, if as an
outcom e o f all this, and as the result of our
efforts to fo rtify our own position in the w orld
of intern atio n al com m erce, w hich will m ake the
A m erican bill of exchange in liquid and sterling
character, second to none on the w o rld ’s m arkets,
we will buv back a p a rt of our securities abroad,
it will undoubtedly be fo r the benefit o f the in­
vestm ent bankers. F o r they will not only do
th eir sh are in the distribution, b u t at the sam e
tim e a question with m any u n settlin g elem ents,
is o u t o f the way. W e personally believe the
problem will be solved w ith o u t a serious dtstu rb ance here.
A pologizing fo r this digression as a final w ord,
we w ant to say th a t we believe th a t the o rg a n iz a ­

tion o f the federal reserve system will redound
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to the benefit of the investm ent bankers.
Federal Reserve Bank of St. Louis

r

1.—I t will have a tendency to stabilize interest
rates, so th a t we will not be called upon to face
in o u r operations sudden changes in the rates ol
interest.
2.—Any loss of custom ers or loss of purchasing
pow ers, w hich the federal reserve system may
bring to the investm ent world, will be m ore than
replaced by the general benefits to the entire
country resulting from a broader and better bank­
ing system , th a t is going to be established w ithout
fail.
3.— It will go a long way tow ard elim inating
serious credit disturbances and it will place th e re ­
by the legitim ate operations of the comm ercial, in­
dustrial and a g ricultural com m unity on a better
and sa fe r basis, less subject than heretofore, to
disturbances caused by factors outside of their
respective spheres of activity, and of their own
m aking.
4.— T he foregoing will enable us to recom mend
to our custom ers w ith m ore confidence, the se­
curities of o u r corporations. F o r the danger of
m any serious obstacles in the way of the develop­
m ent o f th eir business and of the m arket position
o f their securities will be considerably l e s s e n e d
if not entirely eliminat*-! —^
^
^
(J -

firm Finances Saved Big Panic,
Says Reynolds
/y
Only the fa c t th at the U nited S tates was in a
better state to m eet financial reverses th an seven
y ears ago saved the country from the disastrous
results of a panic w orse th an th at of 1907, accord­
ing to Geo. M. R eynolds, president o f the Con­
tinental & Com m ercial N ational and d irector of
the F ederal R eserve B ank o f Chicago, in an ad­
dress at the U niversity o f C hicago last week.
/
M r. R eynolds spoke to an audience of students
and faculty m em bers on "T h e E ffect of the
E uropean W a r on A m erican Credits."’
"T h e paralysis o f business th at follow ed the
opening o f the E u ro p ea n w ar show ed the depend­
ence of A m erica upon the re st of the world,”
said Mr. R eynolds. "V\ e have ju s t passed through
a period of business depression fa r w orse than
the one th at occurred in 1907, and I may say we
have safely passed th ro u g h it.
“ W hen 1 tell you th a t 95 per cent o f the busi­
ness of this c o u n try is done on credit you will see
th at o u r confidence in each o th er is the most
im portant fa cto r th a t goes to m ake up prosperous
business.”
EX PLA INS

H IG H INTEREST RATE.

M r. R eynolds said the high ra te o f interest
c u rre n t at presen t is due to the fact th at stock
exchange loans carried a t the tim e the exchanges
were closed have not been paid. T hey cannot
be paid, and the securities held by the banks can­
not be sold, he continued. Banks in Chicago
have $20,000,000 tied up in such exchange loans
at present, Mr. R eynolds estim ated. T his money
cannot be touched until the exchanges open.
T he “buy a bale o f c o tto n ” m ovem ent will not
w ork, according to M r. Reynolds. H e said the ac­
tion called fo r by the backers o f the move was
not sound econom ics. H e asserted the only way
o u t of the difficulty in which the sou th ern cot­
ton raisers find them selves is fo r the “little fel­
low s” to sell w hat they can for the price they
.•?an £"■ •
r V m o n tr on th eir debts. If
:he system w ere carrieu tnrougn tne DaiiKs w ouia
be able to extend credit to their sou th ern debtors. |
V. S. BANK ING WORLD POWER.

“ T he new federal reserve system which will
be carried into operation «*»--M onday is not per­
fect,” said M r. Reynolds, “but it has the basis for
the best system in the w orld.
“ F o rty per cent o f the bankinj*j)ow e r o f the
w orld is concentrated in A m erica. W e have not
the place this pow er entitles us to in the w orld’s
b anking affairs. W e have not know n w hat a
fo reig n investm ent looks like. U nder the new
system we w ill be able to occupy o u r place.
“ F o u r hu n d red and eighty m illion dollars will
be released in C hicago on M onday. T he mone>
w as form erly required by the reserve. W e will
be able to do th is because the new law will allow
a m obilization of reserves in tw elve piles, instead
o f in 25,000, as fo rm erly was the case.”

State Banks And The Federal
Reserve System
^
D u r i n g th e disc u ssio ns b e fo re the jo in t se s­
sion of th e T r u s t C o m p a n y a n d th e Sayings
Bank S e c tio n s, of the A m e ric an B a n k e r s ’ A s ­
sociation, a t R ic h m o n d , on the q u e s tio n as to
w h e t h e r sta te b a n k s and t r u s t c o m p a n ies
sh o u ld e n t e r th e F e d e r a l R e se rv e B a n k s y s ­
tem, P r e s i d e n t F. H . Goff, of tin T r u s t C o m ­
pa n y section, re a d a n u m b e r of i n te r e s tin g
le t t e rs fro m p r o m i n e n t b a n k e r s e m b o d y in g
th e ir view s as to th e a d v isability of sta te ba n k s
a n d t r u s t c o m p a n i e s e n t e r i n g the ne w system .
A. B a r to n H e p b u r n , c h a i r m a n of th e b o a r d
of d ire c to rs , of th e Chase N a t io n a l Bank, of
X ew Y o rk , in his l e tte r e x p r e s s e d th e ho pe
t h a t in the n e a r f u tu r e b a n k in g i n stitu tio n s
g e n e r a ll y m a y b e c o m e m e m b e rs , “ in o r d e r
th a t th e s y s te m m a y r e p r e s e n t the c o n c e n ­
t r a t e d b a n k i n g p o w e r of t h e c o u n try .
He
said:
“ I believe th e law, in the m ain, to be a
g o o d one, a n d b a se d u p o n th e u n d e r ly i n g p r i n ­
ciples w h ic h will w o r k o u t a b e t t e r bankin g,
financial a n d c re d it s y s te m for th e c ountry.
It is o u r d u t y as b a n k e r s and as patriotic
citizens to give to th e law loyal su p p o r t, in
o r d e r to e n a b le the sa m e to a cc o m p lish the
g r e a t e s t g o o d possible. I t s efficiency will de­
p e n d l a r g e ly u p o n th e b a n k in g p o w e r back ot
th e m a n a g e r s of the C e n tr a l R e se rv e Board
a n d th e v a r io u s local b r a n c h e s . I t is, t h e r e ­
fo re e m i n e n t l y d e sirab le t h a t all. o r as m any
..f o u r b a n k i n g i n stitu tio n s as possib le become
m e m b e r s o f th e sam e, a n d give it th e i r p ra c
tical s u p p o rt.
" T h e law involves m a n y a n d ra d ic al c h an g e
f ro m th e p r e s e n t m e t h o d s of c redit p r o c e d u re
It will n e c e s s a r ily take so m e little tim e foi
the m a n a g e r s to i n a u g u r a te th is n e w sy s te n
a n d b r i n g it to a s t a te o f efficiency. T h
- y s te m will s t a r t w ith s u b s ta n t ia l ly all th.
n a tio n a l b a n k s of the c o u n try . I t m a y b
helpful, r a t h e r t h a n o th e r w is e , it t r u s t com
parties a n d s t a te h a n k s re fra in f r o m join in;
at the o u t s e t, a n d give th e m a n a g e r s a littl
t im e t o g e t th e n e w s y s te m in g o o d workin;.
, ,r d e r
T h e m e c h a n i s m o n c e e stab lish e d , th
jo in in g o f a d d itio n a l o r new' b a n k s m a y b
v e r y e a s ily effected. T h e test of t h e law n
p r a c t ic a l o p e r a t i o n m a y sho w d e fe c ts whicl
can a n d s h o u l d be r e m o v e d by legislation,
ha v e n o d o u b t t h a t C o n g r e s s will r e a d ily re
sn o n d to a n y r e a s o n a b l e d e m a n d s f o r legisla
t i o n
o f th is c h a r a c t e r.
O f c ourse, the law
wil" be s u b j e c t e d to th e c losest s c ru tin y by
bu sin e ss m e n . p u b l ic i s t s a n d e c o n o m i s t s as
well as b a n k e r s , a n d a n y w h o l e s o m e I w s l a tion r e q u ir e d will d o u b t le s s have b a ck of it a
c o n se n su s of o p in io n d e m a n d i n g its adoption.
A. J. H e m phill, p r e s i d e n t ot tlie G u a ra n ty
T r u s t C o m p a n y , o f N e w Y o r k , e x p re ss e d a p ­
p r o v a l of the F e d e r a l R e s e r v e Act, saying :
" I feel c e rta in t h a t th e t r u s t c o m p a n ie s will
c o - o p e r a te w ith the v a rio u s r e g io n a l b a n k s so
as to m a k e th e w h o le s y s te m a c o m p le te su c ­
c e s s a n d in th is w a y s e rv e th e b e s t in te re s ts
of the pe o p le a t large. T h e b r o a d law re ce n tly
a d o p te d b y th e sta te of N e w Y o r k will, in
m y o p in io n , p r e v e n t th e t r u s t c o m p a n i e s o r ­
ganiz ed u n d e r -t h e law s of t h a t s t a te b e co m in g
m e m b e rs o f th e F e d e r a l R e s e rv e s y s te m until
the F e d e r a l R e se rv e A c t is a m e n d e d a lo n g
sim ilar libe ral lines. I a n ti c ip a te a s th e o p e r a ­
tion o f th e s y s te m in d ic a te s t h e n e c e s s a r y
a m e n d a t i o n s t h a t t h e s e will be e n a c t e d . ”
E D H u l b e r t , vice p r e s i d e n t o f th e M e r ­
c h a n ts L o a n & T r u s t C o m p a n y , o f C h ' c a s ° ,
t h o u g h t t h a t c o - o p e r a ti o n o n the p a r t o t the
c o u n t r y ’s t r u s t c o m p a n i e s a n d sta te b a n k s w a s
e sse n tia l to t h e su c c e ss of the n e w sy s te m ,
saying: ,
.
,
.
•‘ Vi! F e d e r a l b a n k in g le g isla tio n in t h e p a st,
d e s ig n a te d to p r o te c t d e p o s ito rs a n d fa c ilita te
n sin e ss h a s b ro k e n d o w n u n d e r p re s s u re ,
la rg e ly b e c a u se sta te b a n k s have n o t b e en in luded in its o p e r a t io n .
I n a s m u c h as s ta te
Digitized for'mFRASER
i k s r e p r e s e n t a g r e a t deal m o r e than h a lf
,,f the b a n k i n g p o w e r o f the c o u n tr y , it is o b ­
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Federal Reserve Bank of St. Louis

v ious t h a t n o re m e d ia l legislation can be u l ti ­
m a t e l y su ccessful th at does n o t includ e them .
\\ hen the M o n e t a r y C o m m iss io n first p r o ­
m u lg a t e d its p l a n for b a n k in g re fo r m , it e x ­
clud ed sta te b a nks. T h e c o m m is s io n b e c a m e
c o nv inc ed, h o w e v e r, e arly in th e d e b a t e th a t
the p lan w o u ld be a failure if sta te b a n k s w e re
n o t in clud e d o r if a n y a t t e m p t was m a d e to
fo rce t h e m t o do b u sin e ss on n a tio n a l lines.
I Ins r e c o g n i ti o n of the real p o sitio n of state
b a n k s in o u r financial s y s te m w a s in m y j u d g ­
m e n t t h e g r e a t e s t step in b a n k in g r e f o n r
w h ic h lias b e en ta k e n in fifty y e ars. I hope
a n d believe t h a t th e F e d e r a l R e se rv e B o a r,
will r e c o g n iz e the i m p o r t a n c e a n d necessity
of g e t t i n g the s t a te b a n k s in to th e n e w sys
tem a n d will, at an e arly date, define its atti
tu de t o th e s t a te b a n k s in such a w a v tha
th o s e d o i n g a c o m m e rc i a l bu sin e ss will be
g la d to join , th u s giving th e c o u n t r y a n idea',
s y s te m w h ic h can o n ly be b r o u g h t a b o u t in
o n e w a y — n a m e ly , by sta te c o n tr o l o f the
kin d o f b u s in e s s w hich shall be c o n d u c te d ,
s u p p l e m e n t e d b y g o v e r n m e n t su pe rvision a n d
c o n t r o l in its o p e r a t io n s ."
In his l e t t e r Col. F. H. F r ie s , p re s i d e n t of
th e W a c h o v i a B a n k & T r u s t C o m p an y , of
W in s to n - S a l e m , N. C.. sa id t h a t he w a s in
f a v o r o f his in stit u t io n j o in i n g the n e w s y s te m
fo r t w o p a r t i c u l a r re aso n s.
“ F i r s t , be c a u se I t h o u g h t t h a t w e w e r e n o w
n e a r i n g a n a tio n a l sy s te m baseel u p o n p r o p e r
p r in c ip le s t h a t s h o u ld include all b a n k s a nd
nn a n c i a i in s titu tio n s , t h a t w ould g r o w in
s t r e n g t h w ith th e g r e a t c o u n t r y t h a t th e a s s o ­
c ia tio n will be called u p o n to serve.
I am
quite su r e t h a t th is will be so undei t h e g u i d ­
a n c e o f a w ise a n d liberal b o a rd , su c h as
se e m s t o h ave b e en selected. T h e o t h e r c o n ­
sid e r a t i o n is e spe cially a pplicable to a b a n k
o f d e posits, w h i c h we a re to a c e r ta in e x ­
ten t.
T h e r e a r e a d v a n t a g e s a c c r u in g to
m e m b e rs h i p in the m a t t e r o f d is c o u n t a n d
e m e r g e n c y c u r r e n c y t h a t is a d irec t a n d p o s i ­
tive a d v a n t a g e a t tim e s a n d a s e n t im e n ta l
a t t e n d a n t a d v a n t a g e t h a t se e m s
t o a dd
s t r e n g t h b e c a u se d irec t a n d i m m e d ia te relief
lies c lo s e r to t h o s e i n stitu tio n s t h a n th o se
th a t do not. T h e t r u s t c o m p a n ie s d o i n g o n ly
a fiduciary b u s i n e s s will find little a d v a n t a g e
in jo in in g .
I t h in k , th e re f o r e , t h a t it will
have a t e n d e n c y to d ifferentiate if n o t u lti­
m a t e ly s e p a ra t e t r u s t c o m p a n i e s a c c o r d in g to
the c h a r a c t e r o f th e b u sin e ss t h a t o c cupies
their fu n d s a n d a tt e n ti o n s .
The
C l e a rin g
H o u s e fe atu re m ig h t also be of s o m e value
to us.
O f c o u r s e the d i s a d v a n t a g e s o f the
t r b i t r a r y r u lin g s b y the b o a r d w i t h o u t a fore< now ledge of h o w o u r b u sin e ss is c o n d u cted ,
Dr t h e re la tio n t h a t m ig h t e x is t b e tw e e n the
various d e p a r t m e n t s m ig h t be a n n o y i n g to say
the least, p a r ti c u l a r ly a s I believe t h e y will
t end t o i n a u g u r a te a s y s te m a n d in tr o d u c e a
rigid e n f o r c e m e n t of the rules t h a t will tend
to s t a n d a r d i z e all in the re se r v e sy s te m , w h ic h
m ig h t, a n d d o u b t le s s would , a p p ly m o re c lo s e ­
ly t o o t h e r s e c ti o n s of th e c o u n t r y t h a n o u r
ow n, w h e r e lib e ral ideas a n d p r a c tic e s p r e ­
vail. F o r t h e s e r e a s o n s it h a s been a d e b a t ­
able q u e stio n , a n d o u r e x ec u tiv e officers are
n o t a s fully c o n v in c e d as to the a d v a n t a g e s
a s I a m , a n d w e h ave sim ply do ne w h a t m ost
i n s t it u t io n s h a v e done, d e f e rr e d o u r a c t i o r
until th e b o a r d h a s o r g a n iz e d and u n til it:
I r u lin g s a re p r o m u l g a t e d and w e cou ld se.
s o m e th i n g o f its p ra ctic a l w o r k in g .”

I>»v »V I U

Sub-Treasuries Not To Be Merged
In Reserve Banks ?/r. /■/
A fte r six months’ deliberation Secretary of
the T reasury McAdoo has practically decided noi
to adopt the plan suggested by Irving Shuman,
sub-treasurer at Chicago, for the m erging o f
United State sub-treasuries with the district re ­
serve banks in the federal reserve system.
T he factor o f prim e im portance which, it is
understood, has operated to m ake it practically
certain th a t the sub-treasury will not be done
away with, or even reduced to any e x te n t in op­
erations, is that the federal reserve banks are only
quasi-public institutions. In the opinion o f m any
bankers the reserve bank system is a private
institution, the stock o f the reserve banks
being owned by the national banks.
T h e in­
fluence o f the governm ent, although pow erful
through the privileges the governm ent has con­
ferred on the system , is considered indirect and
chiefly regulatory.
T he question of w hether the reserve in stitu ­
tion is a p art of the governm ent or not is now
the hands of the departm ent o f ju stic e for
•cision.
It is th ere fo re considered absolutely essential
at the governm ent retain its own system of
ndling the billions in gold and silver coin and
rrency for which it is responsible.
/

&

u u ij K

PW M K

I n s te r lin g e x c h a n g e , also , t h e r e h a v e b e en so m e p h e n o m e n al de
re lo p m e n ts. E a r ly in A u g u s t r a te s a d v a n c e d to u n p re ce d en te d ai
well a s u n w o rk a b le p re m iu m s . T h e p a s t w eek h a s seen th e m ops to re d -to a p p ro x im a te ly th e n o r m a l g old p a r ity w ith th e pro sp ect t i n t
b e fo re th e first o f th e y e a r thesy w ill go d e c id e d ly lo w e c In sy m p a th y
w ith o u r c o n s ta n tly e x p a n d in g 1 e x p o rts :
’
• .‘JV '.a P
T h e fo re ig n t r a d e o f th is c o u n tr y h a s h a d so m e s to rm y exp#riences. O u r s h ip p in g w h ic h , a t <3ie o u tb r e a k o f th e w a r, w a s paralyzed,
h a s b e co m e p h e n o m e n a lly a e tiv t, a n d o u r s h ip m e n ts to E u ro p e have
a ssu m e d s u c h p ro p o rtio n s t h a t th e y h a v e a lre a d y , w ith th e a ssist­
a n c e o f e x p o rts o f g old to C a n a d a , liq u id a te d m o re th a n 50 p e r-c e n t
of o u r e s tim a te d im m e d ia te fo re ig n d eb t. In fa c t, e x p o rt* a re grow ­
in g to s u c h p ro p o rtio n s t h a t i t is a lr e a d y b e g in n in g to a p p e a r a s if
th e $ 1 0 0 , 0 0 0 ,0 0 0 gold p ool h a d a n s w e re d its p u rp o se a n d could now
be c o n v e n ie n tly dissolved.
■
M oney, w h ic h W'as p ra c tic a lly u n b o rro w a b le n in e ty d a y s ago, is
now a v a ila b le in im m e n se a m o u n ts a n d is lo a n in g fre e ly o n call at
6% p e r c en t, w ith so m e le n d e rs d e n ^ a n d in g only 5 p e r c e n t o r a shade
less w h e re th e c o lla te ra l is e x c e p tio n a lly good. A nd tim e m oney
p ro m ise s to be w ell u n d e r 6 p e r f e n ^ i ^ l h e
t h e tu r n o f th e
. In s te a d o f a $50,000,000 ban k , ile n c it w e now h a v e a s u rp lu s of
a p p ro x im a te ly $7,500,000. T ru e , . raly a w eek a g o it w a s $15,000,000;
b u t sin ce t h a t tim e w e h a v e s h ip p e d m o re gold to E u ro p e a n d , w h at
1b m o re .significant, w e h a v e m a te ria lly re d u ce d th e a m o u n t of e m e r­
gen cy c u rre n c y o u ts ta n d in g . In Nc;w Y ork a lo n e fu lly o n e -th ird o f th is
d istre s s p a p e r h a s b e e n re tir e d . So w hile th e re is no p ro sp e c t of a
ra p id b u ild in g u p o f b a n k -jreB em es— w h ich a re , in cid e n ta lly , to d ay of
a r a th e r n e g a tiv e c h a r a c t e r — e a c h w eek w ill see m o re e m e rg en c y
c u rre n c y re tire d a n d t h e b a n k in g p o sitio n g ra d u a lly re sto re d to n o rm al.
T h e lo an a c c o u n t, r e n d e r e d in fle x ib le th ro u g h th e su sp en sio n o f th e
se c u rity m a rk e ts , is n o w m o re e la s tic th a n a t a n y tim e sin c e th e w ar.
L a s t w e ek lo a n s w e re re d u c e d , .ac c o rd in g to th e a v e ra g e figures, m ore
t h a n $11,500,000.

- Jt ■

Federal Bank Headquarters
Officials of the Gu ard ian Savings Si T r s
C« said Fridav that as yet there is nothin!' tan i
hie to the report that the Cleveland Federal Re
serxe Rank would occupy the Guardian's nres< n
q r a r t e r s a f te r it moves to the N ew Fnglani
building. Bankers say they believe the Guardiai
/

,

ibuilding would be an excellent location fo r thi
federal institution, but fo r some
me to cotru
E. R. Fanci er’s bank p m b a ’ lv will use the W il ­
liamson building offices and sh are the vaults in
the basement with the Union National. T he se­
lection of a permanent site for the federal bank
probably will not be made until it is self-sustain'Cig-

An Epoch In Our Financial History
Xext Mondav will m ark the hesrinnine of a new
epoch in the financis’ history of the U nited States.
More than one hun dre d state bankin g institu
t.ons throughout the U nited State s evidentlv hav,
applied to the Federal Reserve Board f..r admi*
sion to the new nankins: system
The applicants include some larg e hanks, which
members teel will add materially to the strenetlo f the system. A sub-committee o f the board
has under consideration re g u la tio n s for their a d ­
mission and .s expected to he able to repo rt next
week. T h e principal question fo r decision is how
on" real estate




to m ake loan.

R E S E T O -fiM L K O PEN S
\
fflERE T 0 D A j r ; ? ^ C T S
$ 1 § J t) 6 .0 0 0 . IN F O L D
'Y h ? F e d e h il "R eserve B a n k of
C leveland w ill becom e a re a lity w ith
th e o p en in g of b u sin e ss to d ay . Its !
d ire c to rs e s tim a te
th a t
by n ig h t
a b o u t $16,500,000 in gold a n d gold certillc a te s w ill h a v e been received fror?i
m em b er b a n k s. T he first pay men
of $l!,000,000 on th e c a p ita l stock la
a lre a d y in th e b a n k 's v a u lts in tho ■
W illia m so n building.
E le v e n o th e r re se rv e b a n k s w ill
open in o th e r c ities a t th e sam e time.
C lev elan d is th e c e n te r of d istric t j
No. 4, e m b ra c in g all of Ohio, th
w e ste rn se c tio n of P e n n sy lv a n ia , th e i
n o rth e rn p a r t of W est V irg in ia ari-li
E a s te rn K e n tu c k y . T h ere a re 7f>7
m em ber b a n k s in th is d istric t, m a k ­
ing th e C lev elan d F e d e r a l R eserve j
B a n k fo u rth am o n g the o th e r eleven
in c a p ita l sto c k a n d re serv e s tre n g th . I
E.
R. F a n c h e r, go v ern o r of th e
C leveland b a n k ; D. C. W ills, c h a ir­
m an of d ire c to rs, and o th e r direc-}
to rs fro m all ove r th e d is tr ic t a re j
expected to pre sid e a t th e opening, j
T hey, w ith re p re s e n ta tiv e s of the j
m em b e r b a n k s, will be g u e s ts o f :
F ir s t N a tio n a l B a n k officials to d ay j
a t a lu n ch eo n a t H o te l S ta tle r. Jo h n
S herw in, p re sid e n t of th e F i r s t N a ­
tio n al, w ill pre sid e a t th e luncheon.
C e n tra liz a tio n of re se rv e funds,
w hich is th e b a sis of the re g io n a l.
b a n k p lan , is e x p ected to m a k e fin an ­
cial p a n ic s im possible, b y e lim in a t­
ing th e rush* to r, cash in tim e s of
tig h t fin an c -eft|ij\/ i
|9 l 4
T h e fe d e ra l re se rv e b a n k s will not
d e a i d ire c tly w ith th e public, but ,
vMth e a c h o th e r, w ith m em b e r b a n k s ’
a n d w ith th e g o v e rn m e n t.

IS ENDING TODAY
Carried Nation Through Half
Century of Sunshine
and Storm.
U. S. Board Takes Final Step
to Begin the New
Regim e-

NOV

B Y H . S. i f W W T H A L .

T o d ay is th e la s t clay o f th e na
t!ona! banking- sy ste m of th e U nited
S ta te s.
The sy stem w a s conceived during:
th e civil w ar, w as c re a te d b y law in
1804, a n d a f te r fifty y e a rs o f hon->rble service, it passes. T h e natio n al
b a n k sy ste m in re a lity m erg e s into
th e fed eral re serv e sy ste m , w hich is
c o n stru c te d upnn
,
T he n a tio n a l b a n k a c t served the
c o u n try well. I t m a d e s tu rd y b a n k ­
in g in stitu tio n s a n d in all norm al
tim e s accom plished all desired ends.
H u t in a b n o rm a l tim es, th e system
proved in ad e q u ate .
T om orrow e n te rs th e fed eral re ­
se rv e system , w ith its c en traliza tio n
of gold, e la stic cu rre n c y , m a rk e t for
m e rc h a n t p ap er, a n d c e n tra l go v ern ­
m en ta l control. A board of seven
m en, in w hom th e n a tio n h a s full
confidence, to m o rro w becom es the
ru le r s o f finance in th is co u n try .
S tep.
A fte r long c o n sid eratio n , th e fe d ­
eral re serv e bo ard y e ste rd a y a n ­
nou n ced th e ra te s of d iscount to be
.ch arg ed by th e tw elve regional
b an k s.
T h e C leveland, B oston, Richm ond,
C hicago a n d St. L o u is in stitu tio n s
w ill e x a c t 0 p e r vent, from th e ir c u s­
tom ers, th e m e m b e r b a n k s, on m e r­
c h a n t p a p e r of a ll m a tu ritie s .
T h e N ew Y ork a n d P h ilad e lp h ia
reg io n al b a n k s w ill c h a rg e f>1 -2 per
c en t, fo r p a p e r m a tu rin g in less th a n
th ir ty d a y s a n d 0 p e r cent, for p a p er
ru n n in g longer. T h e A tla n ta , M inne­
apolis, K a n sa s C ity, D a lla s a n d San
F ra n c isco re g io n a ls will d e m a n d 0
p e r cent, fo r p a p e r ru n n in g less th a n
th ir ty d a y s a n d 0 1 - 2 fo r longer m a ­
tu ritie s .
T h e re a so n for th e diversified ra te s
is obvious. T he fe d era l b o a rd h a s
m ad e a su rv e y of conditions, h a s d is­
covered t h a t in tw o e a s te rn c en ters,
\ Tew Y ork a n d B oston, m o ney U
ch ea p a n d in th o se te rrito rie s h a s
m ad e th e d isc o u n t ra te s low est.
C leveland is in a n a re a w here m oney
is n e ith e r e x tre m e ly cheap n o r ex ­
tre m e ly d ear, a n d o u r d isco u n t r a te
s trik e s a m edium b e tw ee n th e high
a n d th e low.
T he ra te s a re to a o e rta in e x te n t
e x p erim e n tal. B etw een th e lines one
c an re ad t h a t th e b o a rd d e sires m em ­
b e r b a n k s to do a s little re d isc o u n t­
in g a s possible a t th e s ta r t, a n d h a s
a cc o rd in g ly fixed th e d isc o u n t r a te s
so t h a t th e re is little difference b e ­
tw een th em a n d g e n e ra l m a rk e t
ra te s , w ith the re su lt t h a t th e re hi
no profit in re d isc o u n tin g .
So P ro fit in R e d i « c o a n t l n « ,

A m em b er b a n k in th is te r rito ry
wiJJ loan on a c u s to m e r’s n o te a t G
p e r cent., a n d th e re re m a in s b u t one
in cen tiv e in stea d of twro fo r th e b a n k
to tu rn th e n o te in to th e fe d e ra l r e ­
serve bank. T he e le m en t of p rofit b e ­
ing rem oved, th e m em b e r b a n k can
have p a p e r re d isco u n ted fo r th e p u r ­
pose o ffor
e sta
b lish in g re se rv e in th e re Digitized
FRASER
erionol
b ank.
T he tw e lv e in s tltu - >
http://fraser.stlouisfed.org/

Federal Reserve Bank of St. Louis

tions desire gold and certificates in j
the g re a te st possible volume ju s t now i
and a re offering no special induce- 1
m ent for m em ber b anks to tu rn in
anything else a s reserve.
tVlint S jn ln ii DofN n t S ta rt.
T he federal reserve system a t the
*tart. therefore, will su b sta n tia lly in ­
crease th e c ap a city of m em ber banks
to accom m odate their borrow ing c u s­
tom ers, b u t these facilities will a rise i
from the perm itted reduction in re- 1
serv e behind deposits r a th e r th an
from the rediscount privilege.
F u rth e rm o re , the regional ban k s
will not s ta r t o u t as com petitors of
m em ber banks.
F or instan ce, a
C leveland bank m ay be rediscounting
for an A sh tab u la bank a t 6 p e r cent.,
an d the federal reserve b a n k of
Cleveland w on’t jum p into th e m a r­
k e t w ith a 5 1 -2 per cent, ra te and
ta k e business a w ay from th e Cleve­
land m em ber. The gist of th e m a t­
te r is th a t the federal reserve system
is being begun conservatively; w ith
th e in ten t, to fill the re serv o irs w ith
gold and to prevent credit Inflation.
W ee k In X n t a l i e l l .
Y e ste rd a y ’s weekly sta te m e n t of
7 m o jn«w York clearing house banks,
I d a ily average, shows a reduction in
loans of $11,500,000. L oans a t $2,­
1113,000,000, a r e about $227,000,000
la rg e r th a n a t th is tim e la s t y e a r and
* th e a m o u n t now out on stock ex­
; chan g e co llateral is understood to
be a bout $200,000,0*HJ. T he loan total
is g ra d u a lly responding to th e general
re a d u stm e n t of affairs.
S u rp lu s reserves w ere c u t down
from the £ 111,0 0 0 ,0 0 0 of la s t w eek to
$8,600,000, but th is m an ifests the o u t­
flow of gold to C anada and additio n al
re tire m e n t of em ergency notes. De­
po sits rose $2,300,000, a n d all in all
th e sta te m e n t indicates th a t the
gro u n d gained by the b an k s is held.
T he floor of th e New Y ork Cotton
exchange will be a scene of activ ity
today in p rep arn tio n for tom orrow 's
re -o p e n in g a fte r th ree m onths of idle­
ness. Telephone* are being installed,
c le rk s recalled, a p p a ra tu s d u sted up.
T he new w eek w ill And p ra c tic a lly a ll
of the big c o tto n exch an g es open,
and c o tto n Is relied on to keep the
fo reig n e x ch a n g e m ark e t in o u r favor
as it has been th e p a st w eek. London
night d ra fts w ere up to 4.8815 y e s te r­
day. com pared w ith a close of 4.87
F riday, b u t no one com plains of th is
n a tu ra l reactio n . The ra te h a s been
holding c o n sisten tly below the gold
exp o rtin g point and hope is stro n g
th a t we w ill keep our sto ck of y e l­
low m etal from inroads of conse­
quence. G erm an ex change is so w hol­
ly in our fav o r th a t a m an in New
Y ork who w a n ts to pay a bill in
B erlin can m ake ab o u t 8 per cent,
discount in the o peration.
O nly tw o big m a rk e ts re m a in idle
in th is c o u n try a f te r tom orrow , the
New York sto ck a n d coffee ex ch an g es;
the coffee bourse is expected to re ­
sum e soon and little by little , the
rig o r of sto ck exchange ru le s is less­
ened. T he w eek b ro u g h t fo rth an
intim atio n , how ever, th a t th e sto ck
m a rt w ould n o t s ta r t in on the
old scale u n til Ja n . 1, a t th e earliest.
T h ere h a s been a tu rn in steel tra d e
feeling, a n d som e g ro w th in volum e
of o rd ers. P la n ts in the P itts b u rg
a re a say th ey w ill p u t m any men
back to w o rk th is w eek.
P h ilad elp h ia b a n k e rs have been
ta k in g som e new ra ilro ad equipm ent
notes, in clu d in g $270,000 M issouri P a ­
cific te n -y e a r 5s on a basis said to
h ave been 6 1-4 p e r cent. The A t­
la n tic R efining Co., S ta n d a rd Oil
child, declared i t s first dividend since
th e disso lu tio n , though a n u m b er of
the o th e r fo rm er su b sid ia rie s have
been reducing disbursem ents. A num ­
ber of th e S ta n d ard Oil sto c k s a re
now below the level of J u ly 30, b u t
a s u totfa.it,‘a*1 n u m b e r a re a t o r be­
yond the ante-b*aUum level.

'JEW ERA BEGINS
WITH OPENING OF
RESERVE BANK
The Cleveland fed era l reserv e ^
bank, tem porarily located on tn e j
around floor o f the W illiam son
building, w as officially born
Monday. It represen ts th e com ­
bined id eals of th e fo rem o st
modern bankers and finan ciers
and w ill replace a b a n k in g s y s ­
tem obsolete and inefficient.
The new sy stem p ro m ises to re v o ­
lutionize b a n k in g a n d provide a n
elastic currency.
A pproxim ately 5SO.OOO.OOO of b a n k ­
ing reserves will be re le ased in th e
Cleveland d istric t.
B a n k e rs i n te r ­
p ret from th is a n u ltim a te c re d it e x ­
pansion of m ore th a n $200,000,000. B a n k
credits released M onday a ll o v e r th e
U nited S ta te s w ere in e x cess of *450;000 000, m eaning th a t e v e n tu a lly b u s i­
ness Will h ave tw o billio n s e x tr a
credit a t its d isfH lfV
] fj
W hen the ("nrveiaine iifSTTfijtion
gets properly undov w a y b a n k s in
territo rie s h a rd pressed fo r c a sh will
be able to red isco u n t th e ir p a p e r a t
the local federal in s titu tio n , th u s
providing th e
m a n u f a c tu re r
and
m erch an t m eans fo r e xpansion.
F o u r hu n d red v isitin g
b a n k e rs
gave th e b a n k 's o p e n in g a h o lld a j
1lone, b u t m an y re g u la r in q u irie s
were m ade by m em b er b a n k s fo r th e
rediscount of paper.
i R eserve deposits M onday a lre a d y
w ere in excess of $2 ,000,000, a n d i t w a s
expected th a t by W e d n e sd a y th e
a m o u n t would be in cre ased to $!■!,500,000.
T he b a n k h a s a lso in its
v a u lts th e $2,000,000 re p re s e n tin g th e
in itial subscription to its
c a p ita l
stock. U ltim ately th e b a n k 's gold
holdings or th e ir e q u iv a le n t w ill b e
$100,000, 000.

D.
C. W ills, boss of Hie c u rre n c y ,
h a s n 'i ordered any of th e new n o te s
yet. T h eir a p p e a ra n c e h e re w ill In­
d ica te th a t th e c u rre n c y is e x p a n d in g ,
I a n d W ills is by no m ea n s c e r ta in it
needs stre tc h in g a t tliis tim e.
W ills said th e new sy ste m w ill m a k e
b a n k e rs Invent new e x cu ses fo r t u r n ­
ing dow n u ndesirable a p p lic a tio n s fo r
loans.
T hey c a n ’t s a y “ M oney is
tig h t a n d our b a n k is n o t len d in g ."
H e probably will h a v e to tell h is u n ­
desirable c lie n t th e tr u th .
1

EXTEND WELCOME

^A NK ERS FETE OFFICERS
OF FEDERAL INSTITUTION
it

NB- 5 W J
Commerce Body and Bankers
Give Luncheon to Federal
Reserve Officials.

Recep­
tion to Government
Agents.
D ire cto rs a n d officers of th e F e d ­
eral R eserve B an k of C leveland w ere
g u e sts yestjfffca*’ noon of th e C ham ­
b e r of Com m erce, a n d la s t evening of
the b a n k ers of C leveland. A t noon th e
g u e sts w ere dined In th e c h am b er
lib ra ry , a n d in th e e vening in th e
U nion club.
E R . F a n c h e r. gov ern o r o f th e fede ra T o a n k , a t la s t e v en in g 's b a n q u e t
expressed his belief th a t “ th e first e f­
fe c t of th e o p eratio n o f th e new la w ”
will be to lessen th e ten sio n of the
p a st few w eeks or m onths.
“ N one of th e officers of th e F e d e ral
R eserve B a n k of C leveland is cock­
su re of w h at is going Co h ap p en ,” said
Mr. F a n c h er, "b u t w e hope, a n d I b e ­
lieve, you a ll h av e confidence th a t
th e re will be som e m a te ria l benefits
Kor a ll o f u s.’’
M r. F a n c h e r w ent Into d e ta il a s
to m eth o d s of ex p an d in g le g itim a te
c re d it u n d e r th e law .
C oncerning
a c riticism so m etim es m ade, h e sa id :
“If you feel th a t th e new sy ste m
does not provide for sufficiently c en ­
tra liz e d
control.
m o b ilizatio n
of
fo rces w here needed, a n d p ro p e r c o r­
re la tio n o f th e tw elve d istric t banks.
I fe a r you h ave not been w a tch in g
th e fe d era l re serv e b o a rd e x ercisin g
th e fifty -th re e d istin c t p o w ers spe­
cifically c o n ferre d upon it by th e
act, b esides som e few — 57 o r so— n o t
specified, b u t p e rh a p s im plied. T he
bo ard seem s to be d oing p r e tty w ell
In h a n d lin g Its tea m o f tw elv e s p ir it­
ed h o rse s; th e y a re n o t r u n n in g a w a y
w ith th e coach.
“ My ow n feeling is t h a t th e p ro p e r
purpose of th e a c t is, a n d I hope its
effect w ill be, n o t so m uch to m ak e
a n e x p an sio n of c re d it easy, a s to
m ak e c re d its b e tte r. T h is is. I b e ­
lieve, by f a r th e g r e a te r need. M r
V a n d erlip sta te d before th e se n a te
co m m ittee t h a t ‘u n d o u b ted ly a b a n k
will feel freer, if it h a s a c e n tra l
re serv e b a n k to go to fo r d iscounts,
th a n it does now .' B u t he p ointed i
o u t t h a t th e re will be co n tro l of th e |
d is tric t re se rv e b a n k b o a rd s a n d of
th e fe d era l re serv e b o a rd to re s tr a in
b a n k e rs in a n y lo ca lity from ‘lo an in g
m ore because th e y c a n re d isc o u n t
th a n is w ise fo r th em to lo an .’ I t la
m y ju d g m e n t a n d m y hope, t h a t th e
a m o u n t of re d isco u n tin g in n o rm a l
tim es will be v e ry m o d e ra te , so t h a t
In a b n o rm a l tim e s we m a y h a v e th e
pow er o f re d isc o u n tin g to fa ll b a c k
upon.”
H e concluded: “ In m y opinion, th e
C leveland b a n k h a s a b o a rd of d ire c ­
to rs t h a t should in su re i t a n equal
ch an ce of success w ith a n y o f th e
o th e r e lev en banks, to s a y th e le a s t—
a n d t h a t C leveland Is to be c o n g r a tu ­
la te d on th e p ro sp e ct of g a in in g a
m ig h ty good citizen a n d a re a l b a n k ­
er, In M r. D . C. W ills.” M r. F a n c h e r
w as g re e te d w ith .sustained c h ee rin g
a s he ro se to sp eak .
Col. J . J . S u lliv a n w a s to a s tm a s te r




E l v a d o r e R Fa n c h e r

Oorer>non

ReservoO&ik

C O L .J .J .S U L L IV A N ,
C h a v rm a n ffa n < ju e .t C om rraM ee.
v a n c a n e a io r s- to a s t to m m, a n a u
w as given sta n d in g .
Mr. F a n c h e r
and th e d ire c to rs o f the b a n k also
w ere th e su b je c t of to a s ts In the
course of th e evening.
C o n g ressm an B ulkley told w h a t
financial leg islatio n is now sim m ering
: in W a sh in g to n , including am end< m e n ts to th e fe d era l reserve a c t and
I ru r a l c red its. B u t he sta te d his be1 lief t h a t for th e n e x t decade no m ore
I e sse n tia ls of finance w ould be th e sub1 je c t of legislation, now th a t th e bankt ing system , so long considered o u t­
grow n, h a d been replaced by a new.
A tto rn ey J a m e s H. H oyt expressed
his a d m ira tio n of th e reserve act. H e
pleaded for less legislation o b stru c ­
P C . W I L L S , C h a tm a n .
tiv e to b u sin ess a n d urged th a t "a
Fre e ? * r,a t R e s e r v e 8 a n /c
living c h an c e" be given the railro ad s
th e co u n try . "T he in te rests of the
a t th e b a n q u e t a n d w a s c h a irm a n of of
ilro a d s a re th e in te rests of the
the c o m m itte e w hich a rra n g e d It. In ra
b
a
n
k ers, of th e shippers and of th e
th e c o u rse of th e ev en in g he In tro ­
n try ." said Mr. H oyt. "T hey are
duced Ju d g e Jo h n H . C larke. D. C. ca ollu re
la te d , th e re is a n interh arm o n y
W ills, fe d era l re serv e a g e n t a n d c h a ir ­
b
etw
een th em .”
m an of th e C leveland b a n k 's d ire c ­
H is ta lk w as in te rsp e rse d w ith
to rs, C o n g ressm an R o b e rt J . B ulkley hum or. H e read a supposed le tte r
a n d A tto rn e y J a m e s H . H o y t, a ll of fro m a coal com pany q u o tin g prices
w hom m ad e m e a ty ta lk s e ith e r on th e to a p rospective cu sto m er In w hich
re serv e sy ste m o r on b u sin ess a ffa irs. th e coal com pany, a t th e end of every
Ju d g e C larke to ld how th e sy stem o th e r w ord, q uoted opinion of coun­
would u n ite 7,500 b a n k s “ for th e con­ sel In te rs ta te com m erce reg u latio n , ’
d u c t of b u sin e ss In norm ul tim es and public u tility o rd e r o r a c t of congress
for th e p ro tec tio n o f husiness a n d the to a ssu re Itse lf a n d its c u sto m e rs;
c o u n try in c rises.” H e a d v ised b u si­ t h a t It w as a c tin g in accordance w lth ^
ness m en to look less to c o n g ress and
le g isla tu re s fo r p ro sp e rity a n d m ore ’a '\ 't the noon C h am b er of Co. mrrcel
to P rovidence, sa y in g in p a r t “ we luncheon, M orris A . Black, p r e s e n t t
ha v e h a d good tim e s u n d e r low ta riff of th e c h a m b e r presided.
a n d bad tim e s u n d e r high ta riff; we
--- a--h a v e h a d bad tim e s u n d e r low ta riff
an d good tim e s u n d e r high ta riff. B u t
w e n e v e r h a v e h a d good tim es w hen
we h a d bad crops, n o r b a d tim e s
w hen w e h a d good c ro p s.”
Mr. W ills d jv elt on th re e fe a tu re s of
th e re se rv e sy ste m , th e m ethod of
e le ctin g d ire c to rs w hich gives m em ­
b e r b a n k s six o f th e nine d irec to rs,
m a k in g th e re g io n a l in s titu tio n “ a
b a n k of b a n k s ”— th e e sta b lish in g o f a
fe d era l re se rv e a g o n t in each b an k
w ho h a s been te rm e d “th e fe d era l r e ­
serv e b o a rd on th e sp o t,” t h a t Is, th e
c e n tra l W a s h in g to n powder In c a rn a te d
—a n d th ird , th e a d v iso ry council,
com posed of one m a n from eac h fe d ­
eral d is tric t, th e tw e lv e to m e e t w ith ■
th e fe d e ra l re se rv e b o a rd fo u r tim e s a
y e a r o r o fte n e r a n d to keep it In to u ch i
w ith g e n e ra l b u sin e ss conditions.
W Ken M r. W ills finished. Col. S ulll- I

°R E S E N T W EEK TO
USHER I N TH E NEW
F I N A N C I A L SYSTEM
*nonths ago, but m ost of these in s ti­
B Y IV. S. V O V s i x S
tu tio n s h av e th u s f a r been un ab le to
E d ito r The A m e rica n B a n ke r.
ta k e a d v a n ta g e of the chan g e beN E W YORK, N o v e m b er 15.— cause of th e 25 per cent ru le of the
sVith th e com ing o£ th e new w eek, C learin g H ouse A ssociation, of w hich
" te re s t is being riv e te d u p o n th e th ey a re m em bers.
•re lim ln ary m ovem ents o f th e new
The Question n a tu ra lly arises a s to
e d e ra l re se rv e system , th e
effect th e fa cilitie s th a t will be im m ediate*f w hich is sup p o sed ly to re v o lu - *Y av ailab le by the pew in stitu tio n s,
ionize fiscal p ra ctic e in th e U n ite d *nd th e e x ten t to w hich th e y w ill be
>:ates. T h e new sy stem is f o rtu n a te
to benefit th e business in te re s ts
n t h a t it is w elcom ed w ith o p e n of th is country. I t m ust be rem em arm s on a ll sides; t h a t it h a s re - bered th a t th e
federal
reserve
(oived, a n d will c o n tin u e to receive, b a n k is a “ b a n k ers’ b an k ” ; th a t is.
the u n stin te d s u p p o rt of p a trio tic it Is n o t perm itted to tra n s a c t busi>ankers a n d b u sin ess m en in ev ery Jiess d irec tly w ith a n y m e rc h a n t or
q u a rte r, a n d th a t it h as, m o reo v er, m an u fa c tu re r, but m ust deal w ith
a w e a lth of c a p ita l a n d d e p o sits— th em ind irectly th ro u g h th e m edium
in re a l gold, sufficient to p lac e it in ®f the “ m em ber b a n k s.” It is doul>ta c o m m a n d in g p o sitio n in c o m p a ri- ful w h e th er the new in stitu tio n s will
son w ith o th e r fin an c ia l o rg a n iz a - a tte m p t to do m ore th a n th e redistioire, n o t only of th is c o u n try , b u t c o u n tin g fun ctio n a t p resen t; tho
of E u ro p e a n n a tio n s a s w ell.
fa c t t h a t they h a v e m ade ap p liA ccording to a n official s ta te m e n t cation for m em bership in the v a rio u s
p u t o u t fro m th e office of th e C om p- < 1 a rin g houses is evidence of th is
t ro lle r o f th e C u rre n c y th is w eek i .sum ption.
th e to ta l c a p ita l a n d s u rp lu s of th e
R e n d e r G re a t Service.
7,630 m e m b e r b a n k s w ill be $1,783,This, in fact, is all th ey will needt
390(14 6; a s th e y a r e re q u ire d to s u b ­ to do a t p re sen t; for, w ith the re le a s ­
sc rib e fo r s to c k in th e re serv e b a n k in g of n e arly $500,000,000 in reserves
in a n a m o u n t e q u al to 6 p e r cen t
due to th e m ore liberal reserv e r e ­
of su c h c a p ita l a n d su rp lu s, th e
q u ire m e n ts, and w ith the conversion
n e w in s titu tio n w ill th e re fo re h ave o f com m ercial p a p e r into the form
a su b sc rib e d c a p ita l o f $107,003,400, of liquid a sse ts, th e y w ill re n d e r
of w h ic h b u t o n e -six th is paid in a t In v a lu a b le service a t th is tim e. It
th e p re se n t tim e.
5s to be hoped th a t th e business m en
D e p o sits A rc H uge.
iand th e b orrrow ing c o rporations will
T h en a s to d e p o sits: th e to ta l d e ­ do th e ir sh a re in p u ttin g th is su rp lu s
p o sits o f th e m e m b e r b an k s a re m oney in to a c tiv e use, so t h a t the
•som ew hat in excess of six a n d th re e - benefits of the new system a re not
q u a r te r b illio n s of d o lla rs, a n d th e y •wholly im a g in ary . I f not em ployed
a r e re q u ire d to d e p o sit w ith th e r e ­ in productive b u sin e ss it will find its
se rv e in s titu tio n a b o u t $244,000,000; w ay to the W all s tre e t speculative
In a d d itio n th e re to , all tre a s u ry c en ters, and it is "up to” th e b u s i­
fu n d s now ly in g id le a t th e n a tio n ­ n ess m en of th e U nited S ta te s to
al tr e a s u r y a re to be dep o sited w ith keep it m ore u sefu lly employed.
th e re se rv e b a n k s. T hey sh o u ld ,
T rad e a n d export s ta tis tic s a re now
th e re fo re , * h a v e a v a ila b le c a s h in tellin g a very in te re s tin g sto ry . Our
e x ce ss of $4 00,000,000 b e fo re a s in ­ tra d e b a la n c e in S eptem ber w as $16.­
gle tr a n s a c tio n is re co rd e d .
000,000, w hile in
O ctober A m erican
T h e fe d era l b a n k in N ew Y ork e x ports exceeded im p o rts by over
w ill d oubtless be the la rg e st in th e $60,000,000. Should tra d e figures c o n ­
sy ste m . I t will h ave a to ta l s u b ­ tin u e in th is p ro p o rtio n —a n d th e in ­
scrib ed c ap ital of $19,876,392, c a r ry d icatio n s a re t h a t e x p o rts will in ­
b a n k d ep o sits alone of $100,000 ,000 . c rea se r a th e r th a n de cre ase —it will
a n d w ill in tim e d o u b tless perform be a v e ry sh o rt tim e before we shall
m a n y of th e fu n c tio n s w hich a re h a v e w iped out our indebtedness to
now finder th e ju risd ic tio n of th e is u r 0 pef an(j jn a w ay m uch m ore aclocal su b tre a s u ry . I t h a s been c a l- oep tab le to us th a n by th e exporc u la te d t h a t in N ew Y ork city alone , a t ion 0f gold
th e a m o u n t of $166,317,000 now held
A jj Qur trafle ba)ance
,g
a s legal re se rv e s by th e n a tio n a l a n d w m flnd i(. possible t 0 absQrb a n jn _
s ta te b a n k s a n d t r u s t com panies w ill r re a s jn g a m o u n t of o u r se c u rities if
be re le ased a s soon a s th e new sy s- E u ro p e is disposed to seu them . II
tem begins to o p e rate. T he p re se n t hoJ(Js m a n y blllions of A ile r ic a n
n e t deposits o f th e s e th re e c la sses „ bli&ationg b u t tb e re is no reaso n to
of Irtstltu tio n s is a b o u t J-,066,406,00., s u p p0se t h a t m ore th an a sm all
d istrib u te d a s follow s.
fra c tio n of th ese E u ro p ea n holdings
: : : : : : : : : : : : : : : : : : «f A m e ric an sto c k s a n d bonds w 0»m
Stata banks ................................. 2T4.i98.ooo be sold here. T h e head of one of th e
jfoeelosooJ Src a t in te rn a tio n a l b an k in g houses
_ ,
. _____
” ’ J'
said re c e n tly t h a t it w as not likely
R e le a s e o f R e se rv e s.
(h a t nlo re th a n S100,000,000 of our
The re le ase of re serv e s, a s b ased | s t o c . k s a n ( ] bond s w ould be sold by
upon fig u res com piled b y th e C om p-| E urope upon th e reopening of the
tro lle r o f th e C u rre n c y a n d th e N ew exchanges
Y ork s ta te b a n k in g d e p a rtm e n t, a re
„
„
„
, _
,s follow s:
E a s i,y C a re d F o r
f :tonal, bank* .............................. SS8.316.0W T h a t su m is g re a t, b u t a t the
£ At' taSk*anie* .............I" . .... "?.’;« . 0W p re sen t r a te It a m o u n ts to only one
.................................... ~
— a n d a h a lf m o n th s’ excess of e x p o rts
J166.31T.M0 c y e r irnports. T h e build in g up of a
T he r e serv e r e q u ir e m e n t s of s ta te g re a t er tr a d e b a la n c e is very w ide-,
Digitized
' nks wfor
e reFRASER
re duced b y t h e so-called Iv re co g n jze(i a s a necessary p re- j
i T u y l law p a sse d a b o u t six ,,
http://fraser.stlouisfed.org/

Federal Reserve Bank of St. Louis

...m a ry to th e re su m p tio n of u n re ­
s tric te d stock ex ch an g e operatio n s.
Vint It is not by a n y m ea n s agreed
t h a t tra d in g c a n n o t be resum ed until
it is resum ed w ith o u t re stric tio n .
H anking p ractices being w h a t they
h a v e been in th e p a st, th e closing of
th e stock exchange h a s e x erted unfaW riiW 3 ,>influence f a r beyond b ro k ­
erag e circles them selves, a n d it is
not w ell th a t the a tte m p t to re ­
e stab lish n a tu ra l m a rk e t conditions
should be delayed a n y longer th a n is
a b so lu te ly necessary.
In v e stm e n t b a n k e rs re p o rt a n in ­
c re a sin g d em an d for good securities,
s h o rt-te rm notes being in p a rtic u la r
favor. S tock prices on th e “ outside
m a rk e t" h ave show n a su b s ta n tia l
im provem ent, such sta n d a rd Issues
a s A tchison, N ew Y ork C en tral, St.
P au l, S o u th ern a n d U nion Pacific and
U n ited S ta te s Steel re g iste rin g im ­
p o rta n t gains. T he im provem ent in
g en eral financial se n tim e n t a p p ears
to be coincident w ith th e m uch
e a s ie r tone to m oney, w hich is now
w ell below 6 p e r c en t for th e d ista n t
m a tu ritie s.
T he p u b licatio n th is w eek of the
g o v e rn m e n t crop re p o rt e stim a tin g
th e se a so n 's production from the
Soil is b u t a n o th e r rem in d er of the
v a s t a m o u n t of w ealth t h a t will re ­
tu rn to our a g ric u ltu ra l d istric ts
th is year. W hen we consider th a t
th is y e a r's w h e a t crop of 891,950,000
b u sh els is 130,000,000 m ore th a n our
la rg e st previous crop, and t h a t the
price o f w h e at is c o n sta n tly soaring
on a c c o u n t of th e E u ro p ea n conflict,
it is easy to figure one billion dollars
to r th e w h e at crop alone.
King- Corn In Line.
T h en alo n g com es K ing C orn, w ith
2,705,602,000 bushels a t 70 c e n ts each,
n e a rly tw o billions m ore. O ats, b a r­
ley, rye. potatoes, flaxseed, all show
an in cre ase over la st year. C otton
w ill to ta l 7,341,000,000 pounds, and
u n d e r no rm al conditions (w hich a re
n o t f a r d is ta n t a s fa r a s th e e o tto n
crop is concerned) will yield a n o th e r
billion dollars.
P re s id e n t G eorge B.
Caldw ell,
sp e a k in g on T h u rsd a y to th e in v e st­
m en t b a n k e rs of A m erica, rem in d s
us of th e fa c t th a t we h a v e a n a n ­
n u a l su rp lu s of ten billion d ollars
of a g ric u ltu ra l products to sell; th a t
o u r m a n u fa c tu rin g is b eg in n in g to
receiv e a stim u lu s by d em ands from
ab ro ad , h eretofore supplied by th e ir
ow n m ills a n d m en; t h a t o u r new
b a n k in g sy ste m
will
s tre n g th e n
c re d its a n d fa c ilita te s ta b le condi­
tio n s a n d m ore re aso n a b le m oney
ra te s . T he signs a re propitious.'
A m e ric a Is a b o u t to com e in to her
ow n.

$250,000,000 in N ew N otes.
U n d e r th e new sy ste m th e fed eral
re serv e notes, w h ich , in tim e, p rob­
ab ly w ill e n tire ly re p la ce th e n a ­
tional b a n k notes, now so fa m ilia r,
w ill be issued upon com m ercial paper
a ris in g o u t of a c tu a l b u sin ess t r a n s ­
actions.

IN MARKETIODftY
Opening of Twelve Federal Insti­
tutions Is Expected to Pro­
vide Elastic Circu­
lation.
$250,000,000 IN N O TES
IS S U E D TO D E P O SIT A R IE S
Evolution of New System Will B p
S low, Governors Desiring to
Feel Their Way.

w n v t r .- v m

W A S H I N G T O N ;1 N o v e m b e r
15. —
W i t h t h e o p e n in g to m o r r o w o f t h o
tw elve f e d e r a l r e s e r v e b a n k s , t h e n a ­
tio n w ill b e g i n ^ c -tiia l o p e r a t i o n o f i t s
new c u rre n c y s ^ te m
d e s ig n e d to
p r o v id e a n e l a s t i c c i r c u l a t i n g m e d iu m
b a s e d u p o n m o d e r n i d e a s o f f in a n c e
r n d e c o n o m ic s .
I t h a s ta k e n th e r e s e r v e b a n k , o r ­
g a n i z a t i o n e o ? u m itte e a n d t h e f e d e r a l
re s e rv e b o a rd a lm o s t tw e lv e m o n th s
to w o r k o u t d e t a i l s o f o r g a n i z a t i o n to
th o p o in t w h e re a n o p e n in g d a te w a s
c h o sen . N o tw ith s ta n d in g c a re fu l d e ­
l i b e r a t i o n s w h ic h p r e c e d e d e v e r y p r e ­
l i m i n a r y s t e p , t h e t w e l v e b a n k s w ill
n o t fo r m an y w eeks ta k e up an d ex ­
e r c i s e a ll t h e f u n c t i o n s b e s t o w e d u p o n
t h e m b y C o n g r e s s . S u c h e v o l u t i o n as
w ill r e s u l t f r o m
t h e o ld n a tio n a l
b a n k i n g s y s t e m o f n e c e s s i t y w ill in
m o s t r e s p e c t s b e s lo w . T h e re serv e
board, th e g u i d i n g s p i r i t o f th e new
s y s t e m , i s i t s e l f f e e l i n g i t s w ay over
s tra n g e g ro u n d , a n d
th e m e n in

c h a rg e of th e tw elv e b a n k s pro b ab ly
w ill feel th e s a m e de sire to w ork
s lo w ly
a n d w ith s u r e n e s s , r a th e r
th a n be v e nturesom e.
P a p e r C u rre n c y M o re E la stic .
Tho n ew sy stem is g e n e ra lly c o n ­
ceded to be a com prom ise betw een a
c e n tra l b an k a n d th e p re se n t system ,
w ith its th o u sa n d s of u n its, sc a tte re d
re serv e s a n d fixed lim its of cu rren cy .
Its chief a ttra c tio n a n d value, th o se
who in te rp re t it find in th e e la stic ity
it w ill give to recognized p a p e r c u r ­
rency.
U n d er th e p re se n t law n a tio n a l
b a n k c u rre n c y is a lm o st a fixed
q u a n tity , b a se d upon n a tio n a l b a n k
c ap ital, issu ed upon T’n ite d S ta te s
bonds a n d u n re sp o n siv e to th e chill
of h a rd tim es o r th e e x u lta tio n of
boom days. Its use led, th e e x p e rts
say, to u n re s tric te d loans a n d sp e c u ­
latio n in th e d a y s w hen m oney w as
e asy a n d to a h o a rd in g of re so u rce s
a n d a tig h te n in g of th e p u rse s trin g s
of c re d it w h en th e y w ere h ard . I t is
said to h a v e b re d th e p an ic of 1&07,
w hen so lv e n t b a n k s w ith la rg e c re d ­
its in re se rv e a n d c e n tra l re serv e
c ities w ere helpless a n d co u ld g et
b ack to th e ir ow n c o u n te rs n o n e of
the m illions th e y h a d placed , w ith
th e ir la r g e r a n d stro n g e r c o rre sp o n d ­
ent#.




I t s e e m s p l a i n t h a t t h e y w ill r i s e
a n d f a ll in a m o u n t a s th e tid e s o f
b u s i n e s s r i s e a n d f a ll, a n d t h a t t h e r e
w ill b e n o p l e t h o r a o f m o n e y t o lie
id le . T h e y w ill b e o b l i g a t i o n s o f t h e
U n ite d
S ta te s
g o v e rn m e n t,
w h ic h
n a t i o n a l b a n k n o t e s a r e n o t , a n d w ill
h a v e b a c k o f th e m a la rg e re s e rv e
of
g o ld
in
th e
re g io n a l
b an ks.
T h ro u g h th e m th e re s e r v e b a n k s a re
e x p e c te d t o c o m e t o t h e a i d o f a n y
n e e d y m e m b e r b a n k w h ic h h a s p l e n ­
ty o f g o o d p a p e r b u t n e e d s c a s h . T o
f u r t h e r i n s u r e t h e flo w o f m o n e y , r e ­
s e rv e b a n k s th e m s e lv e s m a y b e r e ­
q u ir e d t o r e d i s c o u n t t h e d i s c o u n t e d
p a p e r of o th e r re s e rv e b a n k s.
M o re t h a n $250,000,000 o f t h e n e w
n o te s h a v e
been
ordered b y th e
C o m p tro lle r o f th e C u rre n c y fo r th e
tw e l v e b a n k s .
T h e y a r e In $4, $10,
$20, $50 a n d $100 d e n o m i n a t i o n s , a n d
a re to b e a c c e p te d b y a ll m e m b e r
b a n k s a n d f o r a ll c u s t o m s , t a x e s o r
o th e r
d u es.
The
fe d e ra l
re se rv e
a g e n t o f e^S T i’ „ U w i^ %in t h e s y s t e m ,
w ho isT fn e
go v e rn m e rT fc ^ re p r e s e n ­
ta b le * th e re , h a s th e s e n o t e ^ i n c u s ­
to d y r e a d y fo r th e a p p lic a tio n of
m em ber b an k s.
^

L
DOORS OF TWELVE
U. S. Begins Operation of New
Regional Institutions Over
Country, One of Which is
Located in Cleveland.
D ire c ^ rs ^ r ^ f t r i c t Here
Arrive and Are Given
Welcome Before Be­
ginning Labors.

iS H H H e

RANKS FOURTH IN S IZ E

Flow of Seventeen Millions in
Gold to Come From
767 Members.
W ith th e open i n g o f b u sin e ss to d ay
th e n a tio n b e g in s a c tu a l o p e ra tio n of
its n e w b a n k in g a n d c u rre n c y sy ste m
a s la id d o w n 4 n t h e fe d e ra l re se rv e
a c t.

Twelve regional banks, the chan­
through -which the system
reaches the business of the oountry,
wlU open today. Among th e m Is the
E-edera! Reserve bank of Cleveland.

n e ls

w ith Its h e a d q u a rte rs on th e first
floor o f th e W illiam son building.
G ov. E . R . F a n c h er, C hairm an of
{Directors D . C. W ills, a n d probably
a ll o f th e e le v en o th e r directors, liv­
in g tn O hio a n d neighboring states,
w ill b e h e re to w elcom e callers. For
d a y s w orkm en h a v e been remodeling
th e b a n k in g ro o m s; th ey w ill be spick
a n d sp a n In m arb le a n d m ahogany
w h en th e d o o rs sw in g th is m orning.
C leveland is th e h e ad q u a rte rs of
fe d era l re serv e d istric t N o. 4, which
Includes all o f Ohio, th e w e ste rn third
o f P e n n sy lv a n ia , e a ste rn K entucky
a n d th e n o rth p ro jec tin g “p a n handle”
o f W e st V irginia. In th is d istric t a re
767 b an k s w hich h ave joined th e fed­
e ra l reserv e system . T hey m ake the
F e d e ral R eserve b an k of C leveland the
fo u rth in c a p ita l stock a n d reserves
of th e tw elve in stitu tio n s. T he Cleve­
land b a n k is exceeded by those in
N ew Y ork, Chicago a n d P hiladelphia,
b u t exceeds those in B oston, St. Louis,
K a n sa s C ity, San Francisco, A tlan ta ,
M inneapolis. R ichm ond a n d D allas.
<;ol<I W i l l F l o w

In .

All o f to d a y cash, well guarded,
w ill be com ing in from m em ber banks
in gold a n d yellow backs a n d by eve­
n in g th e re should be In th e v a u lts
o f th e in s titu tio n the g re a te r p a rt of
§17,000,000. •
O f th is, $2,000,000 gold is already
th e re , first p a y m e n t on th e capital
stock. T oday a n d in th e next few
d a y s will a rriv e th e reserves which
th e m em ber b a n k s a re bound to tu rn
in to th e reg io n al. E ac h m em ber m u st
tu rn In a fra c tio n of his to ta l r e ­
serve, in gold, o th e r law ful m oney or
obligations o f m e rc h a n ts w hich th e
regional b a n k is w illin g to accept. B u t
in accordance w ith th e desire of the
regional b a n k th e $15,000,000 reserve
In sta llm en t n o w to be paid will, it
is expected, b e alm ost all gold and
yellow backs.
T he d irec to rs a n d officers of the
In stitu tio n h e re w ere e n te rta in ed S a t­
u rd a y by th e C ham ber of Commerce
a n d th e b a n k e rs of th e city.
T he board, th e officers a n d all re p ­
re se n ta tiv e s of th e 767 m em ber b anks
who come, will be e n te rta in ed a t
luncheon a t 12:30 to d ay in H otel
S ta tle r by th e F irs t N a tio n a l B ank
of Cleveland, w ith P re sid e n t John
Sherw in presiding.
H o w B a n k a W i l l A c t.

T he tw elve regional b an k s, g e n era l­
ly speaking, w ill not do business w ith
ihe public.
T h eir dealing will be
confined to tra n s a c tio n s w ith the
governm ent, w ith m em b er b a n k s and
w ith each o th er, w ith the exception
th a t th e re g io n a ls c an deal in fo r­
eign exchange, b u y a n d sell bonds
and notes of th e U nited S ta te s, sta te s,
cities a n d o th e r political subdivisions,
a n d can if th ey deem, th e financial
sltu a tiq n a t a n y tim e n o t responsive
to th e p u b lic needs, do buaineas d i­
re ctly w ith borrow ers, u n d e r re g u la .
tions p re scrib e d by th e fed eral re ­
serve b o a rd a t W ash in g to n . T h is is
th e body o f seven m en who preside
o v e r th e sy stem .
I t h a s ta k e n th e officials n early
tw elve m o n th s to w o rk o u t d e ta ils
to th e p o in t r.t w hich it seem ed a d ­
visab le to o p e n th e regional b an k s,
a n d th e evo lu tio n w hich w ill re su lt
fro m th e old n a tio n a l b a n k sy ste m

slow.
iXSTTV
c h ie f ben efit
from the
sy a tetu Is t h a t It w ill fu rn ish
to th e p a p e r m oney of th e
U n d e r tlie old la w natio n al
n o te s a re alm o st a fixed qu an based a s th e y a r e on the
1a m o u n t o f n a tio n a l b a n k s ' cap ital
a n d o n g o v e rn m e n t bonds. T hey a re
u n re sp o n siv e to th e need In h ard
tim e s a n d In boom tim e s for m ore
currency* a n d in no rm al tim es for
l e » currency.
T h e n ew system also pro v id es for
c e n tra liz a tio n in th e re g io n a l b an k s
of th e gold ar.d o th e r law fu l m oney
re se rv e s of m em b er b an k s. R eserv es
n o w held b y m em ber b a n k s in cor­
re sp o n d e n t b a n k s a r e to be g ra d u a lly
s h ifte d in to th e re g io n a l b an k s a n d
In to t h e m em ber b a n k s ’ ow n v a u lts.
T h u s, th e old p iling u p of m oney in
a. few lea d in g c en ters, w ith its con­
c o m ita n t fa cilitie s fo r u n re stric te d
i i u i n W all S tre et, a n d o th e r sp ecu ­
latio n on a big scale, is g ra d u a lly tc
pass.
.
W all S tre et w ill still h a v e m oney
b u t in m uch sm a lle r a m o u n t than
heretofore. T h e n a tio n a l b a n k s the
c o u n try over, w hich a re th e in ­
s titu tio n s com pelled to Join the new
system , will by degrees consign much
o f th e m oney th e y now keep in the
e a s t to th e v a u lts of th e regional
b an k s a n d to th e ir ow n vaults.
R eserv es u n d e r th e old system
m ad e u p a chain, c o u n try b an k s k eep­
ing p a r t of th e ir reserve in b anks
the
ill m o derate-sized cities, a n d
. -i.nks in these cities, passing th e ir
m oney Into th e b ig centers. W henever
th e re cam e a financial sq u all, th e re
ensued a scram ble for th is m oney.
E ac h in stitu tio n h a d to call in loans
in o rd e r to m ak e up w hat it owed
o th e r In stitu tio n s, and pan ic w as
h eightened. t Tn d e r tho now system
o f c en tralizin g re serv e s in regional
b an k s, i t Is believed financial panic
is fo rev e r elim inated from th is c o u n ­
try .
U n d e r th e now sy ste m federal
re serv e notes, a new c irc u la tin g
m oney, not yet in th e h a n d s of the
public, will be Issued, a n d probably
will, in tim e, e n tire ly su p p la n t the
p re sen t com m on n a tio n a l b a n k notes.
T he new n o tes will have b ehind them
as se c u rity 4(1 p e r cent, in gold plus
100 per cent, in notes a n d bills of
bu sin ess m en w hich h a v e been In­
dorsed by th e m em b e r b a n k s and
have been a p proved by th e federal
re serv e bank.
T he federal reserv e n o te s a re ob­
lig a tio n s of th e U n ited S ta te s a n d
a re
redeem able
in gold a t the
tr e a s u ry
W ashington, a n d in gold
or o th e r Tifwful m oney a t th e federal
re serv e banks.
T he a m o u n t o f fed eral re serv e
n o tes o u t will be low ered a s the
m e rc h a n t p a p er behind th em Is paid
oft. T h e volum e of notes o u t Is th u s
expected to ex p an d a n d c o n tra c t
w ith th e needs of business. As a
p re c a u tio n a g a in s t red u n d an cy , one
reg io n al bank ta k in g in federal r e ­
serve notes issued b y o th e r regional
banks, will not p a y them out again,
b u t will re tu rn th em for cash or
c red it to th e regional b a n k issuing
them .
In re a lity th e regional b o n k s will
n o t issue federal reserve notes, but
the g o v e rn m e n t w in issue th 'i notes
th ro u g h the banks. T he n o tes will
be in d e n o m in a tio n s of $5, £10, $20
150 a n d $100. The federal reserve
a g e n t in each reg io n al ban k , h e re D.
C. W ills, h a s a n a m o u n t o f these
n o tes In cu sto d y re a d y fo r a p p lic a ­
tion of m em b er b an k s, a n d doubtless
some of these n o tes will be applied
tor to d ay a s souvenirs.
In th e fu tu re th e regional bon k s
probably will do th o “ c le a rin g '' of
checks for the b a n k s th ro u g h o u t th e
co ufor
n try
, t h a t is, w ill tr a n s m it a n d
Digitized
FRASER
collect checks d ra w n by a n d on in-



M t m i u u i in separated places,

Phis,

It la expected, will be done w ith m uch
g re a te r ra p id ity th a n through th e
p re sen t relativ ely unorganized m eth ­
ods, a n d should result Jn sav in g for
use h u n d re d s of m illions of dollars
for d a y s a t a tim e; use of th e money
is lost d u rin g tho tim e of tra n s it.
T he entiTe federal reserve system
is going in to effect g radually. The
com plete sh iftin g of reserve, fo r in­
stan ce, will not tak e place until a t
th e end of th ree years. T he system
will go step b y step in all its o p era­
tio n s so the evolution m ay produce no
shock. The officials strongly believe
th is end will be a tta in e d .
T he system will come very close to
th e business m an in th a t it provide
w h a t is term ed a rediscount m ark et
fo r com m ercial paper. W hile th e re ­
gional banks will deal w ith m em ber
b anks In alm ost all cases, the effect
on tho business of the com m unity will
be direct.
A business m an now borrow s a t his
bank, giving his note; the bank u n ­
der th e old system had to hold th a t j
note in Its v a u lts until m a tu rity or,
only a s a special favor, m ig h t be per­
m itted to tu rn the note o ver to a
frien d ly bank or pap er d e aler and
realize on it. B u t under th e new sy s­
tem th e original bank can im m ed iate­
ly indorse the note and tu rn it into
th e regional bank, receiving cash or
c r e d i t therefore a s it desires.
In this ‘'rediscounting” th e m em ­
b e r bank a t tim es will m ake a profit.
F o r instance. It m ay ch arg e its c u s­
tom er (! per cent, a t a tim e when the
regional bank r a ta e will be only 5 o - l
per cent. F o r the present, however,
th e discount r a te of tlie Cleveland
regional bank is 0 p e r cent.

REAL BUSINESS
BEGINS AT U.S.
REGIONAL BANK
The C leveland federal re serv e bank
T u esd ay began to assum e th e a sp e cts
of a m ighty financial in stitu tio n . Of­
ficers a n d clerks alike w ere lite ra lly
buried in work. It w as estim a te d
th a t before th e close of b u sin e ss re ­
serv e deposits would a m o u n t to
33.000,000.
liftu _ m M M J
No a ctu al f lf iU ^ n iA tjfh M ||^ rn m e rc ia l p ap er has yet occutred. b u t this
fe a tu re of the sy stem is expected to
develop w ithin a few days. G overnor
E. R F a n c h e r is m ailing c irc u la rs to
th e m em ber b a n k s containing: th e r e ­
d iscount in stru ctio n s and form s.
C h a irm a n D avid
C. W ills said
T u esd ay th e C leveland d istric t e v e n t­
u a lly will be th e wonder of th e YZ
re se rv e b a n k divisions. Tie said th a t
h is o b se rv atio n s so f a r had led to the
conclusion the fo u rth d istric t is selfc o n tain in g .
“T he w onderful stre n g th of th is
district,* ’he said, “will be reflected in
th e re la tiv e ly sm all a m o u n t of p ap er
w e will h a v e to rediscount. Of course,
w e will be p re p are d a t all tim es to
fa c ilita te b a n k in g o p e ratio n s w here
needed.”

New Banking System Re­
leases Big Sum for Busi­
ness Accommodation.

N0V-17m

Caution Will Prevent Too Sud­
den Lubricating of Finan­
cial Machine.
r.V 11. 9 . RO SK X TH A JU

Her,ire th e w eek ondrf there, w ill b e
available for new lo ap s b y C3eveland
n ■, tonal b a n k s a t le a s t SO,001),000 aa
r e f i l l of op eratio n of th e fe d e ra l re it» c a re e r d o e s th e n ew
*,-s tem l'enc’e r itself se rv ic e a b le to
;i,» business house, w hich d e sire s to
B a n k s w ill n o t
extend its borrowing
r u s ’i p e llm e ll t o fill u p
. th m .r lo an
iodsert. T hey will go slow ly to re■.liiist them selves to th e new ri'nu'-re, ents. t a r t t h e *(S,000,000 is a c o n ­
s e r v a t i v e e stim a te of th e a m o u n t
th'Lt Tvill be released and u su b le fo r
accom m odation
of
m a n u fa c tu re r,
w holesaler, re ta ile r, fa m ie r.
B anks in re serv e cities, of w iiich
C leveland is one, tearT' now red u ce
th ir reserves from th e old —'>-perc ent-of-deposit level to 15 p e r c en t,
on dem and d ep o sits a n d ;> p e r cent,
on th e ir sm all volum e o f tim e d e ­
posits.

m

J

$1,500,000 More.
In to the Federal Reserve bank of
Cleveland yesterday came $1,500,000 in
gold from member banks, m aking the
total stock payments and reserves
turned in so far $7,000,000. The form al
order for reserves w ent out only Mon­
day night, and much w as paid in in a d ­
vance. When all is in, first stock pay­
m ent and first reserves, there will be
$17,UOU,UOO, minus w hatever m erchant
paper arrives as reserve. L ittle or none
of this is expected.
■,^1'tVi V'rV^"- , auditor of the F arm ers
I>epusll. .NHLHjnai bank of P ittsburg, has
been made auditor of the Cleveland
institution.
Plans for increasing the w ealth of
cash and expanding* the operations of
re£l°n&l banks were before
the federal reserve board yesterday as
telegram s vontinued to arrive, telling of
the successful opening of the in stitu ­
tions. T j^ first week’s operation of
the sysiodWVj|My result in augm enting
0OO banks- t y f / i t^- more than $150,000,The plan und<*
is tht
tran sfer to the r«>giorW #® ks of inuct
of the loose cash in the tre a su ry and
most of the governm ent funds deposited
in national banks. Secretary McAdoo
has not yet d e te rm in e d to m ake those
changes, but if th e first w e e k 's business
shows th a t th e b a n k s could employ
m o re money th e hoard probably will
s u g g e s t th a t he act.




j ONCLE SAM OPENS RESERVE BANKS
JO SHAKE Off YOKf Of WAIL-ST

J

17-Ton Door Guards Reserve Bank Millions

K lm e r E . B ill, c u s to d ia n o f t h e fe d e r a l r e s e r v e b a n k v a u lt, a n d t h e s e v e n le e n -to n d o o r b e h in d w h ic h
a r e imTTTon77""""“*““
Can you m ove 17 to n s o f w eig h t?
E lm e r E. Bill, 1288 W . L akeav, can , w ith one h a n d . H e is n ’t
so husky, e ith er.
, B ill Is cu sto d ian o f th e b ig v a u lt
in th e b a se m e n t of th e F e d e ra l R e ­
serv e ban k , W illia m so n b u ild in g ,
w hich open ed M onday.
T he m a ssiv e door of th e v a u lt
w eighs 17 to n s. I t w ill be B ill’s
d u ty to o p e n a n d close t h i s d oor




e v e ry day. H e g u a rd s i t c o n s ta n t­
ly w h ile i t is open.
T w e n ty -fo u r
th re e -in c h
ste e l
bolts, w ith tim e-lo ck a tta c h m e n ts ,
defy a ll th e A lias Jim m y V a len ­
tin e s o f th e w orld. Move th e door
of th e v a u lt a n d a b u rg la r a la rm is
tu rn e d in.
B u t t h a t is n ’t th e only p re c a u ­
tion ta k e n a g a in s t th e ft of th e
$3,500,000 th a t now repose b e h in d
th a t b ig d oor—a n d th e m illio n s
m ore t h a t w ill be added.

T ouch a pin to th e w all o f th e
v a u lt a n d a b u rg la r a la rm Is tu r n e d
in; c u t a w ire le a d in g to th e
tre a su re room a n d a d a n g e r s ig n a l
is flashed.
Jo se p h G rupe, 1292 91st-st, com ­
pleted in s ta lla tio n of th e a la rm sy s­
tem M onday.
E.
R. H oyer, 67 N oble-av, e r p e r t
for th e D iebold S afe & L ock Co.,
m ade final te s ts M onday a n d p ro ­
n ounced th e sa fe safe.

o
£

T h e e n ti r e n a tio n a l b a n k in g
sy s te m o f th e U n ite d S ta te s w a s
o fficially re v o lu tio n iz e d M onday^
in th e e ffo rt to s e t A m e ric a n
fin an c es f r e e fro m th e d o m in a tio n
o f N ew Y o rk a n d th e N ew Y o rk
s to c k e x ch a n g e.
U ncle S a m ’s 12 g r e a t n ew
banks
fo r
b an k ers,
o fficially
k n o w n a s fe d e r a l r e s e rv e b a n k s ,
w e re th r o w n o p en M o n d a y in t h e !
12 c itie s s e le c te d a s fe d e ra l r e - ;
s e rv e
c e n te r s — C le v e la n d ,
N ew
Y o rk , P h ila d e lp h ia , B o sto n , R ic h ­
m o n d , V a ., A tla n ta , C h ica g o , St.
L o u is, M in n e a p o lis, K a n s a s C ity,
D a lla s, T ex., a n d S a n F ra n c is c o .
T h e e s ta b lis h m e n t o f th e s e
dozen b a n k s , w ith a to ta l c a p ita l
s t o c k a n d d e p o sits w h ic h w ill
u ltim a te ly a p p ro x im a te $ 2 0 ,0 0 0 ,­
0 0 0 ,0 0 0 , is t h e
c u lm in a tio n
of
P r e s i d e n t W ils o n ’s s tr u g g le to
t e a r th e W a l l - s t y o k e fro m th e
b a n k s of t h e c o u n tr y b y g iv in g
t h e U n i t e d S t a t e s a n e la s tic c u r ­
re n c y s y s te m w h ic h w ill p re v e n t
b a n k e r s ’ p anics.
C l e v e l a n d 's f e d e r a l b a n k , te m ­
p o r a r i l y lo ca ted o n t h e g r o u n d
floor of t h e W i l l i a m s o n b u i l d i n g ,
w h ic h o p e n e d officially a t 10 a. m.
M o n d a y , re ally o p ened co n sid er­
a bly b e f o re t h a t h o u r to re c e iv e
t h e v a s t s u m s of c a s h s h i p p e d
f ro m i ts 764 m e m b e r b a n k s to
pa y t h e i r first i n s ta llm e n ts on
t h e r e s e r v e f u n d s th e n e w
cur­
r e n c y la w r e q u i r e s th e m to d e ­
posit.
C a sh Is P o u r in g In .
T h e s e w e r e p o u r i n g In l a s t
w eek, $ 1 ,5 0 0 ,0 0 0 b e i n g re c e iv e d
on S a t u r d a y a l o n e
fr o m t h is
source
T h e e n t i r e first p a y m e n t
of c a p i t a l s t o c k f r o m t h e m e m ­
b e rs
b a n k s is a l r e a d y i n t h e
v a u lt s o f t h e r e s e r v e b a n k f — b e ­
in g a p p r o x i m a t e l y $ 2 ,0 2 0 ,0 0 0 , all
in g o ld o r g old c ertific ates .
“ T h e r e will be n o a t t e m p t to
p e rfo rm a t o n c e all t h e f u n c t i o n s
p ro v id ed f o r t h e r e s e r v e b a n k s in
th e n e w c u r r e n c y a c t , ” s t a t e d E.
R. F a n c h e r , g o v e r n o r o f t h e
C le v e la n d re s e rv e b a n k , M o n d a y .
“ F o r th e p r e s e n t t h e b a n k s ’ a c ­
tiv itie s w ill be la r g e ly c onfine d to
d is c o u n tin g b ills o f e x c h a n g e a n d
c o m m e rc ia l p a p e r.
C hangM
G ra d u a lly .
" O th e r fu n c tio n s , p r o v i d e d fo r
in th e c u rre n c y a ct, will be a d d e d
to th e r e s e rv e b a n k s ’ a c t i v it i e s
fro m tim e to t i m e a s t h e f e d e r a l
re s e rv e b o a r d m a y d i r e c t.
I t is i
n o t a im e d to force u p o n t h e c o u n - !
try a ll a t one' t i m e t h e c d m p l e te
re v is io n u l t i m a t e l y to b e effecte d
by th e n ew law .
T h is will be
done g rad u ally .
" T h e d is c o u n t r a t e fo r th e
C lev e lan d re s e r v e b a n k w ill be
s t r a i g h t 6 p e r c e n t. T h e r e s e rv e
b a n k s do n o t h a v e a n y d e a lin g s
d ire c tly w ith th e p u b lic — t h e i r
d e a lin g s a r e e n tir e ly w ith m e m ­
b e r b a n k s .”
T h e m in im u m m a c h in e ry is to
be e m p lo y e d iu th e s e f ir s t d a y s
o f th e r e s e r v e b a n k s , th e fo rc e a t
C le v e la n d 's b a n k on o p e n in g d a y
b e in g 20 m en , to be in c r e a s e d
l a t e r a s th e b a n k 'B f u n c tio n s
expand.
Advocates? o f t h e n ew sy s te m
c la im it will a void b a n k e r s ' p a n ic s
by p r e v e n t i n g th e c o n tr a c tio n of
c r e d i t in th e b u s i n e s s w o r l d of
A m e ric a a n d by a c tin g a s a c h ec k
on th e w ith d r a w a l o f c u rre n c y
fro m c irc u la tio n .
H o w I t W o rk s O u t.
I t f u r n is h e s a m e a n s o f t u r n ­
in g e r e d it in to c u rre n c y
w her




Cleveland Reserve Bank Facts
L o c a tio n — G ro u n d flo o r o f W illia m s o n b u ild in g .
G o v e rn o r— E j R ^ F a n c h e r , f o r m e r vice p re s id e n t o f th e U nion
n a tio n a l h a n k o f (JleveTaBST*
S e c r e ta ry — E ^ C ^ B a x J g j , fo r m e r a s s i s t a n t s e c re ta r y of th e
C le v e la n d c h a m i jf F W c o m m e r c e .
F e d e r a l r e s e rv e a g e n t a n d c h a ir m a n o f b o a r d — D. C. W ills,
f o rm e r c a s h ie r o f th e D ia m o n d n a tio n a l b a n k o f P itts tn iP g ." " '
C a p ita l s to c k — $ 1 2 ,1 0 0 ,3 8 4 , to b e p a id in in six in s ta llm e n ts
■it 9 0 -d a y i n te r v a ls ; first i n s ta llm e n t a lr e a d y p a id a n d n e x t d u e on
F e b r u a ry 1, 1915.
N u m b e r o f m e m b e r b a n k s — 7 64.
D e p o sits— F i r s t i n s t a l l m e n t no w c o m in g in fro m m e m b e r
b a n k s to to ta l a p p r o x im a te ly $15,000,(100. S eco n d c all to be m ad e
in 12 m o n th s w ith th r e e y e a rs to c o m p le te to ta l d e p o s it o f re se rv e s,
w h ic h g o v e rn o r F a n c h e r e s tim a te s w ill be b e tw e e n $ 4 0 ,0 0 0 ,0 0 0 a n d
$ 5 0 ,0 0 0 ,0 0 0 , d e p e n d in g o n th e n u m b e r of s t a te b a n k s w hich
c o m e in.
n e e d e d a n d i t p r e v e n ts tn e a r m
of th e c o u n tr y ’s r e s e rv e c u r ­
re n c y in to th e c o n tro l o f th e few
in N ew Y o rk w h o h a v e m a n ip u ­
la te d t h in g s m a in ly to s u i t th e m ­
se lv es.
H e r e 's ho w th e n e w re se rv e
sy s te m is e x p e c te d to w o rk o u t:
Up to th is tim e a v e ry la rg e
p a r t o f th e c u r re n c y — t h a t is,
paper
m oney— of
th e
U n ite d
S ta te s h a s b e e n b a n k n o te s , is ­
s u e d o n th e s e c u rity o f 2 p e r
c e n t g o v e r n m e n t b o n d s, b o u g h t
by th e b a n k s a n d d e p o s ite d b y th e
b a n k e r s w ith th e U n ite d S ta te s
t r e a s u r y a s s e c u rity fo r th e is s u e
o f t h e i r b a n k n o te s .
: T h u s , c u rre n c y h a s been b a se d
on t h e g o v e r n m e n t’s d e b t.
B ut
th e s e 2 p e r c e n t g o v e rn m e n t
b o n d s a r e a c o m m o d ity b o u g h t
a n d s o ld in th e m a r k e t in a s p e c ­
u la tiv e w a v a n d a t tim e s t h e i r
p ric e h a s b e e n so h ig h t h a t b a n k s
fo u n d i t u n p ro fita b le to b u y th e m
as s e c u rity f o r n o te is s u e s .
In
su c h tim e t h e r e w o u ld be m u ch
d im in u tio n o f c u rre n c y .
T lio O ld W ay .
In th e p a n ic o f 1907 o n e b a n k
in P h ila d e lp h ia w ith $ 3 ,0 0 0 ,0 0 0
of g o v e rn m e n t d e p o s its a n d w ith
$ 1 ,0 0 0 ,0 0 0 o f c a p ita l h a d n o t o n e
d o lla r of c u r re n c y in c ir c u la tio n
w h e n th e p a n ic c a m e , a n d d id n o t
issu e o n e d o lla r of c ir c u la tio n
d u r i n g th e p a n ic . WTh y n o t? Be­
c a u s e th e b a n k m a d e m o re m o n e i
by n o t is s u in g c u r r e n c y t h a n bj
b u y in g b o n d s a n d is s u in g c u r ­
re n cy .
In p la c e o f b o n d s, i t is p la n n e d
by t h e n e w a c t to h a v e t h e 2 p e r
c e n t b o n d s r e t i r e d in fa v o r o f 3
p e r c e n t b o n d s (w h ic h c a n n o t be
u se d
fo r b a n k - n o te is s u e se ­
c u r ity ) d u r in g a p e rio d o f 20
y e a rs , a n d in t h e m e a n tim e to
issu e
c u r re n c y
b a se d
n o t on
b o n d s, b u t u p o n t h e a s s e t s : th a t
is, n o te s d u e b a n k s by b u s in e s s
m en.
T h e s e p ro m is s o ry n o te s , r u n n in g
' fo r 90 d a y s, t a k e n by t h e ib eal
b a n k e r , a re by h im t u r n e d o v e r
o th e re g io n a l r e s e r v e b a n k s , a n d
■e re c e iv e s fo r th e m c u rre n c y
v hioh h e lo a n s to h is p a tr o n s .
B y w h a t is th is c u r re n c y se ­
a re d ?
In th e f irs t p la c e th e r e
a p ro v id e d a g o ld r e s e r v e o f 40
p e r c e n tj t h e r e is a s e c o n d a ry re e rv e p ro v id e d of 100 p e r c e n t o f
.-w ind, g ilt-e d g e d , 9 0 -d a y b u s in e s s
p a p e r; s e c u rity of $ 1 .4 0 fo r e v e ry ,
i o ll a r o f th e s e n o te s t h a t is iss­
ued.
N a tio n 's F a i t h P le d g e d .

in a a a u io n to t h a t , th e y a r e
m ad e th e first a n d p a r a m o u n t lien
u p o n a ll th e a s s e ts o f th e re g io n a l
re s e rv e b a n k s ; a n d , a d d e d to
;h a t, a b o v e a ll, th e y a re In d o rse d
by
a
n a tio n
of
1 0 0 ,0 0 0 ,0 0 0
p eo p le w h o se f a ith a n d h o n o r a re
p lig h te d to th e liq u id a tio n of th e
n o tes.
By p ro v id in g th u s a q u ic k a n d
s u re m e a n s fo r tu r n in g b u sin e ss
c re d its in to c u rre n c y i t i t ex­
p e c te d t h a t c u rre n c y w ill com e
o u t fre e ly in re s p o n s e to d e m a n d s
fo r it.
U n d e r th e o ld sy s te m , fo r every
h u n d re d d o lla r s you d e p o site d in
a b a n k , u n d e r th e law t h a t b a n k
w as r e q u ir e d , if a c o u n try b a n k ,
to k e e p 15 p e r c e n t In Its v a u lts to
m e e t c u r r e n t d a ily dem K nds fo r
th e t r a n s a c ti o n o f b u sin e ss. It
m ig h t lo a n o u t th e o th e r 85, b u t
it h a d to k e e p on h a n d 15 to r e ­
sp o n d to lo ca l r e q u ir e m e n ts .
B u t, u n f o r tu n a te ly , th e law w e n t
f u r t h e r a n d d ire c te d th e c o u n try
b a n k to d e p o s it $9 o f t h a t $15 r e ­
se rv e w ith th e b a n k s o f so -called
re s e rv e o r c e n tr a l r e s e rv e cities.
If, w ith th e b a n k of a re se rv e city,
it, in t u r n , m ig h t d e p o sit 12 p e r
c e n t of th e a m o u n t w ith th e b a n k s
of th e c e n tr a l re se rv e c ity , so, In
| re a lity , In ste a d o f h a v ijig a r e ­
! se rv e o f 15 p e r c en t in th e c o u n try
b a n k we h a d a re se rv e o f fo u r a n d
th r e e - q u a r te r s p e r cent.
In to S to c k S p e c u la tio n .
T h e r e s u lt w as t h a t w h e n tr a d e
w as slow a n d b u s in e s s s la c k , th e re
b e in g n o d e m a n d fo r c u rre n c y , th e
fu n d s of th e c o u n try DankB g ra d ­
u a lly fo u n d th e i r w a y in to th e
Y auns of th e g r e a t b a n k s of New
Y ork c ity , w h e re th e y w e re th ro w n
in to th e m a t l s t : - m o f sto c k sp e c ­
u la tio n .
T h e y s h o u ld h a v e been
k e p t In th e v a u lts of th e local
b a n k s , r e a d y to re s p o n d to th e
b u s in e s s r e q u ir e m e n ts of th e local
se c tio n s o f t h e c o u n try .
I l l u s t r a t i n g th le p r a c tic e : On
th e 1 4 th d a y of M arch o f th is c u r­
r e n t y e a r, th e c o u n try b a n k s o t
th e U n ite d S ta te s h a d o n d e p o sit
w ith N ew Y o r k c ity $ 8 3 6 ,0 0 0 ,0 0 0 ,
w h e re a s t h e c o u n try b a n k s w ere
in d e b te d to N ew Y o rk c ity o n ly to
th e e x te n t o f $ 1 9 2 , 0 0 0 , 0 0 0 .
T h e re is a c u r r e n t n o tio n t h a t
th e c o u n tr y b a n k s d e p e n d upon
th e g r e a t b a n k s of N ew YsuJk-tflJ
m o n ey to d o b u sin e ss. As a m a t­
t e r o f fa c t. N ew Y o rk d e p e n d s on
th e c o u n tr y b a n k s fo r m o n e y w ith
w hich to s p e c u la te . T h e n e w law
c h a n g e s a ll th is .
U n d e r t h e new sy s te m , i t is p ro ­
p o se d t o k e e p th e r e s e rv e s a t

WHAT'S WHAT AMONG
U. S. RESEBVE BANKS
T hose a r e th e tw e lv e fe d e ra l
r e s e rv e b a n k s w ith t h e i r c a p i­
ta l, b a se d o n six p e r c e n t of
th e to ta l c a p ita l sto c k a n d s u r ­
p lu s of th e m e m b e r b a n k s :
No. 1, Boston ..................... S 6.924,5*3
2 , Jinw Y ork ....................
*. Philadelphia .............
4: Cleveland ...................
5. Richmond ...................
6. Atlanta ......................
f , Chlrago ......................

1J.S00 738
12.100.384
6.S42.713
4.702.S58
12.887.701

No. 10 . Kansas City ...............
No. 11. balla*
... .
No. 12: Ban Franeisco

5.653.924

No.

20.fi27.MW

8. Bt M ill* .......................
9. Minneapolis ...........

6.367.006
4.702.55R
5.600,91

8.115.494

h o m e ; to k e ep m oney w h e re it o r­
ig in a te s , w h e re b u sin e ss c re a te s It,
so th a t, w h en it is re q u ire d , it
can help b u sin e ss a n d re sp o n d to
b u sin e ss d e m a n d s.
I t is p ro p o se d to r e tu r n to th e
12
lo c a litie s w h e re th e re se rv e
t a n k s a re s itu a te d th e re se rv e
f u n d s of th e c o u n try b a n k s w hich
b e fo re h a v e b e e n s e n t to New
Y o rk . A giv an a m o u n t— o n e -ih ird
o f th e r e s e r f e — is to be k e p t in
th e • 'a u lts of th e local b a n k s.
A n o th e r th ir d , o r a little m ore
th a n o n e -th ird , is to be k e p t in the
v a u lts o f th e re g io n a l reserv o
b a n k , a n d a l it t le le ss th a n onetl ir d m ay be k e p t in th e v a u lts of
t o e re g io n a l re s e rv e b a n k , o r in
th e v a u lts o f th e local b a n k , a t
th e o p tio n o f th e local b a n k .
T h e re g io n a l b a n k s a r e not su p ­
po se d to do w h a t th e n a tio n a l
b a n k s d id in th e re c e n t c o tto n
c ris is w h e n th e y to o k fro m th e
g o v e rn m e n t la r g e q u a n titie s of
e m e rg e n c y c u rre n c y a n d lin ed
th e ir v a u lts w ith It, d e c lin in g to
lo an it o u t a t a n y re a so n a b le ra te
of I n te r e s t to th e ir c u sto m e rs.
B a n k e rs o f th e C lev elan d r e ­
se rv e
bank
re g io n
g a th e re d
M o n d a y a t th e S ta tle r to c ele ­
b r a te th e i n a u g u r a tio n o f
th e
a b a n q u e t.

L * if* •
»D tlm rm

* r L A i* ‘
E

f

f

e

c

t

f

7

1U | £

O pening o f t h e n e w tytfnking systera, official reo pening of t h e N e w
York a n d N e w Orleans c o tton e x­
ch ang e s a n d the Now York c u r b m a r ­
k e t (.were the ou tstan d in g - develop­
m e n t s of th e <lay Ih th is c o u n try . So *
beneficent w as the influence on se ntirnent t h a t N e w York experienced in ­
c rea se d d em and for in v e s tm e n t s e ­
curities, a few in terior s t a t e b a n k s j
w e r e re porte d loaning: 'C autiously a t
5
pe r cent., a n d m unicipalities u n - l
dortt>«.»k negotiation for bond issues.




0. S. BANKS OPEN
AND NEW ERA IN
FINANCE IS SEEN
8 t£V 8 l i W i H t r t M 1/fcAUI
7,571 Money Institutions,
With $1,800,000,000 Capi­
tal and Surplus, in

wmm
rn

Hundreds Go to Cleveland’s
Reserve Center and Of­
ficials Are Busy
as Hosts.
B Y NIGHT BANK HERE
HAS $5,500,000 GOLD
Banquet at Hotel Statler
Marks Beginning of
Work in City.
E a rtjr y e sterd a y m o rn in g S ecretary
W . Q. McAdoo In W ash in g to n signed
a fo rm al order, h a d It teleg rap h ed to
th « new fe d era l re serv e b a n k s In
tw e lv e cities, a n d th e fe d era l reserve
sy ste m o t t h e U n ited S ta te s w as
launched.
T he 7.371 b a n k s w hich belong to
th e system h av e a c ap ita l a n d surplus
o f a b o u t $1,800,000,000. These re ­
sources, w ith th o se o f th e govern­
m en t, a n d th e co -o p eratio n of th e
people o f th e U nited S ta te s, a re re ­
lied on to m ake th e new b a n k in g and
c u rre n c y sy ste m e stab lish a new
financial e ra.
B a n k e rs by th e h u n d re d cam e to
th e F ed eral R eserve B an k of Cleve­
lan d In th e W illiam son build in g y e s­
te rd a y . T hey cam e to see th e re s e r­
v o ir In w hich th e ir gold Is deposited,
t!1* m en who will have c h a rg e of th a t
gold a n d tho m anifold o p e ratio n s th a t
w ill be based on It. C h a irm a n of
D ire cto rs D. C. W ills, Gov. E . R.
F a n c h e r, S e c retary E . C. B a x te r, a n d
seven o th e r d irec to rs of th e b an k
w ere hosts, a n d b usy hosts. A t 12:30
p, m . m ore th a n 400 b a n k e rs s a t
d ow n to luncheon in H otel S ta tle r a s
g u e sts o f th e F ir s t N a tio n a l B a n k of
C leveland.
B a n k ers w ho a tte n d ed re p re se n te d
in s titu tio n s In Ohio, P e n n sy lv a n ia ,
K e n tu c k y a n d W est V irg in ia w ith a
c ap ital a n d su rp lu s of m ote th a n
5150,000,000.
A round th ese tab le s
ivere g a th e re d re p re se n ta tiv e s of
probably m ore m oney th an h a v e ever
s a th e re d in like assem bly here before..
U a a fS.SOO.OOO I n V a u l t * .

B y la s t ev en in g th e F ed eral R eserve
iiank of C leveland h a d In its v a u lts
ib o u t *5,500,000 In gold coin a n d gold

certificates representing coin In the
U nited S ta te s tre a s u r y .
O f th is
$2,000,000 w a s th e first p a y m e n t on
the $12,100,000 stock, a n d th e o th e r
500,000
w a s tu rn e d in b y th e m e m ­
ber b anks a s re serv e s.
‘
T hey a r e n o t obliged to tu r n tn a n y
reserves a s y e t, a s th e o rd e r w e n t o u t
only la s t n ig h t, b u t m a n y b a n k e rs,
d esirin g to lessen th e load on r e ­
gional b a n k officials, s e n t in th e ir
funds, to b e counted a n d sto r e d a w a y
before th e g re a te r influ:; T h is c o u r­
tesy Is in d icativ e of th e sp ir it which
h a s a c tu a te d b a n k e r s all ov e r th e
country, sa y tho Cleveland officials.
The m en w ho a re in s t a l l in g t h e s y s ­
tem h a v e received co -o p era tio n u n ­
stinted. A bout $11,500,000 m o re gold
will be tu rn e d in a s re se rv e in the
next few days, each m em b e r b a n t
being obliged to tu r n In a fra c tlo i
o f th e re serv e s held b y it.
T elegram s of c o n g ra tu la tio n w er
received y e sterd a y from S ecretary
McAdoo, from m ost o f th e eleven o th - 1
e r regional b an k s a n d from b a n k e rs
a n d business m en th ro u g h o u t th e
country.
C le v e la n d e r s W i r e G r e e t in g s .

T he C leveland officers w ired th e ir
g reetin g s to M r. McAdoo a n d th e
eleven siste r banks.
T he h e a d q u a rte rs in th e W illia m ­
son building w ere d e co ra te d w ith
g re a t b a sk e ts a n d v ases o f flow ers t h a t
cam e a s trib u te s from B o rto n & B orton, th e C entral N a tio n a l b ank, th e
S uperior Savings & T ru s t Co., th e C iti­
zens Savings & T ru st Co.. th e C leve­
lan d N atio n al bank, th e C leveland
T ru st Co., F . S. C rane, th e G u a rd ia n
Savings & T ru st Co., H a y d en , M iller
& Co., E d w a r d C. H u n t, D r. p . j .
M oran, th e N a tio n a l C om m ercial
bank, tho N ational C ity bank, th e
TUlotson & Wolcott Co., M r. a n d M rs.
L ym an H. Treadway, th e U nion N a ­
tio n al bank a n d Chris B. W ilhelm y
Jo h n Sherw in, p re sid e n t of 't h e
F ir s t N a tio n a l bank of C leveland,
S ta
ta tle
tlp r.
r
S

™
th 6 w'as
UnChe0n
‘«*
T here
m usic ina n dH °th
e

t e r ' h V f l 63 " 'ere d e c 0 ra t"d w ith c e n ­
t e r b a sk e ts of c h ry san th e m u m s. A t
th e sp e a k ers’ table, besides M r. S h erwln, w ere M ayor N ew ton D B a k e r
M r. Fa ncher, Mr. Wills, M oiri's B lac k '
P resident of the C ham ber of Com
m erce; T hom as H. W ilson, vice pre“ d e n t of the F irs t N a tio n a l b a n k ;
A.

and, T hom as

.u%

Cy ’

2

A.

Com bs of Lexinir

a ' £°prtt
°f Plt^
d <• '
‘n c k of SaiyerviUe,

a * " ki» «

Of the 704 m em ber b a n k s in th e
n d m . diStri ^ WUh th e ir c a p ita l
more
bQ— *202. 000.000.
more t h a n half of the b a n k s h a d r e p ­
resentatives p r e s e n t no
Cleveland bank.
* 6V6ry
w h a t ' h ^ 11,3 ma(*e a b rief talk, tellin g
h i i p of th« hIS C° - Work0- . with th e
bank s h o n i ?
3 °* t h e mem ber
tioned the r f aCCOraplish- H e m en uew c irc u la t ^ 1' ^ ? " 6 DOtes* th e
h a n d ,” he' 'saicft°“ tC

these n ° t e s on

conditions r e Q u i r e ^ u ^ n o r b l f o r l ”611

X

T his w a s re fe rre d to by M ayor B&-1
r, w h e n he spoke a little late r.
“My condition re q u ire s It,” th e
>r said, lau g h in g , “a n d th e y c an
th em a s soon a s th ey please.”
T h e m a y o r re fe rre d to his “c h e ru b ”
d a y s w h en In a c a n ta ta he h a d borne
h is s h a re of th e ra d lain t q u e en 's fivey a rd c am b ric tra in . H e h a d n e v er
fe lt p ro u d e r th a n w hen he toddled
a cro ss th e sta g e, th o u g h his p a r t in
th e p e rfo rm a n ce w as sm all.
So e v ery citizen, though his p a r t in
the new
sy ste m
m ig h t be sm all,
should w o rk w ith it a n d be proud of
It, sa id th e m ayor.
Mr. T rea d w a y . Mr. P a tric k , Mr.
W ard ro p , Mr.
W ilso n , and
Mr.
R a n k in m ad e sh o rt talk s, a s did
Mr. F a n c h e r.
T he la s t
n am ed
s ta te d th e regional b a n k s would begin
c au tio u sly . In a few days, he added,
th e C leveland b an k w ould a n n o u n ce
its re a d in e s s to j-eceive b an k (n o t in ­
div id u a l) d r a fts d ra w n by m em ber
b a n k s on re serv e a g e n ts in th is d is­
tric t a n d th a t, vice versa, m em ber
b a n k s could check out of th e reg io n al
ban k , If th ey happened to h av e a n
excess of re serv e th e re a n d desired
to tr a n s f e r It to a re serv e a g e n t in
th is d istric t.
T h is m a rk s a step
fu rth e r th a n th e stric tly gold o p e ra ­
tio n s w hich h av e h ereto fo re o b tain e d
in c onnection w ith th e reg io n al b a n k .
R e d isco u n tin g
m e rc h a n t
p&per
w ould be th e first fu n c tio n of th e
reg io n al D a n k , said M r. F a n c h er, a n d
th a t if co n d itio n s w ere sa tis fa c to ry ,
he hoped a low er r a te th a n th e p re s ­
e n t 0 p e r cent, w ould be an n o u n ced
fo r th is d is tr ic t w ith in th o n e x t six ty
d ay s.
A low or r a te w ould p e rm it m em b er
b a n k s to c o n v e rt b u sin e ss m en ’s n o tes
a n d b ills in to c a sh o r c red it a t th e
re se rv e b a n k . N o m e rc h a n t i.jj>or
h a s b e en tu rn e d in to th e. ClQjflMa.nd
b a n k so fa r. a ll re se rv e s b e in g paid
in gold, la w fu l nloney o r yellow backsa s th e fe d e ra l re se rv e b o a rd h a d s u g ­
gested.
All of th e tw e lv e re g io n a l batik s
w ere su c c essfu lly lau n c h ed y e ste rd a y
—In C leveland, N ew Y ork, C hicago,
B oston, P h ila d e lp h ia , Chicago, M in­
neapolis, S t. L ouis, K a n s a s C ity, A t- t
la n ta , R ichm ond, D a lla s a n d San
S’ranciw'-o-

Vo

*—

H eilfn c o u n t liit t W e r e

1 •

Yet.

‘

T h e re h a s been no re d isc o u n tin g of
m e rc h a n t p a p e r b y th e F e d e ra l R e ­
se rv e B a n k of C leveland y e t, though
th e N e w Y ork in s titu tio n did som e
rig h t fro m th e s ta r t. T h ere w a s m ore
in d u c e m e n t for th e e a s te rn m em ber
b a n k e rs to tu r n in p ap er, a s th e re ­
d isc o u n t r a te th e re is 5 1-2 p e r cent,
fo r le s s - th a n - th irty - d a y m a tu ritie s .
W ith its 6 p e r c en t, r a te fo r all m a ­
tu r itie s th e C leveland b a n k h a s a s y et
h a d no a p p lic a tio n s. I t is a tr ib u te to
th e s itu a tio n in th is d is tr ic t t h a t th e
m e m b e r b a n k s h a v e fo u n d no need
th u s to m ak e a s s e ts liquid.
A s a d ra w b a c k to decided e ase In
O hio c o u n try b a n k s com es no w th e
live sto c k q u a ra n tin e a n d th e k illin g
of c a ttle In p a r ts o f th e s ta te . T he
r a is e r w h o h a s b o rro w e d a t h is b a n k
is n o t In position to p a y b a c k his
loans, if a n y q u a n tity o f h is c a ttle a re
k illed . I t m a y be tr u e t h a t h e h a s a
claim a g a in s t th e s t a te a n d th e g o v ­
e rn m e n t t h a t w ill be p a id to th e p e n ­
ny, b u t w hile t h a t c la im goes th ro u g h
th e n e c e ssa ry c h a n n e ls b e fo re its p a y ­
m e n t, i t re m a in s a c la im a n d n o t
c a sh . A s fa rm e rs h a v e been h o ld in g
g ra in fo r h ig h e r p rice s a n d th e b a n k s
h a v e been c a rr y in g th e m , th e c a ttle
tro u b le p u ts a little m o re p r e s s u r e on
th e b a n k s. B u t th e r u r a l re se rv e s
h a v e b e en in such a d e q u a te sh a p e —
th e y h a v e been c alled to o b ig —t h a t
the p re s e n t d is tu rb a n c e is e asily
w e a th e re d .
T h e c a ttle In d u s tr y In
O hio m a k e s no ite m in b a n k b u sin e ss
In O hio a s j t does, fo r In sta n c e , in the.
w e st. T hose c ity b a n k s w h ic h a re
c a rry in g lo a n s to c o u n try b a n k s will
be e x p e c te d to c o -o p e ra te w ith th e
r u r a l in s titu tio n a s t h a t d o e s w ith Its
c lie n t.
*




m e K eserva Banks: * ----

.

F e d e ra l reserv e b anks in a dozen A m erican
c ities will open fo r business th is m orning. W hat;
is believed w ill prove a new e ra in U nited S ta te s '
business is th u s a t han d . The prospect is of
special in te re s t to C leveland because th is city
is th e c en ter o f one o f th o tw elv e reserv e dis­
tr ic ts and th e hom e o f a reserve b a n k .
A g re a t m ass o f p re lim in a ry w ork, even a fte r
th e e n ac tm e n t o f th e law , w as necessary before
th e b a n k s could a ctu ijjjy be sta rte d . T he act es­
ta b lish in g th e systeih w as signed by th e president
on C hristm as eve Inst y e ar. T hen cam e th e selec­
tio n of reserv e c ities. T he p re s id e n t’s choices for
m em bers of th e c e n tra l reserv e bo ard w ere an-

E ven w ith all th ese p re lim in a rie s a tte n d e d to,
th e re w as s till f u rth e r delay. T he w a r and th e
consequent d istu rb a n c e o f c re d it th e w orld over
caused a postponem ent o f th e o pening o f the
banks. T he system could n o t be got in to w orking
order in tim e to m eet th e h igh tid e of t h a t dis­
a ste r, a n d th e re w as m uch n a tu ra l h e sita tio n
ab o u t p u ttin g i t in to o p e ratio n in th e m id st of
th e d istu rb a n c e lest m ore d am age bo done th a n
benefit c o n ferre d , th ro u g h th e n ecessary read ju stm onts.
» ...
I t is now a g ree d
* c o ^ l$ irJ f$ j ^ v e v ery
g re a tly im proved. T he need of th e new b a n k in g
eystem is sc a rc e ly less, and the- s a fe ty w ith w hich
i t m ny b e e sta b lish e d is g re a te r. F in a n c ia l men
th e w orld e v e r w ill observe how th e now system
w o rk s a t th e s ta r t. T he U n ited S ta te s, till now,
h a s labored u n d e r an a n tiq u a te d b a n k in g a n d cur­
re n c y plan w hich no o th e r ad v an c ed n a tio n on
e a rth w ould h a v e endured.
One a sp ect o f th e im proved situ a tio n h a s alread y
been noted in th ese colum ns.
L a s t w eek the
N a tio n a l , C ity B a n k o f N ew Y ork opened a
b ran ch in B uenos A ires, u n d e r a u th o rity of this
fe d e ra l re serv e a c t. H e reto fo re , such a n a c tiv ity
could not h a v e been u n d e rta k e n . I t m eans much
fo r th e fu tu re grow th o f A m erican tra d e abroad,
fo r th is b ra n c h b a n k in South A m erica w ill be
follow ed b y m an y o th ers rc a tte re d w here oppor­
tu n itie s seem to e x ist in all p a rts of th e w orld.
T h is is th e g o v e rn m e n t’s h e lp in g hand exten d ed
to th e com m erce and in d u stry o f th e U nited
S ta te s a n d th e w orld. A nd th e benefits w ill
accrue, in som e degree, to ev ery citizen.

16,000,009 HERE
New Banking System Re­
leases Big Sum for Busi­
ness Accommodation.
Caution Will Prevent Too Sud­
den Lubricating of Finan1 cial Machine.
UV

II.

^ I f u n u ^ J o n of th e c o tto n e x ­
p l a g e s , here a n d in Iav erp o o l, is rei *1°** upon f u r th e r to b o lster th e south,
, th o u g h th e $185,000,00Q loan fund
| lag s. H o p es o f fre e r m o v em e n t of
th e sta p le a n d th e c o u n try 's general
i fo reig n tra d e show ing fo r O ctober, a s
issued y e ste rd a y , w ere in line w ith
*n ste rlin g ex ch a n g e to:
■$4.8736 fo r d em and. A s v irile a s a n y
1o th e r fa c to r in th e p re se n t L ondon
e x ch a n g e is g ra d u a l p a y in g v off of
foreign d e b ts owed us, a s re s u lt of th e
ru n n in g out. o f v a rio u s m o ra to ria .
O ctober e x p o rts of m erc h an d ise
fro m th e U n ited S ta te s w ere $195,­
283,000 co m p ared w ith $271,801,000
la s t y ear, b u t show ing a n e x p o rt b a l­
a n c e o v e r O ctober, 1914, im p o rts of
$57,,105,000. T*he g a in in e x p o rt b a l­
a n c e over S e p te m b e r th is y e a r, w as
$15,902,000.

S. R O S B T t H A L .

B efo re th e w eek e n d s th e re w ill b o
vvaliable fo r new lo an s b y C leveland
n a tio n a l b a n k s a t le a st $0,000,000 a:-,
re s u lt o f o p e ra tio n of th e fe d e ra l re ­
s e rv e sy ste m .
So oawly-tn its c a re e r does th e new
sy s te m re n d e r itself- se rv iceab le to
th e b u sin e ss h ouse w hich d esires to
♦ N teiid its b orrow ing. B a n k s w ill not
ru s h pellm ell to fill u p th e ir loan
ledgers. T hey w ill go slow ly to re ­
a d ju s t th em se lv es to th e new req u iren e n ts , b u t th e $0,000,000 is a con­
s e rv a tiv e e s tim a te of th e a m o u n t
th a t. w ill be re le ased a n d u sab le fo r
a cc o m m o d a tio n
of
m a n u fa c tu re r,
w h o lesaler, re tu ile r, fa rm e r.
B a n k s in re se rv e cities, *>f w hich
C lev elan d is one, c an now reduce
r h : ir re se rv e s from th e old 25-p e r•*»nt-of-deposit level to 15 p e r cent.
*»n d e m a n d d ep o sits a n d
p e r cent.
'*:i th e ir sm all volum e of tim e de­
posits.
' x
'
l.n lir ic n t iiiK

.

**»

be

S le w .

On th e b a sis of th e Sept. 1.2 shuw :jg to th e c o n tro lle r o f th e cu rre n c y
ie p o sits in C leveland n a tio n a l b an k s
w ere $84,400,000. H ere, a s in m anv
O ther c ities, re serv e s w ere a sh a d e
below th e 25 per cent, level, so th a t
th e
.present
allo w ab le
re d u c tio n
w ould be a little u n d e r $8,400,000. If
one figures th e n ew ly released m oney
as b a sis fo r new b a n k c re d it a n d not
as loaned in cash, th en th e new loans
t h a t can be m ad e w ill be found fa r
•nore th a n $8,400,000.
B u t, a s sta te d , th e b a n k s w ill do
th e ir a d ju s tin g g ra d u a lly , p re su m ab ly
w ill exercise th e sa m e ju d g m e n t a n d
a u tio n th e y h a v e h e reto fo re exercised
m lo an in g , a n d th e $0,000,000 is a
fig u re w hich im plies a not too h a s ty
ru b ric a tin g of th e financial m achine.
T h ro u g h o u t th e s ta te th e r e w ill be
a v a ila b le in like m a n n e r a c o n se rv a ­
tiv e $20,000,000.
E f f e c t Gootl.

L O p e n in g of th e new b a n k in g sy si« m , QfUcial re o p en in g of th e N ew
Y o rk a n d N ew O rlean s c o tto n e x ­
c h a n g e s a n c rth e N ew Y ork curl) m a r ­
k e t w ere th e o u ts ta n d in g develop­
m e n ts o f th e d a y in th is c o u n try . So
beneficent w as th e influence on s e n ti­
m e n t t h a t N e w Y ork e xperienced in ­
c re a se d d e m a n d fo r in v e s tm e n t se ­
c u ritie s , a few in te r io r s ta te b an k s
w ere re p o rte d lo a n in g c au tio u sly a t
5 1-2 p e r cen t., a n d m u n ic ip a litie s u n ­
d e rto o k n e g o tia tio n fo r bond issues.
H e re th e c ity fin an c e d ire c to r a n ­
nounced th e s a le to H ay d en , M iller &
Co. o f $170.0)0 4 l- 2 s o ver th e coun­
t e r a t p a r, m a k in g possible th e beg in ­
n in g o f w o rk on C lev e lan d ’s first sew ­
a g e d isp o sa l p la n t. F u rth e rm o re , th e
c ity let it be k n o w n t h a t it w ill have
$1,375,000 bonds, p ro ceed s to be used
fo r v a rio u s p u rp o se s, to offer before
th e y e a r closes.
'
T h e steel tr a d e n o te d tra c e s of new
life, e a s te r n P e n n s y lv a n ia fo r in ­
sta n c e , re p o rtin g in c re a s e in in q u irie s
1a n d s a le s of p ig iro n .
T h e steel
Digitized
FRASER
iratte,forhow
ever, h a s a d is ta n c e still
to wro.


WILSON S E E S BRIG HTER
FUTURE FOR U. S. TO
FOLLOW BANK OPENING
W a s h i n g t o n . N ovem ber it .—'"a
fu tu r e c le a r a n d b rig h t w ith prom ise
of th e b e st th in g s" w as th e w ay
P re s jd g n ^ ^ ro s o n sum m ed up h is view
o ^ O i^ m is m e s s prospect to n ig h t in a
le tte r to S e c retary McAdoo, of the
T re a su ry D e p artm en t, c o n g ra tu la tin g
h im upon the opening of th e new fe d ­
e ra l re serv e b a n k system .
" F u n d a m e n ta l w rongs once rig h ted ,
a s th ey m ay now easily a n d quickly
be.” w rote th e P re sid e n t, “ a ll differ­
ences w ill c le a r aw ay. W e a r e all
in th e sa m e boat, tho u g h a p p a re n tly
w e had fo rg o tte n it. W e now know
th e po rt for w hich we a re bound. W e
h ave, and sh a ll have m ore a n d m ore
a s our new u n d e rsta n d in g s ripen, a
com m on discipline of p a trio tic p u r ­
pose.
.
"W e sh all advance, and a d v an c e
together, w ith a nfew sp irit, a new
e n th u sia sm , a new c o rd ia lity of sp irl ite d co-operation. I t is a n in sp irin g
p ro sp ect.”
Wilson re fe rre d to th e new tariff
law, the new cu rre n c y law, th e newt r a d e com m ission law a n d t h e labor
p rovisions of th e new a n ti - t r u s t law
a s the m ea n s th ro u g h w hich "th e
soil has everyw here been laid b a re
a n d o u t of w hich m onopoly is slow ly
to bo e rad ic a te d ." H e a d d ed th a t
“u n d o u b ted ly th e m eans b y w hich
c re d it h a s been se t free is a t th e
h e a r t of all th ese th in g s; is th e keypiece of th e w hole stru g g le .”
R e fe rrin g to th e “o p p o rtu n e n e ss”
o f th e c u rre n c y law t h e P re sid e n t
s a id: “T h e w a r w hich h a s involved
th e whole of th e h e a r t of E u ro p e h a s
m ade it n e ce ssa ry th a t th e U n ited
S ta te s should m obilize its'* reso u rce s
in th e m ost effective w ay possible.”
H e spoke of th e difficulty of m a r ­
k e tin g th e c o tto n crop, of th e c o u n ­
tr y and added t h a t “ no d o u b t in the
lig h t of th e new day, w ith its new
u n d e rsta n d in g s, th e problem s of the
ra ilro a d s w ill also be m e t a n d d e a lt
w ith in a sp irit of can d o r a n d j u s ­
tice."

LATTfllER FAILS
TO LAND RESERVE
BANK PLACE HERE
• -------------- -

t-9 « 4

Politicians Learn Efforts of Cox’s
Faction to Get Cashiership for
Banking Superintendent
Has Been Frowned On.
P o litic ia n s lea rn ed
th a t
a stre n u o u s a tte m p t to h av e S ta te
B a n k in g S u p e rin te n d e n t E m ery L atta n n e ^ appolntecT""’c a sh ie r of- *We
C leveland F e d e ra l R eserve B a n k has
oeen m ad e by th e C ox-W olf D em o­
c ra tic fa c tio n a t C olum bus. T he a t ­
tem p t a p p a re n tly h a s failed.
L a tta n n e r, who h a s been close to
G overnor Cox a n d th e D em ocratic
s ta te o rg a n iz atio n , is e xpected by
p o liticia n s to go o u t of office sh o rtly
a f te r G o v ern o r-elect W illis goes in.
I t w as definitely lea rn ed th a t L a t­
ta n n e r h a s been a n a p p lic a n t fo r th e
po st of c a sh ie r in th e new bank.
H is can d id acy , i t is u nderstood, re ­
ceived th e e n th u s ia stic su p p o rt of
H a rry P. W olf, of C olum bus, a m em ­
ber of th e re serv e board. W olf w as
appo in ted th ro u g h th e influence of
G overnor Cox, a n d he a n d his b ro th ­
er, R o b e rt W olf, a r e p a rtic u la rly
close to Cox. A re p o rt w as p e rm itte d
to get o u t t h a t L a tta n n e r is n o t to
be a ppointed, a lth o u g h no m a n yet
h a s been selected.
*

*

*

P ro m in en ce in a n a tio n a l w a y cam e
y e ste rd a y to J. M a rtin T hum m , m em ­
b er of th e D em ocratic e x ec u tiv e com ­
m ittee a n d a d e p u ty c le rk of m unic­
ipal c ourt.
T h u m m ’s p ic tu re w a s p rin te d in a
page o f p ro m in e n t D e m o cra ts t h a t is
a f e a tu r e of th e N a tio n a l M onthly, a
publicatio n owned b y N o rm a n E.
M ack, th e D em o cratic co m m itteem an
from N ew York.
.

.

.

A m ee tin g of th e D em o cratic e x ­
e cu tiv e co m m ittee is expected w ithin
a few d a y s to choose a su ccesso r to
Ju d g e M anuel L evine, w ho is to leave
th e m u n ic ip al ben ch fo r th e c o u rt of
com m on pleas. T he m a jo rity of the
o rg a n iz atio n seem ed to believe t h a t
M aurice B e rn stein w ould be chosen.
M ayor B a k e r h a s le ft th e field open,
it is said..
R ep u b lican p o liticia n s w ere told
y e sterd a y th a t C a p ta in R. L. Q ueisser h a s received th e in d o rse m e n t of
Colonel C. N. Z im e rm a n a n d the
F ifth R egim ent, O. N. G., fo r a p ­
p o in tm e n t on G o v e rn o r-ele ct W illis’
m ilita ry staff. A n u m b e r of frie n d s
of M ajor C h arles R. M iller w ere d is­
cussing him a s a p o ssib ility fo r a d ju
ta n t gen eral.

Enormous Amounts in Gold and
Gold Certificates Transferred
to Federal Institution
Without Hitch.
F IR S T DAY GIVEN OVER TO
CO UN TIN G ftp GIANT FUND
Rediscounting to Get New Notes
Expected by Members
Soon.
W A SH IN G T O N .
N ovem ber
17.—
H ow $170,000,000 in gold a n d law fu l
m oney w a s sh ifted w ith o u t a h itc h
y e ste rd a y from b a n k s w hich a re
m em b ers of th e fe d era l re se rv e s y s ­
tem to th e re se rv e b a n k s w a s told in
to d a y 's re p o rts to th e fe d era l re se rv e
board- Of th is to ta l a b o u t $137,000,000
w as in gold o r gold c e rtific a te s a n d
th e re s t in o th e r form s of m oney.
A ccording to e stim a te s, betw een
*70,000,000 a n d $80,000,000 is y e t to be
tra n s fe rre d from the m em b er b a n k s
to th e re se rv e b a n k s to m e e t th e re ­
se rv e re q u ire m e n ts.
T h e reserve
bo ard re c e n tly re q u este d t h a t the
b a n k s use m oney in th is operatio n ,
a n d so f a r a s th e first d a y ’s re p o rts
show no a tte m p t w a s m ad e to re so rt
to t h a t provision of th e c u rre n c y a c t,
w hich allow s b a n k s to m ak e p a r t of
th is tr a n s f e r in com m ercial paper.
M oney C o u n te d Y e ste rd a y .
T h e first d a y of th e tw e lv e re serv e
b a n k s a p p a re n tly w as d ev o ted la rg e ­
ly to c o u n tin g th is m o n ey a n d to th e
u su a l cerem onies a cc o m p a n y in g th e
lau n ch in g of a new o rg a n iz atio n .
O nly a few m illion d o lla rs ’ w o rth of
com m ercial p a p e r w a s re d isco u n ted .
Officials said to n ig h t th e re w a s ev ery
re aso n to ex p ect la rg e a m o u n ts of
re d isco u n ts in th e n e a r fu tu re .
A t p re s e n t th e re is close to J300,000,000 o f em ergency c u rre n c y a n d
possibly $100,000,000 c le a rin g house
loan c e rtific a te s o u ts ta n d in g o r In th e
h a n d s o f b a n k s.
U n d e r th e new la w th e b a n k s can
ob'-ain fe d era l re se rv e n o tes by r e ­
d isc o u n tin g w ith re se rv e b a n k s th e
sam e s o rt of com m ercial p a p e r th a t
th e y p u t u p fo r e m e rg en c y c u rre n c y .
So f a r th e re se rv e b o a rd h a s p u t no
ta x on fe d e ra l re se rv e notes. I f a
high t a x is im posed la te r, su c h a ste p
p ro b a b ly w ill be o nly te m p o ra ry a n d
designed to p re v e n t a f u r th e r in ­
c re a se in th e c irc u la tin g m edium
u n til m o st of th e e m e rg en c y c u r ­
ren cy h a s been re tire d .
$20,000,000 In N o te s R e a d y .
No d em a n d w a s m ad e y e ste rd a y ,
so f a r a s re p o rts h e re show , fo r
fe d era l re se rv e notes. A b o u t $20,000,00# ha.ve b een p rin te d a n d a re in th e
h a n d s o f th e fe d e ra l re se rv e a g e n ts
of th « d iffe re n t re se rv e banka. T h e ir
s u b s titu tio n fo r e m e rg en c y c u rre n c y
to b e g ra d u a l.




DISCOUNT RATES
SEEM PROBABLE SOON
r

LSADEE.

Federal Banks Will Know This Week Whether Initial
Rates Are Too High—Opening Creates Sense of Se­
curity in Banking Circles.
BY F. F. D U N C A N ,
F in a n cia l E d ito r of The Leader.
I
p to th e i-lose of b u sin e ss y e s te rd a y a fte rn o o n a b o u t o u e -th ird of
t h e tirst, in s ta llm e n ts of re s e rv e s h a d been paid in to th e fe d e ra l reserve
b a n k of C lev elan d fro m m e m b e r b a n k s o f th e f o u rth d istric t. As the
fo rm a ! c all w as n o t s e n t o u t u n til M o n d ay th e re sp o n se s a re not ex­
p e c te d in la rg e v o lu m e u n til today.
F e d e ra l R e se rv e A g en t W ills sa id t h a t a lo w e rin g of th e in itial 6
p e r c e n t d isc o u n t r a te w ould d e p en d upon w h e th e r o r not a la rg e body of
th e b a n k s e le c te d to ta k e a d v a n ta g e of th e p riv ile g e of p a y irg h a lf in
a c c e p ta b le p a p e r. T h is w ill a ffo rd a n in d e x a s to w h e th e r o r n o t the
in itia l r a te is to o hig h .
N o a p p lic a tio n s fo r r e d is c o u n ts h a v e y e t been received. L ocal b a n k ­
e rs a r e r a t h e r u n a n im o u s in th e s ta te m e n t t h a t th e y w ill not re d isc o u n t a t
6 p e r c e n t fu r th e v e ry good re a so n t h a t th e y c an “g e t th e m oney c h eap er
e ls e w h e re .” To th is s ta te m e n t, h o w ev er, is a d d e d a n o th e r of som e sig­
n ific an c e : “It's good to fee! t h a t w e c a n ste p o v e r to th e W illiam son
b u ild in g a n d g e t ir a t 6 p e r c e n t.”
I t is e v id e n t fro m th is t h a t a fe e lin g o f s e c u rity a n d confidence has
a lre a d y been e n g e n d e re d in b a n k e r s ’ m in d s by th e o p e n in g o f th e fe d era l
b a n k s.
F o rm s fo r a p p lic a tio n s fo r re d is c o u n ts w ere s e n t o u t by th e local in ­
s titu tio n y e s te rd a y to all b a n k s in th e d istric t.
T lie D a lla s in s titu tio n to o k p ro m p t a c tio n y e ste rd a y a n d low ered
Its r a te % p e r c e n t fro m th e in itia l ra te . As th e open m a rk e t ra te s
q u o te d a t le a d in g c e n te rs o f th e K a st fo r g ilt edge p a p e r a re now well
b e lo w th e b a n k r a te s it lo o k s lik e a fo reg o n e c o n clu sio n th a t th e la rg e r
re g io n a l in s titu tio n s w ill lo w e r t h e i r ra te s sh o rtly .

R A IL R O A D S PL A C E O R D E R S FO R ST E E L R A ILS.
A fa v o ra b le im p re ssio n w a s c re a te d by th e a n n o u n c e m e n t of th e r e ­
s u m p t i o n of a n u m b e r o f th e m ills o f th e G a ry p la n t a n d th e in fo rm a tio n
t h a t th e N e w Y o rk C e n tra l lin e s a re in th e m a r k e t f o r 25,00(1 to n s of
ste el ra ils. T h e l>aily I r o n T ra d e also m a k e s t h e sta te m e n t t h a t w ire
m ills a r e so h e a v ily b o o k ed w ith fo reig n b u sin e ss t h a t th e y c a n n o t a ssu re
p r o m p t d e liv e ry on a d d itio n a l o rd e rs fro m th e sa m e source.
*
S om e n ew in q u iry is a p p e a rin g fo r p ig iro n . P itts b u rg m ills a re now
ru n n in g g e n e ra lly a t 50 p e r c e n t of c a p a c ity , a c o n sid e ra b le im p ro v e m en t
o v e r p re v io u s w e e k s w h e n low re c o rd o u tp u t f o r a lo n g p e rio d of y ears
p re v a ile d . I t is e v id e n t t h a t th e w o rs t o f th e d e p ressio n in th e steel
tr a d e s h a s b e en seen , a n d t h a t o rd in a ry ne ce ssities w ill p ro v e al leas\
a slow r a te o f im p ro v e m e n t. T h is does n o t m ea n th a t a w ild sc ram b le
to p u rc h a s e th e c o m m o n s h a r e s of th e ste el list w ill p ro v e im m ed iately
p ro fita b le.
T h e r e w a s f u r t h e r e n c o u ra g e m e n t in th e d e p a rtm e n t o f c o m m erce
fig u res o f e x p o rts fo r th e w e ek e n d in g N o v e m b er 14 a t th e te n p rin cip al
e x p o rt p o rts of th e c o u n try . T h ese sh o w ed an excess o v e r im p o rts of $ 2 1 ..'>76,342.
F o r th e first h a lf o f N o v e m b er th e e x p o rt excess w as $ 3 2 ,3 9 2 ,2 1 4 .
T h ese fig u res in d ic a te t h a t th e e x ce lle n t tra d e b a la n c e of O c to b er is of a
c o n tin u in g n a tu r e a n d o ffers v a lu a b le lig h t u p o n th e re c e n t decline in
ste rlin g e x c h a n g e r a te s to n o rm a l. T h e te n p o rts re p o rte d h a n d le 80 p e r
c e n t o f th e fo re ig n b u sin e ss of th e c o u n try , so t h a t th e y a re fa irly
c o m p re h e n siv e .
C o tto n f u t u r e m a r k e ts w e re w e ak on o fferin g s from th e S o u th a n d
h e d g in g o p e r a tio n s by c a s h in te re s ts. In v e s tm e n t d e m a n d h a s been slow
to develop, e v id e n tly f o r th e re a so n t h a t th e p u b lic h a s n o t y e t been in ­
fo rm e d a s to th e p ro v isio n s o f th e no*- sty le g o v e rn m e n t c o n tra c ts. H ence
liq u id a tio n o f th e old c o n tr a c ts h a n g in g o ver th e m a r k e t a n d th e w eight
i.f th e c a s h m a r k e ts h a s n o t y e t fo u n d c o m p e n sa tio n fro m d e m a n d fro m
th e in v e s tm e n t p u b lic . T h e d e clin e o f a b o u t 30 p o in ts y e sterd a y is ex­
p e cted to d e v e lo p th e n e c e ssa ry p u b lic in te re s t. T h e p rice s th em se lv es
a p p e a r to d is c o u n t a ll o f th e a d v e rse f e a tu re s o f t h e c o tto n m a rk e t
situ a tio n .

M O NEY R A T E S D E C L IN E IN E A S T E R N MARKET.
I n th e K a s t? r n m a r k e ts th e lo w est ra te s se e n since J u ly w e re re0lj
all d iv is io n s
th e m a rk e t p a rtic ip a tin g . C all m oney ra n g e d
fro m 4 ’4 to 5 p e r cent- t h e lo w e r r a te s p re v a ilin g w h e re th e n a tu r e o f th e
c o lla te r a l w a r r a n te d . r ° r p e rio d s r a n g in g fro m tw o to six m o n th s ra te s
, . , r f rertiHjfcd to
tie r cl*nt. Som e th ir ty - d a y m oney sh a d e d t h a t figure.

Much o f th e y p e r c en t m o n ev put oot re p re se n ted renew als of loans m ade
a t 6 11> 8 p e r cent.
^
I n te r io r b a n k s w e re re p o rte d as fre e len d e rs in New Y ork. The,
sm o o th n e ss w ith w h ic h th e m ac h in ery of th e fe d era l banks w en t into
o p e ra tio n w as larg e ly responsible fo r th e freedom w ith w hich fu n d s w ere
offered.
Til th e in v e s tm e n t m a rk e t the tra d e waJS rep o rte d as broad b u t w ith ­
o u t th e a d v a n c e s in p rice s th a t h a v e been in evidence of late. H ow ever,
th e r e w ere f u rth e r a d v a n c e s scored in th e S ta n d ard Oil list on th e curb.
F o r th e g e n e ra lity of sto c k s in th e unofficial m a rk e t bid and asked prices
dU played a w ider d isp a rity w ith a consequent dim inution in th e trad in g .
A b e tte r d em an d fo r co p p er m etal se n t th e price up to 12 cents a
pound. C onditions in th a t trad e, how ever, can n o t be called satisfacto ry ,
m a in ly on a c c o u n t of th e B ritish em bargo upon exports. On th e o th er
h a n d It w as re p o rte d th a t a larg e a m o u n t of c otton is to he sh ip p e d a t
once to G erm an y In A m erican bottom s.

T h e S e c tio n a l A p p e a l.
The trouble w ith the proposal so urgently made
before the adjournm ent of congress th a t the gov­
ernm ent should do som ething fo r cotton was the
perfectly p a te n t fa c t th a t it was a purely sectional
plea. Southern senators and representatives were
asking th a t the interests of ono section be cared
fo r a t th e expense of the whole country. The
opposition of P resident Wilson probably prevented
the desired legislation before the recent adjourn­
m ent. Developm ents now indicate th a t the cotton
situ atio n is solving itself, helped very g reatly by
the action of S ecretary McAdoo in the m atter of
the cotton loan. The inauguration of the reserve
banks adds a fu rth er elem ent of assurance.
So much have conditions improved it is prob­
able th a t most of those who were asking congres­
sional assistance now gee th a t the president was
rig h t. A few—Senator Vardanian, for one—are
still outspokenly of the opinion th at the presi­
dent was wrong and th a t congress will vet be
obliged to
I 'i A ‘
In this respect Vardanian takes the position
w hich th e sugar Dem ocrats from Louisiana and
the wool D em ocrats from varjjus western and
c en tral sta te s assumed w hen th; tariff was under
discussion last year.
T hey titled the sectional
view point. The cotton predicam ent was more se­
rious th an either of the others, fcut the principle
wa* the same.
1JA W 7 r.
An ad m in istratio n
not
progress
unless it is able and willing to view big questions
in th eir n ational scope. Southetn dominance in
congress, due to wholly natural causes, has been
criticized from tim e to time. And th eir success
iu o ther d irections may have emboldened certain
m em bers to ask fo r w hat the head of the adm in­
istratio n could not countenance.
Congress will be in session again in three weeks.
There will be time to tak e care of cotton, if cotton
still needs takin g care of and if congressional
action is deemed the wisest course to pursue. Hut
present indications are th a t no action by congress
will be necessarv.




Regional Institution Takes in
$1,500,000 More.
1 In t 6 the Federal Reserve bank of
Cleveland yesterday came $1,500,000 In
go ld fro m member banks, m aking the
to ta l s to c k paym ents and
reserves
turned in so far 57,000,000. The form al
o r d e r fo r reserves w ent out only Mon­
d a y n ig h t, a n d much was paid in In a d ­
v a n c e . W hen a ll Is in, flrrft stock p a y ­
m e n t a n d fir s t reserves, there will be
*17,000,000, minus w hatever m erchant
p a p e r arrives as reserve. L ittle or none
o f th is Is expected.
M .1. Flemine. auditor ot the F a rm ers
bank of P ittsburg, has

TI

P la n s ror fncr£afcfn#C*f^ w ealth of
cash a n d expanding the operations of
the tw e lv e regional banks were before
the fe d e ra l reserve board yesterday as
te le g r a m s v o n tin u e d to a r r iv e , te llin g of
th e s u c c e s s fu l opening of the in s t i t u ­
tio n s.
T h e tirst w e e k ’s o p e r a tio n of

th e s y s te m m a y r e s u lt in a u g m e n tin g
th e b a n k s ’ cash by m o re than $150,000,­
000.
T h e p la n u n d e r c o n s id e r a tio n Is th e
tr a n s f e r to th e re g io n a l b a n k s o f m u c h
o f th e loose c a s h in th e t r e a s u r y a n d
m o s t o f th e g o v e r n m e n t f u n d s d e p o s ite d
in n a tio n a l b a n k s* S e c r e ta r y M cA doo
h a s n o t y e t d e te rm in e d to m a k e th o s e
c h a n g e s , b u t if th e f ir s t w e e k ’s b u s in e s s
s h o w s th a t th e b a n k s c o u ld e m p lo y
m o re m o n e y th e b o a rd p ro b a b ly w ill
s u g g e s t t h a t h e . a c t.

>*.

*

w fcilw countlng' H e r e Y e t.”
,
T h ere h a s been no rediscountin^S of
fn e rc h a n t p a p e r by th e F e d e ra l Rek
se rv e B ank of Cleveland y e t, tfiougb:
th e N ew Y ork in stitu tio n did som e
r ig h t from th e s ta r t. T h ere w a s m o re
in d u ce m en t for th e e a s te rn m em b e r
b a n k e rs to tu rn in paper, a s th o r e ­
d isc o u n t r a te th ere is 5 1-2 p e r c en t,
fo r le s s-th a n -th trty -d a y m a tu ritie s .
W ith its 6 p e r cent, r a te fo r a ll ma<
tu r itie s th e Cleveland b a n k h a s a s y st
h a d no ap p licatio n s. I t Is a tr ib u te to
th e situ a tio n in th is d is tric t t h a t fh e
m em b e r b a n k s h a v e fo u n d n o need
th u s to m ak e a sse ts liquid.
A s a d ra w b a c k to decided e ase in
Ohio c o u n try b an k s com es no w th e
liv e sto ck q u a ra n tin e a n d th e k illin g
of c a ttle in p a r ts of th e s ta te . T h e
r a is e r w ho h a s borrow ed a t h is b a n k
is n o t in position to p a y b a c k h is
lo an s, if a n y q u a n tity of h is c a ttle a re
k illed. Tt m ay be tr u e t h a t he h a s a
cla im a g a in s t th e s ta te a n d th e g o v ­
e rn m e n t th a t will be paid to th e p e n ­
n y , b u t w hile th a t claim goes th ro u g h
th e ne ce ssa ry c h an n e ls b e fo re its p a y ­
m e n t, i t re m a in s a c la 'm a n d n o t
c ash . As fa rm e rs h a v e been h o ld in g
g ra in for h ig h e r p rice s a n d th e b a n k s
h a v e been c a rry in g th em , th e c a ttle
tro u b le p u ts a little m ore p re s s u re on
th e b an k s. B u t th e r u r a l re se rv e s
h a v e been in such a d e q u a te sh a p e —
th e y hfive been called too b ig — t h a t
th e p re sen t d istu rb a n c e is e asily
w e ath e red . T he c a ttle in d u s try in
Ohio m akes no ite m in b a n k b u sin e ss
in Ohio a s it does, fo r In sta n c e , in th e
w est. T hose c ity b a n k s w h ic h a re
c a rry in g loans to c o u n try b a n k s will
be expected to c o -o p e ra te w ith th e
r u r a l in stitu tio n a s t h a t does w ith Its
clien t.

Trade Revival All Over Coun­
try is Shown in Figures of
Federal Government
Experts.

of Commercial Success
in Letter to Secre­
tary McAdoo.
S C E N T P LO T TO INJURE
>ON AND CA BIN ET

W

7 ft i f l f j

e lie v e ^ ff
Officials Believe'Effort
Has
Been Made to Create Ar­
tificial Conditions.
B V BEX F. A L L B S ,

P l a i n D e a le r B u r e a u ,

38 P ost Bids..
W A SH IN G T O N , N ov. 17.
F a c ts , n o t th eo ries, in d ic a te th a t
th e b u sin e ss c risis in th e U n ited
S ta te s is over. W ith fa c ts a s the
b a sis of th e ir optim ism , th e h e a d s of
a ll th e g r e a t d e p a rtm e n ts o f th e gov­
e rn m e n t in d a ily to u ch " ’1th ev ery
a r te r y of a c tiv ity in th e c o u n try a re
confident th e U n ited S ta te s is e n te r ­
in g upon a period o f g r e a t b u sin e ss
p ro sp e rity a n d h a p p in e ss.
All in fo rm a tio n re a c h in g g overnmentf-.l d e p a rtm e n ts here te n d s to th e
belief th a t th e d epression oind p essi­
m ism w hich seized b u sin e ss e n te rp ris e
w ith th e bi ta k in g of th e w a r cloud
o v e r E u ro p e ra p id ly is b e in g d is­
sip a te d .
H ig h officials of th e a d m in is tra tio n
believe th e y h a v 3 th e p o sitiv e e v i­
dence th a t in som e se c tio n s of th e
c o u n try th e re w as a plo t to th ro w
sa n d on th e w heels of re tu rn in g p ro s- j
p e rity fo r political effect. T h is e v i­
dence, th ese officials believe, is p a r ­
tic u la rly co n v in c in g w ith re sp e c t to
c e rta in se c tio n s of P e n n sy lv a n ia . B u t
no g ib b e t a s h ig h a s H a in a n 's w ill be
e rec te d fo r th e se offenders a s th « \
p re sid e n t once th re a te n e d , c e rta in ly
n o t for th e p re sen t. T he evidence h a s
been filed fo r fu tu re re fe re n ce . In th e
m ea n tim e, e v e ry d e p a rtm e n t of th e
g o v e rn m e n t Is u n d e r in s tru c tio n s tu
c o -o p e ra te w ith a n d a ssist" in ev ery
le g itim a te w a y th e b u sin e ss of th e
c o u n try .
W ilN O it

W r i t * * O p t im is t ic a lly .

P re s id e n t W ilson to n ig h t sounded
a n o te o f o ptim ism .
In a le tte r to S e c re ta ry McAdon of




tne tre a su ry d ep artin '
ing him on th e o pening of th e new
federal re se rv e b a n k sy stem , tho
president sum m ed ftp M s view of th®
business p ro sp e ct a s " a fu tu re cle ar
and b rig h t w ith protniae of th e best
th in g s.”
“ F u n d a m e n ta l w ro n g s once rig h te d ,
a s th ey m a v now e a s ily a n d q uicklv
be,” w ro te th e p re sid en t, “all d iffer­
ences will c le a r a w ay .
“W e a re all in th e sam e b o at,
though a p p a re n tly we h a d fo rg o tte n
it. W e know th e p o rt for w hich wo
a re bound. W e h av e, a n d shall have
m ore a n d m ore, a s o u r new u n d e r ­
sta n d in g s ripen, a com m on discipline
of p a trio tic purpose.
“W e sh a ll a d v a n c e a n d a d v an c e to ­
g e th e r, w ith a ne» “p lrit, a new e n ­
th u sia sm . a new c o rd ia lity of sp irite d
co-o p eratio n . I t is a n in sp irin g proHp ect.”
Mr. W ilson re fe rre d to tho new
ta riff law , tho new' c u rre n c y law , th e
new tr a d e com m ission law a n d th e
lab o r p rovisions of th e new a n ti- tr u s t
law a s th e m eans th ro u g h w hich “ th e
soil h a s ev ery w h e re been laid b a re
c u t of w hich m onopoly is slow ly to bn
e ra d ic a te d .”
H e adcled t h a t “ u n d o u b ted ly th e
m ea n s b y w hich c re d it h a s been set
free is a t th e h e a rt of a ll th ese th in g s;
is th e keypiece o f th e w hole s tr u c ­
tu re .”
\
R e fe rrin g to th e “ o p p o rtu n e n e ss” of
th e c u rre n c y law , th e p re sid e n t said :
“ T he w a r w hich h a s involved tho
w hole of tho h e r.rt of E u ro p e h a s
m ade it n e ce ssa ry t h a t th e U nited
S ta te s should m obilize its re so u rce s in
th e m o st effective w ay possible."

llS&3SSS

ington official*
W hile
w ere held It w a s discovered th a t _
flood o f p ro d u c ts from th is c ount
to E urope, a lo n g w ith tho lncreasi...
o rd e rs for A m erican m ade goods, ha!
a lm o st rem oved th e su b je c t o f c o n ­
' ten tlo n . T rad e conditions dem on­
s tra te d t h a t th e debt of th e U n ited
S ta te s to G re a t B rita in w as beln £
wiped o u t so ra p id iy ijia t it no longer
w as th e cau se of a n y e m b a rrassm en t
to th e bu sin ess in te re s ts of e ith e r the
U nited S ta te s o r E ngland.
F rom e v ery section of th e c o u n try 1
a n d w ith o u t a d isse n tin g note tele ­
g ra m s of en co u ra g em e n t a n d op ti­
m ism have com e to t:m ends of the
new b a n k in g system >f th e c o u n try
slnce th e opening ot tho tw elve fe d ­
e ra l re serv e b a n k s y e sterd a y . A big
v ita l ch an g e in th e b a n k in g system
h a s been p u t in to effect, a p p a re n tly
w ith o u t tho slig h test j a r o r friction
in a n y section. H eads of th e g o v e rn ­
m ent a re ju b ila n t. T hey believe the
nmw b an k in g system now in o p e ra ­
tion, will m ark the beginning of th e
g re a te s t period of in d u stria l e x p a n ­
sion a n d business p ro sp e rity th is
c o u n try h a s experienced.
S e n a to f B u rto n of Ohio, him self a
financial expert, has c h ara cte riz ed
P a u l M. W arb u rg , New Y ork re p re ­
s e n ta tiv e on the fe d era l reserve
board, a s th e g re a te s t scientific
b a n k e r in th e world.
“Nov. 16 m ay be considered a s the
F o u rth o f J u ly in th e econom ic life of
th e U n ited S ta te s,” sa y s Mr. W a r­
burg. "C om ing g en eratio n s w ill com ­
m em o rate it a s m ark in g th e fo u n d a ­
tio n of o u r financial em ancipation.
T he new b a n k in g system , w isely a d ­
m in istered . w ill prove to be the
m eans, not of inflation, b u t of safety.
Independence a n d g rad u al h e a lth y exnansion.”

lliHcniiiveH R a llr o n t l P r o b le m .

H e spoke of th e difficulty of m a r ­
k e tin g th e c o tto n crop of tho c o u n try
a n d add ed t h a t “no d o u b t-in th e light
of th e new day, w ith its new u n d e r­
sta n d in g s, th e p roblem s of th o r a il ­
ro a d s will also be m et a n d d e a lt w ith
in a s p irit of c an d o r a n d ju stic e ."
T he sim ple figures r e la tin g to th e
business of th e c o u n try fo r th e p a st
few w eeks re v ea ls a sto ry of r e tu r n ­
ing p ro sp e rity re q u irin g n e ith e r e x ­
p la n a tio n nor e la b o ratio n . T he U n it­
ed S ta te s e x p o rts d u rin g th e m o n th
of O ctober w ere a p p ro x im a te ly $G0.000,000 m ore in v alu e th a n th e im ­
po rts. T he figures th u s fa r o b tain e d
in d icate th a t the m o n th of N o y em b er
will re co rd a to ta l f a r m ore th a n O c­
to b er b a la n ce in th is c o u n try 's fa v o r.
F ig u re s from th e te n lea d in g p o rts,
h a n d lin g m ore th a n 72 p e r c en t, of
th e e x p o rt b u sin e ss of th e e n tire
c o u n try , show th e e x p o rt bu sin ess
la s t S a tu rd a y to ta le d $10,421,551, a s
a g a in s t im p o rts of $2,330,512. T he
d a ily a v e ra g e fo r th e s e p o rts in N o­
vem ber of la s t y e a r w a s $0,983,426
In e x p o rts a n d $4,923,397 in im p o rts.
T h is m ean s, g o v e rn m e n t officials
ire convinced, a g ra tify in g a d ju s t­
m ent of co m m ercial co n d itio n s a m p ly
c a rin g fo r th e b a la n ce of tr a d e w ith ­
o u t th e need of a rtificial a g re e m e n ts
betw een th e U nited S ta te s a n d G re a t
B rita in fo r th e re o p en in g of th e e x ­
ch an g e s o r fo r a n y o th e r purpose.
T he re ce n t v isit of S ir G eorge P a ish ,
re g ard e d a s th e forem ost financial
a u th o rity in E n g la n d , is in d ic a tiv e
of how c o nditions a r e rig h tin g th e m ­
selves th ro u g h n a tu r a l, r a th e r th a n
a rtificial ch an n els. S ir G eorge cam e
to th is c o u n try fo r p a rtic u la rly se c re t
c o n feren ces w ith S e c re ta ry of th e

1 © n o n 1 mul W l n t l - l 'p U r a m u t lc .

S e c re ta ry McAdoo a nnounced th a t
th e c o tto n lo an fund w as o v ersu b ­
scrib ed . N o rth e rn b a n k s w ere to
m a k e up $100,000,000 and som e B os­
to n in stitu tio n s in a tex tile a re a , h u n g
back . So w h a t did the fed eral reserve
b o a rd do y e sterd a y b u t call in Igiihn.
L oeb & Co., w ho helped ou t. W h a t
d id th e c o n tro ller of th e c u rre n c y do
b u t Invite B e rn ard B aruch, rich m an,
w ho used to live in South C arolina, to
d in n er, a n d a f te r d in n er Mr. B aru ch
sa id he'd give $1,500,000. T he con­
tro lle r took him up a s f a r a s a m il­
lion.
“Selfish opposition of c ertain
te x tile m a n u fa c tu re rs ” is th e w ay
S e c re ta ry McAdoo e x p la in s th e d e ­
lay . E a rlie r in th e d a v ru m o r had
it th a t th e p lan h a d failed, a n d th is
c o n trib u te d to a slum p in cotton on
th e e x ch a n g es, th e decline in New
Y ork ru n n in g from $1.50 to $1.75 a
b ale. T he fu n d w as com pleted la s t
n ig h t.
T o tal e x p o rts a t th e ten chief U n it­
ed S ta te s p o rts w ere $47,587,000 fo r
th e w eek ended N ov. 14, o r a t th e r a te
of $7,250,000 a d a y . F o r the. first h a lf
o f N o v e m b er th e ex p o rt excess over
im p o rt
w as
$32,392,000.
Ocean
f re ig h t ra te s , r is k c h a rg e s a n d th e
h a z a r ^ g f c j w ^ ^ ^ - ^ j j j ^ ^ e i r p a r t,

B A N K DIRECTOR ONCE
FOE TQ}]$ P 0 N SH IN ER S
A. B. Patrick, Now on Local ■fie'serve Board, “ To ted ” Gun fo r
Many Years as U. S. Marshal in Eastern Kentucky.
F ro m fifteen y e a rs o f “ to tin g ” i i
gain, a s d e p u ty In tern a l rev en u e cotlec to r a n d la te r
U n ited
State!)
m a rs h a l fo r a ll e a s te rn K en tu ck y , on
q u e sts for “m oonshiners" and o ther
law -b re a k in g m ountaineers, to a d i­
re c to r of th e new F e d e ral R eserve
B ank, in C leveland, m ig h t be term ed
a long shot.
A-.
a stocky, ru d d y fajfeil^m an, w u h a tin g e ot g ra y in
h is h a ir a n d m u stach e, a d m itte d a t
th e H o te l S ta tle r la s t n ig h t th a t he
h a d done ju s t th a t. T h a t, how ever,
w a s a b o u t all Mr. P a tric k would a d ­
m it a b o u t him self.
H o is g re a tly h am pered by a
m o d esty th a t is usu ally to be found
in m en of g r e a t personal co u rag e a n d
re m a rk a b le c are ers. Mr. P a tric k 's
b ro th e r “ S am ,” w ho is a trifle over
six feet, s tr a ig h t a s a n In d ia n (and
a ll th e o th e r a d je c tiv e s used by n ovel­
i s t s in d escribing K e n tu ck ian s), w as
p re se n t, b u t d id n ’t reckon it would
be polite for him to tell on his
b ro th er.
I t m a y be t h a t “S am ," desp ite his
su p e rio r size, Is still a fra id of his
b ro th er, n o tw ith s ta n d in g t h a t th e l a t ­
t e r resig n ed a s U nited S ta te s m arsh al
fo r th e E a s te r n d is tric t of K entucky,
co m p risin g six ty -se v en counties, la st
F e b ru a ry .
A. B. P a tric k is wellrem em bered in c e rta in sections of
" K a in tu c k ” a s being q uicker th a n a
jte e l t r a p a n d one of th e best shots
in t h a t s t a te o f good sh o ts.
“All I c a re to s a y ," said th e federal
b a n k d ire c to r g e n tly , “ is th a t I c a r­
ried a re v o lv e r fo r fifteen y ears
h u n tin ’ m oo n sh in ers a n d never killed
a m a n n o r g o t killed. A s a m a tte r of
fa c t I never w ounded a m an a n d w as
n e v e r w ounded ”
" I d a re sa y he h a s a record for
c a p tu rin g m ore p riso n e rs th a n a n y
o th e r m a n in K e n tu c k y ,” sa id B ro th er
•Sam.”
"Y es, I h a v e h a n d le d m en,” a d ­
m itte d "A. B .”
" B u t I a m g lad I
n e v e r sh o t one. I w a n t no m a n ’s
blood on m y h a n d s.”
Mr. P a tric k Jives in S alyersville,
w hich is in th e m o u n ta in s o t e a s t­
e rn K e n tu ck y , te n m iles from a ra il­
road. H e ' w as fo rm erly a d ire c to r in
th e S alyersville N a tio n a l B ank. W hile
U n ited S ta te s m a rs h a l his h e a d q u a r­
te rs w e re a t C ovington, Ky.
" I ’m a fra id som e of m y colleagues
of th e b a n k w ill look ask a n ce a t me
if th e y le a rn iny h isto ry ,” sa id Mr.
P a tric k . “J no lo n g er c a rry a re ­
volver—h a v e n 't fo r nine m o n th s—a n d
pro b ab ly n e v e r w ill a g a in .”
«r-




L

TO II. S.

Other Cleveland Institutions
Count Cash.
^ a -e u w
v fai e r
M o n e y p o u re d in to t h e F e d e r a l R e ­
s e r v e B a n k o f C le v e la n d a ll d a y y e s ­
t e r d a y , u n til a t c lo s in g tim e t h e tellers*
c a g e s a n d t h e v a u l t s c o n ta in e d n e a r ly
$11,000,000., O f th i s $2,000,000 is s to c k
p a y m e n ts arid A th e ^ b a la n c e m e m b e r
b a n k s* reserV e*. X &
•
M o re m o n e y w ill c o m i^ J a K in g in to ­
m o r r o w a n d n e x t d a y , i t is e x p e c te d ,
u n t i l $17,000,000 h a s a r r iv e d in a ll.
T h e re g io n a l b a n k h a d b o rr o w e d a
n u m b e r o f m e n fr o m lo c a l b a n k s a n d
tl'ie c le a r in g h o u s e f o r q u ic k d is p o s itio n
o f t h e n e w c a s h , m o s tly g o ld a n d go ld
c e r tif ic a te s , b u t y e s te r d a y fiv e m o re
I te lle r s w e re c a lle d f o r a n d w e re w ill­
in g ly f u r n is h e d b y C le v e la n d i n s t i t u ­
tio n s .

T h e Trial b y Fact.
I t is significant th a t th e in au g u ra tio n of th e new
reserve b a n k in g system occurred w ith o u t the
slig h test d istu rb an ce to business or finance. So
f a r as observed, th ere w as no j a r and no fric tio n
anyw here. T he c o u n try accep ted the new fa c ili­
ties w ith th an k fu ln ess a n d w ith fu ll a ppreciation
of w h at th ey prom ise to com m erce and industry.
P a u l M. W arburg, m em ber o f th e c en tra l r e ­
serve board, who has been called the a b le st scien­
tific b a n k er in th e world;- a p tly suggests th a t Nov.
16 m ay become known in h isto ry as A m erica ’a
economic F o u rth o f Ju ly . T h a t w as th e day the
new system sta rte d . Tjhe suggestion accords w ith
th e general feelin g o lV Q tp f a n d optim ism which
signalized th e ad v en t of th e i e v
From all q u a rte rs come re p o rts w T eonditions
ra p id ly im proving. T he opening of th e tw elve
d istric t b an k s has been g re e te d w ith renew ed
business a c tiv ity . In d u stry , fre e d from the ham ­
p ering influences of an a n tiq u a te d b anking and
currency system , responds w ith a la c rity . The in ­
fluence is f e lt in all b ranches. The th eo re tic vir-

The fa v o ra b le aspect of th e opening p u ts the
seal of indorsem ent upon th e m ethod follow ed in
fo rm u la tin g th e plan. The currency a ct is a
product of a w ide co-operative effort. E v ery in ­
te re s t was c onsulted; b a n k ers, business men, those ’
e x p ert in com m erce, in in d u stry , in s ta te c ra f t
were consulted. The m easure as first introduced
in th e house w as am ended rep ea te d ly in responst
to suggestions b y those who understood th e prob
lem.
.
T hroughout th e discussion i t w as W oodrow W il­
s o n ’s lead ersh ip th a t shaped th.e progress, b u t it
w as the A m erican people, sp eaking th ro u g h th e ii
re p re se n tativ es, wljo w ro u g h t th e epoch-m aking
m easure o f reform w hich w en t in to operation
u n d e r such fa v o ra b le {mspices th is w eek. A nd the
sense of sa tis fa c tio n over th e fa v o ra b le in au g u ra ­
tio n o f the system belongs n o t to leaders in busiand go v ern m en t a lo n e; i t belongs, in lik e deto ev ery A m erican w ho realizes the necessity
o f a sound finance i f th e n a tio n is to continue




BORROWS TELLERS FROM
BANKS 10 COUNI GASH
, ----------------- V ----------- j * .

1 1 > 19 #

Reserve Institution Calls in Five Men to Handle $4,­
000,000 Receipts—Allies Order More Material
From Cleveland Concerns.
BY F. F. DUNCAN,
Financial Editor of The Leader.
T h e F e d e ra l R e se rv e B a n k o f C lev e lan d b o rro w e d five te lle rs fr o m
lo cal b a n ka to c o u n t t hr- c ash t h a t y e s te rd a y ro lle d In to th e coffers o f th e
In stitu tio n . T o ta l deposit*1 re ce iv e d to tho~ ciose"oT B S tlK IB g'hours w ere
a ro u n d $4,000,000, m aking- to ta l tr a n s f e r s o f re s e rv e fu n d s to th e b a n k
to d a te o f $9,000,000. T h is b rin g s th e to ta l r e c e ip ts o f t h e b a n k . Inclusive
o f sto c k su b s c rip tio n s , u p to a b o v e $11,000,000.
AH o f th e fu n d s tu r n e d In so f a r h ave b e en in c a s h , th e r e h a v in g
been no a p p lic a tio n s fo r re d isc o u n ts. In N ew Y o rk C ity th e C h em ical
N a tio n a l led oft in th is re sp ec t w ith a re d is c o u n t o p e ra tio n Involving o ver
$2,000,000. To d a te , how ever, th e o p e ra tio n s o f th e fe d e ra l b a n k s h a v e
so f a r sim p ly a m o u n te d in la rg e p a r t to th e tr a n s f e r o f a p o rtio n o f
th e re se rv e m o n ey o f th e b a n k s fro m th e ir ow n v a u lts to a new d e ­
p o sito ry — th e re lie f a ffo rd e d fro m th e lo w e rin g o f th o re se rv e ra tio s r e ­
q u ire d h a v in g e ased th e s itu a tio n to a p o in t w h e re t h e n e ce ssity fo r re d lsc o n n tin g h a s b e en re d u c e d v e ry co n sid era b ly .
P ro b a b ly th e sig n ific a n t f e a tu r e o f th e d a y ’s n e w s w a s t h e b r o a d e n ­
in g in te r e s t in th e p ig iro n m a r k e ts a n d th e m o re c h e e r f u l fe e lin g now evi­
d e n t In th e ste e l tra d e s .
M u n ic ip a litie s a r e e n te r in g th e m a r k e t f o r c a s t iro n p ip e a n d th e r e
Is a g e n e ra l re v iv a l o f in q u irie s f o r m a te ria l u se d in m u n ic ip a l Im p ro v e ­
m en ts. I t Is q u ite n a tu r a l t h a t so m e stim u lu s *.o in d u s try sh o u ld c o m e
first o f a ll fro m th is q u a r te r. T h e m u n ic ip a l bond m a r k e t w as th e first
to o pen. T h e re a r e no w few c ities, possessed of poort c r e d it in n o rm a l
tim e s, t h a t c a n n o t se ll b o n d s o n a re a so n a b le basis. T h e o nly r e s tr a in t
u p o n th e s a le s o f s u c h b o n d s Is t h e fe e lin g t h a t by w a itin g a little lo n g e r
th e r e m a y b e s till f u r t h e r im p ro v e m e n t In th is resp ect.

EXPOET MOVEMENT EXPANDS DAILY.
N ew lig h t u p o n t h e c a u s e fo r th e r e c e n t d e clin e in s te rlin g e x c h a n g e
r a te s w a s fo u n d In th o la rg e e x p a rt m o v em e n t of c o tto n , am ou n tin g to
a b o u t 110.000 b a le s f o r th e ftrst th r e e d a y s th is w eek, a n d in th e new s
th a t 5,500 b a r r e ls o f refin ed oil h a d been ta k e n fo r e x p o rt by a N o rw eg ian
S te am e r. T h e c o tto n a lo n e w ill m a k e e x c h a n g e to a to ta l of $3,500,000.
T h e oil s h ip m e n t does n o t r u n in to m o n ey v e ry fa st, b u t it p o in ts th e
g ro w in g d iv e rs ity o f t h e e x p o rt m o v em e n t.
T h a t th e f o r e is n o rd e rs fo r w a r m a te ria l a re g ro w in g r a th e r th a n
d im in is h in g is e v id e n c e d in th e In fo rm a tio n c u r re n t y e ste rd a y t h a t th e
P e e rle s s M o to r C a r C o m p an y , o f th is city, h a s re ce iv e d a la rg e OTder fo r
tr u c k s fro m th e B ritis h g o v e rn m e n t. Specific a n d official d e ta il a r e la c k ­
in g o w in g to th e u s u a l secrecy s u rro u n d in g su c h o rd e rs. T h is follow s th e
o r d e r fo r 19,000 to n s o f s te e l fo r p ro je c tile s p lac ed w ith a P itts b u r g c o n ­
c e rn th is w eek.
S e c re ta ry M cA doo a n n o u n c e d t h a t e x p o rts fro m te n A m e ric a n p o rts
on T u e s d a y w e re a lm o s t $5,000,000.
A ta n g ib le to k e n of im p ro v e m e n t in th e in v e s tm e n t s itu a tio n w as
th e a n n o u n c e m e n t b y th e c o m m itte e In c h a rg e o f tr a d in g in u n lis te d bon d s
a n d g u a r a n te e d s to c k s t h a t its p e rio d o f u se fu ln e s s h a d com e to a n end.
T he c o m m itte e h a s th e r e f o re d isb a n d e d w ith th e a n n o u n c e m e n t t h a t a
w ell e s ta b lis h e d m a r k e t now e x ists a t p ric e s t h a t do n o t e n d a n g e r th e loan
a c c o u n t.
M oney r a te s w e r e ste a d y a t th e lo w e r r a te s e s ta b lish e d e a r lie r in
th e w e ek . S te rlin g e x c h a n g e c o n tin u e d t o ease slow ly. I n f a c t r a te s
a r e now a t a p o in t t h a t su g g e sts a n o rm a l b a la n c e In th e in te rn a tio n a l
e x c h a n g e m a r k e ts so f a r a s L o n d o n a n d N ew Y o rk a r e co n ce rn ed .

BRITAIN’S NEW WAR LOAN DOING WELL.
In t h e Txm don m a r k e t th e new w a r lo a n offered a t 3% p e r c e n t
In te re s t a t 95 w a s re p o rte d d o in g nicely, a lth o u g h c o n so ls su ffe red , th e re
b e in g n o b u sin e ss d o n e a t th e official m in im u m p ric e s a llo w ed . A t th e
s e ttle m e n t on th e L o n d o n sto c k e x ch a n g e th e r e w e re so m e d e a le rs w ho
fa ile d to c o v e r t h e i r c o m m itm e n ts b u t th e s e a r e b e in g given tim e a n d a re
n o t b e in g clo sed o u t, a s a s o r t o f unofficial m o ra to riu m s till e x ists in th e
L o n d o n fin a n c ia l d is tric t.
N ew Y o rk b a n k e r s a n d sto c k e x c h a n g e a u th o r itie s h e ld a n o th e r c o n ­
fe re n c e on t h e s u b je c t o f re o p e n in g th e e x c h a n g e , b u t th e re s u lt w as
n o t c o n clu siv e. C h ic a g o b a n k s h a v e a p p ro v e d th e p ro p o sa l to o p en th e
e x c h a n g e in t h a t c ity n e x t M o n ia y .
W ith th e c o m p le tio n o f iht> c otton lo n s u b s c rip tio n t h e fe d e ra l *»-

se rv e b o a rd c a 'rrie d o n t th e provisions of th e u n d e r s t a n d i n g by n a m in g
W . P . G. H a rd I ng a n d P a n l M. W arb u rg , o f th e board; A. H. W igYin a n d
T am es S. A le x a n d e r, of New Y o rk ; Ja m e s B. Foreran, of C hicago; -F e a tu s J.
W ade, o f St. La m is; I^evi L. Rue, o f P h ilad e lp h ia . and W illia m A. G aston
of B oston, a s a c o tto n lo an c o m m itte e to ad m in ister th e fund. The* firs,
m e e tin g o f t h e c o m m itte e w ill be h e ld in N e w Y ork la te r in th e w eek.
In th e cottor, m a rk e t th e dow nw ard m ovem ent w as of less fo rce a n d
seem ed to ln c 'ic a te a n end of th e h ed g in g operations t h a t h ave fo rce d
fu tu r e s a t a louver p a rity th a n th e spot m a rk e ts __________________________

y ^

u s

l

,

r

.

Chicago Buying Paper Freely for Rediscount Pur­
poses; Missouri Vote Against Full Grew Bill Shows
Change of Attitude Toward Carriers.
BY F. F. DUNCAN,
i
Financial Editor of The Leader.

m

T h e F e d e ra l R e se rv e Ba n k of C leveland h a s m ad e a p p lic a tion f or
ad m issio n to Hie ricvQ lam H iT e a rin g
AHSiVJ[yiTTB||*B.y<T‘?i'-n* lie a d n~.ii te a a s a ‘“s pecial” m e m b e r o f tfe it nrm rijyaTim ' mi "vinmi-ji—
T h is follows t h e prcce35nF"seT by th e R e se rv e B a n k o f New Y ork,
w h ic h lias a lr e a d y been admitted to m e m b e rsh ip in th e c le a rin g house
a ssoc iatio n o f t h a t city. The m ove is designed to fa cilitate t h e operatio ns
of t h e re s e r v e b a n k w ith m em ber institutions.
T h re e P i t t s b u r g ban]; tellers w h o h a p p e n e d to be in C leveland yes­
t e r d a y t o o k off t h e i r coals a n d joined t h e forces of t h e fe d e ra l b a n k to
h e lp c le a r up the congestion of w o r k in cide nt to th e re c e ip t of deposits
u n d e r t h e first call for the t r a n s f e r o f reserves. T ellers fro m variouE
C lev e lan d b a n k s h a v e te e n h e lp ing o u t since t h e b a n k opened. I n d i c a ­
tio n s a r e t h a t t h e total deposits will be la r g e r t h a n h a d b een thought,
us m a n y b a n k s a r e p&ytng in m o r e t h a n th e i r m in i m u m requirem ents.
T o ta l r e so u r c e s of th e bank a re now cro w d in g well u p t o w a r d s ithe $20,­
000,000 m a rk .
1
B a n k e rs a n d fe d e ra l reserve officials a re now a ctiv ely d iscussing the
rittitu d e of th e m e m b e r b a ik s to w a rd s rediscounts. M any b a n k e rs ars
v iew in g th e m a tte r of redis -o u n tin g w ith som e tim id ity . T h ey fe a r th at
if th e y ta k e a d v a n ta g e of i e ir p riv ile g es in th is re sp ec t it m a y be tak en
a s a sig n o f w e a k n e ss and lo o k ed u p o n v e ry m u ch in th e lig h t o f b o r ­
ro w ed m o n ey w h ich in the p a s t h a s a p p e a re d u n d e r th e n a m e o f "bills
p a y a b le ” in th e b a n k sta te m en t a n d w h ich usu ally is re g a rd e d as a sign
of a s tra in e d position.
O n th e o th e r h a rd , lea d in g b a n k e rs;'- a m o n g th em G eorge M. R ey ­
nolds, of C hicago, h a ie sta te d t h a t th e y expect to ta k e a d v a n ta g e of the
p riv ile g e a n d to u se t ie fe d e ra l b a n k a t all tim es, a n d w ith c o n sid erab le
fre e d o m a t c e rta in seasons.
I t is s ta te d t h a t it w as w ith th e view to se ttin g u p a p re c e d e n t th a t
su c h a w e ll-re g a rd e d in stitu tio n i s th e C hem ical, o f N ew Y ork, d is­
c o u n te d to th e e x te n t of o v e r $ 2 ,<)0 0 , 00 fl on the d a y of o p e n in g o f th e
N ew Y o rk re se rv e bank.

B U Y IN G P A P E R FOR R ED ISCO UN T PU RPO SES.
F e d e ra l A gent W ills, of th e local in stitu tio n , a n n o u n c e d ye sterd a y
t h a t th e 6 p e r c e n t discount r a te w ould o b ta in until all o f th e reserves
h a d b een paid in u n d e r the first call. I t is probable t h a t t h e ra te will
th e n be lo w ered i f in th e m e a n tim e t h e r e should be no pre ssu re for
re d isco u n ts.
C hicag o b a n k s h ave p u rc h a se d som e $5,0 0 0,000 of c o m m e rc ial p a p e r
w ith in th e la s t few days. F ro m b o th t h a t cent.-r a n d fro m th e E a s t
in q u irie s a r e com in g in to C leveland b a n k s fo r choice c o m m e rc ial paper.
This, it is in fe rre d , is p re lim in a ry to th e co m m en cem en t o f re d isco u n tin g
a t th e fe d e ra l in stitu tio n s a t th e la rg e r m o n e ta ry centers.
T h e r e p o rt t h a t ro a d s c e n te rin g in C hicago will ta k e off som e 500
p a sse n g e r t r a in s is p ro b a b ly c o rre c t in th e m ain, a lth o u g h it m ay be
e x a g g e ra te d a s to th e figures.
A nyone w ho h a s had occasion to tra v e l
a b o u t a b it in th e la s t few w eeks w ill a g ree th a t th e re a re m o re p assenger
tra in s r u n n in g th a n th e c o n d itio n of th e tim es c alls for. F a s t tra in s a re
being ru n a t a n a lm o s t to ta l loss. O utgoing tra in s fro m su c h cities as
C hicago, C in c in n a ti a n d St. .Louis often leave th e tra in sh e d s w ith only
from f o u r to six p a s s e n g e rs in th e sleep ers a n d p a rlo r c a rs. D ay coaches
a re a little b e tte r p a tro n iz e d .
R a ilr o a d m en, h o w e v er, h a v e "been greatly e n c o u ra g e d by re c e ip t of
'.he d e ta ile d a n d c o m p le te fig u res o f th e sw eeping m a jo rity vote of th e
people o f M issouri a g a in s t th e fu ll-c re w ,aw a t th e last electio n . T h ere
.vere 324,085 v o tes a g a in s t th e b ill a n d li9 ,5 f|3 ,in fa y o r o f it, m a k in g the
rote m o r e th a n tw o to ono a g a in s t it. Wjkl ri»*d o p e ra to rs h a v e hailed




th is a s th e tirat ta n ^ io io si^n t n a t m e p e o p ie a t la s t re co g n ize t h a t th e
c a r r ie r s h a v e n o t been g e ttin g f a ir play.

SOME RECOVERIES IN 'W A L L STREET STOCKS.
A l t h o u g h t h e d is a p p o i n tr r ^ e 'n t o v e r t h e a c t i o n o f b a n k e r s t o w a r d s t h e
o p e n in g o f th e b o n d m a r k e t s till c a r r ie d its s tin g , W a ll s t r e e t re p o r te d
s o m e r e c o v e r i e s f r o m t h e d e c l i n e s t h a t f o l l o w e d t h a t a c t i o n . T h e e p is o d e
h a s re v iv e d d is c u s s io n a s to th o p r o b a b le to ta l o f E u r o p e a n liq u id a tio n
t h a t w ill f o ll o w t h e r e o p e n i n g o f t h e m a r k e t s .
V ie w s d i f f e r w id e ly , b u t
th e d is c u s s io n h a s a g a i n b r o u g h t to t h e f r o n t th e E u r o p e a n “ m e n a c e .”
M o n ey r a te s w e re a g a in a little s o f te r fo r c o m m e rc ia l p a p e r, b u t
w i t h l i t t l e c h a n g e in c o l l a t e r a l r a t e s .
T h i s w e e k 's s o f t e n i n g o f r a t e s h a s
o p e n e d th e w a y fo r a c o n s id e ra b le r e tir e m e n t o f e m e rg e n c y c u rre n c y a n d
f o r c a n c e lla tio n o f c le a r in g h o u s e lo a n c e rtific a te s a t th e c e n te r s w h e re
t h a t d e v ic e w a s a d o p t e d .
T h e re tir e m e n t o f e m e rg e n c y c u rre n c y m ay be
p ro lo n g e d b e y o n d th e p e rio d o f n e c e s s ity , f o r th e s im p le re a s o n t h a t th e
n o te s h a v e p a s s e d in to o t h e r h a n d s th a n th o s e o f th e is s u in g b a n k s .
T o d a r ’s N e w Y o r k b a n k s t a t e m e n t p r e s u m a b l y w ill m a k e a f a v o r ­
a b l e sh o T n g , o w i n g t o t h e l o w e r i n g o f t h e r a t i o o f r e s e r v e s r e q u i r e d
f r o m 25 t
18 p e r c e n t .
O w in g t o t h e c h a n g e , c o m p a r i s o n s w i l l b e v a l u e ­
le ss .
T h i >e a r e i n d i c a t i o n s , h o w e v e r , o f a s m a l l c a s h g a i n a n d s o m e
f u r t h e r c o n t r a c t i o n o f t h e lo a n a c c o u n t .
A n o t h e r d i s t r i b u t i o n h a s b e e n m a d e t o t h e p a r t i c i p a n t s in t h e $ 1 0 0 ,tiOO.OOO b a n k e r s ’ g o ld p o o l, f o r m e d t o o p e r a t e in t h e f o r e i g n e x c h a n g e
tn a rk e t.
A l t o g e t h e r $ 5 ,4 0 0 ,0 0 0 h a s b e e n r e t u r n e d t o t h e c o n t r i b u t i n g
h a n k s. O n l y $ 1 0 ,0 0 0 ,0 0 0 w a s s e n t t o O t t a w a , t h e s t e r l i n g m a r k e t h a v i n g
I u t m ^ t i r l c a l l y a d j u s t e d i t s e l f w i t h t h e u s e o f o n l y 10 p e r c e n t o f t h e t o t a l
lu n d
Yt i s n o t a n t i c i p a t e d t h a t a n y f u r t h e r s h i p m e n t s o f g o ld w ill b e
heauV Ted.




^

Plans For State Banks
A W a s h i n g t o n d i s p a tc h sa y s :
The F e d e r a l R e s e r v e B o a rd , h a s t a k e n up t h e
(luestion of r e g u l a t i o n s f o r the a d m i s s i o n o f st a te
bank s to t h e n ew r e s e r v e sy stem . T h e m a t t e r will
iie discussed w i t h care, a n d an e ffo rt m a d e to at. a c t as m a n y s t a t e in st i t u t i o n s as possible.
F i g u r e s gi,-en a t t h e t i m e n a tio n a l b a n k s b e g a n
i suh scribe t o t h e n e w sy s tem sh o w e d a total o f
a b o u t 35,0(10 b a n k s in t h e co u n tr y , o f w h ic h abo ut
7..'>00 b elo n g e d t o t h e n a t i o n a l sy stem .
M a n y sc o re o f a p p licatio n s a l r e a d y h a v e been
received f r o m s t a te b a n k s an d t a k e n u n d e r c o n ­
sid eratio n. N o u n u s u a l increase in th e s e ap p li­
cations is e x p e c t e d u n til th e r e g u l a t i o n s g o v e r n ­
ing t h e i r a d m i s s i o n a r e issued. T h e l a w p ro v id es
th a t no su ch b a n k sha ll be a d m i t t e d u n le s s it h a s
.in u n i m p a i r e d capital sufficient t o entitle it^ to
b eco m e a n a t i o n a l b a n k in its o w n lo cality a n d i m ­
pose s c e r t a i n o t h e r re s t r i c t i o n s on en tr a n c e .
A l t h o u g h t h e b o a r d receiv ed a r e p o r t o f the
•tiicratv ms o f t h e t w e l v e b a n k s f o r t h e se cond
d a v . it w a s a n n o u n c e d t h a t the se co n d day s b u s i ­
ness w a s ab o u t lifer t h r f i r s t and t h a t th e figures
w ould n o t be m a d e public at t W s t i n i e . A s t a t e ­
m en t s h o w i n g a s u m m a r y o f t h e i r o p e r a t i o n s
pr<'hably will be i ss u e d late in the. pr e s e r i f c ^ t f k .

NEW BASK JOBS WILL
BE FILLED SATURDAY
failed F rid a y to n a m e t h e s u c c e s s f u l
a p p lic an ts f o r - d e p u t y g o v e r n o r and
a rio u s m ill"!' officer. The m eeting
w as postponed u n til S a t u r d a y beu e from .-the e lty ol
t iiuso «»f f he
sev eral direetjl
U'mThe b a n k 's v iiur z o m
son b uilding F rid a y eo n tain en app ro x im a tely $17,000,000. a n d i t w a s e s ’.lim ited U n it before t h e c lo s e o f Vmsiness S a t u r d a y t h i s w o u ld lie in creased ti a b o u t *19,000,000.

B a n k 's C a s h fits , OOO.OOO.
A few In q u iries a n d applications
fo r re d isco u n t h a v e com e into th e
F e d e ra l R eserv e b a n k of Cleveland,
b u t n e g o tia tio n s so f a r h a v e p ro ­
duced no b usiness.
T he officers
n e ce ssa rily a d h e re to th e re serv e
a c t ’s p rovisions a s to sh o rt m a tu ri­
ties, a n d on th e o th e r h a n d w ill a c ­
c ep t no d e m a n d p a p er. T here h a s
now reached th e local v a u lts $15,­
000,000 in gold a n d law fu l m oney,
a n d th e re re m a in s o u tsta n d in g b u t
$2,000,000 o f th e first in sta lm e n t of
re serv e s.
S ta te b a n k s a re displaying: new in ­
te r e s t in th e sy stem , a n d a re m aking
a p p lic a tio n s fo r b la n k s here. T he
sy s te m 's lac k of reco g n itio n of long
tim e re a l e s ta te lo an s fo rm s th e ch ie f
b a r to e n try .
R e p o rts fro m th e steel tr a d e in d i­
c a te t h a t B u ffalo p ig iron m ak e rs,
h a v in g sold in re c e n t w eeks n o t less
th a n 73,000 to n s , a re d ra w in g a w a y
from th e ir lo w e st prices.
In th e
P itts b u r g t e r r i t o r y basic iro n a s re ­
s u lt of th e d im in u tio n in o u tp u t is
b ecom ing sc a rc e . C onnellsville cokem a k e rs la s t w eek re lig h ted 190 idle
o vens a n d th is w eek w ill p u t 386
m o re in o p e ra tio n . T he to n e of the
e n tir e ste e l in d u s try is im proved, on
h ope a s m u ch a s on orders, b u t th e
h ope sp rin g s from th e e a s ie r m oney
m a r k e ts a n d th e a n a ly sis o f w h a t Its
e ffects sh o u ld be.

lo cal

J i i m f l r of Cleveland Re­
gional Bank Named.
W ant Lattanner For Cashier
r u m o r e d in C le v e la n d tins w eek t h a t a
a t t e m p t t o h a v e S t a t e B a n k in g S u p e r I
m ery L a t t a n n e r a p p o in ted c a s h ie r o f
m d F e d e r a l R e s e r v e B a n k h a s been
t h e C o x - W o l f D e m o c r a t i c factio n at
t luinhus.
T h e a t t e m p t a p p a r e n t l y h a s failed.
L a t t a n n e r , w h o h a s b een close to Gov. Cox
l a n d the D e m o c r a t i c s t a te o r g a n i z a t i o n , is e x ­
pected by p o litician s t o go o u t of office s h o r t l y
a f t e r G ov.-elect W i l l i s g o e s in. It w a s definitely
le a r n e d t h a t L a t t a n n e r h a s b een an a p p lic a n t f o r
the po st o f c a s h i e r in t h e n e w ba nk.
H i s can d id acy , it is u n d e r s t o o d , received the
„ e n t h u s ia s t i c s u p p o r t o f H a r r y P . W o l f , o f C o ­
lum bu s, a m e m b e r o f t h e r e s e r v e b o a r d . \ \ o lf
w as a p p o i n t e d t h r o u g h t h e influence of Gov.
Cox , a n d h e a n d h is b r o t h e r , R o b e r t W o l f , a r e

______

the
F e d e ral KeStrHJI H ank of Cleveland,
y e ste rd a y w as m ade a m em ber c f th e
national advisory
council of the
fe d era l re se rv e sy ste m by v o te of his
fellow d ire c to rs. Mr. R ow e is p re si­
d e n t of th e F i r s t N a tio n a l B a n k of
C in cin n ati.
The fe d era l a d v iso ry council, com -o se d of one re p re se n ta tiv e fro m each
re serv e d istric t, w ill m eet w ith the
federal reserve board a t least four
tim es a y e a r to keep It in d ire c t touch
w ith conditions.
Selection of Mr. Rowe gives Cincin­
n ati added recognition. W hile she is
the second larg e st city in this reserve
district, her only representation so fa r
has been Mr. Row e's directorship. P itts ­
burg has furnished the chairm an of
the board and D irector R obert W ardrop.
C h airm an D. C. W ills and Gov. E
R. F a n c h e r a re w o rk in g o n -p lan s t*
in cre ase th e C leveland b a n k 's v a u lt
space by devoting a block of safety
deposit boxes to the regional ban k 's
use.

/"V

-2./'

Our New Banking System

.

T he new federal reserve banking law was i u t
into effect M onday w hen the tw elve new fed/ral
reserve hanks were form ally opened fo r busjpess
and a new era in A m erican financial a f fa ir p \:a s
under way. T h e national hanking scheme Xvhi'h
has served the countrv since the Civil W ar. did
vcrv well in its wav. hut it was trem endously de­
fective in th at it failed t<> give relief it/e m e rg e n ­
cies. Nevertheless, the fifty odd veapf o f its e x ­
istence were years «>f nrosperitv fo r this country
but the fact remain* that du rin g these years we
had several very severe money panics caused absolutelv bv the unscientific law un d er which our
national hanks were operating. Tt is believed that
the new svstem will rem edv th is : that a monev
nanic in U nited States in tho future will he imnossible. W e. o f course will have o n r ups and
dow ns in business: w e will have o u r depressions*
we will have o u r business crises, but a pure and
sim ple monev nanic should never again trouble
us. T he new law should verv greatlv e x n a tn ^ h ^
credit o f U nited S ta te s : it should tend to mntce
monev easier here and it will aid trem endonslv in
offsetting the bad results grow ing out o f thf
frig h tfu l destruction o f property brought about
t*v the K uronean w ar. \ d irec to r o f the Hank of
France, visiting this c o untrv several years ago
said th a t if we would m obilize o u r reserves, tha*
♦*u* U nited States w ould soon become the grea*
Trading nation of th** w orld instead o f the great
borrow ing nation. T h is is iust the thing these
new banks do Tt gets o u r bank reserves togethe*nto tw elve bur reservoirs w here thev are a v ail­
able for additional credit and fo r em ergencies.
Tn th e nast we have verv g reatlv depended nnon
F.urope fo r the monev w ith w hich to develor
o n r countrv. K nrone ln« been a larg e hnver of
Am erican bonds and cfoeks and bac loaned ns hilliopc o f dollars
Tb<‘ destruction of n ro n e rt'
in F u ro n e and th*' trem endous sum s o f mon*»
needed to carrv on th e ,g r e a t w ar m eans tb*«fo r some vears to com e at least we r» n n o t ev
nect anv m onev fr 9 fu fcuro^e. Knt tV*-,t on tu *
‘contrary. E uropean nations will be bidding in thi
viiici ivhii
money,
will
be
offering
in
this
m arket
bond?
and
stocks
which
they
have
heretofore
purchased from us.
T h e new banking law
will serve to alleviate this co n d itio n : it will make
possible fo r us to fu rn ish the m oney to c arry on
our ow n business and to carry on our own de­
velopm ent a t rates w hich should not be higher
than rates which w ere norm al a y ear ago. The
new law undoubtedly w ould have tended to re­
duce interest rates in s"ine sections ot the country
at least, and as th e effect o f the w ar is to in­
crease in terest rates, one condition should offset
‘he o th er and in te rest rates in Cleveland should
not be any h ig h er th an they have been for som e
y ears past.
It is a m atter o f ex trem e congratulation to Un­
people o f O hio th at one o f these g re at federal
reserv e banks is located in Cleveland, and it is
a m a tte r o f c o ngratulation th ro u g h o u t all o f the
fo rrth federal reserve d istrict that this Cleveland
hank will take rank as one o f the largest reserva
'tanks in the country
T h is p a rt o f the country!
is destined to grow in wealth and im portance
m ore than any o th er p art o f the countrv. It is
the cen ter o f in dustrial activity in U nited States
and it will develop by leaps and hounds during
the next few years, and as the district develops
so will the Cleveland Reserve Hank develop, and
it will soon pass fro m fo u rth position to a higher
p- sition.
T he bankers o f the d istric t a re all enthusiastic
in support o f the new C leveland bank, and the
re w hank is officered bv very confident men
I'n d e r the guidance o f G overnor Fancher and
I * ’-airm an W j]!s,. tlie Cleveland Federal Reserve
' R-’rtV wiTT finve a m ost successful career.




’* f /

Cleveland Reserve Bank And Eleven
Other Reserve Banks Open
For Business
T he Cleveland F ederal Reserve Hank form ally
.■in-lied to r business M onday m orning u n d e r most
auspicious c irc u m s ta n c e ^ ^ T h e room s of the new
bank in the W illiam son building w ere decorated
with flowers sent by friends and well w ish e r- o f
the new institution. Som e 400 bankers v isited t
institution during the day and they came f r o m all
parts o f the district. Hankers were present f r o m
Pennsylvania, VV. V irginia, K entucky and f ro m
every section o f Ohio.
T he new institution is now under way, although
it will be developed very slowly. T he re discount­
ing o f paper will be about the first function th t
new bank will undertake. The first installm ent
of the capital stock was paid in last week am ount­
ing to about $2,000,000. It was estim ated th at b_\
M onday evening about $3,500,000 additional' had
been turned in by m em ber banks as reserves. All
this w eek additional deposits have been m ade bj
the m em ber banks and it is estim ated that th t
bank now holds about $15,000,000 o f reserves.
Telegram s of c ongratulation w ere received
from S ecretary M cA doo, from m ost of the
eleven o th er regional banks and from bankers and
business m en thro u g h o u t the country.
The C leveland officers w ired th eir greetings to
M r. M cAdoo and the eleven sister banks.
Secretary McA doo M onday at W ashington
signed tlie 1 'o r m a l^ rtk r aniiiMiiifiiUf, U ia O llti lit
lederal reserve banks w ere established and ready
for' business: Tt ffH3ThrTiTrtt~5trp ir<|ttlrt,dir>-'Set
Tii m otion ll)e nations new currency system and
found the regional banks ready fo r operation.
T h e secretary sent the follow ing telegram o f
congratulations to the federal reserve agent and
g o vernor o f each o f the federal reserve b a n k s :
"P le ase except my cordial co ngratulations upon
the opening o f the fed eral reserve bank o f y our
and d istric
the> t a n d my sincere com m endation upon the
effective w ork you have done in prep arin g the
bank fo r business in the short tim e allow ed fo r
the opening. I am su re th a t the federal reserve
banks w ill serve a g re at and beneficent purpose
in the fu tu re of j u r country and I am su re th a t
this dep artm en t and the federal reserve board
m ay count upon y o u r loyal co-operation in the
im portant w ork and duties which have beeii con­
fided to you. My h e a rty good w ishes fo r your
success.”
B ankers and governm ent officials will w atch
the pro g ress of the system with the utm ost in ­
terest. It sta rts on its m ission w ith 7.5T1 m em ­
ber banks. T h eir authorized capital is put at
$106,795,600. o f w hich o ne-sixth has been called
and is in their vaults. T he exact figures fo r the
cash reserves in all 12 banks has not been ac ­
curately com puted, but the estim ate puts the
am ount a t close to $850,000,000. draw n un d er the
law from the presen t reserve agents o f m em ber
banks.
T he reserv e banks begin operations at a tim e
when m em bers o f th e board feel th at th ere is an
excellent opportunity to test o .t tl- value o f the
system . T h eir ability to rediscount
m m ercial
p a p e rjia s been counted upon as one o t i
m eans
to loosen the purse strin g s of banks, pro 'e m a ­
chinery
lik ii\g ,c^re of crops and g u ’’ally
m eet business needs. “ ’
- __

First .National D in e s B an kers
The president and the d irectors o f the F irst
National Bank of Cleveland, e n te rta in ed som e 400
tankers from Ohio, P ennsylvania. K entucky and
^V. V irginia, a t the H otel S tatler, M onday, at
12:30. T h e guests represented institutions who
are stockholding m em bers o f the Cleveland f e d ­
eral R eserve fem k. T h e affair w as an unusual
success in everv way. T h ere was m usic and the
tables w ere decorated w ith chrysanthem um s.
John Sherw in, president of the F irst N ational
Bank 01 Cleveland presided. T h e re was m usic
and the ro und tables w ere decorated w ith center
baskets of chrysanthem um s. A t the speaker?.' ta ­
ble. besides M r. Sherw in. w here M ayor N ew ton
D. Baker, M r. F ancher. M r. 'V ills. M o rris Black,
president o f the C ham ber o f C om m erce; T hom as
H. W ilson, vice president o: the F irs t N ational
B ank; B ankers G eorge H . R ohrer, and C. A.
Bosw orth. o f Cincinnati, Jam es \Y. G rove and I.
E. Sands, o f P ittsb u rg h , and the follow ing d irec­
tors o f the Cleveland R egional B ank : Vice C h a ir­
man L ym an H . T readw ay, o f C leveland; T hom as
A. Combs, o f L exington, K y .: R o b ert W ardrop,
o f P itts b u rg h : A. B. P atrick, o f Salyerville. Ky.,
and Stacy B. Rankin, of S outh C harleston, O.
O f the 704 m em ber banks in the Cleveland
district, w ith th eir capital and su rp lu s o f about
$202 ,000 ,0 0 0 , m ore th an h a lf o f the banks had
representjU iyes present, as d id , every C leveland
bank.
a
M r, W ills m ade a b rief talk, telling w hat he
and his co-w orkers, w ith the help o f the officers
o f the m em ber banks, hoped to accom plish. He
m entioned the federal reserve Jiotes. the new c ir­
culating money.
'/ / g, ^ / , / ' ' / ' t'
"W e have a stock o f these notes on hand," he
said, "to be issued w hen conditions require, but
n ot before.”
T h is w as referred to by M ayor Baker, w hen
he spoke a little later.
"M y condition requires it,” th e m ayor said,
laughing, “and they can issue them as soon as
they please.”
T he m ayor re fe rre d to his "c h eru b ” days w hen
in a c an tata he h a d bo rn e his sh a re o f the r a ­
diant queen’s tive-yard cam bric train. H e had
never felt p ro u d er th an w hen he toddled across
the stage, though his p art in th e perform ance was
small.
So every citizen, though his p art in tile new
system m ight be sm all, should w o rk w ith it and
be proud o f it, said the m ayor.
M r. T readw ay, M r. P a tric k , M r. W ard ro p . M r
W ilson and Mr. R ankin m ade sh o rt talks, as did
M r. Fancher. T he last nam ed sta te d the regional
banks w ould begin cautiously. In a few days, he
added, the Cleveland bank w ould announce its
readiness to receive b an k ( n o t individual") d ra fts
draw n by m em ber banks on re serv e agents in this
district and that, vice versa, m em ber banks could
check out of the regional bank, if they happened
to h ave an excess o f reserv e th ere and desired to
tra n s fe r it to a reserve ag en t in th is district. T his
m arks a step fu rth e r th an the strictly gold o p e ra ­
tions w hich have h e re to fo re obtained in connec­
tion w ith the regional bank.
R ediscounting m erchant p ap er w ould be the
lirst function o f the regional bank, said M r. F a n ­
cher. and th a t if conditions w ere satisfactory, be
hoped a low er ra te than the presen t 6 per cent
w ould be announced fo r this d istric t w ithin the
next six ty days.
A low er ra te w ould perm it m em ber banks to
convert business m en’s n o tes anil bills into ca^h
o r cred it at the re serv e bank. N o m erchant paner
has been tu rn ed into the C leveland bank so far.
all reserves being paid in gold, law fu l m oney or
yellow backs as the federal re serv e b o a rd had
suggested.
A m o n g th o s e p re s e n t fro m o u t o f to w n w ere
th e fo llo w in g : _
A ckerm an. W m . A.. New K nox N ational
B ank. M t. V e rn o n .
A d a m s. A. F... F i r s t N a tio n a l Bank. Y o u n g s ­
to w n .
A g le r, W . E ., F i r s t N a tio n a l B a n k , G a r r e tts ville.
_
.

Ailes, Jo h n \V „ F irst N a tio n a l Bank. D onora.
http://fraser.stlouisfed.org/ _ P s
'
_________________

Federal Reserve Bank of St. Louis

A llen, E . W ., U n io n N a tio n a l B ank, F osto ria.
A llen d o rf, W m . L.. C o m m e rc ia l N a tio n a l
B ank, S a n d u sk y .
A llis, C. E ., S e c o n d N a tio n a l B ank. E rie.
A rc h e r, G. A., C o m m e rc ia l N a tio n a l B ank.
C olum bus.
A tk in so n , A. L „ F ir s t N a tio n a l B ank. A l­
liance.
B a ch e ld e r, D.. C itiz e n s N a tio n a l B ank,
G allon.
B ailey,
V. H .. Sheffield N a tio n a l B ank.
Sheffield. P a,
B a rlo w . G. H ., C itiz en s N a tio n a l B ank, C orry. P a.
B a rry , R o b e rt D., F i r s t N 'ational B ank.
A liq u ip p a, Pa.
B a x te r, S e th H „ F ir s t N a tio n a l B ank. P i t ­
c airn , P a.
B a b o u t, C. C., F ir s t N a tio n a l B ank. G re e n ­
wich.
B eck w ith . \ \ . E.. M a rin e N a tio n a l B ank.
E rie, Pa.
B e n tle y . C. O ., S e c o n d N a tio n a l B ank. R a ­
v en n a.
B iechels, R. A., C itiz en s N a tio n a l B ank,
W o o s te r.
B odley. H . L., F i r s t N a tio n a l B ank. G alion.
B oesel. Ju liu s, F ir s t N a tio n a l B ank. N ew
B rem en .
B o h re r, G e o rg e H .. G e rm a n -N a tio n a l B ank,
C in c in n a ti.
B o sw o rth . C. A.. S e c o n d N a tio n a l B ank.
C in cin n a ti.
B o tto m field . N . W „ F ir s t N a tio n a l B ank.
O a k n io n t, Pa.
B ow en. C h a rle s H.. N 'ational B a n k of L o ­
gan, L o g an .
B o w en . F . M eade. N a tio n a l B a n k of L o ­
gan, L ogan.
.
B ra u n . E . A.. N a tio n a l B a n k o f C om ­
m erc e . L o ra in .
B re w e r, J u s tin , F ir s t N a tio n a l B ank. Ada.
B rie rlv . F ra n k F.. F a r m e r s ’ N a tio n a l Bank.
B e a v e r F a lls , Pa.
B rig h t, S. C., H e m p e i N a tio n a l B ank. L o ­
gan.
B rig h t, W . M „ L in co ln C o u n ty N a tio n a l
B ank. S ta n fo rd . K v.
B ro c k m a n , D. S.. P e o p le ’s N a tio n a l Bank.
\ \ ellsville.
B ro w n . A. J., P e o p le ’s N a tio n a l
Bank.W a p a k o n e ta .
B ro w n . G uy W ., F a y e tte C ity N a tio n a l
B ank, F a y e tte C ity . P a.
B u c k in g h a m . A. S.. C o m m e rc ia l N a tio n a l
B ank, S te u b en v ille .
B u rle y . J a m e s IX. F irs t N a tio n a l B ank.
M o u n d sv ille. W . V a.
B u tle r. H . H .. F i r s t N a tio n a l B ank. C anal
D o v er.
C a m e ro n . N .. F ir^ t N a tio n a l B ank. P i t ­
c a irn , P a.
C a m p b e ll, D . M „ F a r m e r s ’ N a tio n a l B ank.
L e e c h b u rg . P a .
! C a m p b e ll. J. C., N a tio n a l B a n k o f C o m ­
m erce, C o lu m b u s.
C arey. \ \ . IV. F a rm er's N ational Bank. S a­
lem .
C a rn a h a n . I\. H.. R a v en n a N a tio n a l B ank.
R avenna.
C a rr, W . C.. S e c o n d N a tio n a l B ank. T o le d o .
C la rk . J. V.. F ir^ t N a tio n a l B a n k . W a s h in g ­
to n , P a .
C lo se, J. W „ F ir s t N a tio n a l B a n k . B ellevue.
Cobler. lohn G.. People’s N ational Bank.
F llw o o d C ity. P a .
C offin. E. R.. F ir s t N a tio n a l B ank. Sew ick ley . P a.
C o ry . F . F... P e o p le 's N a tio n a l B ank. Belle-fo u n ta in e .
C ra n e , R. B.. N a tio n a l B a n k of C o m m e rc e.
T o le d o .
C u m m in g s. J. C.. F irs t N a tio n a l E x c h a n g e
B ank. S id n e y .
D av is, D . E „ F i r s t N a tio n a l B ank. M o n o n g a h e la C ity . P a.
D e e n ie r, L. V., N a tio n a l B a n k o f B ro c k v ille.
B ro c k v ille . P a.
D u B o is. J o h n . F a r m e r s ' & M e rc h a n ts ’ N a ­
tio n a l B a n k . B e lla ire .
D u n a n , O . E „ F irs t N a tio n a l B a n k . St.
M a ry s.
D upuis, C harles \V „ Second N ational Bank.
C in c in n a ti.
F .lson, R . R., F i r s t N a tio n a l B a n k , C a n a l D o£££,

E n s w o rth , F . \V., E n s w o r th N a tio n a l Bank,
W a te r fo rd , P a.
E v e rh a rd , O r. II. S., W a d s w o rth N atio n al
B ank, W a d s w o rth .
I-au
F a u lk n e r, H . R., N a tio K
n aill Bj
B ank o f A slitatj la, A s h ta b u la .
F ish e r, T h o m a s H .. F ire t N;
N a tio n a l Bank.
E a st L iv e rp o o l.
F o ltz . S a m u el, F ir s t N a tio n a l B ank, N ew
C a stle . Pa.
F o rn e y , J. W „ C o m m e rc ia l N a tio n a l Bank,
S te u b en v ille .
F ra n c y , E . E., P e o p le ’s N a tio n a l Bank,
S te u b en v ille .
F ry . H . C\. F irst "N atio n al B ank, R o c h este r,
Pa.
F u lk s, C h a rle s L., F irs t N a tio n a l B ank, D u n ­
kirk.
F u lle r. II P., F i r s t N a tio n a l B ank, N o rth
E a s t, Pa.
G allup, H ., C o m m e rc ia l N a tio n a l B ank, S a n ­
dusky.
G a rd in e r. K. G . N o rw alk N a tio n a l Bank.
N o rw alk .
G clh ach , J. A., F irs t N a tio n a l B ank, E llw ood,
C ity, P a.
G e tty , H . T ., F ir s t N a tio n a l B ank, N ew W il­
m in g to n , P a.
G oble, M o n te J F ifth -T h ird N a tio n a l Bank.
C incinnati.
G oebel, J o s e p h S.. F irst N a tio n a l B ank. M a­
rietta.
G ra n t. H . W .. C ity T r u s t and S a v in g s Bank,
Y o u n g sto w n .
G riffith. E. C.. F irs t N a tio n a l B ank. P a r ­
k e r ’s L a n d in g . Pa.
G rim es. L. L . P e o p le ’s N a tio n a l Bank.
S teu b en v ille.
G rove. Ja m e s W .. M o n o n g a h e la N a tio n a l
B ank. P itts b u rg h . Pa.
G u ck ert. \Y. L.. F irs t N a tio n a l B ank of A l­
leg h en y . P itts b u rg h . Pa.
H a m ilto n , G e o rg e L.. U n io n N a tio n a l Bank.
N ew B rig h to n . Pa.
H a n co c k . I esse. P e o p le ’s N a tio n a l Bank,
M o n esso n , P a.
H ardesty. R R.. Am erican N ational Bank.
W a y n e sb u rg . Pa.
H a re . A rth u r R . F irs t N a tio n a l B ank. U p ­
p e r S an d u sk y .
K a r r i. W illiam . C itizens’ N ational Bank,
W o o ster.
H a rris o n , C. F.. M ad R iv er N a tio n a l Bank.
S prin g field .
H a rsi.a w . P.. B.. G ro v e C ity N a tio n a l Bank,
G ro v e C ity. Pa.
H a y es. F. P .. F irs t N a tio n a l B ank. C re st­
line.
H e n d ric k so n . B.. M edina C o u n ty N a tio n a l
B ank. M edina.
H e n g st. G e o rg e C.. R em pel N a tio n a l R ank.
L o ea n .
H e rs h b e rg e r. E. E.. C itv N a tio n a l B ank.
Tiffin.
H e rtz e r. W . I... Tiffin N a tio n a l B ank. Tiffin.
H ilsin g e r, T. C.. N a tio n a l B ank of T o ro n to ,
T o ro n to .
H in d s. G. F.. K e n t N a tio n a l B ank. K ent.
H ine. I r a F... F ir s t N a tio n a l B ank. M antua.
H o b a rt, C. A.. K in sm a n N a tio n a l B ank.
K in sm a n .
H n e e . H . F.. F irs t N a tio n a l B ank. K en to n .
H o llin e to n . W . A.. F ir s t N a tio n a l B ank.
F in d la y .
H o lt. F ra n k . F ir s t N a tio n a l B ank. P o r t C lin ­
to n .
H o o v e r. D r. A. M.. F irs t N a tio n a l B ank.
P a r k e r ’s L a n d itie . Pa.
H o rn tin g . Tohn. D re sd e n N a tio n a l B ank.
D re sd e n .
H o s k in s . H . E.. F ir s t N a tio n a l B a n k . W il­
m in g to n .
H o s tc rm a n . F . E .. C itiz e n s' N a tio n a l B ank.
S p r’ngfield.
_
_
H o u s e r. T h e o d o r e N.. F i r s t N a tio n a l B ank.
S to n e b o ro . P a.
H u lse . J o n a s J.. C o m m e rc ia l N a tio n a l B ank.
U n n e r S a n d u sk y .
Id d in g s . S. C.. S e c o n d N a tio n a l B a n k . W a r ­
ren.
Tacobs. T . A
M a h o n in g N a tio n a l B ank.
Y o u n g s to w n .
T am eson. D avid. C itiz e n s’ N a tio n a l B ank.
N FRASER
e w C a stle . P a .
Digitized for
Teffers, C. W „ N a tio n a l E x c h a n g e B ank.

http://fraser.stlouisfed.org/
Federal Reserve
■ f i i Bank
i i f c of
w St.
- VLouis
a“

J in n in g s, J. J., C ity N a tio n a l B ank, C olum bus.
fo h n s. H. R., F irs t N a tio n a l B ank, G ra fto n ,
1 Jo n es, C. E „ O ld P h o e n ix N a tio n a l B ank,
M edina.
ju n g lin g , H, R., B rid g ep o rt N a tio n a l B ank,
B ridgeport.
K aufm an, H . S., C ity N a tio n a l B ank, C anK elly, J o h n G., B ra d d o ck N a tio n a l B ank,
B raddock, Pa.
K elly, J. H o w ard . F irs t N a tio n a l B ank,
M onesson, P a.
.
K ennedy, C. H ., C o m m ercial N a tio n a l B ank,
Y oungstow n.
K ent, \Y. S., K e n t N a tio n a l B ank. K ent.
K eppel, H e n ry , N a tio n a l B an k of C o rry ,
C orry, l ’a.
King, E dw ard, N ational Bank of Law rence
C ounty, N ew C astle, Pa.
K insey, O. O.. F irs t N a tio n a l B ank, L o w e ll.
K lin g er. S. B . F a rm e rs ’ N a tio n a l B ank
U aviland.
K napp, W . E „ M ilford N a tio n a l B ank, M il­
ford.
K reb. W . A. W .. F ir s t N a tio n a l B ank, G len
C am pbell, Pa.
L air, C. B„ P e o p le ’s N a tio n a l B ank, G re e n ­
field.
L am b erto n . C hess, L a m b e rto n
N a tio n a l
Bank, F ra n k lin . Pa.
L a m b e rto n , R o b e rt. L a m b e rto n N a tio n a l
B ank, O il C ity, Pa.
L in d e rm an , \Y. S.. D uquesne N a tio n a l B ank.
P itts b u rg h . Pa.
L o o se, H. E., F irs t N a tio n a l B ank, N a ­
poleon.
L ove. F. S.. F ir s t N a tio n a l B ank. R u ssellton. Pa.
M cC artn ey . \ \ . S.. C e n tra l N a tio n a l B ank,
C am b rid g e.
M cC loskey. 1). \ \ .. F irs t N a tio n a l B ank,
E a s t P a lestin e .
M cC ullow . C.
V. F irst N a tio n a l B ank.
( ireenw ich.
M cCune, John, Jr.. Grove City N ational
B ank, G rove C ity. P a.
M c D o n o ld , J. N.. F irs t N a tio n a l B ank,
S m ith to n , Pa.
M cD o n ald . J o h n R., F irs t N a tio n a l B a n k ,
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S h a ro n , P a.
M c F a rlin . J. J.. F irs t N a tio n a l B ank. G ir­
ard.
M c K a y , W . S.. F ir s t N a tio n a l R ank. G ro v e
C ity, P a .
M cW ee. J. S., F ir s t N a tio n a l B ank. A da.
M c L ain , H . L.. U n io n N a tio n a l B ank, M a s ­
sillon.
.
M c M a h o n . C. S., N a tio n a l B ank o f C a m ­
b rid g e. C a m b rid g e .
M cM ullen S. A.. D u q u e sn e N a tio n a l B a n k . I
P itts b u r g h . ? a .
V icQ uigg, J o h n , P o m e ro y N a tio n a l B a n k .
P o m e ro y .
M aize. F re d S., F irs t N a tio n a l B ank, R u ss e llto n , Pa.
M e n to n y a , E. L.. F irst N a tio n a l B a n k ,
I tica.
M artin. J M „ F irst N ational B ank • G rove
l. lty. P a.
M a rlin g , C o lo n el H. A., C itizen s N a tio n a l
B ank, I ro n to n . •
M ellott, J. F„ F irst N ational B ank
BelIaire.
M iller, \ \ . S.. N a tio n a l B an k o f E ly ria E lv ria.
’
J
M itch ell. A. F.. N o rth e rn N a tio n a l B a n k , T o ­
ledo.
M itchell. W a lte r S.. M ellon N a tio n a l B ank.
I lttsh u rijh , P a.

R ,n T a X 3 i„ T

'•

H.n£na s .

S' * * * ~

M o n tie th .
v re stlin e .

\ \ illiam .

F irst

N a tio n a l

B ank,

' O

M oody, E. I)., D e n n iso n N a tio n a l B ank
D ennison.
M oore, W . H ., F re d o n ia N a tio n a l B ank
rr e d o m a . Pa.
M o rriso n , G e o rg e W ., F a r m e r s ’ N a tio n a l
B ank, B e av e r F a lls. Pa.
M oser, J. F., F irs t N a tio n a l B a n k , W a p a i k o n eta.
M y ers, F. E., F ir s t N a tio n a l B a n k , A sh la n d .
N a y lo r,
E. B., T iffin
N a tio n a l
B ank,
Tiffin.
Neff, J. F., B e lm o n t N a tio n a l B ank, B el­
m ont.
N ic h o lso n , H . B.. P e o p le ’s N a tio n a l B ank
W ellsv ille.
’
N o rto n , E u g en e T „ F ir s t N a tio n a l B ank,
C onnellsv ille, Pa.
O eh m , L . P.. F irs t N a tio n a l B a n k , B ellevue*
^ O lds, L. W ., N a tio n a l B ank o f C o rry , C o rry ,
P a rk e r,
J.
H ..
F irs t
N a tio n a l
B ank,
Y o u n g sto w n .
P a rk e r, W . H ., F a r m e r s ’ N a tio n a l B ank,
H a v ila n d (p ro b a b le ).
P a tte r s o n , Jo s e p h , F ir s t N a tio n a l B ank,
A sh lan d .
P e a rso n , C. H ., M e rc h a n ts ’ a n d M a n u fa c ­
tu re rs ’ N a tio n a l B ank, S h a ro n , Pa.
P e te rs o n . B. W ., D o lla r S a v in g s & T r u s t
C o m p an y , W h e e lin g , W . V a.
Pollock. E. r„ D elaw are N ational Bank,
D elaw are.
P o r te r , I. M „ F irs t N a tio n a l B a n k . M idland.
P a.
P o w , F . R „ F irs t N a tio n a l B a n k , Salem .
P o w e rs , R o b e rt, R.. F ir s t N a tio n a l B ank,
D e law a re .
R eibold, L. S., T e u to n ia N a tio n a l B ank, D a y ­
ton.
R h o d e s. D. H ., N a tio n a l B an k o f M c K e e s­
p o rt, M c K e e sp o rt, Pa.
R ic h a rd so n , S. M., C itiz e n s N a tio n a l B a n k .
C incin n ati.
R id d le , H . W ., R a v e n n a N a tio n a l B ank, R a ­
venna.
R o b b , A. D., F ir s t N a tio n a l B ank, C astle
S h a n n o n , Pa.
R o o t, j . W ., F ir s t N a tio n a l B a n k , G a rre tts ville.
R unkie. H . L., K e n to n N a tio n a l B ank, K e n ­
to n .
S a n d s, L a w re n c e E ., F irs t-S e c o n d N a tio n a l
B ank, P itts b u rg h , P a.
S e ite r, E d w a rd A.. F if th - T h ir d N a tio n a l
B ank, C in cin n a ti.
S e y m o u r, B. B., N a tio n a l B a n k o f A s h ta ­
b ula, A sh ta b u la.
S h e re r, W illia m P.. F ir s t N a tio n a l B ank,
Z anesville.
Sheriff, A. P., H a rr is o n N a tio n a l B ank.
Cadiz.
S h e rm a n , J o h n M ., F ir s t N a tio n a l B ank, F r e ­
m o n t.
S m ith , S. S.. F i r s t N a tio n a l B a n k , C h a rd o n .
S n y d e r, G e o rg e A., L 'nion N a tio n a l B ank,
F o s to ria .
S p ittle . F. C .. B e lle fo u n ta in e N a tio n a l B ank.
B e lle fo u n ta in e .
S q u ire . S. H.. N a tio n a l B a n k o f E ly ria .
E ly ria.
S w ift. Ioh n C . E x c h a n g e N a tio n a l B ank.

I Lodi-

'.

.

.

.

Stein. 1'. I... O hio N ational Bank. C olum ­
bus.
S to v e r. F re d S.. M e rc h a n ts N a tio n a l B ank.
D efiance.
S te w a rt.
C h a rle s
1''...
F o u rth
N a tio n a l
B a n k . C adiz.
S to ltz . A. C.. S e c o n d N a tio n a l B ank. B uj c y ru s.
S to n e . X. C . N a tio n a l C ity B ank. A k ro n .
T o m lin so n . F. C.. S e c o n d N a tio n a l B ank,
j I ro n to n .
T o p p e r, R. C., F ir s t N a tio n a l B ank. J e ff e r ­
son.
T ru e s d a le . H . C., N o r th e rn N a tio n a l B ank.
; T o le d o .
Y e az e y , J. H „ F ir s t N a tio n a l B ank, N ew
W ilm in g ti.il. Pa.
W a d d e ll, j . E„ M a rio n N a tio n a l B ank. M a ­
rion.
W e a v e r, F. K., F a r m e r s ’ N a tio n a l B ank,
i F re e p o rt, P a.




W e b e r. E . F., M e rc h a n ts N a tio n a l B ank,
M ead ev ille, P a.
W ertz, Charles M., F a r m e rs N a tio n a l Bank.
B ry a n .
*
W h ite , H . E „ R etn p el N a tio n a l B ank. L ogan.
W’h ite , R. L., R e m p e l
N 'a t w a l
Bank.
L ogan.
.
W illia m s.
B. J.. F irs t N a tio n a l B ank.
S helby.
W illia m s. J. W ., F ir s t N a tio n a l B ank, Shelby.
W ilso n , C. P., N ile s T r u s t C o m p an y . N iles.
W in g e r, G e o rg e \V.. F irs t N a tio n a l Bank.
S p rin g field .
W itn e r, C. E ., F irs t N a tio n a l B ank, G re e n ­
ville, Pa.
W o o d s, R o b e rt R., W a y n e C o u n ty N a tio n a
B ank, W o o s te r.
___
1 11 ill
ilj| ii il B ank
K* IT
BrtTaire.
| _ .Y o u n g , M. L ., F a rm e rs N a t i i in a l"

1
2 /, / 9 / y . _

Cleveland BankersEntertain Federal
Reserve Board
' T he officers and d irecto rs o f the Cleveland F e d ­
eral R eserve B ank w ere guests Friday evening
o f last w eek of the b ankers o f Cleveland at din­
n e r at the L’nion Club. A bout 200 bankers of
P ittsburgh, Cleveland and Ohio w ere present and
the affair was in every way a m ost notable suc­
cess. Col. J. J. Sullivan, president of the Cen­
tral N ational Bank and of the S uperior Sav­
ings & T ru s t Co., presided. In the course of the
evening he in troduced G overnor E. R. Fancher,
o f the F ederal Reserve Bank, Ju d g e John 11.
Clarke, D. C. W ills, federal reserve agent and
chairm an o f the Cleveland bank’s directorate,
C ongressm an R obert J. Bulkley. and A ttorney
Jam es H. H oyt, all of whom m ade meaty talks
either on the reserve system o r on business
affairs.
E. R. Fancher, g overnor o f the federal bank
expressed his belief th a t ‘‘the tirst effect of the
operation o f the new law " will be to lessen the
tension of the past few weeks o r m onths.
"N one o f the officers of the Federal Reserve
B ank o f Cleveland is cocksure of w hat is going
to happen,” said Mr. Fancher. "but we hope, and
I believe, you all have confidence th a t there will
he som e m aterial benefits for all o f us.”
M r. F a n c h er went into detail a s to m ethods of
expanding legitim ate credit u nder the law. C on­
cerning a criticism som etim es m ade, he said: " If
you feel th a t the new system does not provide fo r
sufficiently centralized control, m obilization of
forces w here needed, and proper co-relation o f the
tw elve d istrict banks, I fear you have not been
w atching the F'ederal R eserve B oard ex ercis­
ing the fifty-three distinct pow ers specifically
c o n ferre d upon it by the act. besides some few —
'>7 o r so—not specified, blit perhaps implied. T he
board seem s to be doing pretty well in handling
its team of tw elve spirited h o rse s; they are not
running aw ay w ith the coach.
"M y own feeling is th at the proper purpose of
the a ct is, and I hope its effect will I.e. not so
m uch
to
m ake
an
expansion
of
credit
easy, as to m ake credits better.
T his is.
I believe, by fa r the g re ater need. Mr. Y anderlip stated before th e senate com m ittee th a t ’u n ­
doubtedly a bank will feel freer, if it has a central
reserve bank to go to fo r discounts, than it does
now .’ B ut he pointed c u t th a t th ere w ill be con­
trol of the district reserve bank boards a n d o f the
F'ederal R eserve B oard to re strain bankers in any
locality from ‘loaning m ore because they can re ­
discount th an is wise fo r them to loan.’ It is
my ju d g m en t and my hope, th at the am ount of
re discounting in norm al tim es will be very m oder­
ate, so th a t in abnorm al tim es we may have the
pow er o f rediscountin'.? to fall back upon.”
H e concluded : “ In my opinion, the Cleveland
bank has a bo ard o f d irectors th a t should insure
it an equal chance o f success with any of the
o th er eleven banks, to say the least—and that
C leveland is to be co ngratulated on the prospect
o f gaining a m ighty good citizen and a real
banker, in M r. D. C. W ills.”

r / o o h a n k l “ fe i hoW.,the svsteni w ould'unite
m il
T th<; C° ndl,ct f>f bu*iness in northe fo m iiri "
T
P r?tectjon of business and
to I, mi. i* m c n *Js- H e advised business men
’ n' i U'SS ! ° C on« ress a,’<l legislatures for
n irt
1
. '" T C
P r '"i'> ™ «-. saving in
in d liar) t a ' e
K°C- tlm cs lm der l°w tariff
had t m
j U1
'~’h ta rif f: " e ,,ave ha<l
r
I- ,e S .lmt ' r
ta n ff an,! sood tim es un­
hen
, RUt " e ,1CV° r harl
f'n e S
when w e had bad crops, nor had times when we
had good crops.
M r. \ \ ills dw elt on three features of the re ­
serve system, tlie m ethod of electing directors
w hrch gives m em ber banks six , .f tb.>
... j : — f
tors, m aking the regional institution "a bank of j
i an k s"—the establishing of a federal reserve j
agent in each bank who lias been term ed “the
federal reserve board on the spot.” that i-. the
central W ashington pow er incarnated—and third,
the advisory council, composed of one m an from
each federal district, the tw elve to meet with the
Federal Reserve B oard fo u r tim es a year or
o ften e r and to keep it in touch with general busi­
ness conditions. W hen Air. W ills finished. Col.
Sullivan called for a toast to him. and it was
given standing.
M r. Fancher and the direc­
to rs o f the bank also were the subject of toasts in
the course o f the evening.
C ongressm an Bulkley told w hat financial legis­
lation is now sim m ering in W ashington, includ­
ing am endm ents to the federal reserve act and
ru ra l credits. B ut he stated his belief that for
th e next decade no m ore essentials of finance
I w ould be the subject of legislation, now that the'
>pan k in g system , so long considered outgrow n,
j had been replaced by a new.
I A tto rn ey Jam es H. H oyt expressed his adm ir­
ation o f the reserve act. H e pleaded for less
legislation obstructive to business and urged that
a living chance” be given the railroads of the
lcountry.
T he interests o f the railroads are the
: interests o f the bankers, o f the shippers and of
the country.” said M r. Hoyt. "T hev are all rc- lated. there is an interharm ony between them .”
H is talk was interspersed with hum or. He
i^ad a supposed letter from a coal companv q u o t­
ing prices to a prospective custom er in which the
coal com pany, at the end o f even- o ther word,
quoted o p in io u -o f counsel; interstate commerce
regulation, public utility ord er o'r act o f c o n ­
gress to assure itself and its custom ers th a t it w a?
a ctin g in accordance with law.

high as that they are charging patrons. Conse­
quently there is “n o th in g in it," unless the de­
mand for money increase for banks to rediscount
commercial paper.
The rates vary in the different districts, as has
been predicted, the board refusing to m ake an
effort to equalize interest rates in the various
parts of the country. R ath er have the norm al
conditions been recognized, the reserve system
thus supporting ra th e r than tending to break
down conditions w hich arose un d er the currency
system which financiers have so generally
| criticised.
T he several reserve banks are at liberty to change,
rate of rediscount from tim e to tim e, provided
, their rates are approved by the F ederal Reservfj
tfc S Jf1:,

Reserve Board Has Plan For In­
creasing Store Of Cash
A W ashington dispatch s a v s :
Although the tw elve federal reserve banks only
began business M onday, the F ederal R eserve
B oard already has before it rfan s fo r w idening
their field of operations and increasing their
stores o f cash.
T he board m ay not be willing to draw any
definite plans from one day’s business, but the
first week may have a m aterial effect and may re­
sult in augm enting the cash of the banks by more
than $150,000,000. T he board has un d er consider­
ation the deposit o f a large part o f the loose
cash now in the trea su ry and the tra n s fe r of most
of the governm ent funds now deposited in nation
al banks.
T h e board M onday m:,de public a circular defin­
ing tim e deposits as including any deposit sub­
ject to check on which the bank has the right by
w ritten contract w ith the depositor at the tim e
of deposit to require not less than thirtv days'
notice before any p art o f it may be w ithdraw n.
Any agreem ent w ith a depositor not to enforce
the term s of such a contract shall vitiate the

R ate Of R ed iscou n t Fixed
A W ashington dispatch s a y s :
T he Federal R eserve B oard announced S a tu r­
day that the im tiaT rafes o f discount to be charged
by the ( leveland reserve bank will be 6 per cent
fo rjto m m erc ia l paper o f various term s of m atu r­
ity.
T he ra te announced for the Cleveland bank,
to gether w ith the rates fixed for o th er banks,
accords w ith published statem ents that the Re­
serve B oard w ould fix rates in the beginning
so high as to discourage inflation. T he
o f discount is fixed fo r the banks a t ' Boston,
Cleveland, Chicage. St. Louis and Richmond.
In o th e r d istricts a distinct advantage is given
sh o rt term paper. T he rate fixed fo r the New
Y ork and P hiladelphia banks fo r paper m aturity
| n o t exceeding 30 days is o ’j per cent, and fo'r
paper o r longer m aturity B per cent. T he rate for
paper o f m atu rity of less than 30 days is fixed at
« per cent fo r the Dallas. A tlanta, K ansas City,
M inneapolis and San F rancisco banks and a rate
of 6’A per cent fo r paper o f longer m aturity.
T hese rates accord w ith prevailing interest
rates in the several com m unities, according to in­
I form ation which the R eserve Board has gathered
I with care ill the last few weeks, and because they
ja re n o t Io w t th an p revailing rates th ere is absent
j any invitation to rediscount com m ercial paper belyond the no rm al needs o f the com m unity. M em her banks are faced with a discount ra te quite as




1
Not Drawing From Metropolis.
A n in terestin g ; fe a tu re o f th e f e d ­
e ra l re se rv e sy s te m 's o p e ra tio n is th a t
so f a r it h a s n o t re su lte d in d ra w in g
m oney out o f N ew Y ork. To p re v e n t
c o n c e n tra tio n o f th e n a tio n ’s idle
f u n d s in th e m etro p o lis fo r u s e of
T V all S tre e t is one of th e p rim e ob­
je c ts of th e law . b u t bv re q u e stin g
m em b er b a n k s to dip in to th e ir ow n
v a u lts fo r th e firs t in sta llm e n t of r e ­
serv es, th e fe d e ra l re se rv e board d e t n y s t h e a n ti-c o n c e n tr a tio n provisions.
J s e w Y ork b a n k s la s t w eek a c tu a lly
S a in e d fro m th e in te rio r $13,000,000

On b a l a n c e .

'Tin- law in te n d s to sp read th is
6 .-awing d o w n 1 of e a s te rn balan ces
o v e r th ree y e a rs, b u t a s long th ere a f V r a s so m a n y in s titu tio n s o t h e r 1
th a n n a tio n a l b a n k s re m a in o u t of
i lie sy ste m th e s tre e t w ill n o t suffer
from loan p o v e rty .
T he s tre e t h a s a good h a n d ic a p in I
She race, w ith l a s t S a tu rd a y ’s e le a rin e
’•ortse s u rp lu s $170,800,000, th e la rg e st
-i th e h isto ry o f A m erican finance.
Vioney for a ll d a te s w as offered yee.erday a t 5 p e r cent., w ith w e ste rn
-t’.lies c u ttin g o u t co n sid erab le sum s
h ro u g h c o rre sp o n d e n ts. T h e open i
n a rk e t ra n g e fo r m e rc h a n t p a p er
*as 5 to 5 1-2 p e r cent.

HHSI LUWtKllS ANNOUNCED
IK RESDISCOUNT RATES'
i v r |*
m

Federal Reserve Board ^ ^ i ^ e w England Figure for
Thirty-Day Merchant Paper to 5% Per Cent.,
!
Encouraging Use <Tf New Privilege.
%
------- --------- t------------------ MOV 2 1 M l

Cash in Cleveland TUgfWiai Bank W ^
§W>000’000
■
—Week’s Clearings and Failures Make Good
Comparison With Recent Trend.
B Y H E R B E R T S. R O SEN TH A L .
O f prim e sig n ific a n ce is th e fe<ler»l reserve b o a r d ’s decision to low er
tjie re d isco u n t ra te in N ew E n g la n d from 6 to 5*^ p e r cent, fo r com m ercial
p a p er ru n n in g t h ir ty days or less. I t is a reco g n itio n of e asie r m oney con
tiitio n s in t h a t te rrito ry , a n d in d ic a te s in c id e n ta lly t h a t th e Boson reg io n al
b a n k has re ce iv e d i ts f i r s t in sta llm e n t of reserv es from m em ber b a n k s
com plete, a n d from now on is w illin g to p a y out as well as ta k e in.
T h a t th e W ash in g to n b o a rd a lre a d y has seen f i t to le t down b a rs
in one section o f th e c o u n try , is a trib u te to th e w ork in g of th e new system ,
and m em ber b a n k s a re en couraged to m ake p a p e r assets liquid.

Local Banks Cash Over $19,000,000.
In th e C leveland in s titu tio n th e 6 per cent, r a te still o b tain s, a cc o u n t­
in g fo r th e absence of re d isco u n tin g to d ate. B u t th e te n ta tiv e a p p lic atio n s
a lre a d y re ce iv e d in d ic a te t h a t a low ering o f th e r a te w ould produce a ta k in g
a d v a n ta g e o f th e new priv ileg e.
Cash in th e C lev elan d b a n k is now well over $19,000,000, w ith th e f ir s t
in sta llm e n t of reserv es n e a rly a ll in a n d some niem bers m a k in g g re a te r d e ­
posits th a n required. R e d isco u n tin g is fe asib le here, b n t as long a s th e ra te
rem ains a t its p re se n t level, i t a ffo rd s little inducem ent.
•

Clearings and Failures.
To w h a t e x te n t th e bu sin ess skies a re c le arin g can be gleaned from th e
w e e k ’s b a n k c le arin g s, th e to ta l of lea d in g c itie s of th e c o u n try . T he
fig u re is 15.7 p / r c en t, below th e show ing o f th e lik e p eriod la s t y e ar, b u t
m akes s a tis fa c to ry com parison w ith the. re c e n t tre n d of th is y ear. L a s t '
w eek, fo r in stan c e, th e to ta l w as 21 p e r cent, u n d e r th e lik o 1913 period.
The p re se n t fig u re is th e m ore g ra tify in g in th a t a ll o f th ese com parisons
a re m ade w ith open sto c k e x ch a n g e periods la s t year.
In th e m a tte r o f business fa ilu re s th e 364 fo r th e la te s t w eek com pares
w ith 371 la s t w eek. T he in cre ase in num ber is 7 per cent, over th e p eriod
la s t y e ar, a s a g a in st a n ^ n c re a s e ' la s t w eek o f 21 p e r cent.
I n th e se figures, th e c le a rin g s a n d
th e e m b a rra s s m e n ts , t h e w hole c u r ­ to o u r gold su p p ly a s w ould p re m a ­
tu r e liftin g of th e N ew Y ork lid.
r e n t b u sin e ss s itu a tio n is su c c in c tly
In c id e n ts of th e d a y in clu d e d
p o rtra y e d .
C o n d itio n s a r e below d e c la ra tio n of a 5 p e r c en t, e x tr a
th o se of l a s t y e a r, b u t th e differen ce d iv id e n d o n (ie n e ra l C hem ical, th e
second e x tr a o f th a t a m o u n t th is y e a r.
i* b e in g a p p re c ia b ly lessen ed .
T h e c o tto n m a r k e ts w ere ste a d y , r e ­
\i> A n s w e r F r o m B a n k o f E n g l a n d . flec tin g
th e p ro g re s s of th e c o tto n
E n g lish , F re n c h . G e rm a n a n d R u s ­ fu n d to w a rd a c tu a l len d in g a n d th e
s a tis fa c to r y ta k in g s of E n g lish s p in ­
sia n b u sin e ss in te r e s ts a r e g ra d u a lly n ers, w hich w ere 83,000 b a le s of a ll
d ra w in g do w n th e ir N e w Y o rk k in d s th is w eek.
C losing o f th e N e w Y o rk C e n tr a l's
r r e d its in p a y m e n t o f m e rc h a n d ise .
T hese h a v e been a ffo rd in g u s n o b a l­ 2 .1. 0 0 0 -to n ra il o rd e r w ith th e L a c k a ­
a n ce o f e x c h a n g e o n th e o th ^ r sid e w a n n a S teel Co. afid n ew In q u irie s
a n d w ill n o t u n til p a y m e n t tim e fo r pig iro n w e re h ig h sp o ts in th e
com es, b u t th e fo reig n e x c h a n g e m a r - tee l tra d e a n d re -e m p lo y m e n t o f lak e t c o n tin u e s to ta k e c a re o f itse lf, “b o r in th e m e ta l tra d e s , chiefly in
w ith s ig h t d r a f t s o n L o n d o n e n d in g P itts b u r g a re a goes on. T he e a s t r e ­
th e d a y a t 4.88. T h e a b n o rm a l B e r ­ p o rts th e 12 1 -S -cent q u o ta tio n for
lin e x ch a n g e p e rs is ts a s m u c h in o u r e le c tro ly tic c opper, d eliv ered th ir t y
d a y s, now g iv in g w a y to 12 1-4. a n d !i
fa v o r a s e v er.
'Die p rin c ip a l p o in t now in q u e stio n n u m b e r o f p ro d u c e rs h a v e le f t th e
is w h e th e r th e B a n k o f E n g la n d w ill m a rk e t, c a rin g to sell no m o re a t
h elp s u p p o rt A m e ric a n s e c u ritie s th e s e figure?.
w h e n th e L o n d o n s to c k e x c h a n g e r e T h e N e w Y o rk c le a rin g h o u se
opens. T h e p lan w h ic h S ir G eorge b o n k s to d a y issu e th e ir w eek ly s ta te P a is h c ab led fro m W a s h in g to n In - m e n t in n e w form , sh o w in g th e locai hid ed a su g g e stio n t h a t th e b a n k tio n o f th e v a rio u s d iv isio n s o f r e ­
g r a n t a c re d it o f $100,000,000 to th is serv es, a n d sh o w in g d o u b tle ss a lso a
side f o r a b so rp tio n of Y a n k e e s t h a t i m a te ria lly in c re a s e d excess b e ca u se
m a y b e offered fo r sa le . To th is re c - Io f th e re d u c tio n in leg a l re q u ire m e n ts ,
o m m e n d a tio n th e b a n k h a s so f a r
T h e T oledo s to c k e x ch a n g e h a s
m ad e no a n sw e r. If th e c re d it is n o t j v o te d to re o p e n M o n d a y a n d th e St.
g r a n te d , re su m p tio n o f open t r a d i n g L o u is e x c h a n g e p re p a re s fo r e a rly r e ­
in L o n d o n w ill b e a r a s m u ch m e n a c e ! su m p tio n .




W. S. ROWE ELECTED
TO ADVISORY COUNCIL
C incinnati B anker Gets Im port­
ant Post in Federal Re­
serve System.

_______ u-ntA
A i M 1"T

W i l l i a m S. Row e, p re sid en t of th«

F irs t N ational B an k of C incinnati,
w as
^ rp e p b e r of t he adof th e fe d eral reserv’d
to ropresent^T T e^fourtn disn c t7 "a t yesterday’s m eeting of direc­
t o r s of th e C leveland fed eral bank.
Xo a ction w as ta k e n to fill th e still
v a ca n t p osts of dep u ty g o v e rn o r and
tre a s u r e r .
T h e a d v i s o r y council is m ade up of
tw e lv e m e m b e rs , elected one each b..
th e r e s p e c t i v e boards of th e regional
b a n k s . I t w ill confer four times &
y e a r w i t h t h e f e d e r a l re serv e board
a t W a s h in g to n , or o f te n e r if occasion
r e q u i r e s it.
T h e c h ie f function of th e advisory
c o u n c i l is t o m a k e recommendation*in r e g a r d to discount ra te s a n d ting e n e r a l conditions p re v a le n t in tli»J
r e s p e c t i v e d is tric ts of th e m em bers.
I t w ill b e a p o w erfu l fa c to r in s h a p ­
i n g t h e p o lic ie s of the fed eral boar 1.
H e n c e t h e ap p o in tm en t is regarded
a s o n e of t h e m ost im p o rta n t a t th e
d is p o s a l of t h e d irec to rs o f th e r e ­
g io n a l b a n k s .
M r. R o w e ’s a p p o i n t m e n t to th e post
is c o n s i d e r e d a l o g i c a l o n e . H e is the
d o m i n a n t f ig u r e in b a n k i n g circles in
C in c in n a ti, a n d h is e x p e rie n c e is prob­
a b ly m o re v a r ie d th a n a n y of th «
o t h e r b a n k e r m e m b e r s of th e board
o f t h e C le v e la n d b a n k . Fils app o in t­
m e n t w a s a l s o d u e o n te r rito ria l a c ­
c o u n t, a s a P i t t s b u r g b a n k e r now oc­
c u p i e s t h e p o s t o f c h airm a n of the
I b o a rd a n d fe d e ra l
re se rv e
a g en t,
w h ile a C le v e la n d b a n k e r h a s the
g o v e r n o r s h i p . T h e a p p o in tm en t of a
C i n c i n n a t i a n p r e s e r v e s th e balance
in t h o lo c a l o r g a n i z a t i o n .
d ire c to rs o f
th e
C leveland bank
a l s o c o n s id e r e d t h e q u e stio n of e n ­
la r g in g th e v a u l t s p a c e of the bank.
T h e s e c o n d a n d t h i r d c alls fo r the
p a y m e n t o f r e s e r v e s w ill duplicate
th e in ru s
o f r e s e r v e s w itn esse d last
w e e k a n d w ill c a ll f o r larger vault

space.

URGE CASH TRANSFERS
FEATURE RANK REPORT
---------- -

New York Institutions Show Huge Nominal Surplus of
$176,830,000, Due to Transit of Cash to Federal
Banks; Figures Temporarily Inflated.
BY F. F. DUNCAN
^ '0 ' ' Financial Editor of The Leader.
N ew Y ork b a n k s w ere due to show a gain in su rp lu s of a b o u t $100,­
000,000, because of th e low ering of the reserve re q u ire m e n ts fro m 25 to 18
p e r c en t u n d e r th e federal reserve act.
T h e sta te m e n t of averages sub m itted show ed a su rp lu s of $176,830,540,
due to a cash gain of $68,147,000. T his e x tra o rd in a ry gain is m an ifestly
d u e to d u p lic a tio n s in th e cash account w hich w’ould p ro b a b ly not h ave
been show n h a d th e actu al figures, as of F rid a y n ig h t, been given in stea d
of th e d aily averages.
T h e sm a lle r New Y ork ban k s and th e outside b a n k s of th e New Y ork
re se rv e d istric t evidently used th e big b a n k s in m a k in g th e ir tr a n s fe rs of
f a s h to th e new reserv e depositary. The la rg e r b an k s in tu rn used th e
su b -tre a s u ry as a m edium of tra n sfe r. N o th in g is c le a re r th a n th a t it
w ill ta k e a n o th e r w eek to erase th e d u p lic a tio n s in c id e n t to th e m ak in g
o ver of the b a n k in g system and p re sen t a n in te llig e n t se t of figures. T h e re
w as. probably, very g e n era l use m ade of New Y ork b a n k s a n d th e s u b ­
tre a s u ry for c ash tra n s fe rs to o th e r E a s te rn fe d e ra l b a n k s to help sw’ell
lie figures.
T h e re w ere o th e r ite m s of in te rest in th e sta te m e n t. T he b a n k s evilently w elcom ed th e low ering of reserves a s th e loan a c c o u n t show s a n ex>ansion of $13,000,000. D eposits show ed a n expansion o f over $100,000,000,
10 d o u b t p a rtly influenced by th e du p licatio n s re fe rre d to. C ircu la tio n dere ase d $14,076,000. As th e k n o w n ’ re tire m e n ts of e m e rg en c y c u rre n c y
vere in excess of th a t a m o u n t the discrep an cy is due to th e a v era g e show ng. M aking d u e allow ances for d u plications th e re is ev id en tly a su rp lu s
»f so m e th in g lik e $100,000,000 on (he new basis of c o m p u tin g re serv e s
vhlch will go a long way to w a rd s pro v id in g fo r th e re tire m e n t of e m e r­
gency cu rre n c y o u tstan d in g a n d c le arin g th e sla te of c le a rin g house loan
ertifi cates.
T h e entire operation o f tra n s fe rrin g reserv es fro m m e m b e r b a n k s to
ed eral reserve in stitu tio n s c rea te d no d istu rb a n c e to th e b a n k in g m ah in ery w h atev er. T he only possible ph ase o f th e m a tte r th a t m ig h t have
o n trlb u te d to d istu rb an c e w as th e c ontingency th a t c o u n try in stitu tio n s
n ig h t h av e draw n upon c o rre sp o n d e n t b an k s a t re serv e a n d c e n tra l reserv e
ities, th u s re ta in in g th e ir cash in v a u lts u n d istu rb e d a n d p u ttin g th e b u rlen of tra n s fe r upon th e city banks. T h e c o u n try in stitu tio n s, how ever,
leeded th e advice of th e fe d era l re serv e a u th o ritie s a n d m ad e th e tr a n s f e r
xlm ost e n tirely fro m th e ir fu n d s in v a u lt, lea v in g b a n k b a la n ce s u n d is ­
tu rb ed . T he o p e ratio n sim p ly a m o u n te d to th e p la cin g o f a p a r t o t th e ir
re se rv e s and idle fu n d s in a new depositary.

F E D E R A L B A N K S BEGIN REDISCOUNTS.
T h e com bined figures of th e tw elve fe d e ra l b a n k s a s given o u t by th e
fe d e ra l re serv e bo ard a t W ash in g to n , y e sterd a y , show re d isc o u n ts of $5,<107,000. m a rk in g the a c tu a l co m m e n ce m e n t o f th e re d isc o u n t fu n c tio n s of
i he h a n k s. T otal so ld holdings a re given a t $203,415,000. T he d e ta ile d
'ig u re s a re given u n d e r th e h e a d of " B a n k S ta te m e n ts ” elsew h ere on th is
page. T h e re d isco u n tin g w as done p rin c ip a lly a t N ew Y ork, C hicago and
M inneapolis.
Y e ste rd a y 's p in n in g re p o rt, sho w in g th e u n u su a l to ta l of U,C24,708
b a le s g in n ed to N ovem ber 14, w as g e n e ra lly in te rp re te d a s in d ic a tin g a
■ o tto n
c ro p
in
excess even of th e
la s t
g o v e rn m e n t
e stim a te
w ith p o ssib ilities t h a t it w ould re ac h th e p re v io u s re c o rd cro p of 16,000,000
bales. T h a t in fe re n c e is not safe. T he S o u th h a s h a d a n u n u su a lly long
Npell o f fine w e a th e r fa v o ra b le fo r p ick in g a n d ginning. Its g inning c a p a c i­
ty, too, h a s been speeded u p y e a r by year. T h e re is n o th in g in th e figures,
in th e lig h t of th e se fa cts, to give th e h o ld e r of c o tto n a n o th e r frig h t as
to th e f u tu re o f prices. T h e m a rk e t took t h a t view of it a n d th e r e w as a
s tr o n g rise a f te r th e figures w ere a n n o u n c e d w ith a su b seq u e n t re ac tio n
t h a t le f t a fa ir n e t g a in fo r th e day.
T h a t th e N ew Y ork S tock E x ch a n g e is n o t in clin ed to su b m it tam e ly
to th e d o m in a tio n o f le a d in g financial in te re s ts w ho w e re resp o n sib le fo r
t h e sto p p a g e o f p la n s fo r th e o p en in g of re s tric te d tra d in g in bon d s w as
e v id e n c e d in a n o th e r a n n o u n c e m e n t y e ste rd a y to th e efTect t h a t a definite
-p lan w o u ld be su b m itte d to th e board of g o v e rn o rs on T uesday. I t w as
s ta te d t h a t th is n e w plan m ee ts all O bjections p re v io u sly urged.
T h e e x c h a n g e m e m b e rs h a v e a gpod d eal to ju s tify th e m in th e ir fight
- s o m e th in g m o r e o t a n official m a r k e t th a n now exists. T h e lis t of




s to c k s c o m m a n d in g a p re m iu m o v e r J u ly 30 p ric e s is g ro w in g ra p id ly . It
is tr u e t h a t th e re h a s been a decline o f 3% p o in ts a v e ra g e in tw enty-five
ty p ic a l liste d ra ilro a d bon d s on to p of a d ro p o f 4% p o in ts in Ju ly . T his
w ould n o t in itself, h ow ever, a p p e a r to ju stify o p p o sitio n to a c o n tro lled
o p e n in g of th e m a rk e t. I t is e v id e n tly c o n sid e ra tio n fo r th e u n se e n w eak
sp o ts in th e m a rk e t a n d u n c e rta in ty a s to w h a t effect L o n d o n 's h u g e w a i
lo an w ill h a v e u p o n fo reig n se llin g th a t d ic ta te d th e o p p o sitio n to th e r e ­
o p e n in g o f th e bond m a rk e t.

SHIS’ EXCESS RESERVES
GO OP TO $169,300,000
.'few York Clearing House Institutions Report Huge
Increase in Surplus Cash, but Money Carries No
Invitation to Borrowers—Will be ‘Safety Fund.’ ‘
Another Plan to Re-Open Eastern FlolPKrttoifiHrading to be Passed On—Regional Banks Hold
.
$203,415,000 Gold.

•***

F o r th e w eek ended y e sterd a y th e excess cash reserv e of th e New Y ork
c learing house ban k s was $176,800,000. T his m ark s an increase of $169,­
300,000 in th<i w eek, b u t th e show ing is illusive. I t re fle c ts th e change in
legal requirem ents in cid e n t to the goirig in to e ffe c t of th e fed eral reserve
system .
,
,
<
The b an k s a re ric h / - w h at is tec h n ica lly surplus cash, b u t th e g re a t
bulk o f i t is not m oney w a .tin g to be p u t out in loans and o th e r in v estm en ts.
I t is th e “ s a fe ty f u n d ” w hich th e b a n k s w ill keep in th e ir v a u lts u n til th ey
decide th a t th ey w an t to do business on reserv es as low a s the new law
perm its.
The fu n d c arries no in v ita tio n to come a n d borrow , a n d it w ill re ­
m ain huge u n til th e stock exchange reopens a n d u n til we are n e are r c e rta in ty
t h a t th e re will be no fo reig n ra id s on our gold. W hen th e exchange resum es,
th e re w ill'b e a reserv o ir of call m oney and it m ay be needed.
L o an s of th e N ew York c le a rin g house b a n k s rose $13,000,000, d aily
average, in the w eek, b u t w ith the rijduction in reserv e needs th is is n e g ­
ligible, except th a t i t calls a tte n tio n t<» the f a c t th a t th e b a n k s are c a rry in g
a bout $240,000,000 m ore loans th a n a t th is tim e la s t year.
F ro m now on th e b a n k s will re p o rt tlio lig h t o f th is no c o n sid erab le inth e lr d e m a n d a n d tim e d e p o sits a s cre ase in c a sh a n d d u e from re se rv e
se p a ra te item s, th e first c allin g fo r 18 a g e n ts w a s to be expected. I n fa c t
p e r cent, re serv e s th e la t t e r fo r 6 p e r
ancl dU 8 w e n t dow n $127,000.
cent., ex cep t th a t N ew Y ork s ta te in A m U e of th lg lo st caah w
w(e n t
no
re
se
rv
e
s titu tlo n s need c a rr y
Into th e F e d e ra l R eserv e B a n k of
a g a in s t deposits.
.
C lev elan d , w hich h a d gold a n d law fu l
\ e w P l a n f o r R e o p e n in g .
m oney h o ld in g s a t th e close o f b u si­
A n o th e r plan to reopen th e N ew n e ss F rid a y o f $16,464,486. W h a t
Y ork stock ex ch an g e fo r open bond c ash C leveland b a n k s tu rn e d In fo r
tra d in g u n d e r re s tric tio n s w ill be th em se lv es c o u n ts a s re serv e , b u t
ta k e n u n d e r c o n sid era tio n by th e gov­ m oney tu rn e d in fo r a c c o u n t o f c o u n ­
e rn in g com m ittee T u esd ay a n d , if a p ­ t r y c o rre sp o n d e n ts c u ts dow n C leve­
proved, will go i n t o . o p e ratio n a t a n la n d m em b er reserv e.
e a rly d a te . The re s tric tio n s a re m ore
T he re g io n a l b a n k 's
s ta te m e n t
rig id th a n th o se c o n ta in ed in th e p lan sho^ ‘g a c a p tta l p a id in of $2,025,eo su d d en ly re v erse d la s t w eek a t th e
y<u a n d d e p o sits o f $14,457,272.
re q u e st of b a n k s a n d in v e s tm e n t t s B a n lu H o ld $ 2 0 3 ,4 1 5 ,0 0 0 G old.
houses.
R e ti r e E m e r g e n c y > o t « H e r e .
F ig u r e s fo r t h e f lr s t five d a y s of
, ,
,
.
..
____...
. b u s in e s s of t h e tw e lv e reg io n al b a n k s
N ew Y ork h an k s, besides free ly r<v show ^
a n d gold c e rtific a te s
tirin g c le a rin g house oan^c e rtific a te s, am ountlnK t0 $20,415,000, legal te n h a v e n o w c u t d a j v n th P r e m e r g e n c y d0r an(J gUver certlflcates> $37,308,n o te s to>^O W .O O O , w h i c h J s a little CRX)_ a n d a em ail a m o u n t of m in o r
m ore th a n h a lf " h a t they issued I n a cQin , n th0 v a u lts
R e d isco u n ts fo r
n u m b e r o t sectio n s of th e c o u n try re - th e flve dayg £ m o u n te d t0 $5,G07.C leveland b a n k h a s h a d $300,000 c a n celed a n d a n o th e r c o n te m p la te s e a rly
w ith d ra w a l of a block; th e to ta l o u ts ta n d in g fro m c ity b a n k s h e re a t th e
high m a rk w a s in th e neig h b o rh o o d
of $ 2 500 0 0 0 .
■
Tw o b a n k s ta te m e n ts w ill b e issued
in C le v e la n d a t eac h w e e k e n d h e re a fte r— t h a t of th e fe d era l re s e rv e ins titu tio n a n d t h a t o f th e cle arin g
h ouse
m em b e rs
com bined.
T he
c le a rin g house s ta te m e n t t h i s w e e k
s h o w s f o r ttie s e v e n n a t i o n a l b a n k s
a d e c re a se in l o a n s o f $1,325,000 in

r o u n d n u m b e r s , a n d a c o r r e s p o n d in g

d e c r e a s e o f $1,1^8,000 in d e p o s its . I n


<**>: t h >f J ° u ' d hf ve ^een m a te ria l*’. . ? ?
?
a.lf0";’ bUr ®“ te rn in ­
s titu tlo n s ta k e n th e lead In v io la tin g
c u sto m a s a n exam ple fo r th e tim id,
T h ere w ill be little u se of th e p riv ilege in n o rm al m oney tim e s, even
th o u g h r a te s a re re d u ce d from p re s ­
e n t levels u n le ss th e re d u c tio n Is
g re a t e nough to afford th e m em b e r
b a n k a w o rth w hile p ro fit.
T he
m em b e r t h a t lo a n s m o n e y a t 6 an<
h a s to p a y 5 1 -2 f o r a re d is c o o i
fin d s l i t t le in d u c e m e n t in t h e h r
p e r cent, w hen h e f ig u re s th eo retl<
cost

of r e s e r v e s a n d
p e n s e s.

g en eral

-

N ew fe d era l reserv e n o te s h ave
h a v e been issued, chiefly in Chicago,
N ew Y ork a n d M inneapolis, th e re be­
ing a b o u t $1,215,000 in circulation,
b a ld R e s e rv e 80 P e r C ent.
T he gold reserv e of th e e n tire sy s­
tem is now equal to 89 p e r cent, of
its liabilities, iw ui, cash _ reserye to
"105 per cent. ■ o_f ^ i l.labilities.
al
T he
B an k of E n g lan d will h av e to go a
long w ay before it can b e a t th e p ro ­
portion of gold to liab ilities. B u t
th e regional yellow m eta l ra te s will
sin k w hen profits begin to be m ade.
D o u b t Xeetl o f F a l l C o tto n F n n d .
T he principle of cash If you dem and
it has w orked such good psychological
influence in th e foreign d e b t m atter,
or a t le a st helped exports accom plish
the result, th a t c o n trib u to rs to -the
cotton pool now question w h e th er
they w ill h ave to give th e ir fu ll
prom ised q u o tas to it. E n g lish sp in ­
ners are buying, the cotton exchanges
a re open and e x p o rts from U nited
S tates p o rts so fa r th is re aso n ex­
ceed 1,008,000 bales.
The hope th a t only p a r t of the
$135,000,000 loan fund w ill be needed
has its rise in these fa cto rs, but yes­
terd a y ’s g in n in g figures indicate a
crop of 15,500,000 bales, w hich w ill
a t le a st equal the 1911-12 record
breaker. Out of th a t y e a r’s crop
10,355,000 bales w ere exported, la s t
y e a r 8,396,000 bales w e n t to o th e r n a ­
tions. and th is y e a r exports w ill have
to show a speed not h ereto fo re ex­
perienced if the su rp lu s is lo be a d e­
q u a te ly reduced.
During the week sterling exchange
h a s been held to near normal levels
M erchant paper declined to 5 per cent,
for the best notes and 51-2 for
names not so well known, w ith de­
mand better than supply.
Great
B ritain opened subscriptions for her
$1,730,000,000 w ar loan, but the In­
fluence th a t m ay have on American
securities is not deemed menacing
enough to prevent resum ption of open
bond trading in New York.
President Wilson in a letter to Sec­
retary McAdoo again gave an intim a­
tion taken as favorable to railroad
rate increases. The steel trade, though
running considerably under SO per
cent, of capacity, took h eart from im­
proved pig Iron Inquiry and scattered
buying brought on by low prices. Our
txports for October were 1105,000,000,
t J39.000.000 gain over September and
a $57,000,000, excess over .O ctober imp rts.
M nv o
1Q U

fJ * ,» R .

fra n k

crane

* * ' Copyright. 1 »1«

...

r* tm iJ tim f A ID P a u l M. W a rb u rg : “T h e 16th d a y of No
v e m b e r m ay be c o n sid e re d a s th e F o u rth of Ju l;
in th e econom ic life o f th e U nited S tates. Com
in g g e n e ra tio n s w ill c o m m e m o ra te it a s m a rk in g th*.
fo u n d a tio n o f fin an cial e m a n c ip a tio n ."
T h e d a te m e n tio n e d is t h a t on w h ich th e fe d era '
re se rv e sy ste m w e n t in to o p e ra tio n .
By th is systeir
th e m o n ey m on o p o ly is b ro k e n up.
R eserv e b a n k s ir»
th e v a rio u s se c tio n s o f the c o u n try w ill do w h a t has
h e re to fo re been d one by a W all s tre e t group.
I t is a n a tte m p t to keep th e
m o n ey fro m being co rn ered . T he
tro u b le w ith a bu sin ess w orld
w h e re m o n e y is based on gold, a
flu c tu a tin g basis, is th a t it is p o ssi­
ble fo r th e p o w e rfu l a n d privileged
to m a n ip u la te th e m o n ey supply.
Ju st a s th e y play w ith th e beef,
ste e l or w h e a t supply.
T h e fe d e ra l re serv e system , w hile
it does h o t go to th e ro o t o f th e
m a tte r, a n d base m o n ey on som e
w ide a n d sta b le p ro p e rty , su c h a s
la n d , th e so u rc e o f a ll w e alth ,
m a k e s a s trid e in th e rig h t directio n .
I t w ill su p p ly m o n ey to fa rm e rs,
upon th e ir p ro d u c ts, fo r six m o n th s.
JTSdAZ' CRAKE' T h a t is g ra in m oney, w e m ay say,
h o g a n d c a ttle m oney.
I t w ill fu rn is h m e rc h a n ts, m a n u fa c tu r e rs a n d o th e r
b u sin e ss mten w ith m oney u p o n w h a te v e r ta n g ib le s a t ­
isfa c to ry a sse ts th e y m ay b e a b le to show . T h a t is
m o n ey re s tin g u p o n m a n u fa c tu re d goods, upon c o m ­
m e rc ia l p ro fits a n d o th e r w e a lth form s.
I t is c alled g iv in g c red it. I t is re a lly c re a tin g m o re
m oney, fo r m o n e y Is w h a te v e r is used a s a c irc u la t­
in g m edium .
F e a r h a s b e en e x p ressed t h a t th is m ay lead to ” in flatlo n ,” w h ic h sh o w s how bu sin e ss-m e n a re frig h te n e d
by w ords. F o r th e only k in d s of c u rre n c y in fla tio n
t h a t is d a n g e ro u s is t h e o v er-issu e o f c u rre n c y w h ich
is n o t re d e e m a b le a t a n y tim e in re a l v alu e, o r o f
m oney th a t is n o t u n iv e rs a lly a c c e p ta b le a s leg a l
te n d e r.
In a s m u c h a s th e n ew sy ste m s b ro a d e n s th e m e a n s
b y w h ic h b u sin e ss is c a rrie d on It is e x p ec te d to b e of
g r e a t benefit.
In a s m u c h a s th e g o v e rn m e n t itself, re p re s e n tin g
th e w h o le people, h a s its h a n d u p o n th e m a c h in e ry , it
is hoped th a t th e sh re w d n e ss a n d ra p a c ity of th e few
w ill n o t be a b le to use th e m o n ey su p p ly of th e c o u n ­
t r y to p riv a te a d v an tag e .
T h e w h o le th in g is a ste p in th e r ig h t d irec tio n , a
m o v e to w a rd d e m o c rac y a n d to w a rd o rg an ized , effec­
tiv e a n d re sp o n sib le d em o cracy .
I t is a n o th e r in d ic a tio n o f th e com in g day w h e n
th e p e o p le sh a ll a tte n d to th e i r own b u sin e ss a n d n o t
lea v e i t in th e h a n d s o f fe u d a l lords.

S

W t 10 INSTILL
LIFE IN BUSINESS
Federal Reserve Banks and
Cotton Trading Aid the
Financial
ajiciai World.
worm,
uses TaRe^RlV
Many Houses
T a l< £ * liv ac n tage of Depression to

!nv3hj5£*ia

Special to P lain D ealer from F in a n c ia l Age.

The fo rm a l o p e n in g of th e fe d era l
re se rvfor
e FRASER
b a n k in g sy ste m a n d th e reDigitized
m m ptjcni o f u n re s tric te d tr a d in g on


th e c o tto n e x ch an g es in L iverpool,
N e\v Y ork a n d N ew O rlean s w ere th e
oversh ad o w in g e v e n ts of th e financial
•week. B oth w ere c o n trib u tin g fa c to rs
to fu r th e r im p ro v em en t in b u sin ess
a n d financial se n tim e n t, a n d b o th o f­
fe re d tan g ib le evidence of th e a ll
a ro u n d b e tte rm e n t in fu n d a m e n ta l
c onditions, c o n ce rn in g w hich so m uch
h a s been w ritte n in re c e n t w eeks.
In o th e r d irec tio n s d ev elo p m en ts
w ere a s s a tis fa c to ry a s one could
w ish, a ll th in g s considered. F o re ig n
new s, w h e th e r r e la tin g to th e m ili­
ta r y o r to the. fin an cial s itu a tio n , w as
n o t a d v e rse to o p tim istic c alcu la tio n s,
a lth o u g h n o th in g tra n s p ire d to affect
th e p re v ailin g view t h a t th e w a r will
be one o f long d u ra tio n , e n d in g w ith
th e com plete e x h a u s tio u o f th e bel­
lig e re n t n a tio n s.
T h e foreign e x ch a n g e m a rk e t, a l­
th o u g h som ew hat s te a d ie r th a n last
w eek, g e n era lly ru le d in th is c o u n try ’s
fa v o r, a n d f u r th e r in d ic a tio n s w ere

afforded t h a t in th e n o t d is ta n t fu ­
tu re a h u g e c re d it b a la n c e will be
s u b s titu te d f o r .t h r
lu n try ’s p re sen t
1
ccount. th a t
d e b it b a la n ce on t<
w ill e v e n tu a lly dir*
ip flow of gold
to th ese shores.
T he sig n s o f r.:J
iry e ase w ere
fu r th e r increased.
lo r th e first
tim e since th e w a r hpg-an it w as pos­
sible to borrow u n lim ite d a m o u n ts of
call m oney in th e N ew Y ork m a rk e t
on good ra ilro a d c o lla te ral. T he se ­
c u rity m a rk e ts , such a s th e y wore,
a lso contin u ed to reflect th e m o re con­
fident se n tim e n t w hich h a s gro%vn up
In th e financial co m m u n ity .
E v ery w h e re i t is b e in g ta k e n fo r
g ra n te d th a t th e decided b e tte rm e n t
now m a n ife stin g its e lf in th e financial
situ a tio n w ill, in due course, ex ten d
to o th e r d e p a rtm e n ts of b u sin e ss e n ­
deavor. In view of all th is it is n o t
su rp risin g t h a t foreign confidence in
th e A m erican b u sin e ss f u tu re h a s to
th a t e x te n t re -e sta b lish e d its e lf th a t
foreign b a n k e rs a rc now m o re e ag e r
to lend'T noney to th e A m e ric an m a r­
k e t th a n th e y w ere a n x io u s som e
w eeks ago to w ith d ra w it th ere fro m .
T h e reopening of th e c o tto n e x ­
ch an g e s a f te r a su spension o f th re e
a n d o n e -h a lf m o n th s w a s q u iet a n d
orderly, a n d offered no evidence of
th e b re a k e rs w h ic h m a n y feared
m ig h t a p p e a r. T h e o p en in g prioes on
th e N ew Y ork m a rk e t h a d been p ra c ­
tic a lly fixed b efo re h a n d to p ro te c t
d e a le rs a g a in s t a n y su d d e n a n d d r a s ­
tic decline, a n d a lth o u g h th e re w a s a
re a c tio n la te r, the. g e n e ra l c h a r a c te r
of th e m a rk e t w a s sa tis fa c to ry .
T he re su m p tio n of b u sin e ss in c o t­
ton w as n a tu r a lly re g ard e d a s a hope­
fu l a u g u r y of a n e a rly re o p en in g of
th e N ew Y ork sto ck ex ch a n g e. A
stili m ore fa v o ra b le a u g u ry , how ever,
w a s fu rn ish e d b y th e re c e n t h eav y
b u y in g of bon d s a n d IhigH g ra d e n o tes
w hich are. bein^i tak tin toy in v e sto rs in
larg e volum e a n d a t prices v e ry close
lo th e .oafiVg level of J u ly 30.
E v id to tly • liia n y fin an cial in s titu ­
tions a re ta k in g a d v a n ta g e of th e
p re sen t dep ressio n to in v e s t su rp lu s
’u n d s in h igh g ra d e se c u rities, for
several in v e s tm e n t h o u se s w hich a re
m ow n to h a n d le c o n sid era b le b u si­
ness for c o u n try b a n k s h a v e la te ly
oeen receiv in g good sized o rd e rs for
th e b e st se c u rities. T hese d evelop­
m en ts em phasize, o f course, th e
n ecessity of a n e a rly r e tu r n to public
tra d in g in bonds, a t le a st, a n d of
fu rth e r ste p s to p u t th e m a rk e t in
listed sto ck s on a n a tu r a l basis.

STA TU S OF S T A T E BANKS
W ORRIES F E D E R A L BOARD
W A SH IN G T O N , N ovem ber 24.—A d ­
m ission of s ta te b an k a n d tr u s t com ­
p anies to th e federal re serv e sy stem s
h a s proved a difficult problem fo r th e
i fed eral
re serv e board. T h e bo ard
probably will decide n o t to m ak e finai
re g u la tio n s to govern such a d m is­
sions u n til it h a s a n o p p o rtu n ity to
discuss th e m a tte r w ith r e p re s e n ta ­
tiv e s of such in stitu tio n s . A pplica­
tions of m ore th a n 100 s ta te ban k s
a n d tr u s t com panies a lre a d y a re on
file w ith th e board.
Difficulty also h a s been en co u n tered
by the b oard in a tte m p tin g to define
how fa r a s ta te b a n k c a n go in Iqartf
on real e sta te .
•
h
•
R e p o rts to th e board show a c o n ­
s ta n t pick in g up in re d isco u n ts, N ew
Y ork y e ste rd a y re d is c o u n tin g ab o u t
J3,000,000 w o rth of co m m ercial paper,
C hicago o v e r a m illion d o lla rs a n d St,
Louis a b o u t th e sa m e a m o u n t.

CITYS HEW BANK
OPENS IIS DOORS
McAdoo Announces Opening
of Federal Reserve Bank
System Nov. 16.

U. S. Regional Institution is
Settled in Preliminary
Quarters.

Secretary Says Money
Aid Cotton Conditions
in South.

No Business Being Done, but
S taff of Four is
Working.

91EV8.

BY PLAIN D EA LER’S LEAPED \V
W A S H I N G T O N , O c t. 2 5 .— A flo o d
o f g o ld w ill p o u r o v e r t h e c o u n t r y
w ith in th e n e x t th re e w e ek s.
S e c r e ta r y M cA doo a n n o u n c e d t o ­
n ig h t th e g ig a n tic fe d e ra l re s e rv e
b a n k s y s t e m w o u ld o p e n N o v . 10.
W ith t h e tw e lv e b a n k s th r o w n o p e n
m o r e t h a n $ 4 0 0 ,0 0 0 ,0 0 0 . t h e s e c r e t a r y
s a y s , w ill b e r e le a s e d f r o m t h e m i n t s
a n d m a d e a v a i l a b l e t o th o c o u n t r y s ^
b an k ers.
T h is , c o m in g o n to p o f t h e c o n ­
s u m m a tio n o f th e sch e m e w o rk e d o u t
h e r e d u r i n g t h e l a s t w e e k f o r th e
S i:!0 .0 0 0 ,0 0 0 c o tto n p o o l, w ill p u t o n
c a ll m o r e t h a n $ 5 0 0 ,0 0 0 ,0 0 0 t ie d u p
in g o v e r n m e n t o r p r i v a t e v a u l t s .
T h e o p e n in g ' o f t h e r e s e r v e b a n k s ,
t h e s e c r e t a r v o f t h e t r e a s u r y p o in ts
o u t, s h o u ld a id t h e m o v e t o r e lie v e
th e t i g h t e n e d c o tto n s i t u a t i o n in t h e
s o u th . Til i t s l a r g e r a s p e c t , it is c a l ­
c u l a t e d h e r e , i t w ill g o a lo n g w a y
t o w a r d a i d i n g th e p la n o f g o v e r n ­
m e n t b a n k i n g in t h e i n t e r n a t i o n a l e x ­
c h a n g e f o r w h ic h S ir G e o rg e P a is h ,
th e E n g lis h r e p re s e n ta tiv e o f th e e x ­
c h e q u e r . a n d t h e A m e r ic a n ^ a n k e r s
h a v e b e e n w o r k in g .
In h is s t a t e m e n t M r. M c A d o o s a y s :
“ U n d e r th e p re s e n t s y s te m th e s e c ­
r e t a r y o f th e t r e a s u r y c a n n o t w ith
p r u d e n c e s c a t t e r t h e ‘g e n e r a l f u n d
o f th e t r e a s u r y a m o n g t h e g r e a t n u m ­
b e r o f w id e ly s e p a r a t e d
n a tio n a l
b a n k s t h r o u g h o u t t h e c o u n tr y .
Up
to t h e p r e s e n t tim e I h a v e g o n e a s
f a r in t h a t d ir e c tio n a s I h a v e f e l t
i t w a s w is e to go. b u t w i t h t h e l a r g e r
p o w e rs c o n fe rre d b y th e fe d e ra l r e ­
s e r v e a c t a n d t h e u s e w h ic h I m a y
h e a b le to m a k e o f th e f e d e r a l r e ­
s e r v e b a n k s a s fis c a l a g e n t s o f t h e
g o v e r n m e n t it w ill b e p r u d e n t a n d
w is e to d e p o s it a l a r g e a m o u n t o f
•th e g e n e r a l f u n d
in t h e t r e a s u r y
o f th e f e d e r a l b a n .
“ A s so o n , th e re ff
a s , tlie f e d e r a l
re se rv e b a n k s a re
i 1 w il l t r a n s f e r to t h e m a s la rg e .
.o u n ts o f g o v ­
e r n m e n t f u n d s a s p o s t 'b l e .
T h i s in
t u r n w ill e n a b l e t h e m t o e x t e n d l a r g e
c r e d i t s to n a t i o n a l b a n k s -a n d s t a t e
b a n k s w h ic h m a y b e c o m e m e m b e r s oi
th e
f e d e r a l r e s e r v e s y s t e m , w h ic h
th e y in t u r n m a y e x t e n d t o th e ii
c u s to m e r s .”




C le v e la n d 's re g io n a l b a n k is a re ­
a lity .
,
In a littl e ro o m o n th e fir s t flo o r of
th e W illia m s o n b u ild in g s its H o ra c e
D a v is o f P i t t s b u r g , s e c r e ta r y to D . C.
W ills , c h a i r m a n o f d ir e c to r s . M r. D a v is
is y o u n g , p le a s a n t a n d b u s y w ith v is it­
o rs . H e a n d th e y o u n g w o m a n s te n o g ­
r a p h e r m i k e u p th e s ta f f n o w in th e
q u a r te r s . E . R . F a n c h e r , g o v e rn o r, a n d
M r. W ills a r e d e v o tin g p r a c tic a ll y a ll
th e ir tim e to th e in s titu tio n a n d so o n
w ill h a v e q u a r t e r s in th e little oiflce. On
th e g la s s p a r titio n o f th e h e a d q u a r t e r s
s ta n d s th e le g e n d " F e d e r a l R e s e rv e
B a n k o f C le v e la n d .”
B e n ja m in S tr o n g , jr .. g o v e rn o r o f th e
F e d e r a l R e s e rv e B a n k of N ew Y olk,
w ill re c e iv e a n a n n u a l s a la r y of $30,000
it w a s le a rn e d y e s te r d a y . P ie r r e J a y .
c h a i r m a n of th e b o a rd , w ill re c e iv e a p ­
p r o x im a te ly $10,000.
I*i a n o fficial s t a t e m e n t S e c r e ta r y M c­
A doo. w h o n a m e d th e d a te f o r th e b e ­
g in n in g o f b u s in e s s b y th e r e s e r v e
b a n k s u n d e r a u th o r ity v e s te d in h im
b y th e c u r r e n c y a c t, s a id h e h a d d e ­
c id e d u p o n N o v . 16, fo llo w in g a c o n f e r ­
e n c e w ith th e r e s e r v e b o a rd a n d b e ­
c a u s e o f th e e m e rg e n c y s itu a tio n in th e
s o u th , b e lie v in g t h a t th e b a n k s w ill be j
of a id to t h a t s e c tio n a n d b e n e fit o th e r i
p a r t s o f th e c o u n tr y . T h e d ir e c to r s a n d
g o v e r n o r s of th e tw e lv e r e s e r v e b a n k s ,
a t a m e e tin g in W a s h in g to n .re c e n tly ,
v o te d a g a i n s t o p e n in g on N o v 10 a n d
e x p re s s e d th e ir p r e fe re n c e of N o v . 30.
T h e f e d e r a l r e s e r v e b o a r d y e s te r d a y
a s k e d th e bo n d ii
c o m p a n ie s lis te d w ith
th e t r e a s u r y d e p . tm e n t to f u r n is h r a te s
fo r b o n d s fo r p rtlc e rs a n d e m p lo y e s of
th e tw e lv e f e d e r a l r e s e r v e b a n k s . T h e
o fficers to b e b o n d e d w ill be th e g o v ­
e r n o r o f th e b a n k s a n d h is s ta f f, th e
fe d e ra l r e s e r v e a g e n t a n d h is s ta f f a n d
th e d e p u ty fe d e ra l r e s e r v e a g e n t. T h e
b o a rd e s ti m a te s t h a t th e n u m b e r o f e m ­
p lo y e s o f e a c h b a n k w ill b e fr o m 100
to 500.
I

COTTON PLAN LAUNCHED
O EVSU K S-flH ilSI s m a
Federal Board Tentatively
Approves Loan Scheme.
m - 2 , 1814

BY PL A IN DL-TALEirs T e ASVD W IR E.
W A S H IN G T O N , O c t. 24.— A v ita l s te p
to w a r d s e a s in g u p th e c o tto n s itu a tio n
w a s ta k e n to d a y b y the f e d e r a l re s e r v e
b o a rd w h e n it a n n o u n c e d its te n ta tiv e
a p p ro v a l o f a $135,000,000 c o tto n pool
d e v e lo p e d fr o m th o p la n o r ig in a lly p ro ­
p o sed b y F e s tu s
W a d e , S t. L o u is
b a n k e r.
Secretary o f the T r e a s u r y M cA doo in
a s t a t e m e n t t o n ig h t g iv e s th e e s s e n tia l
f e a tu r e s o f the p la n as:

]. New York bankers will subscribe
$50 ,<>00.000 on condition th a t an addi­
tional $50,000,000 be subscribed by cities
in noncotton producting: states.
, 2. The $35,000,000 rem aining will be
provided by the cotton states.
3.
Money will be loaned on cotton to
I borrow ers a t interest not exceeding 0
per cent- for one year w ith privilege of
tran ew al fo r six months. A. guarantee

fu n d to be m a d e u p by tlTe b o rro w e rs
s h a ll p ro v id e a g a i n s t lo s s to le n d e rs.
O p e ra tio n ol' th e pool w ill be u n d e r the
s u p e r v is io n of th e fe d e ra l r e s e r v e b o a rd
th r o u g h a c o m m itte e w h ic h it w ifi a p ­
p o in t.
In th e c o tto n pool c o n fe re n c e w ere,
b e s id e s S e c r e ta r y M cA doo. A lb e r t H .
\ \ lggin, J . s . A le x a n d e r. A. J . H e m p ­
h ill a n d W illia m W o o d w a rd o f N ew
Y o rk , a n d t e s tu s J . W ad e.
I t is p ro v id e d t h a t a ll s e r v ic e s r e n ­
d e re d in t h*‘ a d m in is tr a tio n o f th e fu n d
b y v o lu n ta r> c o m m itte e s a n d b a n k e r s
s h a ll be w ith o u t c h a rg e , b u t th a t theb o rr o w e rs s h a ll p a y
p e r c e n t, on th e
a m o u n t 1 »anecl to th e m in to a fu n d to
be ‘/a'li.-d th e g u a r a n te e fu n d to be used
ex- iusiv- iy fo r p a y in g th o n e c e s s a ry lixp e n s - s of H .lm ln istra tio n w h ic h it is estii 1 1 - 7 w ill n o t e x ce e d o n e -e ig h th of
1 p-*r <ent. a n d th e r e m a in d e r to be
us>-a to m a k e g o o d a n y lo sse s w hich
m a y be in c u rre d on lo an * th a t m a y be
m a d u on c o tto n a t th e s tip u la te d r a te
o f »: c e n ts a p o und.

'tR te

itan li E n t r y

P ro b le m .

T h e q u e s ti o n of s t a t e b a n k e n t r y
n t o t h e f e d e r a l r e s e r v e s y s te m c o n ln u e s a le a d in g s u b je c t o f in te r e s t,
’h e s t a t e b a n k , b y a n d la r g e , lo a n s o n
e< u n t i e s a n d o n r e a l e s t a t e to th e e x lu s io n o f c o m m e r c ia l p a p e r .
I t s <h i e f i n c e n t i v e s to jo in the syse n i, t h e r e f o r e , a r e t h e p r e s tig e a n d the
> e n e fits to a c c r u e fr o m c o n c e n tr a te d
n o b ile r e s e r v e s . B u t a s a s s e t s of s t a t e
^ a n k s a r e d e v o te d to m a t e r i a l r o t
s u b j e c t to d i s c o u n t b y r e g io n a l banks,
? v e n t h e b e n e f it o f th e r e s e r v e chests
ire n o t
w h o lly
a v a i la b le to them.
C o u n try s t a t e b a n k s w o u ld fin d some
:o m fo rt in th e c a t tle a n d a g ric u ltu ra l
a n d prffrer p r o v is io n o f t h e a c t . but
th e g r e a t m a s s o f s ta te in s titu tio n s
i r e n o t d i r e c t l y c o n c e r n e d w ith th is .
I t is s u g g e s t e d t h a t r e a l estate
lo a n s b e m a d e liq u id in th e sense th a t
t h e y b e g r a n t e d f o r s u c h periods as
to m a t u r e a t i n t e r v a l s o f s ix months,
* h u s o f f e r in g c o n s t a n t d is c o u n t raat e r i a l . B u t t h i s w o u ld b e w h o lly sub- ,
v e r s iv e o f t h e r e a l e s t a t e lo a n idea.
M o st r e a l t y lo a n s a r e m a d e not
w ith t h e i n t e n t i o n o f h a v i n g th e m
? a u l o ff a t s t a t e d i n t e r v a l s b u t are
lo o k e d u p o n b y t h e b a j i k s a s c o n t i n ­
u in g i n v e s t m e n t s , t o r u n a s long a s
th e • b o r r o w e r a n d t h e l e n d e r are s a t ­
is fie d w i t h t h e te r m s .
T h e bulk of
b a n k l o a n s t h u s m a d e in Cleveland,
fo r i n s t a n c e , h a v e a tw e lv e - m o n th
m a t u r i t y , a f t e r w h ic h th e y c a n be t e r ­
m i n a t e d at. w ill b y e i t h e r p a r t y ; it is
u s u a l l y t r u e , a ls o , t h a t t h e borrow er
c a n p a y o ff b e f o r e t h e f ir s t y e a r ends,
b u t t h a t h a s n o r e l a t i o n t o th e p re s­
e n t d i s c u s s io n .
T h e point is th a t
b a n k s m a k e r e a l e s t a t e l o a n s a s m ore
o r le s s p e r m a n e n t in v e s t m e n t s , a n d
th e s u g g e s t i o n o f ro ta tin g m a tu ritie s
to f u r n i s h o p p o r t u n i t y f o r ta k in g a d ­
v a n t a g e o f d i s c o u n t privileges would
, w o r k a r e v o l u t i o n repulsive to m any
s t a t e b a n k e r s . O n e w ay o u t o f course
| is f o r s t a t e b a n k s t o go in to th e m eri c h a n t p a p e r b u sin ess. A s th e ir a d ­
m is s i o n in t o th e sy stem is su b je ct to
r e g u l a t i o n s t o b e m ade by th e federal
re serv e b o a r d , th e problem w ill afford

^

w

n

iff* .™ 1 t .

R e le a s in g M oney t o r Loan*.

bU :

A
j M -o-on f o r R , „ . ,

hy th e niearlng house banks in New
L
show ing a n $8,500,000 surplus
i eservo a fte r an eleven weeks' deficit.
. * re su lt of the greater leeway
g ra n te d by the New York stock e x ­
change au th o ritie s to dealers in
J ™ . * considerable volume of busiess in investm ent securities is be?sact€d’ and lt ls
th a t
th rill
** un<*er the restrictions im ­
posed upon N ew York houses a re
Say averag,ng about $1*500,000 a

<i<S*eVa*jnc^ national b an k ers have
a iscufaed re tirin g em ergency c u r­
rency.
but
will
re tire
no
t o n ^ n r r ^
3
1 -2
(a n d It is ?rue th n t l a S ^ ‘erday,
round am ount a t present, 'ln e y will
houses can borrow
know n
" H it a t Jeaat u n til a fte r the regional
the e a s t a" m S £ n t £ , b e tte r te rra s to
D anju ^b e g i n o perating Monday, "Nov.
hom e. T he b i t
a n th ey can ftt
1 , ** *s not c ertain th a t the new
N
ew Y ork c le f r tn ^ 2s reserve o f th e
re ae ral reserve notes will be ready
a t the -jitart. S'lven a n Im petus f o r ^ h bai>ks h a s
th ere t h a t h a s J » CJleap m ° M y
the am ount of reserve resm aller cities
Tho J5L ’ spread to
2,Jfi .1
banks will a u to ­
m atically drop when they tu rn over
When th e n e w 'b a lk a c c e n t Int
A fe atu re of th e investm ent m arr . f i a? jn stallm e n t of reserve to the
#a s lt is’ is the r ^ th er heavy
egional banks, it is understood th a t
demand for sh o rt term notes, espe­
th e reserve tra n s fe r will be m ade
cially fo r those issued by m unicipala v ailab le a s excess c a ^ ‘ ®r, ' 01]
even m ore sm oothly th an a t first o u t­ lUtfS. The m ark e t shows good in­
course w as not the caseW it*.
lined, and th a t m em ber b an k s need
quiry', also, for really high grade
c
ity a n d c o u n try b a n k s to w h / 680^ 6
pay only h a lf of th eir first In stallm ent
bends ru n n in g fo r periods ranging
in gold or gold certificates, and the re st
•miMlble reserve r e d u c tio n s '" p e rkim
V
™
*
to
fi*ty
years
a
n
d
a
v
a
il­
only p a rtia l recom pense "in b ro u ^ h t
In m erchant pap er of such a m o u n t
able *or the em ploym ent of tru s t
cash because of th e r e s e r v o
e x cess
th a t rediscounted. It w ill afford a
funds. T hough the volume of sales
Ing system . W hile C hirnZ ? f yrs“ n ldcred it In the regional b a n k equal to
is m uch below th a t ordinarily seen
sam e a s N ew York im S S
red th e
th e o th er h a lf of th e req u ired first
a t th is tim e of year, the to ta l de­
reserve.
m d cotton facto rs
<<I*a ra n tin e
m and is m uch in excess of w h a t it
1
g
a
in
st
th
e
g
re
a
te
s
t
e
a
w
u
,herfi
w
as
a
few
weeks
ago.
c o n tro lle r of th e c u rre n c y h a s
e stim a te d th a t th e lessening of re ­
>ondCTatingryk
th
e
a
^
S^
i™®n^
e
Pe­
s e rv e re q iilra n e n ts will se t free m ore
th a n J270.000.000 In gold and equlvances
' n t im m ediately, a n d th e se c re ta ry
«*---a
of th e U nited S ta te s tre a s u ry h a s a n ­
nounced th a t he will Im m ediately de­
BANK FIGURES MUSSED UP BY NEW RULE
posit in th e regional b anks a large
sum out of th e tre a s u ry ’s g en eral
fund.
I t th u s seem s cle ar th a t In the
issue,! »
J , g? , .,8C0te.r ed th a t e rro rs h a d been m ad e in th e form
th ird w eek of N ovem ber a t the la te st
th e business m an w ho w a n ts to b o r­
m,oooaooo.eek ag0 and that the tota! r— s h a d been o v « r-sta te d by
row a n d can m ake a sa tis fa c to ry
s ta te m e n t will be able to do so w ith ­
o u t exertion. I t Is well to rem em ber
th a t reserves o 7 b T n k ? d e p o s e d “
^ t h e " ^ n ^ n a f ?C* " hiCh
how ever, th a t th e regional b a n k s will
a g e n ts sh a ll be counted a s reserves onlv
r
k)
n o t hold th e ir v a u lts open for indis­
»bove those lim its suoh d e n o sif, “
UP ‘° C ertaln llm lts- ° v e r a n d
c rim in a te d istrib u tio n of funds.
th a t reserv
es aa w
eek ago w ere
re serv e s a t all. H en ce th e fact
reserv es
w eek
-o ta v n ti
n v
■n a
»*.
A Chicago s ta tistic ia n e stim a te s
$39,000,000. B ut to all in te n ts4 ua o« «v> e. »r-sta
te d by
th
e excess a#» m
o u n tin g ^
t h a t E urope will need a b o u t 7,500 000
n o t umml.. .
" .
an,, P u rp o ses th is is still re serv e , aa lth
lth oo uu g h
bush els o f w h e at a w eek from o u t­
side from now on.
In d ia a n d
a n d ™ % r o m nfeservlh t a ^ as ^ fo n , f ° rh th e $4 S 8 -’429 d e c re a s e in cash
A u s tra lia a re n o t im p o rta n t fa cto rs
.an d c le a rin g
- d e m e n t o f th e Clevein w h eat e x p o rtin g th is year, a n d th e
colum
n. I t m e a n s um
only
A rg e n tin a crop w ill n o t m ove for tw o
th a t th is a m o u ftl m ore o r
«„0 i
,
r ------y
.
• m ore o r less, of re a l re serv e s m ay not be co u n te d such
m o n th s yet. On th e U nited S ta te s
a n d C a n a d a will con tin u e to fall the
i
sim
n
lv
'
--t,
Mow
a
n
d
h
e
r
e
a
f
te
r
a
Au
of
™
»
=
v
r
blind item will a p p e a r m th e local a n d \'e<v '
dem and. So th a t prices, w hich have
ob scu re th e a ctu al m ovem ent o f reserves.
' .°,^,: !>a n k s ta te m e n ts tc
been h ig h er th a n in a n y O ctober in
tw e n ty years, will con tin u e vigorous.
re serv e s h a v e decrea^e'd o n ly ^ b o u r$ 1 ° B 0 0 000ka s ^ te m e n t U ‘S f° Und th a l
T here is a re p o rt th a t certain
rected. $89,000,000 excluded figures
, c o m p a red w ith th e corA m erican tra c tio n
in te re sts have
th
e „ th e b an k s, in th e p £ t
^
° n ‘W e v i d e n t
a g e n ts a b ro ad b u y in g up th e ir sh a res
. in cj. i_»’h lc h is n o t a c c o u n t e d ’to 'r l^ th e ^ d u o U r a .H ^ '6 r;l a d e a h u ff e *r a ir
to p re v e n t selling w hen the exchange
reopens. T his is th e m ost Ingenious
th e
m ethod so f a r devised fo r a n tic ip a tsta-^
ng liquidation.
.* /
th e otily t r u e c r i t e r
T he Y oungstow n S heet & T ube Co
e ts n o th in g like a little depression
lftte h a s b e e n t h e c o u r sl e° no fh lea n vd i nc g rh;“
a t el s a s to th e n io n e ta rj
. . W IJ
ita n d in th e w a y o f p a y in g bonuses to
...
■ d e c i d e d d o w n w a r d t e n d e n c y , r e a c h i n - T h a n k fu lly , thes<
im ployes. T he profit sh a rin g d is tri­
m in im u ra s arounc
4 f- tr.M ™ 1- t0- T;-C h,’*Ce .c a ” a m l ® h o rt t i m e lo a n s
bution now being m ade for the \ e a r
U n til th e re is m ore lig h t shed nr.™
^ ^ * *s.'.
snded J\ily 1, is $200,000. I t would
b an k repr,, ,.f a re b u ilt u p th ese days th e
m P thods «>y w hicJ
la v e been $400,000 u n d e r o th e r con
figures ar^’ J^eve
iltlo n s.
w holly6
holly f r o m 'th e 'f r e e r t Wel1 t0 rorf?et th<
- its im p re ssio nis
s w
w ith wj-l ,»jyhe le n d e rs a r e o p e ra tin g
t ,___ freedom , o r la c k o f it
o p e ratin g .
T h ere w as, h o w ev er, fu rth e r
evldenc<
,
ise
m
e
n
t
in
th
e
c
irc
u
la
tio n in th e X ew Y o rk f l ™
I h i s s h j.'t
d ecrease of $14,335,000, refleotin«r
,
--------U r e m e n f /;,e m e r g e n c y c u rre n c v .
° 8:0011 P ro g re ss in th e re *«*•«*«** «•»* C irc u la tio n .
FEDERAL BANKS NOT A FACTOR YET
-nenf-i81^ 1' *vldence of the fu n d a T h e fe d e ra l b a n k s h a v e a s y e t co n trib n r
T on, In
" eSS 01 b anking posi’kxatlo n of th e c re d it s tra in . R e se rv e deposits o f
r#*
'sheri
couidinbeadvices
fu rn snea th a n ^th°a?t Untry
contained
ev
u
ie
ir
s
a
f
e
l
S
^
-------------—
.........n
a
z
a
Jj£
»
']
•
i / r ° m v a rlo u s centers du rin g
r^ trf^ o -10. thK erreCt th a t ban k s
» ii
8 clearin g house certificates
i s w ell a s em ergency currency. B oth
■>i th ese expedients h a v e served th e ir
p urpose a d m irab ly , b u t it is likely
“ *e f ‘ong tim e before any su b re d u ctio " a ln the a m o u n ts
o u ts ta n d in g can be effected.
ch an c es a r e th a t the r e tir e ­
m en t o f b a n k n o tes will soon reach
larg e p ro p o rtio n s. A nyhow , th ey will
be c o n v erted in to th e new fed eral re?.o tes a s 80011 a s th e ra p iin a l
yjjiifii18
com e
in to
p ra c tic a l
o p e ratio n . "\Vhen t h a t tim e a rriv e s
th e c o u n try w ill h av e a c u rre n c y th a t
W J r ®s P °n<* fo th e needs o f business
find th e re will no lo n g er be a n y use
for th e inflexible so rt w hose com plete
elim ination h a s fo r y e a rs been th e
•hief a im of m o n e ta ry re fo rm e rs.
P e rh a p s th e m o st im p o rta n t to ken
»f m o n e ta ry im p ro v em en t th a t re e
n
t w aeks
h a v e fu rn ish e d w as th e

a v o ra b le s ta te m e n t issued S a tu rd a y



s = « « ~ K v s s r s v r .
th e re

a ^ e n e d T o ^ u Z T i t th e

o f t h ? f 6 Set fre «-°

SimPly ° P6n a Way f ° r bC" iB erent

t l m e ' ^ e i n g ' u ^ p " u n u se d ^ r edU "tstru m r-n t6'^ofPg re " tS of re d ia c o u n t tllis
as D ossihif ,
P roposed to confine th e a ,n
P otency. F o r th e
<'- r
in trad*
i
J*08 t}lis c o u n try ’s r r o v i n v
/
3 e x Pe ° te d , w ill
«nen fu ilv
Ka ste rn fe d e ra l b a n k s w ill e Po an ce a s a w o rld p o w er
in v ogue
W ith th «* o p p o rtu n itlI” ' r i P ,,them S eh‘e s - * t h e x p e rt
to th e m s e it
foreign b a n k s h ave m ad e th- « versed in th e m e th o d s
i» te i■ l o T r t : ^ t G ' h p ir ™ “ n t S
T b e^ C ^ e l a n H I ™ ? ^
b a n kTs . in t h e s e- operatio n s. P r o b a b l y p a rtic ip a te w ith th e E a s t e r n " 11 ° th 6 r
ai

rHiS:°u,n U n c tio n s

r e lie v e ^ h ^ n a tf o n tl
yeas te r d T v da0mrSUc
! a m o u n tin g Z ' Z T &

w
f“ d ^ - l 'i n s m u M o n "

^
Z ?

S^Th

^
^ s o m ^ V s t e m of
^
£ £ £ £

W ill C le a r C h e c k s .

Among: th e o th er function# of th e
fed eral reserv e bank a re th e clearin g
of checks fo r m em bers, b u y in g a n d
selling of foreign exchange, receiv in g
of go v ern m en t deposits a n d a c tin g a s
th e fiscal ag en t of th e governm ent,
etc. T he fed eral re serv e b a n k s m ay
open b ran ch es w ithin th e ir own d is­
tric t. E ac h branch m u st be o perated
by a board of directo rs possessed of
th e sam e Qualifications a s d irec to rs of
th e p a re n t bank. T hese pow ers wfll
be g ra d u a lly adopted.
An official of the T re a su ry D e p a rt­
m en t a t W ash in g to n re ce n tly o u t­
lined th e m ethod of doing business
u n d e r th e new system , from w hich
the follow ing su m m a ry m ay be of
in te re s t:
A m e rc h a n t p u rc h ase s a bill of

a ? m

m

a m

m

s

bank, w hich will honor th is cla ss of
com m ercial pap er a n d a d v an c e tho
money: T he bank will not be com ­
pelled to c u rta il such a n in v estm en t,
because w hen the occasion d em ands
th e p a p e r can be co n v erted into cash
by red isco u n t a t th e reserve bank.
R ealizin g th a t it m ay be desirable
to reco n v ert its com m ercial pap er
Into cash , the. m em ber bank h a s a n
added incentive in m ak in g only such
loans a s a re co n serv ativ e and sound.
On the o th e r hand, th e re serv e b a n k
tias each m em ber b an k a s a custom er,
in d it is th ere fo re in terested In the
:ran sae tio n s o f each m em ber b an k
in d in th e class of p a p er th a t each
iccepts. A reserv e b a n k in tu rn ,
n a y desire to call upon th e g o v e rn - 1
m ent, w hen occasion arises, fo r a n
issue of federal re serv e notes. Com ­
m ercial pap er held by the re serv e
b a n k m u st be placed wit^i th e gov­
e rn m e n t in order to stjcore such a n
issue.
. , A” | " ,
S h o rta g e U nlikely.
T he occasion can h a rd ly a rise w hen
a m em ber bank calls upon a re s e rv e '
b an k for cash, offering com m ercial I
p a p e r for rediscount, only to find n o '
m oney in th e reserv e b a n k to accom ­
m o d ate th e call. A reserv e b a n k is
not likely ever to ru n o u t o f funds,
a s se t fo rth in th e a c t:
F ir s t—T h e reserv e b a n k s w ill not
be su b je cted to th e sam e k in d of d e ­
m an d s a s th e m em ber b an k s. A re ­
serve b a n k will hold its resources
for th e benefit of its m em b e r banks.
Second—W h en ev er th e re so u rce s of
a re serv e bank becom e insufficient th e
fed eral re serv e b o a rd m ay p e rm it or
re q u ire o th e r re se rv e b a n k s to fu r ­
n ish th e n e ce ssa ry fu n d s b y re d is­
c o u n tin g fo r th e needy re se rv e bank.
T h ird —A re se rv e b a n k m a y re so rt
to th e issu a n c e of fe d era l re serv e
notes by th e g o v ern m en t. Such notes,
If fo und n e ce ssa ry to issu e th em ,
will be secu red by p a p e r eligible for
re d isco u n t held by th e re serv e bank.
In such a n In sta n c e th e y w ill be r e ­
so rtin g to th e u se of th e c re d it of
th e U n ited S ta te s g o v ern m en t.
R e d u n d an c y of m oney is p ra c tic a lly
im possible u n d e r th e new law . In th e
first place, a f te r tw o y e a rs n a tio n a l
b a n k s m ay r e tire th e ir c irc u la tio n
a n d sell tlie ir U n ite d S ta te s bonds
to th e re se rv e b an k s. R e se rv e b a n k s
m ay issu e n o tes on such b o n d s th en ,
b u t t h a t m oney can g e t in c irc u la tio n
only w h en tu rn e d o v e r to m em b e r
b a n k s fo r co m m ercial p a p e r offered
for red isco u n t. A t th e sa m e tim e th e
n a tio n a l b a n k c irc u la tio n lia s been
re tire d . Also, h e re a fte r new n a tio n a l
b a n k s w ill n o t be re q u ire d to p u r ­
ch ase g o v e rn m e n t bonds a n d ta k e o u t
c irc u la tio n . T h is w ill h a lt th e c o n ­
s t a n t In c re a se in th e n a tio n a l b a n k
i circu latio n .




*1

mi

LIFE IN BUSINESS

Federal Reserve Banks and
Cotton Trading Aid the .
Financial World.

&E.AU

t u iu m u

a n a a t p noM v e ry

i in

to th e closing level of J u ly 30.
E v id e n tly m an y fin an c ia l In s titu ­
tions a re ta k in g a d v a n ta g e o f tho
present degression to in v e s t surpluu
funds in high g ra d e se c u rities, for
several in v e stm e n t h o u ses W hich are
known to h a n d le c o n sid erab le b u si­
ness for c o u n try b a n k s h a v e lateljbeen receiving good sized o rd e rs for
l ho b e st se c u rities. T hese develop­
m en ts em phasize, o f course, the
necessity of a n e a rly r e tu r n to public
tra d in g in bonds, a t le a st, a n d of
fu rth e r ste p s to p u t th e m a rk e t in
listed sto ck s on a n a tu r a l b asis.

Many Houses T ake Advan­
tage of Depression to
MOV
- s !3 &
Special to P lain D ealer from F inancial Age.

T he fo rm al o p e n in g ’ o f th o federal
re serv e b a n k in g sy ste m a n d th e r e ­
su m p tio n o f u n re s tric te d tr a d in g on
th e c o tto n exL’llf lll^ a 'T u L iverpool,
N ew Y ork a n d N e w O rle an s w e re th e
oversh ad o w in g e v e n ts o f th e financial
w eek. R oth w ere con trib u tin g - fa c to rs
to f u r th e r im p ro v e m e n t in b u sin ess
and fin an c ia l se n tim e n tJ a n d b o th o f­
fered ta n g ib le evid en ae o f th e all
a ro u n d b e tte rm e n t in fu n d a m e n ta l
conditions, c o n c e rn in g w hich so m uch
has been w ritte n in re c e n t w eeks.
In o th e r d ire c tio n s dev elo p m en ts
w ere a s s a tis fa c to r y a s one could
w ish, a ll th in g s c o n sid ered . F o reig n
new s, w h e th e r re la tin g to th e m ili­
ta r y o r to th e fin an cial s itu a tio n , w a s
not a d v e rs e to o p tim istic c alcu la tio n s,
a lth o u g h n o th in g tr a n s p ir e d to affect
th e p re v a ilin g view t h a t th e w a r w ill
lie one o f long d u ra tio n , e n d in g w ith
the co m p lete e x h a u s tio n o f tl.e b e l­
lig e ren t n a tio n s.
T h e fo reig n e x c h a n g e m a r k e t, a l ­
th o u g h so m e w h a t s te a d ie r th a n la s t
w eek, g e n era lly ru le d In th is c o u n try ’s
favor, a n d f u r th e r in d ic a tio n s w ere
afforded t h a t in th e n o t d is ta n t f u ­
tu r e a h u g e c re d it b a la n c e w ill be
s u b s titu te d for th e c o u n try ’s p re se n t
d e b it b a la n c e on fo reig n a c c o u n t, t h a t
w ill e v e n tu a lly d ire c t th e flow o f gold
to th ese shores.
T h e sig n s of m o n e ta ry e a se w ere
fu rth e r in creased , a n d fo r th o first
tim e since th e w a r b e g an it w a s p o s­
sible to b o rro w u n lim ite d a m o u n ts of
call m oney in th e N ew Y o rk m a rk e t
on good ra ilro a d c o lla te ra l. T h e se ­
c u rity m a rk e ts , su c h a s th e y w ere,
also c o n tin u e d to reflect th e m one c o n ­
fident se n tim e n t w hich h a s gr</wn u p
in th e fin an cial c o m m u n ity .
E v e ry w h e re i t is b e in g ta k e n fo r
g ra n te d th a t th e decided b e tte rm e n t
now m a n ife s tin g its e lf in th e fin an c ia l
situ a tio n w ill, in d u e co u rse, e x te n d
to o th e r d e p a rtm e n ts of b u sin e ss e n ­
deavor. in view o f all th is it is not
su rp risin g t h a t fo reig n confidence in
th e A m e ric an b u sin e ss f u tu re h a s tc
t h a t e x te n t re -e sta b lish e d its e lf th a t
foreign b a n k e rs a re now m o re eagei
to lend m oney to th e A m e ric a n m a r ­
k e t th a n th e y w ere a n x io u s some
w eeks a g o to w ith d ra w it th e re fro m
T he re o p en in g o f th e c o tto n e x ­
ch an g e s a f te r a su sp en sio n o f thre<
and o n e -h a lf m o n th s w a s q u ie t am
orderly, a n d offered no evidence o
th e b re a k e rs w hich m a n y f c aret
m ig h t a p p e a r. T h e o p e n in g prio es 01
the N ew Y ork m a r k e t h a d been p ra c
tic a lly fixed b e fo re h a n d to protect
d e alers a g a in s t a n y su d d e n a n d d r a s ­
tic decline, a n d a lth o u g h th e re w a s e
re ac tio n la te r, th e g e n e ra l c h a ra c te i
of th e m a rk e t w a s s a tis fa c to ry .
T be re su m p tio n of b u sin e ss in c o t­
ton w a s n a tu r a lly re g a rd e d a s a h o p e­
ful a u g u r y o f a n e a rly re o p en in g of
the N ew Y ork sto c k ex ch a n g e. A
still m o re fa v o ra b le a u g u r y , how ever,

Mm f i n o m
Latest Issue Expected to
Reach Cleveland Shortly.
Slow ly b u t su re ly th e n ew paper
m oney Is com ing in to circu latio n , a l­
tho u g h none h a s been issued here. The
F e d e ra l R eserv e b a n k s of N ew York,
Chicago a n d M inneapolis a re p u ttin g
It o u t a n d a b o u t $1,-50,000 Is in c ir­
c ulation. T he n e w n o tes com e in Jo,
$ 1 0 , $ 2 0 , $50 a n d $100 denom inations
a n d a re Issued by th e governm ent
th ro u g h th e tw elv e fed eral je s f r v e
baw h e n th e C le^ iflV d & 4 k
to
red isco u n t, t h a t is to in v est In m er­
c h a n t p a p e r held by m em ber banks,
j th e fe d era l re serv e notes w ill come
!o u t in th is te rrito ry . A s th e re is m ore
I th a n $ 2 ,*>0 0 ,0 0 0 ,0 0 0 p a p er m oney in
! c irc u la tio n in th is c o u n try th e new
bills h a v e n o t m ad e them selves a p ­
p re ciab ly fe lt in th e general stock of
m oney.
T he new m oney can be detected a t
first sig h t, th o u g h it is n o t g re atly
d iffe re n t from th e p re sen t b a n k notes.
T he face of th e new bills h a s more
w h ite sp ace th a n th e old bills.
A
legend on th e back of th e -new c u r­
re n c y te lls t h a t i t is redeem able in
gold a t ♦he U n ited S ta te s tre a su ry , or
in gold o r o th e r law ful m oney a t the
re se rv e b a n k s. T he face of th e $5
n o tes b e a rs a p ictu re of L incoln and
tw o seals, th e old one of th e U nited
S ta te s tre a s u ry a n d th e new one of
th e fe d era l re serv e b a n k th ro u g h
w hich th e bill is issued.

BANK E X T ENDS F A C ILIT IE S
R e g i o n a l I n s t it u t io n to B r o a d e n
* ^
M e m b e rs * P r i v i l e g e s .

th a t th e F e d e ra l TTeseiwe
Cleveland w ill on Dec. 1 afford its
m ember banks facilities for tran sfer­
ring, by b an k d ra ft in fa v o r of m em ­
ber b a n k s in reserv e c ities in th is
d istric t, excess reserv es held in the
Cleveland b an k or fo r tran sferrin g :
funds by b a n k d ^ l t to th e C leveland
in stitu tio n . R e stHftQ ops w ill be such
a s to p re v e n t goM L V law ful money
from going outside tne d m r iq if la s r e ­
su lt of th e new fa c iliti« T 'T j n j r #
T he C leveland b an k s h o rtly ^ rflP be
know n as No. 1 m em ber of th e C leve­
land c l e a r i n g house, a n d w ill be a d ­
m itted to its facilities.

--- Q---

FIGHT ABANDON!
\im

FEDERAL BANK NAMES
LAW FIRM AS COUNSEL

Survey Committee of Cleve
land Foundation Opposes
Giving Up Classes.

Takes No. 1 in Local Clearing
House; New York Banker
Calls on Officials.

•

ays Associated Charitiei
Institution Should be

T h e su rv e y com m ittee of th e Cleve­
la n d F o u n d a tio n th is a fte rn o o n in a
c o n fere n ce -with th e c h a ritie s and
c o rre c tio n s a n d th e finance com m it­
te e s of th e il___ i m» il " ITT~TniMi«
nl 11 iii>iJj_ti hm i iTTTllii proposal to a b a n ­
d o n th e tr a in in g class fo r social
■workers c o n d u cted by th e A ssociated
C h a rities.
T h is s ta n d b y tlie su rv e y com m it­
te e is re g a rd e d a s im p o rta n t in view
o f th e decision sev eral w eeks a g o bv
t h e b o a rd o f tru s te e s o f W e ste rn R e­
se rv e u n iv e rs ity to e sta b lish a social
tr a in in g school in connection w ith
th e u n iv e rs ity .
“ W e do n o t th in k th e p lan s of the
u n iv e rs ity tr a in in g school a s outlined
w ould m a k e It bro ad enough to tak e
th e p lac e o f th e A ssociated C harities
tra in in g school,” said A llen T. B urns,
d ire c to r of th e su rv e y com m ittee.
" T h e A sso ciated C h a ritie s tra in in g
c la ss does e x tre m e ly p ra c tic a l work.
P o ssib ly th is c la ss m ig h t be a b a n ­
doned w hen so m e o th e r sim ila r u n ­
d e r ta k in g su c h a s th e u n iv e rs ity so­
c ia l tr a in in g schol a tta in s a suffi­
c ie n tly b ro a d scope.”
M r. B u m s sa id th e A ssociated
T ra in in g school h a s tra in e d sixty-six
v is ito rs w ith in Its ow n o rganization
a n d h a s s e n t tw e n ty -n in e to other
c h a rita b le o rg a n iz a tio n s. A m ong the
l a t t e r a r e W . H . W in a n s, c ity com­
m issio n er o f re se a rc h a n d publicity;
H ow ell W rig h t, s u p e rin te n d e n t of
C ity h o sp ita l; E u g en e F o s te r, a ssist­
a n t su p e rin te n d e n t of L ak e sid e hos­
p ita l; M iss K a th e rin e K e n n ed y , head
o f th e m o th e rs’ pension division of
th e Juvenile c o u rt, a n d M iss B erth a
M. S te v en s, o f th e v o c atio n al guid­
a n c e b u re a u o f th e S ta te -C ity F ree
E m p lo y m e n t d e p a rtm e n t.
M r. B u m s w ill tell council com m it­
te e s th e s u rv e y oom m ittee h a s m ade
in te n siv e s tu d ie s o f 774 c ases w here
re lie f w a s giv en b y six o rg a n iz atio n s.
H e w ill p re s e n t a tab le show ing th e
e x te n t of th is stu d y . I t will show
10 0 c ases fro m th e m o th e rs’ pension
div isio n o f th e ju v en ile c o u rt, 200
from t h e c ity o u td o o r re lief d e p a rt­
m en t. 1 01 from th e school b oard pen^ n d e p a rtm e n t, 200 from A ssociated
C h a ritie s, 100 fro m th e H e b rew R e lie f
A ssociation a n d s e v e n ty -th re e from
th e S a lv a tio n a rm y .
T h e su rv e y c o m m itte e a t th e m ee t­
ing th is r.fte rn o o n will p re s e n t a com preh.
the
veljfT’a g en c ie s in th e city, do1
a n d p riv a te .




The Federal Reservo Bank of Cleve­
land has been virtually adm itted to the
Cleveland Clearing- House Association,
although form al action will be delayed
until the local clearing house authori­
ties have been advised us to the form
of relationship moat to be desired. The
federal bank will be designated in the
clearing house with an honorary title
of either “special" or “associate” mem­
ber. It will have first place in the
clearing house as No, 1 Qjatoag J he mem­
bers.
t
; v A jy /M
Chairman P . C. W illy annouhced yes­
terday th a t the directors of the bank
had appointed the law firm of Sj^juirc,

^ niu3,Lyem

as fc,,p,,ral

Jt^TTTfutchins. Jr.. vice president of
tlie National Bank of Commerce, of
New York, was a visitor a t the Cleve­
land Federal Bank yesterday.
Mr. Hutchins would make no forecast
as to when it will be safe to face for­
eign liquidation and open the Eastern
m arkets, but he was enthusiastic over
the prospects for a steadily expanding
export trade which m ust ultim ately
place this country in a fundam entally
sound economic position among the n a­
tions of the world.
“The export situation is splendid,’*
said Mr. Hutchins. “ You have only to
reflect upon the extent of the orders
placed with Cleveland automobile m anifacturers and to a large extent paid
or.
“How much foreign liquidation Is
ihead no one can forecast.
Foreign
>eld American securities are not count­
ed in millions; the total is in the bil­
lions. How much selling will be in­
duced by the opening of the m arkets
no one can tell. All we know i3 th a t
when it was proposed last week to open
the bond m arket there was a surprising
outbreak of renewed selling."
S te rlin g is H ig h e r.
NEW YORK, November 24.—M ercantile pa­
per, b&i.t per cent. Sterling exchange strong;
sixty-day bills, $4.8650; for cables, $4,950; for
demand, $4.8965. B ar silver. 49%c.
E x p o rt* G ro w ing.
WASHINGTON, November -4.—Exports at
the ten principal ports which handle 80 per
cent of th a t business totaled $39.2X7,637 for the
W#e&
>;oveniber 21 • as against Imports
.
. . ’A2 , Ieavl»g a trade balance of more
th an $14,000,000 in favor of the United States
for the week and bringing the trad* balance
ror the month to more than $46,000,000.
P i t t s b u r g 's O p e n in g .
PITTSBURG. November 24. — Directors of
the Pittsb u rg Stock Exchange today voted to
open the exchange December 2 for un restrict­
ed trading in stocks which closed under $15
Ju ly 30. Trading In other stocks will be re ­
stricted to the prices of Ju ly 30, less one divi­
dend.
K a n s a s ’ New C rop.
TOPEKA, KAN.. November 24.—The condi­
tion of fall-sow n w heat in K ansas is 83.28 and
the area seeded approxim ates 8,870,000 acres,
according to a report of the S tate Board of
A griculture today.
The acreage this year is second largest In
thf* history of the state, being surpassed only
by th a t of last year, the report stated.

NEW U. S. BANK
SZ A lZ tL
Will Call on Other Cleveland
Institutions to Lend
Employes.
Supplies for Kegio'narivroney
House Soon to Come
From Capital.
To get the Federal Reserve Bank of
Cleveland into working'TfTHot. without
delay, the board of directors this week
probably will send out a n emergency
call for co-operation of Cleveland
banks. The regional bank will require
a staff of from ten to fifteen people a t
the start, and as these people have not
been taken into the service, other Cleve­
land banks will be asked to permit em­
ployes to devote time to the new bank.
Supplies have been ordered and soon
will be on the way from W ashington.
D. C. W ills of P ittsburg, chairm an of
directors, is making his home here, and
E. R. Fancher, governor of the bank,
from now on will give all his time to
establishm ent of. the new Institution.
Tem porary offices are in the W illiam­
son building in the ground flo^r corner
space and in the oank vaults in the
basement, but a n upstairs office also
will be used for tlie time being. Gold
will be paid in by member banks early
in November.
W. B. McDougal, bank exam iner for
the Chicago Clearing House association,
has been elected governor of the Chi­
cago federal reserve bank. He has held
his present position since 1906. Previ­
ously he was a national bank examiner.
The directors did not decide upon the
governor's salary, but it is understood
it probably will be $30,000 a year.
Members of the executive committee
were elected as follows: W. F. McLellen, Columbia City, Ind.; George
Reynolds, Jam es B. Forgan, C. H. Bosworth and Mr. McDougal, all of Chi­
cago.
A I .E H
sing- R e d is c o u n t P r i v i l e g e .

W ith 5 1-2 per c en t, th e low est
egional b an k re d isco u n t ra te , th ere
tevelops a n in creasin g use of the
>rivilege. T he New Y ork regional in ­
stitution y e ste rd a y liquidized a bout
*1,000,000 w o rth of p a p e r fo r its m em b^rs, th e Chicago a n d St. L ouis
regionals a b o u t $1,000,000 each, a n d
o th e r re se rv e b a n k s sm a lle r am ounts.
In th e tw o d a y s of th is w eek th e r e ­
discounts h a v e a g g re g a te d m ore th a n
for all of la s t w eek. T he C leveland
in stitu tio n h a s h a d som e applications,
but h a s ta k e n on no paper, a n d for
th e p re se n t th e re will be no reduction
in th e local ra te .
T he W ash in g to n
board is religiously w o rk in g a g a in st
inflation. I t considers th e m a tte r of
th e regional b a n k s’ m a k in g th e ir liv ­
ing a secondary th in g a t th e sta rt-o ff.
E ven th e p e rm itte d in v e s tin g in sh o rt
tim e m unicipal p a p e r is su b je ct to
reg u latio n of th e fe d era l re serv e
board, a n d th is a n d fo reig n ex change
business figures little, if a t alt, in p re s ­
en t operations. T he b a n k s a re to h av e
firm foundation, w ith first re se rv e s all
In, before dlvfdend pro d u ctio n is
th o u g h t of, r.nd m em ber b a n k s even
so will fa v o r th is m ethod of in au g u ra l.
A m eeting w ith re p re se n ta tiv e s of
s ta te b anks anil t r u s t com panies w ill
be held by th e fe d e ra l re se rv e bo ard
in the n e ar fu tu re to d isc u ss m eth o d s
of e n try of th ^ a a in stitu tio g fL iP iP the

H0V 2 i

W>

o,

First Statement Of Federal Reserve
System 'Tf J>F '9/y

Pittsburgh Protest On Bank Location
To Be Heard Soon TiorJY

A W ashington dispatch says: T he first show ­
ing o f the condition o f th e tw elve fe d era l re­
serve hanks was m ade public S atu rd ay by the
F ed eral Reserve Board. T h e statem ent includes
operations fo r the five preceding days and is
prelim inary to the detail statem ents th a t will come
weekly later.
M em bers o f the board do not expect redis­
counting operations to be large or quantities of
federal reserve notes to be taken out until the
banks w ere firmly organized, their first reserve
installm ents collected and th e way paved fo r
handling com m ercial business fo r m em ber hanks.
T he statem ent o f condition fo llo w s:
Cash on h a n d : Gold coin and certificates $203,­
415,000, legal tender silver certificates, etc $37,•!08 000, total $24(1.723,000. R ediscounts $5,60,.000
all other assets $«5,000, total *246,425.M0^ Caprtal
paid in $18,072,000, reserve deposits $227,138,000,
federal reserve notes in circulation $1,215,000,
total $246,425,000.
Gold reserve against all liabilities 89 per cent,
cash reserve against all liabilities 105 per cent,
cash reserve against all liabilities a f te r stttinR
aside 40 per cent gold reserve against federal
reserve notes in circulation 105 per cent.
^
“R ediscounting privileges h a v e been availed o f
to a considerable extent in N ew \ ork, Chicago, St.
L ouis and K ansas City,” said the board in its sup­
plem ental statem ent.
“E lsew here the show ing is m uch sm aller.
F ederal reserve notes to m eet local dem ands have
been issued principally in Chicago, N ew 1 ork and
M inneapolis, but every bank has been supplied
w ith an adequate quantity of notes to m eet its
needs. T h e relatively sm all am ount o f re d is­
counts as com pared w ith the resources of the
system is due to the policy o f the F ed eral Re­
serve B oard in encouraging the paym ent o t r e ­
serve deposits in actual m oney instead ot
in rediscounted paper. R ates o f rediscount
established a week ago w ere fixed w ith this policy
in m ind. R eport* from all districts a re of the
m ost encouraging n a tu re and the outlook to r
business is stated as satisfactory.
“T he establishm ent o f the system has already
had an im portant effect in increasing the lending
pow er of the local banks in addition to the loan
pow er o f the fe d e ra l.rc s c u te la u k s ."

A W a s h in g to n d isp a tc h sa y s: A h e a rin g u p ^ J
P itts b u rg h a i»ainst t he lo c ^ tiuu
thtee p r o te sstt of _________
o t ilie Fe<Terar~rcserve bank to r U istrict
at (.le v ela iu l, will he held h e to re tn e F ed eral
K eserve H oard TTeiT 'W M l U1 n yHM ^TW P. T h e
d a te lo r tile h e a rin g h a s n o t y e t V r set, b u t
it w ill be a fte r th e re g io n a l ha
/a s filed w ith
th e b o a rd its b rie f in a n sw e r
i
P itts b u rg h
p ro te s t. N o w th a t th e b an k has been o rg a n ­
ized a n d its officers d e sig n a te d , it w ill be the
d u ty of th e s e officers to re p ly to th e a rg u m e n ts
fa v o rin g c h a n g in g the lo c a tio n o f the bank
fro m C lev e lan d to P itts b u rg h . W h en th is b rief
is filed th e h e a rin g w ill he held, a t w h ich c o u n ­
sel fo r th e p r o te s ta n ts a n d fo r th e b an k will
m a k e th e ir o ra l a rg u m e n ts . N o w itn esse s will
b e c a lle d by th e re se rv e b o a rd .
I t is le a rn e d th a t th e re is n o t m uch likelih o o d
o f c h a n g in g th e b o u n d a rie s o f the 12 re g io n s at
th is tim e, a lth o u g h th e re se rv e b o a rd h a s not
p a sse d u p o n th a t q u e stio n . T h e su g g e stio n has
b e e n m ad e th a t th e w e ste rn se c tio n of P e n n ­
sy lv a n ia , in c lu d in g P itts b u rg h , be ta k e n o u t of
th e
C lev e lan d
d is tric t
and
a tta c h e d
to
th e P h ila d e lp h ia d is tric t a n d th a t th e s ta te of
N ew Je rse y , n o w a p a r t o f th e P h ila d e lp h ia
d is tric t, be a tta c h e d to N ew Y o rk . L o u isv ille
a lso is d issa tisfie d w ith b e in g p laced in the
sam e d is tric t w ith St. L o u is a n d p r e fe r s to be
in th e C le v e la n d d istric t. B a ltim o re also h a s a
p r o te s t p e n d in g a g a in s t th e lo c a tio n o f th e r e - j
g io n a l b an k a t R ic h m o n d in ste a d o f a t B a lti­
m o re. T h e s e a re q u e s tio n s w h ich the F e d e ra l
R e se rv e B o a rd w ill h a v e to th re s h o u t in th e
n e a r fu tu re .

cieveiana federal Reserve Bank

News

u

T he F ederal R eserve Bank o f C leveland has
leeu virtually adm itted to the C leveland Clearing
H ouse A ssociation, a lthough fo rm al action will
«■ delayed until the local clearing house a u ­
thorities have been advised as t*► the form of
relationship snost to he desired. 1 lie federal hank
will be designated in the clearing house with an
hon o rary title o f e ith e r "special” o r “associatem em ber! It will have first place in the clearing
house as No. 1 am ona the m em bers.
C hairm an D. C. W ills announced T uesday th at
the d irectors of the bank had appointed the law
firm of Squire, S anders & Dem psey ib general
counsel fo r the bank.
T
R. G. H utchins Jr.. v ic e ,p re sid e n t o f the .N:itional Bank of Com m erce, o f New \ ork. was
a visitor at the C leveland F e d e ral B ank 1 uesday.
‘ M r H utchins w ould m ake no forecast as to
w hen it will be safe to face fo reig n liquidation
and open the eastern m arkets, b u t he was en­
thusiastic over the prospects fo r a steadily e x ­
panding e x p o rt tra d e w hich m ust ultim ately place
this country in a fu n d a m e n ta l^ sound econom ic
1" isitioii am ong the natio n s o f the world.
"T h e e x p o rt situ atio n is sp le n d id .' said Mr
H utchins. "Y ou have onlv to reflect upon the
e x ten t o f the o rd e rs placed w ith Cleveland a u to ­
mobile m an u fa c tu re rs and to a larg e e x te n t paid
' “H ow m uch foreign liquidation is ahead no
one can forecast. F oreign held A m erican secu ri­
ties a re not counted in m illions: the to ta l is in the
billions
H ow m uch selling will be induced bv
the ..petting o f the m ark e ts no one can tell All
we know is that w hen it was proposed last week
t.> open the bond m ark et th ere w as a su rp risin g
.,ntbreak o f renew ed selling."




Elect Rowe To Advisory Council
W illia m S. R ow e, p re s id e n t o f th e h irs t N a ­
tio n a l B ank o f C in c in n a ti, w as e le c te d a m em ­
b e r o f th e a d v is o ry c o u n c il o f th e F e d e ra l r e ­
se rv e sy s te m , to r e p re s e n t th e fo u rth d istric t,
a t S a tu r d a y ’s m e e tin g o f d ire c to r s o f th e C leve­
la n d F e d e ra l B ank. N o a c tio n w as ta k e n to
fill th e still v a c a n t p o s ts o f d e p u ty g o v e rn o r
a n d tre a s u re r.
T h e a d v is o ry co u n cil is m ad e up o f 12 m e m ­
b e rs . e le c te d o n e each b y th e re sp e c tiv e h o a rd s
of th e re g io n a l b a n k s. I t w ill c o n fe r fo u r tim e s
a y e a r w ith th e F e d e ra l R e se rv e B o a rd at
W a s h in g to n , o r o f te n e r if o c c a sio n re q u ire s it.
T h e ch ie f fu n c tio n o f th e a d v is o ry c o u n cil is
to m ak e re c o m m e n d a tio n s in re g a rd to d isc o u n t
ra te s a n d th e g e n e ra l c o n d itio n s p re v a le n t in
th e re sp e c tiv e d is tric ts o f th e m e m b e rs . It w ill
be a p o w e rfu l f a c to r in s h a p in g th e p o licies of
th e fe d era l b o a rd .
H e n c e th e a p p o in tm e n t is re g a rd e d a s one
o f th e m o st im p o rta n t a t th e d isp o sa l of the
d ire c to r s o f th e re g io n a l b a n k s.
M r. R o w e 's a p p o in tm e n t t o th e p o s t is c o n ­
sid e re d a lo g ic a l o n e . H e is th e d o m in a n t figure
in b a n k in g c irc le s in C in c in n a ti. H is a p p o in t­
m e n t w a s a ls o due on te r r ito r ia l a c c o u n t, as a
P itts b u r g h b a n k e r n o w o c c u p ie s th e p o st of
c h a irm a n o f th e b o a rd am i fe d e ra l re serv e
a g e n t, w h ile a C lev e lan d b a n k e r h a s th e g o v ­
e rn o rs h ip . T h e a p p o in tm e n t o f a C in cin n a tian
p r e s e rv e s th e b a la n c e in th e lo c a l o rg a n iz a tio n .
D ir e c to rs o f th e C lev e lan d b a n k a l s o c o n ­
sid e re d th e q u e stio n o f e n la rg in g th e v ault
sp a c e o f th e b a n k . T h e second a n d th ird calls 1
fo r th e p a y m e n t o f re se rv e s w ill d u p lic a te the
in ru sh o f re s e rv e s w itn e s se d la s t w e ek , a n d w ill
c a ll f o r la r g e r v a u lt sp ace.

* r t S' f

Federal Reserve Banks Cannot
Make Prosperity

JOINS STAFF OF
REGIONAL BAN]
' ^ - .

A N e w Y o r k disp atc h sa y s: J u d g m e n t m u st
i>e su s p e n d e d a n d a p e n e r o u s a t t i t u d e m u st he
o b s e rv e d bot h t o w a r d the F e d e r a l Re serv e B oard
a n d the m e a s u re s a d o p t e d hy it if th e new
m o n e t a r y sy stem o f the U n i t e d S tates is to he
a success , in the op inion o f B e n ja m i n S tro n g , Jr.,
g o v e r n o r o f th e F e d e r a l R e serv e Ban k o t N ew
Y o r k City. Mr. Stro m ? voiced his opinion at a
so -called .p r o * p e ri t y lu n ch eo n gi ven hy the M e r ­
c h a n t s ’ A sso ciation .
“ I s h o u l d w a r n y o u t h a t th e r e s e r v e h an k s c a n ­
no t m a k e p r o sp e r ity ." M r. S t r o n g said. “ As they
g r a d u a l l y a s s u m e t h e i r f u n c t i o n s they will c e r ­
tainly a i d in t h e r e c o v e r y o f b usin e ss f r o m the
! sh ock o f w a r and. T nope, will r eap th eir share
| o f the r e w a r d . ”
1 M r S t r o n g a d v o c a t e d a g r a d u a l intro duction
o f th e a c ce p te d hill f o r m e r c h a n d i s e t o rep la c e
the b e t t e r k n o w n note o f h a n d . S u c h hills could
he s u b s t i t u t e d f o r notes, he said, a class o f paper
w o u ld he c r e a t e d which wou ld co m m a n d a p r e ­
m iu m in t h e m o n e y m a r k e t s of th e country.
“ O n e i m p o r t a n t f u n ctio n o f th e reserve hanks
1at the o u t s e t. ” h e said, “ should he to s ta n d ard ize
the d e v e lo p m e n t o f illi< p ractice an d to put a
p r e m i u m u po n t h a t hill which c o n f o r m s to sound
b usin e ss principles.
O u r v ast do m esti c t r a d e
d m u l d n o t be di-> r j a n i z e d o r h a m p e r e d b> a
su d d e n a n d radical d e p a r t u r e f r o m m eth o d s no w
1 s a t is f a c t o r y to m e r c h a n t s a n d a pp rov ed In m a m
1b a n k e r s .”

t

Status Of State Banks Worries
Federal Board
A W a s h i n g t o n d isp a tc h s a y s :
A d m i s s i o n o f s t a t e b a n k a n d t r u s t companies to
rhe fed eral r e s e r v e sy stem has prov ed a difficult
p r o b l e m f u r t h e F e d e r a l R e s e r v e Board.
The
a r d p r o b ab ly will decide n o t t o m ak e final r e g u ­
latio ns to g o v e r n su ch a d m i s s i o n s until it has an
o p p o r t u n it y t o discuss t h e m a t t e r with repre sentaives
su c h in stitu tio n s. Applications o f m ore
t h a n - j s t a t e b an k s a n d t r u s t co m panies already
a r e on 1'ile w ith t h e b o ard .
Difficulty a l s o h a s been en co u n tered by t h e
b o a r d in a t t e m p t i n g to define h o w far a state
b a n k can g o in loans on real estate.

N ew

Paper Money Out

Slowly but su rtly the new paper m<me> is c m ig in to circulation, although none has been issued
ere. T h e F ederal Reserve Banks of N ew Y ork.
L hicago and M inneapolis are putting it out and
a bout $1,250,000 is in circulation. The new notes
com e in s.j. .$10, $20, $50 and .$100 denom inations
and are issued by the governm ent through the
tw elve federal reserve banks.
\ \ hen the Clevel.\; [ bank begins to rediscount,
th at is to invest in m erchant paper held by m em her banks, the federal reserve notes will come
out in this territo ry . A s there is m ore than $2,­
500,000,000 paper m oney in circulation in this
c o u n try the new bills have not made them selves
appreciably felt in the general stock of money.
T he new money can be detected at tirst sight,
though it is not greatly different from the present
bank notes. T he face o f the new bills has m ore
w hite space than the old bills. A legend on the
back o f the new currency tells th a t it s redeem ­
able in gold at the I tiited S tates T rea-ury, o r in
gold o r o th e r law ful money at th e reserve banks.
T h e face o f the $5 notes bears a pict ire o f L in­
coln a n d tw o seals, the old one of the U nited
Digitized
S ta for
le s FRASER
T re a su ry a n d the new one t the federal
http://fraser.stlouisfed.org/
re serv e bank th ro u g h which the bili is issued.

Federal Reserve Bank of St. Louis

FPANK J 2 U P I_ IMDEM
F ra n k J . Z u rlin d e 'i, fo r t: e la s
te n y e a rs d isco u n t .eller v. th th
F ir s t N atio n al ban> of C '^veland
will jo in th e sta ff rj. th e F e d e ra l Ke
serve B ank of C leveland a s rediscoun
teller.
Mr. Z urlinden, o nly 36 y e a rs old
h a s been in th e b a n k in g business
tw e n ty years, h a v in g s ta rte d a s m es­
sen g er w ith th e old S ta te N a tio n a
w hen th e la te S e n a to r M. A. H a n n a
w as its presid en t.
J. R. K ra u s vice- p re sid e n t of the
F irs t N a tio n a l, te rm s M r. Z urlinden
“ a w onder a t fig u res.” “W e a re s o r­
ry to lose h im ,” said Mr. K ra u s . “ The
reserv e b a n k g e ts a m a n w ho has
exceptional a b ility .” M r. Z urlin d en
will ta k e his new p lace in a few d ay s.

NEW

MONEY" OUT TODAY

R f‘ m p Hank WIlTTTroalafe *3 nn.l
glO V o te .— ----------------Today the t t m new federak reserve
i
notas will jro into ctrculaM <W \» Cleve\ oveW ™ t afiont
and cha.rm ao o t^ h e W e d e r a l Reserve
bank,
y—
-— —
.
L.
over *75.000 of the
notes to E. fi. Fancher. Governor of
the banfe Mr. F an ch er will put the cur­
rency into th e tills and th ey will go
18
p o s s ib le a n out-of-tow n bank in
this federal reserve district, which has
m ade it possible to issue the notes a t
this time, m ay dem and them ; in which
case the entire batch will go o u t of
town.
Only
and *10 denom inations will be
put out today. The fives bear a por­
tr a it of P resid en t Lincoln. The ten»
have a ttra c te d com m ent in the eaat be­
cause they have on the back a steel
plant and » h a rv este r binder, two trust*
the governm ent is suing .1

T H A N K S G IV IN G S P I R I T
P E R V A D E S W A L L ST.,
AS TRADE I M P R O V E S
‘V
i s l IV.
l-UL o /A 6 ,
E d ito r The A m erican B anker.
N E W YORK, N ovem ber 20.—Th.
sp irit of th an k sg iv in g w as v erj

n e t T u esd ay and. a fte r going over
]ie w hole su b je c t v e ry carefully,
n a d e th e follow ing a n n o u n cem en t:
"T he special com m itteo of five rules
(h a t so m u ch of h u l e No 21 a s a p Siies to d e alin g s in listed bonds
m uch in evidence la s t week. a n . th ro u g h th e c!earin g hous6 be r e ­
W all s tre e t has b re ath ed m ore easilj eCin(ied, to ta k e effect a t th e close of
th a n a t a n y tim e since th e w a r be business on
F rid a y , N ovem ber 27,
gan. And th is Is rig h t a n d reason- 1»W- B eginning on S a tu rd a y N o­
,,
™
. . , ...
. . . vem ber 28. 1914, d e alin g s in bonds
able. T he success w hich followed th< Usted jn thp ex change w i„ be p e r.
resum ption of business in c e rta in de- m ltted on th e floor of th e exchange
p a rtm e n ts of the financial d istric t betw een th e h o u rs of 10 a n d 3 o’clock
th e previous week, to g eth e r w ith th e each d a y except S a tu rd a y , w hen d eale asing of the m oney situ a tio n a s a ta g . ■hall cease a t « o’clock noon.
,
. '
Such d ealin g s to be u n d e r th e s u p e r­
re su lta n t of the opening of the new vlsjon and reK uIatlon of th e c o m m it.
F ed eral bAnks
’
iv ed a n excel- tee an(j t0 be fo r c ash o r re g u la r w ay
lent to n io ’f
He m ark et, w hile th e only a n d not below th e m inim um
I-toid-yoi;- * have b ^ n
highly prices a s a u th o rize d by th e com m itcom plim enting them selves upon th e ir tee from tim e to tim e T ra n s a c tio n s
g re a t a b ilitv to predict th e course a t prices o th e r th a n those allow ed by
of f u t u r e events.
*he oomm ttee. or in e vasion of the
R ep o rt.' from the cotton a n d c u rb c o m m itte e s rules, a re pro h ib ited . All
m a rk e ts -ie ll of sn excellent buy in g rules of th e ex ch an g e gov ern in g delem and.
hich in the. la tte r m a rk e t livery and d e fa u lt on c o n tra c ts cov, as carrie. - h e p r i c e of m any sh a re s ered by th is resolution sh all be I..
o a higlu point th a n the Ju ly 3" fber
° rce28. 1914.
ow bh u t " rth
h e closing off ™con­
*'
tuotatlon-*4».id still gaining.
t r a c ts ‘u n d e r the ru le ’ sh all be s u b ­
E x rh n n g e S till Closed.
je c t to th e foregoing provisions."
T his is n o t a s im p o rta n t a n a n ­
The governors of th e N ew Y ork
Jtock E xchange a re still u nable or| nouncem ent a s m ig h t seem on first
In w illing to yield to th e a lm o st uni"; read in g , a n d In fa c t it m ak e s v ery
’ e r s a l cla m o r for th e reopening of thftj little ch an g e
In e x istin g c u id itio n s.
•xchange. M any a re a fra id a s y e t , C e rta in ly It does n o t ju s tify the d aily
if th e h o rro rs of foreign liquidation n ew sp ap ers IB a n n o u n cin g th e "o p e n ­
which m ight be em phasized should ing of th e sto c k ex> .a n g e " in big
he fo rtu n es of w a r tu rn one w ay or headlines, a s m a ’, l ! 'j if th en i did on
he oth er. I t does not seem re aso n - W ednesday m ori .ig. I t Is n o th in g
ible, how ever, th a t a deltlge of fo r­ new to tra d e l n .; s t e d jq n Js, a n d all
eign selling can com e a t th is tim e th a t th e e x c h a r se g ;rnor» h ave
ii.
t,.ery of
* h e n we consider th a t from the| done w as to add th
w h evr fa ­
standpoint of sa fety of principal and the stock ex change
th
• ad>f good a n d prom pt re tu rn on th e In­ cilities a lre a d y ex I ted f
vestm ent, A m erican se c u ritie s a re su ­ ing in th ese bonds.
perior to those of a n y o th e r n a tio n in
Establish :*t iniuii .
II
the world.
In brief, th e condlt, ns
w hich
A m erica is th e only really larg e
f i olted
civilized c o u n try in th e w orld n o t a l - ! tra d in g in listed I*, ids
read y e ith e r p a r tic ip a tin g In th e . w lll include the e; . Ib li
i \r each
w a r o r th re a te n in g to p a rtic ip a te , j m om iA g of c e rta in n .n in n ,
figures
F u rth e rm o re , A m erica is^not * ^an* ! a t or above whictV'oi
w iirV a n s a e ru p t n a tio n . E n g la n d , it is
tions be p e rm itte d .
.louid^a seller
le to
will com e very n e a r beingo u ta bof
th e | l,e u n a b le to se c u re tl;is price, he has
th e sinew s of w a r
«provide
----- - - —
-------1
i l conU llt ll
n o th in g to do b u t to w a mit unnotil
c u rre n t sa v in g s of h e r
s*
P , ' d itlons so im prove a s to provide a
pie. F ra n c e has excellent a sse s
p u rc h a se r a t th e “e sta b lish e d ” price,
th e form of th e fr u its or
g
. ; [n thla w ay th e exoh a n g e a u th o ritie s
th a t h a v e a l r e a d y ^accum u a e . ^
j expect to feel th e ir w ay u n til th ey
if th e w a r c o n .tin u e s for
,
| are ju stified In e n la rg in g t'he scope of
period it
is
expected
th a t
''p u b l i c trad in g ..
1
m ost a ll c o n tin e n ta l c o u n trie s c o n ­
T he n e x t
.* 5 i? u b te d ty be
cerned, as well a s J a p a n a n d T u rk e y , the add'H o,
^ u a r a r '* .^ sto ck s to
m ay be com pelled to d e fa u lt, te m p o ­ the llsi i f- -- irltii.s
«•' tch opSn
ra rily in som e in stan c es a n d m ore or though
p-.-esti cte
■sactions
less ‘ p e rm a n e n tly In o th e r official a re per i e£; it!
4’
a! course
s ta te bonds.
should v m ie s ’o< .
(>ora lions In
w hic1- t h e r » ft-i
^ slig h t
G o v e rn o rs M eet.
ji
.•. V.' o th er
It m u st not be fo rg o tte n , h o w ev er, in te re s t a l i
se
c
u
rities
tiw
t
a
re
,.k ext h a t m a n y fo reig n ho ld ers of A m e ri­
A b rice s uncan sto ck s, th o u g h re aliz in g th e s u ­ chan g e ■ welal list.
th e sto< t jx 1 ■in g e in a n ­
p e rio r q u a lity of th e ir holdings, m ay der ct. .
be im pelled by p a trio tic m o ti\e s Into agem ei: i iloes n o t , beU ( e t h a t so
m
uch
d
a
n
g
e
r w ill e x is t
th e d irec ­
sa c rificin g th e ir in v e s tm e n ts in o rd e r
to c o n trib u te to th e ir c o u n tr y ’s ne- tion of u n c o n tro lla b le fo reig n Uqu Ic essltie s in th is tim e of peril.
In j datlon.
su c h a case of co u rse, it is im pos- j So f a r a s m oney c onditions a re consible to e stim a te th e e x te n t of th e cerned. th e y could h a rd ly b e m ore
liq u id a tio n th o u g h th e p re se n t pos- fa v o ra b le 'n r th e e x p erim e n t of busts ib llitie s a re rem ote.
I 's s re su m p tio n a n d it Is conceded
4 T he ro v e rn o rs of th e e x c h a n g e by b a n k in g In te re sts t h a t th e r e Is a t
le a st no im m ed iate n e c e ssity of o r­




g a n is in g 'a pool o r fu rn ish fnc40>all
m oney w hen th e exchange reopens.
T he c o m m itte e ’s ru le s for d e alin g In
bonds p re v en t tra n s a c tio n s for fo r­
eign acc o u n t by cable. T hey provide
th a t th e se c u rities shall be in such
position a s to be delivered w ithin one
day a fte r th e tra n s a c tio n s a re m ade.

Knim nR

C it y

R e g io n a l

W ill

S ta rt

WASHINGTON. Dec. 1.—A uthority
w as given th e F ed eral R eserve bank
a t K a n sa s City by the federal reserve
board to n ig h t to c le a r checks bv
m em bers banks, and sim ila r a u th o rity
w ill be given im m ediately to the C hi­
cago bank. T his is th e first step
ta k e n to w a rd having reserv e b anks
exercise the clearing f notion provided
in the new currency 1. *•.
T he C hicago b a n k w ill begin w ith
c le arin g s for b a n k s in reserve cities
only and g ra d u a lly w f l extend the
scope of its operations. It is the
hope of m em bers of the federal re ­
serve board th a t u ltim ate ly a larg e
p a rt of th e c le a rin g s of the c o u n try
wlll be done th ro u g h the reaerv#
hanks, a c h an g e from p re sen t m eth ­
ods, w hich is expected to save m il­
lions of d o lla rs and m uch time.
The board today approved a rcdls;o u n t ra te of 5 1-2 p e r cent, on th irtv la y m a tu ritie s r.nd 6 per cent, on all
>ther m a tu ritie s fo r the Cleveland
•eserve bank and a flat ra te of ti per
:ent. for th a t a t K a n sa s City. The
'h ic a g o b an k d e sires a flat ra te of
1-2 p e r cent, on all m atu rities, b u t
o fa r th is h a s n o t received th e sancIon of the board. R ediscounts by th e
welve b a n k s h a v e n o t increased m ae ria lly in th e la s t few lays.

T o C ut

R e d is c o u n t R a t e s .

T he fed eral re serv e b o a rd y e ste rd a y
•■irtualW decided to reduce ra te s In
all sectio n s w here th e h ig h e r figures
no w p re v a il, except a t K a n sa s C tty
w h e re th e regional b an k is contented
w ith (1 per cent, fo r th irty -d a y pap er
a n d <! 1-2 fo r longer m a tu ritie s . T he
decision, w hen form ally m ade into a n
order, wil! c u t th e uniform G per cent
i n f ,a Pd ra te to 5 1 -2 pe?
o / l L t l n ia ti i ^ e s and 6

1

FEDERAL BANK LOWERS DISCOUNT RATE.
T h e d isc o u n t r a te o f th e f e d e r a l re s e rv e b a n k o f C leveland w as
lo w e re d y e s te rd a y t o E H p e r c e n t fo r m a tu r itie s o f less th a n th ir ty days.'
T h e « p e r c e n t r a te w ill c o n tin u e to p re v a il fo r lo n g e r m a tu ritie s . T h e
b a n k y e e te rd a y re p o rte d to ta l d isc o u n ts o f $100,000.
T he a c c e p ta n c e s
a r e fro m b a n k s o u tsid e o f C lev e lan d . T h o se in s titu tio n s w hich a re r e ­
d is c o u n tin g p a p e r a t th e b a n k a re n o t ta k in g out fe d e ra l re serv e notes.
T h e y a r e c re d ite d a t th e b a n k w ith th e a m o u n t of th e p a p e r ta k e n , a n d
t h e o p e ra tio n re le a s e s th a t a m o u n t o f fe d e ra l re serv e n o tes w h ich th e
b a n k m a y p a y ou t. In c o n se q u en c e local n a tio n a l b a n k s a re being notified
to d a y t h a t th e b a n k h a s $1,000 in th e new fe d e ra l n o tes fo r each o f th e
lo ca l m e m b e r b a n k s. As th is is t h e first o f th e new fe d e ra l issue a v a il­
a b le , It Is a n tic lo a u d . t,h£t .tUgJt n iajt h a y ^ ^ so u v e n ir v a lu e above p a r fo r
t h e p u rp o s e o f QiJEki&aa ’b r w w io l .The riotes a re in five and te n d o lla r
d e n o m in a tio n s.
(Jfe C '?
ltU 4
N a tio n a l b a n k s o f C lev elan d a r e slow ly rixfhfigw lhP ir"M S w rgency
c u rre n c y . I t is a n tic ip a te d t h a t th e la s t of th e issue *’111 d isa p p e a r in th e
e a s ie r m o n e ta ry p o sitio n w h ic h is se a so n ab ly due s h o rtly a fte r th e tu rn
o f t h e y e a r. N ew Y o rk I n s titu tio n s a r e p re p a rin g to r e tire tho la s t ol
c le a r in g h o u se c e rtific a te s o u tsta n d in g . I t is possible t h a t th is w ill b t
-

♦ V ito

ir o o lf

EXCESS RESERVES REDRCEB,
BUT t lf f lJ E H U HUGE
New York Clearing House Banks

Correct Last Week’s
Statement—Giant ‘Safety Fund’ Decreases
to $132,400,000—Make New Loans.

Bond Dealing Produces Gains and Losses—View Ob­
scured by Hindrance to European Selling
—Rediscounting Started Here.
BY HEBBBBT 8. EOSENTHAL. v

1914

■

B a n k e rs needed a w eek to get th e reserve requirem ents tinder th e new.
b an k a c t dow n to scientific preciseness. T he New Y ork clearin g house in
y e s te r d a y ’s sta te m e n t am ended th a t o f th e w eek before and announced t h a t
th ^ ejocga re serv e th e n re p o rte d as $176,800,000 should h a v e been b u t $137,j f 't r eivpp o f
' 601".. m aking th e p re sen t
show ing, d a ily a v era g e a s a re aU*tBM oTfgurf
-.OOP. T his is now
th e am ount o f th e a ssu ra n ce fu n d , a support
t m arket, a b o lster
o f th e stock m a rk e t w hen needed and a g en era 1 i. • ' -t ‘ cash supplem ent­
in g th e fe d e ra l re serv e system . T he business v o i J "ii console its e lf fo r
th e sum m ary lopping off o f $39,000,000 from th e w fe t; fe n d w ith th e th o u g h t
t h a t i t i» still g ig an tic.
TVith i t to b a ck th em , th e N ew Y ork b a n k s saw fl l t o in crease th e ir a l­
re ad y larg e loans $8,000,000 in th e w eek a n d w ere able 11 eal' in $14,300,000
em ergency currency.
ho te s t ot now ^
....... .................
R e su m p tio n o f open bond d e alin g .
Bol]_ ^
tack o f due notioe to Ku'
developed a m ix tu re of g a in s a n a rope w a s designed to accom plish w h a t
losses, losses no g re a te r In n u m b er It did. B y th e m iddle of n e x t w eek
a n d e x te n t th a n th e c o m m itte e of five th e re w ill be a c le a re r view.
sh o u ld h a v e ex pected. Such declines C l t v d s s i B a n k ttedJscoTinti.
MS alx p o in ts in S o u th e rn R a ilw a y 4s,
O f p rim e T
financial In te re st
n in e p o in ts In S e a b o ard A ir L in e a d ­
ju s tm e n t 5s a n d flve a n d o n e -q u a rte r y e s te rd a y wa. p e first re d isco u n tin g
B ank of
V Bi
p o in ts In W ab a sh firsts, re su lte d from by th e F e d e r ' - 1 F.esePV^
p ra c tic a l rem oval o f price re stric tio n s C leveland. . A . ufc'r t>er bank in ■
sm
a
lle
r
c
ity
,
nc
,
resf
,ve
city,
tu n w «
In th ese issues. T here w ere a few
1 IV' j f $75,000 In
• ti l e r sev e re decline* from J u ly 30 lev­ in a n accept*
ri a n d th e m a ­
els, a n u m b er o f lesse r recessio n s a n d p ap er, took
c h in e ry w a s .
C ash h ..t n o t
a tew gains.
been tran sm it* tl ;
' so t h a t none
E u r o p e C o a lin '* S ell.
o f th e new fe d e ra l, >■ trv e v je te s is
A s th e d a y ’s to ta l tr a d in g a m o u n te d Issued In th is d istric .
Kt th e 6 p e r
t o only 1644,000 p a r v alu e. It Is p lain cent, d isco u n t r i t e . T‘ VnembeV b a n k
B n ro p e did little selling. W hile E u ro ­ d oubtless m ad e n olhl. , ton th e t r a n s ­
p ean s had a few b o n d s a w a itin g a action, b u t It in c re a . its fa c ilitie s
m a r k e t here, th e y h a d n o t been given to accom m odate, whitfli a f te r a ll will
tim e to g e t m ore o v e r re a d y f o r quick be a p re d o m in atin g benefit of th e s y s ­
d eliv ery u n d e r c a s h tr a d e ru le s. T he tem . T h e C leveland regional b a n k
a n n o u n c e m e n t of y e s te rd a y ’s re o p e n ­ re p o rts fo r th e w eek ended w ith th e
in g w as n o t d e fin itely m ad e u n til close of b u sin e ss F rid a y , before th e
T u esd ay a n d th e w hole m a tte r o f re ­ re d isco u n tin g , c a p ita l p a id In $2,029,­
su m p tio n a f te r th e first o rd e r's w ith ­ 300, d e p o sits $15,800,100, a n d c a sh
d ra w a l h a d been u n d e r c o n sid e ra tio n $17,818,300: th e cash n e c e ssa ry to b a l­
Mb th a n a w eek. I n th e s e d a y s o f de­ a n ce th e Item s in clu d es re se rv e sy s­
lay ed la n d tr a n s it a n d u n c e rta in ! tem o rg a n is a tio n ex p en ses a n d c u r ­
s te a m e rs a w eek g iv e s little oppor- : r e n t o u tla y of th e b a n k .
tttn lty fo
r ocean bond sh ip p in g .
T h e e n tir e re se rv e s y s te m ’s w eekly
Digitized
Y e stefor
rd aFRASER
y 's m a rk e t th erefo re^ w as s ta te m e n t, p ublished e lsew h ere on



tn .s page, snow s how c au tio u sly th e
w heels a re a e t going, w ith to ta l re ­
d isc o u n ts in n e a rly tw o w eeks o f oper­
atio n a m o u n tin g to only $7,388,000 on
th e p a r t of tw elve in stitu tio n s h a v in g
$270,018,000 resoiu-ces, o t w hich 97
per c en t. Is m o stly in th e v au lts.
E leven o f th e b a s k s h a v e re d is ­
counted.
>o x d e n S e ttle m e n t C o n o lv d o tl.
T he L ondon sto c k ex change s e ttle ­
m ent o f d ealin g s fo r th e fo rtn ig h t
preceding th e w a r h a s been concluded.
^ few larg e A nns, c h ie fly w ith fo rsign connections, a n d a b o u t th irty
sm aller firm s w ere u n a b le to m eet all
their liab ilities. T h a n k s la rg e ly to
A e B ritis h tre a s u ry , It Is hoped to
u c trica te m o st of th e se people soon
»ut th e se ttle m e n t outco m e knocks
iw ry p re d ic tio n s o f e a rly sto c k e x ­
m an g e op en in g th ere .
A n u m b e r o f A m erican n o te Issues |
held b y B ritish a n d F re n c h in v e sto rs
a g a in w ill be called in to servioe— th a t
1s if w e d o n ’t ta k e b a c k too m an y
bonds in th e m eantifpe. E x p o rts a re
d oin g th e ir level b e ./, b u t th e process
o f c an cellin g pj xseeds In m a n n e r
slow a n d o rd erly . O th e r th in g s re ­
m a in in g in s t a tu quo, th e e x p o rt e x ­
cesses we a re now ex p erien c in g w ould
cancel o u r fo reig n d e b t be fo re th e
s p rin g o f 1915, b u t th is ta k e s no a c ­
c o u n t o f lthe se c u ritie s w e m a y h a v e
to p a y for.
S u b scrip tio n s fo r th e B ritish w a r
loan produced a te m p o ra ry d istu rb a n c e
In m oney there, r is k in g In ro ad on
floating supplies, w hich a cc o u n ts In
good p a r t for th e p re se n t ftrmnAss pf
s te rlin g ra te s a t New York.
D evelopm ents- OTvth e w eek included
th e fu n d a m e n ta l liiTprovem ent in the
ste el in d u stry , w hich Is n o t y e t lea v ­
e n in g t h ’ oaf. C opper m etal ro se to
12 3-4 c en ts, w h e re it stood y esterd ay .
W hile g .i^ ra l byyerfTyho'tv c o n se rv a ­
tism a t Sjl* ’ level J t l t • V>ud '-ractftd
by th e Pn. ted p. < uoT
am by in ­
s is te n t nee
'f
rr;>;
on . ''k ers. i
C all a n d t*
at.
loan j in
th e e a s t a s I'-1' a- ”■*
cen . and
p rim e m e rc h a n t i—p_- .
uoted a t
4 3-4 p e r cent.
‘ *iase tells
p a r t of th e sto ry a * t P a # \ ‘tn l Im­
p ro v e m e n t.
T h e C hicago a n d C leveland stock
ex c h a n g e s reopened a n d b o th 'lessen ed
th e ir re s tric tio n s a f te f th e first ex­
p erien ces of ch eerfu l m ark e ts. P h ila ­
d e lp h ia resum ed, a n d the N ew Y ork
coffee exchange, tly: P itts b u rg a n d
W a s h in g to n sto ck exchanges a n d the
P a r is b o u rse a re scheduled to do like­
w ise a t e a rly d a te s.

Sere's G o v ern o r Fancher's Speech
Fhat M r. Fancher D id ’N o t M ake

E .R .F A N C ttE R ^

E.&.TIL10
H E sp e e c h t h a t E lr a d o r e R. F a n c h e r , d is tin g u is h e d g o v e rn o r of
t h e C le v e la n d d i s t r ic t F e d e r a l R e se rv e b a n k , w a s c a lle d upon
to m a k e in h is ow n h o n o r a t a b a n q u e t te n d e r e d h im re c e n tly ,
______ w h ic h th e f r ig h te n e d M r. F a n c h e r d id n o t m a k e b u t w h ic h
w a s m a d e a n y w a y , is s till th e jo y o f C le v e la n d ’s b u s in e s s m en.
T h e first b a n q u e t g iv en M r. F a n c h e r a f t e r h is a p p o in tm e n t a s gov­
e r n o r w e n t off in a s fine s ty le a s t h e m o st c o r re c t c o u ld w ish . E v e ry ­
th in g w a s se rio u s, d ig n ifie d , p ro p e r.
M r. F a n c h e r ’s c lo s e r, p e rs o n a l
frie n d s t h o u g h t s o m e th in g m o re w a s n e c e s s a ry . T h irty -s e v e n o f th e m
p la n n e d a se c o n d b a n q u e t.
,
T h e firs t s te p in t h e i r d a r k plot, w a s t o e n g a g e th e R o a d s id e C lub
fo r it. T h e ir seco n d w as to a p p o in t C. E. A d a m s t o a s tm a s te r .
M r.
F a n c h e r , a c c o rd in g to th o s e w ho h a d th e in s id e s to ry o f th e a ffa ir,
w e n t to T o a s tm a s te r A d a m s a n d lite r a lly b e g g e d t h a t h e w o u ld n o t be
c a lle d u p o n to m a k e a sp eech .
T o a s tm a s te r A d a m s r e lu c ta n t ly c o n s e n te d .
On th e n ig h t of th e
b a n q u e t h e c a lle d firs t .upon W a r r e n H a y d e n . L jn in n H . T re a d w a y a n d
f lo g e r E n w rig h t. a ll o f w h o m s a id v e ry n ice t h in g s a b o u t th e g u e s t of
th e e v e n in g . A nd th e n , c o n tra ry - to h is p ro m is e , M r. A d a m s c a lle d u p o n
M r. F a n c h e r fo r a h is to r y o f h is life .
Mr. F a n c h e r a lm o s t tu r n e d p a le in a la r m a n d s u r p r is e .
He
g ra s p e d th e a r m s of h is c h a ir a n d , lo o k in g w ild ly a b o u t, p r e p a re d to
g e t to h is fe e t to p r o te s t a g a in s t h is b e tr a y a l, w h ile a t th e s a m e tim e
E . G. T illo ts o n sto o d u p , c le a re d h i s t h r o a t a n d in th e n a m e o f E . R.
F a n c h e r g a v e th is p a ro d y a n d b u r le s q u e o f F a n c h e r ’s lif e a n d d e e d s :
It is h a r d for m e a d eq u a te ly to I ------------------------------------------------- r-------ex p ress m y g ra titu d e to you for this •!
splendid d in n e r a n d fo r th e sp irit
weli a s th e hopes of m y m a tu re r
th a t pro m p ted it. I tr u s t you will
vears. H isto ry re co rd s t h a t I w as
re m it y o u r pro p o rtio n o f th e ex- ,
lorn on th e 17th d a y of O ctober,
pensos pro m p tly so th a t th e m em ­
1S64. n e a r Ionia, M ich., ju s t how
bers of th e self-ap p o in ted com m it­
n ear Ionia I am u n a b le to tell, b e ­
tee m ay h a v e no a d d itio n a l cause
cause I w as n o t p a y in g p a r tic u la r
fo r w o rry —re m e m b e r som e of th em
a tte n tio n to g e o g rap h ica l lo catio n s
a re in th e bond business.
n t th e tim e. P o s te rity a g re e s th a t
It is e v id e n t to a ll t h a t th e te s ti­
th e sto rk did a fine Job. R eferen ce
m onial is m erited. I deserve m ore
to a stro n o m ic al ta b le s show s th a t
th a n th is fro m th e m ost of you.
th e 's r e a t p la n e ts of V enus. J u p ite r
W hen I th in k of th e in d ig n ities th a t
a n d M ars w ere in c o n ju n c tio n on
I h a v e suffered on th e golf links a t
th a t fa te fu l n ig h t, a n d I a ttr ib u te
th e h an d s of Scofield, Seobell a n d
m uch of m y genius, m y in d o m itab le
M cLoud; w hen I ponder over som e
will a n d su p e rb good n a tu re to t h a t
3f th e loans I h ave h a d to m ak e to
fo rtu n a te occu rren ce. My n p m e is
H ayden and T illotson. I feel I am
not P e te r: lt is E iv a d o re. , T h is
Mitltled to al! I h ave received tosounds like a fa m o u s te n -c e n t c ig a r,
ilg h t a n d m ore—ayu. m uch more.
b u t is re a lly a n old S p an ish n a m e of
T he to a s tm a s te r has ask e d m e to
gre.nt re n o w n —" E l” m en n in g ‘'th e ” :
ell you so m e th in g of m yself, to re"V a
m e a n in g
" e a s .- s f ;
and

•eal—all I t w ore—som e of th e ideals
" P o re ” ' “ w a y .”
http://fraser.stlouisfed.org/ ind In sp ira tio n s of my
t #rre ^ to be th e s m a rte s t boy

T

Federal Reserve Bank of St. Louis

In all 'h a t section. E a rly in my
'ife m y p a re n ts moved to Lorain,
^ h io , w here I soon a ssim ilated all
th a t th e public s”hoois of th a t town
could offer. In 1882. I e n te red the
em ploy of th e F ir s t N atio n al B ank
"f- L orain, w here I learned th a t in
th e eyes of good hankers, a r.lne
m ay look like a six w hen viewed
from the p ro p e r angle. H ere I also
l»arned to “click my heels." w hich
a cco m p lish m en t I am glad to say
w a s fully review ed in tho P ress of
O ctober 22.
T h in g s shaped up so th a t in 1886
V e st E v e ro tt w as in need of a
c ap a b le a s s is ta n t a n d se n t fo r me.
M odesty p re v e n ts m y say in g how
m uch he needed me, b u t m y record
sp e a k s for itself. I have been hon­
est. in d u strio u s a n d tidy, yea—very
tidy. I have nev er let m y Industry
or h o n esty p re v en t m y a tte n tio n to
th e lig h te r th in g s of life—society,
lite ra tu re a n d m usic. I sing a s a
b la c k sm ith p e rsp ires, freely and
well, a n d m y love for m usic Is so
pronounced th a t for m an y y ears I
em ployed u H a rp e r to accom pany
n:e d u rin g b u sin e ss hours.
It w a s d u rin g th e '80s th a t I
learned from Jim W arw ick the a d ­
v a n ta g e of im m a cu late dress. I
■ought to e m u la te th e cavalier-like
m eth o d s of Jim S ack ett. a n d I
c u ltiv a te d th e m odest—though e f­
fectiv e—social accom plishm ents of
•me of th e p re c e d in g speakers, th e
h an d so m e R oger E n w rig h t.
In I90T, w hile the whole world
shivered, I decided to save It, and
boldly issued re am s of clearing
house c ertific ates. T rue. C harlie
!'a in e a n d a few o th e r obccuro
b a n k e rs helped m e a little In this,
b u t I n a l l y “ tu rn e d th e trick "
A bout •'UH tim e, I first m et one

* h o IB h e re tonight, w hose t r a n s ­
c e n d e n t g e n iu s in th e re a lm s of
flnance
a lw ay s
Inspired
me.
T h ro u g h « him. I learn ed to know
a n d to love t h a t m odern Cicero,
Mr. H ay d en . In th e tr u e a r t of
m ak in g tw o d o llars grow w here
only one h a s been before, th e re is
no one like th e g re a t A m erican
<J. Ft.) N u tt. Tho silv er-to n g u ed
H ayden ta u g h t me to look wise, to
talk a g re a t deal a n d sa y nothing.
A ssociation w ith these tw o has been
o f g re a t benefit to me. In the early
90’s T saved a y o u n g in d u stry from
oblivion a n d th ereb y p u t C harlie
A dam s In a position to acquire
e v e ry position of honor and tru st
in th is fa ir c ity of o u rs w hich had
r o t p re viously been annexed by L y­
m an T r e a d wriy. Is .it a n y wonder,
m y friends, t h a t in the association
f>c.:»uch m en I also h a v e become
g re a t?
M y se rv ice s to the c o u n try w ere
g e n era lly recognized, and sh o rtly
a fte rw a rd , by v irtu e of several
p re ss n o tic e s a n d a c tiv ity on the
p a r t o f som e c o u n try b a n k ers
w hose p a p e r I had largely redis­
counted, I was elected a m em ber of
the no to rio u s council of the A m er­
ica n B a n k e rs ’ A ssociation, A few
d a y s In co m p an y w ith so m any o th ­
e r " little b ro th e rs of the rich ” who
com posed th e council, a n d several
lun ch eo n s a t l*rier Cliff, w here I
s a t a t th e fe et of th e g re a t V and e rlip a n d o th ers, stim u la te d m e to
still g r e a te r e ndeavors, i gave my
m usical re ta in e r his release, end
so u g h t n o th in g ( Ise but business. I
even g a v e up p lay in g golf.
You maj* h ave heard of a m an by
th e n a m e o f N elson A ldrich. Only
re ce n tly h a v e P aine. M urfey a n d I
Im m ortalized him. We have issued
4*11 of th e em ergency c u rre n c y th a t
his law w ould lot us: and. a s I look
a ro u n d a t y o u r e ag e r and intelli­
g e n t y o u n g face*. I su sp ec t th a t
had it n o t b?en for th is em ission we
would n o t h a v e been h e re tonight.
E volu tio n Is the pro cess of devel­
opm ent. a n d v e a rs ago it become
a p p a re n t to P a u l W arb u rg . George
Roynoldp. C nssie C hadw ick a n d me
t h a t th e re should he a new banking’
system .
T he ra p id ly Increasing
p opulation of D em o cratic b an k ers
a t F o rt L ea v en w o rth finally con­
vinced th e D em ocratic p a r ty th a t
we w er^ rig h t In o rd e r to have a
fed eral b a n k in C leveland, we de­
cided to elect W oodrow W’ilson
•^President. All th a t follow ed since
h is in a u g u ra tio n is easily rem em ­
bered. You h av e h e a rd from the
p re c e d in g sp e a k e rs so m eth in g of
tho new b a n k w hich I shall honor.
W h en m y c o u n try called me. like
old C in c in n a tu s or Is ra e l P u tn a m —
I don 't know w hich—I left th e p ’ow,
fig u rativ ely , obey*»d th e call, and
p u t c om fort, a b ra n d new building
w ith lu x u rio u s offices and a goodlooking ste n o g ra p h e r behind me. I
h a v e ta k e n up th e burden. N a u g h t
else b u t iove of c o u n try w as con­
sidered. T h e p a ltry $2j,00J stip en d
w as not th o u g h t of. Does a n y reAl
p a trio t e v er consider such w orldly
th in g s?
T a d m it t h a t the* new position
m ay be a ste p p in g sio n e to som e­
th in g still g re a te r, b u t w h a t of
th a t?
Doe** n o t financial h isto ry
p ro v e t h a t one g re a t !.ank is b e tte r
t h a n tw e lv e , a n d 19 it not probab'.e
Digitized
t h a tfor
inFRASER
th e n e a r fu tu re th ere shall



Jje b jtio n e governm ent b a n k and
one go/ernor?
N otw ithstanding the sacrifices I
have inade. T look for some pleas­
ure in th e new ' field. Think of. th e
opportunities th a t aw ait me there.
W hat will be my decision when old
Paine comes stealthily to m y desk
w ith a bunch of notes under his
arm fo r rediscountV What*- sh all I
do w hen G arretso'i. M urfey, Sul­
livan apply for help? Je rry will
have to tell me .:n all m eetings
h ereafter w hether he represents a
tru s t com pany or a national h ank:
and John S h e rw in — the re ig n tn s
m onarch of th a t hydro-hended m o­
nopoly across th e stre e t—will have
to do m y bidding. P erh ap s even
some h ig h-strung tru st com panies
will have to enter my system , and
I tr u s t th a t I shall know more
about the “oldest and largest tru s t
com pany in Ohio," the “sa fety first
and continuous n rd lt." and the
“G uardian way" th an any one m ind
h a s-h a d the opportunity of le a rn ­
ing.
No more shall I have tc
listen to the siren songs of b rok­
ers. bond men and dry goods deal­
ers. If the proper ra te of I n te r ­
est is 6 per cent; who shall say to
me " n a y ” if I d e.ide upon eight?
Xo m ore shall T be a m arty r. I
have been a m odern Joan of Arc
m any tim es, nnd In th a t noble role
I have saved my country. L ike the
maid of France, I have been free­
ly roasted; but "henceforth, h e re ­
a f te r anti in the fu tu re "—as T re a d ­
way nnd Mp.rlatt would say—I shall
Jo a n o? Are to m y h e a rt’s c o n te n t
to th e glory oC God and m y coun­
try a t the ra te of "one hundred
dollars per diem and no overtim e."
None shall oppose me.
The hero of m y early days w as
A lexander H am ilton. Nov/ I w or­
ship a t the shrine of the G eorgia
Peach who has tram pled un d er foot
the overfed and overpaid barons
of W all street.
Friends, in all seriousness and
•gratitude. I th a n k you for this e v i­
dence of friendship. You have
been m y frie n d s.in shadow a n d in
sunshine. W e sftfell go on a s friends
until the end. God bl*««

K D .'V I>W m , C* " *
ACe ,„ .
of the C IpV and r O n a T ° k V61, a 86n 11
called to Bellevue Pa v
2 ' vvas
ernoon because of th» 5 . t day a f u
fnpther-In-lau- Mr« inh«eai c
his
Mrs. Seville hkd been m % ' S evilleber of w e e k s
Thf *
for a num held in Bellevue ihl« S
1 w£11 be
ta k in g place t o m o r r ^ 6" 1"*- hurial

IOINS STAFF OF
Cm '

F

ra n k -

K

j /

39 2 5

W hltim m avenue, y e ste rd a y r e ­
ceived notice of his a p p o in tm e n t as
red isco u n t c le rk of th e F e d e ra l R e­
serve B ank. Z u rlin d en h a s resgned
fro m the. position o£ d isc o u n t teller
of th e F i r s t N a tio n a l B a n k to a c ­
cept the federal post.
"M r. Z urlin d en is leaving: us w ith
the re g re t not only of th e officers b u t
>f his fellow c le rk s."
said C. E.
F arn sw o rth , c a s h ie r of th e F i r s t N a ional.
Z urlinden h a s h a d tw e n ty y e a rs
xperlence in b a n k in g , s ta r tin g his
a re e r a s a m esse n g er in th e S ta te
National B an k a t the a g e of sixteen.

M O N T RATE IS C O T 1
| . FOR CLEVELAND DISTRICT
F4deiralM**vfc
Figur£?or2 Tl®lf-Day
Paper to 5yz Per Cent.—Reduction Marks Move
of Local Bank to Earn Its Living.
Bond Prices Fairly Firm in Second Full Session on
New York Exchange—Restricted Resumption in
Stock Trading Under Consideration.
BY H E R B E R T S. RO SEN TH A L .
:
"While th e low ering of discount ra te s by th e fe d e ra l reserv*e board is a
reco g n itio n o f the easie r money m ark e t conditions, i t is also th e first im por­
ta n t step to w a rd m ak in g the new system e arn its own living.
T he F e d e ra l R eserve B an k of C lev elan d ’s r a te fo r com m ercial p ap er runniag t h ir ty days or lees y e ste rd a y w as reduced from G to 5% per cent.,
though no change w as m ade fo r p a p er of longer m a tu rity . C uts w ill be a n ­
nounced in n early e v ery reserve d istric t and m em ber bankB are encouraged
to give custom ers a ll reasonable accom m odation. A s m a tte r of fa c t, th e new
C leveland r a te w ill stim u la te reg io n al b an k business only m oderately, fo r
b a n k e rs can g e t m oney in th e e ast a t 5 per cent, and less.
T he one-half of l 'p e r cent, under th e general open m a rk e t ra te ru lin g in
th is te r r ito r y is n o t m uch of an inducem ent, fo r tho m em ber b a n k e r con­
sid ers even 1 p e r cent, too sm all a m arg in w hen he figures overhead ex­
pense'
A s fo r th e ^ c o u n try b an k er, t he am ount o f th irty -d a y pap er in his
p o rtfo lio a t th is tim e of y e ar is sm all, and th e benefit of th e new ra te is
av ailab le to him fo r th e m ost p a rt only as longer-tim e p a p e r approaches
m a tu r ity ./

can say, *!th confidence, th at no selft^
interests assisted at its birth. I*can
fu rth er say th a t beyond those primarily
responsible for Its provisions—Mr. Gian
snd others of the House, Senator O + W
and others of the Senate, and the 5?ecre ta ry of the T n easury-there looms np
one figure more entitled to the c r ^ i t
for its provisions than any of the oth
era. the m an primarily responslblePresident Wilson/*

M A A K hK S l i t L S l T f
U lf lio o
— O fficers a n d d ire c to rs of th e F e d ­
e ra l R e se rv e B a n k w ere e n te rta in
| a t d in n e r a t th e H otel S ta tle r la*t
n ig h t by S e n a to r T hom aa A. Com bs
I T oT ln^tnn. K v

AT ASLOW PACE
Total Accommodation Now
Afforded by Cleveland Re­
gional Bank $97,784.
High Rates Keep Volume
Down, a Few Applica­
tions Are Pending.

V a l u e N ot to b e M in im is e d .

] B u t th e v a lu e of th e lo w erin g is
riot to be m inim ized. I t w ill produce
a so m e w h a t in cre ased volum e of re ­
d isc o u n tin g a t th e re g io n a l b a n k , it
w ill en co u ra g e m em ber b a n k s to a c ­
co m m o d ate each o th e r on p a p e r or
a d e q u a te se c u rity of a n y so rt, a n d it
Is fo rm al acknow ledgem ent m a t th e
tim e s p e rm it loosening of th e strin g s
pn th e re se rv o ir gold.
: I t is w o rth y of n o te th a t th e C leve­
la n d re g io n a l b a n k w a s th e la s t to
s t a r t re d isco u n tin g , b u t th is th ro w s
no lig h t on m oney h ero a s com pared
to o th e r sectio n s because o u r ra te s
w ere m id w ay betw een th e low a n d the
h ig h . T he v a lu e bein g placed a t th is
tim e on liq u id ity is exem plified in the
w hole sy ste m sho w in g a t th e end of
la s t w eek; w hen re d isco u n t of p a p e r
m a tu rin g in n o t o v e r th ir ty d a y s w a s
$">.837,000. co m p ared to ?1.097,000 ot
p a p e r ru n n in g n o t over six ty days,
a n d $429,000 fo r lo n g er m a tu ritie s .
B o n d P r ic e s F a ir ly F irm .

T h e second fu ll sessio n 's open d e al­
in g in bon d s on th e N ew Y ork e x ­
c h a n g e p roduced a re p etitio n of th e
la g g in g m o v em en t of th e p re ce d in g
day. C losing p rice s w ere a b o u t on a
level w ith th o se o f M onday, a n d in
som e issu e s tra d in g cam e to a n a b ru p t
sto p a s th e m in im u m s w ere reach ed .
In th e fa ce of lig h t dem and th e lig h t­
n e ss of offerings w a s g ra tify in g . .
All tra d e s fo r fo reig n a cc o u n t m u st
be so d e sig n ated , w hich fu rn ish e s a n
in d ic a to r fo r th e com m ittee of live in
fixing m in im u m s. T he p re se n t m a r­
k e t does n o t p re te n d to be a c riterio n
of c o n d itio n s: it is te s tin g o u t to d e ­
te rm in e w h a t th o se c o nditions a re,
a n d ju d g m e n t will be held in a b e y ­
ance.




GIVES WILSON CREDIT
FOR CURRENCY ACT
Governor Hamlin Says President
Is Mainly Responsible for
Banking Law.

C A -f f i 4

NEW YORK, December 3 .-P a n ic due
to distrust of banks has been relegated
to the museum of antiquities by the
new reserve banking system . In the
opinion of Governor Hamlin, of the fed­
eral reserve board, voiced this a fte r­
noon in a speech before the New York
Cham ber of Commerce.
H oarding by the people usually fol­
lows hoarding by banks, and does not
precede, asserted Mr. Hamlin.
“ If hoarding by banks should cease.*’
he said, “ hoarding by the individual
would never occur, and both will be rel­
egated to obscurity under the federal
reserve system ."
Mr. Ham lin did not think th a t all
panirs would be done aw ay with, of
necessty, by the new system .
“ If in the fu tu re business expands
unduly under the spirit of speculation
the day of reckoning will surely come in
the future as it has in the past." he
said. “ Undue expansion will correct
itself, ju st a s the air bubble will u lti­
m ately burst. I believe, however, th a t
the federal reserve banking system will
m aterially
check
undue expansion.
When, however, the sta te banks and
tru st com panies of the United States
join the federal reserve system (I hope
in the n e ar future), even th a t possibili­
ty will be g reatly minimized.
“Much speculation exists as to the a u ­
thorship of the federal reserve act. I

T he F e d e ral R eserve B ank of
C leveland for th e w eek ended w ith
close o f b u sin e ss F rid a y re p o rts totpJ
reso u rces of $18,77*5,027, of which
. is g o ld * n d gpid certifi­
c ates.
^ • * < n » l | B fV U r
T he b a n k h a s $59,450 federal r e ­
serv e n o te s on hand, th e am ount
of th e $75,075 certified by th e federal
re serv e a g e n t for circ u la tio n w hich
h av e n o t y e t a ctu ally been p u t out.
N ew n o tes a r e not necessarily issued
to re d isco u n tin g m em ber banks, b u t
w hen p a p e r is re discounted th e new
cu rre n c y is tu rn e d in to th e regional
b a n k ’s till from the fe d era l reserve
a g e n t’s v a u lt, to be d istrib u te d in the
o rd in a ry course of b usiness. R edis­
counts, all m ade in th e la te s t week,
a m o u n t to $97,781 a n d som e a p p lic a ­
tio n s a re pen d in g to be pasae4 Mn to ­
m o rro w .
^ r
y * W
For the p resent reserve Js f la r e d against
ieposit liabilities, m aking the ratio of gold
to deposits 102.8 per cent., but as an ap ­
preciable am ount of new federal reserve
notes Is put out, both gold and cash r e ­
serve will be figured ag ain st depoeit and
noteliabiU files. The Uem. -a ll other lia ­
bilities” includes profits, expense
checks
outstanding not yet turned In and other
minor m atters.
As w ill tw seen from the difference be­
tween federal reserve notes -" I n circula­
tio n ," th a t is certified for issue by the
federal reserve agent, and the am ount on
hand. ther« are now only S15.0C2 of the
Cleveland district notes actually in circu­
lation. In this territory there is outstand­
ing considerable emergency currency which
probably will be retired before the new
year has fa r advanced. This is the first
statem en t of the bank to be put out in this
enlarged form , so th a t no oomparlaon with
the previous week is possible, but hereafter
weekly comparisons wfU be made.
Cle\ eland notional hanks report for the
week a negligible decrease In loans or
$31,984, a like moderate increase in de­
posits of Wu,9i4. but a decrease in cash
and due from reserve agents of $901 842.
In th is decrease is seen fu rth er retirem ent
of em ergency currency an d some reduction
of eastern reserve balances due to paym ent
of local m erch an ts for goods Figures* nhow
th a t notw ith stan d in g the w ar o u r Imports
are large and paym ent for these Is finding
its w ay into local banks* accounts. C ountrr
*
banks in th is te rrito ry a re j------

With I Ott y <MH'cnpoiidwit» ra th e r ttttgt discnapglng old. w hich Is a ttrib u te d to th e q u ar­
a n tin e and afte rm a th and probably holding
of products which figure in forecasts for 1
^higher prices.
1
STA TEM EN T OF F E D E R A L RESER V E
B ANK O F CLEVELAND.
RESOURCES.
Gold and gold certificates.............. *17 127 595
Legal ten d er n o te s..............................
’i>54'755
Silver certificates an d subsidiary
’
c°ln .....................................................
488 264
Federal reserve notes on h a n d ....
59-45<)
N ational bank notes on h a n d .........
2^040
_ T o tal ................................................n8.632TlW
R ediscounts ..........................................
97 73^
All o th e r resources..............................
* 46,’iao
T otal resources ............................$18,776,027
L IA B ILIT IES.
C apital paid in .................................... $2,030,44fi
R eserve deposits ................................ 16,rt5a.60l.,
Federal reserve notes in circulation
7n.075
10.001
AJ1 o th e r liab ilities..............................
T otal liabilities ............................$18,770,027
Gold reserve a g ain st deposit liabilities

102 .8%.

C ash reserve a g a in st deposit liabilities
111.5%.
CLEVELAND CLEARINGS.
L a st week ............................................$22,700,305
Week last year ................................ 25,648.014
; Dec. 5. 1014............................................ 3.705.0&>
! D ay la st y e a r....................................... 3,834,048

P R O T ES T
F ree

C H IN ESE

LOAN

M aaon n In d o rs e N a t io n
R e s o lu tio n .

W id e

.f* c m u
y e sterd a y indorsed a reso lu tio n p ro ­
te s tin g a g a in s t the nego tiatio n of a
loan by a g e n ts of P re sid e n t Y uan Shi
K ai w ith U nited S ta te s b a n k e rs. T h e
resolution a sk s P re sid e n t W ilson to
w ithhold his official M jprcagl. & such
Chinese o rganizations
f > ^ r th e
U nited S ta te s a re being asked to s u p ­
p o rt th is resolution, w hich o rig in a ted
in New Y ork a n d w hich is su p p o rte d
by several prom inent leg isla to rs in
C hina.
The resolution say s a g e n ts of Y uan
Shi K ai a re in th is c o u n try try in g to
borrow for th e C hinese republic m uch
m oney from A m erican b an k ers. T he
backers of the reso lu tio n sa y th is
m ove violates a provision of th e new
c o n stitu tio n of China.

m ! ) tsb tu a u r o iftn

IS LARGE AT $11

Rediscounting of Twelve Regional Institutions Less
Than $10,000,000—Reasons for Slow Increase
—Bonds Ease, Stocks Firm.
1
"
O il 4
BY H E R B E R T S. R O SEN TH A L . %
The N ew Y ork clearing house banks y e sterd a y issued th e ir sta te m en t of
a c tu a l conditions fo r th e w eek ended F rid a y night. T his is th e first w eekly
re p o rt of a ctu al condition since the w ar began, and d aily average show ings
w ere m ade th e rule. The re tu rn to the ol<l form m akes com parison w ith the
p re v io u s w eek less sa tisfac to ry , but it gives a broad survey of th e work
-of th'e 'tWo la te s t w eeks'
jj
D eposits increased $10,GOO,0(H) in th e la te s t showing, while loans, as
n a tu ra l w ith th e big surplus reserve, rose $22,400,000. C irculation decreased
,700,000 from the previous w eek's average, b u t it is probable th a t the
a c tu a l am ount of em ergency currency recently re tire d was fa r above th is
sum , as in d ic a te d by th e loss of New Y ork banks to the su b tre asu ry fo r th e
w eek e f more th a n $34,000,000.
The excess reserv e m ain ta in s its sta n d in g as sa fe ty fund a t the large
figure of $119,400,000, a decrease of $8,700,000. I t is pro v id in g cheap
m oney fo r stre n g th e n in g th e bond a n d stock m ark e ts and as restrictio n s
on tra d in g are lessened th e f u n d ’s im p o rtan ce w ill grow.
T h is w e e k the c le a rin g h o u s e m akes —
...
. . ..
. k n o w n h o w m uch of t h e “reserve in
ic
noted th a t A m a lg a m ated
o w n v a u l t s ” is specie, $201,500,000, C opper h a s risen to the d ig n ity of th e
f o r t h e m o s t p a r t gold. T h is is a par- c le a rin g house group of stooks, b u t
t i a l c o n c e ssio n to t h e criticism m a d e 8**®* is still to be h eard from ,
l a s t w e e k th a t t h e lum ping of m etal
T he dro p in ste rlin g exchange to
a n d p a p er m oney g a v e n o a d e q u a t e ’ -t” 1-4 for s ig h t d ra fts w as re a sc o n c e p tio n o f how m u c h rock-bottom ®uring. T his is n o t the low est since
-Old is held
th e w a r began. N eeds of th e N ew
Y ork C ity n o te sy n d icate a re ta k e n
H onda a n d S to c k s C o n tr a r y .
c are o f for th e present, a n d c otton
B o n d s a n d s to c k s y e s t e r d a y m o v ed is m oving d a y by day. T here w as ta lk
B o n d s e v i n c e d ' lnt h f o n Yn n U S S T f h T E J l E E

a n d 't h e 'l i s t Sgrew*
M ifrflx B d v le ld s e c u ritie s
to
a ne“
m u s t a d j u s t th e m s e l a
..
r t a t u s o f a f f a ir s s e e m s to 1be ™ * i n g
h u t ^ f o r e I t ^ n b « t a k e n fo r
. a l i t t le w h ile m u s t elftp ee
to g iv e e m e r g e n c y s e lle r s tu n e to
liz e . A fte r th e first flu sh 6 f th e
e n e d n a r k e t h a s p a s s e d I t w ill
r Ir,
a t . o n o f t h e tre n d
b o n d s th e re w e re no
t h e ® T erag» b e in g
t h a t i f fo re ig n
" g 'th e y a r e do

• .x - m e a l f « h ..



T

P > ^ o ra o f^ lo n e y
N e w ^ k
m a k e s 11 lik e ly t h a t a s th e 8 e lo a n s
raa tu r e th e y a re -being paid off.
R e ic h sm a rk s w ere stro n g y e s te rd a y
risin e to n e a r 88 c e n ts , w h ich
In a y n o l be d u e ^ gelUng of
G e r m a n - h e ld s e c u ritie s ,

^ ^

INCREASES 13,0011111
W A S H IN G T O N , D e c e m b e r 5.—A s t a t e ­
m e n t a c c o m p a n y in g th e r e p o r t o f c o n ­
d itio n o f t h e f e d e r a l b a n k s p o in ts o u t
t h a t th e b a n k s a p p a r e n t ly a r e o b s e r v ­
in g t h e b o a r d 's re c o m m e n d a tio n s t h a t
a la r g e p e r c e n ta g e o f t h e p a p e r d is ­
c o u n te d b e o f n o t lo n g e r m a t u r i t y th a n
th ir ty d a y s. T h e s t a t e m e n t s a y s :
“ C a s h h o ld in g s a n d
d e p o s its sh o w
s m a ll c h a n g e s a s c o m p a re d w ith th e
p re v io u s w e e k , w h ile g o ld h o ld in g s
s h o w a n I n c re a s e o f a b o u t $3 ,0 0 0 ,0 0 0 ,
la rg e ly o ffs e t b y r e d u c tio n s In o th e r
c a s h h o ld in g s . R e d is c o u n ts a m o u n t in
ro u n d fig u r e s to $10,000,000 a n d t r a n s ­
a c tio n s a r e r e p o r te d b y a ll tw e lv e o f
th e b a n k s . T h e I n c r e a s e o v e r t h e p r e ­
v io u s w e e k t h u s I n d ic a te d is n e a r ly $2,­
500,000. M o re t h a n 75 p e r c e n t o f th e
p a p e r d is c o u n te d
w ith
th e
re serv e
b a n k s m a t u r e s w ith in
th ir ty
d ay s,
w h ile N e w Y o rk , C h ic a g o a n d S t. L o u is
r a n k In t h e o r d e r s t a t e d a s r e g a r d s
r e d is c o u n t b u s in e s s .
T h e a g g r e g a te
a m o u n t o f c a p ita l s h o w n is s lig h tly
d iff e r e n t fr o m t h a t r e p o r te d l a s t w e e k
a s a r e s u l t o f a d j u s t m e n t s w h ic h h a v e
b e en n e o e s s a r y in th e c a p ita l a c c o u n t
o f s e v e r a l o f th e m e m b e r b a n k s .

Bankers a t Cincinnati.

New York Clearing House Banks Report Modest Reduc­
tion in Safety Fund, Which Serves Good
End in Supporting Markets.

in o p p o s ite d ir e c tio n s .

1-tUthflL HANKS GOLD :

C hairm an D. C. W ills and Governor E. B.
Fancher, of the federal reserve bank, were
guests a t the dinner of group 1, Ohio B ank­
ers’ Association, a t C incinnati la st night.

Elgin B utter Market.
ELG IN . IL L ., December 5.—B utter, 82c a
pound. Unchanged from la st week.

E m e rg en c y

a u iv *

---------------------- .c

In th e e a s t call lo an s a g a in W6 e
m ade a s low a s 3 1-2 p e r cent. * 0 4
b e st m e rc h a n t p a p e r sold a t 4 1 -4 .
In th e m oney m ovem ent betw een th is
te rrito ry a n d N ew Y ork th ere Is a
te m p o ra ry deadlock a s th e p a r of
N ew Y ork ex change a t C hicago for
the la s t th ree d a y s h a s show n.
E m e rg en c y c u rre n c y is a rriv in g a t
th e tre a s u ry in su ch a m o u n ts th a t
th e c o n tro lle r's office is w eeks b e ­
hind in /c o u n tin g a n d d estro y in g . As
expected, m uch of It w a s nev er used.
T he fe d era l re serv e b o a rd p e rm itte d
a re d u ctio n of th e re d isc o u n t r a te on
com m ercial p a p e r of m a tu rity n o t
exceeding th ir ty d a y s to 5 1 -2 per
cent, in th e M inneapolis regional
b a n k a n d th e th re e in th e south, in
S t. L ouis, D a lla s a n d A tla n ta , a
g u a rd ed re co g n itio n of th e m oney
tre n d in th e cotton sections.
T he c o n sid era tio n b e in g given by
those in c h a rg e of th e cotton loan
fund to th e su g g e stio n t h a t loans be
m ade only u p to 80 p e r cent, of th e
value of c o tto n on th e b a sis of 6 c en ts
a
*o r m *dclling, in stea d of up
to 100 p e r ^cent. is a n o th e r o utcroping of th e m oney tre n d .
.

C lio o a ln * a C l e a r a n c e City.

T he fed eral re serv e bo ard y e sterd a y
discussed w ith th e regional b a n k gov­
e rn o rs th e selection of a regional
b a n k c ity a s a c le a ra n c e c en ter for
th e e n tire c o u n try .
C hicago won
som e fav o r in th is conference because
of its c en tral location a n d because of
th e existence th e re of a su b tre a s u ry
a n d im m ense v a u lt fa cilitie s. C le v e ­
land, m ore n e a rly th e c e n te r of th e
c o u n try ’s volum e of business, is in th e
ru n n in g . T he fed eral b o a rd cam e to
n o conclusion a n d i t wra s decided th a t
fo r th e p re se n t th e re serv e b a n k s
s h a ll c le a r o n ly ch ec k s of m em b er
b a n k s in t h e i r p a r tic u la r d istric ts.
T h e q u e s tio n o f c le a ra n c e s f o r o u t ­
sid e b a n k s w a s t u r n e d o v e r to a c o m ­
m i tte e o f flv e g o v e r n o r s , w h ic h w ill
r e p o r t to t h e b o a rd n e x t m o n th .

-JCttAjL. J S A U B .S SOON TO O i-J S K A IJ S J W r i l V J U i .* .
A ll o f t h is h u b e e n a c c o m p lish e d w ith o u t d l~ < *
fe d e ra l re se rv e b a n k s. A ll tw e lv e In s titu tio n s h a v e
0 n ly n w a s e , r ^ r n ^ r ^ ° o ° p e n e d .
d isc o u n t r a te s n a m e d w as to p r r f « * t h e ^ T S S l i t o W
e x c u s e . If t h e s i g n s r e a d t r u e , c a n
b a-nks m u s t s o o n b e g in to o p e ra )

- *
T h e fe d e ra

In l i t * ^ l s c o u n t m a r k e t o r 1e

p o rt; J. N. Kclioe, of M arysville; Ed Seiter, of
C in cin n a ti; T hom as M cEvilley, o f N orw ood; S.
P., R ankin, of South C h a rle sto n : W . E. H utton
and J. M. H u tto n , of Cincinnati, and W . O.
B arnitz, o f W !?Ntetown.
i h o m f s J. D a v T l^ re tirin g chairm an of the
g ro u p s ably p r e s id e tr ^ t the general m eeting and
acted a s to astm a ster at^Htf banquet.

f ° re lS u “ g T e ^ w e e k c ir c u la r s h a v e a p p e a r e d
a n n o u n c in g t h e i r I n te n tio n ., to d e a l I n 1b a n k e r s b a n k e rs ’ c o r r e s p o n d e n c e w i th t h i s e n d i n v
•
o r3 ed p a p e r . T h is
o lare th e ir I n te n t io n to e i t h e r b u y o r s e ll b a n k e r s e n d o r s e d p a p e ^
looks lik e t h e s e c o n d p h a s e o f a m o v e m e n t s e e n d u r i n g
^
s c o u rin g
w hen N ew Y o r k a n d C h ic a g o b a n k s w e n t o u t In v a s t
th e c o u n try f o r all t h e c h o ic e p a p e r t h e y c o u ld f in d . T h e b o n a n o u *
ioo, lt w ould a p p e a r , a r e g e t t i n g I n to t h e r u n n i n g .
. w >>ether
All o f w h ic h e x c ite s so m e I n t e r e s t i n g q u e r ie s . O n e o f t h e m Is w h e u i
th o N ew Y o r k f in a n c ia l d i s t r i c t is t o b e p e r m l t t . d t o c r e a t e a n o p e n d Is-

th e re sid u e a f t e r th e c h o ic e s t v ia n d s h a v e b e e n a s s im ila te d b y t h e c a p i t a l
•£ ? £ * * * , —

o.

j w

W

u

o f 'th e heading c e n te r s in s w e e p in g u p a l! th e c h o ic e p a p e r th e y c a n g e t. p a r tlc n la rly s u c h a s b e a rs b a n k e r s ’ In d o rse m e n ts.
the b an k perfo rm helpful services to the busine?'
needs o f the country ra th e r than be concerned
in earniner dividends, b u t th a t th ere would he
wavs and m eans found bv w hich a fte r the first
f*-w m onths the bank could be m ade to earn
A Cincinnati dispatch s a y s ;
dividends.
_
to
have
been
the
H e a sse rted th a t the nrim arv function o f the
D eclared by those present
the
m
ost
enjoyable
new
svstem
w
as
not
to
m
a
te
cred
its
easier b " t
w iost instructive as well as
to m ake credits better, and be believed th a t it
W e tin g ever held by the group, uie iim u,
ivould re s 'd t ir, imnrovinor the c h ara cte r o f the
m eeting and banquet o f G roup 1, O hio B ankers
ne souint in n s ooff the
tn m em ber banks.
Association, com prising the banks in the
south
inguished
I
H e said th
, a t th e C leveland bank had restricted
w e s te r n . c o u n tie s of th e state, w a s distiu;
coilccti<: system a t the start, but th a t eventually
last S aturday night by the presence of G
Inovernor tj,c collection
i.' R Fancher and F e d e ral R eserve Agent
el1lt L L i .
t |i s would grow to be a g re a t function o f the
nk. “ T li?
, I nk T he board w as proceeding carefully, m ak ­
TTifls. o f the C lev e laW R egional Bank.
i h n n V p rl
.
■ _______
;Lfi;ilt-! which was attended by over 300 banker*
ing progress slowly, but surely.
was held a t the H otel Sinton. T h e m eeting .^ t
J l l e said th a t a conference of all the governors
tl e group was devoted to a n interesting inform al •If the system w ould be held at W ash in g to n on
discussion of the new w a r ta x and the w ork­ T uesday and W ednesday, to discuss and plan a
system ,
ing o f
the
new
fed eral
reserve
iy ste m o f interchange collections betw een the 12
A fterw ards an elaborate banquet w as served in ^districts.
the ballroom rii the Sinton.
1le d eclared the present system w as n earer a
M W R enick, president o f the M erchants N a ­
i central bank th an m an y tho u g h t, because of the
tional of M iddletow n, was elected chairm an o f the
| large pow ers e xpressed and im plied o f the Federal
••roup- C. \V. Dupuis, cashier of the Second N a­
Reserve B oard, b u t th a t the present system had
tional Bank o f Cincinnati, w as re-elected sccrethe a d v an tag e over the central bank in th a t it pro­
and
trea
su
re
r,
a
n
d
\
\
.
B.
G
ebhart.
president
tary
vided 12 w ell-distributed reserve centers over the
...v Citv X ational o f D ayton, C. C. E ulass. country. H e said th e m otto o f th e country. “F
.f the
cashier o f the L ebanon X atinrial o f L ebanon and
and
P luribus U num ,” m ight well be designated as the
E dw ard A. Seiter. vice p r u d e n t o f the^ H tth w ere elected m em ­ m otto o f the new reserve banking.
T h ird X ational of C incinn
H e said th a t u n d e r the in stru ctio n s o f the F ed­
bers o f the executive com m ittee fo r th ree years
T h ere w as no opposition to th e candidates who eral R eserve B oard the ra te of discount in any
district could not be changed w ith o u t the central
were nom inated bv a com m ittee, consisting ot
board's approval. H e said th at ultim ately the new
1 honias XictVviirev.»©» C in cin n ati; u . w. o a iu ..
system w ould req u ire some changes in the m eth­
of M iddletow n, and S. D. I itton, o f H am ilton.
ods o f business of the m em ber banks, but these
GOVERNOR FANCHER TA LK S.
G overnor F a n c h er gave an in te restin g talk o changes w ould be w orked out gradually.
the organization and purposes o f th e C lev elan
H
1 1e
L* predicted
p r C U I C t C U lth
na
ati under
u iiu c i
the
m e
new
n
t w
s
system
ta ic m
banks
u anivo
reserve bank. He declared th a t estim ates o f th w ould be called on less frequently to finance what
cost o f the bank and the num ber o f employes th.. should be fixed capital requirem ents of industrial
w ould be required to run it w ere far m exees and business houses, and w ould result in m aking j
of w hat had actually been needed. So ta r th the general investm ents of the m em ber banks
bank has but 30 em ployes and every effort ha m ore liquid in character.
been m ade to keep the o verhead expenses fron

Lrroup une bankers Meet At
Cincinnati

M S C I'S S

WAR TAX.

le asserted th a t w ith the hearty co-operation
P1'n e 'aid th ere w ere 500 applicants fo r position:
in the bank but none f r o m C incinnati, indicating 0 f t ]le m em ber banks nothing but good could
t i n t everv b anker in C incinnati w as apparently sat corne o{ t he new system .
isfied w ith his p re sen t position. H e said the Cleve
C. W ills, federal reserve agent, told o f the
land bank had th e sm allest am ount o f re discount1 new system from the standpoint o f the direct
of anv of the tw elve reserve banks, and w as the representative of the governm ent on the banklast one to issue anv of th e federal reserv e cur hoard.
rencv.
H e declared th is to indicate th a t tne. A m ong those tak in g a prom inent p a rt in the
fo u rth d istrict was an exceptionally stro n g one u a r t ax and reserve system discussions preceding
and w as less affected bv the eeneral business dt t ile b anquet w ere O. X. Sam s, o f M iddletow n
nression th an m ost others. H e declared th e pur-|c n- F
—ittn n n f Hamilton*. Al L arkin, of Newnose o f the F e d e ral R eserve B o a rd w as to hav<-




K e g u i a u u i i c .rm o t a t e B a n n s
T he F ed eral R eserve B oard at W ashington hel<
i l . C°|I ,r cuc'' i,,e *dav^ w ith representatives o
■■tate hanks and tru st com panies, to discuss regu
ations fo r th e ir en trance to tho federal svstem
out tailed to reach a point w here definite rule
to govern th e ir adm ission could he outlined. Th.
com m ittee o f sta te bankers, appointed for the pur
pose o f considering this question several month
me
at the Richm ond m eeting o f the America!
a n k e rs' A ssociation, late r announced its inauini}
) solve the problem for the present.
B ankers in W ashington T uesday tentatively
ffered one suggestion w hich did not meet with
re a t fav o r am ong board m em bers. 7 hey proposed
:iat state banks and tru st com panies lie perm itted
- quit the federal system w ithout the process ot
iquidation now required o f banks which give up
heir m em bership. It was pointed out luesday
light th at if a large num ber of state banks were
o en te r the system and were to becom e a vital
lart o f it they m ight be able in the future tc
x e rt u ndue influence th ro u g h such an arra n g e ­
m ent. T h e board, som e of its m em bers 'aid
m ight find em barrassm ent in the ability of thou­
sands o f banks to w ithdraw if it m ade rulings
thev did n o t like.
. . . .
, ■ , <
In a m em orandum left with tnc board the bank­
ers pointed out th a t hardships m ight be imposei
upon state institu tio n s th ro u g h the pow er ol
the board by law to m ake regulations to goverr
the operation of all m em ber banks. T he memo
randum pointed to the difference between na
tional and sta te banks, and declared that tu tu r
regulations m ight prove difficult for state bank
to meet, and th a t in s u c h cases no rem edy woul
be left to them but liquidation.

HbNHY N. S F A N D A R T
PU B LIC ACCOUNTANT
1001

I Maln775

ILLUMINATING
CLEVtLAMD

BUILDING
c«nt

jsk-h

Reserve Board And State Banks
A U asffTngton dispatch says :
1 liat fu tu re federal reserve boards may abus
th eir pow ers and work hardship on -tate bank
and tru st com panies w hich en te r the system i
le a r expressed by state b ankers’ com m ittee. 1
declares th at while it is easy fo r banks to entej
the system , they have no way o f getting out ex
;ept through liquidation. They suggest th at thi;
provision is u n ta ir to banks which may desire U
.ontinue in business a fte r having given the fed
ral reserve system a trial and found it unsatis
actory, and they particu larly object to the faci
h a t any decision the board m ay m ake is irreocable.
As to the section em pow ering the board to fix
egulations and by-law s governing sta te banks and
ru st com panies, the statem ent r e a d s ; "T h is reguatio n seems to contain elem ents o f g rave danger
nd to im pose hardships not imposed on national
■anks.”
I he hankers’ com m ittee declares th at it has
een unable to m ake any positive recom m endaions for am endm ent, but hopes its objections
j t h e law as it stands will be heeded by the
“S n i.




I

i c u c ia i .re s e rv e s y s te m

December circular o f N ational City B ank s a y s :
ih e m ost im portant event o f the past m onth was
1K‘ opening of the federal reserve banks. T he
iecdn4^com bined statem ent show ed reserves of j
ipproxim ately $270,000,000, or a little above lot*
per cent against all demand liabilities. O nly o n e*
hird of capital to be called up has been paid in,
i?id the first instalm ent of deposits. W hen all
layments required w ithin six m onths a re com ­
pleted, the total will probably be abeve $300,000,) 00 .

"

W ith $250,000,000 qjT.deposits and $50,000,000
jf capital paid in. these banks will have received
MOO,000,000 of reserve money, w hich w ould pernit rediscounts of $350,000,000, and still have a
reserve of 50 per cent, provided rediscounts did
*ot involve a loss of gold. W hile $350,000,000
loes not bulk very large when com pared w ith
iabilities of all member banks, which reserve
lanks are organized to protect, it is a very hand-ome sum to have available fo r rediscounting.
Rediscounts and bills payable of all national banks
it last statem ent aggregated about $150,000,000.
Perhaps the m ost notable featu re is the show ng o f reserves released in m em ber banks, New
* ork coming to the front w ith a surplus of $137,100,000. W ith rediscounting privileges available,
t will he unnecessary for m em ber banks to carry
is large reserves as form erly, but herein lies proision for credit expansion on a very larg e scale.
I hese reserves have been released fo r use, in
li'Cretion of bankers, and it m ay be assum ed th at
iltim ately they will come into use, but it is clear­
y desirable that they shall not be used .'reely at
iresent.
Such a degree of expansion—suddenly m ade—
vould be abnorm al and unhealthy at any tim e.
111.1 in early operations of the reserve banks
nigh* bring em barrassm ent to them. W hile these
urpl. s reserves are being alw>rbed the reserve
.auks will have little c o i^ ^ p 'o v e r the m oney
uirket, and i n ^ r e s e n t unsettled sta te o i uic
..reign exchanges it is conceivable th a t considerble m ischief could be done before they obtained
tfectual control. If, for exam ple, these surplus
eserves were so used as to create balances against
s in the foreign exchanges, the effect w ould be
) cause dem ands or. reserve banks for gold for
xport. T his m ight come about from a general
elaxation of the money m arket w ithout being
irectly traceable o r foreseen.
T he credit situation in the U nited S ta te s is
norm ously im proved by having the reserv e banks
n operation, but gold resources o f th ese banks
re not yet so large that they can view adverse
. reign balances with indifference. W e a re still
veak in o u r international relations by reason of
!:e fact th a t so large a p art o f o u r gold stock is
.cajtered in 25,000 banks and in circulation, while
lem afM s^for export in the fu tu re as h e re to fo re
\ ill fall on N ew York.

riiiS B U K G A BAD LO SER.
I T is n e a rly b e yond b e lie f t h a t a fte r
th e re se rv e d is tr ic t b a n k s c re ­
a te d by th e new b a n k in g law o f the
U n ite d S ta te s h a v e b e en open ed and
a f te r th e y a re a c tu a lly doing bu si­
n e ss, th e fe d era l re se rv e b o a rd will
u n d o a n y p a r t o f th e w ork done by
its c o m m itte e on o rg a n iz atio n . N o th ­
in g o f th e k ind w ould b e h e a rd of it
P itts b u rg w ere n o t so bad a lo se r in
a fa ir light,
C lev elan d won th e c o n te st fo r th e
lo ca tio n of (he re s e rv e b a n k o t th e
fo u rth d is tric t a s sq u a re ly a s p o s­
sib le. I t w a s n o t a su c c e ss g a in e d by
politics. T h e r e s u lt w as n o t th e
fru it of c h ic a n e ry o r m is re p re s e n ta ­
tio n of a n y k in d . I t c am e a s th e
d e lib e ra te c h o ice of c o m p e te n t m en.
a f te r long c o n sid e ra tio n of th e fa c ts
b e a rin g upon th e ir decision.
Y e t n o tw ith s ta n d in g a ll oft t f ^ |
r e a s o n s fo r b e lie v in g th a t th e d is­
t r i c t re s e rv e b a n k w ill s ta y w h e re it
w as o rig in a lly
placed, C lev elan d
b u sin e ss in te r e s ts m u s t n o t ta k e too
m u ch fo r g ra in e d .
h e n P itts b u r g s
re p re s e n ta tiv e s a re giv en th e ir h e a r ­
ing, in J a n u a ry , b e fo re th e fe d e ra l
re s e rv e b o a rd , th e ir a rg u m e n ts m u st
be m e t a n d C le v e la n d 's c a u s e up­
h e ld in th e m o st fo rc ib le a n d con­
v in c in g m a n n e r. N o th in g le s s w ould
p ro p e rly g u a rd th o rig h ts a n d p ro ­
m o te th e nroR 'i-ss of th e S ix th C ity.

DltolNtddbKUW5

In m a tu r itie s th e re d is c o u n ts of
.he re g io n a l b a n k now ru n ro u g h ly
is follow s:
#90,000 th ir ty d a y s or
css, $100,000 s ix ty d a y s o r less, $130,X)0 n in e ty d a y s o r less, $40,000 o ver
ninety d a y s— p ro viding, a s th e y a re
leslg n e d to do, ro ta tio n of m a t u r i ­
ties.
T he o u tp u t of fe d era l re se rv e n o tes
re w In th e w eek trom $15,625 to
51,2t)5, th e fig u res re fe rrin g to a c ­
tu a lly c ir c u la tin g notes, th e d iffe r­
ence betw een th o se on h a n d a n d
those certified fo r c irc u la tio n by th e
fe d era l re se rv e a g en t- T ho in cre ase
In fed eral re se rv e n o te s is in sig n ifi­
c an t, a s th e e m e rg en c y c u rre n c y still
o u t in d is tric t N o. 4 Is e a s ily sulfi
oient to ta k e c a re of all h o lid a y
needs.
T he Item “ all o th e r re so u rc e s" is
m ade up j*or th e m o st p a r t o f law ful
m oney in th e p rocess of b e in g e x ­
changed fo r gold a t th e s u b - tr e a s u r y :
w hile th e a m o u n t is p ra c tic a lly a s
good a s cash . It is “in a b e y a n c e " a n d
th e re fo re n o t p u t dow n a s su c h ; th e
Item includes a lso expenses.
“All
o th e r lia b ilitie s” is m ad e u p chiefly
of in te re s t in pro cess of b e in g e a rn e d
th ro u g h th e re d isco u n ts.
I t is interesting: t h a t o f th e $413,­
0 0 0 in cre ase in re d isco u n ts of th e
tw elv e reg io n al b a n k s fo r th e w eek,
$264,751 w as in th is d is tric t. T h is
i in d ic a te s a g a in t h a t th e re la x a tio n in
j m oney h a s n o t been a s g r e a t here
a s in som e o th e r sections; th e sh o w ­
ing Is f u r th e r a cco u n ted fo r by th e
m a tu rin g of s h o rt-tim e p a p e r in th e
fo u r w eeks w hich h a v e p a sse d since
th e first re d isc o u n tin g w as done. T he
C leveland b a n k w a s th e la s t to s t a r t
a n d c o n se q u en tly h a s few c u rre n t
m a tu ritie s . T he sta te m e n ts follow :

f

F*ED£RjiI, R ESE R V E BANK O F C L E V E ­
LAND.
RESOURCES.
Dm. 11.
Dec. i .
GoM alid gold c«rtfrtoatw .................. *17.025.470 *17.«7.M>S
tender n o ta a ..
S30.GSG
SM.7C8
Silver oertlfleatft* and
subsidiary cotn
..
477.488,304
F edem t reserve notes
96.U65
59.4B0
on hand ..................
N ational bank notes
on hand ..................
3,00ft
2,040
Total ........................ *l«,4a2.404 *18.032.104
Rediscount* ...............
Sfl'2.03S
87.78-1
All o th e r m aoepce*...
455,375
4H.139

Rediscounts of Cleveland In
stitution Increase $264,­
000
in Week.
Extends Greater Accommo
dation to Members— Sys­
tem’s Statement.
In th e w eek ended w ith th e d o s t
of b u sin e ss F rid a y , th e F e d e ra l R e ­
serv e B a n k o f C leveland a ffo rd e d its
m em b er b a n k s b o rro w in g fa c ilitie s in
in creased volum e. T he re se rv e in s ti­
tu tio n ’s re d isc o u n ts rose from $75,075
to $362,635 a n d m o re a r e p ending
to b e p assed on.
T h e re g io n a l b a n k Is receiv in g
m ore r p
for acco m o d atio n ,
and
e ; • >es o n a n d its re q u ire ­
m ent., - :r.f> fixed In th e b u sin e ss
mb
i\g a c c e p ta b le pap er
in gT tatf i
uiint. T h is extension
ot th e b a n k 's a cco m m o d atio n s is not
i u e to a n y p e rce p tib le tig h te n in g in
h e m o n e y m a rk e t, b u t r e s u lts from
i n u m b e r of causes, a m o n g them
o w e rin g of th e r a te on m a tu ritie s
to t exceeding th ir ty d a y s to 5 1-2
>er cen t., a p p ro a c h of m o re paper
o re q u ire m e n ts laid dow n, a s sta te d ,
ind to p re p a ra tio n fo r t u r n o f the
/e a r b u sin e ss m oves.
T h e c o u n try b a n k e r is b e g in n in g
tlso to b rin g in p a p e r Issued to r
igrl c u ltu r a l purposes, a n d
pap er
iased on live stock, w h ic h c a n
UK exceed!!




Total resource!! ___ *19,280.412 *18,776.CC17
L IA B ILIT IES.
C apital paid in ..........
$2,0110,946 *2,000.440
Reserve deposit* . . .
17.004,874 16,853,802
Federal reserve notes
certified for circu148.6S0
75.07S
laUon ........................
All other lia b ilities.
8,542
18.604
Total liabilities . . . *19.250,412 *18,778.027
Gold r sssrvs a g ain st a ll liabilities for Dec,
11, 99 psr cent.; for Dec. 4. 102.8 per cent.
Cash reserve a g a in st all liabilities for Dec.
11, 107 per c e n t ; for Dec. 4, 111.5 p e r cent.
Cash reserve ag ain st deposit liabilities,
setting aside 40 p e r cent, gold reserve ugalnst
federal reserve notes In circulation, for Dec.
11, 108 per cent.; for Dec. 4, 111.8 per cent.
FE D E R A L R E SE R V E SYSTEM.
W ASHINGTON, Dec.
12.—The consoli­
dated weekly statem ent of the tw elve fed­
eral reserve banks shows slig h t change*
during the p a st week. The statem en t fol­
lows:
RESOURCES.
Gold coin and certificates, $232,073,000;
legal tender notes, silver certificates and sub­
sidiary coin, $28,170,000; total. $200,248,000.
Bills discounted and loans: M aturities
witWn th irty days, $8,46ft.000: m aturities
w ithin sixty days. $1,900,000; other, $1,881,­
000; total. $10,257,000.
All other resources. $1,076,000.
Total resources, $272,47ft,000.
L I A B ILITIES.
C apital paid in, $18,047,000
R eserve deposits, $250,937,000
Federal reserve notes In clrculaxion fnet
am ount), $2,493,000.
T otal liabilities, $272.4TG.OOO.
Gold reserve a g ain st all HaWlitise. 91 6
per cent.. Cash reserve a g a in st a ll liabili­
ties. 101.8 per cent.
NTJ7W YORK C L E A R IN G HOUSE
N E W YORK, Dec. 12.—T he sta te m e n t of
the a c tu a l condition of clearing bouse btwnks
a n d tru s t com panies for th e w eek show a
th a t they hold $116,992,400 reserv e in excess
of legal requirem ents. T his la a decrease of
$2,478,230 from la st week.
ACTUAL CO NDITION.
Increase.
Loans, sto..................... $2,182,T53,000 $3,659,000
fR eservs
1«
own
va u lts
..................... 888,559,000 *3,651,000
R eserve In federa! reserve h a n k ..
93,842.000 *837,000
R eserve In o tb sr

N et tim e d e p o sit* ....
91,509.000 1.16,
Circulation ..................
60,067.000 •5.149,000
A ggregate re s e rv e .. . .
457,470,000
Exooss reserve ........
115.992,400 •2,478,280
tO f which $261,501,000 Is specie.
OTHER NEW YORK BANKS.
Loan* ..............................$560,056,700 $1,923,900
Specie .............................. 42.214,600
71,700
Legal tenders ................ 12,204.000
*58,100
Total deposits ................ 686.968,900 *1,087,500
Banks* cash reserve 4n
v a u lt ............................ 11,482,800
T ru st com panies' caah
reserve in v a u lt........ 42,936,800 .
•Decrease.
LOCAL NATIONAL*.
Cleveland national banks report for the
;reek ended w ith the cloee of business F rliay la st decrease ui loans of $384,169, de
•roese in deposits of $1,050,016 and decrease
n cash and due from reserve agents of
;257r408.
CLEVELA N D CLEARINGS.
ASt week ..............................................$21,102,586

in«*t vsar .............................24

H a le s

M e a n B u sin e s s.

R eduction o f discount r a te s bv the
F e d e ral R e se rv e B ank of Cleveland,
effective to d ay , will be sim ultaneous
J
"
*
K ^nsa
th ese tw o c ities _____
ana A
Atlai
tla n ta t W fa l~
fo r m a tu ritie s n o t exceeding th irty
d a y s will now be 5 per cent., for m a ­
tu ritie s not over six ty d a y s 5 1 -2 per
cenL. a n d for all o th ers 0 per cent.
T he th irty -d a y -o r-le ss ra te Is th e low­
est in th e co u n try . A ste p in recog­
nition of so fte r m oney m ark ets, tho
reduction Is also a m ove to increase*,
th e regional b a n k ’s business. P ro fit
a t th e s t a r t has been a m in o r consid­
eratio n , b u t it is rem em bered t h a t two
ad d itio n al sto ck su b scrip tio n in sta ll­
m e n ts wil! be p a y ab le in th e next
e ig h t m onths, and t h a t th e reserve
sy ste m a lre ad y h a s a paid -in cap ital
of $18,047,000, on w hich it hopes to
e a rn 6 per cent, dividends, w hich a re
cu m u la tiv e.
*
T he r i e v c l a y i f 4 g i |n $ I & 1 & re ­
d isc o u n ts a re frow tB6u(«SW tt,000,
h a v in g risen from $3<>2,l3()0 a t the
close of th e w eek T he paid-in capital
is $2,030,SHU.

ftlltKAL BANK REDUCES
ITS REDISCOUNT RATES
T h e C leveland fe d era l re se rv e b a n k
>oard T u esd ay took a n o th e r s te p to va rd pro v id in g a la rg e r c re d it for
n a n u fa o tu re rs a n d m e rc h a n ts.
It
■educed Its red isco u n t ra te s on S0lay p a p e r from 61-3 to 5 per cent,
tnd on 60-day p a p e r from 6 to 51-2
>.-r c en t. A ll m a tu ritie s of m ort
h a n 60 d a y s s ta n d u n c h a n g e d a t t
>er c en t.
*
T h is m ove on th e p a r t of'Tlie govrn m e n t in s titu tio n In d ica te s a f u r
h e r m o n e ta ry re la x a tio n in th is dis
riot. U n d er th e r a te s h e re to fo re it
orce re d isc o u n ts by m em b e r bank)
lave been lig h t. I t is e xpected npv
h a t m ore 30 a n d 60-day p a p er wil
ie tu rn e d o ver to th e fe d era l banU

^

(

( f

,

•

.

'" f it

/X - t i

Cleveland Federal Bank Lowers
Rates

T h e F ederal R eserve B ank o f Cleveland W ed ­
nesday announced a n o th e r low ering of its dis­
count rates. F o r paper m atu rin g in :i0 days or
less the rate w as reduced fro m b'A to 5 per cent.
F o r paper not t ver BO days the rate is now 5'/2
l>er cent a n d fo r o th er m aturities 6 per cent
J

,

-

Federal keserve cans

^

;

F red erick H. C urtiss, chairm an of the d ire g ^ rs
of th e F ederal R eserve Bank o f Boston, in an
a d d ress before the B oston A rt Club, said in
p a r t:
T h e business m an i> asking. “W h at will the
new federal bank law m ean to the business man,
w hat did we need any federal reserve banks for.
and is it goin g to m ake it easier for a business
m an. sound financially, to take care of an e x ­
p an d in g a n d e n la rg in g business?”
Indirectly the federal reserve act was dev.loped
from the lessons o f the 1907 panic, and while
we shall probably again have com m ercial crises
— fo r business in the fu tu re may expand unduly
as it h a s in' th e p a s t - a financial panic will be
im possible u n d e r the new lartv which is a sa fe ­
gu ard against the b re a k y ^ rd n w n of o u r hankin'.
•system , and th ese crises will be lim ited in effec
to com m ercial ra th e r than financial, as they have
been in other banking cou n tries even under tin
presen t e x tra o rd in a ry circum stances produced b;
the p re sen t war. ( )nr troubles will be m on
1 'calized. and les* violent and less devastating ii
th e ir results.
U n d er the national banking act too large :
p ro p o rtio n of o u r banking reserves have tender
to c oncentrate in Xew Y ork City, w here the;
have been loaned out against stock exchang
collateral, instead of being used for commercia
purposes, w ith the results th at ra te s for mone;
and prices fo r securities have fluctuated her.
m ore w idely th an in any o th er country. TheS'
loans, m ostly m ade on dem and, have proved .
m ost a ttrac tiv e form o f liquid investm ent fo
bankers in no rm al tim es, but with a genera
dem and for th e ir paym ent they prove t.. lie any
th in g but liquid.
U nder the new banking law these banking re
serves will ultim ately be carried in the federa
rese-ve bank in the district w here the} belon;
and will be invested in the highest grade of short
tim e com m ercial paper, o f a character and ma
tu ritv th a t will m ake them available w hen callei
fo r by the banks to w hom they belong.
In 1907 there w ere difficulties experienced ii
collecting custom ers- checks w hen payable oi
banks outside Xew F .ngland: in other words, ou
dom estic exchange broke dow n during th at period
T he federal reserve act provides that the federa
reserve hank shall accept at par, checks am
d ra fts draw n by depositors o f any m em ber ban!
th ro u g h o u t the country. It m ean- th at in tim<
practically all charges o f exchange will he don<
aw ay with thro u g h o u t the country. A depositoi
in any m em ber bank will have his checks c o llects
"in all parts o f the c o u n try free.
I think the new h anking system max inaki
noney easier but I feel -tir" it will make money
-ates steadier, w hich i- quite as im portant to
he business m an. fo r if a m erchant can count
m w hat he h a s got to pay fo r money, he can
;auge his business accordingly.
T h e a d ju stm e n ts o f the new reserve requirenents th a t w ent into effect N ovem ber Hi with tht
ipening o f the federal reserve bank released some
■190,000.000 of cash thro u g h o u t th e country, which
s available to g ra n t fu rth e r accom m odation ti
he business com m unity.
T he efFect o f tlie release o f this money haIready
proved a facto r in the larg e reduction o f

ar.k
issued under the A ldrich-V reeland
http://fraser.stlouisfed.org/
ct.

Federal Reserve Bank of St. Louis

Federal Advisory

C ouncil

I T he foijUwing is the com plete list of the mem
hers o f thelfecleral advisory council of the federal
reserve sysV 'm :
Daniel G. \ i i n g ..................................D istrict No. 1
P resident F irst N ational Bank, Miiston.
J. P. M o r g a n ...........................
. .DiotnVt \ 0 . 2
1. P. M organ & Co., New York.
I L. R u e .................................................D istrict No. :
President Philadelphia N ational Bank.
Philadelphia.
W. S. R o w e ......................................... D istrict No. I
p re sid en t h irst N ational Rank, Cincin
1»ti.
D irector Federal Reserve Bank
Cleveland.
George J. S e a y .......................... . .. D istrict
G overnor F ederal Reserve Bank of
Richm ond.
.. . . D istrj
C harles A. Lyerly
P re sid e n t F irs t N ational Bank, C hat­
tanooga.
. .
Jam es B. F o r g a n ................................. D istrict No. i
P resident F irst N ational Bank. Chicago.
D irector Federal Reserve B ank of Chi­
cago.
..D is tric t No. 8
Kolia W e l l s ..............
G overnor F ederal R eserve Bank of
St. L ouis.
. ..D is tric t No. 9
C. T. J a f f r a y ...............
F irs t vice president. F irst N ational
Bank. M inneapolis.
..D is tric t No. 10
F.. F. S w in n e v ..............
P resident F irst N ational Bank, K an­
sas City.
i
T H o w ard A r d r e / . ............................ D istrict N o. 11
. C ashier C itv^KFationnl
ationr R a n k . Dallas.
Archibald
K_
» aVrc1..
..
.
1 G o ^ jw jffiy ^ fc ra l Reserve B ank otjjjg
^ rrtD ^ sc o .

/\ r o o r
P

j _. o s c i

ITTSBU RG is still tr y in g to get th e fourth
d istrict fed era l reserve bank a w a y from

C leveland.

A cco rd iu g

to

W ash ington

d is­

p atches, bankers o f th e eighth e itv h a v e hired'
law yers and com piled figures and ap plied for a
h earing b efore th e reserve board in the hope of
p ersuad ing it to th eir w ay of th in k in g — nam ely,
that th e governm ent blundered w hen it recog­
nized C leveland as a better p lace for th e bank
than P ittsb u rg .
C levelan ders can v iew th is effort w ith entire
eq u anim ity. T he cabinet m em bers w ho located
th e b anks g ave P ittsb u rg 's claim s fu ll consid­
eration. T hese claim s are no stro n g er now than
they w ere then. T he reserve board is n o t lik ely
to ch an ge th e original arrangem en t w ith o u t
good reason. The fa ct that, th e bank h as been
su ccessfu lly estab lish ed in C levelan d is^an addi­
tional reason a g a in st such a change, w h ile no
valid argum ent for it C&i- b f ftjauul in civic
jealousy.
P resum ab ly the on ly resu lt of th e h earing
w ill be F U R T H E R P U B L IC IT Y OF A SORT
NOT P A R T IC U L A R L Y H E L P F U L TO P IT T S ­
BURG— fu rth er a d v ertisin g o f C L E V E L A N D ’S
P R E-EM IN E N C E in th is p a rt o f th e country,
o f P IT T SB U R G 'S C H A G R IN a t b ein g out­
stripped and o f T H E P IT T S B U R G W A Y of
y ellin g frau d, clam oring for a reco u n t and try ­
in g to go behind the returns, in stea d o f accepti n f f d e f e a l L I K E _ ^ r'r'r‘, '‘

ino

Federal Reserve Bank Report
, T he consolidated statem ent of the tw elve fee
Cral reserve hanks m ade public last S a tu rd ay
allows slight changes during the past week in
spurces o r liabilities. T h e statem ent follow s:
*R esources—
Cojd coin and certificates.$232,073,000
Let*al tender notes, silver,
certificates and subsidi­
ary X o i n ............................ 28,170,000
—
$260.2-# .000
Hills discounted and loans:
M aturities wKhin 30 d ay s.$ 0 ,466.000
M aturities w ithtu **>o days.
1.960,000
1.831.000 r
O ther
• .. ................
---------------~ ,10,257,000
All o th er r e s o u r c e s ............................... y* 1 *976,000
T otal r e s o u r c e s ...................................... $272,476,000
Liabilities—
Capital paid i n ............................................*
Reserve d e p o s i ts .....................• • • ■ . • • -50.937,000
Federal R eserve notes in circulation
3,402.00(1
(n et a m o u n t ) ........................................
T otal lia b ilitie s ......................................$272,476,0011
Gold reserve against all liabilities. 91.5 per
^C ash reserve against all liabilities. 102.3 per
^ T h e statem ent, by d istric ts ^ i o w s the follow ­
' F irst d istrict (R n sto n ) v f f n l cash. *13.259.000;

more Money Panics
ics

\

W e have noticed several statem ents; of la te lto
the effect that the new federal reserve la
law w aslnf
such a n a tu re th at it w ould prevent in the fu tife ,
panics and depressions. O f course, there
here is got
the slightest fou n d atio n fo r such statem
ents PVs
■ments.
long as people con tin u e to do business there
be tips and dow ns in business, and there
0JMU4 and depressions.
W hen the
is m oving along at a prosperous rate, befc
prosperity is at an end, there will be a period
when business is greatlv overdone, an ingritahle
reaction will follow . People will over-speculate
at tim es: th ere will alw ays he periods o f big fail­
ures and we will continue to have panics.
T h e federal reserv e act, how ever, is expected
■to do aw ay w ith w h a t is know n as a money panic
—such a panic as we had in 1907. when out of
a clear skv cam e a period o f nanic. follow ed by
depression. M onev rapidly disappeared and the
banks w ere com pelled to refu se snecie paym ents
and reso rted to clearin g house certificates. W hen
this panic cam e upon us. th ere w as nothing the
m atter with the country. It w as prosperous—e x ­
ceedingly prosperous, but the supplv o f currencv
was too lim ited to tak e care o f the ever increasing
business, and w hen a big failure in Xew Y ork
canw along, the w hole countrv becam e panic
stricken ; the stock m ark et tum bled dow n and we
" e r e p im p e d into desnair. W e have had a great
l’nnv panics o f this n a tu re in this country, caused
irim arilv bv the unscientific banking svstem we
lad in this c o u n trv until .a few m onths ago. T here
•as not h-en a pure i^pnev panic in E urope for

over a hu n d red years, due to the fact th at they
~
M T
*------- "
have a system over th ere which provides an
gold, $12,700,000; loans and rediscounts, $145,0<K>:
■lastic currency.
! deposits, $11,825,000.
If some lug failu re should distu rb the financial
Second D istrict (N ew Y o rk )—T o tal cash, $105.
Aorld in tile fu tu re, th ere will be no need of
1232,000; gold, $86,858,000; loans and rediscounts
>anks h o ard in g m oney anil consequently there
$2,035,000: deposits, $103,837,000; federal reserve
'i l l
be no
money
panne.
T h e national
notes, $152,000.
■anker in the L nited S ta te s knows full well that
T h ird D istrict ( P h ilad e lp h ia !—-Total cash, $20.
inder the federal reserv e act lie con . btain w hat
153,000; gold, $17,840,000; loans and rediscounts
nonej he needs i n n th e fed eral reserve bank so
$537,000; deposits, $19,359,000.
>ng as his in stitution is solvent and so long as lie
F o u rth D istrict (C lev e lan d )—T o tal cash $18.
as good com m ercial p ap er to rediscount. The
342.000; gold. $17,033,000; loans a n d rediscounts
ederal reserv e act aim s to give cred it to those
$363,000; deposits. $16,069,000: federal reserv
ho a re entitled to cred it at all tim es, to provide
notes, $52,000.
ii absolute ela-tic c urrency w hich will expand
F ifth D istrict (R ic h m o n d )—T o tal cash, $8,489
■hen tim es a re p rosperous and co n tract when
imni : gold. $8.407,000: loans and rediscounts. $748
mes are dull
It absolutely rem oves from the
IKK): deposits, $7,643,000; federal reserve note
*ti^nal banking system the incentive to hoard
$512,000.
lOtiey at any time.
S ixth D istrict (A tla n ta ) —T o tal cash. $5,088
000; gold. $3,080,000 ; loans and rediscounts, $367
F U R T H E R D R O P IN F E D E R A L R A T E S E X P E C T E D .
000: deposits. $4,855,000; federal reserve n o te
$125,000.
T tatcs o f th e fe d e r a l b a n k s h a v e b e en lo w ered g e n e ra lly d u rin g th<
Seventh D istrict (C h ic a g o )—T o ta l cash. $38.
w eek to t h e 5 p e r c e n t ba sis f o r t h ir ty - d a y p a p e r. I f th e to k en * o f th«
028.000; gold, $36.688.000; loans and rediscount:
open m a r k e t a n d o f s te r lin g e x c h a n g e a r e c o rre c t th e r e w ill b e o thei
$3,395 000; deposits, $37,898,000: fed eral reserv
re d u c tio n s b e fo re th e firs t of th e y e a r o r im m e d ia te ly a fte rw a rd s .
notes. $1,472,000.
M in im u m b a n k r a te s o f th e fe d e ra l in s titu tio n s a re now at parit}
w ith t h a t o f t h e H ank o f K n g la n d . H u t w h ile th e te n d e n c y of sterling
E ighth D istrict (S t. L o u is )—T o ta l cash, $11,522.
e x c h a n g e s is d is tin c tly d o w n w a rd s a n d below th e g oid e x p o rt level, th<
000 ; gold. $10,189,000; loans and rediscounts, $1.
influence o f th e L o n d o n b a n k r a t e sh o u ld n o lo n g e r be effective on thii
160.000; deposits. $11,589,000; federal reser\
side. K a te s o f th e re se rv e b a n k s sh o u ld be g u id ed m o re d ire c tly in thi
notes, $494,000.
f u tu r e by h o m e in flu en ces in t h e v a rio u s re se rv e d is tric ts . T h e re w a s i
Vintli D istrict (M in n e a p o lis)—T o tal cash.
m o d e r a te in c re a s e In r e d is c o u n ts by th e C le v e la n d fe d e ra l b a n k in thi
408.000; hi ild. $9,497,000; loans and rediscounts
w e e k -e n d s ta te m e n t issued y e ste rd a y , b u t t h e c o n so lid a te d r e p o rt o f al
<94.000; deposits, $8,790,000: federal reserve notes
fe d e ra l b a n k s sh o w ed a d e c re a s e .
T h e ra te s a re c le a rly to o h ig h ti
$25,000.
a tt r a c t b u sin e ss f ro m th e m e m b e r b a n k s.
T enth D istrict (K a n sa s City. M o .)—T o tal cash
N e x t w e e k 's fin a n c in g e v e n ts in th e e a s te r n m a r k e ts ' a re expeete<
510,975.000; gold. $10,475,000; loans and redisto e m b ra c e a n u m b e r o f s h o r t te rm n o te issu e s by im p o rta n t in d u s tria l
•ount'. $388,000; deposits, $10,130,000; federal rc- w hose tr e a s u r ie s h a v e been b a d ly d e p le te d by th e d e p ressio n o f th e p u
fo u r m o n th s .
K m issio n s b y t h e r a ilr o a d s h a v e te m p o ra rily ceased, sit
ervc notes. $329,000. ■
E leventh D istrict (D a lla s )—T o ta l cash, $6,- th o u g h m a n y a re k n o w n to be h a r d u p a n d th e issu es so f a r b ro u g h t cm
44.(MM); gold, $6,161,000; loans and rediscounts. have been re a d ily p lac ed . D u rin g t h e w eek a n o th e r im p o rta n t se ries o
120.000: deposits, $5,905,000; federal reserve ra ilro a d d iv id e n d re d u c tio n s se rv e d to c r e a te a s p irit of cau tio n . Twi
lea d in g s o u th e r n ro a d s, A tla n tic C o a st a n d L o u isv ille & N ashville, re
otes. $216,000.
duced t h e i r r a te s fro m 7 to 5 p e r c e n t. T h is is th e first im p o rta n
T w e lfth D istrict (.San F ra n c is c o )—T o tal cash. tro u b le sig n In t h e 7 p e r c e n t list.
3,000; gold, $13,145,000; loans and redisA r a lly in th e p ric e o f c o p p e r m e ta l to 1 3 ^ c e n ts a p o u n d to w a rd
$605,000; deposits, $12,440,000; federal re- th e e n d o f th e w eek a p p e a re d t o c o n ta in th e e x p la n a tio n fo r fav o ritisn
sh o w n th e c o p p e rs w h e n th e N ew Y o rk m a r k e t re o p en ed . P ro d u c tio i
is do w n to a b o u t 50 p e r c e n t o f n o rm a l, b u t th e c o p p e r p eople a p p e a
to be u n a n im o u s ly o p p o se d to s e llin g th e i r p ro d u c t below th e c o st o
th e p ro d u c tio n . T h e c o p p e r in d u s tr y is e v id e n tly th e only one le ft th a
Is a b le to a c c o m p lish t h a t k in d

I

"Si.1




.• - - t i

''k

•< a . , / & ■

I j

The Non-Borrowing Country ttank
Br'fTAVID JAMESON,
Presiidant N ational Citizens Bank, of New Castle, Pa.

•
O u r b a n k is t y p i c a l r ^ l n e r e a r e th ou sa n d s of
c o u n t r v h a n k s liku -it
It is in a to w n o f 40.000
p op ulation , w h e r e tlu- d e m a n d for monev never
e q u a l s th e >rtpply. 1 h av e talk ed to officers from
q u i t e a t i m b e r o f h a n k - like ours. T h ey think
t h e fed eral h an k s c h em e deals h arsh lv with them ;
so h a r s h l y t h a t they will try to lind relief in some
o f t h e w ay s o p e n to th em .
\ \ e a r e told w e m u st n o t knock. W e are e x ­
h o r t e d t o boost the new scheme, an d we have
b een t r y in g to do it. O n e way t •* <1.* it will be
to point out a n d help c o r n e t fe ature s th at may
n e e d co r re c tio n . J u s t now it looks to some of
i b as i f wc h a d been compelled to furn ish m a ­
t e r i a l s f o r tlu c o n s tru c tio n o f a p etard <>n which
w e will be the first t<> be hoisted. T h e p r i m a n
p u r p o s e o t the new law was " t o furn ish an elastic I
currency."
Hut for w h o s e benefit is the elastic!
curre nc> p r o v i d e d : 1 It is fo r the benefit of tin
p ublic r a t h e r t h a n th at " f th e hanks
It c'M s
t h e public, wh o yet th e benefit, nothing. It costs
a co nserva tiv civ m a n a g e d bank like otir>. which
g e t s no bene it. se vera l tho u sa n d <I■d :a r< per year.
Thi> is m an ifcstiv u n j u s t . I 'a principal supposed
benef its t . » its a r e : ( a ) 1‘he reduction >f legal
r e s e r v e s fro m 1'> per cent to r.’ per c e n t ; ( M
t h e "p r iv ile g e " to r ediscou n t ti.iper " f a kind
w h ich we do not ow n. t*> meet an cm ergenc\
w h ic h h a s n e v e r arise n.
■eser:e m a y 1■«
thin an d the ;vThe
•' !'ih's hit sii/ !\y the iM*?</,•
serve
We
nn-'t coinluct
ness mav 1 a n o t h e r t h in g
!/ a nd sate! . *n a p d r e e d reo n r business pr
ch a n g e m the
serv e.
He tic-• Til!
b e l l e 't
crves. w e
•>h
C’a r r x ir .g as
mergencv
:
h a v e been i:’ ;
tm i note
w hfch h a s (•'. •. r
e pnv i .< e to bor. .r 1» m 'wing a !■dbar
bell'lit
>k like
t ow o r re d isc *i•*■
nuts, not
\ \ hat w e m ed i
cut
:’' u r f T
reilisci »unts
( 'r r
■r •
• -nr nii »tte'. ■ t u
OM | TITION

Is
UU»^ ui>lem, tllev
I n s t e a d • f lu lpin
ITlev
■WIT]‘etc vv:t:; us for much
c o m p l i c a t e it.
• heTct<
rained..
o f tile paper vv
t.. its c a s u a l li d tl.e
t w e e n o u r coiitr
:s w hich must e kepj. will i
p e r ce nt o f < u r
r \ e ban k .vdl have <
th e m , t h e t' Lera I
d th-'tisand d o ” ,
■i
t h i n g *\er one 1
f which they m.
till >11CV I T tlu
. .n r best sources
n o th in g
In tla
TTesp* n ‘
have be • n o u r v
\ lieede'
h a v e h ad m iap an er t<
steij' 1 o f Miidinu.
e n e ac- ;
w h ic h is no '
•r redi<the
c o u n t, wd! ser.'l
ni i• it u i i h ,
T h - re-jic- '11ni
. san.noo
•nr m in > ' % • r: hi ve
• • a,dial and
ntrii niposits VII i, '. i au r-av
e> t h e y
eapiiiit. r
!a v a s t
;i\ t h a t m u c h
w ill e.i "
lat ni -llev eiu!
;e n t on
e a r n e d ■m
cent on
the capital, r. *a>.
>‘4.
the* r e s e n t
•V.
-if.:
ag ain s t
s y s te m .

T h is

!o,.ks 1i-,.

I > t h e r e an g mm] rea
t o i t ’ ft the public w . i th e public -'tig !? to hav
is t h e r e a m *a a* •” wh
..\lt Mfl •1! tl U! t ' -e c r n r r v ban k > • nn!•'■(. rci fullv *'
I’F.is

I- »k

KK[‘' s , a a

- r

W h .ir -Ci.-ut ::he p a p e r thev w - r r. d ; s C O " T V •*'
.T
:
a ll e m e r g e n ."
T1h> t i - I ! ■ rh>- -taper w i n / ' - w i11 b r r, ! : s ■• ti.lat r.g •'
•t’Ute'I " s h ‘ a ' 1 ' e es sentially
Th- p r - v c e d s m ■s- v ,• V , i n t . • "n erm a r- n : in •. •
:
sav th at " -e ‘ : an eightmentv'* It i s s.,




ner cent ot the paper in th e a v e r a g e c o u n t r y D a n k j
is paper the proceeds o f which h ave g o n e into j
the m o re o r less p e r m a n e n t i n v e s tm e n ts o f the
b o rro w er
PTH’t f r rmotCy it wc did n o t tak e such
paper, o u r monev w o u l d h r id le in o u r v a u l t s i
much o f th e time.
O t h e r in stitutio n s m o r e in
lannoiiy w it Ii the spirit o f the tim es w o u ld be
ioing the busine ss a n d their stock w o u ld be p ay ­
ing the divi dends. T h e new law d oes n o t m eet
and pro vide for c on ditio n s t h a t are, bu t it a t ­
tempts to p rovide for c o n ditio ns as it* f r a m e r s
wish they were.
I am no t c o nv inced t h a t c o n ­
ditions as they a r e a r e n ot to be p r e f e r r e d to
conditions as b ank ers m igh t wish th e m . 1 am
r i su re t h a t an a t t e m p t is n o t being m a d e to
tun: the clock which m a r k s bu sin e ss p r o g r e s s
back abo u t tw enty years.
EFFECT OF EXPERIENCE.

S trict business pa p e r d isa p peare d, at least f ro m
ilie iron regions, a f t e r th e panic o f 1802. P r i o r
to that t im e metal p r o d u c e r s h a d sold t h e i r o u t p u t
n three or fo u r m o n t h s ' time, t a k i n g the n o te o r
acceptance of buyers in distant places. T h i s p a p e r
the m a n u f a c t u r e r e n d o r se d a n d d isc o u n te d in his
bank. In so m any cases the m a n u f a c t u r e r fo u n d
his confidence misplaced that, a f t e r th e y e a r r et e n ed t ' \
sy stem of t r a d e d isc o u n ts w as de■ d. the p r i m a ry p u r p o se o f w hich was to c o m ­
ic! b uyers to get t h e i r credit «// h o m e w h e r e they
vo re k no w n . T h e r e co uld be only o ne r easo n w i n
a buyer did not pay cas h an d tak e th e benefit of
a discount which a m o u n t e d to ten o r tw elv e per
cent p er an n u m , a n d t h a t r easo n w o uld be t h a t he
did not have credit at h o m e go od e n o u g h to b o rn-w
:t at ~i\ per ceit. T h e m a n u f a c t u r e r s a r g u e d
that thev • <ught no t t<» give credit to a m a n w h o
could not get Tedit f ro m those w h o h a d t h e best
Ma aiis , ,f k n ow ing his responsibility. W hile this
change pr;: *iic;dlv en ded th e iss ue o f business
■a ' <»- :n this line o f bu siness, a n d co m p elled th e
■ ■rs in mativ cases t ■• b o r r o w a n o r tio n o f t h e i r
-■
ing- capital at t h e i r h o m e ban ks, in m a n y in■
s ii ace* m m odatioii e n d o r s e m e n t s o r m o r twh o can sa \ ii was no t a ste p in th e r igh t
'’ c: a in ? Rxactly th e am e c h a n g e has tak en
th an iron a n d steel. It
a- in ina.nv b n es ot l n
1 be -aid the bu yer s. u m eeting this c hang e,
re p e r m a n e n t w o r k i n g
lid not h a v e it. T h e y
•'ital.
Mo s t ' ' i t h e m
' a r e f a b r i c a t o r s , -mrdl
-mall m an i a c t u r e r s a n d m erchains
T h e ha •■s b ad idle m o n e y : no real. <•1H•ashioui-d conn r a d n ap er was obtainable. If
rnei i ■i■7••••d s . thev m ist get loans. Thev
"A t h e
•urn l a : -u naiver beincr offe red f!i«l
i' a n : tin old -tim e s t a n d a r d s ; b u t i’
*• all ih<
was a e d the' to o k it. T h e a m o u n t
i' d i I n t l . ■ -with tl.e seasons, bu t no t m uch.
1,;,, iker knew that • . :*orn»wer w as u s i n g it
nart o f his mi.ro • r less " p . T m a n e n t ” capital,
kne hat if be a s k d t liave it paid, the b o r >o-dd t.-ke i’.is ci »nt .«> so m e less p a r ­
a-. i b o r r o w i n g th ere.
n stitu tio n . and

.[ i

■I.K in ST\
trar.sii

PAPER.

fro m b u sine ss p a p e r
rd
at a i ac re m o te f ro m t h a t at
: lo h o m e c red its obt’a er was is
eh t'
e ’lie o|H i c c mni' d a t <1 is best
' ui i■'ii. T h is plan, by
d
nai
c a ' h ]>ayments o ffe r e d
ch la r g
1uv to b« .r ro w at ho m e,
■- cotnpei
t
n e a r lv ;
b e t t e r lines o f bu sim e th e on ly lines o f
' **n>-Ss mi w lr d i ' ' e
bi ' u sine ss miner s y s te m
' i-a> m e l l t s t i l ’ , \ 1 -•
ire lines in which c r e d i t s
■r
1". ' S -1 ,T
I
U<
the ban k er who
' * This Will i ’11 b
v hat 1 am saving. In t h e
■ I s , -• b t i s i i a * s w b i i a r e c o n d r c t e d m o s t skill!
a .n d til* 1*.
hie' the b a n k e r can m ake
•
’st s a • e l . •b.<re is n o ' t, M-r an v o ld -stv le
•P -s J.aper
bjeb can b r t r u t h f u l l y said to re p ­
*

'p

distinct step or stage

J

in tiie

productive or distributive process — "the pro­
gression o f goods from producer to consum er”
and the proceeds of which does not come to be
regarded In- lender and bo rro w er as investm ent
m ore or less “perm anent.”
r i 'T DOWN LOSSES.

T he business w orld has obtained too much
benefit from this im proved svstem o f credits to
" ' *In»r1v go back to form er m ethods T h eir losses
have been ru t down enorm ously bv th*1 simple <v
pedient which compels the buver to get credit
w here he is known instead of w here he is mv
Known, i ne discount to r cash has done it. 1 he
banks cannot compel the business world to undo
the progress of tw enty years. 11 the banks try
it. it will be the banks th at do th a t will get hurt.
11 certain banks undertake to w ithdraw the more
>r h*ss “perm anent” capital which they are loaning,
»»thers m ore liberal will get the business, the in­
terest and the deposits now com ing to such banks.
\\ hen the w ithdraw ing banks try to reinvest their
money in >eli-liquidating paper to borrow ers who
will not employ it in any sense as part of their
perm anent investm ent.’’ they will find there will
i"l be near enough o f such paper to go around.
rh e \ will seek w ider opportunities and will prohib l y lind it advisable to w ithdraw from a system
11 which their activities are so much restricted and
heir earnings so much reduced.—Journal o f the
I merit an Hunkers' .Issociulion.

W ilson B locks Land Bank Plan
P r e s id e n t W ilson a n d th e H o u s e b a n k i n g an d
c u rre n c y c o m m itte e a re at o d d s o v e r th e su b jec t
o f r u r a l c re d its le g islatio n .
B e c a u s e o f h i s fail
i:re to c o e rc e th e c o m m it te e in to th e a d o p t io n o f
; a b il l w h i c h p l e a s e s h i m , t h e P r e s i d e n t , i n h i s a n ­
; fil ial a d d r e s s t o C o n g r e s s , l a s t w e e k , i n f o r m e d
t h e l e g i s l a t o r s t h a t t h e r e is n o t t i m e e n o u g h a t t h e
p r e s e n t ses sio n to l a k e u p th e s u b je c t.
He e\! p r o s e d h is r e g r e t s to th e c o u n t r y f o r t h e lack o f
| tim e.
A c c o r d in g to m e m b e r s o f th e c o m m itte e , h o w ­
e v e r . it w o u l d b e a n e a s y m a t t e r t o o b t a i n t h e
p a s s a g e o t t h e B u l k l e y b il l a t t h e p r e s e n t s e s s i o n
if t h e P r e s i d e n t w o u l d a p p r o v e it. T h i s m e a s u r e
w ;is i n t r o d u c e d in t h e H o u s e l a s t M a y . a f t e r a
b i t t e r fight b e f o r e t h e b a n k i n g a n d c u r r e n c y c o m ­
m i t t e e in w h i c h t h e c o m m i t t e e v o t e d d o w n t h e
a d m i n i s t r a t i o n ’s p r o p o s i t i o n s .
WILSON

UPSETS EX PKCTATloX S.

T h re e w eeks ago. at a national c o n fe re n c e of
f a r m e r s a t W a s h in g to n , called by th e e x e cu tiv e
council "I th e P r o g r e s s i v e
r a n g e r s , th e B ulkley
bi l l w a s e n d o r s e d .
A t t h a t t i m e it w a s g e n e r a l l y
u n d e r s t o o d t h a t P r e s i d e n t W i l s o n w o u l d rec«*m
m e n d r u r a l c re d its le g islatio n a t th is session.
i ....
•
•
,
•m easure w h ic h h a * a p u r s e d
I ,
I" -. " '' 1-’ 1." " "> " > e ■■■
•••••■. t h e S e c r e t . - . I the- I r e s i d e n t s a n t a g o n i s m r e q n i . v
,
..
' f i t l In- T r e a s u r y t n p u r c h a s e f r o m f e d e r a l l a n d
! k i n k s c r e a t e d by th e p r o p o s e d la w . f a r m lo a n
I k i n d s in a n a m o u n t n o t t o e x c e e d $.>0,n00.ni)0
d u rin g an y o n e year.
P r e s i d e n t W i l s o n is a b s o l u t e l y o p p o s e d t o an y
p ro v is io n w h ic h calls o n th e g o v e r n m e n t to e n te r
the b a n k i n g b u sin e ss f o r th e benefit o f tb e f a n n ­
ers.
H e desires th e passag e o f a m e a s u r e w hich
w ill p u t tb e r u r a l c r e d i t s s y s t e m o n its fe e t w i t h ­
o u t assistance fro m th e g o v e rn m e n t.
PI RL’OSE o F BULK LEY BILL.
T i l e I b d k l e y b il l " a s a p p r o v e d b y t h e h o u s e
co m m ittee a lte r an e x t e
I in v e stig a tio n ot th e
ru ra l cred its question.
i li e m e a s u r e , i n b r i e f ,
p ro v id e s fo r th e c rea tio n of n a tio n a l fa r m loan
a s s o c ia tio n s . w h ic h sh all he s u b s c r ib e r s to n a t io n a l
land b a n k '.
T h e r e a re to be as m a n y la n d h an k s
as fe d e ra l re s e rv e d istricts a n d th e fe d e ra l r e ­
s e r v e a g e n t s in e a c h d i s t r i c t a r e t o h a v e s u p e r x isi, >u i l i ' - r t h e l a n d b a n k s .
The
f a r m r cm a s s o c ia tio n s , w h ic h a r e c h a r ­
te red bv th e n a tio n a l g o v e rn m e n t, a r e to h av e
t h e p o w e r t o l o a n .*» p e r c e n t n f t h e v a l u e o f
la n d a n d
per c e n t o f th e v alu e o f b u ild in g s
o n flr-t m o r t g a g e s . p r o v id i n g t h a t
th e
en tire
o n e l o a n s h a ’l n o t e x c e e d S 4 .0 0 " .
am ount
I n e x c h a n g e f o r c a s h . t h e l a n d b a n k s will r e ­
c e i v e t h e - e n i o r t v . i e r - . w h i c h t h e y will o f f e r t h e
to r issu er o f f a rm lo an
rrn n n n t
li




INTEREST OS' « o \ IIS VIM ITER

T h e bonds a re to he in sums of $ 10.), $500 and
SI.000, calling fo r such rates of interest as the
Federal K e s e r^ J ^ o a rd may approve, n o t exceed­
ing r> p c^ W H I^ ^ W fc n ev e r a land hank has m o rt­
gages sufficient to secure an issue of $ 100,000 of
bonds, it can m ake the issue with the approval of
the reserve hoard un d er the provisions of the
bill.
T hese additional powers and duties would be
placed on the F ederal Reserve B oard bv the pas­
sage of th e B u lk ier b ill:
1. T o organize and ch arter federal land h a n k s
2. The review and later, at its discretion, the
ra te of interest to he chartred by national farm '
loan asso ciatio n s; the rates to be uniform j
thro u g h o u t each state, if business conditions per­
mit.
:s. T o g ra n t o r refuse to federal land banks
a u th o rity to m ake any specific issue of farm loan
bonds and to fix the rate of interest oil bonds ap­
proved.
4.
T o recom m end to tile Secretary of the
T rea su ry the purchase of farm loan bonds.
j. T o require reports and statem ents and to
m ake e xam inations o i federal lan d hanks and
national fa rm loan associations.
. li. T o appraise farm lands through the farm
land com m issioner.
T. T o exercise such incidental pow ers as shall
be necessary to fulfill the duties and functions
c onferred upon it by the act.
RESERVE BOARD

IS

1‘LK.VSEH.

T he Federal Reserve Hoard, according to good
authorities, is gratified at the I’re-.ident s determ i­
nation not to press ru ral credits legislation now.
U nder the provisions of the house hill the bederal
Reserve B oard will have general supervision over
the operations of the farm loan associations, as
well as the tw elve land hanks.
M em bers of the ho ard hold th a t the task of
steering the new banking and currency system
into safe w aters is enough for the present.

—

v c uut u uaiiK d ep recia ted
-New

\o rk

d isp atch

says:

R e p o r t t h a t a m o v e m e n t is u n d e r w a y f u r a
c e n t r a l b a n k i n g in s ti t u t i o n in th is s ta te li d e p r e ­
c a t e d n o t o n l y b e c a u s e it is n o t r e p r e s e n t a t i v e o f
g e n e r a l s e n t i m e n t i n t h e s t a t e , b u t b e c a u s e i t is
t h o u g h t it w i l l d o p a r t i c u l a r h a r m a t t i n s j u n c t u r e
w h en q u es tio n o f a d m ittin g state b an k s an d tru st
c o m p a n i e s t o f e d e r a l r e s e r v e b a n k s is u n d e r d i s ­
cu ssion.
W h a t e v e r a n t a g o n is m o r d iffe re n c e o f opin io n
ex iste d b e tw e e n s ta te in stitu tio n s a n d national
b a n k s s o m e m o n t h s ago, o r w h e n th e tw o classes
o t b a n k i n g s t a t u t e s w e r e b e in g d r a w n up. n o
lo n g e r exists,
f e d e r a l re s e rv e b an k o f this d is ­
tric t e n t e r ta i n s a n c a r a e i L j t o i f c to b rin g th e state
in s titu tio n s into th e fe d e ra l system .
O fficials o f
h e lo c al in s titu tio n
have
under
co n sid eratio n
p la n s l o r in d u c in g s ta te b a n k s a n d tru s t co m p an ieU r , i OI!V,
° » tllL‘, m : i l t c r ? » o w b e f o r e t h e l e d a
v e s e r v e b o a r d is t h i s a d m i s s i o n o t s t a t e
a n k s a n d t r u s t c o m p a n i e s a n d it is b e l i e v e d s o m e

, act, ''111 U l11 i’'' lakt-n
i«‘Ciutate the m ovem ent.
)ne

of

!!’.S.l .i,V ,o n s

th e

the ,u‘a r future to

< h ief o b je c tio n s

i m o . ti' t

‘e d e ra l

to

b rin g iii”

system

,s t h a t

state
th e

would have to fo rego a fa ir revenue fr >m colt r u s t e r 0, f c l l t c k s '
1S a I s o u n d e r s t o o d , t h a t n
s t c o m p a n i e s c o m e in . s o m e t h i n g s h o u l d b e
I.m e t o c j n a l u e p r i v i l e g e s a n d l a t i t u d e n.-.w e n io n 1
t
vvf c o rn Pa n i e s - c o m p a r e d w ith nao t f e r d l -f
,m h c r l n ' l n c e m e m s c o u l d lie
I
' • u a n >- l " m a k e s t a t e i n s t i t u t i o n s giv<
' i * ;ulvni't a g e s is a p r o b le m now b e f o r e
re­
serv e board.
•i n n i l i e ' f ' S C' , n l " lL' n 1t,i-v R e l i e v e d tb, - b e n e f i t s f p . m
‘‘u ! s -':s u ' ” ' " ’' l i i n t i m e bo b r . u g h t 1:
t > sta te institutions.
D irectors o f t h e X V F e d -

eral Reserve Bank have g re at hopes in this respect,
and m any state hankers are co-operating with
them . Kor this reason they freely denounce talk
o f a cen tral institution in opposition to the local
reserve bank. A side from the danger inherent in
such a step fo r Xew York'.-- banking position, the
point is m ade th a t o ther states m ight follow the
exam ple in form ing separate central institutions,
which w ould be confusion w orse confounded.

Want Emergency Currency Retired
A W ashington dispatch s a y s :
Steps w ere taken M onday by the f ederal Re­
serve R oard to m ake retirem ent of ^m rtifency
currency issued on com m erc;al paper shortly a fte r
the outb reak o f the European w ar m ore attractive
to banks. T h e board approved the reduction of
the rediscount ra te of the Federal B ank o f A t­
lan ta to 5 per cent on thirtv -d ay m aturities, 5'/,
per cent on sixtv-day m aturities, and fi per cent
of longer m aturities. At the same tim e the othei
eleven banks w ere notified o f this action, w ith tin
com m ent th a t they also m ight m ake such rates.
A lthough m ore than $iUU,U00,UU0 o f the $330,­
000,000 ol em ergency currency outstanding a few
weeks ago has been retired, m em bers of the boarc
believe the tim e has arrived when they shouk
aid in taking m ost o f the rem ainder out o f circu­
lation and replacing it, if the present am ount o
currency is needed, with federal reserve notes.
Em ergency currency is subject to a 3 per ceni
ta x fo r the lirst three m onths it is in circulation,
w ith an added tax each m onth until it reaches ii
p e r cent. As long as the difference betw een the
o rd in ary rate o f discount on com m ercial paper
and th e ra te o f rediscount was small, however,
th ere was no reason fo r banks to retire th eir
em ergency c urrency and take out federal reserve
notes.
Much o f the emergency currency still in circu­
lation has about reached the point w here a 4 per
cent ta x m ust be paid upon it and in a fe'v weeks
nil.re it will be paying 4,'j per cent.
T he -Atlanta bank has been anxious to r som e
tim e to secure a lower rediscount rate and has
pointed o u t th at in its territo ry there is between
$00,000,000 and $70,000,000 o f emergency c u r­
rency secured by its best paper, which could be
b e tte r used to secure reserve notes.
T h e bo ard decided to m ake Monday its official
ilav fo r the review of rediscount rates.

i

BANK STA TEM EN TS

C apital paid I n .................................... S I m J’oo!)
Reserve deposits ................................ -«-084.W0
Federal reserve notes........................
-.Safi.wo
Total liab ilities .........................
34®-9(£?*2S>
Gold reserve ag ain st all liabilities
Cash reserve a g ain st all liabilities.
10_.a%
C LE V E LA N D FE D E R A L BANK.
Resources.
_
Gold and gold certificates............$17,589,970 00
Legal ten d er notes, e tc .......... j OJ.98J
Rediscounts and l o a n s ^ . A5?8,**i>l ou

....% -VI..17!

00

T otal resources .......................... $19,308,603 00
Liabilities.
r*apltsl stock paid In ..................... $2,030,946 00
N et deposits .................................... 17,125,109 00
t-vdsrsl reserv* notes............. .
146.550 00
All o th er lia b ilities.........................
5,998 00
T otal liab ilities .......................... $19,108,003 00
reserve against all liabilities. 104.19

p e r cent; cai»h reserve against all liabilities,

K .28 per cen t; ce»h reserve a g a in st all
liabilities a fte r setting aside 40 per cen t gold
r*i r»e a g ain st federal reserve motes in cirm.'u- n.
5r j>er cent.




ACTUAL CONDITION.
Loans, e tc ...................$2,178,386,000 •$4,872,000
tR eserve
in
our
5.128.000
va u lts ......................
838,687,000
K eserve in federal
1.471.000
reserve bank . . . .
05,313,000
R eserve
in
other
1.618.000
depositories ..........
31,087.000
340,000
N et demand deposits 1,975,076,000
N et tim e d e p o sits...
93,578,000 2,249,000
Circulation ................
56,837,000 •3,230,000
A ggregate reserve . .
465,687.000
Itxeoss reserve ........
125.297,980 8,305,580
tO f which $256,387,000 is specie.
A ggregate reserve . .
405.687,(K)0
Excess reserv e..........
125,297.980 8.305,580
O TH ER N E W YORK BANKS.
Loans, e t c .................. $558,491,600 •$1,565,100
42,494.400
279.800
Specie ..........................
L e g a J s ..........................
12,257,800
53.800
640,900,000 8,945,100
T o tal deposits ..........
B anks' cash reserve
in v a ults ..............
11,353,100
Trust
companies
reserve in v a u lts.
*13.390,100
•Decrease.
LOCAL NATIONALS.
Cleveland n ational banks rep o rt for tb e
vi* ek ended w ith th e close of business F riday
lajst decrease in loans of $125,830. decrease
In deposits of $1,441,'779 and decrease in
c ash an d due from reserve a g en ts of $007,135.
CLEVELA N D CLEARINGS.
Dec. 19......................................................$ 8.850.968
D ay la st y e a r ........................................ 3,654.357
L ast week .......... ...............
22,006,881
Week la st y e a r.................................... 25,535,543

I

F E D E R A L R ESER V E BANKS.
WASHINGTON', December 19. - Toda\ «
statem e n t of combined resource* and liab ili­
ties of tho tw elve federal reserve banks at
the clone o f business December 18, WH.
sho'vc:
_
RESOURCES.
Dec. 18. 1914.
Gold coin and certificates................ 1^33,279.000
Legal ten d er notes, e tc .................... 25,008,000
T otal cash ........................................... 258,287,000
Bills discounted and loans:
M atu rities w ithin th irty d a y # ..;..;
n,049,000
M atu rities w ithin six ty d a y s .......
2,266.000
O ther ....... ...............................................
1.728.000
Total discount* ...................................
J’SS’SS
U1 oth^r resources.............................
- .w^.uw
T o tal resources ................................... *69.990.000
%
LIA B IL IT IE S .

A llS r

N EW YORK C LEARIN G H O USB B.VNKH.
Increase
Loam?, e tc ................— $2,178,386,000 •f4.S72.WM
R eserve in our vault.:.
338,07.000
----5.128,0*10
R eserve In federal re ­
serve bank ...............
90.313.000
1.47.,000
R eserve in other d e­
positaries ....................
31.687.000
3,618.000
N et demand deposits.. 1,975.676.000
340.000
N et tim e deposits........
93.578.000
2.249.00m
C irculation ....................
66.837.000 •3.230,000
A ggregate reserve ...
465,687.000
E x c e s s re s e rv e ...........
125.297.950
8,305.5d0
O TH ER N EW YORK BANKS.
Loans, e tc ....................... $258,491,600 • | 1,565.1«
Specie ..............................
42,494.400
: 79.80(1
Legal tenders ..............
12. 257.800
53,800
Total deposits .............
Ci0.909.000
3.945,100
B anks' cash reserve
in v a u lts ..................
11.353.100
T ru st companies’ cash
reserve in v a u lts ....
43.399.100
•Decrease.
CLEVELAND CLEARIN G HOUSE BANKS.
Loans decrease ....................................... $125,836
D eposits decrease ................................... 1,441.77'.
Cash and due from res. agents dec.. 607,12i

PaperTTefd*By fteserve’ sys
tem $1,214,000 L e ss Than
at Previous Week End.
Difference is Due to Matur­
ing of Shortest Time
O b lig a t io n

„

R e d isco u n ts of th e fe d era l re serv e
sy stem , a s 's h o w n by th e com bined
s ta te m e n t of th e tw elv e re g io n a l
banks, d ecreased $1,214,000 In tho
w eek ended w ith th e close of b u sin e ss
F rid a y .
_
1
N o tw ith sta n d in g t h a t r a te s w ere
low ered so th a t n in e of th e in s titu ­
tio n s a re ta k in g p a p e r m a tu rin g in
t h ir ty d a y s o r less a t 5 p e r c en t., m a ­
tu rin g o b lig a tio n s m a te ria lly exceeded
new p a p er ta k e n on. A t th e close of
th e previous w eek re d is c o u n ts to ta le d
$10,257,000; a t th e close o f th e la te s t
w eek $9,043,000.
G en eral buA ness
q u ie t a n d th e o p e ra tio n of th e fe d era l
re se rv e a c t h a v e accom plished mone;
re la x a tio n , a n d to th e d e g ree th*.
m em b e r b a n k s in m a n y In sta n c e s cai
keep th e ir ow n re d is c o u n t r a te s b<
s u b s ta n tia lly below th o se o f th e r*
g io n al b an k t h a t c o rre sp o n d e n ts flm
T* c h e a p e r to go to th e m em b e r In sti

Mink bringing It to.

£ £

« S to «i>»

1* tU i. w e r. n o t th.

.lumtToM to m t -

?» ‘“

{ rtZ *

vyatam an d to tho o p a n m w W * • # J ” ,
due* a con»Uunt an d und*»if*bl« * h lru n * or
"*(vhil« th* r«derv» « y » t« m l» * 5L il^En 5
railed on for money to *ny « « » *
while lt la not y«t a p ro it m a k to f
tion, lta ateadyiiiK b«n «*Sl1^ L W * 12 )£ J lS
condition. U being conowMI • •
a etatem ent accom panying th e ebowlng, tne
federal reserve board eaye:
, h_
"Tho ne to chargo of t i e
«h*y
banks a re fully alive to th e fa c t th a t iney
would be niU underntandln* the fulictlon of
federal reserve banka If, in tim e . «/
dance, they should try to force hiveflUiients,
and th a t they m ust not be * ° vSV"e4 J ^ ^ e
desire to secure too early p ro fit, from tne
federal reserve hank*. They “>“ •*
a c t from th e viewpoint of w h at la b est for
the general situ a tio n ."
.
uo vThe individual regional in stitu tio n s have
a gain ad ju sted th eir statem en ts, issuing th e ir
showings, to new and condensed form th is
* As the method differ* only to m inor p a r­
ticu lars, the previous w eek’. *t»*en‘'2
the Cleveland bank h a . been adlueuid for
purposes of comparison and 1. In c lu ile d h e re
w ith. The local Institution h as been ex ­
changing law ful money for gold a t th ®
tre a su ry , which accounts for m u ch of the
present Increase in lta gold hoUUnm an d decreaso In ' ‘all otner reso u rce. ’ w hich In ­
cludes law ful money to tra n s it. Th*®„
changing continues. Federal re e e r v e jio te . In
circulation, th a t is tu rn ed over
...e oajia
by tho federal reserve a g e n t for circulation
show no change Rediscounts have Increased
« U 918 In the week to »578,W>t; ln o rea^-.
a re shown In th is item by a num ber o f th e
interior regional., w here th e extrem e ease of
the east la not duplicated. W hile th e item
la term ed “ rediscounts an d lo an s" th e “ an a
loans" la Included for fu tu re open-m ark et
operations: loaning la now confined to realacounts. Tho statem en ts follow:
F E D E R A L R E S E R V E SYSTEM.
RESOURCES.
Dec. 18, 1®14.
Gold coin and certificate* .............. *283,279,000
Legal tender notes, sliv er certifi­
c ates and subsidiary coin ........ 25.008,000
T otal ................................................$258,287,000
B ills discounted and lo an s:
M aturities w ithin 30 day *.............. ? 5.040.000
M aturities w ithin 00 d a y s . . . ........
2.206,000.
1.728.000 V
O ther ....................................................
T o tals ..............................................I
All o th e r resources ..........................

9 048Z5!

2.66U.OOO

T o tal ro sources .......................... $209,990,000
LIA B IL IT IE S .
C5n pi till paid In ................................ $ 18,050.000
Ri*»ervB deposits .......................... 248,084,000
Federal reserve notes In c irc u la ­
tion ....................................................... e . e e
3,856,000
T otal liabilities .......................... $269,990,000
Gold reserve a g ain st all lla b llltle a .. 92.6%
Cash reserve a g ain st a ll lia b ilitie s .. 102.5%
CLEVELA N D F E D E R A L R E S E R V E BANK
RESOURCES.
Gold an d gold c ertlDec. 18.
Dec. 11
c ates ............................$17,589,970 $17,025,470
Legal tender notes, ailver certificates an d
subsidiary coin ........
696.986 1,308,624
Rediscounts and loans
578.561
SG2.68S
All other resources . . . .
443.096
553.683
T otal res<*irces ........ $19.308,603 $19,200,412
L IA B IL IT IE S .
? ap ltal paid In .............. $ 2,030,940 $ 2.030.94A
N et deposits .................. 17,125,109 17,064.374
Foderai resewve notes
In circulation . . . . . . .
146.550
146.550
All other liab ilities___
5,l>98
8.542
T otal llabllltlea ........ $19,308,008 $19,250,412
3old reserve ag ain st all llab. 104,199c.. 99°'
Hash reserve ag aln at all liab. 8.33% .. 107%
N E W YORK BANKS.
N EW YORK. Dec. 19.—The ata tem e n t of
actual condition of clearing houae banks an d
tru st com panies for th e week shows th a t
*.hey hold $125,297,980 reserve In excess of
legal requirem ents. T his Is an in crease of
18.305.580 from la st w eek.




m y id enter i
DANK DISTRICT 4
Two Counties of W. Virginia
Would Join Cleveland Re­
gional Institution.
Date of Pittsburg’s Protest
is Fixed for
Jan. 13.

• eve : m u u m

N a tio n a l b a n k s in tw o cou n ties of
W e st V irg in ia liave a sk e d th e fe d era l
re serv e b oard in W a s h in g to n to tr a n s ­
fe r th em from th e R ichm ond reserv e
d is tric t to th e C leveland d istric t.
T h eir re a so n s th e y w ill give fo r­
m ally a t a W a s h in g to n h e a rin g to be
held J a n . 27, b u t i t is know n in a d ­
vance w h a t som e of th ese re a so n s a re
—th e tre n d o f b u sin e ss from th a t
section, in th e m id st of a n oil a n d g a s
a re a , is to w a rd th e n o rth a n d th e w est
r a th e r th a n to w a rd th e e a s t. T ra in
a n d c o n se q u en tly m ail service is b e t­
te r in th is d irec tio n , a n a in p hysical
d ista n c e th ese co u n tie s a re n e a re r to
C leveland th a n to R ichm ond by a b o u t
320 m iles. T h e c o u n tie s a r e W etzel
a n d T yler, situ a te d j u s t u n d e r the
W e st V irg in ia p a n h an d le, w hich is a l ­
re a d y in th e C leveland d is tric t. In
th e tw o co u n tie s a re five n a tio n a l
'b a n k s w ith com bined c a p ita l a n d su rplug of $562,000. In th e m a tte r of
d o lla rs accession o f th ese five w ould
m ea n only $33,720 m ore c a p ita l for
th e F e d e ra l R e se rv e B a n k of C leve­
land, b u t tho p lea sin g th in g a b o u t it
to local b a n k e rs is th e se n tim e n t d is ­
played. B oth c o u n tie s b o rd e r the
Ohio, bein g lo ca ted a s h o r t d istan c e
u p th e riv e r fro m M a rie tta . T h ey in ­
clude th e to w n of S lste rsv ille w ith
th re e n a tio n a l b a n k s a n d M iddleb o u rn e. N ew M a rtin sv ille, Sm ithfleld.
P in e G rove, H u n d re d a n d a n u m b er
m ore.
W hile in o th e r W e s t V irg in ia c o u n ­
tie s th e s e n tim e n t h a s n o t c r y s ta l­
lized, th e re is know n to be a good deal
o f fa v o r to w a rd C leveland In places
of th e size of P a rk e rs b u r g a n d F a i r ­
m o n t. If th e tw o a p p ly in g co u n ties
g e t in, th e C leveland d is tr ic t w ill con­
ta in 709 m em b e r b a n k s, w ith v a s t
possib ilities in th e w a y of fu tu r e e n ­
tr y of s ta te in stitu tio n s . T ho d istric t
is fo u rth in a m o u n t of c a p ita l of th e
reg io n al b an k s, being exceeded o n ly ,
b y X ew Y ork, C hicago a n d P h ila d e l­
p h ia a n d not by B oston; th e ad d itio n s
w ould n o t a lt e r o u r sta n d in g in th is
re g a rd .
W h ile th ese b a n k s w a n t to g e t in,
P itts b u rg c o n tin u e s to w a n t to get
out. T h e fe d era l re se rv e b o a rd yese rd a y fixed J a n . 13 a s th e d e te when
he Sm oky C ity p ro te s t a g a in s t being
included in th e C leveland a re a will
oe h e a rd . Col.
J . S u lliv a n , a ctiv e
in th e first w o rk to b rin g th e region?!
b a n k to C leveland, will uphold th is
c ity 's side. B a n k e rs d o u b t t h a t a n y
a rg u m e n t P itts b u r g m a y m a k e wiil
p re v ail on th e fe d era l b o a rd to m ake
a c h a n g e of th is m a g n itu d e a f te r th e
re se rv e sy ste m h a s Deen so far a d ­
vanced.
P ittsb u rg 's fight places D. C. W ills,
chairm an o: director* of the Cleveland bank,
and R obert W arJrop, a director, in ra th e r
unpleasant pr>sltion. Mr, W ills Is a form er
PtttHburffer, h a ving spent the g reater p art
of bis life th e n and n*ar by, and Mr. W ard 'u p is still
P ltts b ’irg«r. T\T>at attltu d #
these m en will take Is not announced, but
Mr. "Wills has definitely inovfrl his resi­
dency to clevetnnfl

----------- a s a!read>
known, is p r »
voked about belnff attache.! tOTLhr Richmond
dl
district
and she w ill com plain to the re*
serve board J i n . 9.
Hank era frem rltles
alonjr the H udson river oppoalte Xe-»
vork. In the s ta te of New Jereey, will ap ­
pear J a n . 30 to ask tra n sfe r from the Phila­
delphia to the Kew York district. Kebnasks
, ebra.lt i
and W yoming bankers will tra n sfe r from
fretn the
K ansas City to th e Chicago d is tric t,'

'V

la n lu s*

S u rp lu s

.

G ro w s.

T he a c tu n l s ta te m e n t o f th e n o w
Vork c le a rin g h o u s t b a n k s rev ealed
an in cre ase of $6,305,000 In su rp lu s
reserves, w hich a r e now $125.297 0 0 0 ,
a fund desig n ed ly held larg e a s a
su p p o rt to tho se c u ritie s m a rk e ts a n d
a s a b u lw a rk fo r g e n era l business
d u rin g th e first few m o n th s of r e ­
duced re q u ire m e n ts u n d e r th e federal
re se rv e a c t. L o an s a re still h igh * t
$2,178,000,000. h a v in g m ade th e sm all
de cre ase of $4,372,000 f o r th e w eek.
T here w a s a cash gain of $8,200,000
a n d a de cre ase of $3,200,000 to e m e r­
gency c u rre n c y , lea v in g b u t a few
m illions still o u tsta n d in g . T he m a x i­
m um w as $140,000,000 a n d $128,500,0!X> had been re tire d u p to th e week
end.
.
D ecrease in red isco u n t* o f thfe fe d ­
e ral re serv e sy ste m Is a n o th e r version
of the sto ry o f m oney case. T h ere is
ta lk of f u r th e r red u ctio n In ra te s,
th o u g h tho fed eraj re serv e board u n ­
d e r o rd in a ry circu m stan ce* will not
e n te r into com petition w ith m em ber
b a n k s, nor, on lt sta te d y e sterd a y , will
it a tte m p t to forceM gV estm ent of re ­
g io n al in s titu tio n s ’ funds.
D em and fo r copper h a s lessened,
co n su m ers hoping for a re ac tio n a fte r
th e ste a d y a d v an c e to 1 3 1 -2 cents.
A s to th e te n o r of steel tr a d e s e n ti­
m en t. it is enough to sa y t h a t th e re-

Jtrs-________ _ __________ _

—

.

d u ctio n in w ag es of m ill operativ es
co n tem plated for J a n u a ry Is bein*
su b je ct of fu rth e r consideration.
C otton edged h ig h er y e sterd a y rra
tho nows th a t for th e second tim e on
th is crop the d a y ’s cargoes a w aitin g
cle ara n c e exceeded th o se o f th e cor­
responding d a y la st y e ar.
W h ea t jum pe* 2 c e n ts a bushel in
C hicago, M ay c lu in g a t $1.25 7-8; the
c a n n y fa rm e r iu rth e r r e s tr ic ts his
selling a n d th e ecp o rter re d o u b le s his
e x ertio n s fo r futures.

ADDITIONAL
FINANCIAL
PITTSBU RG BAN KERS TO
•AIR GRUDGE 0N,JAN. Y,
WASHINGTON.'. ’O - e r ib W
—Th
(|pv;'i ’psprx ^ boaid lodHy
nr
:
f jr hearing hanker* in jm-cVs
pair;st designations of federal rese~v
,t:.-s and
of reserve cCstnjft
. - made by the reserve hank, urganlia
; :o«i committee,
naltlm ore bankers will argue a grains
;du»!on in the Richmond d istrict Ja n
<:ary <1; P ittsburg bankers will prot .-~
against their a lig n m e n t to the C*We
land 0 is trio i January 13
- Bankers* from cities along the H l
5on K iv r opposite Nev> \o rk . in J;t
st. 1t* of New Jersey, will aj>?>ear J a n u ­
ary 20 to ask transfer from the Pfcilnd'*ii>hia to th** New York district, tiank
era from
and Tyler courtier
\\\-st Virginia, will ask transfer fron
the Richmond to the Olev*hiUri distrlc’
January 27.
- -H
Nebraska and Wyoming bankers wtL
hr1 heard F e b r u a r y 3. asking for
fer from the Kansafc City to the Chi*
^ago district; South Oklahoma »*ank-*'r*
will requeet February 10 to \ i
from the Dallas to the Kansas
district. lU nkers fr-.m Htewart. Xlon^
cromery and Kob*-i
counties. Tt-nn..
will urge a tra n sfe r from the A tlanta IQ
the St L o u is (district ut the la st l.
mg. Fci*ruar l ’

m u iH W :
E
Bankers Consider Joining of
State Institution With
City Association.

I W h at te rm s tt ts proposed to m ak e
I over m a tte rs so r.rnny y ears in d isp u te
is not m ade known, a n d b a n k e rs con­
cerned will n o t discuss the su b je c t in
a n y phase.
*
A point urped for th e en larg ed
clearing: house is th a t the to ta l c le a r­
ances will be g re a te r fo r th e reason
th a t exchange of checks now done
betw een banks p riv a te ly w ould a ll go
th ro u g h th e central place. U nder the
plan being considered, how ever, the
difference th u s m ad e w ould be sm all.

Announcement of Adoption
of Plan Expected by
End of Year.
A fte r y e a rs of discussion th e m a t­
t e r of adm itting: s ta te b a n k s a n d
t r u s t com panies into tho C leveland
C lea rin g H ouse asso ciatio n a g ain is
u p fo r c o n sid eratio n . An a n n o u n ce ­
m en t is expected before th e end of
th e year.
O nly th e seven n a tio n a l b anks and
th e fed eral re se rv e b an k a re morrib e rs of th e association, which accom ­
plishes for all of thi* th irty -th re e In­
s titu tio n s in th e c ity th e interchange
an d collection o f checks. T his y ear
th ese checks will a m o u n t to m ors
th a n $1,230,000,000.
T ha c le a rin g house, o f necessity,
lias broad pow :rs o f ex am in in g in ­
s titu tio n s w hich c le a r o r h ave th eir
c le ara n c e done th ro u g h it, a n d as
co n d u ct *1- th e g o v e rn in g of th o c le a r­
in g house is inifltjc h a n d s of th e seven
n a tio n a l banka.
**
J •' iM
N o com p lain t Is maWe o f tW.V The
C leveland c le a rin g house is h a rm o n i­
o u sly conducted, b u t it is recognized
a s ju s t t h a t s ta te in stitu tio n s be
g iv en a voice in th e m an a g em e n t.
A s a rra n g e d , the checks of tw entyfive n o n n a tio n a l in s titu tio n s m ust
p a ss th ro u g h
the seven
national
b a n k s, eacji n onm em ber h a v in g a
m em b er to a c t for it, a n d th e re is a
general fa v o rin g of d ire c t tra n s m is­
sion a n d independence.
I f conferences being held re su lt a s
th ey a re exp ected to, a c erta in figure
will be n am ed and all s ta te in s titu ­
tions h a v in g c a p ita l stock a n d s u r ­
plus a m o u n tin g to th is s ta te d sum
or m ore will be a d m itte d , w hile the
sm aller banks, w ith less check in te r­
c hanging to do. will c o n tin u e to a c ­
com plish it through m em bers.
T h ro u g h y e a rs p a s t th e re h ave
been differences betw een n a tio n a l and
s ta te b a n k e rs on th e q u e stio n of in ­
te r e s t paid on b a n k deposits. N a tio n a l
b a n k s w ere n o t p e rm itte d u n d e r fed­
e ra l law to pay so m uch a s s t a te In­
stitu tio n s on d e p o sit» m a d e w ith them
b y o th e r banks.
,
T h is d ifference m e a n t com petition
b e tw ee n th e tw o c la sses o f in s titu ­
tio n s. T ru s t c o m o an les h e sita te d to
re d u c e th e ir ra te s because th e y h a d to
m e e t c o m p e titio n from w ith o u t the
c ity . T hese a n d o th e r c o m p a rativ ely
m in o r m a tte r s p re v e n te d closer co-op• ra tio n .
T h en th e c le a rin g h o u se e x a m in e r,
id e a w a s a d o p te d a n d th is, w ith its
su b m issio n o f a ll in s titu tio n s cleni-ino-l
1th ro u g h th e clearing: nouse «> wtgia
, or»H u n h e ra ld e d e x a m in a tio n , w orked
a -rre a te r d e g re e of c o -o p era tio n . Now

tota!L o f ^ 000 so th e c le a rin g house
,8 ^ t U u t e d r n p - s e n t s d ire c tly nnW
i c o n stltu ?7C 500 ooo. T h e g ra n d I




Merchant Paper Put Up With
Cleveland Institution De­
creases in Week.
Statement Makes
Ease of Money in Dis­
trict 4.
So sm ooth h a s th e m oney s itu a ­
tion become in th is te rrito ry th a t th e
I'e d era l R eserve B a n k of C leveland
n o t only took on no n ew red isco u n ts
in th e la te s t week, b u t experienced a
decrease in th e a m o u n t o u tsta n d in g
due to p a y m e n t of m a tu re d paper.
In th e previous w eek th e C leve­
land In stitu tio n increased its re d is­
counts by $215,916, w hile th e sy stem
a s a w hole show ed a $1,214,000 d e ­
crease.
In th e la te s t period th e
C leveland b a n k jo in ts th e g e n era l
trend, its facilities afforded m em ber
b anks d ropping $41,269 to $537,282.
T h is is reflected in p a r t in a d e ­
crease of $4,565 in fed eral re se rv e
notes in circu latio n . I t is a com m on
erroueous belief th a t th e a m o u n t o f
these n o tes o u t w ill respond w ith d i­
re ctn ess to th e a m o u n t of re d is­
counts, b u t th e fa c t is th a t fe d era l
re serv e
notes a re a n em ergency
currency, w hich in o rd in a ry tim e s
will not be p u t o ut unless new c u r­
rency Is needed. A s long a s it is
feasible to do so, th e F ed eral R e ­
serve b a n k w in p a y borrow ing m em ­
b ers In c red it or cash if desired, c a ll­
ing for new c u rre n c y from th e fe d ­
eral re serv e a g en t o nly w hen c u rre n ­
cy expansion is d esirable.
On fed eral re serv e n o tes now o u t­
sta n d in g no in te re s t is paid, b u t a n
in te re s t ch arg e w ill
be im posed
w hen
th e
system
g e ts
f u r th e r
a lo n g ; w hen th a t tim e com es th e
F e d e ral R eserve b a n k w ill o b ta in
n e w c u rre n c y from th e g o v e rn m e n t
re p re se n ta tiv e , th e fe d era l re se rv e
a g e n t, b y a process v e ry sim ila r to
th e p re se n t re d isco u n tin g fo r m em b er
b a n k s; th e regional b a n k w ill s ta n d
in th e re la tio n of bo rro w er fro m th e
go v ern m en t. Tho lim ited a m o u n t of
fed eral re serv e n o tes now o u t w as
e m itte d n o t to s a tis fy em erg en cy
needs, b u t to m ak e th e b a n k s a n d th e
public a cq u a in te d w ith th e money.
T h e regional b a n k , b e g in n in g w ith
th e la te s t sta te m e n t, re p o rts “all
o th e r resources in th e n e t, t h a t is.
th e excess over w h a t w ould be
term ed “all o th er lia b ilitie s” in th e
lia b ility portion o f th e sta te m e n t.
T h e show ing a t th e close of bu sin ess
y e ste rd a y , w ith
com parison, fo l-

Gold an d gold certifi­
cate* ........................... $17,568,202 $17,580,070
Legal tender notes, sil­
v er certificates and
subsidiary coin.......... 1,080,107
606.88*
Rediscounts and loans.
537.2*3
978,551
Ail o th er resources
(net) ..........................
150,550
437.o«8

T otal re so u rc es.. . . .$10,345,240 $10,308,603
LIA B IL IT IE S .
Dec. 24.
Dec. 18.
Capital paid In ............ $ 2.030,946 $ 2,030,046
Vet deposits ................ 17,172,809 17,125.109
Federal reserve notes
in circulation ..........
141.985
146,550
T otal lia b ilities........ $10,345,240 $19,308,608
3old reserve a g a in st all liabllltles requiring re s e rv e ..101.46% 104.10%
3ash reserve ag ain st a ll lia ­
bilities requiring re s e rv e ..107.75% 108.83%
H o s ie r a n d O th e r B re w e rle * .
In a q u a rte r close to th e brew ing com­
panies whose securities a re dealt in on th*
ocal stock exchange differences w ere point­
'd out yesterday betw een tbe secu rities of
Cleveland & Sandusky, K ansas City, H uebler-Toledo. D ayton and Stark-T uscaraw aa *>»
i group, and H oster-C olum bus. W hen H oster
* as formed ten years ago it began business
with a bond issue $000,000 more th a n tr**»
total of its stock, thu*? m aking a fixed
charge of $54,000 before dividends. E ach cf
the other five w ere incorporated w ith a stock
and bond issues equal in par value*
W here the H oster sinking fund takes oniy
$50,000 bonds p ar value a year afid does
not provide th a t in terest be continued on
them accum ulating for succeeding purchase.-,
the other five com panies pay into th e ir sin
ing funds definite am ounts of money whien
retire increasing am ounts of bonds a s prices
iecline. The fivo com panies also keep up
Interest paym ents on • bonds in the sinking
fund, thus providing a co n stan tly increasing
sum for purchase.
Out of 5.250.000 bonds originally issued
H oster up to Jan . 1 th is year had retired!
$45,000, while Cleveland & Sandusky out of
$6,000,000 originally em itted had retired
$1,519,000.
The H oster preferred stock is cum ulative;
while th a t of the o th e r five is not. but as
dividends become liab ilities only when de­
clared. c um ulative dividends not declared are
merely an “ overhanging fa c to r.” This has
not made a sharp distinction between H oster
and the other issues.
H oster’s business continues and step s to­
ward re-organization a re expected for the
near future.
Report had It y esterday th a t in th e re ­
vam ping holders of H o ster’s bonds woulff
receive 50 per cent. Ui new bonds and 50
per cent, in stock and th a t instead of the
approxim ately $9,100,000 securities now our,
the capitalization would be $5,000,000. As to
how preferred and common shareholders will
fare the report said nothing; on tho preferred
nearly 50 per cent, unpaid dividend has ac­
cum ulated.
R egarding Cleveland & Sandusky It is
stated th a t the com pany will have $153,080
to devote tq sinking fund purchase Sept. 1
next, th a t the com pany has no floating In­
debtedness other ih a n w h a t has been in­
curred since the first of the cu rre n t m onth,
and th a t it has $.f>00,000 cash in bank.

BAIMIV d i h i L.m
CLEVELAND FE D E R A L BANK.
Resources.
Gold and gold certificates................. $17,668,29
Legal tender notes, e tc ...................... 1,069,10'
Rediscounts and loans........................
637.28
All other resources..............................
150,56:

Total resources ................................. $19,846,244
Liabilities.
C apital paid 4 n . .. .. .. ,, .- r .. .. . jr::,r'.T r'*$2,030,94*
Net deposits ......................................... 17,172.30'
Federal reserve notes in circulation
141.98;
Total liabilities ................................ $19.345,24*
Gold reserve a g ain st all liabilities. 101.4*
per cent; cash reserve a gainst all liabilities
107.76 per cent; cash reserve ag ain st al
liabilities a fte r s ettin g aside 40 per cent golc
reserve ag ain st federal reserve notes In cir
culation, 108.17 per cent.
A LL F E D E R A L BANKS.
Resources.
Dec. 24, 1814
Gold coin and c e rtific a te s .............. $232,568.00<
Legal tender notes, e tc .................... 25.748,00*
M aturities w ithin th ir ty d ays.........
4.102.00*
M aturities w ithin six ty d a y s..........
2.750.00'
O ther m atu rities ................................
1.700.00(
Total discounts .................................
8.552,00*
All o ther re so u rc es............
4.815.00*
T otal resources . . I . ' . / . . V i $271,683,00*
Liabilities.
C apital paid in ..................................... $18.050.0CW
Reserve deposits .............................. 249,786.90'
Federal reserve n o te s........................
3,847,00*
Total liabilities ................................ $271,888,001
Gold reserve ag ain st a ll liabilities, 91.7 pei
cent; cash reserve a g a in st all U abilit»s,
101.8 pe r cent.
NEW TO R K CLBA RrN G HOUSE BANKS.
Increase.
Loans, e tc ............. .........$2,179,097,000
9711,000
Reserve in own v a u lts
828.411,000 *19.171,009
R eserve In federal re ­
serve vaults ..............
98.4M.QO0
9,188,000
Reserve in o ther de­
positaries ....................
31,472.000
•216,60$
Net demand denoeits. 1,991.179.60')
4,668.069
Net tim e deposit*.......
98.490.000
*978,000
Circulation ....................
8C.ff7.Ofto M.98L000
e g ate reserve . . . .
49t.8f7.600
xcess reserve ...........
UT.111.800 *9,179,799

urH B R NEW YORK BAJttCB. I
$561,887,100 (3.396.C00
Loan*, etc.................. ...
Specie ............................
42,688,300
193,800
Legal tenders .............
12,267.300
9,500
Total deposits ............
644.754,000
3,843,000
Banks* oaeh reserve in
v a u lts ................ .........
11*222,300
Trust co.»* cash re ­
serve In v a u lts ..........
43,782,800
•Decrease.
Z7L.EVELAND CLEARIN G HOUSE B A NK S.'
Lxmns, increase ...................................... 165,33?
Deposits, decrease ................................. 2,129,131
- '- v ««nd due from res. agents, dec.. 786,77f

O

•-

■>J

Will Hear Pleas For Changes In
Reserve Districts
N a tio n a l banks'trrTW M bounties o f W est V ir­
ginia have asked the federal reserv e board in
W ash in g to n to tra n s fe r them from the R ichm ond
reserve d istric t to the Cleveland district.
T h e ir reasons they will give form ally a t a
W ash in g to n h earing to be held Ja n u a ry 27, but
it is know n in advance w hat som e o f these re a ­
sons a re —the trend o f business from th a t sec­
tion. in the m idst o f an oil and gas area, is to ­
w ard the n o rth and the w est ra th e r th an tow ard
the east. T ra in and consequently mail service is
better in this direction, and in physical distance
these counties are nearei1 to C leveland than to
R ichm ond by about 130 m iles. T be counties arc
W etzel and T yler, situated ju st u n d e r the W est
V irg in ia panhandle, which is already in the C leve­
land district. In the tw o counties are five n a ­
tional banks with com bined capital and surplus
o f $563,000. In the m atter o f d ollars accession
o f these five w ould m ean only $33,720 m ore capital
fo r the fe d era l reserve bank o f C leveland, but the
p leasing th in g about it to local b ankers is the
sentim ent displayed. B oth counties b o rd e r the
Ohio, being located a sh o rt distance up the riv er
from M arietta. T hey include the tow n o f Sistersville w ith th ree national banks and M iddlebourne,
N ew M artinsville, Sruithfield, Pine G rove, H u n ­
d red and a num ber m ore.
W hile in o th er W est V irg in ia counties the sen­
tim ent has not crystallized, th ere is know n to
be a good deal of fa v o r to w a rd C leveland in
places o f the size o f P a rk e rs b u rg and F airm o n t.
I f the tw o applying counties get in the C leveland
d istric t will contain 769 m em ber banks, w ith vast
possibilities in the way o f fu tu re e n try o f state
institutions. T he d istric t is fo u rth in am ount
o f capital o f the regional banks, being exceeded
only by N ew Y ork, Chicago and P hiladelphia and
n ot by B o s to n ; the additions w ould not a lte r our
sta n d in g in th is regard.
W hile these banks w ant to get in. P ittsb u rg h
continues to w ant to get out. T h e fed eral re ­
serve b o a rd yesterday fixed Ja n u a ry 13 as the
date w hen the Sm oky City pro test again st being
included in the Cleveland area will be heard. Col.
J. J. S ullivan, active in the first w ork to bring
the regional bank tcyC Ieveland, will uphold this
city’s side. B anker* doubt th a t any arg u m en t
_

P ittsb u rg h m ay m ake will prevail on the federal
b o a rd to m ake a change of this m ag n itu d e a fte r
the reserv e system has been so fa r advanced.
P ittsb u rg h 's fight places D. C. W ills, chairm an
o f d irec to rs o f the C leveland bank, and R obert
W ard ro p , a director, in a ra th e r unpleasant posi­
tion. M r. W ills is a fo rm e r P ittsb u rg h e r, having
spent the g re a te r p a rt of his life th ere and near by,
and M r. W a rd ro p is still a P ittsb u rg h e r. W h at
a ttitu d e these men will take is not announced, but
M r. W ills has definitely m oved his residence to
C leveland.
.
B altim ore, as already known, is provoked about
being atta ch e d to the Richm ond d istric t and she
w ill com plain to the reserve board Ja n u a ry 6.
B ankers from cities along the H u d so n river, op­
posite N ew York, in th.c.iU tc u i New Jersey , will
appear Ja n u a ry 2ft tn
f e £ h ,la ;
delphw- t* f f i f Ne w Y ork district N e F r r r t W o d j
W ffW iing b ankers will tra n s fe r from the kansSVi
J P t y to the Chicago district.




DISCOUNTS INCREASE
AT FEDERAL BANK
D is c o u n ts o f th e F e d e r a l B a n k of
C le v e la n d re a c h e d a n e w h ig h m a r k on
F r id a y a t *537.282. F u n d s g e n e r a lly w e re
le ss fr e e th r o u g h o u t th e F o u r th d is tric t
l a s t w e ek . l>oeal b a n k s e x p e rie n c e d a
d e c r e a s e o f o v e r J 2 .0 0 0 .0 0 0 in d e p o sits.
T h e e ffe c ts o f th e r e c e n t e m b a rg o on
liv e s to c k s h ip m e n ts h a s r.o t w h o lly w o rn
o ft a n d th is is p a r t l y re s p o n s ib le f o r a
c lo s e r p o s itio n w ith O hio b a n k s . C h i­
c a g o s till le a d s in re d is c o u n ts w ith a
to ta l of J3.034.000. R ic h m o n d Is seco n d
w ith J l,184,000. T h is is r e la tiv e ly la rg e
f o r its to ta l re s o u rc e s o f J9.732.uOO. T h e
to ta l d is c o u n ts a n d lo a n s o f th e tw e lv e
re g io n a l b a n k s a r e a s fo llo w s :
B o s to n ..................................................... J97.00C
N e w Y o r k ......................................... .
620.00C
P h ila d e lp h ia ......................................... H«.00(
C le v e la n d ............................................... 537,(XX
R ic h m o n d ...................... ......................1,1S4,0(X
A tla n ta .................................................. ■*, 731,00(
C h ic a g o ....................................... 034,00(
S t. I-o u is ......... ....................................... SU,<XX
M in n e a p o lis ..................................... .. 402,0(X
K a n s a s C ity ........................................ 108,(KK
D a lla s ...................................................... 598.0m
S a n F r a n c is c o ............................. ...
7ST,00*
W a tc h W o rk s C lose.
WALTHAM, MASS.. December 26.—Thi
plant of the W altham W atch Company, m
ploying 4,000 hands, closed W ednesday foi
three weeks. The usual C hristm as vacatioi
has been three days.
C o n tin e n ta l G as.
C ontinental Gas & E lectric has declared th«
uaual quarterly dividends of l 1* per cent ot
the preferred and
of 1 per cent on the com
mon. payable J an u a ry l to stock of recor<
December 22.
A ., E. A C. E a rn in g s .
A urora, Elgin A Chicago reports for No
vember and five m onths:
Nov. 1914. Nov. 1913
Total earnings ....................... *160,927
$171.07Operating expenses ............... 106.052
112,72:
Net earnings ............................ 55,874
58,34?
37,49f
Interest and t a x e s ................ 89.960
Balance ...................................... 15,924
20,86;
Deprec. and am ortization.. . 2.824
........
Balance ...................................... 13,29t
20,86;
Five m onths ended November 80:
Total earnings ........................ 944,717
968,23;
O perating expense* ............... 583,638
681,3!V
Net earnings ............................ S61.079
386.88:
Interest and taxes ................ 199.017
186.8f
B alance ..................................... 162.06:2
200,031
Deprec. and a m ortization__ 16,866
........
w*l*nce ..................................... 145,196
200.03*.

DISC O U N T R A T E S SH O W LO W E R T E N D E N C Y
As to th e m o n ey m a rk e t, th e fo re c a s t m a d e in t h i s c o lu m n a wee!
ago lia s b een p r o m p t in d ev elo p in g . T h e F e d e r a l B a n k t>f New Tori
la te in th e w eek a n n o u n c e d a n o th e r re d u c tio n in th e d isc o u n t ra te fo
s h o r t d a te p a p e r to 4% p e r c en t. C all m o n ey h a s m a d e a m inim um o
p e r c e n t a n d c o lla te ra l lo a n s f o r fixed d a te s a re b e co m in g dimcul
to n e g o tia te a t 4 p e r c e n t o w in g to lac k o f d e m a n d . S terlin g ' r a te s ease
a g a in y e s te rd a y a lth o u g h w e a r e no w In th e p e rio d w h en th e r e should b
a stiff d e m a n d f o r r e m itta n c e to fin an c e th e d iv id e n d a n d in te r e s t dues 01
ro re ig n -h e ld s e c u ritie s d u e on th e first of th e y e a r a n d d u rin g J a n u a n
;.0 rk fu n d s a t M o n tre a l a r e q u o te d a t $7.50 p e r »l,00fi p rem lun
in d ic a tin g a s o m e w h a t o b v io u s e ffo rt to s ta v e off in e v ita b le r e tu r n o f gi
fro m C a n a d a to th is c o u n try .
1 h e re is a n o th e r sid e o f th is m o n e y m a r k e t situ a tio n , howe
w a n k e rs r e p o r t t h a t b o rro w e rs a r e n o t m e e tin g th e ir m a tu ritie s a s prom p
1> a s c o u ld be w ished. T h e N ew T o r k b a n k s ta te m e n t sUll show s a som
w h a t rig id p o sitio n a s to to ta ls . T h e b lin d sid e of th e b a n k s ta te m e n t
tn * o n e t h a t d e a ls w ith th e g e n e ra l c h a r a c te r a /id liq u id q u a litie s o f t
t o ta ls r e p re s e n te d b y th e lo a n a c c o u n t. T h e re a re tim e s w hen th is m a tte
o r c h a r a c t e r ta k e s on m o re im p o r ta n c e th a n th e figures them selves. Oi
t h a t s c o re t h e h ig h ly im p o r ta n t f a c t o r is th e e x te n t to w hich th e rev iv a
i*ow u n d e r w a y wil1 c o r re c t th e fa u lt. T h is is th e a f te r
Vo
d e v elo p a lo n g in t h e e a rly m o n th s of n e x t year,
fo r
orlc b a n k e r s r e p o rte d y e s te rd a y t h a t som e larg e b u y in g ord<
o u tr o
» ! ’ JL°
v * n.d
m a t e r i a l w e re p e n d in g to a d d to th e expo
ferr»<i tv, ^ y 1®8® h a ’i><ers h a v e im p o r ta n t G e rm a n c o n n ectio n s It w a s in
h a t G e rm a n y w a s a b o u t to p la c e so m e Im n n ria n t

:o g r a n t

for •....... — mm m

5 for lo o se r periods. _____
rat*»fl a t th e fouemt reserve banks of
d istricts a re a* fo’lowa: —r

m M S IB

80 days.
•f Y

Regional Banks Keep in
Background in Money
Market.
New Currency in Circulation
Almost Unchanged
for Week.
■'•-Fot- the w e e k e n d e d w ith t h e close
o f b u s in e s s T h u r s d a y t h e f e d e r a l r e ­
se rv o s y s te m r e p o r t s a decrease In r e ­
d is c o u n ts of $401,000 to $8,562,000,
th e s y s te m fit la r g e show ing th e sa m e
t e n d e n c y n s w as rep o rte d b y th e
C le v e la n d b a n k ou F rid a y . M a tu ri­
t y fa llin g d u o a r e paid off and, n o t­
w ith s ta n d in g t h e re c e n t low ering ol
th e s y s te m 's r a t e s , m oney can be n a a
so m u c h c h e a p e r In th e open m ark e t
t h a t new p a p e r is* n o t b r o u g h t in in
a m o u n t s u ffic ie n t to o ffs e t th e d e ­
c r e a s e . A t t h i s s i t u a t i o n th e federal
re serv e b o a r d d o e s n o t com plain; Its
fu rtlo n Is to p r e v e n t a n a bnorm ally
tig h t s itu a tio n , a n d n o t In easy m on­

ey tim e s to »nke p ro fit from m em ber
b a n k s . T h e o p e r a t i o n s so fa r do not
f u r n is h su ffic ie n t to p a y th e 0 per
c e n t, d iv id e n d s o n th e re serv e system
c a p ita l stock, b u t it is too e a rly to
p r e d ic t w h a t th o f u tu r e will b rin g
f o r th in th i s re g a rd . L e a v in g o u t o f
c o n s id e r a tio n th e lim ite d additio n al
f u n c tio n s t h e re s e rv e b a n k s m ay P er­
form b e s id e s th o se now in action, a
r is e in m o n e y ra te s such a s business
b e tte rm e n t a n d con tin u ed foreign
g o v e r n m e n t d em a n d w ould produce,
w ould send th e re d isc o u n t to ta l r n p id Ij T h e t o t a l re so u rc e s are ab o u t
1 TOO 000 l a r g e r th a n th e previous
w eek t h e in c r e a s e b e in g d u e m a in ly
t " l a r g e r a m o u n t s of fed eral re serv e ,
n o te s m t h e h a n d s o f t h e N ew T o rk
" o n ly $9,000 c h a n g e Is show n In
•.m ount of fe d e ra l re se rv e notes in
’irc u la tlo n , th a t is o u tsid e th e regjonii banks
F o r th e p re se n t no g re a t
Jm oun* of new fe d era l re serv e notes
g a r s p u t o u t: th e y a r- b e i n g looked
upon by th e offlci.-Js a s a supplem ent.1 m m n c y to be used w hen general
b u sin e ss ex p an sio n o r c o n tra ctio n
m a k e a lik e m o v em en t In tho c u rre n ­
cy a d v isab le.
FBDEltAL RESERVE BYSTEM.
RESOURCES.
DM. M

D*®-

Gold « oln * " 4 , C*r "$232,568,000 |MS.2T9,000

tiflcate.
tender*, note*,
.liv e r
certificate.
:5 .008.000
i n a ritw ld lary coin 2S.T48,000
,*J5S,318.000 f359.287.000
ToUl
BH .LS DISCOUNTED.

M5tay’2, or5 l ^ th ln -30*
M atu rities w ithin 60

day* or 1®** .......

O ther ..........................

2.750.000
1.700.000

» ®049000
2.266.000
1,728,000

. .. f 6.XS2.000 $ 0,043.000
2.800.000
AH o th- e r resources * 4,815,000
T o tal resources ..$*71,688,000 $260,990,000
UABIL-TTIE9.

C - & ■:::’>8.®88 M SS&S

i ’eueral reserve note*

^

rn n 'aUOn.: net.

S. 847,000

Total I la b ia ties . .$271,683,000
<3oM re ie re o a g a in .t
ill l ia b iliti e s ........
91.1%
Caah reaerve a g a la it
all lta b illtle. ........
101.8%




8.806.000
«M9.990.000
o2.G<5
"■L-W ,
„
,
102.5% I

...l
P h ilad elp h ia
Boston . . . .
Chicago . . .
St. ] ouie ..
n ie v tla n d . . . .
Richmond ................................
A tla n ta ....................................
k i u u City ........................
Dftllaa ..................................
Minneapolis ..............
San FrancUno ....................

5*
a
n

r
6

»
5

5
B'/i

6

N E W YORK CLEARING HOUSE.
A ctual condition*:
Increasa
Loans, e tc ................... $2,170,097,000 $ T il,000
Kenervo in own v a u lt t328,416.000 *10.271,000
R eserve in federal
•
•
resorve vaults . . .
08,409,000 8,186,000
Reserve in other de­
positaries ..............
81,472,000
*218,000
Net dem aand deposits 1,980.170,000 4.508,000
Not tim e d ep o sits..
93,480.000
*278.000
C irculation ..............
52.567,000 *4,261,000
Agrgn^gato reserve . .
458,387,000
Excess reserve ........
117,121,200 *8,176,780
O TH ER N EW YORK BANKS
Loans, e tc ...................
56l.8H7.100 8,305.500
Specie ..........................
42,688.300
103,900
Legal tenders ........ ..
12,267.300
9,B00
Total d e p o s its ..........
644,754,000 8,845 000 i
Banks cash reserve
in v a u lts ................
11,222,bOO
Trust Co.’s cash re ­
serve in v a u lts ....
43,732,600
• Decrease.
fOf w hich $250,524,000 is specie.
LOCAL NATIONALS.
Cleveland n ational banks rep o rt for the |
week ended w ith the close of business F riday
la st Increase in loans $05,337, decrease In
deposits $2,129,132 an d decrease In c ash and
due from reserve a g en ts #786,776.
C LEV ELAN D CLEARINGS.
L ast week .......... ................................ $17,704,035
W. ek la st y e a r ................................21.793.116
Deo. 26 ..................................... ........... 4.010,850
Dajr la s t y ear ..................................... 4,318,707 |

m u h im bAiw
TO CLEARING HOUSE
Members of Association Vote
to Take in Downtown
Trust Companies.
m m
____
:.*i v m
Capital of Institutions Now
in Organization is
$ 2 0 ,6 0 0 ,0 0 0 .

^

T he Cleveland C lea rin g H o u se a s so
ciatlo n a t a m eetin g y e ste rd a y a fte r
noon am ended it* c o n stitu tio n a n d by
law s to ad m it to th e a sso c ia tio n al
t r u s t com panies in C leveland h a ' ini
a c a p ita l stock of $500,000 o r more
T h is will a d m it d o w n to w n C itizen
Savings & T ru s t Co.. th e C levelam
T ru s t Co., th e G u a rd ia n S a v in g s t
T ru s t Co. a n d the S u p erio r S av in g
& T ru s t Co. a n d will b rin g th e asso
c la tlo n ’s m em bership to tw elve. I re
viouslv the s#ven .n a tio n a l b a n k s a n
th e F e d e ral O les6rv« t a n k alone be
fcfntry of m ore b a n k s in to th e clear
ing house h a s been a su b je c t of ais
cusslon In C leveland fo r y e ars. A
local b a n k s c le a r th e ir c h eck s th ro u g
th e c le arin g house a n d a re a ffo rd e
o th e r facilities by tt, b u t up to noi
the question of a c tu a l a d m issio n an
full p a rtic ip a tio n in th e d e lib e ra tio n
of

th e

a s s o c ia tio n

has

not

oeo

g ra n te d s ta te b an k s. T h e re aso n
for tht* w ere several. S ta te b an k
w ere p e rm itte d to p a y in te r e s t on ac
c o u n ts of c o u n try b a n k s .:e p t w ui
th em , w hile n a tio n a l b a n k s w ere not
S ta te b an k s w ere p e rm itte d to keel
reserv e* less th a n w h a t th e n a tio n a
in s titu tio n s w ere com pelled b y lav
to keep. T hese a n d o th e r m a u e n
m ad e th e n a tio n a l b a n k e rs unw ill ni

me

s ta te

in o iu u u o n *

' hu:

favored a b o v e th e n a tio n a l in s titu ­
tion*. th e fu ll fa c ilitie s w hich th<
c learin g h ouse e sta b lish e d by th e n a ­
tional b a n k s afforded.
T he s t a te b a n k s now offered m em ­
bership In th e c le arin g house each
will h av e Its d ire c to rs voto on the
m attpr- E l try w ill solidify th e local
ban k in g situ a tio n , will give th e fo u r
tru s t com panies voice a n d vote in th e
la r g e r b a n k in g q u e s tio n s a s th ey a ris e
And w ill a ffo rd th e s e t r u s t c o m p a n ie s
d ire c t c le a r in g o f c h e c k s I n s te a d of
th r o u g h m e m b e r b a n k s a s is n o w th e |
:.ase. Al] o f th e o t h e r tw e n ty - o n e
>anka w ill c o n tin u e to c le a r th r o u g h
;he c le a r in g h o u s e a s th e y do now
a n d to h a v e a ll f a c ilitie s t h a t now
b elo n g to th e m ; i t w as d e e m e d w ise
to e n la r g e th e c le a r in g house slow ly,
io th e r e s tr i c t io n s as to new m e m b e rs
w e re e s t a b l li ' '

Hai ^g—
wh e n
th&^wretnbers h a v e jo ln w iltalill h ave
p g S -in c a p ita l of $20.fM)0,ffl

U. S. LIMITS BANK
LOANS ON REALTY
D u , o j

M M

j b

federal Reserve B o a r o e stricts Dealings on Basis
of Deposits.
.
W A SH IN G T O N .
D e cem b er A*'30.—
C om ptroller of th e C u rre n cy W il­
liam s to n ig h t notified n a tio n a l b an k s
t h a t th e F e d e ra l R eserv e B oard had
d ra w n a rew »tw «*i ln w rr m in i the
provision in th e a c t g o v e rn in g loans
b y th em on re a l e sta te .
T h e re g u la tio n follow s:
‘‘T he m ax im u m a m o u n t of loans
w hich a n a tio n a l b a n k m ay m ak e on,
re a l e s ta te u n d e r tlie te rm s of sec
tlo n tw e n ty -fo u r of th e fe d era l re
se rv e a c t, sh a ll he lim ite d to
a m o u n t n o t in excess of o n e -th ird
its tim e d ep o sits a t th e tim e of m a k ­
ing of tlio loan, a n d n o t in excess of
o n e -th ird o f its a v e ra g e tim e deposits
d u rin g th e p re ce d in g c a le n d a r year;
provided, h ow ever, t h a t if o n e -th ird
of such tim e d e p o sits a s of th e d a te
of m a k in g th e lo an or o n e -th ird of the
a v e ra g e tim e d ep o sits fo r th e p re ­
c ed in g c a le n d a r y e a r sh a ll have
a m o u n te d to less th a n o n e -fo u rth of j
th e c a p 'ta l a n d su rp lu s of th e bank]
a s of th e d a te of th e loan, then, in
t h a t e v en t, th e b a n k sh a ll have
a u th o rity to m ak e lo an s upon real
e s ta te u n d e r th e te rm s o f th e a c t to
th e e x te n t of o n e -fo u rth of th e bnnk’s
c a p ita l a n d su rp lu s a s o f th e d a te of
m a k in g th e loan. '
T h e fe d era l re se rv e b o a rd today
a p p ro v ed c h an g e s in th e red isco u n t
ra te s by the S a n F ra n c isc o , B oston,
D a lla s a n d C hicago fe d era l reserve
b a n k s. S an F ra n c is c o w ill h ave n
p e r c en t r a te on m a tu ritie s up to
th ir ty d a y s ; B o sto n w ill h a v e the
sa m e r a te w ith 5 p e r c e n t for longer
m a tu r itie s ; D a lla s w ill h av e 5 per
c e n t u p to s ix ty days, 5% on six ty to
n in e ty , a n d 6 p e r cen t on lo n g er m a ­
tu ritie s ; C hicago w ill h a v e fo u r ra te s,
4*6 o n u p to t h i r t y - d a y m a tu ritie s.
5 o n t h i r t y to s ix ty . 5 ti on six ty to
n in e ty , a n d 6 o n o v e r n in e ty days.